PJM Suspended Its 6.8 GW Backstop Auction After FERC Ordered a Rewrite, and the Energy Department Backs the Order

Since the Federal Energy Regulatory Commission ordered PJM Interconnection on Sept. 29 to fix its Reliability Backstop Procurement, the grid operator's planned bidding window has been suspended. That window was supposed to run Sept. 30 through Oct. 21. The goal was to buy 6.8 gigawatts of new capacity for the largest U.S. grid, which stretches from Illinois to Washington, DC.

The delay matters most now. PJM missed its reserve margin targets in two consecutive base capacity auctions, and the one-time procurement was its fix for the gap.

What FERC did

FERC accepted PJM's proposal but suspended it for five months. It set a paper hearing on three elements: cost allocation, transmission owner exit provisions, and collateral requirements for load-serving entities. It also opened a separate Federal Power Act section 206 proceeding to handle any changes that come out of that hearing.

FERC left PJM a shortcut. It encouraged the grid operator to skip the hearing and file a new section 205 proposal that answers its concerns. According to FERC, such a filing would prompt it to approve a motion for abeyance of the paper hearing.

The commission found several pieces just and reasonable. Those include the eligibility requirements for resources, the selection process, the price cap, the exclusion of Fixed Resource Requirement entities from cost allocation, and the absence of direct market power screens.

The three flagged elements go to who pays. FERC said PJM failed to show its cost allocation follows the cost causation principle. It also said the proposed opt-out for qualifying cooperatives and municipal utilities may be unduly discriminatory. On the transmission owner exit rules, it said PJM did not show the costs land on the entities causing them.

Chair Laura Swett called the filing a "mess" in a concurring statement and made clear the commission would not wave through a billion-dollar plan filed at the last minute. PJM had asked for approval by Sept. 29 so bidding could open the next day.

PJM's response

PJM announced the suspension on Wednesday, Sept. 30, less than a day after the order. Spokesman Jeffrey Shields said PJM "intends to work quickly to address the Commission's remaining concerns." He said the timing for launching the procurement was yet to be determined.

Shields also said FERC "provided a clear path to resolving those issues expeditiously and moving the procurement forward."

Joseph Bowring, president of PJM's independent market monitor, Monitoring Analytics, took a different view of the larger problem. He said the current proposal addresses only some of the shortfall, and that rapid data center growth will require even more capacity.

The money at stake

The procurement grew out of a January 2026 Statement of Principles signed by the White House National Energy Dominance Council and the governors of all 13 PJM states. It called for fixed-term resources of up to 15 years, starting with the 2028/2029 delivery year.

Data center demand added nearly $30 billion in costs to recent grid-wide capacity auctions, according to Bloomberg's reporting. Remaining disputes center on keeping the costs and risks of long-term contracts from shifting to other businesses and the more than 67 million Americans PJM serves.

The Energy Department filed a Notice of Intervention and Statement of Position at FERC backing the commission's recommendations. U.S. Secretary of Energy Chris Wright said the department "supports having large electricity users pay for reliable new power generation."

Deputy Secretary James Danly tied the effort to President Trump's Ratepayer Protection Pledge. He said the reforms would increase transparency and prevent "unjust cost shifts onto existing customers." DOE urged PJM to comply promptly with the order.

Private deals keep moving

Outside PJM's market design fight, companies are signing their own supply arrangements. Google and Constellation Energy announced a 20-year nuclear agreement built around an 890-megawatt power purchase agreement. It will boost output at 11 existing reactors in Illinois, Pennsylvania and New Jersey.

Constellation said it plans to invest more than $4.3 billion in the plants, with the first uprate expected in 2028 and the rest running through 2032 or 2033. The companies also struck a separate 15-year deal for 2,700 megawatts in the PJM market.

Constellation CEO Joe Dominguez said Google's financial backing is what lets the company "bring on what is effectively a new reactor."

Separately, the Maryland Office of People's Counsel has asked FERC to reject the NextEra-Dominion merger. It argued the deal would let NextEra capture "explosive forecasted data center-driven electricity demand" and could set off a wave of follow-on utility mergers in PJM. That fight is a separate FERC docket, but it runs through the same data-center-driven demand forecast.

What comes next

FERC suspended the proposal for five months, unless PJM files a replacement proposal sooner. The paper hearing on cost allocation, transmission owner exit and collateral rules proceeds in the meantime. PJM has not said whether it will take FERC's section 205 shortcut, and no new schedule has been set for the procurement.