PJM has abruptly moved a planned backstop reliability auction, to September of this year, from its originally scheduled March 2027, ostensibly to address rapidly growing demand from data centers. PJM’s Board described the change as a way to reduce near‑term reliability risk while preserving the ability of facilities with large loads to make bilateral contracts with generators. Hmm.
The auction is part of a one‑time, two‑part process that does include a bilateral contracting phase; the auction is intended to fill any shortfall emerging from PJM’s next BRA, its Base Residual (capacity) Auction. The nation’s largest grid operator also urged PJM member states to quickly establish rules so that the costs of the procurement are allocated to new data center loads rather than existing residential and commercial customers, but analysts say it’s still unclear how such targeted cost allocation will be implemented, a pattern of uncertainty that PJM’s been grappling with for some time, with no resolution, and a lot of criticism.
The move already follows continuing and often stinging criticism from FERC about PJM’s governance—or lack thereof—and comes as the grid operator combines its stakeholder processes for the backstop with its so-called “connect and manage” (C&M) rules, asserting that the two are deeply intertwined, such that “It has become clear that the Backstop and C&M are too substantively linked to continue to be discussed in separate stakeholder processes.” The grid operator added “Data center participation in the Backstop, whether through the proposed bilateral framework or the centralized procurement, is meant to remove that load from C&M consideration.” Indeed.
And just coincidentally (or not), according to Utility Dive, “The Department of Energy granted a request from grid operator PJM Interconnection to curtail data centers and other large energy consumers during an unexpected heat wave in the Northeast and mid-Atlantic regions this week.” So, adding while subtracting to reach zero?
PJM warned that legal challenges and rehearing requests could delay final certainty on rules until sometime in 2027, while analysts and market observers continue to debate the auction’s size and its potential effect on capacity prices, already criticized for recent, massive increases that have been foisted onto ratepayers. Well, if it’s one thing that PJM isn’t known for these days, it’s certainty.
If this all sounds a bit like “going down the rabbit hole” (a reference to Alice in Wonderland), you’re not imagining it. Perhaps it’s just as simple as a few people in Audubon, Pennsylvania, furiously throwing mud against a wall, and hoping something will stick. So far, no joy.