Electric grid strains while 150 million endure high heat ahead of July Fourth
With a heat dome looming over America this Fourth of July weekend, pressure is building on the power grid, raising the cost of keeping cool.
Wholesale electricity prices on America’s most highly populated regional power grid are surging under the heat. The increased costs by utility companies to purchase adequate power supplies are eventually passed down to households and small businesses. The heat wave comes as summertime electricity costs are projected to rise 10.5% this year due to the confluence of rising electricity rates and more extreme heat.
The National Weather Service estimates that 147 million Americans are under extreme or major heat risk on Thursday. That rises to 159 million people on Friday before the heat begins to ease over the weekend.
“This is what we all worry about,” said Jon Gordon, a senior director with Advanced Energy United, a trade group focused on accelerating clean energy and transmission projects. “Keeping the lights on when the system is stressed.”
The heat is centered over states like Ohio and Pennsylvania — both part of the PJM electric grid, which serves 67 million people in 13 states from the Washington, D.C., area to Chicago. Wholesale electricity on Thursday cost up to $2,000 per megawatt-hour of electricity in some parts of the PJM grid. One megawatt-hour is roughly 110% of how much electricity the average American home consumes in a month.
For the first three months of 2026, the average wholesale price in PJM was $87.57 per megawatt-hour. As the heat bore down on Thursday afternoon, the average price during peak demand hours was over $300, according to the data platform Grid Status.
How do high wholesale costs affect a household’s monthly bills?
Electricity markets have multiple layers, and the exact flow of costs from companies that generate electricity to consumers varies by state.
Immediately, industrial facilities, manufacturers, data centers and utility companies are paying more, but high prices are “going to hit down the line for typical residential customers,” said John Qugley, a senior fellow at the Kleinman Center for Energy Policy at the University of Pennsylvania.
In states like Ohio and Pennsylvania, consumers can choose their electricity supplier and sign up for a fixed monthly rate per kilowatt-hour of electricity they consume. The contracts typically last anywhere from a few months up to two or three years.
That electricity supplier buys power from the wholesale market, but it typically sets rates high enough to offset occasional price spikes.
“They are anticipating events like this. It’s baked into the pricing to some degree,” Gordon told Straight Arrow. But the more severe a price spike, the more likely it is to ripple into how much suppliers will charge over time on new contracts.
In other states such as Kentucky and Virginia, residents must stick with one regional utility company or nonprofit electric cooperative that serves their area. Many of those companies include a clause in customer contracts called a power cost adjustment (PCA).
The PCA is a way for utilities to pass cost fluctuations onto customers, which can include the cost of fuel to run power plants and buying electricity on the wholesale market.
What is the risk to the grid in high heat?
During the heat wave, elected officials and power companies alike are asking residents to conserve electricity. And although the PJM grid has the highest prices, regional power grids from the Midwest to the South and Northeast face similar strains of high demand.
Following an alert from New York’s power grid operator, New York City Mayor Zohran Mamdani called on residents to “alleviate the strain on our energy grid” by setting air conditioning to 78 degrees in a social media post.
“This kind of heat stresses aging infrastructure,” Gordon said. If a power plant malfunctions or a transmission line trips offline under heat, the situation can go from bad to worse.
In Michigan, extreme heat caused an electric substation to fail on Wednesday, leaving 5,000 customers without power, according to local news reports.
Ahead of the heat wave, the U.S. Department of Energy issued two emergency orders for the PJM grid. The first authorized all power plants to operate at maximum capacity from June 30 through Friday night with a temporary exemption from air pollution limits. The second calls on large electricity users such as data centers to operate with their backup generators.
What are the underlying problems for PJM?
The Mid-Atlantic power grid was already in a highly-scrutinized state of transition before the heat wave came.
Virginia is the largest data center market in the world. Other PJM states like Pennsylvania, Ohio and Illinois are frequent destinations for the tech industry to invest computing power that runs artificial intelligence tools. The new sprawling warehouses packed with computers are driving up electricity demand, and PJM doesn’t have enough.
The grid operator will likely make a filing with the Federal Energy Regulatory Commission later this month. PJM is expected to ask for approval to hold an auction later this year to secure more electricity supply and incentivize data centers to bring their own power sources.
The Trump administration has ordered several coal-fired power plants in PJM that had planned to shut down over the past year to stay operational. However, advocates for more renewable energy have criticized the grid operator for taking too long to bring new resources online.
The current strained grid conditions are an “ongoing demonstration of PJM’s inability to deal with the clean energy transition,” Quigley said. “PJM has hardly any battery storage, and that would come in extremely handy today.”
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Ella Rae Greene, Editor In Chief
