PJM Auction Delayed After Federal Rejection
The Federal Energy Regulatory Commission ordered revisions to PJM's power procurement plan.
Updated on Sept. 30, 2026 in Data Centers
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The Federal Energy Regulatory Commission has rejected key parts of a procurement proposal from PJM Interconnection, forcing a delay for a planned reliability auction. The grid operator originally aimed to secure 6.8 GW of new capacity to manage shortfalls.
Why it matters
The auction was designed to address capacity shortages driven primarily by rising electricity demand from data centers. Federal regulators ruled that aspects of the proposed cost allocation were unjust and unreasonable, requiring further revisions.
PJM sought to implement a $555/MW-day offer cap for the backstop auction. Northern Virginia Electric Cooperative estimated that the proposed collateral requirements would force it to post $2 billion.
The players
PJM Interconnection
This is a regional transmission organization that coordinates the movement of wholesale electricity in all or parts of 13 states and the District of Columbia.
Federal Energy Regulatory Commission
This independent agency regulates the interstate transmission of electricity, natural gas, and oil in the United States.
Northern Virginia Electric Cooperative
This is a member-owned electric distribution cooperative that provides power to customers in the Northern Virginia region.
The details
Regulators approved collateral requirements for power suppliers but rejected plans to allow opt-outs for cooperatives and municipal utilities. PJM must now overhaul its cost allocation strategy before it can proceed with the procurement process.
Timeline
September 30, 2026 was the original start date for the auction.
October 21, 2026 was the planned end date for accepting offers.
December 2, 2026 was the intended end date for the selection process.
December 2026 is when a standard capacity auction for 2029/30 is scheduled.
2028/29 is the delivery year impacted by the capacity shortfall.
The Tech Race
This development underscores the growing tension between rapid energy consumption in the data center sector and existing grid reliability infrastructure. It follows a precedent set by the Federal Energy Regulatory Commission's rate-setting authority regarding grid reliability compliance.
Energy cooperatives and municipal utilities may face shifts in future operational costs due to the grid operator's revised collateral and procurement requirements. These changes affect how local power providers manage their long-term supply obligations and budgetary planning.
The takeaway
Reliability backstops are increasingly critical as data centers place unprecedented loads on national power infrastructure. Balancing these growth demands with federal cost-allocation rules remains a central challenge for grid operators.
What happens next
PJM is scheduled to hold a standard capacity auction for the 2029/30 delivery year in early December 2026.
Further reading
Learn more about the grid impacts of Data Centers.
Source note: This article includes information reported by Utility Dive.
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