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PJM Board Orders Immediate Initiation of Reliability Backstop Procurement, Directs Development of Proposal
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The PJM Board has directed PJM staff to develop a proposal to both accelerate and execute a backstop capacity procurement
Currently, the PJM Tariff allows PJM to run a backstop capacity procurement if the system clears short of the
reliability requirement for three consecutive capacity auctions (thus far, the auction has cleared below the reliability requirement in a single auction)
Accelerating a
backstop capacity procurement from the current trigger, "is especially necessary in light of FERC’s recent decision on colocation and its
request for more information on utilization of this backstop procurement framework," the Board said
"Any backstop procurement should specify price, term and quantity as core award
parameters and be consistent with the Board’s direction to procure for the full reliability requirement for the
footprint," the Board said (the "full" requirement includes the load of "connect and manage" new large load, as detailed below)
"The Board directs PJM staff to address cost allocation for any such procurement, including consideration of
mechanisms that assign costs to those LSEs that are short as a result of incremental load growth within their
service areas. Those LSEs may, in turn, determine how such costs are allocated to incremental loads,
consistent with state law," the Board said
"Over the longer term, the Board does not view it as desirable for PJM to serve as the procuring authority to
long-term commitments resulting from backstop procurement. Accordingly, any such procurement should be
viewed as a transitional measure intended to facilitate the timely integration of new supply, while options for a
more durable mechanism are evaluated as part of the broader market review directed below," the Board said
"The Board recognizes that the existing backstop procurement rules are not sufficiently detailed, and that PJM
and the stakeholders will need to discuss the design of the procurement. The Board is directing that immediate
attention be provided to this matter with process and deadlines to be discussed at the upcoming January 22
Members Committee meeting," the Board said
The Board does not propose that "connect and manage" new large load should be removed from the capacity
market
"Removing such load from the market would instead result in large new loads
avoiding capacity costs altogether, with those costs shifted to existing consumers," the Board said
More broadly, PJM's Board directed a, "holistic review of investment incentives in PJM's markets".
The Board said that the current three-year forward, single-year capacity commitment, "has not
produced a sufficient level of bilateral contracting or price certainty to support the scale of new resource investment required to maintain resource adequacy."
"Accordingly, the Board directs PJM to analyze how the energy, reserve and capacity markets can evolve in a
coordinated manner to provide appropriate incentives for both investment and performance. Upon completion
of this analysis, PJM should engage stakeholders to discuss a potential enhanced market framework," the Board said
The Board sought additional stakeholder input as to whether the price cap that was
in place for the 2026/2027 and 2027/2028 capacity auctions should be extended
The Board's direction on the backstop procurement and the other above-described measures were included in a letter from the Board outlining numerous actions PJM is taking to address the, "multiple challenges of integrating new data centers and other large load customers onto the grid while preserving electricity system reliability and affordability for the 67 million people PJM serves".
Other notable actions include (among others):
• Create incentives for Load Serving Entities (LSEs), large loads and/or states to bring new
capacity resources to offset their load additions consistent with cost causation principles
• Establish an expedited interconnection pathway for incremental generation advanced by LSEs,
large loads and/or states
PJM in a news release highlighted the, "Creation of an accelerated interconnection track for state-sponsored generation projects".
The Board stressed that, "although the Board is proposing Tariff
revisions that focus on aggregate new generation demonstrated by LSEs as available to offset their
forecasted large load additions, the states within PJM’s footprint retain the authority to determine how
such frameworks are applied to individual retail customers, including large loads".
See the Board's letter here
ADVERTISEMENT Copyright 2026 EnergyChoiceMatters.com. Unauthorized copying, retransmission, or republication
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Accelerated Interconnection Track For State-Sponsored Generation Projects, & Similar Projects (BYONG)
Holistic Review of Investment Incentives in PJM's Markets
January 16, 2026
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Copyright 2026 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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