Why are Energy Bills Going Up June 2025?
The increase in energy bills beginning in June 2025 is largely driven by higher prices in PJM’s capacity market. As previously mentioned, the capacity market functions like an auction where utility companies buy energy in advance to meet future demand during peak periods, such as extremely cold or hot days.
In PJM’s most recent auction in early 2025, prices rose higher than expected due to a surge in projected demand. PJM attributes this increase to two main factors:
- Rapid growth in energy use for expected data centers, and
- A shortage of new, reliable energy projects being built and connected to the grid.
According to PJM, data centers alone account for 70 percent of the projected increase in demand. But supply has not kept pace with this unexpected increase in demand. As a result, utilities paid more for future capacity, and those costs are passed on to customers.
A significant reason for this supply shortfall is PJM’s own delays in connecting new energy projects to the grid. Before a new project, such as a solar or wind farm, can connect to the grid and deliver electricity, it must go through PJM’s interconnection queue. This is a review process that assesses whether the project can be safely added to the grid, but in practice, this has become a major bottleneck. As of March 2025, 143 gigawatts worth of projects — including 79 projects in New Jersey — were awaiting approval in the interconnection queue, enough to power about 115 million homes. For comparison, PJM currently has about 179 gigawatts on the grid as of 2025. In 2022, PJM decided it would not review newer project applications until early 2026, and it’s unlikely that projects currently applying to join the grid will come online before 2030. However, PJM’s recent Resource Reliability Initiative fast-tracked primarily fossil fuel projects, even though over 95 percent of projects awaiting approval are renewable and storage projects, giving gas-powered energy an unfair advantage.