PJM Files Revised Backstop Procurement Plan to Address Capacity Shortfall

PJM Interconnection on Oct. 29 filed an amended proposal with the Federal Energy Regulatory Commission to advance its Reliability Backstop Procurement, a mechanism designed to address a capacity shortfall and assign the costs of additional generation to large electricity consumers driving demand growth. The revised proposal targets a March 1, 2027, procurement launch and modifies provisions governing cost allocation, credit requirements, and the responsibilities of load-serving entities.

The procurement aims to address a 6,831-megawatt shortfall in capacity resources cleared through PJM’s 2028/2029 Base Residual Auction. Rapid demand growth from large loads has outpaced new generation additions, raising concerns over the grid operator’s ability to maintain adequate electricity supplies. PJM will recalculate the shortfall using updated information to account for the revised procurement timeline.

FERC largely accepted PJM’s initial proposal on Sept. 29 but suspended its implementation for five months to address outstanding issues. The revised plan builds on the PJM Board of Managers’ strategy to secure additional generation through the backstop procurement while facilitating private bilateral contracts between large electricity consumers and capacity suppliers. The approach aligns with principles outlined in January 2026 by governors of PJM’s 13 states and the White House National Energy Dominance Council.

Under the revised schedule, electric distribution companies will report updated large-load quantities before the procurement begins. The bidding window will close March 28, with final procurement targets determined April 28 and results published May 10. PJM intends to secure resources for up to 15 years, with a maximum willingness to pay based on a megawatt-weighted average of $555 per megawatt-day. The procurement target will be reduced by qualifying capacity secured through executed bilateral contracts to avoid duplicate purchases.

For cost allocation, PJM proposes assigning charges to load-serving entities based on large-load growth between actual summer peak demand in 2026 and forecast demand for the 2028/2029 delivery year. The revised filing also introduces lower uniform credit requirements and updated payment terms. Load-serving entities exiting PJM will remain responsible for procurement charges throughout the remaining commitment period.

Other revisions eliminate opt-out provisions for certain municipal utilities and cooperatives, require peak-shaving plans covering at least five years for eligible exemptions, adjust site-control requirements, extend the time available to correct bid deficiencies and clarify eligibility requirements for demand response and distributed energy resources as qualifying procurement offsets.