PJM Interconnection has delayed its planned reliability backstop procurement auction, which had been set to begin Sept. 30, after federal regulators only partially approved the proposal. The auction was intended to secure emergency capacity to cover a shortfall driven by surging data center demand. FERC said parts of the plan dealing with cost allocation, transmission owner exits, and collateral requirements for load-serving entities may be unjust and unreasonable.
FERC Chair Laura Swett said the commission would not be forced into accepting a flawed, last-minute procurement mechanism with billion-dollar implications for consumers. The agency suggested alternatives, including allocating costs using updated load forecasts and assigning exit costs to load-serving entities within a transmission zone. It also rejected a proposed opt-out for cooperatives and municipal utilities, calling it discriminatory.
PJM said it is reviewing the order and intends to work quickly to address the commission's concerns, but a new auction timeline has not been set. The backstop procurement was meant to acquire 6.8 GW of new capacity after PJM's last two base capacity auctions fell short of reserve margin targets. Commissioner Lindsay See said grid operators need better load forecasts to adapt to sustained and asymmetric demand growth.