Hagerstown utility warns customers of higher costs after PJM capacity price surge

HAGERSTOWN, Md. — Hagerstown utilities staff told the mayor and council that a sharp rise in PJM capacity-market prices will increase the city’s power purchase cost-adjustment (PPCA) rate, with an average projected rise of about 1.64 cents per kilowatt-hour.

Nathan Frydinger, the utility presenter, said PJM reported capacity prices moving from about $2,300 to more than $16,000 per day for the region — a change that equates to roughly $5 million in annual costs that will be passed through in the city’s PPCA. Based on Hagerstown’s sales assumptions, Frydinger estimated the increase would add about $16.40 per month for an average residential customer (about 1,000 kWh per month) and roughly $111.50 annually.

Frydinger said the market spike is driven by higher demand (including large data centers and industrial onshoring), retirements of carbon‑emitting plants and challenges siting new generation. He told the council the city can pursue demand-side measures to reduce its peak-load contribution — the portion of the system’s five peak days for which a utility is billed — which would lower the PPCA calculation.

Options under study include distributed solar (limited by available land in the service territory) and energy-storage batteries, which Frydinger said can deliver megawatt-hours rapidly during peaks and could be deployed in partnership with a developer. “We can lower our peak-load contribution,” Frydinger said, adding that consultants are evaluating cost-sharing models and other technical solutions.

Staff noted the market change began in June and the city plans to reflect the new PPCA on customer bills in August after it receives and processes the June invoice. The utility has posted a frequently asked-questions document online and will include a notice on bills, as required by the Maryland Public Service Commission. Officials also pointed residents to energy-saving tips from the Maryland Department of Energy and outlined customer-assistance options including average payment plans and direct payment arrangements handled by customer service representatives.

Council members asked about comparative rates in neighboring territories and whether the increase will significantly change typical bills. Frydinger said the headline jump in daily capacity costs does not translate dollar-for-dollar to retail bills; because the PPCA is one component of several pass-through charges, the projected residential effect is modest in dollar terms but material for households on thin margins.

No council vote was required; this item was presented as an informational update and staff said they will return with more detailed proposals if the council wants to pursue storage or other peak-shaving investments.