The U.S. Energy Information Administration (EIA) reported average commercial-sector revenue of 14.47 cents per kilowatt-hour for August 2026, up 4.3% from 13.87 cents a year earlier. PJM Interconnection (PJM), the regional grid operator, set the price of future capacity at $325 per megawatt-day, the highest its rules allow, and still finished 6,831 megawatts short of its reliability requirement.
On Oct. 9, the Federal Energy Regulatory Commission (FERC) rejected most of PJM’s large-load package. Rate design now shapes asset value as much as the energy price does. Congress returns from its pre-election recess on Nov. 9 with two competing proposals for allocating data-center power costs. Neither has become law, and lawmakers will have little time to act.
Key Facts at a Glance
Retail price: Average commercial-sector revenue was 14.47 cents per kWh in August 2026, up 4.3% year over year. EIA uses revenue per kWh as a proxy for price. EIA forecasts annual averages of 14.00 cents in 2026 and 14.21 cents in 2027, compared with 13.41 cents in 2025.
Capacity: The PJM 2028/2029 auction cleared at $325 per megawatt-day. The $16.4 billion total would have reached about $29.7 billion without the price cap.
Federal ruling: On Oct. 9, FERC rejected PJM’s Interim Resource Adequacy Service and accepted a 50-megawatt Large Load definition and a registry. PJM owes compliance filings within 30 days, or by about Nov. 8.
State tariffs: Missouri approved large-load tariffs for Ameren Missouri and Evergy. Colorado scheduled evidentiary hearings on Xcel Energy’s proposal for Oct. 21 through Oct. 28; the Commission has published no decision date.
Financing: PACENation reports $13.5 billion in cumulative C-PACE investment through December 2025 across 3,837 commercial projects.
What a Capacity Price Means for a Building
Grid operators pay power plants and demand-reduction resources to stay ready for the hottest and coldest days of the year. That standing fee is the capacity price, and PJM sets it through an auction held years before the power is needed. The 2028/2029 auction cleared 138,317.8 megawatts at $325 per megawatt-day, which works out to $118,625 per megawatt per year (325 dollars multiplied by 365 days). The total bill reached $16.4 billion.
The price cap kept that bill from climbing further. PJM’s own simulation without the cap put the total at $29.7 billion, a difference of $13.3 billion, or 45% of the uncapped total (ChargedUp! calculation based on PJM figures). The auction also procured capacity at a 14.4% reserve margin against a 20% target. A price pinned at the maximum while supply runs short signals that demand for dependable power exceeds what the rules allow the market to price. Analysts at Jefferies, quoted by Utility Dive, expect FERC’s ruling to produce higher capacity prices for longer in PJM. That view is an analyst forecast, and future auctions will test it.
Multiplying an assumed 2.0 megawatt building peak by the auction price gives a gross screening value of $237,250 a year, a rough ceiling for comparison; actual bills differ because each utility and supplier assigns capacity costs differently.
The Price Increase in NOI Terms
Net operating income (NOI) is the cash a building earns after operating costs. Investors turn NOI into value with the capitalization rate, or cap rate, which is the annual return they require. A 6.5% cap rate means each $1 of NOI supports $15.38 of value. A cost that cuts NOI therefore cuts value by a multiple of the cost.
The August figures show a 0.60-cent gain per kilowatt-hour over the prior year. Consider a hypothetical 350,000-square-foot office building. EIA’s 2018 survey puts average office energy use at 65.6 kBtu per square foot across all fuels, with electricity supplying about 71% of office energy. That implies roughly 4.8 million kilowatt-hours of electricity a year, an estimate that actual utility bills should replace. At that load, the 0.60-cent gain adds about $28,600 of annual expense. The expense removes about $477,000 of value at a 6.0% cap rate, $440,000 at 6.5% and $409,000 at 7.0%. Recovering the full amount through rent requires about $0.08 per square foot.
Lease structure decides who absorbs the cost. In gross and modified gross leases, the landlord pays operating costs and absorbs the increase. In triple-net leases, tenants pay those costs directly, which moves the exposure into occupancy cost, renewal negotiations and tenant retention.
FERC Leaves the Cost Questions to the States
PJM had proposed letting new large electricity users, such as data centers, connect to the grid without bringing matching new generation if they agreed to be cut off before grid emergencies. FERC rejected that Interim Resource Adequacy Service. It accepted PJM’s definition of a large load (a site drawing at least 50 megawatts, with affiliated facilities within one mile counted together) and a registry that tracks those sites, effective Oct. 12. The order states that “certain aspects of PJM’s proposal appear to present an impermissible intrusion on retail rate regulation.”
That finding places key questions, such as who pays for grid upgrades and who loses power first in an emergency, with state regulators. FERC also declined to limit the definition to data centers, so a logistics campus, a cold storage cluster or a high-power charging depot can qualify by adding up its buildings.
Missouri and Colorado Show Where State Rules Head
Missouri has already acted. The Missouri Public Service Commission (PSC) approved Ameren Missouri’s large-load tariff on Nov. 24, 2025. It applies to customers whose forecast monthly maximum demand reaches 75 megawatts. The terms protect other customers from the cost of serving a very large newcomer:
A minimum contract of 12 years, with an optional five-year ramp-up period.
A minimum monthly bill based on 80% of the capacity the customer reserves, whether the customer uses it or not.
Collateral, or a financial guarantee, equal to two years of minimum bills.
Advance notice of 36 months to end service at the term’s close, and 24 months to terminate early.
The PSC also approved a large-load tariff for Evergy. Consumer advocates quoted by ABC17 want longer contracts (15 to 20 years) and a 95% minimum, and the PSC says current rules protect ratepayers.
Missouri’s general rate pressure continues alongside the tariff. Ameren Missouri requested about $343 million in additional annual base-rate revenue, equal to about $13 a month for the average residential customer, according to the PSC. ABC17 characterized the request as an increase of about 10%. Ameren attributes the filing to grid and generation investment and says infrastructure for announced data centers is not driving it.
Colorado is weighing a similar approach. Xcel Energy filed a large-load tariff on April 2 (Proceeding 26AL-0137E), and the Colorado Public Utilities Commission (PUC) scheduled evidentiary hearings for Oct. 21, 22, 26, 27 and 28. The Commission lists its decision as to be determined. A ruling that adopts long minimum terms and full cost responsibility would confirm the Missouri direction. A ruling that shortens terms or lowers collateral would show a commission weighing development speed above ratepayer protection.
What the Data Says
Three signals from the past three weeks point the same way. Prices rose, dependable power grew scarcer and responsibility for the cost moved to the state level.
Retail prices trail wholesale prices. EIA reports that the generation portion of retail prices follows wholesale fuel costs with a delay that depends on customer contracts. EIA projects PJM wholesale prices up 41% in 2026 and down about 7% in 2027, while the national commercial retail average rises 4.4% in 2026. The two figures cover different areas, yet the gap shows where exposure sits: at the point when a fixed-price supply contract renews. EIA’s lag statement concerns fuel costs, so the timing for passing capacity charges through to tenants varies by utility and contract.
Slower growth still lands on a higher base. EIA forecasts commercial price growth easing from 4.4% in 2026 to 1.5% in 2027. The forecast 2027 price of 14.21 cents sits 6.0% above the 2025 price of 13.41 cents (ChargedUp! calculation based on EIA figures). For the hypothetical office, that 0.80-cent gain adds about $38,200 of annual expense and removes about $587,000 of value at a 6.5% cap rate. Underwriting that treats 2027 as relief overlooks that prices keep rising from an elevated base.
Planning decisions now carry a power question. Missouri’s tariff applies at 75 megawatts and FERC’s PJM definition at 50, so each service territory needs its own screen. Phased developments can cross a threshold as buildings add up. Site plans and zoning applications benefit from cumulative load schedules by phase, a clear answer on who funds the substation, and a view of what the tax base gains against the cost of delay if a project waits in the interconnection queue.
C-PACE Brings Private Capital to the Fix
Commercial Property Assessed Clean Energy (C-PACE) finances efficiency, storage and resiliency upgrades through an assessment on the property, repaid over time. PACENation, the industry association that compiles national market data, reports $13.5 billion in cumulative C-PACE investment through December 2025. Commercial Observer, citing PACENation, counted 40 states plus Washington, D.C., with enabling legislation in June.
Institutional lenders are building dedicated funds. On April 16, Clearwater PACE announced the initial close of an Ares-backed financing vehicle sized at up to $300 million, without disclosing the amount committed at that close. Private Equity International reported target loans of roughly $40 million to $50 million at an average loan-to-value ratio of about 35%, meaning the lender funds about 35 cents of every dollar of property value. That ratio shows the assessment covering part of the cost, so a storage or microgrid project still needs a plan for the rest.
Local governments are joining. According to WBRC, the Fairfield, Alabama, city council voted Oct. 22 to explore C-PACE under a new state law, with a public hearing set for Nov. 2. A proposed data center campus has said it is interested, and the mayor says the city is not borrowing. Municipal staff weighing similar programs can ask who collects and enforces the assessment, which improvements qualify, and how the program interacts with large-load tariff obligations.
C-PACE funds the cost of an upgrade, and the upgrade must still reduce demand or capacity costs by more than the annual assessment to improve NOI. Lender consent, accounting treatment and loan term vary by deal and need review with counsel.
Three Actions for This Week
Pull 12 months of utility bills and confirm the rate class, the supply contract end date and how capacity charges pass through to tenants for every asset in PJM territory.
Rerun the pro forma with energy expense growing 4.3% and cap rates from 6.0% to 7.0%.
Calendar the Nov. 2 Fairfield hearing, the Nov. 8 PJM compliance filing and the Colorado decision, and file comments in the state dockets that govern service territories where development is planned.
The Bottom Line
Capacity costs, retail prices and tariff design moved against pro formas in the same month. FERC’s ruling placed the decisive proceedings with state commissions, and each commission ruling sets the price of connecting to the grid for the next wave of development. The data points to a market where scarce capacity sets the baseline, contract renewals deliver the cost and tariff design assigns the risk. Assets with a known rate class, known contract dates and a secured interconnection position hold the advantage in that market.
What to Watch in Congress After the Election
Congress returns from its preelection recess on Nov. 9, and two proposals on who pays for data center power are in play. Neither is law, and the legislative calendar is short.
The Senate bill, the Bipartisan American Affordability and Jobs Act of 2026 (S. 5653), is a broad permitting package introduced Sept. 30. According to a McGuireWoods analysis, Section 2107 would require facilities of at least 20 megawatts to bear the full incremental cost of serving them and would bar utilities from shifting those costs to other customers. Utilities would need financial assurances before building, and states would gain authority over rates and service arrangements for these loads. A Senate floor vote is expected after Congress returns, the bill still needs House passage, and the text could change.
The House has already acted on a milder approach. The Ratepayer Protection Act (H.R. 9340) passed 417 to 3 on Sept. 16. According to the National Association of Counties (NACo), it asks states to consider a standard under which data centers of 100 megawatts or more cover the incremental cost of grid upgrades. Roll Call reports that the bill sets no required standard: states would begin considering rules within one year of enactment and finish within two. The Senate fell short of the 60 votes needed to advance it on Sept. 30, 57 to 43, and critics, including Senate Minority Leader Charles Schumer, have described its voluntary design as a weakness.
The two bills would change the scenario in plain terms. Today, whether a large project pays its own way depends on where it sits. A hypothetical 30-megawatt campus would meet the Senate bill’s 20-megawatt test, fall below FERC’s 50-megawatt definition for PJM and sit under Missouri’s 75-megawatt tariff threshold. A federal floor would narrow those gaps, and the Senate bill’s grant of rate authority to states matches FERC’s finding that retail rates belong to state regulators. State dockets in Missouri and Colorado would stay the place where the details get set.
The design would likely raise the value of sites with existing grid capacity relative to sites that need new upgrades, because a covered project would fund its own upgrades before it connects. No source quantifies that premium, so it remains an expectation to test in the market.
Four items deserve attention as the session opens:
Whether the Senate schedules a floor vote on S. 5653 during the limited days before the new Congress, which NACo notes is a narrow window.
Whether the 20-megawatt threshold survives, since it determines which mid-size campuses owe upfront costs.
Whether the Senate keeps a mandatory cost-responsibility rule or moves toward the House’s voluntary state standard.
Whether the financial assurance requirement matches the collateral that state tariffs already require, such as Missouri’s two years of minimum bills.
Reader Lens
Owner and Investor: Commercial price growth of 4.3% erodes NOI; stress test value at 6.0% to 7.0% cap rates and audit capacity pass-through language in every lease renewal.
Planner: Tariff thresholds of 50 to 75 megawatts, minimum bills and collateral decide who funds grid upgrades, which shapes rate fairness, permitting timelines and the cost of delay for large-load projects.
Sources
ABC17 News, Consumer advocates warn Missouri lacks data center cost safeguards, but regulators disagree (Oct. 26, 2026): https://abc17news.com/news/special-report/2026/10/26/consumer-advocates-warn-missouri-lacks-data-center-cost-safeguards-but-regulators-disagree/
Ameren Missouri, Storm hardening, electric grid upgrades and new generation underpin request to update electric rates in mid-2027: https://www.amereninvestors.com/investors/financial-releases/financial-releases-details/2026/Storm-hardening-electric-grid-upgrades-and-new-generation-underpin-request-to-update-electric-rates-in-mid-2027/default.aspx
Colorado Public Utilities Commission, Electric Rate Cases (Proceeding 26AL-0137E): https://puc.colorado.gov/electric-rate-cases
Commercial Observer, C-PACE Lending Expanding in Size, Scope as Regulations Adjust (June 2, 2026): https://commercialobserver.com/2026/06/c-pace-lending-expansion-2026/
Federal Energy Regulatory Commission, Order in Docket ER26-3515-000 (Oct. 9, 2026; PJM-hosted copy): https://www.pjm.com/pjmfiles/directory/etariff/FercOrders/9207/20261009-er26-3515-000.pdf
McGuireWoods, Bipartisan American Affordability and Jobs Act of 2026 Proposes Sweeping Reform for Energy and Infrastructure Projects (October 2026): https://www.mcguirewoods.com/client-resources/alerts/2026/10/bipartisan-american-affordability-and-jobs-act-of-2026-proposes-sweeping-reform-for-energy-and-infrastructure-projects/
Missouri Public Service Commission, Ameren Missouri General Rate Case Notice (July 1, 2026): https://psc.mo.gov/Electric/PSC_Sets_Intervention_Deadline_for_Ameren_Missouri_General_Rate_Case_-_pr-27-01
Missouri Public Service Commission, Large Load Tariff Fact Sheet (April 2026): https://psc.mo.gov/CMSInternetData/Community%20Outreach/Large%20Load%20Tariff%20Fact%20Sheet%20-%20April%202026.pdf
Missouri Public Service Commission, Order Approving Ameren Missouri Large Load Tariff (Nov. 24, 2025): https://efis.psc.mo.gov/Document/Display/858399
National Association of Counties, Congress Makes Progress on Data Center Legislation (Oct. 20, 2026): https://www.naco.org/news/congress-makes-progress-data-center-legislation
PACENation, PACE Market Data: https://www.pacenation.org/pace-market-data/
PJM Interconnection, 2028/2029 Base Residual Auction Results Report: https://www.pjm.com/-/media/DotCom/markets-ops/rpm/rpm-auction-info/2028-2029/2028-2029-bra-results-report.pdf
Private Equity International, Clearwater PACE holds initial close of Ares-backed $300m C-PACE strategy (April 16, 2026): https://www.pei-privaterealestate.com/credit/clearwater-pace-holds-initial-close-of-ares-backed-300m-c-pace-strategy/
Roll Call, Voluntary ratepayer protection bill blocked in Senate again (Sept. 30, 2026): https://rollcall.com/2026/09/30/voluntary-ratepayer-protection-bill-blocked-in-senate-again/
U.S. Energy Information Administration, Commercial Buildings Energy Consumption Survey, Office Buildings: https://www.eia.gov/consumption/commercial/pba/office.php
U.S. Energy Information Administration, Electricity Monthly Update (August 2026): https://www.eia.gov/electricity/monthly/update/end-use.php
U.S. Energy Information Administration, Short-Term Energy Outlook (October 2026): https://www.eia.gov/outlooks/steo/pdf/steo_full.pdf
U.S. Energy Information Administration, Today in Energy, U.S. electricity prices continue steady increase (May 14, 2025): https://www.eia.gov/todayinenergy/detail.php?id=65284
Utility Dive, FERC rejects most of PJM’s large load interconnection plan (Oct. 12, 2026): https://www.utilitydive.com/news/ferc-pjm-large-load-interconnection-iras-byonc/832716/
WBRC, Fairfield sets public hearing on C-PACE financing program (Oct. 22, 2026): https://www.wbrc.com/2026/10/23/fairfield-sets-public-hearing-c-pace-financing-program/