A harsh winter raised energy costs, along with an auction you’ve never heard of

ROCKVILLE, Md. — As D.C., Maryland, and Virginia prepare to deal with the oncoming higher prices from new tariffs, many people locally are still dealing with higher energy costs.

What is driving these costs? Part of the higher energy bills comes from the exceptionally cold winter. But experts say there’s another part to it: an energy auction that you have probably never heard of.

To get some insight, we started in Rockville, Maryland, at the home of Suzanne Babich. Babich said this winter her bills have skyrocketed compared to last year.

“The only difference is what the energy company is charging,” Babich said. “That's the only difference."

When we last talked to Suzanne Babich, she was explaining how she has kept track of every single utility bill and energy usage since 2020.

“I'm only paying $36 on an average,” she said.

Part of her and her husband’s retirement plan is based around controlling costs. To make sure they were ready for energy costs, they spent years following the utility’s plans for energy efficiency.

“Our heat is gas, we have solar panels, we keep lights turned off in rooms we aren’t in,” she said, rattling off the laundry list of improvements and efficiencies they put in place.

They even run the laundry and dishwasher only during off-peak hours. Still, this winter her energy bill skyrocketed in January-then higher.

“Actually, then the bill went from $169 to $231 in February,” she said.

If her energy usage hasn’t changed from last winter to this, what has changed?

When we last talked to Pepco, a spokesperson told us this winter has been particularly devastating for energy consumption. But they also sent an inspector out to look at the Babich’s home.

So what else could it be?

“We're seeing high prices in a lot of places,” said Danielle Powers, an energy analyst with Concentric Energy Consulting. “That's a function of many things.”

Powers has studied the energy and utility markets for years -- her firm consults on many different aspects of things like energy generation, markets and consumption.

She wants to start by explaining where your energy comes from: PJM.

“PJM is the Pennsylvania, New Jersey, Maryland interconnection and it is a group of 13 states, plus the District of Columbia,” she explained.

Powers said to think of PJM like a Costco group. All 13 states share a grid that generates energy, moves transmission, and shares the overall costs too. No single state has to do it all, and it makes power cheaper for everyone:

“Now we're in a situation where we've got demand growing at a rate we've never seen before, primarily due to the data centers and we've got generators (power plants) retiring,” she said.

The power costs are decided each summer when PJM has an auction to determine next year’s costs.

But given the situation across the grid - too much demand, not enough supply - the auction went higher than in previous years.

“We’ve seen low prices for a long time,” Power said. “But this was really a perfect storm of factors.”

The base costs that PJM auctioned to energy companies like Pepco or Dominion went significantly higher than in years past.

“Whatever the prices PJM has in their in their auctions that gets passed on to the customer through the utility because those are costs they're incurring,” she explained.

That is how bills, during an already difficult winter, got worse. Even for Suzanne Babich.

“It's added the stress to our retirement,” she said.  “When you go from $41 a month to $231, that’s an extra $200.

Ways Pepco says customers can save money on their power bills: