{"document":{"slug":"filing-20260821-5180","title":"Limited Protest of Sierra Club et al. to one aspect of PJM Interconnection, LLC’s proposed Reliability Backstop Procurement","issued":"2026-08-21","accession":"20260821-5180","docket":"ER26-3380-000","group":"PJM filings","filer":"Sierra ClubNatural Resources Defense Council","kind":"filing","file":"sources/originals/20260821-5180_01.pdf","url":"https://sustainableferc.org/wp-content/uploads/2026/08/20260821-5180_Limited-Protest-of-Public-Interest-Organizations.pdf","sha256":"cdcd999fa9ff74dfe38b9920c469c1927d6d8df827ddf23fced9991f77e3d742","pages":43,"tokens":12758,"emptyPages":[]},"pages":[{"page":1,"startToken":0,"endToken":252,"text":"1 \n \nUNITED STATES OF AMERICA  \nBEFORE THE  \nFEDERAL ENERGY REGULATORY COMMISSION  \n \n \nPJM Interconnection, LLC  \n)  \n)  \n) \nDocket No. ER 26-3380\n \n \n \nLIMITED PROTEST OF PUBLIC INTEREST ORGANIZATIONS \n \n \nPursuant to Rule 211 of the Rules of Practice and Procedure of the Federal Energy \nRegulatory Commission (“FERC” or the “Commission”),1 Sierra Club and Natural Resources \nDefense Council (“NRDC”) (collectively, “Public Interest Organizations” or “PIOs”) submit this \nlimited protest of one aspect of PJM Interconnection, LLC’s (“PJM”) proposed Reliability \nBackstop Procurement (“RBP”).2 For the reasons described below, PIOs urge the Commission to \napprove PJM’s RBP Filing with a modification to either require RBP supply to be located near to \nlarge loads, or to require RBP supply to be fully responsible for funding necessary network \nupgrades, which will enable the RBP to better achieve its intended objectives.  \nIntroduction \n \nThe unprecedented number of new large load additions, mostly data centers, in the PJM \nfootprint has outstripped new supply, and PJM’s capacity auctions have cleared short of the \nregion’s reliability requirement for consecutive auctions despite hitting auction price caps in both \nauctions.3 These shortfalls increase the risk of loss-of-load events and sustained high-capacity \n \n1 18 C.F.R. § 385.211. \n2 PJM Interconnection, L.L.C., Reliability Backstop Procurement to Address Resource Adequacy \nConcerns Stemming from Large Loads, Docket No. ER26-3380-000 (July 31, 2026), Accession \nNo. 20260731-5214 (“RBP Filing”). \n3 The auction fell short by 6,623 MW and 6,831 MW of unforced capacity in the 2027/2028 and \n2028/2029 auctions, respectively. Id. at 7–8."},{"page":2,"startToken":252,"endToken":576,"text":"2 \n \nprices for existing ratepayers who are not responsible for these new shortfalls. The RBP is an \nattempt by PJM to remedy these shortfalls without shifting costs to residential and other existing \nratepayers. PJM proposes a one-time procurement of new capacity sized to the 2028/2029 \nshortfall, with costs that will be allocated to the zones and load-serving entities (“LSEs”) serving \nthe new large loads that are driving the unprecedented new demand.4 PIOs generally support \nPJM’s proposal to procure new capacity and allocate costs to the large loads that require it. \n \nPIOs support many aspects of the RBP Filing. For example, PJM is admirably candid \nabout the fact that the capacity shortfalls are “primarily driven by the unprecedented addition of \nlarge loads, most notably data centers.”5 PJM also takes seriously and attempts to realize the \nRatepayer Protection Pledge, in which the nation’s largest data center developers and utilities \ncommitted to “build, bring, or buy” the new generation their new demand requires and to pay \n“the full cost of those resources.”6 In an effort to ensure that costs of the RBP are borne by the \nlarge loads, PJM structured the RBP charges, which are reduced by Qualifying RBP Offsets \nwhere load has already procured its own new capacity,7 to flow to the zones where the new large \nloads are being built under a load-adjustment methodology that the Commission has already \napproved.8 PJM’s proposal achieves this cost allocation while respecting state jurisdiction by \n \n4 See id. at 7, 31, 100–04. \n5 Id. at 1. \n6 Ratepayer Protection Pledge, The White House (Mar. 4, 2026), \nhttps://www.whitehouse.gov/ratepayer-protection-pledge/#signatories (“White House Ratepayer \nProtection Pledge” or “Ratepayer Protection Pledge”); see RBP Filing, supra note 2, at 16–18 \n(describing the Pledge and its July 23, 2026 expansion to more than 200 utilities, developers, \ncooperatives, and governors). \n7 RBP Filing, supra note 2, at 35–44. \n8 Id. at 100–02."},{"page":3,"startToken":576,"endToken":834,"text":"3 \n \nassigning costs with sufficient information on which loads are the cost causers such that states \nand retail regulatory authorities are able to assign costs appropriately.9  \n \nPJM’s consent to modification is a further signal that it is committed to the most effective \nRBP possible. Rather than a present a take-it-or-leave-it package, PJM “consents to the \nCommission’s exercise of authority to modify and/or sever any element of the proposed Tariff \nand RAA language,” so long as any modification “is consistent with PJM’s overarching \nobjectives in this filing.”10 PJM invites stakeholders to “comment as they feel necessary and \nappropriate.”11 PIOs accept this invitation by proposing a narrow but important modification that \nthe Commission can prescribe in an order approving the RBP. \n \nPJM’s consent is bounded by its “overarching objectives in this filing,” yet the RBP \nFiling never defines these objectives explicitly.12 Fairly read, however, the RBP pursues four \nobjectives: \n1. Identify and procure the correct amount of capacity; \n2. Procure new capacity that is additive to the PJM system, not a mere reshuffling of \nexisting resources; \n3. Procure new capacity on time; and  \n4. Ensure that the large loads that require new capacity bear their full costs without shifting \ncosts to other ratepayers and while preserving state authority over retail cost allocation. \n \nThis limited protest identifies a narrow but important modification that will help the RBP \nadvance these objectives. PJM’s proposal currently lacks any requirement regarding the location \n \n9 Id. at 99–100. \n10 Id. at 3. \n11 Id. at 132. \n12 Id. at 131."},{"page":4,"startToken":834,"endToken":1149,"text":"4 \n \nof RBP supply. Instead, PJM argues that RBP resources may be located anywhere in the region \nbecause the interconnection process will ensure that supply is initially deliverable to load, and \nthe regional transmission planning process will ensure that supply remains deliverable over the \nlong term. However, as discussed below, PJM’s proposal to allow RBP supply to be located \nanywhere in the footprint will make the RBP’s success reliant on large-scale network upgrades \nthat will likely cause significant delays and incur significant costs. Further, the interconnection \nprocess and regional transmission process risk inappropriately spreading the costs of network \nupgrades to other interconnection customers and ratepayers, rather than achieving the goal of the \nRBP—and the goals of federal and state policies—to require large loads to bear their own costs. \nTo remedy this defect, this protest respectfully recommends that the Commission modify the \nRBP filing by either requiring RBP supply to be located near to demand, or by requiring RBP \nsupply resources to be fully responsible for the cost of network upgrades. Such a modification \nwill reduce reliance on large, slow, costly network upgrades and better achieve the RBP’s \nobjectives of bringing new supply online quickly and facilitating appropriate allocation of costs \nto LSEs serving new large loads.  \n \nImportantly, this modification will disturb neither the RBP’s architecture nor its schedule, \nand falls squarely within PJM’s consent. This modification will help the RBP procure the new \ncapacity the region needs, where it needs it, with costs borne by the large loads that require it.  \nBackground \nI. \nPJM’s capacity market is facing reliability and affordability concerns as PJM \nstruggles to meet data center load growth.   \n \n \nPJM’s capacity market, the Reliability Pricing Model (“RPM”), worked relatively well \nfor the two decades since it was first established in 2006. Its market was built for predictable, \ngradual load growth where new generation resources could be built within the market’s three-"},{"page":5,"startToken":1149,"endToken":1447,"text":"5 \n \nyear forward timeline.13 However, as load growth, generation retirement, and supply chain \ndevelopment time have all increased in the past few years, PJM has recognized that the current \nstate of its market is untenable.14 PJM’s markets are facing two major pain points: (1) data center \nload is growing too fast for PJM’s supply, leading to reliability concerns; and (2) PJM’s supply \nand demand imbalance is causing high capacity prices, leading to higher bills for all ratepayers.  \nA. \nPJM’s capacity market faces increased reliability risks as data center load \ngrows too quickly for PJM’s supply.  \n \n  \nFirst, PJM’s market is facing unprecedented load growth from rising data center demand, \ncausing major supply and demand imbalances and increased reliability risks. Markets across the \nU.S. have not experienced this level of demand growth in decades. Electricity demand in the \nU.S. was relatively flat from the early 2000s until the early 2020s.15 That trend has quickly \nchanged. Over the next five years, the U.S. is expecting electricity usage to grow 5.7% per \nyear.16 Data centers are expected to make up 25% to 55% of the total demand growth in the U.S. \n \n13 PJM, Powering Reliability Through Market Design, 4 (May 6, 2026), https://www.pjm.com/-\n/media/DotCom/library/reports-notices/special-reports/2026/20260506-powering-reliability-\nthrough-market-design.pdf.  \n14 Id. at 3.  \n15 Mark Schipper & Tyler Hodge, After More Than a Decade of Little Change, U.S. Electricity \nConsumption is Rising Again, U.S. Energy Info. Admin. (May 13, 2025), \nhttps://www.eia.gov/todayinenergy/detail.php?id=65264.  \n16 John Wilson et. al., Grid Strategies, Power Demand Forecasts Revised Up for Third Year \nRunning, Led by Data Centers, 6 (Nov. 2025), https://gridstrategiesllc.com/wp-\ncontent/uploads/Grid-Strategies-National-Load-Growth-Report-2025.pdf (“Grid Strategies 2025 \nLoad Growth Report”)."},{"page":6,"startToken":1447,"endToken":1810,"text":"6 \n \nthrough 2030.17 PJM predicts that 30 GW of large load demand will come online by 2030 and 70 \nGW of large load demand will come online by 2038.18 \n \nMost data center load growth through 2030 will be concentrated in the Electric \nReliability Council of Texas (“ERCOT”) and PJM.19 Three states—Virginia, Texas, and \nCalifornia—host the highest concentration of data centers, and Virginia hosts the largest number \nof data centers in the country.20 PJM’s Dominion Zone, which covers Virginia, is expected to \nhave the largest absolute increase in summer peak demand through 2030.21 RTO-wide, PJM \nexpects its peak load growth to increase 65,733 MW by 2036 for its summer peak and 66,980 \nMW for its winter peak.22  \n \nPJM’s expected data center load growth is incompatible with current generation \ndevelopment timelines. While developers can typically build hyperscale data centers within 18 to \n \n17 Id. at 3; Jonathan Koomey et. al, Bipartisan Pol’y Ctr. & Koomey Analytics, Electricity \nDemand Growth and Data Centers: A Guide for the Perplexed, 10 (Feb. 2025),  \nhttps://bipartisanpolicy.org/wp-content/uploads/2025/02/BPC-Report-Electricity-Demand-\nGrowth-and-Data-Centers-A-Guide-for-the-Perplexed.pdf.  \n18 Letter from Paula Conboy, Chair, PJM Board of Managers, to PJM Stakeholders on Critical \nIssue Fast Path – Reliability Backstop Procurement and Connect and Manage, 1 (Jul. 27, 2026), \nhttps://www.pjm.com/-/media/DotCom/about-pjm/who-we-are/public-\ndisclosures/2026/20260727-board-decisional-letter-on-cifp-reliability-backstop-procurement-\nand-connect-and-manage.pdf 1 (“PJM Board July 2026 Decisional Letter”); PJM Proposes \nFramework to Connect Data Centers Without Compromising Reliability, Affordability, PJM \nInside Lines (Aug. 13, 2026), https://insidelines.pjm.com/pjm-proposes-framework-to-connect-\ndata-centers-without-compromising-reliability-affordability/.  \n19 Grid Strategies 2025 Load Growth Report, supra note 15 at 5. \n20 Rebecca Leppert, What We Know About Energy Use at U.S. Data Centers Amid the AI Boom, \nPew Research Center, Pew Research (Oct. 24, 2025), https://www.pewresearch.org/short-\nreads/2025/10/24/what-we-know-about-energy-use-at-us-data-centers-amid-the-ai-boom/. \n21 Mark Schipper & Jonathan Church, Commercial Electricity Sales Have Soared in Virginia, \nDriven by Data Centers, U.S. Energy Info. Admin. (May 5, 2026), \nhttps://www.eia.gov/todayinenergy/detail.php?id=67664.  \n22  PJM, 2026 PJM Load Forecast Report, 6 (Jan. 14, 2026), https://www.pjm.com/-\n/media/DotCom/library/reports-notices/load-forecast/2026-load-report.pdf."},{"page":7,"startToken":1810,"endToken":2136,"text":"7 \n \n24 months, new generation resources can spend 4 to 5 years in interconnection queues before \ncoming online.23 Transmission upgrades can take even longer, with average timelines for \ntransmission upgrades ranging from 7 to 10 years to plan, approve, and build.24 In short, it takes \nfar longer to build new power plants than data centers.  \nAs a result of its supply and demand imbalance, PJM has fallen short of its reliability \nrequirement for the past two base residual auctions (BRAs). PJM’s 2028/2029 BRA cleared 6.8 \nGW short of PJM’s reliability requirement, while the 2027/2028 BRA cleared 6.5 GW short.25 \nPJM expects that, without the Reliability Backstop Procurement, the 2029/2030 BRA in \nDecember would clear short as well.26 Falling below the reserve margin means that PJM has to \noperate with slimmer reserves and endure more reliability risks.27 NERC has classified PJM as \nan elevated risk area from 2026 to 2028 and a high risk area from 2029 onward.28 NERC predicts \nthat as data center load growth continues to increase in the coming years, the risk of reliability \nshortfalls will increase as well.29 \n \n23 Rachel Mural et. al, Data Centers and Large-Scale Electric Growth: The Virginia and Texas \nExperiences, Belfer Ctr. for Science and Int’l Aff. (Apr. 20, 2026), \nhttps://www.belfercenter.org/research-analysis/data-centers-texas-virginia-comparison.  \n24 Id.  \n25 PJM Capacity Auction Procures 138,318 MW of Generation Resources as Work Continues to \nAddress Growing Electricity Demand, PJM Inside Lines (Jul. 14, 2026), \nhttps://insidelines.pjm.com/pjm-capacity-auction-procures-138318-mw-of-generation-resources-\nas-work-continues-to-address-growing-electricity-demand/.  \n26 RBP Filing, supra note 2, at 27.  \n27 PJM Capacity Auction Procures 138,318 MW of Generation Resources as Work Continues to \nAddress Growing Electricity Demand, PJM Inside Lines (Jul. 14, 2026),  \nhttps://insidelines.pjm.com/pjm-capacity-auction-procures-138318-mw-of-generation-resources-\nas-work-continues-to-address-growing-electricity-demand/ \n28 N. Am. Elec. Reliability Corp. (“NERC”), 2025 Long Term Reliability Assessment (Jan. \n2026), https://www.nerc.com/globalassets/our-work/assessments/nerc_ltra_2025.pdf.  \n29 Id. at 17."},{"page":8,"startToken":2136,"endToken":2478,"text":"8 \n \nB. \nPJM’s capacity market faces high capacity prices, causing increases in \nratepayers’ bills.  \n \n \nSecond, in addition to facing increased reliability risks, PJM’s market is also facing \nunsustainably high prices. The past three BRAs cleared at the price cap, clearing at $325/MW-\nday in the 2028/2029 BRA, $333.44/MW-day in the 2027/2028 BRA, and $329.17/MW-day in \nthe 2026/2027 BRA. For reference, PJM’s 2024/2025 BRA cleared at $28.92/MW-day and at \n$269.92/MW-day in the 2025/2026 BRA.30 PJM’s independent market monitor (IMM) estimated \nthat data centers caused 63% of the increase in prices in the 2025/2026 BRA, resulting in an \nincrease of $9.3 billion in higher costs for PJM customers.31 As of January 2026, the IMM \nestimated that the costs to other customers increased by $23 billion as a result of data center \ndemand in the 2025/2026, 2026/2027, and 2027/2028 BRAs.32  \n \nPJM’s increased capacity costs are raising ratepayers’ bills. In June 2025, Pepco \ncustomers in Washington, D.C. saw their bills increase by $21 per month, and D.C.’s Office of \nConsumers’ Counsel attributed about half of that increase to the spike in capacity market \nprices.33 Similar trends are expected across PJM. In June 2026, PJM customers collectively \nbegan paying an additional $1.4 billion in capacity market costs driven by data center demand.34 \n \n30 PJM, 2026/2027 Base Residual Auction Report, 5 (Jul. 22, 2025), https://www.pjm.com/-\n/media/DotCom/markets-ops/rpm/rpm-auction-info/2026-2027/2026-2027-bra-report.ashx.  \n31 Cathy Kunkel, Projected Data Center Growth Spurs PJM Capacity Prices by Factor of 10, \nInst. for Energy Econ. and Fin. Analysis (Jul. 30, 2025),  https://ieefa.org/resources/projected-\ndata-center-growth-spurs-pjm-capacity-prices-factor-10 (“Kunkel, Projected Data Center \nGrowth”).  \n32 Monitoring Analytics, Analysis of the 2027/2028 RPM Base Residual Auction Part A, 3 (Jan. \n5, 2026), \nhttps://www.monitoringanalytics.com/reports/Reports/2026/IMM_Analysis_of_the_20272028_R\nPM_Base_Residual_Auction_Part_A_20260105.pdf.  \n33 Kunkel, Projected Data Center Growth. \n34 Id."},{"page":9,"startToken":2478,"endToken":2783,"text":"9 \n \n \nThe increase in PJM’s capacity market prices has sparked concern from the White House, \nthe 13 PJM states, the PJM board, and from data center companies themselves. On January 15, \n2026, the White House’s National Energy Dominance Council and the governors of the PJM \nstates signed a joint Statement of Principles Regarding PJM, urging PJM to hold a Reliability \nBackstop Auction to procure new capacity resources for data centers and allocate the costs of \nthat new capacity to Load Serving Entities (“LSEs”) with new data centers that have not \nprocured their own capacity.35 Similarly, on January 16, the PJM board released a board \ndecisional letter that directed PJM staff to develop several proposals to address reliability and \naffordability challenges caused by large load additions in PJM.36 Like the White House and PJM \nGovernors’ Statement of Principles, PJM’s board urged PJM staff to initiate a Reliability \nBackstop Procurement and address cost allocation for LSEs that are short as a result of load \ngrowth in their service areas.37 \n \nLastly, the largest AI data center companies and developers in the country signed the \nWhite House’s Ratepayer Protection Pledge—introduced on March 4, 2026, and expanded in \nJuly—a voluntary commitment from data center owners to build, bring, or buy the new \ngeneration resources needed to satisfy their new energy demands and pay the full cost of those \nresources.38  \n \n35 Statement from the White House Nat’l Energy Dominance Council & PJM Governors of \nPrinciples Regarding PJM, 1 (Jan. 15, 2026), https://www.energy.gov/documents/statement-\nprinciples-regarding-pjm.  \n36 Letter from David E. Mills, Chair, PJM Board of Managers, to PJM Stakeholders on Critical \nIssue Fast Path - Large Load Additions (Jan. 16, 2026), https://www.pjm.com/-\n/media/DotCom/about-pjm/who-we-are/public-disclosures/2026/20260116-pjm-board-letter-re-\nresults-of-the-cifp-process-large-load-additions.pdf.  \n37 Id. at 6.  \n38 White House Ratepayer Protection Pledge."},{"page":10,"startToken":2783,"endToken":3077,"text":"10 \n \nII. \nPJM’s Reliability Backstop Proposal should be accepted with modifications to better \nachieve the RBP’s objectives. \n \nPIOs generally support PJM’s Reliability Backstop Procurement proposal but urge the \nCommission to exercise its authority to modify the proposal to better accomplish PJM’s \nobjectives to: (1) procure the correct amount of capacity to meet the RBP target; (2) procure new \ncapacity; (3) procure that new capacity on time; and (4) ensure that large loads that require new \ncapacity bear the costs of building and connecting that capacity. Specifically, the Commission \nshould accept PJM’s proposal, but only on the conditions that PJM either require RBP supply to \nbe located near to large loads, which will help ensure that new supply can come online timely, \nand that reliability risks or costs associated with delivering new RBP capacity to large loads are \nnot shifted to other ratepayers, or require RBP resources to cover 100% of network upgrades. \nAdditionally, the Commission should encourage states to mandate take-or-pay agreements \nbetween LSEs and large loads to mitigate the risks of cost-shifting if a data center fails to \nmaterialize as expected.  \nDiscussion \n \nI. \nThe Commission Should Only Modify PJM’s RBP Filing to Better Accomplish \nPJM’s Objectives. \n \nPJM has consented to Commission modification of “any element” of its proposal, so long \nas the modification is “consistent with PJM’s overarching objectives in this filing.”39 That \nconsent is bounded by the decision in NRG Power Marketing v. FERC to not permit \nmodifications that would produce “an entirely different rate design.”40 PJM’s objectives set the \nlimits of what modifications the Commission can require. However, the RBP Filing does not \n \n39 RBP Filing, supra note 2, at 130–31. \n40 NRG Power Mktg. LLC v. FERC, 862 F.3d 108, 115–16 (D.C. Cir. 2017)."},{"page":11,"startToken":3077,"endToken":3341,"text":"11 \n \ninclude any explicit statement of PJM’s objectives. To assist the Commission’s consideration of \nmodifications to PJM’s filing, PIO’s explain that the text and context of PJM’s filing reveal the \nfollowing four objectives. \nFirst, procure the correct amount of capacity. PJM explains that “the primary purpose of \nthe RBP Target is to determine how much UCAP MW is needed to meet the reliability \nrequirement shortfall without over-procuring,”41 and the PJM Board directed the target equal the \n2028/2029 shortfall, reduced for documented bilateral contracts and self-supply arrangements for \nnew capacity serving new load.42  \nSecond, procure new capacity. The RBP “is designed to attract new supplies of capacity \n(i.e., new ICAP), not merely incremental resource efficiencies.”43  \nThird, procure new capacity on time. While the contracts are for 15 years to incentivize \nnew generation,44 the need for new capacity is urgent, and therefore, the timely procurement of \ncapacity is an objective of PJM’s filing.45 PJM’s ranking of offers “from earliest to latest offered \nDelivery Year” even before considering cost shows PJM’s commitment to solving the immediate \ncapacity need.46  \nFourth, ensure that the large loads that require the new capacity bear its costs. The RBP \nFiling invokes the Ratepayer Protection Pledge’s commitment that large loads will pay the “full \n \n41 RBP Filing, supra note 2, at 52. \n42 Id. at 22 n.69 (quoting PJM Board July 2026 Decisional Letter at 2). \n43 Id. at 51. \n44 Id. at 42. \n45 Id. at 51 (requiring new capacity to be online no later than June 1, 2032). \n46 Id. at 75."},{"page":12,"startToken":3341,"endToken":3622,"text":"12 \n \ncost” of the new resources their demand requires and promises an allocation under which those \ncosts are not socialized to residential and other existing customers.47  \nPIOs respectfully recommend that the Commission adopt this articulation of the RBP’s \nobjectives and use those objectives when requiring modifications to the RBP. \nA. \nObjective One: Procure the Correct Amount of Capacity \n \nThe RBP’s quantity of procured megawatts is set by administrative decision, not by \nmarket clearing. In the RPM auctions, the amount of capacity procured emerges from an \nadministratively established demand curve interacting with competitive offers. Because the RPM \nis annual, the amount of capacity procured is revised annually and therefore responds to changes \nin the market. The RBP has no comparable self-correction. PJM sets the target, reduces it for \nverified Qualifying RBP Offsets and opt-outs, and procures the final number under fifteen-year \ncommitments.48 Any over- or under-procurement is therefore locked in for fifteen years. Under-\nprocurement of new capacity leaves a reliability gap the RBP is designed to fix, which leaves \ncustomers exposed to increase loss-of-load risk. Over-procurement would mean that the \nparticipating zones and LSEs are stuck with fifteen years of charges for capacity they don’t need. \nPJM describes “the primary purpose of the RBP Target” as determining “how much UCAP MW \nis needed to meet the reliability requirement shortfall without over-procuring,” and it built the \nmatching rules to “avoid[] over-procurement, under-procurement, and double-counting.”49 \nIn evaluating the RBP and any modifications proposed in this protest and by other parties, the \nCommission should ensure that the RBP procure the right amount of needed capacity. A \n \n47 Id. at 16–18. \n48 Id. at 31–34. \n49 Id. at 52, 37."},{"page":13,"startToken":3622,"endToken":3885,"text":"13 \n \nmodification that improves the correspondence between the quantity procured and the shortfall \nthat actually exists advances this objective and falls squarely within PJM’s consent. \nB. \nObjective Two: Procure New Capacity \n \nThe second objective recognizes that the shortfall was due to a lack of steel in the ground \nsupply rather than a mispricing of existing megawatts of supply. The need for genuinely new \nsupply is recognized by the PJM Board, the Governors’ Principles, and the Ratepayer Protection \nPledge. The RBP, therefore, “is designed to attract new supplies of capacity (i.e., new ICAP), not \nmerely incremental resource efficiencies, to address the current capacity shortfall and a provide \nstable, long-term source of capacity.”50 If, for example, the RBP merely allowed existing \nresources to move from the RPM to the RBP, the entire process would be an exercise in wealth \ntransfers with no reliability benefits. Genuinely additive procurement, by contrast, protects \nexisting customers from paying for reliability problems they did not cause while also providing \nnew load with long-term sources of generation. \nThe Commission should therefore make additionality a core touchstone as it evaluates the \nRBP Proposal and any proposed modification. The Commission should ask: does the resource \nadd installed capacity that the system did not have before? A modification that admits \ndemonstrably additive resources enlarges the pool of new supply and advances the objective \nwhile increasing competition, improving speed to power, and lowering costs. A modification that \nwould relax the screen against reshuffled or paper capacity is contrary to the objective and \ntherefore should be dismissed by the Commission. \n \n \n \n50 Id. at 51."},{"page":14,"startToken":3885,"endToken":4177,"text":"14 \n \nC. \nObjective Three: Procure New Capacity on Time \n \nThe third objective recognizes that the need for new capacity is based on an existing \nshortfall, not a mere trend or forecast. The 2027/2028 and 2028/2029 auctions have already \ncleared short, and capacity is valuable for reliability only when it is installed. Supply arriving in \n2035 does nothing for loss-of-load risk in 2029. The RBP Proposal recognizes this urgency in its \nselection criteria. The RBP only allows projects that can demonstrate a feasible commercial \noperation date of June 1, 2032, or earlier.51 Once it collects all eligible projects, PJM then selects \noffers “in rank order from earliest to latest offered Delivery Year,” and only then by levelized \ncost. This means that PJM is willing to pay a higher price for capacity that arrives sooner.52 \nTimeliness of projects is also important because PJM proposes to reset the trigger for the \nTariff’s pre-existing Reliability Backstop Auction so that no such auction can occur unless BRAs \nclear short for three consecutive Delivery Years beginning with 2032/2033. PJM justifies this by \nassuming that “all RBP Resources should have reached their respective commercial operational \ndates” by that delivery year.53 The Commission should, therefore, recognize that significant \nreliability risks hang on the ability of the RBP to actually procure new supply in the next few \nyears. \nThe Commission should therefore treat speed to power as a key objective when \nevaluating the RBP Proposal and any proposed modifications. Where the Commission finds that \nthe RBP will not actually bring new supply online quickly, it should require changes. Where a \nmodification would improve speed to power, the Commission should consider adopting such \n \n51 Id. at 72. \n52 Id. at 75. \n53 Id. at 123–25."},{"page":15,"startToken":4177,"endToken":4501,"text":"15 \n \nmodification and vice versa. Similarly, the Commission should reject proposals that exclude \nresources that can be rapidly deployed or that tolerate slippages in commercial operation date.  \nD. \nObjective Four: Ensure That the Large Loads That Require New Capacity \nBear Its Costs. \n \nPJM and its stakeholders recognize that new large loads, especially data centers, are \nuniquely responsible for the failure of recent auctions to clear at desired reserve margins. This \nfailure to meet reliability standards puts everyone in the PJM footprint in danger of increased \nloss-of-load events. The RBP is designed to shore up that shortfall through new supply. Because \nthese new costs are so clearly and uniquely caused by the massive expansion of data centers and \nsimilar new large loads, cost causation principles require that the RBP allocate costs to those new \nlarge loads. This is not a controversial position. The nation’s largest data center developers \npledged to pay the “full cost” of the new resources their demand requires.54 The thirteen PJM \ngovernors pledged to direct these costs to “new data center loads that have not otherwise \nprocured capacity or agreed to be curtailable.”55 PJM promises that RBP costs “will not become \nstranded costs, which would ultimately be socialized.”56 It is therefore crucial that the RBP fulfill \nits objective of ensuring that new large loads actually pay for the new supply they need. \nThe Commission should apply this objective when evaluating the RBP and any proposed \nmodifications. Commission and PJM jurisdiction over ratemaking, however, extends only so far. \nStates set retail rates, which are actually charged to individual ratepayers—be they residential \ncustomers or data centers—for capacity charges assigned to LSEs by PJM. It is therefore \n \n54 Id. at 17 (quoting White House Ratepayer Pledge). \n55 Id. at 12 (quoting Statement from the White House Nat’l Energy Dominance Council & PJM \nGovernors of Principles Regarding PJM, 2 (Jan. 15, 2026), \nhttps://www.energy.gov/documents/statement-principles-regarding-pjm). \n56 Id. at 109."},{"page":16,"startToken":4501,"endToken":4851,"text":"16 \n \nimperative that states and LSEs have the information necessary to assign costs to the new large \nloads that are responsible for the need for this new supply procured through the RBP. The \nCommission should reject any component of the RBP that fails to sufficiently meet this cost \nallocation objective and should adopt the modifications that best realize this objective. \nTaken together, the four objectives listed above state what PJM designed the RBP to do: \nprocure the correct amount of new capacity, on time, at the cost of the large loads that require it. \nThe Commission should evaluate any proposed modifications to PJM’s RBP filing against these \nobjectives and should adopt PIOs’ narrow modification described below, which will help ensure \nthat the RBP meets PJM’s objectives. \nII. \nThe Commission should modify the RBP by requiring RBP supply to be located new \nlarge loads in order to minimize delays and the risk of cost-shifting.  \n \nTo ensure that PJM accomplishes its objectives to procure the (1) correct amount of (2) \nnew capacity (3) on time to meet the 2028/2029 shortfall and (4) allocate the costs of that \ncapacity to new data center load, PJM must include a locational deliverability requirement for \nRBP Sell Offers. Prioritizing RBP resources that are closer to zones with large load growth will \nensure that RBP resources are not bogged down with large network upgrades that can cause \ndelays or high costs that could be passed onto other customers through the interconnection queue \nor RTEP. Failing to include a locational requirement in the RBP imperils the RBP’s ability to \nachieve its objectives in several ways. First, the absence of a locational requirement increases the \nlikelihood that high network upgrade costs may prevent RBP resources from showing up at all, \nfailing the objectives to procure (1) the correct amount of (2) new capacity. Similarly, because \nthe absence of a locational requirement makes it more likely that RBP resources may require \nsignificant network upgrades, it also increases the risk of network upgrade delays, failing the \nobjective to bring resources online quickly to meet the 2028/2029 shortfall. Furthermore, the"},{"page":17,"startToken":4851,"endToken":5133,"text":"17 \n \nhigh costs of network upgrades could also be spread to other interconnection customers or to \nresidential customers through the RTEP process, failing the objective to allocate RBP costs to \ndata centers. The Commission should modify PJM’s proposed tariff to correct this problem by \nincluding a requirement that RBP resources be located in the same zone as the large loads they \nserve. This locational deliverability requirement would address each of the problems described \nabove and help better accomplish each of the RBP’s objectives.  \nAdditionally, the Commission could modify PJM’s RBP filing by requiring RBP \nresources to pay 100% of network upgrade identified through the interconnection process. This \nmodification would prevent initial network upgrade costs from being shifted to other \ninterconnection customers or flowing through to ratepayers. However, this modification would \nnot prevent cost-shifting that could occur if future RTEP processes identify the need for upgrades \nto maintain deliverability. Similarly, this modification would not prevent large, costly, slow \nnetwork upgrades from delaying or deterring the successful completion of RBP supply projects. \nFor these reasons, a modification to require RBP supply to pay 100% of the network upgrade \ncosts identified in the interconnection process is only a partial solution that will not accomplish \nall of the RBP’s objectives. Accordingly, PIOs respectfully suggest that the Commission view \nthis modification as additional to a requirement that RBP supply be located near large loads, not \nas a completely sufficient alternative modification.  \nCurrently, PJM’s RBP proposal plans to procure capacity RTO-wide, with its \nprocurement target based on the region-wide shortfall.57 PJM does not intend to match specific \nsupply to specific demand or consider locational constraints in the RBP.58 PJM’s proposal \n \n57 Id. at 33.  \n58 Id."},{"page":18,"startToken":5133,"endToken":5430,"text":"18 \n \nacknowledges that there are locational considerations for resource adequacy but states that it \ndoes not need to consider locational constraints in the RBP because PJM does not have the \ninformation necessary to determine the locational parameters for the RBP’s 15-year commitment \nterm.59 PJM worries that including locational considerations in the RBP would result in over- or \nunder-procurement.60 PJM asserts that its interconnection process and its RTEP process will \nensure the deliverability of RBP resources.   \nThough PJM’s concern about the risk of over- and under-procurement with respect to \nlocational deliverability appears reasonable, PJM fails to properly consider the reliability and \naffordability risks associated with having resources located farther away from the load they \nintend to serve. PJM’s failure to consider locational deliverability in supply bids in the RBP will \nrisk: (1) deliverability issues due to transmission constraints if RBP resources are located far \naway from the zones with large loads; (2) higher costs from the new transmission infrastructure \nneeded to get new capacity to new large load in different zones, which will be socialized to other \ninterconnection customers or ratepayers; and (3) substantial delays to the deliverability of RBP \nsupply due to the slow pace of network upgrade construction. These outcomes are not consistent \nwith PJM’s objectives to procure 6.8 GW of new capacity by 2032 (at the latest) and to allocate \nthe costs of that capacity to data centers procuring capacity through the RBP. To better align the \nRBP with PJM’s objectives, the Commission should modify PJM’s proposal to prioritize RBP \nresources that are in the same zones as large loads, or at least to include requirements that new \nRBP supply will be responsible for 100% of the costs of network upgrade needed to ensure their \ndeliverability.  \n \n59 Id. at 34.  \n60 Id."},{"page":19,"startToken":5430,"endToken":5756,"text":"19 \n \nA. \nPJM’s proposal to exclude a locational requirement for RBP generation bids \ncould lead to reliability risks.  \n \nPJM’s decision to exclude a locational requirement in the RBP will increase risks of non-\ndelivery or delayed delivery if generation resources procured through the RBP are outside of \nzones with growing large load demand. As proposed, the RBP relies on the assumption that PJM \nwill be able to build network upgrades quickly enough to get RBP resources online in the next \nthree to six years.61 This assumption is overly ambitious at best and unrealistic at worst. Recent \nanalysis shows that most new power plants faced network upgrade timelines of at least three \nyears after those projects had already cleared the queue.62 As of April 2026, about half of the \nprojects in TC2 were delayed by baseline upgrades, with average construction timelines of about \n5 years.63 Projects just entering the queue or without a signed interconnection agreement will \ntake much longer. Resources that require larger network upgrades, like resources that are farther \naway from load, will likely take longer to interconnect due to network upgrade construction \ndelays. \nThe risks associated with large network upgrades are not speculative. Recently, the high \nnetwork upgrade costs and long construction timelines affected several projects in PJM’s \nReliability Resource Initiative (“RRI”)—an interconnection fast-track that aimed to procure \npurportedly “shovel-ready” projects that could come online quickly to meet PJM’s near-term \ncapacity needs. However, the RRI procured large projects that resulted in the need for large, \n \n61 PJM aims to get resources online by the 2028/2029 delivery year at the earliest and by the \n2032/2033 delivery year at the latest. RBP Filing, supra note 2, at 38–40. \n62 Yamit Lavi et. al, Unlocking the Grid, NRDC (Apr. 7, 2026),  \nhttps://www.nrdc.org/resources/unlocking-grid.  \n63 Devin Leith-Yessian, PJM Receives 811 Interconnection Requests in Queue Cycle 1, RTO \nInsider (Apr. 29, 2026), https://www.rtoinsider.com/131291-pjm-receives-811-interconnection-\nrequests-queue-cycle-1/."},{"page":20,"startToken":5756,"endToken":6109,"text":"20 \n \nlengthy network upgrades, causing a significant proportion of RRI projects to withdraw after \nbeing assigned network upgrade costs. 10 out of 51 RRI projects withdrew from the \ninterconnection process, with two projects dropping out before being studied, and eight projects \ndropping at the first decision point in TC2.64 2 of the 3 largest RRI projects withdrew in \nNovember 2024, shortly after PJM determined their network upgrade costs.65 The two projects \nrepresented a quarter of the RRI’s total capacity.66 The RRI’s 28% drop-out rate67should have \nbeen a lesson for PJM: procuring resources that need large, time-consuming network upgrades \nincrease the likelihood that those resources will not be able to deliver the capacity that resources \nneed by PJM’s desired commercial operation date. To avoid making the same mistake as it did in \nthe RRI, PJM should focus on procuring resources that will require smaller, less costly network \nupgrades.  \nIf PJM’s objectives are to (1) procure enough (2) new capacity (3) to meet the 2028/2029 \nshortfall by 2032 at the latest, then PJM should prioritize resources that can be built the fastest. \nResources that are farther away from zones with RBP allocations will most likely require large \n \n64 Claire Lang-Ree & Tom Rutigliano, Unlocking Storage is the Solution to Data Center Strain, \nNRDC (Jan. 29, 2026), https://www.nrdc.org/bio/claire-lang-ree/unlocking-storage-solution-\ndata-center-strain.  \n65 PJM maintains an interconnection queue tracker. See PJM, Cycle Service Request \nStatus, https://www.pjm.com/planning/m/cycle-service-request-status (last accessed August 20, \n2026). RRI withdrawals were identified by cross-referencing the withdrawals in the tracker by \nProject ID number. See also PJM, RRI Additional Summaries, slides 6–8 (May 6, \n2025), https://www.pjm.com/-/media/DotCom/committees-\ngroups/committees/pc/2025/20250506/20250506-rri-addendum---post-meeting.pdf. The \nwithdrawn RRI projects are AH1-676, AH1-690, AH1-697, AH1-705, AH1-707, AH1-717, AH1-\n720, AH1-726, and AH1-729, and AH1-735 totaling over 3.76 gigawatts of capacity.   \n66 Id. The two largest withdrawals are AH1-690 and AH1-676. \n67 Claire Lang-Ree & Tom Rutigliano, Unlocking Storage is the Solution to Data Center Strain, \nNRDC (Jan. 29, 2026), https://www.nrdc.org/bio/claire-lang-ree/unlocking-storage-solution-\ndata-center-strain."},{"page":21,"startToken":6109,"endToken":6434,"text":"21 \n \nnetwork upgrades that will take longer to build. To ensure that the RBP selects the fastest, most \nefficient resources to meet PJM’s objectives, the Commission should modify PJM’s proposal to \nrequire that PJM consider locational deliverability in RBP sell offers. The Commission can \neither: (1) require RBP resources to be located within zones with RBP allocations or (2) add \nlocational proximity into the RBP’s scoring criteria, so that projects sited near load growth areas \nare scored higher.  \nCommission precedent supports the inclusion of a locational deliverability requirement in \nthe RBP. The Commission previously found that PJM must include locational requirements in its \ncapacity market structure to ensure that supply is deliverable to the LSEs it is serving. The lack \nof a locational element in PJM’s capacity market was one of the primary reasons that the \nCommission found PJM’s capacity market unjust and unreasonable before establishing the \nRPM.68 The Commission found that “the lack of a locational element [in the RPM] is a \ncontributing factor to reliability problems within PJM”69 and that the lack of a locational element \ncreated a market structure that did not ensure that supply was available to all areas.70 In that \nproceeding, PJM itself acknowledged that its capacity market structure was flawed because it \nallowed LSEs to contract with resources located anywhere within PJM regardless of whether \ntransmission constraints would prevent delivery.71 Yet, in its RBP proposal, PJM will procure \ncapacity from anywhere within PJM without regard to whether it can be delivered in a timely and \nreliable manner to the zones with RBP allocations. The Commission’s and PJM’s reasoning in \n \n68 Order Denying Rehearing and Approving Settlement Subject to Conditions, 117 FERC ¶ \n61,331 at P 20 (2006).  \n69 Initial Order on Reliability Pricing Model, 115 FERC ¶ 61,079 at P 49 (2006).   \n70 Order Denying Rehearing and Approving Settlement Subject to Conditions, 117 FERC ¶ \n61,331 at P 2 (2006). \n71 Id. at P 14."},{"page":22,"startToken":6434,"endToken":6738,"text":"22 \n \nthe 2006 order makes clear that PJM’s current RBP will not accomplish PJM’s objectives to \nprocure enough capacity to meet the RBP target on time because the RBP does not ensure that \nRBP supply can actually be delivered to RBP buyers by the time it is needed. Even if the \ninterconnection process and RTEP can ensure eventual deliverability after the RBP closes, those \nprocesses cannot ensure that RBP supply will come online on time without lengthy network \nupgrade delays.  \nPJM’s proposal does not explain why the lack of a locational element in its proposal will \nnot lead to deliverability concerns. PJM argues that it will not calculate locational parameters 15 \nyears out because PJM does not have the information needed to determine those parameters 15 \nyears ahead. PJM states that if it were to include locational parameters in the RBP based off of \ntoday’s conditions, then the results would be inevitably skewed based on “nothing more than \nspeculation as to the state of the system ten and fifteen years from now,” leading to over-\nprocurement or under-procurement.72 PJM adds that the inclusion of a locational parameter \n“would ignore the fact that ‘PJM’s interconnection process ensures the initial deliverability of \nnew capacity to the RTO.’”73 PJM also notes that the RTEP process “studies and addresses any \ntransmission upgrades needed to ensure ongoing deliverability of capacity resources.”74 Each of \nthese rationales for excluding a locational deliverability requirement is flawed. \nTo PJM’s first point, that it does not have the information needed to project locational \nparameters 15-years ahead, PJM does have some locational information that it can use to project \nload demand in certain areas, similar to the three-year forward forecast it uses in the RPM or \n \n72 RBP Filing, supra note 2, at 34. \n73 Id. at 34.  \n74 Id. at 34."},{"page":23,"startToken":6738,"endToken":7078,"text":"23 \n \nlong-term load forecasts for resource adequacy planning.75 PJM can choose its comfort level \nwith projecting locational parameters, whether it wants to use projections for three years, five \nyears, ten years, or fifteen years, but any locational considerations will be better than none. For \nexample, the Capacity Emergency Transfer Objective and Capacity Emergency Transfer Limit \n(“CETO/CETL”) figures that PJM used for the 2028/2029 auction could be a helpful parameter. \nWhile those CETO/CETL limits might not necessarily persist for the full 15-year term of the \nRBP contracts, they are a reasonable input for a locational deliverability requirement, especially \nbecause they correspond to the same auction that led to the shortfall the RBP attempts to resolve. \nPJM knows the load growth hotspots right now, like Northern Virginia, Ohio, and Pennsylvania, \nand can reasonably expect that load will continue to grow in those areas, considering that there \nare no indications that load growth is slowing down.76 PJM should prioritize generation closer to \nthose areas that matches the load growth in those areas, where PJM knows load is growing the \nfastest. \n  PJM’s second point, that the results of the RBP will be inevitably skewed based on \n“nothing more than speculation as to the state of the system ten and fifteen years from now,” is \ninconsistent with the rest of PJM’s proposal. The RBP target is the reliability shortfall from the \n2028/2029 BRA, which is based on load forecasts from EDCs. The RBP will procure 15-year \ncontracts to meet that forecasted load. The RBP itself is speculating that that projected load will \nshow up and that 15 years of capacity needs to be procured for that load. The RBP is betting on \n \n75 See PJM, 2026 PJM Load Forecast Report (Jan. 14, 2026), https://www.pjm.com/-\n/media/DotCom/library/reports-notices/load-forecast/2026-load-report.pdf. \n76 Zachary Skidmore, Dominion Sees No Slow Down in Northern Virginia Data Center Demand, \nProposes New Electricity Rates for Large Load, Data Ctr. Dynamics (May 2, 2025), \nhttps://www.datacenterdynamics.com/en/news/dominion-reports-high-data-center-demand-in-\nnorthern-virginia-proposes-new-electricty-rates-for-large-load-customers/."},{"page":24,"startToken":7078,"endToken":7409,"text":"24 \n \nthe state of the system fifteen years out from the 2028/2029 delivery year using load growth \nestimates for 2029. It is unclear why PJM would find that speculation acceptable enough to \nassign 15-year obligations to LSEs but not enough to develop locational parameters based on \nthose same projections. PJM already knows where the load growth concerns are today and is \nprocuring capacity for that load. Consequently, PJM should at least optimize planning to ensure \nthat the capacity can meet the load its planning for.  \nTo PJM’s third point, the idea that the interconnection process and RTEP will catch all \ndeliverability concerns, ignores the fact that one of PJM’s objectives is to get capacity online \nquickly, and ignores the goal of making sure large loads pay their fair share of costs, because \nRTEP is socialized to all load, as detailed in the next section. The interconnection process and \nRTEP can ensure that supply will eventually be deliverable but cannot ensure that supply will be \ndeliverable to load on time. The risks of network upgrade delays are known, especially for large \nprojects. Resources located outside of zones with RBP allocations will require larger network \nupgrades to ensure deliverability than resources that are located within the zones. This may \nrequire lengthier interconnection studies and will likely require longer network upgrade \ndevelopment time. With the average network upgrade timeline taking at least 3 years77 after a \nresource makes it through the queue, which now takes 1 to 2 years,78 the RBP is increasing the \nlikelihood that resources will be delayed in coming online on time to meet the RBP’s objectives. \nIn short, a locational deliverability requirement will help PJM achieve the RBP’s objective of \npromptly bringing online much-needed new supply.   \n \n77 Yamit Lavi et. al, Unlocking the Grid, NRDC (Apr. 7, 2026),  \nhttps://www.nrdc.org/resources/unlocking-grid. \n78 PJM, Fact Sheet: New, Faster Generation Interconnection Process (May 21, 2026), \nhttps://www.pjm.com/-/media/DotCom/about-pjm/newsroom/fact-sheets/interconnection-reform-\nprogress-fact-sheet.pdf."},{"page":25,"startToken":7409,"endToken":7716,"text":"25 \n \nIt’s important to note that, as PJM mentions in its proposal, if load patterns do change, \nPJM can use RTEP’s annual studies to identify any transmission upgrades needed to ensure \nongoing deliverability of RBP resources. However, even in this scenario, a locational reliability \nrequirement will likely minimize the network upgrades needed. The zones experiencing \nsignificant large load growth are more likely to continue to do so than other zones. Locating RBP \nsupply near to those zones will be more likely to ensure smaller network upgrades and faster \ndeliverability timelines in the immediate term and will minimize the need for future network \nupgrades in comparison to PJM’s proposal to permit RBP supply to be developed anywhere in \nthe region.   \nThe Commission could modify PJM’s proposal to address locational deliverability in a \nfew ways. PJM could require RBP resources to be located within a certain zone or require that \nRBP resources be located within a reasonable electrical radius to large loads to minimize the risk \nof lengthy network upgrades. In the alternative, PJM could add a locational component to its \nselection criteria, where proximity to the top 5 load growth zones can be weighed alongside \ncommercial operation date, but before considering price. This would ensure that projects outside \nof a particular zone can participate, but those closer to the zone would be prioritized. By \nchoosing resources based off of commercial operation date and location first, PJM could ensure \nthat the RBP procures the resources that can come online the fastest. PJM is concerned that \nmodifications to the filing could jeopardize the commencement of the RBP in September and \nencourages the Commission to ensure that proposed modifications allow for quick and efficient \nimplementation.79 The modifications suggested above will not jeopardize PJM’s timeline. The \nmodifications recommended in this section do not require that PJM get their locational \n \n79 Id."},{"page":26,"startToken":7716,"endToken":8006,"text":"26 \n \nparameters perfect; they only require that PJM do its best with the information it already has. The \nvarious modifications proposed in this section are flexible and allow the Commission and PJM to \nconsider which modifications can be done within PJM’s desired timeline. The modifications \nsuggested will both ensure that PJM can begin the RBP in September and that resources can be \ndelivered on time without unnecessary upgrade delays.  \nB. \nPJM’s proposal will unjustly and unreasonably shift costs to other \ninterconnection customers or ratepayers.  \n \nLooking beyond the deliverability risks associated with omitting a locational requirement \nin the RBP, PJM’s proposal also fails to consider the cost-shifting risks that the proposal will \ncreate. PJM argues that inclusion of a locational parameter in the RBP would “ignore the fact \nthat ‘PJM’s interconnection process ensures the initial deliverability of new capacity to the \nRTO,’”80 but PJM fails to consider that its reliance on the interconnection process to guarantee \ninitial deliverability ignores the risks of shifting costs to other interconnection customers or \nratepayers. Although PJM’s interconnection process can ensure that RBP resources will initially \nbe deliverable to LSEs with RBP allocations (once network upgrades are complete), the RBP’s \nlack of a location requirement increases the likelihood that network upgrade costs and \ninterconnection study costs will be higher if supply resources are located farther away from the \nzones they will serve. Other resources in interconnection clusters may share the initial costs of \nconnecting RBP resources. Those costs will then be passed onto other ratepayers in higher \nenergy costs. This kind of cost-shifting is inconsistent with PJM’s objective to allocate all costs \nof procuring capacity for new large loads to those large loads. Additionally, this cost-shifting is \n \n80 RBP Filing, supra note 2, at 34."},{"page":27,"startToken":8006,"endToken":8304,"text":"27 \n \ninconsistent with the Ratepayer Protection Pledge and the Commission’s June 18 Large Load \nOrder.81   \n1. \nThe RBP will likely shift costs of network upgrades to other \ninterconnection customers and to all PJM load.  \nThe RBP raises cost-shifting concerns for network upgrades in the interconnection \nprocess. Order No. 2023 requires transmission providers to initially allocate network upgrade \ncosts among interconnection customers, based on a proportional impact method.82 The Order \nalso requires costs of network upgrades at substations to be allocated equally among each \ngeneration facility interconnection to the same substation.83 The lack of a locational element in \nthe RBP raises the likelihood that RBP resources could be located farther away from LSEs with \nRBP allocations, increasing the risk of needing larger network upgrades to ensure that the RBP \nresources will be deliverable. These network upgrades are inefficient and unnecessary, as a \nlocational requirement in the RBP would mitigate the need for these upgrades and likely yield \ndeliverable capacity more quickly and cheaply. Interconnection customers in the same cluster as \none of these RBP resources will need to share in those network upgrade costs if the customers \ninterconnect to the same substation or in any way benefit from or contribute to the need for the \nupgrade. In this scenario, higher network upgrade costs from a network upgrade that ensures load \ndeliverability from an RBP resource to a zone with an RBP allocation means higher shared costs \nfor every resource in that cluster.  \n \n81 See White House Ratepayer Protection Pledge; see also Order Instituting Proceeding Under \nSection 206 of the Federal Power Act, 195 FERC ¶ 61,211 (Jun. 18, 2026) (“Large Load \nOrder”). \n82 Improvements to Generator Interconnection Procedures and Agreements, 184 FERC ¶ 61,054 \nat P 453 (2023) (“Order No. 2023”).  \n83 Id. at P 454."},{"page":28,"startToken":8304,"endToken":8594,"text":"28 \n \nGenerators will pass these higher costs onto ratepayers. PJM acknowledges this \npossibility for customers of RBP resources, stating in its proposal that “[s]ellers will have the \nopportunity to reflect on the anticipated cost of any network upgrades, estimated or final, \nassociated with the RBP Resource’s provision of capacity in the RBP Sell Offer.”84 Non-RBP \nresources in the same cluster will similarly have to consider how to price their generation to \nrecover costs of high shared network upgrades. Thus, inefficient planning in the RBP will result \nin unnecessarily high network upgrades and subsequently result in higher prices from generators \nand higher costs for ratepayers.  \n2. \nThe RBP will likely shift the costs to study RBP resources to other \ninterconnection customers. \nAdditionally, the RBP raises cost-shifting concerns for interconnection study costs caused \nby RBP resources. Under Order No. 2023, costs of cluster studies are shared between \ninterconnection customers on a per capita and pro rata MW basis.85 Order No. 2023’s study cost \nallocation requirements acknowledge that cluster study costs are affected by the number of \ninterconnection requests and the size of the proposed generators in each cluster.86 Order No. \n2023 recognizes that the megawatt size of projects in an interconnection cluster contributes \nsignificantly to the total cost of a cluster study.87 The Order also recognizes that complex studies \ncan lead to correspondingly higher study costs.88 Without a locational component in the RBP, \nRBP resources may need more complex studies to ensure load deliverability if they are located \n \n84 RBP Filing, supra note 2, at 56.   \n85 Order No. 2023, supra note 81 at P 416. \n86 Id. at P 418. \n87 Order No. 2023, supra note 81 at P 418. \n88 Id. at P 418."},{"page":29,"startToken":8594,"endToken":8892,"text":"29 \n \nfarther away from LSEs with RBP allocations. The costs of these complex studies could increase \ncosts for other customers in the cluster. PJM could decrease the risk of this cost-shifting by \nconsidering locational deliverability in the RBP prior to the interconnection process. Instead, \nPJM chooses to unnecessarily burden other interconnection customers with an increased risk of \ncomplex cluster studies and higher study costs.  \n3. \nPJM’s proposal will unjustly and unreasonably shift costs to all PJM \ncustomers through RTEP.  \nPJM’s proposal also risks shifting significant transmission costs to all PJM customers \nthrough the RTEP process. PJM’s RBP filing reasons that a locational element in the RBP is \nunnecessary because PJM’s RTEP will study and address any transmission upgrades needed to \nensure the deliverability of capacity resources to load.89 Unlike in the standard interconnection \nprocess, where generation pays for costs of upgrades, reliability-driven upgrades identified \nthrough RTEP are paid for by load. As a result, the costs of any reliability-driven upgrades that \nare caused by any transmission constraints associated with RBP resources and identified through \nRTEP will be unjustly and unreasonably socialized to all load in PJM, which fails to achieve \nPJM’s objective to allocate RBP costs to LSEs with large loads and is inconsistent with the \nRatepayer Protection Pledge.  \nIn 2024, utilities in 7 PJM states passed $4.3 billion in data center-driven transmission \ncosts onto customers in their service area.90 In early 2026, PJM’s board approved $11.8 billion in \n \n89 RBP Filing, supra note 2, at 34.  \n90 Mike Jacobs, Union of Concerned Scientists, Connection Costs: Loophole Costs Customers \nOver $4 Billion to Connect Data Centers to Power Grid, Union of Concerned Scientists, 3 (Sep. \n2025), https://www.ucs.org/sites/default/files/2025-\n09/PJM%20Data%20Center%20Issue%20Brief%20-%20Sep%202025.pdf."},{"page":30,"startToken":8892,"endToken":9208,"text":"30 \n \ntransmission projects identified as a part of PJM’s RTEP window 1.91 PJM’s baseline project \nspending almost doubled from its spending in 2024 and 2023, with baseline projects costing $5.9 \nbillion in the 2024 RTEP and $6.6 billion in 2023.92 The increase in upgrades are driven, in large \npart, by increases in data center load in Virginia and throughout the PJM region overall.93 For \ninstance, $4.8 billion of the 2025 RTEP upgrades will go to the Dominion area alone.94  \nAs baseline project spending increases, PJM needs to be more efficient in its transmission \nplanning. There is growing frustration surrounding RTEP spending on data center-driven projects \nand how those costs are being allocated to PJM customers.95 Ignoring deliverability constraints \nin the RBP will increase the likelihood that inefficient, costly upgrades will be identified in \nPJM’s RTEP and will be unjustly and unreasonably allocated to load.  \n4. \nThe RBP risks cost shifts that are inconsistent with the Ratepayer \nProtection Pledge and the Commission’s Large Load Orders. \n  \na. \nCost-shifts in the RBP violate the Ratepayer Protection Pledge \nand the Commission’s June 18th Large Load Orders. \n \nThe lack of a locational element in the RBP will likely cause cost-shifts that violate the \nRatepayer Protection Pledge and the Commission’s June 18th Large Load Orders. The \n \n91 Ethan Howland, PJM Board Approves $11.8B Transmission Expansion Plan, Util. Dive (Feb. \n17, 2026), https://www.utilitydive.com/news/pjm-rtep-transmission-expansion-plan-dominion-\nnextera-exelon/812311/.  \n92 Id. \n93 PJM Reviews Preliminary Recommended Projects for 2025 RTEP Window 1, PJM Inside \nLines (Dec. 10, 2025), https://insidelines.pjm.com/pjm-reviews-preliminary-recommended-\nprojects-for-2025-rtep-window-1/.  \n94 Ethan Howland, PJM Board Approves $11.8B Transmission Expansion Plan, Util. Dive (Feb. \n17, 2026), https://www.utilitydive.com/news/pjm-rtep-transmission-expansion-plan-dominion-\nnextera-exelon/812311/.  \n95 Complaint Requesting Fast Track Processing of the Maryland Office of People’s Counsel, at \n17–19, Docket No. EL26-63 (May 7, 2026), Accession No. 20260507-5026."},{"page":31,"startToken":9208,"endToken":9517,"text":"31 \n \nCommission should modify PJM’s proposal to ensure that other PJM customers do not pay for \ncostly upgrades for RBP resources. The Commission can easily fix this issue by either: (1) \nrequiring RBP supply to be in the same LDA as large loads; or (2) requiring RBP supply to be \n100% responsible for network upgrade costs, which will be reasonably allocated to LSEs with \nRBP allocations through RBP supply offers.  \nFirst, the Commission should modify PJM’s proposal because it violates the Ratepayer \nProtection Pledge. The Ratepayer Protection Pledge was signed by 7 of the largest U.S \nhyperscalers, more than 250 utilities and cooperatives, and 38 data center developers. In this \npledge, companies that signed on promised to cover all new delivery upgrades required to \nservice network upgrade costs to ensure that those costs are not shifted to ordinary households.96 \nIn the RBP context, this pledge would cover the network upgrade costs identified in the \ninterconnection process and through RTEP. The signees also promised to procure the generation \nresources needed for their energy demand and pay the full cost of procuring that energy.97 This \npromise should include covering both the costs of building network upgrades and the study costs \nof connecting needed supply.  \nThe RBP does not currently allow data centers to fulfill their promise to its full extent. \nWithout a locational requirement for RBP resources, RBP resources may be located far from the \nload they are meant to serve—increasing the likelihood for expensive network upgrades needed \nto get the capacity to the loads it intends to serve. Data center companies that have promised to \npay for all of the network upgrades needed to serve their load cannot do so if the costs of their \nnetwork upgrades are shared by other new generators through the interconnection process or \n \n96 White House Ratepayer Protection Pledge.  \n97 Id."},{"page":32,"startToken":9517,"endToken":9804,"text":"32 \n \nallocated to all load through the RTEP. The Data Center Coalition acknowledged some of this \ntension in its RBP proposal, stating that an RBP with no locational commitment constraint could \nincrease RTEP costs over time as PJM identifies transmission reliability constraints.98 As the \nDCC recognizes, data centers cannot fulfill their promise to pay for all network upgrades if the \ncosts of network upgrades are shifted to other customers through PJM’s current planning \nprocesses. To prevent this adverse outcome, the Commission should modify PJM’s proposal to \neither require the RBP to procure resources in the same LDA as, or near to, large loads, in order \nto ensure that transmission constraints are mitigated. \nSimilarly, the current RBP structure will increase study costs from the need for larger \nupgrades and complex modeling to determine deliverability, which, under current rules, will be \nspread between generators in the same cluster as RBP resources. Though RBP resources serving \ndata centers will be allocated some of those costs, the higher cost of connecting these resources \nwill be spread to generators other than RBP resources, and data centers will not pay for those \ncosts. This structure does not allow for data centers to cover the full costs of their generation as \nthey promised to in the Ratepayer Protection Pledge. To allow data centers to carry out this \npromise, PJM’s RBP must include a locational element to mitigate the study costs assigned to \nother generators, or PJM must assign the increased study costs caused by RBP resources to those \nresources.  \n \n \n \n98 PJM, Joint EDCs and Data Center Coalition Reliability Backstop Procurement Package \nExecutive Summary, 5 (June 30, 2026), https://www.pjm.com/-/media/DotCom/committees-\ngroups/cifp-rbp/2026/20260630/20260630-item-02f---joint-edcs-and-data-center-coalition---rbp-\n--executive-summary.pdf."},{"page":33,"startToken":9804,"endToken":10071,"text":"33 \n \nb. \nCost-Shifts in the RBP violate the Commission’s June 18 Large \nLoad Order.  \n \nSecond, the RBP is unjust and unreasonable because the proposal is inconsistent with the \nCommission’s Large Load Order. As described in the Commission’s June 18 Large Load Order, \nthe Commission has a duty to address the risk of cost shifting among transmission customers that \nmay result in unjust and unreasonable rates.99 PJM’s current RBP proposal will likely result in \nunjust and unreasonable rates by shifting RBP costs to other transmission customers through \nPJM’s interconnection process and through RTEP.  \nThe Commission’s June 18 Large Load Order preliminarily found PJM’s tariff to be \nunjust and unreasonable because it lacks adequate mechanisms to mitigate the risk of cost \nshifting among transmission customers.100 The Commission is concerned that PJM’s tariff does \nnot ensure that large load customers would be ultimately response for costs incurred to provide \ntransmission service, including the cost of network upgrades.101 Additionally, the Commission is \nconcerned about inefficient and unnecessary infrastructure development that leads to unjust and \nunreasonable rates through unnecessarily high network upgrade costs.102 \nThe RBP proposal confirms all the Order’s worries about PJM’s inadequate cost-shifting \nprotections. To the Commission’s first concern, the RBP relies on the interconnection process \nand RTEP to ensure deliverability but includes no adequate mechanism to mitigate the cost-shifts \nassociated with those processes. Stakeholders alerted PJM to these cost-shifting concerns in the \nproposal in stakeholder discussions, but PJM’s proposal does not address these issues. To the \n \n99 Large Load Order, supra note 80, at P 68.  \n100 Id. at P 66.  \n101 Id.  \n102 Id."},{"page":34,"startToken":10071,"endToken":10379,"text":"34 \n \nsecond concern, the current RBP structure will not ensure that large load customers will be \nultimately responsible for costs incurred to provide their transmission service. The RBP will \nlikely spread higher costs to generators due to complex load deliverability studies and higher \nnetwork upgrade costs for the cluster. Load will likely experience higher costs through RTEP as \nthe RTEP will likely identify costly transmission upgrades to deliver capacity from RBP \nresources. In either case, end ratepayers are ultimately responsible for costs incurred to provide \ntransmission service to data centers, not the data centers themselves. \n Lastly, the lack of a locational requirement in the RBP will likely lead to inefficient and \nunnecessary infrastructure buildout. If the RBP procures RBP resources that are farther away \nfrom the LDA it will serve, PJM may need to build transmission infrastructure to get the capacity \nfrom the RBP resource to the LDA. This result is inefficient and unnecessary when there may be \nresources closer to the LDA that could serve the load. This procurement structure could lead to \nunnecessary build-out and unnecessary network upgrade costs, which as the Commission points \nout in its June 18 Order, would be unjust and unreasonable.  \nIII. \nThe Commission should encourage PJM states to do their part in allocating costs to \ndata centers.   \n \nIt is important to note, as PJM does in its filing, that states have a large part to play in \nensuring that cost allocation at the retail level adequately allocates RBP costs to data centers \nreceiving capacity from RBP resources. The Commission has acknowledged states’ role in cost \nallocation as well, stating in its June 18 Large Load Order that “states determine how \nCommission-approved rates are collected among the relevant retail consumers along with the \nrates for state-jurisdictional matters.”103 The PJM Governors affirmed this role in their Statement \n \n103 Id. at P 69."},{"page":35,"startToken":10379,"endToken":10715,"text":"35 \n \nof Principles Regarding PJM, in which the 13 PJM governors agreed to use all available \nauthorities to ensure that LSEs allocate the cost to procure new capacity through the RBP to new \ndata center loads.104 States must take this responsibility seriously. If not, the states risk spreading \nRBP costs to all load. \nPJM’s filing states that the PJM states will have a central role in protecting their \nratepayers from cost shifts from the RBP.105 The RBP relies on each of the states to refine cost \nallocation to determine which retail loads should be allocated the cost of the procurement.106 If \nstates do not adopt adequate tariffs, costs from the RBP may be allocated to residential customers \nor small industrial or commercial customers.  \nUnder the current RBP proposal, LSEs that forecast data center load and procure capacity \nfor that load in the RBP may be left with enormous costs if that forecasted load does not show \nup. Because PJM proposes that LSE defaults will result in the allocation of the defaulted costs to \nother LSEs hosting large loads, if one LSE cannot cover the stranded costs resulting from data \ncenters failing to materialize, then the rest of the LSEs with RBP obligations may be left holding \nthe bill. There is a real risk of this outcome occurring. The CEOs of Constellation Energy and \nVistra Energy have both warned their investors about the risks of overbuilding.107 In a 2025 \nearnings call, Vistra CEO James Burke stated that load “interconnect queues . . . may be \noverstated from three to five times what might actually materialize in regulated markets or \n \n104 Statement from the White House Nat’l Energy Dominance Council & PJM Governors of \nPrinciples Regarding PJM, 2 (Jan. 15, 2026), https://www.energy.gov/documents/statement-\nprinciples-regarding-pjm.  \n105 RBP Filing, supra note 2, at 10.  \n106 Id. at 11.  \n107 Cathy Kunkel & Dennis Wamsted, Risk of AI-Driven, Overbuilt Infrastructure is Real, Inst. \nfor Energy Econ. and Fin. Analysis (Jun. 3, 2025), https://ieefa.org/resources/risk-ai-driven-\noverbuilt-infrastructure-real."},{"page":36,"startToken":10715,"endToken":11054,"text":"36 \n \ncompetitive markets.”108 Expert estimates in 2024 stated that, nationally, utilities are planning for \n50% more demand than the tech industry is projecting.109 Similarly, in November 2025, experts \nestimated that utility forecasts were overstating data center load growth by almost 25 GW.110  \nIf LSEs submit inflated load forecasts for the RBP, there is a risk that PJM will over-\nprocure capacity for load that will never show up. Nevertheless, PJM will still allocate those \nMWs, and the cost responsibility, to those LSEs. For LSEs with data centers that fail to \nmaterialize, this cost responsibility could be burdensome. PJM is expected to pay up to $20 \nbillion for the RBP.111 LSEs can be expected to pay millions of dollars each year depending on \ntheir respective RBP allocations. If data centers fail to show up, LSEs will be left with \nmillions—or even billions—of dollars in stranded costs. If an LSE has more data centers in its \nservice area, it can allocate these costs among remaining data centers. However, if all the data \ncenter load in an LSE fails to materialize, ratepayers will foot the bill, or the LSE will have to \ndefault and spread their costs to other LSEs.  \nThe Maryland Office of People’s Counsel (“MD OPC”) has sounded the alarm on this \nissue, warning its state Public Service Commission (“PSC”) about the risks of failing to pass \nadequate cost allocation tariffs. In comments to the PSC on August 10, 2026, the MD OPC \nexplains that customers in zones with RBP obligations will be responsible for RBP costs \nregardless of whether the large loads included in the utilities’ forecast materialize or are \n \n108 Id. \n109 Id. \n110 John Wilson et. al, Power Demand Forecasts Revised Up for Third Year Running, Led by \nData Centers, Grid Strategies at 3 (Nov. 2025), https://gridstrategiesllc.com/wp-\ncontent/uploads/Grid-Strategies-National-Load-Growth-Report-2025.pdf.  \n111 Ethan Howland, PJM Files Backstop Auction Plan at FERC to Meet Capacity Shortfall, Util. \nDive (Aug. 3, 2026), https://www.utilitydive.com/news/pjm-backstop-capacity-auction-ferc-\ndata-centers/826792/."},{"page":37,"startToken":11054,"endToken":11375,"text":"37 \n \ndelayed.112 MD OPC estimates that, if the RBP costs are assigned to residential customers in \nthese zones, Maryland customers may be exposed to $562.8 million in additional costs over 15 \nyears.113 MD OPC warns that residential customers could pay as much as $483.2 million and \n$79.6 million in the Potomac Edison and Baltimore Gas and Electric zones, respectively, if \nMaryland does not have an established allocation framework for the RBP.114 The RBP could \nhave similar effects on ratepayers across PJM if states do not step up to do their part. \nTo prevent this cost-shifting, the Commission should encourage states to require take-or-\npay agreements between LSEs and large load customers for any LSEs participating in the RBP \nand require PJM to provide states with enough information to properly allocate costs through \nthose agreements. These recommendations are consistent with PJM’s objective to allocate RBP \ncosts to data centers, the Ratepayer Protection Pledge, and with the Commission’s June 18th \nLarge Load Orders because they will ensure that large loads pay the costs of the capacity \nprocured to serve them, rather than shifting those costs to other customers, or residential \nratepayers.   \nSome utilities have already begun to think about how these take-or-pay arrangements \ncould be implemented. In comments to the MD PSC on August 10, 2026, the Joint Maryland \nExelon Utilities115 urged the PSC to consider requiring an agreement to hold large loads \naccountable for capacity costs, similar to a Transmission Security Agreement (TSA), to protect \n \n112 Id.  \n113 Id. \n114 Maryland Office of People’s Counsel Response to the Commission’s Request for Comments, \nat 3, Docket No. PC 72 (MD Pub. Serv. Comm’n Aug. 10, 2026), \nhttps://opc.maryland.gov/Portals/0/Files/Publications/Others/20260810%20-\n%20OPC%20Comments%20-%20PC72.pdf?ver=-ifE-FBxdPKFNQjWfyueEw%3d%3d. \n115 The Joint Maryland Exelon Utilities include Baltimore Gas and Electric Company, Delmarva \nPower & Light Company, and Potomac Electric Power Company."},{"page":38,"startToken":11375,"endToken":11686,"text":"38 \n \nnon-large load customers from RBP capacity costs if the large load fails to materialize.116 The \nCommission should uplift these recommendations and encourage other states to develop similar \nagreements for RBP costs. \nSecurity agreements like the ones mentioned by the Joint Maryland Exelon Utilities are \nconsistent with PJM’s objective to allocate the costs of the capacity required to serve data centers \nto those data centers and the Ratepayer Protection Pledge. PJM acknowledges that the RBP is “a \nproduct of cooperative federalism” and that state participation will be needed to ensure the \nsuccess of the RBP and to protect residential customers from cost-shifts.117 PJM emphasizes that \nthe states have the jurisdiction to ensure that new large loads, and not residential or small \nindustrial or commercial customers, are allocated the retail costs associated with the costs of \nRBP resources procured at the wholesale level. State-mandated take-or-pay contracts between \nLSEs and large load customers align exactly with this structure that PJM outlines in its filing. \nTake-or-pay contracts will ensure that costs at the wholesale level are sub-allocated directly to \nlarge-load customers, regardless of whether they materialize or not, thereby protecting residential \nand small industrial customers from cost-shifts.  \nAdditionally, take-or-pay agreements are in line with the Ratepayer Protection Pledge \nbecause data centers have pledged to pay the costs of their power, whether they use it or not. The \ncompanies that signed the Ratepayer Protection Pledge have agreed to not only “procure the \ngeneration needed for their energy demand . . . and pay the full cost,” but to also “voluntarily \nnegotiate new, separate rate structures with their utilities and state governments” and “pay those \n \n116 Joint Comments of the Maryland Exelon Utilities on PJM Reliability Backstop Procurement \nProposal, at 5, Docket No. PC 72 (MD Pub. Serv. Comm’n Aug. 10, 2026), \nhttps://webpscxb.pscmaryland.com/DMS/pc/pc72.   \n117 RBP Filing, supra note 2, at 10."},{"page":39,"startToken":11686,"endToken":11956,"text":"39 \n \nrates for the power and infrastructure brought online for them—whether or not they actually use \nthe electricity.”118 Take-or-pay agreements are consistent with this pledge because they will \nensure that large loads will pay the cost of the capacity brought online for them whether or not \nthe large load actually shows up. These agreements will ensure that data centers follow through \non their pledge, instead of leaving residential ratepayers with the bill if data centers fail to \nmaterialize.  \nLastly, the take-or-pay agreements are consistent with the spirit of the Commission’s June \n18th Large Load Order, which addresses the risk of cost-shifting among transmission customers \ndue to speculative requests.119 The Commission’s Order was concerned that speculative \ntransmission service requests on behalf of large loads could result in cost-shifting among \ntransmission customers.120 The Commission was concerned that other transmission customers \nmay have to pay increased rates if an Eligible Customer takes less transmission service than \nanticipated because a large load is operating at a lower demand than anticipated or fails to \nmaterialize.121  \nThe Commission’s Order found that, to prevent these cost shifts, PJM’s tariff should \nrequire that PJM, the relevant transmission owner, and the Eligible Customer enter into a cost \nrecovery agreement that requires the Eligible Customer to make a minimum contribution towards \nthe transmission owner’s revenue requirement if the Eligible Customer takes less transmission \nservice than anticipated because the large load did not materialize as planned.122 The \n \n118 White House Ratepayer Protection Pledge. \n119 Large Load Order, supra note 80, at P 68.  \n120 Id. at P 79.  \n121 Id.  \n122 Id. at P 81."},{"page":40,"startToken":11956,"endToken":12248,"text":"40 \n \nCommission preliminarily found that these cost-recovery agreements were necessary to ensure \nthat Eligible Customers were responsible for paying the costs of large-load driven transmission, \n“rather than having those costs paid by other transmission customers that neither caused the need \nfor nor benefit commensurately from” those transmission upgrades.123 \nTake-or-pay contracts with respect to the RBP would work similarly to the cost-recovery \nagreements outlined in the Commission’s Order and would serve a similar purpose. Like \nspeculative transmission service requests, speculative data center demand that fails to materialize \ncould likely result in cost-shifts among PJM’s customers. If a data center fails to materialize as \nexpected or fails to show up at all, other customers in that LSE, either other large load customers \nor non-large load ratepayers, will have to make up the costs, resulting in higher prices for those \ncustomers. An RBP cost-recovery agreement between LSEs and large loads would, like in the \ntransmission context, protect residential customers from cost-shifts by mandating that large loads \npay a minimum contribution towards an LSE’s RBP obligation if those large loads fail to \nmaterialize as expected. Like the cost-recovery agreements proposed in the Commission’s Order, \ntake-or-pay agreements would ensure that the costs of capacity procured to service large loads \nwould be paid by the large load that caused the need for the RBP, rather than the LSE’s other \ncustomers.  \nTo mandate these take-or-pay agreements, PJM states must have the information needed \nto allocate the RBP costs to the appropriate customers. In addition to preliminarily finding that \nPJM must develop cost-recovery agreements, the Commission’s Large Load Order also found \nthat PJM must provide clear, timely, and detailed information on their website regarding \nNetwork Upgrades for Eligible Customers and information about the costs of those upgrades. \n \n123 Id."},{"page":41,"startToken":12248,"endToken":12546,"text":"41 \n \nThe Commission was concerned that PJM lacked adequate cost transparency measures to \nprovide stakeholders with the information and visibility needed to allocate costs driven by large \nloads.124 The Commission found that the cost transparency measures it proposed in its Order will \nallow state public utility commissions and other state regulators to understand which costs are \ncaused by which customers, so that they can allocate those costs to the appropriate retail \ncustomers.125 \n \nSimilarly detailed information will be necessary in the RBP context. States will need to \nhave enough information about which large loads are associated with certain RBP costs to sub-\nallocate those costs to large loads at the retail level. Like the Commission stated in its Large \nLoad Order, PJM should be required to provide clear, timely, and detailed information about \nRBP costs to states to ensure that states have enough information to mandate take-or-pay \nagreements between LSEs and large loads that adequately ensure that large loads pay for the \ncosts of RBP capacity procured on their behalf, whether or not they materialize as expected.  \nConclusion \nPJM’s RBP filing generally presents a just and reasonable mechanism to procure capacity \nfor large loads that are currently causing a shortfall in PJM’s capacity market and to facilitate the \nallocation of costs to large loads while respecting state jurisdiction over retail rates. However, \nPJM’s failure to include any requirement as to the location of RBP supply resources will increase \nthe RBP’s reliance on large, costly network upgrades that threaten to delay when supply can \nbecome deliverable to the large loads that need it. The modification described above to require \nRBP supply to either be located near to demand, or to be fully responsible for the cost of network \n \n124 Id. at P 74.  \n125 Id. at P 70."},{"page":42,"startToken":12546,"endToken":12696,"text":"42 \n \nupgrades, will help the RBP better achieve its objectives of bringing needed new supply online \npromptly and to allocate costs to large loads rather than shifting costs to others. Accordingly, \nPIOs respectfully request that the Commission approve the RBP filing with the modification \ndescribed above. \n \nDATED: August 21, 2026 \nRespectfully submitted,  \nSIERRA CLUB  \n/s/ Aaliyah Adkins  \nAaliyah Adkins  \nEarthjustice  \n1400 L St NW   \nLobby 2, Unit 34117   \nWashington DC 20005  \n(202) 797-5253  \naadkins@earthjustice.org  \n \n/s/ Nick Lawton  \nNick Lawton  \nEarthjustice  \n1400 L St NW   \nLobby 2, Unit 34117   \nWashington DC 20005  \n(202) 780-4835  \nnlawton@earthjustice.org  \n \n  \n/s/ Justin Vickers  \nJustin Vickers  \nSenior Attorney  \nSierra Club  \n2101 Webster St., 13th Floor   \nOakland, CA 94612  \n(224) 420-0614  \njustin.vickers@sierraclub.org  \nCounsel for Sierra Club \nNATURAL RESOURCES DEFENSE \nCOUNCIL \n/s/ Claire Lang-Ree \nClaire Lang-Ree \nAdvocate, Sustainable FERC Project \nNRDC \n40 W 20th St \nNew York, NY, 11238 \nclangree@nrdc.org"},{"page":43,"startToken":12696,"endToken":12758,"text":"43 \n \nCERTIFICATE OF SERVICE \nI hereby certify that the foregoing has been served in accordance with 18 C.F.R. § \n385.2010 upon each party designated in the official service list compiled by the Secretary in this \nproceeding, by email.   \n  \n/s/ Aaliyah Adkins  \nAaliyah Adkins  \nEarthjustice  \n1400 L St NW   \nLobby 2, Unit 34117   \nWashington DC 20005  \n(202) 797-5253  \naadkins@earthjustice.org"}],"sections":[{"p":1,"at":0,"title":"Opening text","method":"opening text","endPage":1,"endAt":929,"startToken":0,"endToken":132},{"p":1,"at":929,"title":"Introduction","method":"PDF bookmark","endPage":4,"endAt":1668,"startToken":132,"endToken":1087},{"p":4,"at":1668,"title":"Background","method":"PDF bookmark","endPage":4,"endAt":1680,"startToken":1087,"endToken":1088},{"p":4,"at":1680,"title":"I. PJM’s capacity market is facing reliability and affordability concerns as PJM struggles to meet data center load growth.","method":"PDF bookmark","endPage":5,"endAt":491,"startToken":1088,"endToken":1228},{"p":5,"at":491,"title":"A. PJM’s capacity market faces increased reliability risks as data center load grows too quickly for PJM’s supply.","method":"PDF bookmark","endPage":8,"endAt":5,"startToken":1228,"endToken":2137},{"p":8,"at":5,"title":"B. PJM’s capacity market faces high capacity prices, causing increases in ratepayers’ bills.","method":"PDF bookmark","endPage":10,"endAt":6,"startToken":2137,"endToken":2784},{"p":10,"at":6,"title":"II. PJM’s Reliability Backstop Proposal should be accepted with modifications to better achieve the RBP’s objectives.","method":"PDF bookmark","endPage":10,"endAt":1192,"startToken":2784,"endToken":2965},{"p":10,"at":1192,"title":"Discussion","method":"PDF bookmark","endPage":10,"endAt":1206,"startToken":2965,"endToken":2966},{"p":10,"at":1206,"title":"I. The Commission Should Only Modify PJM’s RBP Filing to Better Accomplish PJM’s Objectives.","method":"PDF bookmark","endPage":12,"endAt":339,"startToken":2966,"endToken":3391},{"p":12,"at":339,"title":"A. Objective One: Procure the Correct Amount of Capacity","method":"PDF bookmark","endPage":13,"endAt":188,"startToken":3391,"endToken":3647},{"p":13,"at":188,"title":"B. Objective Two: Procure New Capacity","method":"PDF bookmark","endPage":14,"endAt":6,"startToken":3647,"endToken":3886},{"p":14,"at":6,"title":"C. Objective Three: Procure New Capacity on Time","method":"PDF bookmark","endPage":15,"endAt":197,"startToken":3886,"endToken":4204},{"p":15,"at":197,"title":"D. Objective Four: Ensure That the Large Loads That Require New Capacity Bear Its Costs.","method":"PDF bookmark","endPage":16,"endAt":795,"startToken":4204,"endToken":4627},{"p":16,"at":795,"title":"II. The Commission should modify the RBP by requiring RBP supply to be located new large loads in order to minimize delays and the risk of cost-shifting.","method":"PDF bookmark","endPage":19,"endAt":6,"startToken":4627,"endToken":5431},{"p":19,"at":6,"title":"A. PJM’s proposal to exclude a locational requirement for RBP generation bids could lead to reliability risks.","method":"PDF bookmark","endPage":26,"endAt":445,"startToken":5431,"endToken":7785},{"p":26,"at":445,"title":"B. PJM’s proposal will unjustly and unreasonably shift costs to other interconnection customers or ratepayers.","method":"PDF bookmark","endPage":27,"endAt":109,"startToken":7785,"endToken":8022},{"p":27,"at":109,"title":"1. The RBP will likely shift costs of network upgrades to other interconnection customers and to all PJM load.","method":"PDF bookmark","endPage":28,"endAt":696,"startToken":8022,"endToken":8410},{"p":28,"at":696,"title":"2. The RBP will likely shift the costs to study RBP resources to other interconnection customers.","method":"PDF bookmark","endPage":29,"endAt":440,"startToken":8410,"endToken":8658},{"p":29,"at":440,"title":"3. PJM’s proposal will unjustly and unreasonably shift costs to all PJM customers through RTEP.","method":"PDF bookmark","endPage":30,"endAt":935,"startToken":8658,"endToken":9044},{"p":30,"at":935,"title":"4. The RBP risks cost shifts that are inconsistent with the Ratepayer Protection Pledge and the Commission’s Large Load Orders.","method":"PDF bookmark","endPage":30,"endAt":1069,"startToken":9044,"endToken":9064},{"p":30,"at":1069,"title":"a. Cost-shifts in the RBP violate the Ratepayer Protection Pledge and the Commission’s June 18th Large Load Orders.","method":"PDF bookmark","endPage":33,"endAt":6,"startToken":9064,"endToken":9805},{"p":33,"at":6,"title":"b. Cost-Shifts in the RBP violate the Commission’s June 18 Large Load Order.","method":"PDF bookmark","endPage":34,"endAt":1283,"startToken":9805,"endToken":10268},{"p":34,"at":1283,"title":"III. The Commission should encourage PJM states to do their part in allocating costs to data centers.","method":"PDF bookmark","endPage":41,"endAt":1147,"startToken":10268,"endToken":12426},{"p":41,"at":1147,"title":"Conclusion","method":"printed heading","endPage":43,"endAt":6,"startToken":12426,"endToken":12697},{"p":43,"at":6,"title":"CERTIFICATE OF SERVICE","method":"printed heading","endPage":43,"endAt":397,"startToken":12697,"endToken":12758}]}