American Electric Power Threatens PJM Exit as Prices Soar 76% and Shares Fall 4.7%
AEP•American Electric Power Co. has threatened to exit PJM Interconnection as wholesale power costs surged 76% to $136.53/MWh and capacity expenses jumped nearly 400%, driven by data center demand adding $23 billion in supply costs through mid-2028. The utility’s shares have declined 4.7% since its last quarterly earnings release.
1. Wholesale Power and Capacity Cost Surge
Wholesale power prices on the PJM grid climbed 76% year-over-year to an average $136.53 per megawatt-hour in Q1, while capacity costs rose almost 400% as data center demand increased. PJM’s independent market monitor estimates that three-year supply costs will grow by roughly $23 billion through mid-2028.
2. AEP Threatens PJM Exit and Share Performance
American Electric Power Co. has warned it may leave PJM if reforms fail, highlighting operational and cost concerns for its service area. The utility’s shares have fallen 4.7% since its last quarterly earnings release roughly one month ago.
3. Regulatory and Industry Outlook
Federal regulators will convene stakeholders on July 23 to discuss structural reforms, including potential PJM breakup and governance changes, aimed at balancing high price signals with consumer affordability. Proposed measures include revised procurement timelines and long-term capacity contracts funded by tech companies expanding AI infrastructure.
