The biggest buyers of electricity are locking in power for decades, and in at least one major grid the price of grid capacity, which flows into most business electric bills, has risen more than eleven times in four auctions. Two things decide how much of that lands on you: whether your supply contract passes capacity costs through to you, and how much power your sites draw during a handful of peak hours each summer. Both are decisions you can make now.

This article covers the Google power deal that shows where demand is heading, what the capacity numbers say, how capacity charges are calculated on your bill, and the questions to ask before your next contract renewal.

A 20-year deal shows where demand is going

American Electric Power plans to invest about $4 billion in a 702-megawatt fuel-cell plant near Cheyenne, Wyoming, and sell its output to Google under a 20-year power purchase agreement. AEP will own about 92% of the project; construction is planned to start in 2026, with full operation expected by the end of 2028. These are plans, not an operating plant, and AEP’s description of the project as “near-zero-emissions” depends on carbon capture that has yet to be built.

Google isn’t alone. In 2024, Microsoft signed a 20-year agreement with Constellation to restart a retired nuclear unit at Three Mile Island in Pennsylvania, inside PJM, and buy its power. The point for everyone else: the largest buyers are no longer waiting for the grid. They are locking in dedicated supply for decades. The U.S. Department of Energy reports that data centers used about 4.4% of U.S. electricity in 2023 and could reach 6.7% to 12% by 2028.

What that demand is doing to capacity prices

Capacity is what grid operators pay power plants to be available at peak. In PJM, which serves all or parts of 13 states and the District of Columbia, the price has moved like this, in dollars per megawatt-day:

• 2024/2025: $28.92
• 2025/2026: $269.92
• 2026/2027: $329.17, at the federally approved price cap
• 2027/2028: $333.44, at the cap for the second year in a row

The latest auction still came up 6,623 megawatts short of PJM’s reliability target. Of the 5,250-megawatt increase in PJM’s forecast peak load, nearly 5,100 megawatts is attributed to data centers.

How capacity shows up on your bill

Capacity is not charged on how much electricity you use over the month. In PJM, your charge is your peak load contribution multiplied by the capacity price and the number of days. Your peak load contribution is set by your average demand during the five highest system-wide peak hours from June through September.

That means two levers matter:

• Your contract. Some supply contracts fix the capacity cost for the term; others pass it through as it changes. A low headline price per kilowatt-hour tells you nothing about which one you signed.
• Your peak hours. Cutting load during those five peak hours lowers next year’s charge. A federal research campus that tracks and forecasts those peaks reports cutting its peak load contribution by about 25% and avoiding more than $1.5 million in electrical costs.

What to ask before your next renewal

What about New England and other regions?

Not every region runs the same market, but New England buyers have the same two levers. In New England, each account’s capacity tag is set by its demand during the single hour when the regional grid hits its annual peak, and that tag sets the account’s share of capacity costs for the following year. Accounts that contribute more to the peak carry a larger share of the cost.

New England’s capacity price for June 2027 through May 2028 cleared at $3.58 per kilowatt-month, up from $2.55 to $2.59 the year before. The market is also changing. Starting June 1, 2028, auctions move much closer to delivery, and ISO New England has proposed splitting the year into summer and winter seasons, with each season’s costs shared based on that season’s peak. If that is approved, winter peaks would count too, not just summer ones.

The questions above still apply: know what your contract fixes, know your capacity tag at each site, and check the bill.