U.S. power prices turn volatile

Electricity used to be the boring line item. Not cheap, exactly, but predictable enough that most companies treated it like background noise. That stopped working. A new legal and market note from Foley & Lardner lands in a moment when U.S. wholesale power prices are rising, regional markets are behaving very differently, and volatility is starting to show up as a real operating risk for manufacturers, developers, and lenders. (natlawreview.com) ### What changed? The big shift is that U.S. power demand is growing again after years of relative flatness, but supply, transmission, and market rules are not keeping up at the same pace. In plain English — more buyers are chasing constrained power in markets that were b(natlawreview.com)d to. (natlawreview.com) ### Why is PJM the clearest warning sign? PJM is the country’s largest wholesale power market, and it has become the cleanest example of what happens when load growth outruns new supply. Its latest capacity auction for the 2027-2028 delivery year hit the market-wide cap o(natlawreview.com) to $269.92 per MW-day — as the kind of move that can flow through to double-digit customer rate increases. (utilitydive.com) ### What is driving that jump? Data centers are the headline reason, especially in the Mid-Atlantic. PJM’s own planning material says unprecedented demand growth is being driven primarily by data centers. The market monitor’s 2025 annual report then showed what that looks like in dollars — total P(utilitydive.com)cally, the grid is pricing scarcity before all the new steel is in the ground. (insidelines.pjm.com) ### Is this just a PJM story? No — but PJM is the loudest version. EIA said average wholesale day-ahead prices at most major Lower 48 hubs were higher in 2025 than in 2024, largely because natural gas prices for generators rose. New England saw the biggest jump, up $29 per MWh. So t(insidelines.pjm.com)necks, and generation mix. (eia.gov) ### Why does ERCOT matter here? Texas shows the other side of the story. ERCOT demand grew fast in 2025, but solar, wind, and batteries also grew fast enough to meet a lot of it. Wind and solar together supplied 36% of ERCOT demand in the first nine months of 2025, and batteries set discharge records above 7 GW during summer peaks. That hel(eia.gov)volatility shows up. (eia.gov) ### Why should a manufacturer or finance team care? Because power is no longer just a utility bill. It can change plant economics, contract value, and even where production makes sense. A fixed-price power purchase agreement can look safe until basis risk, congestion, curtailment, or shape mismatch show up. A factory with thin margins can s(eia.gov)That is the real point of the Foley note — energy has become a structural variable in margin planning. (natlawreview.com) ### So what is the bottom line? U.S. power markets are not simply “more expensive” now. They are more uneven, more locational, and more sensitive to demand shocks. The catch is that companies built for stable power costs now have to manage electricity the way they manage fuel, freight, or foreign exchange — as a live risk that can move fast. (natlawreview.com)