As reported previously, on September 29, 2026, FERC partially accepts PJM’s Reliability Backstop Procurement (RBP) proposal but suspends other parts for further review.
| FERC has accepted the basic procurement framework, but the auction remains delayed and important questions about cost allocation and financial obligations remain open. FERC’s order underscores the advantage for data center developers of bringing their own power. Under PJM’s proposal, new capacity contracted to serve new load reduces the amount PJM procures, and FERC pointed to the commitment by all 13 PJM governors to steer RBP costs toward new data center load that has not procured its own capacity or agreed to be curtailable.
Stakeholders will likely want to closely monitor PJM’s revised proposal and the ongoing FERC proceedings for changes that could affect procurement timing, project economics, and customer cost exposure. |
As a reminder the RBP is a one-time procurement of new capacity intended to address a resource adequacy shortfall driven largely by rapidly growing demand from large loads such as data centers.
PJM’s last two capacity auctions cleared short of its reliability requirement -most recently the 2028/2029 auction held in July 2026 fell short by 6,831 MW. The RBP was designed to procure up to that amount of new capacity.
As a result, FERC’s most recent order suspended the RBP proposal until February 28, 2027 that is now subject to refund and a potential “paper hearing.” The RBP bid submission window that was slated to begin on September 30, 2026 is now on hold until the issues raised by FERC are addressed.
Next Steps
FERC encouraged PJM to submit a revised filing as soon as possible to address the Commission’s concerns and expedite the procurement. If PJM submits a new filing by October 29, 2026, FERC indicated it may pause the paper-hearing schedule while it considers the new filing. Otherwise, initial briefs are due from PJM by November 13, 2026.
PJM has indicated that it intends to submit a revised filing by October 29th and has scheduled a special Members Committee meeting for October 22nd to get feedback from stakeholders. FERC indicated that if PJM does not resolve the concerns on its own, FERC may step in and impose its own revised version of the RBP proposal and opened a separate proceeding (Docket No. EL26-108) for that purpose.
RBP Issues Identified by FERC that PJM Must Address
- Cost allocation – FERC found that PJM had not adequately demonstrated that its proposed allocation of RBP costs among “Electric Distributor” zones that equate to the local utility service areas was just and reasonable. FERC indicated that assigning costs to zones based on near-term load growth may be reasonable but was concerned that PJM’s measure of that growth may miss new large loads already built into PJM’s baseline forecast. FERC also preliminarily found that PJM’s proposed opt-out for cooperatives and municipal utilities may be unduly discriminatory. Cost allocation remains as one of the most consequential issue for many stakeholders especially the states. The final outcome will affect how the costs of new capacity are distributed among zones and, ultimately and which customers should bear those costs.
- Transmission owner exit rules – PJM proposed to make an exiting transmission owner responsible for honoring the RBP commitments tied to its departure by preserving them through a separate agreement, paying to tie the resources back into PJM, or paying out the remaining commitment on an accelerated basis. FERC preliminarily found this may be unjust and unreasonable because it assigns costs to the transmission owner rather than to the load-serving entities (LSEs) that benefit from the procurement.
- LSE financial collateral – As proposed PJM would require LSEs to post collateral securing their RBP payment obligations, set at an initial rate of $1.5 million per committed MW. FERC preliminarily found this may be unjust and unreasonable because PJM did not justify the rate figure and left LSEs too little flexibility.
What core items of RBP design did FERC find “just and reasonable”?
- Pricing – A $555/MW-day cap on the MW-weighted average cost of accepted supply offers and a pay-as-bid selection process, under which each selected resource receives its bid price.
- Long-term commitments – Commitments of up to 15 years, intended to provide revenue certainty to attract new generation, with resources required to be in service by the 2032/2033 delivery year.
- Resource eligibility and performance – Eligibility rules for the resources that can participate, including a requirement that demand-side and distributed energy resource aggregation resources have their customers committed for the full 15-year term, and any resource that fails to reach commercial operation on time faces charges for the shortfall.
- Market structure – Utilities that have opted out of PJM’s regular capacity auction to supply power from their own resources (known as Fixed Resource Requirement entities) are not included in the procurement. PJM also chose not to require the new resources to be located in any particular part of the grid, and not to apply its usual rules that screen bids to guard against sellers inflating prices.
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