PJM's 2028/29 BRA: $325/MW-day price cap

PJM’s 2028/29 Base Residual Auction, announced on July 14, 2026, cleared lower than the prior auction while its supply shortfall widened. The lower price traces to the temporary cap; the widening shortfall reflects fundamentals the capped price does not express.

Takeaways:

• PJM's 2028/29 Base Residual Auction cleared at a single RTO-wide $325/MW-day — the third consecutive auction at the FERC-approved cap.

• Number of constrained LDAs remained at zero, and there was no LDA-level breakout

• 138.3 GW of UCAP ($16.4 billion) while falling 6.8 GW short of the reliability requirement.

• Price was set by a temporary cap and floor in place since 2025, not by market conditions; the 2.5% decline from the prior auction reflects only a change in the reference resource's accreditation factor (0.77 to 0.79).

• PJM's own uncapped simulation puts the clearing price 71% above the applied cap — up from 18% two auctions ago — implying the collar reduced the auction's cleared value by approximately $13.3 billion.

• The collar covers four auctions through 2029/30; the last authorized auction runs in December 2026, after which the cap reverts to a Net CONE-based figure PJM estimates at approximately $550/MW-day.

• Forward indicators show no movement toward a sub-cap outcome: new generation and uprates have declined across the three capped auctions (2,669, 774, 525 MW), and a third consecutive auction clearing more than one percentage point below the reserve margin would require PJM to conduct a Reliability Backstop Auction.
  

Auction results

The reserve margin of 14.7% includes the 10,864 MW committed under Fixed Resource Requirement plans rather than cleared in the auction. PJM also reported that the RTO as a whole failed its market structure test — the three pivotal supplier test — resulting in offer mitigation for all existing generation capacity resources.

Metric	2028/29 BRA
Clearing price (RTO, all LDAs)	$325.00/MW-day UCAP — at cap, −2.5%
Cleared UCAP	138,318 MW
FRR committed	10,864 MW
Shortfall vs. reliability requirement	6,831 MW
Reserve margin	14.7%
Cleared value	$16.4 billion
New generation and uprates	525 MW

The clearing price declined while the supply shortfall widened. The price follows from the cap; the widening shortfall reflects supply-demand fundamentals that the capped price does not express. The sections below review the cap's origin, its duration, its calculation, and the indicators that would signal a change.

Origin and expiry

The mechanism is a price cap and floor, or collar, and it is temporary rather than a standing feature of PJM’s market design. The cap has bound in every auction so far; the floor has not.

Date	Event
December 30, 2024	Governor Shapiro and the Commonwealth of Pennsylvania file a complaint at FERC
January 2025	PJM and the Commonwealth settle
February 2025	PJM files conforming tariff revisions
April 21, 2025	FERC approves 4-0, covering two auctions
July 2025	2026/27, the first auction under the cap, clears at $329.17
December 2025	2027/28 clears at $333.44
February 2026	PJM Board moves to extend; files February 27
April 28, 2026	FERC approves the extension, covering four auctions
July 14, 2026	2028/29 clears at $325.00
December 2026	2029/30 — the last auction under the current authorization
2030/31	Reverts to PJM’s standard VRR curve unless extended again

The cap originates in litigation, not in PJM’s market design. The 2025/26 auction cleared at $269.92/MW-day, more than nine times the $28.92 of the year before. In December 2024, Governor Josh Shapiro and the Commonwealth of Pennsylvania filed a complaint at FERC arguing that the standard price cap — which had just been raised to the greater of the gross cost of new entry or 1.75 times the net cost — was unjust and unreasonable, and asking that it be set at no more than 1.5 times net cost of new entry. PJM settled rather than litigate, and the negotiated cap and floor is what emerged. Other PJM-state governors and the Organization of PJM States supported the complaint; PJM’s Independent Market Monitor, LS Power and others opposed the settlement filing filed a complaint at FERC.

The PJM Board moved to extend the cap in February 2026, and FERC approved the extension that April. One auction remains under it. Absent a further extension, the cap reverts to PJM’s standard VRR curve — a multiple of Net Cost of New Entry rather than a negotiated figure, which PJM’s February 2026 filing estimated at roughly $550/MW-day with a zero floor.

How the cap is calculated

The cap is anchored in installed capacity (ICAP) terms at a fixed $256.75/MW-day. RPM clears and settles in unforced capacity (UCAP) terms. To translate between them, PJM divides the ICAP-denominated cap by the accreditation factor of its reference resource, a dual-fuel combustion turbine. PJM describes the method in its results release: the cap “is calculated using the accredited capacity of the PJM reference resource.”

The calculation has two inputs. One is fixed; the other is reset each auction.

Applied cap (UCAP)   =   ICAP anchor   ÷   AUCAP factor

2028/29:   $325.00   =   $256.75   ÷   0.79

Auction	ICAP anchor	÷  AUCAP factor	=  Applied cap (UCAP)
2026/27	$256.75/MW-day	0.78	$329.17/MW-day
2027/28	$256.75/MW-day	0.77	$333.44/MW-day
2028/29	$256.75/MW-day	0.79	$325.00/MW-day

ICAP anchor: the cap fixed in installed-capacity terms under the settlement; unchanged across auctions.   AUCAP factor: the reference resource's accredited unforced capacity as a share of its installed capacity; reset each auction.

The anchor is identical in all three auctions. Only the AUCAP factor moves. It rose from 0.77 to 0.79 for the 2028/29 auction, which lowered the applied cap by 2.5%. Supply and demand conditions were not a factor in the decline, and the factor can move in either direction independent of market fundamentals.

The floor is derived the same way. For the 2027/28 auction it was $138.25/MW-ICAP, or $179.55/MW-day UCAP.

Indicators for future auctions

An auction clears below its ceiling when the supply curve shifts far enough right to intersect demand below the cap. PJM publishes a simulation of each auction with no cap or floor applied. That simulation indicates the distance between the applied price and an unconstrained outcome.

The premium is not uniform across the footprint. In the constrained ComEd zone the 2028/29 simulation implies roughly 139%, and an uncapped auction would have totaled $29.7 billion against the actual $16.4 billion.

Closing that distance requires a sustained increase in cleared supply or a downward revision to forecast load. Supply-side movement has been limited:

• Cleared capacity rose 3,733 MW, of which 525 MW was new generation and uprates.

• Natural gas gained 5,639 MW UCAP — mostly higher accredited UCAP factors, coal-to-gas conversions, and units absent from the prior auction. Coal declined 2,941 MW.

• Physical supply across the footprint grew 1,294 MW ICAP, against a forecast peak roughly 2,000 MW higher.

  
  

This was the second consecutive auction to clear more than one percentage point below the installed reserve margin; under PJM’s tariff, a third would require PJM to conduct a Reliability

Backstop Auction. PJM has opened two fast-track stakeholder processes in response, covering large-load additions and backstop procurement.

What to monitor

Signal	Where it appears	Indication of a sub-cap outcome
Simulated uncapped price	PJM auction release and BRA report	Declining in successive auctions toward the applied cap.
New generation and uprates	BRA report	Sustained multi-thousand-MW entry, reversing the 2,669 → 774 → 525 MW decline.
Expedited Interconnection Track	PJM queue reporting	Projects reaching commercial operation. Up to 10 state-sponsored projects a year; sunsets end-2027.
Backstop Procurement	September 2026 bid window, pending FERC filing	Volume procured, and cost allocation. PJM has said allocation will follow state preferences.
Load forecast revisions	PJM annual load report	Downward revisions to large-load additions, or rules excluding unserved data center load.
Reference resource accreditation	Planning Period Parameters	Moves the applied ceiling independent of supply and demand.

The collar's expiry is a scheduled event. If supply conditions are unchanged at that point, the applied cap reverts to the Net CONE-based figure and the constraint on the clearing price is removed.

Implications

Under the cap, the clearing price reflects a negotiated ICAP anchor divided by a reference-resource accreditation factor. It is not a measure of what supply costs.

Two consequences follow for market participants in the PJM footprint. Capacity revenue is administratively bounded for the duration of the cap, and the applied ceiling moves for reasons unrelated to any individual asset. Resource adequacy is also being addressed increasingly outside the auction. PJM has cited a Reliability Backstop Procurement targeted for September, “Connect and Manage” frameworks for large loads, an Expedited Interconnection Track, and a June 9 RFP, administered by CRA, facilitating long-term bilateral contracts between large loads and generators.

Together these shift more of the resource-adequacy function toward contracted structures — executed interconnection agreements and long-term offtake — and away from the auction clear.