High PJM grid prices are credit negative for regulated electric utilities, Moody's says

"The outcome is credit negative for regulated utilities and load-serving entities that pass through costs to retail customers and for whom affordability concerns are paramount, increasing both regulatory and political risk," Moody's said.

"The result highlights the increasingly difficult balance between preserving affordability and maintaining reliability as data center-related load growth, resource retirements and transmission constraints reshape the PJM market," it said.

High capacity prices in PJM Interconnection, which is the largest U.S. electrical grid, may negatively affect the credit ratings of regulated utilities that are facing pressure to keep power bills low for homes and businesses, rating agency Moody's said on Wednesday.

Regulated electric utilities, which own transmission lines but are generally barred from owning power plants in PJM, see little benefit from rising capacity prices that are paid to generators to ensure there is enough electricity on the grid during times of high demand, Moody's said.

Independent power producers, which own power plants in PJM and paid capacity payments directly, may see credit upgrades as a result of PJM prices that cleared last week at $325 per megawatt-day, the rating agency said.