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St. Marys hears AMP briefing on rising PJM capacity costs and local protections
Summary
An AMP representative briefed the St. Marys City Council on why regional capacity prices have spiked, how those costs flow into retail rates, and how the city's ownership stakes and local generator reduce exposure.
An American Municipal Power representative updated the St. Marys City Council on regional electricity market changes that will push capacity costs higher and explained how the city’s local generation and contract mix limit immediate rate impacts.
The presentation mattered because the PJM capacity market auction and changing load forecasts could raise wholesale and retail electricity prices across the region; the presenter explained what parts of the city’s bill are most exposed and what the city can do to reduce future costs.
The presenter said the city’s wholesale bill has three main components: energy (variable usage costs), transmission (charges to build and maintain high‑voltage lines), and installed capacity (payments to ensure enough power plants exist during peak demand). “This is the other part of your bill,” the presenter said, referring to transmission and capacity charges. The presenter described PJM as the regional coordinator that runs capacity auctions to ensure adequacy years in advance.
Council members were shown the city’s generation mix — including shares of Prairie State coal, local natural gas, and hydropower blocks — and a chart showing the city’s energy portfolio out to 2028. The presenter said that because St. Marys owns or is part owner of several generation assets, the city’s exposure to the recent capacity spike is smaller than for utilities that rely almost entirely on market purchases. The presenter quantified that Unit 7, the local peaking unit, produced about $70,000 in capacity revenue last year and is expected to generate about $890,000 next year, and that transmission savings tied to local generation have been roughly $1.2 million to $1.3 million annually.
The presenter described causes for the capacity price increase: higher load forecasts (driven in part by data centers), a raised PJM safety margin after recent near‑shortfalls, delayed auctions, retirements of older plants without enough replacement generation, and rule changes that altered how capacity is counted. The presenter noted Pennsylvania state intervention produced a temporary new ceiling and floor for auctions (a ceiling near 10 and a floor near 5 in the presenter’s description).
Council members asked questions about whether AMP is considering building new generation. The presenter said AMP is evaluating smaller, behind‑the‑meter peaking projects and banks of smaller generators rather than large new baseload plants, and that rising capital and tariff costs make such projects more expensive. Council member Greg clarified that any wholesale cost increases would be applied to supply charges and would not change the city’s usage rates, which have been fixed since a 2016 decision; the presenter affirmed that point.
The presenter outlined options for lowering future bills, including “peak shaving” (reducing load during hours that set transmission and capacity charges) and maximizing the availability of local generation during peak events. He also cautioned that future PJM auctions could remain elevated for at least the next two years and that data center buildouts significantly increase regional load forecasts.
Council members thanked the presenter for the briefing and there were no formal council directives recorded in the transcript beyond requests for clarification and follow‑up information on AMP’s generation plans.
Looking ahead, the presenter said AMP will continue to monitor PJM auctions this July and in December and will provide updated rate forecasts to the council in the fall.
