Oct 21, 2026 · Research · 3 min
PJM’s capacity shortfall and FERC’s September and October orders
FERC accepted and suspended the backstop procurement, rejected interim service, and retained the large load registry.
PJM Interconnection runs the grid for 67 million people.1 In its capacity auctions, PJM pays power plants to commit ahead of time to being available for peak demand.2 In July it bought 138,318 megawatts for the year starting June 1, 2028, and came up 6,831 megawatts short of its reliability requirement. The price hit the maximum allowed, $325 per megawatt-day, and supply still fell short.1 The auction before that was 6,623 megawatts short.2
PJM uses a loss-of-load expectation of one event in ten years. This is a probabilistic planning criterion, not a guarantee about the interval between outages. In September, PJM told federal regulators it is unclear whether it will meet that standard on June 1, 2027.3 The Federal Energy Regulatory Commission, or FERC, says PJM’s auction “has failed to keep pace” with growth in large loads such as data centers.4
PJM submitted two proposals. FERC accepted and suspended the backstop procurement on September 29, then rejected most of the separate large load proposal on October 9.5,6
The backstop auction
The first fix was a one-time auction for new power supply to fill the 6,831 megawatt gap, with contracts of up to 15 years starting as early as June 2028.7 PJM planned to take bids from September 30 to October 21, 2026.8
On September 29, FERC accepted most of the design but suspended it for five months. The order sets February 28, 2027 as the effective date, subject to refund and further proceedings. That suspension displaced PJM’s proposed autumn bid window.5 FERC sent three pieces to a hearing. The main one is how the cost is split among utilities. The others are what a transmission owner that leaves PJM would owe and how much collateral utilities must post.5 FERC said PJM had not shown that its split charges the customers who cause the cost.9
That is the open question: who pays. The Department of Energy backed FERC’s call for a revised plan and asked PJM to make large new users pay for the generation and wires built to serve them.10
FERC Chairman Laura Swett wrote separately that PJM did not appear capable of the “urgency, clarity, and discipline” ratepayers and utilities need.11
The data center plan
The second proposal covered new large loads, including data centers. Under PJM’s proposed interim service, a new data center or other large user whose utility had not lined up new supply could be cut when supply ran short. A user that brought its own new supply could avoid the cuts.12 The plan also defined a large user and set up a registry of them.6
On October 9, FERC rejected the interim service, the rules for users who bring their own new supply, and the rest of the package that depended on them.6 It said parts of the plan would place duties on retail customers, pick which retail customers get cut, and set a retail rate, all outside FERC’s authority. It also said PJM had not justified treating new large users differently from other load growth.13
When the grid is short, someone decides whose power is cut. FERC said states have “a crucial role to play” in making that call.14
FERC kept the definition and the registry, in effect since October 12. PJM must refile both with the rejected parts taken out.6,15 A large user is now 50 megawatts or more at one site, with affiliated buildings within a mile counted as one site.16 Load-serving entities must report the large loads they serve to PJM: its location, when each block of load comes on, its peak and ramp schedule, its backup generation and fuel, and its contracts.17
What to watch
On October 23, FERC extended the briefing deadlines in response to PJM’s October 13 motion for abeyance. The notice sets new dates; it does not approve the forthcoming replacement proposal.20
- October 29: the end of the 30-day window in which FERC anticipated granting a motion to hold briefing in abeyance if PJM submitted a new section 205 filing. Filing alone does not pause briefing.18
- November 9: PJM’s refiled definition and registry are due.15
- January 11, 2027: initial backstop briefs are due at 5 p.m. The October 23 notice extended the original November 13 deadline.20
- January 26, 2027: reply briefs are due at 5 p.m., replacing the original December 3 deadline.20
- December 9: PJM’s next capacity auction, for the year starting June 2029, is scheduled to open in the timetable described by the September order.19
- February 28, 2027: the September order’s effective date for the suspended backstop rules, subject to refund and further proceedings.5
Reviewed October 27, 2026 against the September 29 and October 9 orders and the October 23 notice. The January briefing dates replace the original November and December deadlines. Future dates remain subject to subsequent Commission action. Original publication date retained.5,6,20 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.
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1
The 2028/2029 capacity auction (delivery year June 1 to May 31), announced July 14, procured 138,318 MW and cleared 6,831 MW short of PJM's reliability requirement at the $325/MW-day cap; PJM serves 67 million people
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2
PJM's Base Residual Auction procures resource commitments to meet reliability requirements for each delivery year; the 2027/2028 auction cleared 6,623 MW short of the reliability requirement
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3
PJM told FERC it is unclear whether, as of June 1, 2027, the region will have enough capacity to meet its reliability metric of one event in 10 years loss of load expectation
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4
PJM's capacity market has failed to keep pace with the unprecedented influx of large load
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5
FERC accepted the backstop, suspended it five months to take effect February 28, 2027 subject to refund, and set a paper hearing on cost allocation, transmission owner exit rules and utility collateral
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6
FERC accepted the Large Load definition and Large Load Registry effective October 12, 2026 and rejected the rest of PJM's proposal
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7
The Reliability Backstop Procurement is a one-time procurement of new capacity aimed at the 6,831 MW shortfall, with commitments of up to 15 years starting with the 2028/2029 delivery year at the earliest
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8
PJM committed to open the bid window September 30 and close it October 21, 2026
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9
FERC found PJM had not adequately shown its cost allocation is consistent with cost causation
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10
DOE backed FERC's call for PJM to revise its backstop and urged PJM to require large new electricity users to pay for the generation and infrastructure needed to serve them
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11
Chairman Swett: ratepayers and utilities need urgency, clarity and discipline, none of which PJM appears capable of delivering at this time
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12
Under PJM's Interim Resource Adequacy Service, new large loads whose utility did not designate new capacity would be subject to load reduction when supply is short; bringing new capacity would avoid curtailment
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13
FERC found parts of the interim service would place obligations on retail customers, dictate which are curtailed and set a retail rate, and that PJM had not justified treating new large loads differently
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14
FERC: states have a crucial role to play by designating which retail customers must be curtailed when the system is stressed
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15
PJM must file the definition and registry again without references to the rejected parts, within 30 days of October 9; day 30 is a Sunday, so the period runs to Monday, November 9 (18 CFR 385.2007)
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16
Large Load means a cumulative peak of 50 MW or more at one site; affiliated facilities within a one-mile radius count as one site
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17
Load-serving entities submit each Large Load's location, in-service dates, peak load and ramp schedule, backup generation and fuel type, and contracts to the registry
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18
The September order originally set initial briefs 45 days later (November 13), superseded by the October 23 notice; FERC anticipated granting a motion for abeyance if PJM submitted a new section 205 proposal within 30 days (October 29); a filing does not itself suspend briefing
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19
The September order describes PJM’s planned December 9, 2026 opening of the 2029/2030 Base Residual Auction
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20
Initial briefs are due January 11, 2027 at 5 p.m.; reply briefs January 26, 2027 at 5 p.m., replacing November 13 and December 3