By Mark Jaffe, EUCI energy writer
Facing economic, regulatory, and political pressures, as well as a surge in demand for electricity, the PJM Interconnection, the nation’s largest grid, is taking steps to get more power and manage peak demand.
The grid operator, serving all or parts of 13 mid-Atlantic and Midwestern states and Washington, D.C., will hold a one-time backstop capacity auction starting in September.
The backstop auction is necessary to meet a 6.8-gigawatt (GW) gap from the PJM’s July 14 auction, which secured 138 GW of capacity at a cost of $16.4 billion in capacity charges.
“The central procurement will look to commit supply to cure the observed megawatt shortfall of the Reliability Requirement in the 2028/2029,” PJM said in its proposal.
PJM is wrestling with adding sufficient generating capacity at manageable prices having seen the cost soar to per megawatt-day for 2026-2027 from $28.92 for 2024-2025.
The July auction had a Federal Energy Regulatory Commission (FERC) approved price cap of $325 per megawatt-day. The governors of PJM states had called for a price cap.
In a second new policy to manage peak load, the PJM proposed new data centers and other large loads that don’t bring their own power supplies be curtailed when grid demand creates a potential capacity shortage.
The policy would “accelerate large load growth while preserving system reliability during periods of capacity shortage,” the grid operator said.
New large loads are forecasted to grow by an estimated 70 GW by 2038, while some 15 GW of electricity generating resources have retired since 2022, according to PJM.
“The Board believes this reliability threat requires decisive action,” the PJM Board of Managers said in a letter to stakeholders.
“The Board is also acutely aware of the affordability pressures facing consumers,” the letter said. “The present trajectory of rapid load growth, tightening supply and rising capacity costs is not sustainable.”
PJM hit an all-time peak load of 168,158 MW on July 2 as temperatures reached 97 degrees Fahrenheit. The grid, however, maintained operations. The previous peak record was 165,563 MW, set on Aug. 2, 2006.
“This was the highest peak we have ever served, through an unprecedented heat wave,” Paul Dajewski, a PJM senior manager, said in a July briefing to the grid operating committee.
PJM is facing pressure from both governors in the states it serves and FERC.
The PJM Interconnection has until the end of September to agree to governance and stakeholder reforms or FERC will impose them, the agency’s chairman, Laura Swett, said at a July technical conference on the state of the PJM governance.
“PJM is facing a grave legitimacy crisis,” Swett said.
A year ago, the governors of nine states served by PJM – New Jersey, Pennsylvania, Illinois, Delaware, Virgina, Kentucky, Michigan, Tennessee, and Maryland – sent a letter to the PJM board calling for reforms.
“At a time of rapidly rising load growth, PJM’s multi-year inability to efficiently connect new resources to its grid and to engage in effective long-term transmission planning has deprived our states of thousands of jobs and billions of dollars in investment that may flow to other regions,” the July 2025 letter said.
“Now these deficiencies threaten the bedrock reliability and affordability our consumers expect and deserve,” the governors said. “We are deeply concerned that PJM’s response has been typified by halting, inconsistent steps and rising internal conflict.”
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