FERC Suspends PJM's Reliability Backstop Procurement Amid Data Center-Driven Capacity Shortfall

PJM Interconnection, the largest U.S. grid operator serving 67 million customers across 13 states and D.C., has postponed its planned one-time Reliability Backstop Procurement (RBP) auction following a September 29, 2026, order from the Federal Energy Regulatory Commission (FERC). The auction, intended to secure up to 6.8 GW of new capacity to address a shortfall in the 2028/29 Base Residual Auction (BRA), was set to open September 30 but will now launch at a date yet to be determined after FERC suspended the framework for five months until February 28, 2027.

The 2028/29 BRA cleared at the $325/MW-day price cap but fell 6,831 MW short of reliability requirements—the first such shortfall for the entire PJM region—with only 525 MW of new generation clearing. Data centers and other large loads have driven much of the demand growth, accounting for a significant portion of recent capacity costs according to PJM's market monitor. The RBP was designed as a 15-year procurement with a $555/MW-day price cap to procure new resources, offset by any bilateral contracts between large loads and suppliers.

FERC accepted key elements of PJM's July 31 filing but identified concerns over cost allocation to zones with large-load growth, rules for transmission owners exiting the arrangement, and collateral requirements for load-serving entities (e.g., potentially billions for Northern Virginia Electric Cooperative). FERC Chair Laura Swett described the proposal as a 'deeply flawed, eleventh-hour procurement' that the commission would not be forced to accept. Commissioners' concurrences emphasized the need for costs to fall on driving customers while urging swift fixes.

The delay highlights broader tensions in grid planning as AI and data center expansion outpace new generation, with PJM estimating up to 70 GW of additional large-load demand by 2038. PJM has stated it welcomes the order and will work on revisions, while independent analyses note the RBP addresses only part of the gap.