PJM Delays Reliability Backstop Procurement After FERC Five-Month Suspension

PJM Interconnection confirmed on September 30 that it would not launch its planned one-time electricity-supply procurement that day after a Federal Energy Regulatory Commission order suspended the proposal for five months. The PJM backstop procurement delay leaves the grid operator revising a mechanism intended to address a roughly 6.8 GW capacity shortfall amid rapid demand growth from data centers and other large electricity users.

FERC issued its order on September 29, accepting the Reliability Backstop Procurement proposal for filing but suspending its effective date until February 28, 2027, subject to refund and further proceedings. PJM’s September 30 confirmation makes the immediate consequence clear: the procurement will not follow its originally announced schedule, and a replacement timetable has not been established.

PJM backstop procurement delay changes the September 30 launch

In an official September 30 update, PJM said its Reliability Backstop Procurement would not begin as planned. The operator will review previously announced milestones and communicate revised dates after assessing FERC’s order. It also plans to provide an administrative update at its October 7 Market Implementation Committee meeting.

The distinction between acceptance and suspension is important. FERC did not declare the procurement unnecessary or permanently reject the proposal. The commission accepted the filing while requiring additional proceedings, leaving both the design and the actual start date unresolved. February 28 is the stated suspended effective date, not a confirmed date for a new auction.

This is a material update to Microgrid Media’s earlier report on PJM’s backstop procurement plan, which described a one-time solicitation scheduled to start September 30 and end October 21. The proposal-stage reporting and the new regulatory action concern the same program, but the federal order and canceled launch change its operational status.

Cost allocation is a central issue in FERC’s review

FERC’s review places particular emphasis on how costs from new generation would be assigned. In her concurrence in docket ER26-3380-000, Commissioner Lindsay See said PJM had not adequately ensured that customers driving the need for the procurement would bear the resulting costs. She also called for better forecasts of which large-load projects will actually proceed.

Commissioner David Rosner’s separate concurrence discussed assigning costs to zones experiencing data-center growth, while noting that states and retail authorities remain responsible for many retail-tariff and customer-curtailment decisions. Those statements explain the regulatory concerns; they should not be mistaken for final retail charges already imposed on individual data centers.

Microgrid Media has also covered the wider debate in its reporting on the federal Data Center Ratepayer Protection Act. That legislative proposal is separate from FERC’s review of PJM’s wholesale-market filing, even though both address who should pay for electricity-system costs associated with growing large loads.

The underlying capacity shortfall remains

PJM developed the backstop after its latest capacity auction secured approximately 6.8 GW less than the reliability requirement for the relevant delivery period. The shortfall is a procurement and resource-adequacy measurement, not a statement that the region is currently experiencing a 6.8 GW real-time outage.

In its September 30 coverage, Reuters reported that the regulator’s decision was aimed in part at preventing costs driven by large customers from being broadly shifted onto existing electricity users. Grid reliability and the distribution of new costs remain separate questions that the revised framework must address.

PJM says its proposed backstop is a transitional mechanism rather than a replacement for ordinary capacity markets. Eligible new supply could also be matched directly with large customers under bilateral arrangements, with confirmed contracts potentially offsetting the amount PJM needs to procure centrally.

Data-center power options remain subject to final rules

For data-center developers, the delayed backstop increases uncertainty over the timing and cost of capacity arrangements. A company with committed new generation or a demonstrably flexible load may have options that differ from those available to a facility relying entirely on incremental regional supply, but eligibility will depend on approved tariffs and actual project performance.

Microgrid Media has previously examined PJM’s proposed emergency large-load framework, including the potential role of on-site generation, batteries and curtailment. The backstop procurement and emergency-load arrangements are related parts of PJM’s broader response to demand growth, but one does not automatically authorize or finalize the other.

PJM states that eligible resources under the proposed procurement must be new supply and are expected to enter commercial operation by June 1, 2032. It has not announced revised procurement dates or a final cost-allocation formula following the federal order.

What happens after the five-month suspension?

The next confirmed procedural milestone is PJM’s October 7 stakeholder update. Further regulatory filings and any revised procurement calendar will determine how quickly the grid operator can proceed and which customers or zones will ultimately be responsible for the associated costs.

The PJM backstop procurement delay does not remove the region’s electricity-demand challenge. It postpones a particular procurement mechanism while regulators and the grid operator work through how new resources will be selected, paid for and assigned to the customers whose demand is increasing.