PJM Interconnection runs an annual Base Residual Auction (BRA) in May/June to procure generation capacity for the delivery year starting 18 months later. The clearing price ($269 per MW-day for 2025-26) is the unified procurement cost across all PJM-zone generators with capacity to sell. The capacity charge flows into residential bills with a 90-day to 6-month lag depending on state. Residential customers cannot opt out.
How the BRA works
PJM aggregates demand forecast across all zones. Generators bid in their capacity at desired price. PJM clears the auction at the price where supply meets demand.
Cleared price applies uniformly across all PJM-zone generators with cleared capacity. The cleared price flows into wholesale market participants' contracts and ultimately into retail tariffs.
How clearing flows to residential bills
Each state PUC reviews the cleared price as part of the annual utility tariff filing. The capacity component of the residential delivery tariff adjusts based on the auction.
Typical lag: 90 days to 6 months from auction clearing to retail bill change. PA fastest at ~90 days; some states take 6+ months.
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Quick answers from the editorial desk
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Further reading