PJM Interconnection, the largest US grid operator, has delayed a planned auction meant to secure backup power capacity for a region facing surging demand from data centers, after federal regulators only partially approved the underlying plan, according to Utility Dive. The backstop procurement auction had been set to begin accepting offers on September 30 and run through October 21.
The Federal Energy Regulatory Commission ruled on September 29 that parts of PJM's proposal — covering cost allocation, rules for a transmission owner that exits PJM, and collateral requirements for load-serving entities — "may be unjust and unreasonable." FERC Chairman Laura Swett said in a concurring statement that PJM's proposal was filed at the last minute, leaving the agency no time "to rehabilitate the mess we received," and added that the commission "will not be forced into accepting a deeply flawed, eleventh-hour procurement mechanism with billion-dollar implications for consumers."
PJM spokesman Jeffrey Shields said the grid operator is reviewing the order and "intends to work quickly to address the commission's remaining concerns," adding that a new timeline for the procurement has not yet been determined.
The backstop procurement grew out of a fast-track stakeholder process after PJM failed to acquire enough capacity in its last two base capacity auctions to meet its reserve margin targets, a shortfall largely driven by data center demand forecasts. PJM intends to acquire 6.8 GW of new capacity to cover the gap for the 2028/29 delivery year, though it may adjust that target as new supply comes online, according to Utility Dive.
FERC approved an offer cap of $555/MW-day for the auction but found fault with how PJM proposed to allocate its costs, offering an alternative approach based on updated load forecasts. The commission also flagged collateral requirements for load-serving entities as potentially unworkable — Utility Dive reported that Northern Virginia Electric Cooperative said it would have had to post roughly $2 billion in collateral under PJM's original plan.