There is a current discussion on this over on the Growing from Seed forum that should answer your questions. I linked it below. You may also want to review the FAQ there on preventing molds, fungi, and damp-off on seedlings.

The key is much less watering and increasing the air circulation. The mold will only grow in warm, high humidity, stagnant air conditions.

Dave

Here is a link that might be useful: I have a problem with my seedlings discussion...

As a side note, noticing your zone info, it seems a little early to be starting pepper plants indoors to me. I typically don't bother starting until early March, and then plant outside in late May. Unless you have great lights set up indoors, you might want to consider holding off for a bit so that they don't get too leggy during the wait to transplant outdoors.

That being said, you're from a different area than I am, and you know your weather conditions better than I do. Just a thought. :)

I would suggest cutting back on the water, as Dave suggested.

Jill

Curt,
How old are the seeds? Usually over a year old and the percentage of germination is highly reduced. Also sounds like too much water and not enough air circulation. You may want to add some sand to the peat mixture for better drainage. I have had better luck germinating seeds from a seed starting soil mixture then the Jiffy peat pellets. They seem to stay too wet. Here in NE FL I start my pepper from seeds around mid to late February for mid April transplant. I think the "fever" has got you. Good Luck

David

I just got the seeds this winter from a trade. Everybody I talked to said that I should start Bhut Jolokia (Ghost Pepper) seeds in December or January here in zone 5, and not put them out until June. They are supposed to be really slow growing, and can take up to a month to germinate.

I went ahead and put a fan on them to try to dry them out a little bit, and have been picking the mold off as I see it. Hopefully that will work, because I don't have any extra seeds for those haha.

My apologies! I didn't realize that ghost peppers were slower and needed to be started earlier.

I got them to dry out...seems to be keeping the mold from growing back...just gotta worry about them being too dry now haha.

Peppers germinate a lot quicker and more reliably if you use the paper towel and baggy method. It's the same as doing a germination test. Put the seeds inside a folded damp paper towel which is then placed in a plastic bag. Put the bag on top of the fridge and, after a few days, check for germination daily. When they sprout plant them in small containers.

Jim