On July 27, 2026, the PJM Board of Managers (Board) directed PJM to file two proposals with the Federal Energy Regulatory Commission (FERC) to address near-term reliability needs and “manage affordability impacts of Large Loads connecting to the grid at a faster rate than new generation.” The first filing directed by the Board will address the need to attract more generation. The second filing will pertain to a mechanism to facilitate Large Load growth while preserving system reliability during capacity shortages.
Reliability Backstop Procurement
The first filing directed by the Board is to encompass a Reliability Backstop Procurement proposal which runs concurrently with private bilateral transaction facilitation as outlined in PJM’s recent The proposal would introduce a two-path mechanism for securing future generation: (i) A Central Procurement path that seeks to commit supply to correct the 6.8 GW shortfall of the Reliability Requirement in the 2028/2029 Base Residual Auction and a (ii) process that will streamline direct contracting between supply and demand to address forecasted load growth.
The Board requires PJM to conduct the Central Procurement from September 30 through October 21, with results to be released in early December. Commitments of up to 15 years will be finalized before the December capacity auction for the 2029/2030 Delivery Year. The Board proposes to cap the total cost of accepted supply offers at $555/MW-day. PJM asserts that this cap would maintain affordability while incentivizing new resources to participate in the procurement process.
For the Facilitated Bilateral Matchmaking Process, an RFP was issued on June 9, 2026, and required parties interested in participating to respond by July 21, 2026. Under this process, initial matches between buyers and sellers interested in bilateral contracting will occur in August 2026 and continue for 6-9 months.
Exclusions and Opt-Out Provisions for Reliability Backstop Procurement
PJM proposes that the initial procurement targets will be lowered by new supply showings to ensure PJM does not double procure for the load. These showings include: signed contracts for new supply, approved new Integrated Resource Plan supply, and Large Load sites committed to demand-side participation.
The Board updated PJM’s proposal to include opt-out provisions for (1) certain Electric Distributor zone/areas whose rates are not regulated by the state and that can demonstrate a documented inability to address cost allocation in connection to capacity backstop procurement which cannot be assigned to Large Loads; and (2) Electric Distributor zone/areas that address their capacity needs through peak shaving adjustment programs codified in state law. The first opt-out will require written support from the relevant governor, relevant electric retail regulatory authority (RERRA) and the interconnecting customer from their load forecast. PJM proposes to exclude Fixed Resource Requirement (FRR) entities from the Reliability Backstop Procurement (and procurement targets) and associated cost allocation.
Board Defines Terms and Cost-Allocation Rules for Resources Eligible to Participate
The Board described the resources that are eligible to participate in the Reliability Backstop Procurement, including:
- New power resources defined as those that demonstrate newly installed capacity and new maximum facility output.
- Capacity Interconnection Rights that are new or transferred from a resource that is either deactivated or announcing deactivation as of April 10, 2026.
- Resources lacking a commitment for the 2028/2029 Delivery Year auction.
- New annual Demand Response and Distributed Energy Resources (provided aggregators show sites and contracts for a 15-year term).
The Board also defined other requirements for participation, including:
- Eligible resources are required to come online no later than June 1, 2032.
- New resources will go through the standard interconnection studies cycle processes.
- Resource developers are responsible for their own transmission network upgrade costs and are expected to include these costs in their offers.
- PJM will allocate costs of the Reliability Backstop Procurement among Load Serving Entities (LSEs) in specific zones or service areas. It will be up to those LSEs and their state regulators to determine how those costs are applied to various rate classes.
The Board believes that existing consumers should not have to bear higher capacity costs caused by new Large Loads that do not bring or otherwise contract for, the new supply necessary to serve them. Thus, the Board instructs PJM staff to exclude any incremental new Large Loads relative to the forecast utilized for the 2028/2029 Base Residual Auction from the demand utilized in future RPM Auctions for delivery years beginning with 2029/2030.
PJM Board Proposes the Creation of a Large Load Registry
The second proposal that the Board directed PJM to submit relates to PJM’s Interim Resource Adequacy Service (IRAS) proposal. This proposal involves creating and maintaining a Large Load Registry that gives state regulators the data they need to set their own load reduction priorities for retail customers. Under this proposal, PJM will partner with state-led programs by using the registry as an informational and operational tool to manage the grid during stressed system conditions. However, for Large Loads that do not bring their own generation by June 1, 2027, and have not yet otherwise secured supply, the Board states that during capacity shortages these new Large Loads will be subject to curtailment (prior to deployment of Pre-Emergency Load Management), thus creating a regional framework for curtailment. Load Management resources are paid to reduce consumption during extreme grid conditions to relieve strain on the system. Compensation to customers directed to reduce load during times of grid stress will be subject to a FERC-approved compensation rate and jurisdiction of state authorities. The Board asserted that state action is crucial because PJM does not have jurisdiction to allocate retail costs directly to individual Large Loads.
For further information, please contact Thomas L. Rudebusch, Bhaveeta K. Mody, and Sylwia Dakowicz.
Article By DWGP Summer Associate Joshua Fleming– Howard University School of Law, May 2027
