How to Time Your Supply RFP Around PJM Auctions

Commercial buyers often ask whether they should hold off on signing a supply contract until after PJM's next capacity auction, hoping the result will tell them where prices are heading. It is a reasonable instinct, but it usually rests on a misunderstanding of what the auction is and what it controls. This guide explains how PJM's capacity auction calendar and forward market can inform the timing of a supply RFP, why "timing the market" is fundamentally uncertain, and why a prepared, calendar-driven process beats trying to predict a clearing price.

This applies to businesses in ComEd territory in northern Illinois, which sits inside the PJM Interconnection. Businesses in Ameren territory participate in MISO, which runs a different capacity construct on a different schedule; the same principles about preparation over prediction apply there too.

What the PJM capacity auction actually is

PJM runs a forward capacity auction — historically called the Base Residual Auction — to secure commitments from generators and other resources to be available in a future delivery year. The auction produces a clearing price for capacity in each zone. That price is a wholesale market outcome that helps determine what suppliers pay to meet their capacity obligations.

The critical point for a commercial buyer is this: a PJM auction clearing price is not a bill rate. It does not appear on your invoice as a line item you can look up. Instead, it is one of several wholesale costs that a competitive supplier folds into the retail price it quotes you. How much of that capacity cost lands on your specific account depends on your facility's peak load contribution, or capacity tag (PLC), which carries your contribution to the system peak forward into your supply cost. Two businesses in the same zone with different load shapes can carry very different capacity costs from the same clearing price.

For a fuller treatment of how these auction outcomes flow toward retail bills, see how PJM capacity prices affect Illinois business bills.

Why capacity is only one of several cost buckets

A retail electricity price is a blend, not a single number. It generally combines:

• Energy — the cost of the electricity itself, which tracks forward wholesale markets and moves daily.
• Capacity — informed by the PJM auction clearing price and your capacity tag.
• Transmission — network charges that move on their own schedule.
• Supplier margin and other adders.

Understanding this structure matters because fixating on the capacity auction means fixating on one bucket while three others move independently. For the mechanics of how these separate, see capacity vs. energy vs. transmission: three buckets. A capacity clearing price could rise while the energy component falls, or the reverse, and the net effect on your quoted rate is not something the auction result alone reveals.

Why "timing the market" is uncertain

The appeal of waiting for an auction is the belief that the result carries predictive signal. In practice, several factors undercut that:

• Forward markets often move before results are public. Traded forward curves reflect expectations continuously. By the time an auction result is announced, much of its information may already be reflected in the energy and capacity forwards that suppliers use to price your offer.
• Prices depend on variables no one controls. Weather, natural gas prices, generation retirements, load growth from new large users, and policy changes all move forward prices. None of these are reliably predictable months out. See forward curves 101 for electricity buyers for how these expectations are built.
• The auction covers a future delivery year. A clearing price applies to a specific delivery period that may not match the term you are shopping, so the relationship between the result and your contract's cost is indirect.

The honest conclusion is that no buyer, broker, or supplier can reliably forecast where prices will be. Anyone promising otherwise is selling confidence, not information. The productive question is not "which way will the market move?" but "am I prepared to act well whenever I need to act?"

How the auction calendar can inform your RFP

Knowing the auction schedule is still useful — not as a buy or wait signal, but as a planning marker. If your contract's notice window gives you flexibility to shop over a range of weeks, and a known auction date falls within that range, you can decide deliberately whether to gather offers before or after it, understanding that the result is only one input. What you should not do is let an auction date override your own contract deadlines. Missing a notice window to wait for an auction can drop you onto a holdover rate — a self-inflicted cost far more certain than any market move.

The disciplined approach is to build the auction calendar into a broader procurement calendar alongside your contract deadlines, rather than treating the auction as the trigger for everything.

Preparation beats prediction

Because the market cannot be reliably timed, the buyer's real advantage comes from process:

1. Know your deadlines. Map every meter's contract end date and notice window so you are never forced to sign in a rush.
2. Assemble clean usage data. Twelve to twenty-four months of usage, and interval data for larger accounts, so suppliers price your actual load shape rather than a guess.
3. Benchmark against the price-to-compare. This tells you whether a competitive offer is even worth taking versus staying on utility default supply.
4. Request offers on matched terms and compare them apples-to-apples — same start date, same volume, same inclusions — so the comparison is real.
5. Decide whether the risk should be fixed or floating. A fixed vs. index decision is about your tolerance for volatility, and it matters more than trying to guess the next auction result.

A buyer who is ready to run a clean RFP on short notice can act well in any market condition. A buyer waiting for a signal that never reliably arrives often ends up acting late, from a weaker position.

The bottom line

The PJM capacity auction is an important part of how wholesale costs form, and its calendar is worth knowing. But it does not set your rate, its result is often already priced in, and no auction outcome makes forward prices predictable. Treat the auction as one input inside a disciplined procurement process — not as a substitute for one. The dependable edge is preparation: known deadlines, clean data, a clear benchmark, and comparable offers.

Sources

• PJM Interconnection — Capacity Market (RPM)
• Illinois Commerce Commission — Plug In Illinois: Electric Choice Basics
• Illinois Power Agency — Electricity Supply Rates

Timing an RFP around the auction calendar organizes your process; it does not promise any particular rate or savings.