{"document":{"slug":"filing-20260821-5145","title":"Comments of Public Service Commission of West Virginia in response to PJM Interconnection, L.L.C.’s Reliability Backstop Procurement proposal","issued":"2026-08-21","accession":"20260821-5145","docket":"ER26-3380-000","group":"PJM filings","filer":"Public Service Commission of West Virginia","kind":"comments","file":"sources/originals/20260821-5145_01.pdf","url":"https://elibrary.ferc.gov/eLibrary/filelist?accession_Number=20260821-5145","sha256":"c1bb720518255106e15e5a983fbafb97e5e05f224c6d73880b52f8e48bcdeb96","pages":7,"tokens":1952,"emptyPages":[]},"pages":[{"page":1,"startToken":0,"endToken":301,"text":"1 \n \nUNITED STATES OF AMERICA \nBEFORE THE \nFEDERAL ENERGY REGULATORY COMMISSION \n \nPJM Interconnection, L.L.C. \n) \nDocket No. ER26-3380-000 \n \nCOMMENTS OF THE PUBLIC SERVICE COMMISSION OF WEST VIRGINIA  \n \n \nThe Public Service Commission of West Virginia (“PSCWV”) respectfully files these \ncomments to address concerns regarding PJM’s July 31, 2026 filing proposing a series of steps to \nacquire a predetermined quantity of capacity in a process it calls Reliability Backstop Procurement \n(“RBP”).1  While the stated need for its unusual and hurry-up new capacity acquisition approach \nis “primarily driven by the unprecedented addition of large loads, most notably data centers, in the \nPJM Region”2 the target level for PJM’s RBP is not specific to new large loads and is not \nsufficiently flexible to modify the RBP target if alternative proposals, championed by PJM itself, \nare successful in acquiring capacity for the new large loads in a more direct way that better protects \nother electric customers from bearing cost increases for RBP capacity they do not  need, and which \nmay not be needed even for new large load.    \nThe PSCWV does not support the filing in its present form and timetable because the \nproposal fails to provide adequate support that the target level of so-called backstop capacity is \nneeded and the proposed tariff fails to assure that the RBP will acquire capacity for and will be \npaid for by New Large Loads (NLL) created by data centers that have not made arrangements to \nprovide their own capacity (“unsupported NLL”).  This major defect in the PJM RBP is created \nbecause PJM is effectively preempting its own parallel path “bilateral matching process” which, \n                                                 \n1 PJM Interconnection LL.C., Reliability Backstop Procurement to Address Resource Adequacy Concerns Stemming \nfrom Large Loads, Docket No. ER26-3380-000 (July 31, 2026) (“Backstop Filing”). \n \n2 PJM filing Cover Letter page 1."},{"page":2,"startToken":301,"endToken":745,"text":"2 \n \nas explained by PJM, reflects a stakeholder’s preferred method for NLL to cover its capacity \nrequirements. \nIndeed, throughout the underlying stakeholder process, PJM members have \nexpressed a strong preference for bringing new capacity to the PJM system \nvoluntarily through bilateral contracting rather than through the RBP. To streamline \nand support the efforts of PJM members to enter into bilateral arrangements for \ncapacity, PJM, in partnership with PJM consultant Charles River Associates, has \nfacilitated bilateral arrangements through a bilateral matching process with the aim \nof connecting supply of new capacity, i.e., new capacity resources, with new \ndemand for that capacity, i.e., new load.3    \n \nInstead of waiting to see if the bilateral matching process resolves the immediate need for \ncapacity to serve NLL, PJM is proposing the RBP based on a perceived 6,831 MW shortfall from \nits capacity target set for its last capacity auction.4  Although PJM’s filing provides for offsets to \nreduce this artificial and potentially unnecessary 6,831 MW target, the offsets are subject to \ncomplex and potentially discouraging qualifications that will likely understate offsets and result in \nan excessive final RBP capacity target that will be committed for fifteen years at high prices that \nwill likely exceed the clearing prices of the last two capacity auctions and could exceed an average \nof $1.4 billion per year.5  \nThe qualifications for the offset include:  \n• Expected commercial operation date no later than June 1, 2032;  \n                                                 \n3 Id. page 30. \n \n4 The Initial RBP Target is the region-wide 2028/2029 Delivery Year reliability shortfall observed in the July 2026 \nBRA for Delivery Year 2028/2029, i.e., 6,831.3 MW UCAP. \n \n5 PJM is setting a maximum $555 per MW-day average levelized cost of all RBP procured capacity on a “pay-as-bid” \nbasis.  Thus, the marginal cleared capacity offer could be many times higher than $555 per MW-day.  If it maintained \nand acquired the 6,831 MW target at an average of $555 per MW-day, the fifteen-year price tag that PJM would \ncommit its load serving entities to pay would be $1.4 billion per year.  Although there is a hope that the load serving \nentities could recover that from unsupported NLL, the risk is that a portion will be passed on to other customers.  The \nbilateral matching of willing buyers and willing sellers or any true two-sided reliability backstop auction that identifies \nand commits willing buyers will eliminate that risk and therefore is far superior to an administratively determined \nassumed willingness to pay that is assigned to state load serving entities and leaves it up to the states to assure other \ncustomers are not burdened with those costs."},{"page":3,"startToken":745,"endToken":1085,"text":"3 \n \n• New build generation resource;  \n• If incremental capacity created by an uprate of existing Generation Capacity \nit qualifies, but only to the extent it is an increase in installed capacity;  \n• If repowering of a deactivated generation resource the deactivation must \nhave taken place prior to April 10, 2026;  \n• Evidence of a signed bilateral contract for at least five Delivery Years with \na commercial operation date prior to the start of the 2032/2033 Delivery \nYear, and matched with load that has an executed electric service agreement \n2027/2028 or 2028/2029 Delivery Year; or  \n• Self-Supply generation that is in an approved or accepted integrated \nresource plan.6  \n \nWhile these qualifications for an offset from the load serving entity allocated share of the 6,831 \ntarget for the RBP can be individually defended, they are necessary only because the starting point \nfor the RBP is a presumed shortfall, not directly tied to unsupported NLL, in PJM’s reliability \ntarget that has not been properly modified after the results of the bilateral matching of NLL to new \ncapacity are known and the PJM capacity model has been rerun eliminating unsupported NLL with \nBring Your Own Generation (“BYOG”) NLL.       \n FERC should not allow PJM to put the cart before the horse, or ineffectively beside the \nhorse, by allowing a premature implantation of a flawed RBP while the superior bilateral matching \nprocess is underway and the results are unknown.  To the extent that new large loads procure new \ncapacity directly the RBP procurement target should decrease. But even more importantly, from a \ncost allocation approach the bilateral contracting is superior because it reduces, or eliminates,  the \nrisk of other customers bearing costs of capacity acquired for NLL.  Bilateral contracts allow the \ncosts of new capacity to be assumed directly by the contracting new  large loads, creating the need \nfor that capacity.  Therefore, there is a reduced need for a large PJM RBP capacity procurement \ntarget.  Lowering the RBP target reduces the capacity costs assigned to load serving entities that \n                                                 \n6 Tariff Attachment DD 18.2"},{"page":4,"startToken":1085,"endToken":1526,"text":"4 \n \ncould be potentially stranded if the new large loads cannot pick up the cost, and minimizes the risk \nof cost shifts to other, non-NLL data center customers.  \nThe bilateral matching process is superior to the one sided PJM capacity market which has \nno real demand price curve bid by willing buyers.  The PJM administratively determined demand \ncurve may be necessary to acquire capacity under normal circumstances.  But “ the proposed RBP \ndiffers significantly from PJM’s standard market constructs.”7  Therefore, a market that receives \nprice bids from willing buyers is superior and a reason to rely more on the bilateral contracting to \nacquire capacity to serve NLL rather than prematurely rushing into the RBP. \nUnder the bilateral contracting model, willing buyers contract with willing sellers without \nresorting to centralized procurement by PJM and a complicated cost allocation or assignment \napproach that assigns costs to load serving entities and leaves it up to them to recover the costs \nfrom NLL.  Thus, a real supply price/demand price capacity acquisition approach is better at \naddressing the region’s capacity needs created by NLL while protecting existing customers.8 \nCONCLUSION \nTo protect customers, and to accomplish goal of assigning costs incurred to serve NLL  at \na minimum, FERC should require PJM to determine a new target for the RBP based on the model \nfrom its last capacity auction run under two different scenarios.’  One run should exclude all NLL. \n                                                 \n7 Affidavit of Danille Croop, Par. 22, Page 6 \n \n8 Although transmission issues are not a part of this docket, the PSCWV is concerned that protection of customers as \nNLL Data Centers stress the electric system will become more and more important in the future and a potential $1.4 \nbillion per year price tag will seem small in the future as FERC, PJM, and states face costs of network upgrades to \nserve the increasing load and new generation resources.  We are currently protected by assignment of network upgrade \ncosts to interconnecting generators, and eventually to interconnecting NLL.  We are also gratified that NLL Data \nCenters have pledged, along with the White House and state governors to protect customers from costs associated \nwith NLL Data Center electric needs.  But allocation of transmission costs and normal RPM capacity to the correct \nbeneficiaries is going to remain a difficult issue that will be faced in the future.  We believe that there is, therefore, a \nnexus between this case and future transmission and RPM cases  because establishing the policies and procedures to \nassure that costs necessary to serve new large load will be the overarching cost allocation issues in the future for both \nwholesale power supply and interstate transmission."},{"page":5,"startToken":1526,"endToken":1760,"text":"5 \n \nThe second run should exclude NLL that is bringing its own generation pursuant to the bilateral \nmatching process established by PJM or for any other reason.  The difference between the two \nresults will provide a critical piece of information that is necessary to determines if the RBP is \nneeded, and, if it is needed, what level of capacity is needed due to unsupported NLL.  Moreover, \nby comparing a capacity reliability target that is created by unsupported NLL and providing states \nwith the location and amounts of the unsupported NLL that the RBP is acquiring capacity for, PJM \ncan provide states with the information needed to identify unsupported NLL,  allocate the capacity \ncosts to that NLL, and insulate other customers from paying for capacity acquired to serve NLL.  \nIn addition, before committing the hopefully much lower level of RBP capacity there should be \nsome delay after providing the state level information to states and their load serving entities so \nthat they can determine that there is a realistic opportunity to recover the costs from the \nunsupported NLL and how they will accomplish that recovery.  \n \nRespectfully submitted this 21st day of August, 2026. \n \nPublic Service Commission of West Virginia, \nby counsel \n \n \n \n     /s/ Robert M. Adkins____________ \nRobert M. Adkins, General Counsel \nWV State Bar I.D. No. 79 \nradkins@psc.state.wv.us \n201 Brooks Street, Post Office Box 812 \nCharleston, West Virginia 25323 \n(304) 340-0450"},{"page":6,"startToken":1760,"endToken":1835,"text":"CERTIFICATE OF SERVICE \n \nI hereby certify that the foregoing has been served in accordance with 18 C.F.R. §385.2010 \nupon each person designated on the official service list compiled by the Secretary in this \nproceeding.  \n \nDated at this 21st day of August, 2026. \nRobert M. Adkins, General Counsel \nradkins@psc.state.wv.us \n201 Brooks Street, Post Office Box 812 \nCharleston, West Virginia 25323 \n(304) 340-0450 \n \n \n \n \n \n \n \n \n \n \n     /s/ Robert M. Adkins____________ \nRobert M. Adkins"},{"page":7,"startToken":1835,"endToken":1952,"text":"Public Service Commission  \n \n \n \n \n \nRobert M. Adkins, General Counsel \n201 Brook Street, P.O. Box 812 \n \n \n \n \n       Phone: (304) 340-0450 \nCharleston, WV  25323 \n \n \n \n \n \n \nFax: (304) 340-3758 \n \n \n \n \n \n \n \n   E-mail: radkins@psc.state.wv.us \n \n \nAugust 21, 2026 \n \nThe Honorable Debbie-Anne A. Reese, Secretary \nFederal Energy Regulatory Commission \n888 First Street, N.E. \nWashington, D.C. 20426 \n \nRe: \nDocket No. ER26-3380-000 \n \nDear Secretary Reese: \n \nEnclosed for filing in the above referenced proceeding is the Comments of the Public \nService Commission of West Virginia. \n \nCopies of this document have been sent to the persons named on the Service List in \nthis proceeding. \n \n \n \n \n \n \n \n \nRespectfully submitted, \n \n \n \n \n \n \n \n \nRobert M. Adkins \n \n \n \n \n \n \n \n(filed electronically) \n \n \n \n \n \n \n \n \n \n \n \nRobert M. Adkins  \nGeneral Counsel  \n \n \n \n \n \n \n \nWV State Bar I.D. No. 79 \n \n \nRMA/rm"}],"sections":[{"p":1,"at":0,"title":"Opening text","method":"opening text","endPage":4,"endAt":1198,"startToken":0,"endToken":1270},{"p":4,"at":1198,"title":"CONCLUSION","method":"printed heading","endPage":6,"endAt":0,"startToken":1270,"endToken":1760},{"p":6,"at":0,"title":"CERTIFICATE OF SERVICE","method":"printed heading","endPage":7,"endAt":915,"startToken":1760,"endToken":1952}]}