We saw in this morning's CPI release:
....Energy
The index for energy increased 4.2 percent over the past 12 months. The gasoline index rose 0.9 percent over this 12-month span and the fuel oil index increased 11.3 percent over the same period. The index for electricity increased 6.9 percent over the last 12 months and the index for natural gas rose 9.1 percent.
Auction results after the jump.
From Bloomberg, December 16:
The outcome of what was, until recently, an obscure US power market auction will be the subject of intense interest this week for electric generators, regulators and consumers alike.
The results due late Wednesday will confirm what PJM Interconnection LLC — the nation’s largest grid operator, serving millions of Americans from Chicago to Washington, DC — will pay power generators to secure capacity starting in 2027. The bill is expected to reach $17 billion, according to a Bloomberg survey of grid experts, policymakers and traders. That would mark the third consecutive year of record-breaking costs, as the swift build-out of data centers is adding billions of dollars to household utility bills.
The PJM auction has emerged as a barometer of US energy inflation, with this week’s results likely to stoke increasingly heated public discourse about affordability. Surging utility bills are already shaping up to be an issue in the congressional midterm elections next year: Despite President Donald Trump saying electricity prices would be halved within a year of taking office, costs have increased. Just last month, Democrats won elections in New Jersey and Virginia — two states within the grid’s territory — as well as in Georgia, after campaigning to lower power bills.
While the so-called capacity auction is just one component of total electricity costs to consumers, it’s one of the fastest growing due to skyrocketing demand from artificial intelligence that’s straining power supplies. Data center electricity consumption accounted for 45% of the price tag in the last auction, according to Monitoring Analytics LLC, PJM’s official independent watchdog.
READ: Election Shocks Underscore Power Bills as New Political Risk
“The capacity market is punishing customers,” said Maryland People’s Counsel David Lapp, the state appointed official advocating on behalf of utility ratepayers. “What we are seeing is a windfall for generators.”
Costs would be even higher if not for a price cap negotiated last year. The limit for this month’s auction is $333.44 per megawatt per day, with analysts widely expecting prices to reach that ceiling, which would be an all-time high. If PJM can’t agree on an extension of the price cap with states in its territory, costs would surge even further in future auctions.
The payouts are expected to be a win for independent power producers including Constellation Energy Corp., Vistra Corp., NRG Energy Inc., Talen Energy Corp., all of which have seen shares benefit from the AI-power boom....
....MUCH MORE
From February 2025's "Nation's Largest Grid To Fast-Track NatGas Power Plants To Fuel Next AI Trade" (GEV):
And more recently:
You can see the politics in that map and it's not just AI. The mix of electricity sources and policy decisions are going to get quite a bit of play heading into the mid-term elections.
And two points on the auction results.
Because of a price cap the auction failed to produce enough commitments to avoid brown-outs. At the Natural Resources Defense Council, December 17:
For the First Time in History, PJM Auction Fails to Procure Necessary Power Supply
And from Reuters via MSN, December 17:
Prices in biggest US power grid auction hit new record, signaling higher utility bills ahead
Chicago, New Jersey, Pennsylvania, Ohio, Indiana, Maryland and West Virginia are going to be subjected to a lot of spin in the next ten months.
If only there was a way to harness that energy.
