By Mark Jaffe, EUCI energy writer
Federal energy officials are pressing the PJM Interconnection – the nation’s largest power grid – to include utility customer protections as the operator pushes to add capacity to fill a projected gap in generation.
On Sept. 29, the Federal Energy Regulatory Commission (FERC) ruled that parts of PJM’s Reliability Backstop Procurement (RBP) plan were “unjust and unreasonable” and called for revisions.
“The RBP is a one-time procurement of new capacity to address significant resource adequacy challenges primarily driven by an influx of large loads,” the FERC ruling said.
However, the commission said, “the existing reliability backstop provisions appear to be insufficient to prevent the grave resource adequacy concerns that led PJM to file the instant proposal in the first place.”
In addition, FERC found that PJM did not adequately demonstrate that its load adjustment methodology would allocate RBP costs consistent with the commission’s cost-causation principle.
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 U.S. Department of Energy (DOE) filed a notice of intervention and position statement in the PJM cases before FERC on Oct. 7.
“DOE agrees with the Commission’s call for improved large load identification and transparency to support a just and reasonable cost allocation,” the DOE statement said.
From 2020 to 2025, the PJM, which serves 67 million people in 13 states and the District of Columbia, saw electricity demand jump more than 9% to 811 Terawatt-hours (TWh) from 743 TWh.
Every PJM annual long-term forecast since 2020 has rising rates of growth, the rate accelerating sharply since 2022. The growth in demand is mainly being spurred by data center development.
PJM hit an all-time peak load of 168,158 MW on July 2 as temperatures reached 97 degrees. The grid, however, maintained operations.
PJM has seen the cost soar to $327 per megawatt-day for 2026-2027 from $28.92 for 2025-2026.
“PJM should implement the cost allocation and other reforms identified by the Commission to ensure that the costs of serving new data centers or other large electric energy loads are not unfairly shifted to PJM’s existing ratepayers,” the DOE said.
For the July auction, FERC approved a price cap of $325 per megawatt-day. The governors of PJM states had called for a price cap.
“PJM’s capacity procurement procedures, however, are consistently failing to obtain adequate supply for the growth projected, let alone for the growth actually occurring,” the DOE said.
PJM acquires new generation through capacity auctions, but recent auctions have been delayed and yielded fewer generation bids than needed while the per megawatt-day (MW-day) price for generation has soared.
“After years of auction delays, in December 2025, PJM fell 6,623 MW short of its reliability requirement in its 2027/28 delivery year auction,” the DOE said. “This places PJM in a worse position than was anticipated.”
The DOE noted that the Trump administration has obtained commitments from utilities, states, data center developers, and cooperatives to a “Ratepayer Protection Pledge” under which large electric energy loads must fund the generation and related infrastructure those loads require.
Seven utilities in the PJM – American Electric Power, AES, CenterPoint Energy, Dominion Energy, Exelon, FirstEnergy, and PPL – have signed the voluntary pledge.
PJM intends to file a proposal at FERC to revise its backstop procurement plan by Oct. 29, Jeffrey Shields, a spokesman for the grid operator, said in an email to Utility Dive.
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