PJM Stakeholders Endorse $555/MW-Day Data Center Backstop Auction, Reject Large-Load Curtailment

PJM Interconnection stakeholders on June 30, 2026 endorsed a two-part reliability backstop procurement plan capped at $555 per MW-day to secure electricity for surging data center load across the grid operator’s 13-state Mid-Atlantic and Midwest footprint plus Washington, D.C., while rejecting every proposed “Connect and Manage” option that would have let PJM curtail large loads during capacity shortfalls. The package now heads to the PJM Board of Managers, which expects to file it with the Federal Energy Regulatory Commission this month and hold a backstop auction as soon as September 2026.

The winning proposal was developed by the Data Center Coalition together with a group of utilities including Dominion Energy, Exelon, Duke Energy Ohio, Duke Energy Kentucky, Duquesne Light, PPL Electric Utilities, Buckeye Power, East Kentucky Power Cooperative, Old Dominion Electric Cooperative and Southern Maryland Electric Cooperative. It centers on a “registry-based subscription model”: load-serving entities, and potentially data centers themselves, ask PJM to buy a specific amount of capacity in a one-time auction, and the large loads that drive the need are billed for the procurement cost rather than spreading it across all ratepayers.

PJM has warned of a looming supply shortfall within two years as artificial-intelligence data centers add gigawatts of new demand. The pressure is already visible in capacity prices: PJM’s most recent auction cleared 134,479 MW at $329.17 per MW-day, near the price cap, and the operator’s next capacity auction for the 2029/30 delivery year is scheduled for December 9. The $555 per MW-day backstop ceiling sits above that clearing price, reflecting the premium of procuring firm capacity on a compressed timeline.

Instead of a curtailment mechanism, PJM staff proposed a large load registry that would give state regulators the data they need to set their own load-reduction priorities for retail customers. Stakeholders rejected all Connect and Manage curtailment options, leaving the registry-plus-backstop approach as the path forward.

Why It Matters

The vote sets up a test of who pays for the grid buildout that AI demand requires. By routing procurement costs to the large loads that trigger them, the registry-based model aims to shield everyday ratepayers from cost-shifting, a concern the Natural Resources Defense Council flagged in calling the plan “common sense” and arguing the public “will not be stuck with the bill.” The outcome now depends on FERC: if the commission approves the filing on PJM’s timeline, a first backstop auction could clear before winter, giving utilities and data center developers a new, ratepayer-insulated route to firm capacity while the interconnection queue catches up.

Sources

• Utility Dive: PJM stakeholders advance data center backstop procurement plan
• RTO Insider: PJM Stakeholders Endorse Backstop Procurement Proposal, Reject ‘Connect and Manage’
• PJM Inside Lines: Stakeholder Process on Backstop Procurement and Connect and Manage Moves Forward