PJM Proposes Capacity ‘Price Collar’ Extension, Faster Interconnection Plan

PJM Interconnection on March 2 reported that it has advanced two board-directed reforms aimed at addressing a widening electricity supply-demand imbalance driven largely by rapid data center growth across its footprint. The grid operator on Feb. 27 filed proposals with the Federal Energy Regulatory Commission to extend its existing capacity auction price collar and to establish an expedited interconnection track for large new generation resources.

The capacity auction framework is designed to secure sufficient power supplies to maintain reliability during peak conditions in future delivery years. PJM’s upcoming auctions in mid and late 2026 will procure resources for the 2028/2029 and 2029/2030 delivery years.

Under the proposal, PJM seeks to extend the current price cap of about $325 per megawatt day and price floor of about $175 per megawatt day for two additional delivery years. The measure would replace a scheduled $550 per megawatt day cap for 2028/2029 and lift the zero-dollar floor, narrowing potential outcomes to limit volatility for customers and suppliers while broader market reforms proceed. PJM has asked the commission to act by April 28 to allow the next auction, scheduled for June 30, to move forward without delay. The measure builds on an April 2025 proposal that outlined a temporary price collar for the 2026/2027 and 2027/2028 delivery years after record auction results intensified concerns about affordability.

In a separate filing, PJM proposed an expedited interconnection track to accelerate review of up to 10 large projects annually over the next two years. Eligible resources must provide at least 250-megawatt accredited capacity, secure backing from a primary siting authority, demonstrate full site control, and commit to commercial operation within three years without milestone extensions. Developers would submit a $500,000 study deposit and a refundable readiness deposit of $15,000 per megawatt, and fund all necessary network upgrades.

The actions stem from a January roadmap issued by the PJM Board of Managers and align with a Jan. 16 statement of principles supported by the region’s governors, the White House National Energy Dominance Council, and the Department of Energy. Additional reforms under development include a one-time reliability backstop procurement and a comprehensive review of wholesale energy and capacity market design to strengthen affordability and long-term resource adequacy.