PJM refiles 6,831 MW power backstop billed by data center growth

PJM has refiled its plan to buy about 6,831 MW of new power capacity through a one-time auction opening 1 March 2027, and has proposed charging each zone by how much large load, mostly data centers, it adds, which means the cost of the grid shortfall now follows the data center build directly instead of being spread across every customer.

What happened?

• The filing: On 29 October 2026, PJM Interconnection, the grid operator for 13 US states and the District of Columbia, filed an amended Reliability Backstop Procurement with the Federal Energy Regulatory Commission (FERC). FERC had largely accepted the first version on 29 September but suspended it for five months to settle the cost split, collateral and exit rules.
• The gap: The procurement is meant to fill the 6,831 MW shortfall from PJM's 2028/2029 capacity auction in July. That auction cleared 138,318 MW at the $325 per MW-day price cap, and with 10,864 MW from areas that arrange their own supply, total capacity was still 6,831 MW short of PJM's reliability requirement. It was the first time, along with the auction before it, that PJM as a whole fell short.
• The new dates: Bidding would open on 1 March 2027 and close on 28 March. PJM would set the final target and supply amounts on 28 April and post results on 10 May. Commitments can run up to 15 years, with a maximum average price of $555 per MW-day.
• The new bill: Costs would be assigned to each zone by its firm large-load growth between the actual 2026 summer peak and the forecast for 2028/2029, as reported by the local electric distributor. PJM defines a large load as 50 MW or more at one site.

Why does it matter?

The direct signal: the grid has run out of spare capacity for new load. PJM said the shortfalls in its last two auctions are driven by electricity demand from large loads growing faster than new power supply. Its July release said the forecast peak for 2028/2029 is about 2,000 MW higher than the forecast used a year earlier, and that large data center loads keep being added. A shortfall does not mean blackouts, but it means PJM would run with thinner reserves, 14.7% in 2028/2029.

The second-order signal: data center growth now carries a price tag on the grid bill. Under the original plan, costs were split on a snapshot of today's load. FERC said that did not match who caused the cost. The new formula points the bill at the zones where large loads are growing fastest, which in PJM means the data center hubs. PJM's own affidavit, as reported by The Duck Curve, puts large-load growth in its 2026 forecast at about 9,000 MW, more than the roughly 6,800 MW gap. So the cap on the target is unlikely to bind, and the zones adding the most megawatts would carry most of the cost.

The price gap shows how tight new supply is. Our arithmetic: the $555 per MW-day ceiling is about 1.7 times the $325 cap that cleared the July auction. If all 6,831 MW cleared at the ceiling, the bill would be about $1.4 billion a year, or about $21 billion over 15 years before discounting. That is a ceiling, not a forecast; the target will be recalculated and cut by any capacity that large loads buy directly through bilateral contracts.

What does it change?

Near term (to mid-2027)

• The start slips five months. The July version would have opened bids on 30 September 2026. Now a procurement built for the 2028/2029 gap runs after the 2029/2030 auction in December, so developers and data center owners face two sets of results in five months.
• Collateral gets cheaper for the buyers. Load-serving entities, the utilities and retailers that buy power for end users, would post collateral equal to 40% of the present value of their payment obligation. A PJM affidavit, as reported by The Duck Curve, puts that at an illustrative $686,000 per MW at the price ceiling, against $1.5 million per MW in July. Lower collateral makes it easier to sign up; PJM concedes it also gives other members less cover if one defaults.
• Fewer ways to opt out. The filing removes an opt-out for municipal utilities and cooperatives whose rates no state regulates, which FERC had said may be unduly discriminatory.

Longer term (2028 and beyond)

• Utilities have a reason to report data center load early and firmly. Distributors must name the large loads backed by a service agreement or construction commitment. A zone's share then stays fixed for the 15-year term. Our reading: that makes a signed electric service agreement the document that decides who pays, which links grid cost to the same contracts that our Explained on contracted power tracks.
• Bilateral deals become the cheaper route for big campuses. Every megawatt that large loads buy directly through executed bilateral contracts comes off the target. PJM began helping match large loads with new generation in June. Data center owners who bring their own supply reduce the shared bill they would otherwise pay through their zone.
• The size of the gap is still disputed. PJM's Market Monitor, as FERC's 29 September order summarised its view, put the shortfall at about 3,055 MW once cancelled and delayed data centers are counted, less than half of PJM's number. The 2028/2029 load forecast due by 1 February 2027 will reset the target.

What should we watch next?

• Comments due 30 November 2026. PJM asked FERC for a comment period ending that day. Data center developers, utilities and state regulators will show whether they accept the large-load cost split. It is on our Catalyst calendar.
• The 2029/2030 capacity auction, bidding from 9 December 2026. It is PJM's fourth auction under the price collar. Another shortfall would add pressure on the backstop and on how fast data centers can connect.
• A FERC order by 29 January 2027. PJM asked for a ruling by that date so bidding can open on 1 March. A rejection or another suspension would push new supply further out.
• What would weaken the catalyst: a recalculated shortfall closer to the Market Monitor's 3,055 MW; large bilateral contracts that shrink the target; or data center cancellations that cut reported large-load growth.

FAQ

What is PJM's Reliability Backstop Procurement?
It is a one-time purchase of new power capacity, on contracts of up to 15 years, to cover the 6,831 MW that PJM's regular 2028/2029 auction failed to secure. It sits alongside PJM's push for direct deals between large power users and new generators.

Do data centers pay the bill directly?
Not directly. PJM charges load-serving entities in each zone, based on how much large load that zone adds. PJM says it cannot dictate how those utilities pass the cost on to retail customers, so state regulators decide who pays at the meter.

Is the March 2027 auction certain?
No. It is a proposal awaiting FERC approval, and PJM has asked for an order by 29 January 2027. The target will also be recalculated with the new load forecast in February 2027.

Why does this matter for AI data centers outside PJM?
Other grids face the same question of who pays for the capacity that large loads need. California's grid operator approved its own large-load rules on 28 October. Our Explained on data center power use shows why a single campus can now move a regional grid.

Takeaway: PJM's refiled backstop ties a 6,831 MW grid gap to the zones adding data centers, so in the biggest US grid the power step now comes with a bill that follows each signed megawatt.

References

1. PJM Interconnection (Inside Lines), PJM files amended Reliability Backstop proposal, 29 Oct 2026.
2. American Public Power Association, PJM files amended Reliability Backstop proposal at FERC, 30 Oct 2026.
3. The Duck Curve, PJM refiles its backstop procurement for March 2027 with lower collateral, 30 Oct 2026.
4. PJM Interconnection, PJM capacity auction procures 138,318 MW of generation resources, 14 Jul 2026.
5. Monitoring Analytics, Timeline for the 2029/2030 RPM Base Residual Auction, 9 Jun 2026.
6. Xcel Energy, Xcel Energy third quarter 2026 earnings report, 29 Oct 2026.
7. Xcel Energy, third-quarter 2026 earnings call transcript (The Motley Fool), 29 Oct 2026.
8. California ISO, CAISO Board advances new procedures for connecting large loads quickly and reliably, 28 Oct 2026.
9. Silicon Motion, Results for the quarterly period ended 30 September 2026, 29 Oct 2026.