At The Belden Brick Company in Sugarcreek, Ohio, a plant that has been firing kilns for 141 years, one line item on the electricity bill went from roughly $1,600 a month to roughly $12,000. Total electricity costs rose 90% over the prior year. The company raised brick prices 4%. “That capacity charge just jumped off the page,” Brad Belden told Reuters, which reported the figures on July 7, 2026. “There are going to be some companies that are on the razor's edge.”
The instinct is to file this under rising energy prices. That framing is wrong, and the distinction matters more than any number in the story. Belden Brick did not get repriced because electrons became more expensive. It got repriced because of a capacity charge — a separate wholesale product, procured three years in advance in an auction run by PJM Interconnection, allocated to individual plants by a formula almost no operator has read, and completely untouched by the regulatory response that state utility commissions have spent the past 18 months building. Understanding which of those things is true determines whether a plant manager has a lever to pull or not.
The number, and the dates that go with it
The 1,038% figure that has circulated all summer is real but needs both endpoints stamped. It measures the move from $28.92 per MW-day for the 2024/2025 delivery year to $329.17 per MW-day for 2026/2027. That 2026/2027 auction was announced July 22, 2025, up $59.22 — 22% — from the prior record, and cleared at the FERC-approved collar cap. It is the price embedded in bills from June 2026 through May 2027, which is exactly why the damage is surfacing in mid-2026 P&Ls rather than last year's.
Two more auctions have cleared since, and both are worse than the headline suggests:
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2027/2028 (announced December 17, 2025): cleared at the cap, $333.44/MW-day UCAP against a $179.55 floor, 134,479 MW procured, FERC Docket ER25-1357. It was the first auction in which the entire RTO, including fixed resource requirement areas, fell short of the reliability requirement. PJM attributed roughly 5,100 MW of a ~5,250 MW peak-load forecast increase to data center demand.
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2028/2029 (announced July 14, 2026): cleared at the $325/MW-day cap, nominally down 2.5%; 138,318 MW procured; $16.4 billion in total auction cost; 6,831 MW short of the reliability requirement, triggering a Reliability Backstop Procurement. PJM CEO David Mills: “demand for electricity continues to grow faster than electricity supply.”
Read the “down 2.5%” carefully. Three consecutive auctions clearing at an administrative ceiling is not a market finding a price; it is a market being prevented from reporting one. The collar exists because of a negotiated settlement with PJM-state governors approved by FERC, a point RTO Insider has covered in detail and general-interest coverage tends to skip. Current capacity prices are administratively suppressed, and they are still short of the reliability requirement. That is the strongest available evidence that the underlying scarcity is worse than the headline number.
How a wholesale auction becomes a line item on your bill
This is the part that makes the story actionable rather than merely lamentable.
Capacity cost reaches an individual facility through its Peak Load Contribution (PLC). PLC is set by the plant's average metered load across PJM's five coincident peak hours — the 5CP, five separate days between June and September when RTO-wide demand hits its annual highs — then grossed up by a capacity loss factor of roughly 1.05. That number is fixed for the following delivery year.
The implication is severe and widely missed: five hot summer afternoons determine twelve months of capacity billing. A plant's total annual kWh consumption is nearly irrelevant to this charge. What matters is what the meter read during five specific hours a year earlier.
From there the cost arrives by one of two paths. Most Ohio and Pennsylvania industrials are shopping customers, so the capacity charge passes through the competitive supply contract — sometimes as a broken-out line, sometimes buried in an all-in $/kWh rate that reprices at contract renewal. Default-service customers get it through the utility's SSO or default auction price. Operators on all-in contracts frequently do not know they have a capacity exposure until the renewal quote arrives with a step change in it.
The attribution, from PJM's own referee
The case that data centers are driving this is not being made by an advocacy group. It is being made by PJM's Independent Market Monitor.
Monitoring Analytics, led by Joseph Bowring, reported on July 20, 2026 that data centers accounted for $6.3 billion of the $16.4 billion in capacity charges from the most recent auction — 38% — and $29.4 billion of $63.6 billion, or 46%, across the last four Base Residual Auctions, as Utility Dive reported. This is a pattern, not a single-auction artifact: Monitoring Analytics earlier attributed 63% of the 2025/2026 auction price increase to data centers, roughly $9.3 billion recovered from consumers in higher rates, a finding summarized by IEEFA (advocacy-affiliated; the IMM report is the better citation for the underlying numbers).
Bowring's proposed remedy is structural: large loads should contract for their own generation first, and those that cannot should clear in a separate PJM auction under 15-year contracts. “There's only one way to do what hyperscalers agree is the right thing to do, and that is to run a separate auction.”
An industrial ratepayer arguing this in a rate case is a self-interested party. The market monitor arguing it is the referee calling the game.
Why industrial classes absorbed two to three times the residential increase
EIA data compiled by Reuters, comparing December 2025 with 12 months earlier, shows the divergence plainly:
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Pennsylvania: industrial prices +31%, residential +14%
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Ohio: industrial +26%, residential +9%
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National: industrial +7%
Industrial increases in those two states ran roughly two to three times the residential increases in the same states, and three to four times the national industrial average. The mechanism is load factor. A continuous-process plant runs flat and high — it is at or near full draw during every one of the 5CP hours by definition, which produces a high PLC relative to its size. A residential class has a peakier but far smaller per-customer contribution, and a residential customer's air conditioning can be curtailed, at least in principle. A glass furnace cannot.
Who gets hit, and why they cannot move
The exposed sectors are predictable: brick, glass, plastics, foundry, and electrochemical processing. Their load is process heat and continuous furnace duty, not adjustable HVAC.
Reuters reported that Plaskolite, an acrylic sheet manufacturer with Pennsylvania and Ohio plants, saw combined capacity charges rise to $1.2 million annually from about $200,000 the prior year — the same shock as Belden Brick's, at multi-state scale. Tosoh SMD, an electronics materials producer in Grove City, Ohio, is considering shifting production to night hours to capture cheaper electricity.
The Tosoh SMD response is the correct instinct and worth examining closely, because it is essentially the only customer-side lever that exists. Capacity charges are set by peak-hour behavior, not total consumption, so moving load off the afternoon does directly reduce next year's PLC. But the cost is real: night-shift labor premiums, thinner supervisory coverage, and quality-control risk on continuous processes where thermal stability is the product spec. And the payoff is deferred — a load-shape change made in the summer of 2026 shows up as a lower capacity bill starting June 2027.
The compounding clock: demand is fast, supply is not
Goldman Sachs Research analysts Hongcen Wei, Daan Struyven, and Samantha Dart project U.S. data center power demand rising from 31 GW in 2025 to 41 GW in 2026 and 66 GW in 2027, against roughly 95 GW of installed capacity by end-2027 at a 70% utilization assumption. Data centers' share of U.S. peak summer demand goes from 4.1% in 2025 to 8.5% in 2027. Goldman flags the Mid-Atlantic — PJM's core — as an elevated reliability-risk region.
Supply is on a different clock, and the specifics are better than the vague “five to seven years” usually cited. PJM's newly reopened interconnection queue drew more than 800 projects, led by roughly 106 GW of gas, per Utility Dive. Projects entering the 2026 cycle reach Phase III eligibility in August 2027 and cannot earn capacity revenue until 2031–2032. Compounding that, high-voltage transformer orders reportedly carry a backlog of about five years.
Scheduled generation additions tell the same story from the other side: 6.4 GW realized in 2024, 8.5 GW in 2025, 13.6 GW scheduled for 2026, 36.3 GW for 2027. Even if every scheduled megawatt lands on time — which queue history does not support — the demand curve arrives first. Operators should plan capacity charges as a structurally elevated cost through the end of the decade, not a spike to wait out.
What regulators are actually doing — and the distinction nobody is drawing
State commissions are moving fast. As of May 2026, 23 states had approved at least one large-load tariff, with roughly seven more pending, per a Columbia Climate Law survey. The mechanisms are converging: 12- to 14-year minimum terms, take-or-pay on contracted capacity, collateral, exit fees, and dedicated rate classes.
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Ohio: PUCO approved AEP Ohio's data center tariff on July 9, 2025 (Case 24-0508-EL-ATA). New loads above 25 MW must pay for a minimum 85% of subscribed usage regardless of actual consumption, for up to 12 years. Stipulation signatories included PUCO staff, the Ohio Consumers' Counsel, the Ohio Energy Group, the Ohio Manufacturers' Association Energy Group, and Industrial Energy Users-Ohio. The industrial bloc was at the table. An appeal was denied in September 2025.
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Pennsylvania: the PUC issued a first-of-its-kind model large-load tariff Final Order on May 12, 2026, covering individual customers above 50 MW contract capacity or co-located customers totaling 100 MW or more. It imposes a “but-for” cost-causation standard — the large load pays upgrades that would not have been needed but for its interconnection, even where others benefit — plus minimum contract terms, exit fees, collateral, and authority for customer self-construction. The framework is guidance; specific terms get litigated in each EDC's tariff filing.
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Virginia: Dominion's GS-5 requires $1.5 million per MW in collateral, a 14-year minimum, and commitments covering 85% of contracted transmission and 60% of generation demand, effective January 1, 2027.
Now the hard point, and it is the one that determines whether any of this helps Belden Brick.
Every one of these tariffs allocates interconnection and transmission upgrade costs. None of them changes the PJM capacity clearing price. The clearing price is set RTO-wide in the Base Residual Auction and billed to each facility by PLC. Creating a separate rate class for data centers changes who pays for the substation and the line rebuild. It does not change the $/MW-day that a brick plant's PLC gets multiplied by. Read the underlying Pennsylvania order and the scope is explicit — it governs interconnection and upgrade cost allocation.
Only a market-design change touches the capacity charge: Bowring's separate auction, a bring-your-own-generation requirement for large loads, or a change to the collar. Everything else is a well-drafted answer to a different question. Any operator who reads “our PUC approved a data center rate class” as relief on capacity charges has misread the document.
The decarbonization misalignment
A capacity price is, functionally, a flexibility price. It rewards loads that can move off five summer afternoons and penalizes loads that cannot.
The industrial classes now being repriced — brick, glass, plastics, foundry, electrochemical — are precisely the sectors with the fewest electrification and efficiency options, because their draw is process heat and continuous furnace duty rather than adjustable building systems. They are, in other words, the loads that industrial decarbonization policy most wants to see electrified and expanded, and they are the loads the capacity market is structurally least able to accommodate.
That is a policy contradiction worth naming plainly: the price signal punishes the industrial classes least able to respond to it, while the loads driving the scarcity — data centers, which are on record as willing to contract long-term for dedicated generation — face no equivalent charge structure at all.
The reshoring arithmetic
No tariff schedule and no CHIPS-style grant offsets a recurring capacity charge. Grants are one-time and capex-linked; capacity charges are annual, indexed to a scarcity that is worsening, and scale with exactly the electricity intensity that domestic process manufacturing is built on. A 90% electricity cost increase compounds against a 4% price increase that customers may or may not absorb. Belden's “razor's edge” remark is a margin observation, not rhetoric.
Senate Democrats including Chris Van Hollen and Don Beyer have formally urged PJM to prioritize consumer affordability over large corporate interests. That pressure, plus the market monitor's findings, defines the three questions worth tracking:
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Does PJM adopt a separate large-load auction or a bring-your-own-generation requirement, as its own IMM recommends?
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Do state PUCs take up capacity cost allocation as a question distinct from interconnection cost allocation — the gap in all 23 states' work to date?
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What is your facility doing about its own PLC before the next 5CP window?
The first two are out of any single operator's hands. The third is not.
Sidebar: read your own bill
A short, concrete exercise for any PJM-footprint plant:
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Find the capacity charge. On a shopping contract it may be broken out or folded into an all-in $/kWh rate — if it is folded in, ask your supplier to itemize it. On default service it arrives through the SSO or default auction price.
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Get your PLC. Your EDC or supplier can provide it. It is a single number in kW, set by your average metered load across the prior summer's five coincident peak hours, grossed up by a capacity loss factor of about 1.05.
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Do the multiplication. PLC in MW × the delivery-year $/MW-day × 365 approximates your annual capacity cost. At $329.17/MW-day, every megawatt of PLC carries roughly $120,000 a year.
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Understand the only lever. Reducing load during five specific summer hours is the sole customer-side control on a cost that is otherwise set a year in advance and locked for twelve months. PJM issues coincident-peak alerts; whether your operation can act on them is a scheduling and process-engineering question that should be answered before June, not during a heat wave.
Related reading
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[The Pentagon Is Printing Propellant — Just Not Where the Bottleneck Is](/article/pentagon-printing-propellant-x-bow-1100-motors-191m-solid-rocket-motor-base)
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[Intel's First Share Sale Since 1971 Closed at $23B — Enough to Tool a 14A Fab It Has No Signed Volume For](/article/intel-23b-stock-offering-14a-capex-before-contract)
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[Detroit Stopped Buying Robots: Auto OEM Orders Fell 25% While Everyone Else Pushed North American Robotics to a $622M Quarter](/article/detroit-stopped-buying-robots-auto-oem-orders-fell-25-percent)
Sources
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PJM Auction Procures 134,311 MW of Generation Resources; Supply Responds to Price Signal (2026/2027 BRA results, July 22, 2025)
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PJM Auction Procures 134,479 MW of Generation Resources (2027/2028 BRA results, December 17, 2025) and the 2027/2028 Base Residual Auction Report
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PJM Capacity Auction Procures 138,318 MW of Generation Resources (2028/2029 BRA results, July 14, 2026)
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Data centers drove $6.3B in PJM capacity auction costs: market monitor — Utility Dive on the Monitoring Analytics report of July 20, 2026
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Big Tech data centers are driving up power bills at America's Rust Belt factories — Reuters Insight, July 7, 2026 (source of all Belden Brick, Plaskolite, Tosoh SMD, and EIA-derived state comparison figures); U.S. News reprint
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US Data Center Power Demand Projected to Double by 2027 — Goldman Sachs Research
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At 106 GW, gas-fired generation leads PJM's newly reopened interconnection queue — Utility Dive
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PUCO orders AEP Ohio to create data center specific tariff; Data Center Costs, Case 24-0508-EL-ATA — Office of the Ohio Consumers' Counsel
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PUC Releases Final Order Establishing First-of-Its-Kind Large Load Model Tariff Framework and the underlying order text — Pennsylvania PUC
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Data Center Regulation: What Local Governments Should Know about Large-Load Tariffs and Clean Transition Tariffs — Columbia Climate Law Blog, June 2, 2026
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Projected data center growth spurs PJM capacity prices by factor of 10 — IEEFA (advocacy-affiliated)
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PJM Capacity Auction Clears at Max Price, Falls Short of Reliability Requirement — RTO Insider
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Senators urge PJM to prioritize consumers' access to reliable, affordable electricity — Office of Sen. Chris Van Hollen
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Average Price of Electricity to Ultimate Customers by End-Use Sector, by State — U.S. Energy Information Administration