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PJM postponed a planned reliability backstop auction after FERC partly approved its proposal and raised concerns about cost allocation, transmission-owner exit rules and collateral requirements for load-serving entities. The auction was intended to address a capacity shortfall linked largely to forecast data-center demand; PJM has not set a replacement schedule.
PJM Interconnection has delayed a planned reliability backstop procurement auction after the Federal Energy Regulatory Commission partially approved its proposal and questioned key rules for allocating costs and managing collateral. The auction was due to begin Wednesday and was intended to help address a projected capacity shortfall across the country’s largest grid operator.
PJM spokesman Jeffrey Shields told Utility Dive that the operator is reviewing FERC’s order and intends to work quickly on the commission’s remaining concerns. He said PJM had not determined a new schedule for the procurement. Before the delay, the operator planned to accept offers from Sept. 30 through Oct. 21, select resources between Oct. 22 and Dec. 2, and announce results before its standard capacity auction for the 2029/30 delivery year, expected in early December.
FERC found that parts of PJM’s proposal concerning cost allocation, transmission-owner exit rules and collateral requirements for load-serving entities may be unjust and unreasonable. The commission laid out possible fixes and strongly encouraged PJM to propose them promptly, saying that could avoid a hearing process. FERC accepted other elements, including PJM’s proposed supplier collateral requirements and a backstop auction offer cap of $555 per megawatt-day, calculated as a MW-weighted average over the delivery period.
PJM’s plan sought to procure 6.8 gigawatts of new capacity to make up a shortfall identified in the auction for the 2028/29 delivery year. The operator may lower that target to account for supply expected to enter the system. FERC questioned whether PJM had shown that its cost allocation would assign expenses to the parties driving them, and suggested using updated load forecasts. It also rejected a proposed opt-out for qualifying cooperatives and municipal utilities, finding it could discriminate against other load-serving entities serving data-center customers.
Reliability Costs at Issue
The delay leaves the timing of an additional procurement uncertain while PJM is trying to address a capacity shortfall. If the backstop auction moves later, the schedule for selecting new resources and communicating how they will support future reliability also shifts. The source material does not establish that the delay will cause outages or that the system lacks enough power today; the immediate issue is procurement planning for a future delivery period.
The dispute also concerns who pays for new capacity. FERC said PJM had not adequately demonstrated that its proposed allocation would meet the agency’s “just and reasonable” standard. That question matters to utilities and customers because the outcome could affect how costs associated with anticipated demand growth are distributed. The commission’s concern about collateral also has practical consequences: Northern Virginia Electric Cooperative said it would need to post roughly $2 billion under PJM’s proposal, according to FERC’s decision.
The case illustrates the limits of relying on market rules alone to manage fast-growing electricity demand. FERC said states have a role in addressing data-center load growth, while Commissioner Lindsay See called for better forecasts of which projects are likely to materialize and where new power and infrastructure will be needed. The auction’s design and timeline could shape how PJM and its members respond to that growth.
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How PJM Reached the Backstop Plan
PJM operates the regional grid across 13 Mid-Atlantic and Midwest states and the District of Columbia. Its backstop proposal followed a fast-track stakeholder process and was intended to supplement the operator’s regular capacity-market process. The proposal was developed amid forecasts of rising demand, driven largely by planned data centers, and after PJM’s last two base capacity auctions did not procure enough capacity to meet its reserve-margin targets.
FERC issued its decision one day before the backstop auction was scheduled to begin. Chairman Laura Swett said in a concurring statement that PJM filed its proposal at the last minute, leaving the agency too little time to address what she called a “mess.” The commission’s order did not reject the entire procurement plan; it approved some elements while identifying issues that PJM may need to revise. That distinction is central to the delay: the procurement may proceed after changes, but its next date is not yet known.
FERC also said PJM should use the most current load and resource forecasts to set its initial procurement target and evaluate cost allocation. See said sustained, uneven demand growth requires better information about where, when and why load is increasing, as well as a clearer view of which projects will actually proceed. The source report does not give a new forecast or quantify how much the 6.8-GW target might change.
“PJM is reviewing the order and intends to work quickly to address the commission’s remaining concerns.”
— PJM spokesman Jeffrey Shields, in an email to Utility Dive
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Auction Timing and Target Remain Open
PJM has not announced when it will restart or reschedule the backstop procurement. It is also unclear which specific revisions the operator will propose, whether FERC will find those changes sufficient, or whether a hearing will ultimately be needed. FERC said prompt fixes could make a hearing unnecessary, but did not guarantee that outcome.
The final amount of capacity PJM will seek is also unsettled. The stated 6.8-GW target could be reduced to reflect supply expected to join the system, and FERC called for current load and resource forecasts to inform the target. The available report does not identify the projects or forecast adjustments that could change it. The reported $2 billion collateral figure is an estimate from Northern Virginia Electric Cooperative, not a confirmed final requirement under revised rules.
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PJM Must Respond to FERC
PJM says it will review FERC’s order and work on the commission’s remaining concerns. Its response will need to address the proposed allocation of procurement costs, the treatment of costs if a transmission owner exits, and collateral requirements for load-serving entities. FERC’s suggested alternatives include allocating costs using updated load forecasts and assigning certain unrecovered costs to load-serving entities within a transmission zone if a transmission owner leaves PJM.
After PJM submits any revisions, the commission’s response will help determine whether the procurement can move forward without a hearing and when the operator can set a new offer and selection schedule. PJM had originally planned to announce results before its early-December standard capacity auction for the 2029/30 delivery year, but whether that sequence remains possible is not clear. The immediate next milestone is a revised timeline from PJM; none had been announced in the source report.
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Key Questions
Why did PJM delay the reliability auction?
PJM postponed the auction after FERC partly approved its proposal but raised concerns about cost allocation, transmission-owner exit rules and collateral requirements for load-serving entities. PJM said it is reviewing the order.
What was the auction intended to do?
The backstop procurement was designed to seek additional capacity to address a shortfall for the 2028/29 delivery year. PJM’s stated target was 6.8 GW, subject to possible reduction based on expected new supply.
When will the auction take place?
PJM has not announced a replacement schedule. Its original offer period and selection dates were postponed, and the operator said the new timeline had not been determined.
What did FERC approve?
FERC approved some elements, including the proposed supplier collateral requirements and a $555 per megawatt-day offer cap calculated as a MW-weighted average over the delivery period. It questioned other parts and offered possible changes.
Could the delay affect electricity bills or reliability?
The ruling raises questions about how the costs of new capacity will be assigned, which could affect utilities and customers. The available information does not establish that the delay will cause outages or specify an effect on individual customers’ bills.
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