PJM refiles its data-centre backstop auction for 1 March; Jefferies sees as little as 630 MW
Victoria Shinder2 min readThe PJM Interconnection has filed a revised reliability backstop procurement (RBP) with the Federal Energy Regulatory Commission, aiming to start the process on 1 March, about seven months later than originally planned. The procurement is meant to fill a 6.8 GW capacity shortfall from PJM's 2028/29 base residual auction, a gap driven by data-centre growth.
FERC rejected most of the first proposal in late September, saying its provisions on cost allocation, transmission-owner exit rules and collateral requirements for load-serving entities may have been unjust and unreasonable. PJM says the revisions are "carefully tailored" to those findings while keeping the structure. According to Maria Scheller of ICF International, the new filing uses more current large-load data to improve cost causation, revises collateral, and lets the obligation and its collateral move with the load when a large customer switches supplier.
Scheller says that sharply reduces the risk for providers of last resort, the utilities that serve customers on default service, but that the outcome depends on states: regulators may have to set customer-specific allocation, security and cost recovery, and decide what happens if a large load shrinks or disappears. Residential customers' direct exposure falls but does not vanish.
The size of the auction may also shrink. Equity analysts at Jefferies wrote on 28 October that PJM utilities including PPL Electric, FirstEnergy and AES Ohio have lowered their near-term large-load forecasts by 6.5 GW in filings to PJM's Load Analysis Subcommittee. With that cut, they estimate the procurement could fall to roughly 630 MW, and further if data-centre developers sign bilateral contracts.
What it means
The gap that justified a special auction is being re-measured as it is being procured. If the forecasts hold, PJM may end up running a new market mechanism for a fraction of the capacity it was designed for, and the hard questions move to state regulators.