PJM enters 2026 amid several efforts to ward off a reliability gap attributed to accelerating data center load, sluggish development of new capacity and resource deactivations.
The risks were laid bare in December, when the 2027/28 Base Residual Auction cleared 6.6 GW short of the reliability requirement. Of the 5,250 MW of load growth included in the auction, the RTO attributed nearly 5,100 MW to data centers. (See PJM Capacity Auction Clears at Max Price, Falls Short of Reliability Requirement.)
With six months remaining before the 2028/29 BRA is to be conducted in June, PJM’s Board of Managers is considering how to proceed in the wake of a Critical Issue Fast Path (CIFP) proceeding focused on large load interconnections. Stakeholders brought forward a dozen proposals, none of which received sector-weighted support from the Members Committee on Nov. 19. During the committee’s meeting Dec. 17, board Chair David Mills pushed the target for a FERC filing to January to allow more time to go through the packages. (See PJM Stakeholders Reject All CIFP Proposals on Large Loads.)
The rejection of the proposals puts the board in a similar position to when the RTO conducted a CIFP in 2023 focused on resource adequacy, when 20 packages were rejected. Because the committee’s vote is only advisory, the board could choose to proceed with any of the options, cobble together elements of them or arrive at its own solution. PJM staff’s recommendation included a request for a second phase of the CIFP to evaluate changes to the reliability backstop and incentives for load flexibility.
The board is weighing its options against the backdrop of a FERC order directing PJM to revise its tariff to include at least four options for large loads co-located with wholesale generation to receive transmission service. It also directed the RTO to provide a report on the CIFP within 30 days of the Dec. 18 order. PJM has scheduled a workshop to discuss the co-location order Jan. 9. (See FERC Directs PJM to Issue Rules for Co-locating Generation and Load.)
Proponents of co-location have argued it allows for more efficient siting of load, reducing the need for transmission upgrades, while skeptics say it would push transmission and ancillary service costs, such as black start, onto other consumers. Independent Market Monitor Joe Bowring and several other stakeholders have argued that if loads are considered critical national security interests, it’s unlikely they actually would be required to curtail or accept non-firm service.
Further complicating the board’s deliberations is a complaint the Monitor has filed with FERC arguing that PJM has the authority to delay large load interconnections that would jeopardize transmission security or resource adequacy (EL26-30). It argued that the recommended CIFP proposal — and PJM’s statements throughout the process — are based on an untested theory that the jurisdictional contours that RTOs operate within do not allow them to require that a load can be served reliably before it is permitted to enter service. (See Market Monitor Files Complaint Over PJM Large Load Interconnections.)
Several Design Changes for June Auction
Several design changes are to affect the 2028/29 auction, including the elimination of a price collar established by a settlement with Pennsylvania Gov. Josh Shapiro (D); the implementation of FERC Order 2222 requiring RTOs to facilitate the participation of distributed energy resources; and the expiration of a measure allowing PJM to model some deactivating resources operating under reliability-must-run agreements as providing capacity. The 2029/30 BRA is scheduled for December 2026.
The price cap was effective for the 2026/27 and subsequent auction, limiting prices to between $175 and $325/MW-day, with adjustments before each to account for shifting accreditation values for the combustion turbine reference resource. The temporary nature of the agreement was intended to avoid high prices while several market changes are implemented. Supporters argued the RTO’s backlogged interconnection queue would prevent developers from responding to high prices.
During a press conference following the posting of the 2027/28 auction results, PJM Executive Vice President of Market Services and Strategy Stu Bresler said staff plan to proceed with the 2028/29 BRA with the auction parameters proposed in the RTO’s Quadrennial Review filing. (See PJM Board of Managers Approves Quadrennial Review Proposal.)
A joint proposal from the Data Center Coalition, Exelon and PPL, as well as the governors of Maryland, New Jersey, Pennsylvania and Virginia, would extend the collar by one year, in addition to adding financial requirements for large loads, creating a demand response product with limited annual run hour restrictions and loosening the participation requirements for the expedited interconnection track proposed by PJM. (See “Data Center Coalition, Utility and Governor Proposal,” PJM Stakeholders to Vote on Large Load CIFP Proposals.)
The governors, along with those of Delaware and Illinois, signed a letter encouraging the board to include an extension of the collar in the CIFP solution it accepts.
The commission’s approval of PJM including the 1,289-MW Brandon Shores and 397-MW H.A. Wagner in the capacity supply stack is also to end prior to the 2028/29 auction. Its temporary nature was similarly intended to allow resources that consumer advocates argued can operationally serve as capacity to be modeled as such while stakeholders pursue a more holistic approach to how RMR resources are reflected in the capacity market. PJM has said it intends to request a one-year extension of FERC’s approval. (See “PJM Plans to Request 1-year Extension of RMR Resources Participating in Capacity Market,” PJM MIC Briefs: Oct. 9, 2025.)
The Deactivation Enhancements Senior Task Force is continuing discussions on a pro forma RMR agreement that would allow the RTO to dispatch relevant resources during a capacity emergency.
PJM Files Quadrennial Review
PJM is awaiting a FERC decision on its Quadrennial Review filing, which would set the auction rules for four years starting with the 2028/29 BRA (ER26-455). (See PJM Board of Managers Approves Quadrennial Review Proposal.)
The proposal would rework the design of the variable resource requirement (VRR) curve to set the maximum price at the larger of either 20% of the gross cost of new entry, or 115% gross CONE minus 75% of the net energy and ancillary services (EAS) offset. The formula establishes a floor meant to prevent high energy market revenues from lowering the maximum capacity price to zero. The curve approved by the commission in 2023 set the maximum at the greater of gross CONE or 1.75 times net CONE, which subtracts the EAS offset from gross CONE.
Jointly proposed by PJM staff and Pennsylvania Public Utility Commission Vice Chair Kimberly Barrow, it is meant to improve the stability of the VRR curve by reducing reliance on multipliers of the CONE parameter. The curve defines the clearing price to be procured in a BRA and at what cost.
The reference resource would remain a combustion turbine, though PJM’s initial proposal would have shifted to a combined cycle generator for all regions except in ComEd, where a four-hour battery electric storage system would be the reference. (See “Stakeholders Divided on Reference Technology,” PJM Stakeholders Discuss Quadrennial Review Proposals.)
The filing has been opposed by the Monitor, which took issue with PJM’s VRR curve shape, and the Maryland Office of People’s Counsel, which sought a Federal Power Act Section 206 investigation into the functioning of the RTO’s capacity market.
The Monitor disputed PJM’s calculation of gross CONE for the reference resource and argued the proposed VRR curve would inflate capacity costs by $6.7 billion, instead recommending a steeper curve.
The OPC argued that PJM’s filing would result in uncompetitive market outcomes so long as developers cannot respond to high prices because of a confluence of the compressed auction schedule, the amount of time it takes projects to clear the interconnection queue and national supply chain shortages. It argued the commission should investigate the capacity market and extend the maximum price set by the proposal until it determines “new entry imposes constraints on the potential exercise of market power.”
Transition to Cluster Cycles to Complete
PJM is about halfway through processing projects being studied in Transition Cycle 2 of its interconnection queue, which is in the second of three phases. Interconnection service agreements are to be negotiated between December 2026 and February 2027.
The cluster-based approach for studying the network upgrades needed for new resources and how costs are allocated is to begin with its first cycle once the April 27 application deadline expires. Reviewing the applications will take a few months, and models are to be posted in June. The total cycle is expected to continue through April 2028.
The shift is intended to allow projects to proceed through the queue more quickly and give developers more certainty about the costs they may face. The backlogged queue has been blamed for holding back new resources, particularly renewables, contributing to the imbalance of supply and demand. Since it implemented its transitional process, PJM has said it is processing more projects than ever — including 306 interconnection requests when Transition Cycle 1 was completed in 2024. (See PJM Reaches Milestone on Clearing Interconnection Queue Backlog.)
Leadership in Flux
PJM leadership is in a moment of transition going into 2026, with two new board members appointed in September and Chair Mills assuming the interim CEO position for “several months” as the search continues for a long-term executive. (See PJM Members Confirm 2 Board Nominees; States Call for Governance Overhaul.)
Speaking during the Dec. 17 MC meeting, Mills said PJM was “incredibly fortunate” to attract outgoing CEO Manu Asthana in 2019, as the leading indicators of the challenges the RTO would face began to emerge. (See PJM Taps Ex-Direct Energy Exec as New CEO.)
Asthana recalled being gifted a firehose at his first MC meeting, which he called a fitting sign of what was to come. He said Mills is more than ready to take over and has his full confidence.
Several governors of PJM member states have pushed the RTO to rework its governance structure to provide more of a voice for the states in its decision-making. Following a multistate technical conference in September, they issued a statement of intent to form a PJM Governors’ Collaborative to “promote greater state and consumer representation in the governance and decision-making processes of PJM.” (See Governors Call for More State Authority in PJM.)
The participation of governors’ offices and state legislators in PJM’s stakeholder process deepened throughout the CIFP, and Pennsylvania separately sponsored an issue charge to explore a sub-annual capacity market design. The Analysis Group presented the preliminary results of its report on such a design to the Sub-Annual Capacity Market Senior Task Force at its Dec. 12 meeting. Monthly task force meetings are scheduled through June.
