Electricity prices just hit a new record on the country’s largest power grid, and the stock market is cheering. Utilities tied to the PJM Interconnection jumped Thursday after a key capacity auction cleared at an all-time high price of $333.44 per megawatt-day.
That surge lifted shares of Talen Energy $TLN ( ▲ 1.29% ) , Constellation Energy $CEG ( ▼ 0.35% ) , and Vistra $VST ( ▼ 1.34% ) , all of which operate large power fleets inside PJM’s 13-state footprint stretching from the Mid-Atlantic to the Midwest.
AI demand is overwhelming supply
PJM officials made it clear what is driving the spike. Demand from data centers continues to grow much faster than new power supply can come online, largely due to AI workloads that require massive, always-on electricity.
Executives warned that the imbalance is not temporary. Data centers accounted for the majority of new demand in the auction, and the grid failed to secure enough capacity to meet its reliability targets. That shortfall means even higher costs could be coming through follow-up auctions.
Consumers pay while generators win
The rising auction prices will ultimately show up on household electricity bills. November CPI data already showed US electricity prices up nearly 7% year over year, the fastest pace since early 2023.
Politicians are starting to push back. Senate Democrats are calling for hearings, and multiple governors within PJM’s territory have demanded reforms to prevent consumers from subsidizing Big Tech’s power needs.
For investors, though, the picture is simpler. Higher capacity prices mean higher guaranteed payments for generators, which is why utilities with exposure to PJM are suddenly some of the market’s biggest winners.