Earlier this year we explained why residents of the PJM area, America’s largest electricity market, have seen their power bills rise by ~20%. We argued that the main culprit was PJM’s auction design choices and how it models demand and supply. To better understand the extent of the problem, our Energy Model team spent the last six months reverse‑engineering PJM’s main system model, the ‘Reserve Requirement Study’, which to date has been a black box.

Using a reconstructed model we found that errors tactically hidden in PJM’s methodology have cost all of its 66 million residents a total of $12B between 2025 and 2027 alone. The study underestimates existing plants by ~4 GW, overstating the supply‑demand shortfall and driving up auction costs. A more accurate model would have produced $6.7B of savings in 2025‑26 with only 14 MW less power procured, and $4.9B in 2026‑27.

PJM’s emergency auction, slated for late September, risks signing long‑term contracts without committed counter‑parties. Semi Analysis estimates an additional 3.8GW of reliable power from winter efficiency gains, which would negate 56 % of the 6.8 GW PJM plans to procure. Without reform, ratepayers remain exposed to inflated costs.