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What’s happening

PJM Interconnection, which manages the power grid across 13 states, reported this month that there was an unprecedented increase in electricity prices. One of their big jobs is to make sure there’s always enough electricity available, especially when everyone’s using a lot of it, like during a heatwave. To do this, they run auctions where power plants bid to supply electricity. The winning plants get paid to be on standby, ready to deliver power when needed.

During the latest auction, power plants bid at about $269.92 per megawatt-day. Don’t worry too much about what a ‘megawatt day’ means - what matters here is that that price is a staggering nine times higher than last year.

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This surge is due to a combination of factors:

- Higher Demand: Data centers, including those for crypto mining and AI, are consuming more power.

- Extreme Weather: Heatwaves and other weather events are pushing energy use higher.

- Less Supply: Older power plants are closing, tightening the electricity supply.

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Why you need to know

Power plant companies are benefiting from these higher prices and seeing their stocks climb. But for everyone else - this isn’t great (to say the least). Your power bills will take a hit, and within the next 12-16 months. Some areas are already warning utilities bills could increase significantly as a result.

We know the wholesale power market is complex and often seems distant from daily life. However, with the largest price increase on record now in play. It's important to understand how these changes could affect you.

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Electricity price spikes don’t just stay in the wholesale market—they trickle down to your monthly bills. And this is just the beginning - we’ll see more of these price signals over the coming months.

What you can do

Here are a few tips to help you navigate these rising costs:

- Monitor Market Trends: Keep an eye on energy price changes and market conditions.

- Shop Around: Look for competitive energy rates to ensure you’re not paying more than necessary.

- Consider Alternative Solutions: Explore options like energy-saving strategies or plans that offer better rates.

The PJM price spike is a significant development for anyone who pays a power bill. Understanding these changes and how they impact your energy costs is essential. Stay informed, compare your options, and take steps to manage your bills effectively.

At Arbor, we specialize in navigating these complex market shifts for you. Our team of experts works tirelessly to track historical, current, and future prices to ensure you’re getting the best deal possible. We’re here to make sure you’re not just paying the price you’re given but finding opportunities to save where you can. Sign up today so we can find you a lower rate before your next high bill comes.