Markets and Reliability Committee

1st Read on Load Management Penalties

VALLEY FORGE, Pa. — PJM presented the Markets and Reliability Committee with a first read on a proposal to establish penalties for load management and price-responsive demand resources that do not perform during pre-emergency events. (See PJM Stakeholders Endorse Penalties for Pre-emergency Load Management.)

Demand-side resources that do not fully respond to RTO dispatch would be penalized at half the rate assessed during performance assessment intervals, which PJM’s Pete Langbein said recognizes the lower reliability risks associated with pre-emergency deployments. That comes out to about $1,150/MWh based on capacity prices for the 2027/28 delivery year. The penalties would count toward the annual stop loss limit for Capacity Performance penalties.

Revenues would flow into a pot to be split between overperforming curtailment service providers if the demand-side response met or exceeded the reduction PJM requested. If there was a shortfall, a pro-rated share of the revenues would be allocated to load-serving entities.

The revisions to the Reliability Assurance Agreement and tariff are set to be considered for endorsement from the MRC and Members Committee during their April 26 meetings. If approved, PJM expects to file the changes at FERC around April 30, with the aim of having the change effective before the 2028/29 Base Residual Auction opens on June 30.

PJM’s proposal was one of three considered by the Market Implementation Committee on March 11, with Voltus seeking a lower penalty rate with a similar overall formula structure, and the Independent Market Monitor proposing to require demand-side resources curtail according to PJM instructions or forfeit their daily capacity revenues.

Monitor Joe Bowring told the MRC that if stakeholders do not endorse the main motion in April, he may bring his proposal as an alternative.

Members Committee

PJM Selects ‘Expedited’ CIFP Process for Backstop

The Board of Managers has decided to use an “expedited” Critical Issue Fast Path (CIFP) process to gather stakeholder feedback and hold a vote on how PJM should implement a reliability backstop auction to be conducted later in 2026. (See PJM Plans to Release Reliability Backstop Design in April.)

PJM has held seven workshops since the start of the year on the idea of having an auction to procure multiyear commitments, resulting in several proposals and perspectives being presented. Staff plan to release the RTO’s initial backstop auction design April 10.

Senior Director of Stakeholder Affairs Dave Anders said the process would follow the same rules as past CIFPs, but with a truncated schedule to advance the board’s aim of conducting an auction in September. That date was laid out in the statement of principles signed by the White House’s National Energy Dominance Council (NEDC) and all of the state governors in PJM. The statement argued PJM would not need to conduct a CIFP process to design the auction rules, as those discussions had already been initiated in the 2025 CIFP focused on large load growth. (See White House and PJM Governors Call for Backstop Capacity Auction and PJM Stakeholders Reject All CIFP Proposals on Large Loads.)

The process would consist of five meetings where stakeholders and PJM would discuss their proposals, culminating in a meeting with the board at which final packages would be presented and the MC would hold an advisory vote. Two Stage 1 meetings will be held April 16 and 17, followed by a Stage 2 meeting May 4 and a Stage 3 meeting the following day. A FERC filing is targeted for June.

The board considered several stakeholder processes to proceed with the backstop discussions, including an “enhanced 9.2(b)” process, referring to the tariff provision requiring the board to consult with stakeholders before making a unilateral filing. The RTO would informally expand on the tariff rules to hold additional meetings to hear perspectives on its design.

Board of Managers Chair and interim CEO David Mills said he has been in communication with the NEDC regarding the White House’s expectations and noted the statement of principles specifically told PJM another CIFP would not be necessary. He said he believes the board made the best decision for the benefit of its members and the process.

PJM Presents Timeline on Resource Adequacy Processes

PJM presented a timeline on which it expects to administer six stakeholder processes centered on maintaining resource adequacy through a confluence of rising data center growth, sluggish capacity development and generation deactivations.

If FERC approves PJM’s backstop design, the RTO expects to begin implementation in July and conduct the auction by Sept. 30.

The MRC voted the same day to endorse two issue charges to create a Connect and Manage framework to curtail large loads not paired with capacity when there is insufficient capacity or transmission headroom. The Connect and Manage Senior Task Force is expected to run from April through June before handing the work off to the MRC and MC, which is expected to continue the effort through September. Implementation is targeted from November to December. (See PJM Forms Task Force to Explore Large Load Curtailment.)

Improvements to PJM’s forecasting of large load additions already are being developed, with staff internally drafting revisions to Manual 19: Load Forecasting and Analysis, and a third-party consultant is being brought in to develop an independent forecast from April to December. A FERC filing is targeted for early June, with an order anticipated by the end of 2026.

Manual language to effectuate the implementation of the Expedited Interconnection Track is being drafted by PJM staff, with stakeholder endorsement to be sought in June and July. PJM is aiming for a go-live date in August. (See PJM Consults MC on Price Collar Extension, Expedited Interconnection Track.)

The RTO also is continuing to prepare its filings responding to a FERC investigation into how it offers transmission service for co-located configurations between large loads and generation. The final filing is expected in April, and workshops are set to continue through the following month. If PJM’s proposal is approved, implementation could begin in June and would likely extend into 2027. (See PJM Presents 1st Look at Co-located Load Compliance Filings.)

And the RTO plans to publish a paper on its market incentives in May, to be followed by a stakeholder process through November, when a FERC filing is anticipated. A broad examination of how each of PJM’s markets contributes to the incentives required to bring on sufficient capacity to serve rising data center demand was one of several items the board requested at the conclusion of the 2025 CIFP process. (See PJM Board of Managers Selects CIFP Proposal to Address Large Load Growth.)

OPSI Announces New Executive Director

The Organization of PJM States Inc. (OPSI) has selected Ben Sloan, director of legal and regulatory affairs, to serve as its executive director following the retirement of Gregory Carmean, who has led the organization since 2012.

“We are very excited to welcome Ben into the executive director role,” OPSI President Dennis Deters said in a statement. “He brings deep expertise in PJM process and substance and a demonstrated commitment to advancing the public interest. His experience navigating complex proceedings at PJM and before FERC and leading coalitions of diverse state commissions across all 14 PJM jurisdictions makes him exceptionally well suited for this position.”

Sloan told RTO Insider he will take over on April 1 and Carmean will remain with the organization through April 17 to aid in the transition. Along with filling his prior position, one of Sloan’s first priorities will be adding a new staffer dedicated to expanding OPSI’s engagement in the stakeholder process.

PJM Considering Requesting Rehearing on DFAX Order

PJM is working on calculating the amount of transmission costs that must be reallocated following a FERC order requiring the RTO to eliminate the de minimis exception from how it determines transmission rates. (See PJM Eyeing Tight Deadline to Eliminate De Minimis Exception, Rebill Decade of Tx Rates.)

General Counsel Chris O’Hara said PJM is considering requesting a rehearing on the order, the scope of the amount to be refunded and the possibility of interest. The order requires PJM to recalculate transmission rates determined through the solution-based distribution factor (DFAX) methodology going back to June 2015 wherever the de minimis exception was used. The practice removed zones from the cost allocation formula if they were responsible for less than 1% of the flow modeled on a transmission upgrade.

PJM also is weighing a motion for clarification on what it is required to do and asking for an extension of the 90-day deadline in the March 6 order, O’Hara said. The RTO’s preference would be to stagger the recalculation of cost assignments to complete a few years every few months, with the full decade to take over a year.

O’Hara said more information on the scale of the rebilling may be available at the Planning Committee’s meeting April 7.

Solution-based DFAX is used to determine the entirety of the cost for projects less than $5 million and under 500 kV, while for higher cost and voltage projects, the calculation is split evenly between the load-ratio share basis and solution-based DFAX. Different methods are used if a project is needed to resolve stability violations.

In addition to rejecting a settlement on the de minimis exception that carried the support of PJM and several transmission owners, the order established a paper hearing evaluating whether solution-based DFAX should be applied to projects required to resolve short-circuit violations. O’Hara said more cost reallocations could be down the road depending on the outcome of that proceeding.

Board of Managers Discusses Streamlining Stakeholder Process

Mills opened a discussion on how PJM can streamline its decision-making processes as the RTO seeks to navigate data center load growth, tightening reserve margins, affordability, and balancing over- and under-procurement. Issues are coming at PJM faster than stakeholders can respond, and Mills said he does not want to see the board put in positions where it must act unilaterally.

“Are there ways we can streamline the process or communications without compromising the [Consensus Based Issue Resolution] process we desperately needed?” he asked.

He noted there were hours of discussions on a pair of issue charges framing how PJM would proceed on frameworks for curtailing large loads that might compromise resource adequacy or transmission security, adding he’s not sure there’s time for lengthy debates on process.

Each of the four areas the RTO is navigating will require states taking on new responsibilities, and Mills said he intends to be firmer with pushing ownership of items outside of PJM’s authority back to the proper forums.

Manager Matthew Nelson said the board read every proposal in the 2025 CIFP process and came ready with questions about them during the final meeting. The process for the backstop auction, however, is likely to be on a much tighter time frame — meaning there might not be the same opportunity for the board to present stakeholders with feedback. He expressed commitment to showing the membership PJM leadership is engaged and listening to their perspectives.

Several stakeholders said their efforts to draft proposals would be aided by PJM making its thinking or stance clear early when considering rule changes.

Clara Summers, of the Illinois Citizens Utility Board, said the Deactivation Enhancements Senior Task Force has been working since October to develop alternatives to costly reliability-must-run agreements for resources which cannot deactivate due to transmission violations. However, stakeholders’ efforts have been challenged by PJM significantly changing its proposal late into that process. She said stakeholders look to PJM to a sense of what is needed and workable.

Constellation Energy’s Erik Heinle said when stakeholders are developing proposals, they are expected to have the design matrix filled out for each element under consideration, which can complicate voting on proposals focused on just a few elements. He suggested that voting on design components instead of packages could simplify package formation and understanding stakeholders’ priorities. Nelson and Manager Vickie VanZandt said they liked the concept.

Heinle pointed to the 2025 CIFP process focused on resource adequacy, which yielded a dozen proposals all in agreement that load forecasting should be improved. Despite that agreement, each package sponsor had to articulate their support for ongoing efforts to rework how PJM forecasts large load additions.

EDF North America Director of Transmission Policy Emma Nix Simon questioned whether dividing PJM’s membership into five sectors continues to make sense as the number of members has grown to more than 1,000. She also suggested a larger set of meetings could be recorded to allow stakeholders to engage with meetings they were not able to attend or rewind to better understand a technical subject.

LS Power Senior Vice President of Wholesale Market Policy Marji Philips said PJM can improve on listening to its members when there is broad opposition to changes it is considering. She pointed to efforts to establish a seasonal capacity market during the 2023 CIFP process focused on resource adequacy, a proposal she said the RTO continued to advocate for despite opposition across the member sectors. The number of proposals also has become unmanageable in some processes — both the 2023 and 2025 CIFPs had more than 10 proposals — leading her to suggest limiting the number of proposals by sector. (See PJM Files Capacity Market Revamp with FERC.)