PJM Will Rebuy 6.8 GW at a $555 Cap, Seventy-One Percent Above the Cap Its Base Auctions Cleared Against

PJM’s Board of Managers issued a decisional letter on July 27 approving a one-time reliability backstop procurement of roughly 6.8 gigawatts, sized to cover the shortfall left by the 2028/2029 Base Residual Auction. Bidding runs from September 30 to October 21, 2026. The price cap is $555 per megawatt-day, set against the $325 per megawatt-day cap that the last three base auctions cleared against.

The structure is unusual on its own terms. A capacity market that has been clearing at its administrative ceiling for three consecutive years is now going back to the market with a ceiling seventy-one percent higher, for the megawatts the earlier auctions did not secure.

The commitments. Base residual auction commitments cover a single delivery year. The backstop carries fifteen-year commitments, with resources required to be online by June 1, 2032. The shortfall being addressed belongs to a delivery year beginning in mid-2028. Roughly four years separate the reliability gap from the deadline by which the resources procured to close it must be operating, which means the backstop is better understood as a long-dated build signal than as a fix for the 2028/2029 delivery year itself.

The demand curve. The same letter directed PJM staff to exclude incremental new large loads that lack dedicated supply from the demand curve used in RPM auctions, beginning with the 2029/2030 cycle. The stated principle is that existing consumers should not absorb capacity costs caused by new large loads that do not bring or contract for the supply needed to serve them.

That is a structural change to how the largest capacity market in the United States forecasts its own requirement. Load growth from data centers has been carried in the demand curve, and therefore priced into every megawatt of capacity every customer buys. Removing it shifts the cost of serving new large loads onto those loads, or onto the supply they procure.

The two decisions run in opposite directions for the same customer, and they arrive in sequence rather than together. Backstop costs land on load-serving entities across PSE&G, ComEd, PECO, BGE, Dominion and the rest of PJM’s thirteen-state footprint. The demand-curve exclusion applies to auction cycles that follow. Cost relief, if it survives review, arrives after the higher bill.

The registry. The board also created an Interim Resource Adequacy Service. New data centers and other large loads without dedicated supply must reduce consumption or activate on-site backup generation when the grid approaches emergency conditions. A new PJM Large Load Registry will collect facility location, capacity and ramp schedule. Compliance obligations begin June 1, 2026, with utilities required to establish IRAS rules subject to state and local regulatory approval, which places practical implementation behind the nominal start date.

The IRAS language is technology-agnostic. A gas generator satisfies it. So does a battery. The category has changed rather than the technology: on-site dispatchable capacity moves from an economic option to a condition of service for a defined class of interconnecting customer.

Ontario’s system operator is running a similar play, applying reliability standards to large computational loads through connection assessments ahead of formal market rule amendments taking effect. Two independent system operators have arrived at the same procedural conclusion, which is that interconnection review is a faster administrative path to a large-load obligation than either a tariff proceeding or a market rule change.

The arithmetic. At the cap, 6,800 megawatts priced at $555 per megawatt-day across a full year comes to approximately $1.38 billion. That figure is a ceiling rather than a forecast, since the cap bounds the clearing price and does not set it, and the procurement target itself is described as approximate.

The seventy-one percent gap between the two caps applies only to the backstop tranche. Capacity already committed through the base auction is committed at the lower price. The distinction is likely to be lost in coverage that leads with the headline cap, and it materially changes what the number means for a commercial electricity bill: the increment applies to a slice of the capacity procured for the delivery year, not to all of it.

The scale question. PJM projects that large-load demand across its footprint could reach 70 gigawatts by 2038. Against that trajectory, a one-time 6.8 gigawatt backstop with a 2032 online deadline addresses a documented shortfall in one delivery year rather than the forward gap. The demand-curve exclusion is the instrument aimed at the forward gap, and it works by reassigning cost rather than by adding supply.

The review. Both the backstop procurement and the demand-curve exclusion require FERC approval before the end of 2026. Neither is settled policy. The backstop auction calendar, opening September 30, runs ahead of that deadline, which leaves the timetable dependent on the pace of the federal review.

For commercial and industrial customers on demand-metered accounts, the near-term direction is set: capacity costs pass through as capacity-tag-driven charges, and the 2028/2029 delivery year now carries an additional tranche priced against a higher ceiling. Peak-coincident cost, the component of a commercial bill that on-site dispatchable capacity is positioned to reduce, is rising for reasons unconnected to fuel prices or clean-energy policy. It is rising because the market operator could not procure enough capacity at the price its own rules permitted, and has decided to pay more rather than accept the shortfall.

A capacity-cost trajectory that has pointed upward across three consecutive auctions cleared at cap now has a mechanism, filed and pending, for bending it back down. Whether that mechanism survives FERC review is the open question, and the answer arrives after the customers affected have already paid for the backstop.

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