The PJM Board of Managers has selected a path forward for addressing a groundswell of large load interconnections expected over the coming decade. It announced a framework to speed the development of capacity resources, overhaul load forecasting and conduct a holistic review of how each of the RTO’s markets can better support resource adequacy needs. (See PJM Stakeholders Reject All CIFP Proposals on Large Loads.)

“This decision is about how PJM integrates large new loads in a way that preserves reliability for customers while creating a predictable, transparent path for growth,” said board Chair David Mills, who is serving as interim CEO. “This is not a ‘yes/no’ to data centers; this is ‘how can we do this while keeping the lights on and recognizing the impact on consumers at the same time?’ We look forward to implementing, along with our stakeholders, these proposals to manage the phenomenal demand growth we are experiencing.”

The proposal is the culmination of the Critical Issue Fast Path (CIFP) process initiated in August 2025 to address large load growth, which resulted in a dozen packages drafted by PJM staff and stakeholders being rejected by the membership in November.

The proposal directs staff to accelerate the reliability backstop to procure additional capacity and define how the related costs will be allocated to load serving entities (LSEs). This includes exploring mechanisms to assign costs to utilities that are capacity deficient.

The board wrote that the current trigger for the backstop, which requires three consecutive capacity auctions falling short of the reliability requirement, is insufficient in light of the 6.6 GW shortfall in the 27/28 base residual auction (BRA). It also noted that FERC’s December 2025 order on co-located loads requested information about proposals to use the reliability backstop to address “acute resource adequacy shortfalls.”

The board wrote that the backstop is considered a “transitional measure” to maintain reliability while the holistic market review is ongoing. (See FERC Directs PJM to Issue Rules for Co-locating Generation and Load.)

The board pointed to a joint CIFP proposal from Amazon, Calpine, Constellation Energy, Google, Microsoft and Talen Energy that included an alternative reliability backstop triggered if a capacity auction clears below 98% of the reliability requirement. It would open an auction for multi-year capacity commitments for new resources or those outside the capacity market. While the board did not mirror the coalition proposal, it wrote that proposals should “specify price, term and quantity as core award parameters.” (See “Joint Stakeholder Proposal,” PJM Stakeholders to Vote on Large Load CIFP Proposals.)

PJM’s CIFP proposal requested a second phase of the process to evaluate changes to the reliability backstop and incentives for large loads to bring their own generation or participate in demand-side capacity resources. (See “PJM Proposal,” PJM Stakeholders to Vote on Large Load CIFP Proposals.)

A backstop auction was requested by governors of PJM states and the White House in a statement of principles released Jan. 16. It calls for the auction to be conducted by September 2026 to allow “15-year price certainty” for new capacity resources. The costs resulting from the auction should be allocated to LSEs that have not procured their own capacity or agreed to be curtailable. (See White House and PJM Governors Call for Backstop Capacity Auction.)

Another parallel between the statement of principles and the board’s proposal lies in the price collar limiting capacity prices to between $175 and $325/MW-day for the 2026/27 and 2027/28 capacity auctions. The statement requested that the collar be extended for two years, while the board requested feedback from stakeholders on such an extension.

During a press conference following the announcement of the 2027/28 BRA results, PJM said the auction would have cleared at $529/MW-day without the collar and the Dominion zone would have separated at $542/MW-day. (See FERC Approves PJM-Pa. Agreement on Capacity Price Cap, Floor. See PJM Capacity Auction Clears at Max Price, Falls Short of Reliability Requirement)

The board’s proposal adopts staff’s recommendation to create a bring-your-own-new-generation (BYONG) pathway allowing new capacity paired with large loads to qualify for a fast-tracked interconnection process, expected to be rolled out by August 2026.

Large loads exceeding available incremental new resources within an LSE would be subject to curtailment under the proposal, under a model similar to the CIFP proposal sponsored by several state legislators, consumer advocates and the NRDC. The large loads would be curtailed prior to pre-emergency load management, which the board wrote is intended to avoid disrupting other demand response (DR) participants.

“Should system conditions over a given period force PJM to invoke its emergency procedures, the board finds it reasonable for certain large loads, including data centers, to move to their backup generators, or curtail their demand, for a limited number of hours during the year to prevent a larger scale outage for residential and other consumers. Such curtailment would be expected to occur infrequently, for limited durations, and only when necessary to prevent broader system impacts, consistent with PJM’s longstanding operational practice of avoiding curtailment whenever possible,” the board wrote.

The board directed a slate of changes to PJM’s load forecasting process, including a pathway for state utility commissions to review large load adjustments (LLAs) submitted by utilities, requirements for utilities to inquire with customers seeking service for large loads about whether they are exploring multiple sites for a single project, and a third-party review of the forecast to identify national trends that may impact PJM’s assumptions.

The holistic review of PJM’s markets is intended to improve how the energy, reserve and capacity markets create the incentives needed to meet resource adequacy. Staff will conduct an analysis in the first half of 2026, followed by a stakeholder process to create a set of recommendations for the board to consider.

“PJM is establishing clear, transparent guardrails for integrating large new loads under defined conditions,” PJM Chief Operating Officer Stu Bresler said in the Jan. 16 announcement of the board’s proposal. “This proposed course of action will require intense work by all of us in 2026 and involve significant changes. But it’s clear that bold action will be required to support the positive growth that is happening throughout the PJM region and the nation.”