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Nov 1, 2026 · Research · 4 min

PJM filed its backstop cost split with each zone’s share fixed for 15 years

At PJM’s price cap and forecast growth, each reported megawatt of large-load growth would carry about $154,000 a year. PJM asked FERC to rule by January 29.

PJM Interconnection, which runs the grid for 67 million people, filed its revised cost split for an emergency purchase of new power supply on October 29.1,8 The filing keeps the feature that drew the most objections. Each utility zone’s share is set once and stays fixed for 15 years.3

Rows of high-voltage transmission towers converging across a plowed field under a pale sky.

What PJM filed

PJM runs an auction that pays power plants to be ready for peak demand. Its last one bought 6,831 megawatts less than PJM says the grid needs. The purchase PJM calls the backstop would buy that gap on contracts of up to 15 years.8 PJM would pay no more than $555 per megawatt-day on average. A megawatt-day is one megawatt held ready for one day.8

The Federal Energy Regulatory Commission, or FERC, accepted the backstop on September 29, subject to refund and a paper hearing. It found PJM had not shown that its way of measuring each zone’s growth was just and reasonable.10

The new filing measures growth directly. A week before bidding opens, each utility reports its customers of 50 megawatts or more with a service agreement, construction commitment or similar agreement.2,7 It reports how much their combined summer peak grows from 2026 to mid-2028, and explains any gap from its load forecast data.2

Each zone then pays in proportion to its reported growth.3 A state or local regulator can name which retail power suppliers, which PJM calls load-serving entities, carry the charge. If none is named, PJM spreads it over every supplier in the zone.14

A load cancelled before the report drops out of its zone’s share.3 The total purchase is also capped at the region’s reported growth. That cap binds only if reported growth falls below the shortfall, which PJM calls unlikely. The shortfall itself is re-estimated from PJM’s 2027 forecast before bidding.4

PJM also asks FERC to excuse it from investigating the cause if its December auction for mid-2029 comes up short. It says the backstop already addresses the shortfall, and two reports have explained it.13

What the October 29 filing changed, and what it kept.

What a reported megawatt carries

If today’s 6,831-megawatt gap clears at PJM’s price cap, the purchase costs about $1.38 billion a year, by our arithmetic.18 PJM’s 2026 load forecast shows about 9,000 megawatts of large-load growth against a shortfall of about 6,800, its witness told FERC.18

If utilities report those 9,000 megawatts, each reported megawatt carries about $154,000 a year at the cap, or $2.3 million over 15 years.18 Fewer reported megawatts would raise that figure. Lower prices or a smaller purchase would lower it. It is our arithmetic, undiscounted, not a quote.18

The charge per reported megawatt at PJM’s price cap and forecast growth.

A large customer can leave the count. If it signs for new supply due online by June 1, 2032, that supply is reported during the bidding window. The customer’s load then comes out of its zone’s growth, and the purchase shrinks with it.19

Suppliers assigned the charge post collateral of 40 percent of their discounted payments. In PJM’s example that is about $686,000 per megawatt of capacity bought, the most it can be at the price cap.15

The fixed share

PJM kept the 15-year freeze. It quotes FERC’s view that a fixed share “may provide greater certainty” to those paying it.3 In the first round, Amazon asked FERC to make PJM update the split as load actually arrives.10 The filing does not.

Plans move. PJM’s independent market monitor counted 4,017 megawatts of planned data center load cancelled or delayed in the year to September 21. That was 42 percent of the data center growth PJM had forecast for 2026 to 2028.9 The monitor estimated those changes would cut the shortfall from 6,831 to 3,055 megawatts.9

Six rehearing requests reached FERC on October 29.12 One, from consumer advocates in Delaware, Washington, D.C., Illinois, Maryland and New Jersey, challenges the 15-year term. They argue it is unnecessary, quoting PJM’s statement that a bilateral contract of at least five years “will address the reliability shortfall.”11 At the price cap, they put the 15-year purchase at $20.8 billion and a five-year one at $6.9 billion.11

The consumer advocates’ arithmetic at PJM’s price cap.

What to watch

Pallara represents no applicant. Not legal advice.

Receipts

Every fact above, with the document it came from. A rule not yet adopted is marked proposed.

  1. 1

    PJM filed section 205 revisions to the Reliability Backstop Procurement on cost allocation, collateral from load-serving entities (LSEs) and exit responsibility; most revisions effective February 28, 2027, section 18.3A effective January 29, 2027; PJM asks FERC to act on all of it by January 29, 2027

    FiledPJM transmittal letter, FERC docket ER27-330, pp. 1-22026-10-29

  2. 2

    No later than seven days before the procurement, each Electric Distributor reports the quantity and identity of incremental Large Load supported by an electric service obligation, construction commitment or similar agreement, and the MW difference between the 2026 actual summer peak and the expected 2028/2029 summer peak, with an explanation for any deviation from its load forecast data

    FiledPJM filing, Attachment A, Tariff Attachment DD §18.3A2026-10-29

  3. 3

    Each zone is allocated by its pro rata share of reported incremental Large Load; the zone's assigned share "shall remain constant throughout the fixed, 15-year term"; PJM retains the snapshot, citing FERC that it "may provide greater certainty"

    FiledPJM filing, Attachment A, §18.3(a); transmittal letter, p. 122026-10-29

  4. 4

    The Initial RBP Target is the lesser of the 2028/2029 shortfall and the UCAP equivalent of region-wide reported Large Load MW; PJM's witness calls this a safeguard for Large Load agreements canceled between the 2027 load forecast and the procurement, and calls the scenario in which reported growth falls below the shortfall unlikely (about 9,000 MW of growth against about 6,800 MW short); the shortfall side is recalculated at the RBP from the 2027 Load Forecast and updated planning parameters (§18.1(a); Croop ¶¶4-5)

    FiledPJM transmittal letter, pp. 53-55; Croop affidavit ¶62026-10-29

  5. 5

    PJM anticipates commencing the procurement on March 1, 2027, with a four-week offer window; by our arithmetic, seven days before March 1, 2027 is February 22, 2027

    FiledPJM transmittal letter, pp. 61-622026-10-29

  6. 6

    PJM moves for a 32-day comment period, with comments and interventions due November 30, 2026

    FiledPJM transmittal letter, p. 632026-10-29

  7. 7

    PJM uses the accepted Large Load definition: end-use customer load with a cumulative peak of 50 MW or more at a single electrical site

    FiledPJM transmittal letter, p. 7 n.182026-10-29

  8. 8

    The 2028/2029 auction cleared 6,831 MW short; the backstop commits resources for up to 15 years at a maximum MW-weighted average of $555/MW-day; contract terms end in the 2042/2043 delivery year; PJM serves 67 million people; a megawatt-day is one megawatt of capacity for one day

    OrderFERC order 196 FERC ¶ 61,245, dockets ER26-3380 and EL26-108, pp. 1, 7, 21-22, n.144, Rosner concurrence2026-09-29

  9. 9

    The Market Monitor: 4,017 MW of data center load, 42% of the forecasted increase in data center load between 2026/2027 and 2028/2029, was cancelled or delayed as of September 21, 2026; after these cancellations and delays, the 2028/2029 shortfall would fall from 6,831 MW to 3,055 MW

    OrderFERC order 196 FERC ¶ 61,245, pp. 44-452026-09-29

  10. 10

    FERC accepted PJM's proposal for filing and suspended it to February 28, 2027, subject to refund and to the outcome of paper hearing procedures; PJM had not demonstrated that reliance on the Load Adjustment process is just and reasonable, and relying on Load Adjustments may not reasonably capture large load growth; Amazon urged FERC to require PJM to update the allocation periodically to reflect actual incremental load growth

    OrderFERC order 196 FERC ¶ 61,245, pp. 39-41, 632026-09-29

  11. 11

    Joint Consumer Advocates (Delaware Division of the Public Advocate, District of Columbia Office of People's Counsel, Illinois Citizens Utility Board, Illinois Attorney General, Maryland Office of People's Counsel, New Jersey Division of Rate Counsel): 6,831 MW x $555/MW-day x 365 days x 15 years = $20,756,847,375, and five years = $6,918,949,125, some $13 billion less; PJM called capacity under a bilateral contract of at least five years capacity that "will address the reliability shortfall"

    FiledJoint Consumer Advocates, Request for Rehearing, ER26-3380, pp. 1, 4, 24-252026-10-29

  12. 12

    Six requests for rehearing of the September 29 order were filed on October 29: FirstEnergy, the Indicated PJM Transmission Owners, Northern Virginia Electric Cooperative, the Office of the Ohio Consumers' Counsel, the Joint Consumer Advocates and Constellation

    FiledFERC eLibrary, docket ER26-3380, accessions 20261029-5261, -5262, -5263, -5264, -5265 and -52702026-10-29

  13. 13

    PJM conditionally requests a one-time waiver of the Tariff Attachment DD §16.2 investigation if the 2029/2030 Base Residual Auction, held in December 2026, clears short; it says the backstop addresses the shortfall and two reports already detail its causes

    FiledPJM transmittal letter, pp. 57-592026-10-29

  14. 14

    Where available, the state or retail regulator's allocation to suppliers (LSEs) is reported by each Electric Distributor; if none is reported for a zone, PJM allocates the zone's charges to all load in the zone by each LSE's share of the zone's daily unforced capacity obligation

    FiledPJM filing, Attachment A, §18.3(b)(iii)2026-10-29

  15. 15

    LSEs responsible for RBP Charges post collateral of 40% of the net present value of total payments, an illustrative rate of about $686,000 per MW of committed capacity, about 3.4 years of undiscounted payments, the highest possible rate because the example assumes the $555/MW-day maximum

    FiledPJM transmittal letter, p. 222026-10-29

  16. 16

    FERC accepted PJM's 50 MW Large Load definition and ordered a compliance filing within 30 days, Monday, November 9, under 18 CFR 385.2007

    OrderFERC order 197 FERC ¶ 61,019, docket ER26-3515, ordering paragraphs (A)-(B)2026-10-09

  17. 17

    PJM states that the 2029/2030 Base Residual Auction opens December 9, 2026

    OrderFERC order 196 FERC ¶ 61,245, summary of PJM's proposed RBP timeline2026-09-29

  18. 18

    PJM's witness: PJM's 2026 Load Forecast indicates approximately 9,000 MW of large load growth, while the projected shortfall for the 2028/2029 auction is approximately 6,800 MW. By our arithmetic, 6,831 MW x $555/MW-day x 365 = $1.38 billion a year at the cap; divided by 9,000 MW, about $154,000 per MW a year; times five years, about $769,000; times 15 years, about $2.3 million, undiscounted. Illustrative at the cap and 9,000 reported MW, not a ceiling: fewer reported MW would raise the per-MW figure, lower prices or a smaller purchase would lower it

    FiledPJM filing, Attachment D, affidavit of Danielle Croop, ¶62026-10-29

  19. 19

    Qualifying offset capacity is new supply expected in service by June 1, 2032 under a bilateral agreement with a Large Load, up to the load's capacity obligation, reported by the Electric Distributor during the bid window; the Large Load is then removed from its zone's growth and the Final RBP Target is reduced by the offset

    FiledPJM filing, Attachment A, Tariff Attachment DD §18.2(b)-(c); Croop affidavit ¶¶19-242026-10-29

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