FERC held its regular open meeting Jan. 22, but much of the discussion focused on events at the White House and in PJM’s headquarters a week earlier.

That’s when the White House’s National Energy Dominance Council and all 13 governors from PJM states agreed to call on the RTO to hold a separate backstop capacity auction for data center load, saying some hyperscalers had agreed to participate. (See White House and PJM Governors Call for Backstop Capacity Auction.)

“I want to recognize this historic agreement reached between the administration and a bipartisan coalition of 13 governors who represent the customers of PJM,” FERC Chair Laura Swett said at the open meeting. “This is a monumental moment.”

Later on the same day as the White House announcement, PJM released the proposals its board had been considering under the Critical Issue Fast Path (CIFP) process to deal with the influx of large loads in its footprint. (See PJM Board of Managers Selects CFIP Proposal to Address Large Load Growth.)

As a power pool, Swett noted, PJM is almost 100 years old and for most of that time has maintained a reliable grid, but now it faces “enormous challenges,” as its load is growing and supply has lagged.

“The market rules of PJM drive decisions to finance, build and operate resources that are needed to support our country’s reindustrialization and to win the AI race against our adversaries,” Swett said. “We are at a crossroads of deciding critical issues to maintain national and economic security, but we need to ensure that hardworking Americans don’t shoulder increasing energy bills.”

The CIFP proposals and PJM’s response to FERC’s recent colocation order include many of the ideas the 13 governors and the White House called for in their statement, Swett said.

“I expect PJM will carefully consider its next steps, and FERC is ready to quickly evaluate any proposals that come before us,” she added.

FERC also acted on rehearing proposals from MISO and SPP to speed up shovel-ready generation as they face their own issues around load growth and resource adequacy. Commissioner David Rosner noted the trend is national and other organized markets — or jurisdictional utilities outside them — face similar issues.

“The message I really want to underscore today is that other transmission providers, I hope, will take a look at what we did with PJM, and what SPP did for themselves, with their stakeholders, with very broad stakeholder support, and consider bringing similar ideas that work for your region,” Rosner said. “And solve the problems that we need to solve, which is get new generation online fast, get large loads connected, and make sure we don’t harm our reliability or raise costs for regular people.”

Commissioner Lindsay See noted that it was rare to see all 13 governors in PJM — who represent states with very different politics — agree on a set of principles.

“As someone who used to work in state government for one of those 13 states, I can confirm that does not happen very often,” the former West Virginia solicitor general added.

Commissioner Judy Chang noted that the issue of large loads is being addressed around the industry and said it was time to start thinking outside the box.

“Just generally, the supply challenge is tricky,” Chang said. “And the great people at PJM are smart and hardworking, and I want to continue to recognize their efforts, both the leadership and the stakeholder community, to continue again to address the challenges and put on their problem-solving hats to address the issues in the Mid-Atlantic region. I know that PJM staff is working hard to address the supply crunch in a very complicated and really difficult environment with very few quick fixes, or very few easy or obvious solutions.”

‘Necessary Partners’

Commissioner David LaCerte said FERC will hopefully have a package of capacity reforms from PJM in front of it soon, and like the other four commissioners, he noted the commission a day earlier had issued an order approving the RTO’s changes to the reliability pricing model (RPM) based on its most recent quadrennial review (ER26-455).

PJM must update its variable resource Requirement (VRR) curve every four years, including major inputs like the gross cost of new entry (CONE) and the expected energy and ancillary services (EAS) net revenues offset.

In the order, FERC accepted a combustion turbine plant as the reference resource for the 2028/29 delivery year and beyond. The peaker plants get most of their revenue from the capacity market, making it easier to calculate the EAS.

“A more accurate and stable EAS offset, in turn, results in a more accurate and stable VRR curve, which provides load and capacity suppliers with greater confidence in capacity auction prices,” the order said.

FERC also approved the shape of the VRR curve PJM proposed, which faced protests from the RTO’s Independent Market Monitor and Maryland’s Office of People’s Counsel because it discounted the EAS offset by 25%. PJM did that to hedge against the risk of overestimating the EAS and thus underestimating net CONE.

“PJM explains that even though it has historically hedged against this same risk by inflating the price cap by a certain percentage, its proposal to inflate gross CONE and deflate the EAS offset achieves the same effect,” the order said. “In addition, PJM correctly notes that capacity market prices should be able to rise above Net CONE during tight market conditions such that the price averages net CONE in the long term.”

FERC also accepted the RTO’s proposals for net CONE and the EAS offset. The order drew a concurrence from Rosner who pointed out states are an important part of resource adequacy in PJM.

“Given states’ authority over siting generation and transmission, public utility commissioners, governors’ offices and state legislatures are all necessary partners in any effort to ensure energy infrastructure is built out at the pace needed to stay ahead of load growth and keep energy affordable and reliable for PJM customers,” Rosner wrote.

“Just as PJM must earn buy-in from its states and its members to achieve durable market rules, we depend on PJM states, load-serving entities and developers to take the financing, procurement, permitting and construction steps needed to turn PJM market signals into steel in the ground. The PJM market is intended to support these efforts — not supplant them,” he wrote.