ER26-3380-000 · 2026-08-21 · Office of the Ohio Consumers' Counsel
The Ohio Consumers' Counsel submits Protest and Request for Rejection of Filing or in the Alternative for Evidentiary Hearings and/or Settlement Proceedings re PJM Interconnection, L.L.C.’s Reliability Backstop Procurement filing
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UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
PJM Interconnection, L.L.C.
)
Docket No. ER26-3380-000
PROTEST AND REQUEST FOR REJECTION OF FILING
OR IN THE ALTERNATIVE FOR EVIDENTIARY HEARINGS
AND/OR SETTLEMENT PROCEEDINGS BY
OFFICE OF THE OHIO CONSUMERS’ COUNSEL
Maureen Willis
Ohio Consumers’ Counsel
Angela O’Brien
Deputy Consumers’ Counsel
Office of the Ohio Consumers’ Counsel
65 East State Street, Suite 700
Columbus, Ohio 43215
Telephone: (614) 466-9531
angela.obrien@occ.ohio.gov
Denise C. Goulet
McCarter & English, LLP
1301 K Street, N.W.
Suite 1000 West
Washington, D.C. 20005
(202) 753-3400
dgoulet@mccarter.com
Special Counsel to the Ohio Office of the Attorney
General for the Office of the Ohio Consumers’
Counsel
August 21, 2026
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UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
PJM Interconnection, L.L.C.
)
Docket No. ER26-3380-000
PROTEST AND REQUEST FOR REJECTION OF FILING
OR IN THE ALTERNATIVE FOR EVIDENTIARY HEARINGS
AND/OR SETTLEMENT PROCEEDINGS BY
OFFICE OF THE OHIO CONSUMERS’ COUNSEL
PJM Interconnection, L.L.C.’s (“PJM’s”) application in this case to implement a one-
time Reliability Backstop Procurement (“RBP”) program to acquire new generating capacity
needed to serve forecasted Artificial Intelligence (“AI”) and other large data center loads should
not be adopted.1 It will unreasonably shift the risks and costs associated with acquiring that new
capacity from the data center loads to existing consumers in Ohio and elsewhere in PJM. The
Federal Energy Regulatory Commission (“FERC”) should reject the filing because it fails to
protect Ohio consumers and other consumers in PJM from the risks associated with this new
forecasted load, and from the associated costs of serving these loads. PJM’s proposal will result
in excessive, unjust, unreasonable and unduly discriminatory and preferential rates for existing
consumers.
In the alternative, FERC should set PJM’s filing for evidentiary hearings and/or
settlement proceedings so that PJM and stakeholders can adequately consider and vet alternative
proposals for acquiring needed new supply for AI and other large data center loads, including
1 This Protest is submitted pursuant to Rule 211 of the Federal Energy Regulatory Commission Rules of Practice
and Procedure, 18 C.F.R. § 385.211.
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proposals prepared by the Independent Market Monitor for PJM (“IMM”) and other consumer
representatives. Unlike PJM’s proposal in this case, the IMM’s and other parties’ competing,
well-founded proposals would properly guard against such unreasonable costs shifts and
excessive rates for existing consumers in Ohio and elsewhere in PJM.
The Office of the Ohio Consumers’ Counsel is the statutory representative of millions of
Ohio residential utility consumers, per R.C. Chapter 4911. OCC actively advocates for Ohioans
in numerous state and federal regulatory proceedings, including proceedings before FERC. OCC
timely intervened in this case on August 14, 2026.2 Ohio residential consumers may be adversely
affected if FERC accepts PJM’s filing in this case. PJM’s proposal would require them to pay for
resource inadequacy risks and related costs that they did not cause, i.e., risks and costs associated
with obtaining adequate generating capacity to satisfy the loads of new AI and large data center
customers.
I.
BACKGROUND
PJM submitted in this docket on July 31, 2026, a proposal for implementing a one-time
procurement of new generating capacity that PJM represents is needed to address “resource
adequacy challenges” in the PJM region.3 PJM states these shortages are associated with
insufficient commitments of capacity in the Reliability Pricing Mechanism (“RPM”) auctions for
the 2027/2028 and 2028/2029 Delivery Years.4 PJM further represents that the insufficiency of
resources in these RPM auctions is “primarily driven by the unprecedented addition in recent
2 Doc-less Motion to Intervene in PJM Interconnection, L.L.C., Docket No. ER26-3380-000, filed by Office of the
Ohio Consumers’ Counsel, available on FERC’s e-library website as Accession Document No. 20260814-5066.
3 Reliability Backstop Procurement to Address Resource Adequacy Concerns Stemming from Large Loads, PJM
Interconnection, L.L.C., Docket No. ER26-3380-000, available on FERC’s e-library website as Accession
Document No. 20260731-5214 (“RBP Application”).
4 RBP Application at 1.
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years of large loads, most notably AI and other data centers, in the PJM region.”5 PJM states
that the proposal is consistent with the following goals agreed to by the National Energy
Dominance Council (“NEDC”) and 13 governors of the PJM states:
procure new capacity resources through a backstop auction;
that auction should commence no later than September 2026;
the auction should provide 15-year price certainty for new capacity resources;
the program should “allocate the cost of any new capacity procured through the
backstop auction to Load Serving Entities (“LSEs”) with new data centers
located in their regions that have not self-procured new capacity or agreed to be
curtailable;6 and
the program should allocate any remaining costs associated with the shortage to
LSEs based on their remaining net shortages.7
PJM states that its region hosts the largest concentration of data center load in the world,
and that its forecasted load is expected to increase by 32 gigawats (“GW”) between 2024 and
2030, with 30 GW driven solely by the large load data centers. It also asserts that the shortfall in
capacity cleared to meet the resource adequacy needs of the region has grown for each of the
past three RPM auction Delivery Years, which includes the 2028/2029 Delivery Year auction,
run in July of this year.8
PJM proposes to implement a one-time auction along the lines of its existing RPM
backstop auction process to secure the difference between the RPM auction results for the
5 Id.
6 Id. at 2 (emphasis in original); see also Statement of Principles Regarding PJM, National Energy
Dominance Council, 1 (Jan. 16, 2026), available at https://www.energy.gov/documents/statement-principles-
regarding-pjm[https://perma.cc/35HJ-W56E]. This document is referred to in the RBP Application as “NEDC/PJM
Governors’ Principle.” PJM states that the governors support includes the 13 states of Delaware, Illinois, Indiana,
Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, and West
Virginia, and the District of Columbia.
7 RBP Application at 2, 9 (emphasis added)..
8 Id. at 6-7.
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2028/2029 Delivery Year and the amount needed to serve forecasted load for that year. The
auction would obtain commitments of new capacity from eligible resources for a fixed term of
up to 15 years, starting with the 2028/2029 Delivery Year and ending with the 2042/2043
Delivery Year.9 The commitment term for the resources acquired in the auction that are
scheduled to commence service after the 2028/2029 Delivery Year will be shortened by a
commensurate number of years, as no commitment will extend beyond the 2042/2043 Delivery
Year.10 In effect, PJM proposes to allow planned new generating resources to participate in the
auction even if their in-service date in beyond the 2028/2029 Delivery Year, so long as those
resources are in-service by June, 2032.11
PJM proposes to limit the auction to new load coming on-line in 2028/2029 that does not
bring its own capacity resources sufficient to serve its needs.12 “In other words, the RBP is a
one-time mechanism that will only procure the capacity necessary to cover any remaining
shortfall from the 2028/2029 BRA after PJM has accounted for new capacity being brought by
new load or that otherwise qualify for a limited opt-out from the RBP.”13
The proposed auction will use a RTO region-wide target, and PJM would enter into long-
term agreements with the suppliers to purchase that capacity.14 PJM proposes to pay each seller
its offer bid, less any revenues the seller is entitled to receive for commitment of the same
capacity in the regular RPM auctions.15 New loads can acquire their own capacity by entering
9 Id. at 8.
10 Id.
11 Id. at 51.
12 Id. at 26.
13 Id.
14 Id. at 28-29, 31.
15 Id. at 29.
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into bilateral contracts for new supply, so long as that new supply is not already committed in an
RPM auction.16 Sellers into the auction will be responsible for all actual Network Upgrade costs
incurred to interconnect their resources to the grid.17
PJM is not proposing to match acquired supply to individual new large loads but rather
proposes to allocate costs to Electric Distributor Company (“EDC”) zones where the new large
loads are located, and then to LSEs within that zone that are short of supply commitments.18
PJM then relies on the states to allocate these costs to retail customers within those LSE areas.19
If a state does not report obligations for new load within LSE regions in their jurisdictions, then
the zonal RBP charges will be to all consumers within the relevant zone.20
If generators bidding in new supply fail to bring their new resources on-line as promised
in the offer, PJM proposes to impose a penalty on those entities equal to 20% of the proposed bid
price.21 If the new resources cannot come on-line within three years of the auction in which they
cleared, PJM will cancel the contract with that supplier. 22 PJM proposes that the shortage
penalties will be allocated to load.23 If LSEs default on payments, then PJM proposes that other
LSEs in the same EDC zone as the defaulting LSE that are short in that same year will pay the
amounts due.24
16 Id. at 33.
17 Id. at 56.
18 Id. at 96.
19 Id. at 97-104.
20 Id. at 99 (“[I]f no allocation is reported by the relevant Electric Distributors with allocated RBP UCAP MW, PJM
will allocate RBP Charges based on the Peak Load Contribution submitted to PJM for the LSEs in the relevant
zone/area.”).
21 Id. at 60.
22 Id. at 61.
23 Id.
24 Id. at 89.
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II.
PROTEST
OCC protests PJM’s filing because it will not minimize costs for consumer, nor
accomplish its objectives of acquiring new generating capacity in the region in a manner that
allocates risks and costs for the new capacity to those causing the costs to be incurred, i.e., AI
and large data center loads. Instead, the proposal will result in shifting these risks and costs to
existing consumers who have not caused the need for new generating capacity and who are
unlikely to use the generating capacity provided by these new resources. The risks and costs
include the realistic uncertainty that either generating capacity or the forecasted AI or large data
center loads will not show up. Moreover, the proposal inappropriately and unreasonably relies
on state laws and regulations, that may not exist in many states, to ensure that these costs and
risks in fact are borne by the AI and large data center loads.
Ohio has no statutes governing allocation of large load-related generation capacity costs
among retail customers. And while there is one case in which the Public Utilities Commission of
Ohio (“PUCO”) has directed allocation of some of these large load driven costs and risks to the
large load data center customers, there are no uniform regulations and tariffs that apply to all
utilities and LSEs in the state.25 Thus, PJM’s proposed RBP program leaves many Ohio
consumers at significant risk of bearing costs associated with these new large data center loads.
In contrast, the backstop procurement proposal prepared by the PJM IMM and proposals
discussed by other stakeholders in PJM would directly allocate the risks and costs of this new
25 In the Matter of the Application of Ohio Power Company for New Tariffs Related to Data Centers and Mobile
Data Centers, Opinion and Order (Jul. 9, 2925), in PUCO Case No. 24-508-EL-ATA; see also In the Matter of the
Application of Ohio Power Company for New Tariffs Related to The Standard Service Offer Service for Data Center
Load, Finding and Order (Aug. 5, 2026) in PUCO Case No. 26-113-EL-ATA. While there are additional matters
pending or contemplated to implement specific data center load tariffs for American Transmission Systems, Inc.,
Dayton Power and Light Company and Duke Energy Ohio, to date the PUCO has not adopted orders establishing
programs for these utilities.
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generating capacity to the new AI and large data center loads, while fulfilling the resource
adequacy needs of the region.
OCC recognizes that PJM has proposed a myriad of rules for the RBP auction intended to
mitigate market power and control prices that OCC has not described here. While OCC is not
addressing in this protest every serious flaw raised by the PJM RBP proposal, OCC notes that the
overall RBP design is unlikely to mitigate market power or achieve the intended objective of
ensuring resource adequacy in a manner consistent with cost allocation principles and in a
manner that will result in just, reasonable and not unduly discriminatory and preferential rates for
consumers. OCC generally supports the protest submitted in this docket by the Maryland Office
of People’s Counsel and other consumer advocates on issues not addressed directly in this
Protest.
A. PJM’s RBP proposal will not ensure just, reasonable rates for consumers;
nor will it prevent unduly discriminatory or preferential rates for consumers.
PJM’s RBP proposal will not constrain capacity prices resulting from the RBP auction,
and will not protect existing consumers from the excessive costs and risks associated with those
auctions. One example is PJM’s proposed pay-as-bid approach for settling the RBP auction.26
PJM argues that this proposal is reasonable because the auction will not be procuring a uniform
commodity and a single clearing price would “transfer inframarginal rents to every seller priced
below the most expensive accepted offer.”27 These are extraordinary claims in light of PJM’s
support for the existing RPM rules that use a single clearing price approach.
FERC has long found the existing offer and clearing price rules for the existing RPM
auctions just, reasonable, and not unduly discriminatory or preferential. Those RPM auctions
26 Id. at 65.
27 Id. at 65-66.
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similarly procure non-uniform commodities (new and existing generating capacity, storage
resources, intermittent resources, demand resources, etc.) as proposed for the RBP auction. They
also pay the single clearing price to all resources clearing at or below the clearing bid, thus
allowing all inframarginal units to receive payments above their offer bids. PJM’s purported
explanation for different rules for the RBP auctions does not address why it now needs to use a
clearing approach that is diametrically opposite what it has supported for over 20 years in its
RPM auctions. Mere statements as to what the new proposal would accomplish without an
explanation for why the disparate treatment is needed or appropriate is not consistent with
judicial mandates for reasoned departures from existing rules.
Additionally, PJM argues that its proposed “maximum willingness-to-pay cap” will
provide “a direct limit on procurement costs even in the absence of offer mitigation.”28
PJM proposes to set the cap at the maximum price for the existing RPM auctions of
$555/MW/day, arguing that this mitigates market power for consumers because
“competitive dynamics are expected to encourage suppliers to submit competitive offers
that more closely reflect their willingness to provide service.”29
That too is an extraordinary claim given that PJM is proposing this one-time RBP
auction because there is a 6,800 MW scarcity of supply in the 2028/2029 Delivery Year.
The $555/MW-day (unforced capacity) offer cap is based on scarcity conditions and is
significantly higher than the clearing price in the 2028/2029 auction of $325/MW-day
price cap, which also reflects the scarcity conditions in that auction.30 Exactly what is it
28 Id. at 68.
29 Id. at 68-69.
30 Id. at 62 for current $555/MW-day offer cap; see also 2028/2029 Base Residual Auction Report at 3 (Jul. 14,
2026), available at https://www.pjm.com/-/media/DotCom/markets-ops/rpm/rpm-auction-info/2028-2029/2028-
2029-bra-results-report.pdf.
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that will constrain supplier incentives to bid at the price cap instead of their marginal
costs in this auction? The answer is: nothing. Current scarcity market conditions in
PJM’s capacity markets simply do not provide the tempering influence needed to mitigate
market power, and as is anticipated in non-scarce markets. PJM has not demonstrated
that its RBP proposal is designed to sufficiently mitigate market power and produce
prices for consumers that are just, reasonable, and not unduly discriminatory or
preferential. Instead, this market design appears guaranteed to result in excessive electric
capacity prices for consumers in PJM that will be allocated the costs of this auction.
One of the most glaring flaws in PJM’s proposal is that by allowing resources that will
not come on-line until after the 2028/2029 Delivery Year to participate, it will not ensure
resource adequacy for the 2028/2029 Delivery Year – the year that new generating capacity is
most needed. PJM proposes to accept offers from planned generating resource owners whose
planned generation have commercial operation dates beyond the 2028/2029 Delivery Year, so
long as the resources have an in-service date no later than 2032.31 PJM states that it is necessary
to accept such offers because it is unlikely there are sufficient planned resources with in-service
dates that line up with the 2028/2029 Delivery Year.32 PJM maintains that allowing resources
with in-service dates beyond that Delivery Year to participate in the auction will mitigate
scarcity in the auction by increasing the otherwise available supply.33 PJM proposes that any
capacity shortfalls in the interim will be addressed by curtailment policies being proposed in
31 RBP Application at 51.
32 Id. at 68.
33 Id.
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newly filed PJM Docket No. 26-3515-000, i.e., the Interim Resource Adequacy Service
(“IRAS”) proposal.34
OCC agrees there is merit in PJM’s concern that scarcity conditions will exist in the RBP
auction. It is for this reason that sufficient market power mitigation rules must be in place to
protect those paying the costs of this auction. As explained above, PJM’s proposal fails to
ensure such mitigation. The proposal’s reliance on planned new generation resources that will
not be in-service by the 2028/2029 Delivery Year for market power mitigation does not address
concerns that the RBP auction is likely to clear at the extremely high price cap due to shortage
conditions. Instead, it means that resources available in the 2028/2029 Delivery Year are still
likely to be well short of supply needed for resource adequacy if the forecasted AI and large data
center loads come on-line as forecasted in that timeframe.
PJM uses the scarcity concern as its main reason for rushing a FERC decision on the RBP
proposal.35 However, for the reasons explained in this protest, that proposal is unlikely to result
in reasonable costs for consumers and unlikely to adequately protect existing consumers from
excessive, unjust and unreasonable rates. PJM’s admits that its proposal is unlikely to resolve
the scarcity conditions for the near future because at least some of the newly-acquired generating
resources will not be in service in time for the 2028/2029 Delivery Year. So, there is no reason
for FERC to rush to put PJM’s proposed RBP auction in place by September 2026 as PJM
requests. Instead, FERC should set PJM’s proposed auction design for evidentiary hearings
and/or settlement proceedings and provide stakeholders and consumers an opportunity to explore
options that would better ensure resource adequacy at just and reasonable rates. The IRAS
34 Id. at 48.
35 Id. at 3-9.
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curtailment proposal in Docket No. ER26-3515 could better address timing concerns resulting
from delaying implementation of a backstop procurement auction.
OCC is also concerned that PJM’s RBP proposal does little to rectify or minimize the
excessive costs existing consumers in Ohio and elsewhere in PJM are paying due to RPM
auctions that have already been run for prior years. The IMM has calculated that data center
demand increased capacity costs to other PJM customers by approximately $23.1 billion across
the 2025/2026, 2026/2027, 2027/2028 Base Residual Auctions.36 The $23.1 billion figure is not
a mere historical artifact of load growth. It reflects a structural outcome of a capacity market in
which extraordinary new demand (data centers) can raise clearing prices across a much larger
base of existing capacity (other customers including residential customers). The result is a
system-wide cost shift that extends far beyond the incremental load that triggered it. The IMM’s
June 30, 2026 RBP proposal, discussed in section C below, demonstrates that significant reforms
to PJM’s RBP proposal are needed to stop the historical subsidies already being provided by
existing consumers to AI and large data center loads.
Accordingly, the task should be not only to prevent future cost shifts from new data
center load, but also to evaluate whether and how PJM’s market design can better account for the
magnitude of subsidies already imposed on existing consumers. Consumer protection requires
more than prospective reform. PJM and FERC must confront the substantial costs already borne
by consumers because data-center demand has been incorporated into prior capacity auctions.37
36 Monitoring Analytics, Critical Issue Fast Path Proposed Reliability Backstop Auction Proposal (Jun. 30, 2026),
available at
https://www.monitoringanalytics.com/reports/Presentations/2026/IMM%20Backstop%20auction%20design%20pro
posal%20-%20V6%202026.06.19.pdf (“IMM RBP Proposal”).
37 Similarly, there is concern with the effect that data centers have had on the energy prices in PJM. Energy prices
have significantly increased in large part due to the 24 x 7/365 data center energy use pushing the marginal clearing
unit higher up in the PJM dispatch stack. In 2023, energy costs across PJM averaged $30.23/MWh. During the first
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For transparency regarding the magnitude of the problem, PJM and the IMM should develop a
standardized accounting of capacity costs attributable to data center demand in each affected
BRA for the past three to five Delivery Years.
PJM and FERC should evaluate whether a legacy data center cost allocation and
consumer credit mechanisms could, consistent with cost causation and other rate principles,
assign identified legacy costs on a forward-looking basis to the load responsible for driving these
costs and risks and provide corresponding credits to existing customers that are bearing these
costs. Such a mechanism should be grounded in demonstrable cost causation and rate principles.
It should avoid arbitrary assignment of historical costs to unrelated new loads. And, to the extent
possible, it should ensure that any recovery amounts are returned to affected non-data center
customers. Where feasible, PJM should consider transitional charges on identifiable responsible
loads to recover a portion of legacy costs. The objective is consumer restitution through
principled cost allocation.
B. The RBP proposal will unjustly and unreasonably leave existing consumers
in Ohio and elsewhere in PJM bearing the risks and costs associated with
these new AI and large data center load.
PJM’s RBP proposal does not accomplish the objective of protecting existing consumers
from the risks and costs associated with procuring new generating capacity for AI and large data
center loads. Instead, the proposal is designed to allocate the costs of the auction to all
consumers in the EDC’s zone where the AI and large data center loads that bring insufficient
generating capacity with them are located.38 Yet many of those consumers are no more
seven months of 2026, energy costs across PJM averaged $72.07/MWh. PJM and FERC should also confront these
costs and should evaluate whether a legacy cost allocation and customer credit mechanism should be adopted.
38 Id. at 96-97.
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responsible for the incurrence of these costs than are consumers in regions where there is no
shortage of capacity for AI and large data center loads.
PJM inappropriately relies on state programs to determine allocation among retail
consumers within these zones. In other words, PJM is asking FERC to punt the question of cost
allocation for these new resources to the states. However, as indicated earlier in this Protest, not
all states have statutes that would allocate these costs to the AI and large data centers driving the
cost incurrence. As note earlier, Ohio is one such state. The PUCO has required a special tariff
to allocate to AI and large data center loads the costs of new generating capacity and other
resources needed to serve them from only one of four utilities serving retail consumers in Ohio,
i.e.. American Electric Power.39 No similar protections exist currently for consumers of the three
other utilities in the state. There is no guarantee under Oho law that all Oho consumers will be
protected against the cross-subsidies inherent in PJM’s proposal. It is fundamentally
unreasonable for PJM to rely on a system of shared state-federal jurisdiction to resolve a
problem raised directly by its proposed wholesale RBP program.
PJM’s proposed penalty structure for ensuring that generation suppliers submitting sell
offers into the RBP auction abide by their offer commitments is similarly unjust, unreasonable,
and unduly discriminatory and preferential. While it is reasonable for PJM to propose shortage
penalties for a supplier’s failure to come on-line by the anticipated commercial operation date
encompassed in its offer, it is not reasonable for PJM to impose those shortage charges and costs
on all loads in the EDC and LSE zones experiencing shortages.40 The purpose of shortage
penalties should be to strongly encourage generation capacity sellers to abide by their
39 Supra, n.25.
40 RBP Application at 61 (“Shortfall charges assessed to RBP Resources will be allocated to load”).
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commitments to supply power by a date certain. OCC understands that events can occur to delay
such commercial operation dates. But the risks of such events should be borne by those with
more direct control over such events, i.e., the suppliers themselves.
Allowing those costs to be transferred to load essentially just shifts the risk that a
generating resource will be commercially operational to the parties with no control over those
operations, i.e., the loads that must bear the costs of the power to be generated. Moreover, that
shift in risk and costs shields the generators, the entities with at least some control over the
process of bringing this generation online, from the costs of their actions or inactions. In the
event of a supplier’s failure to reach a targeted commercial operation deadline, existing load is
already bearing a significant portion of that risk by having to forego the needed capacity and
likely being subjected to curtailment of use. To impose the shortage charges on those loads, in
addition to the shortage conditions, is fundamentally unjust, unreasonable and unduly
discriminatory and preferential. Such a policy allows the suppliers to escape any financial risk or
responsibility for their investments. This violates FERC’s long-held policy of imposing the risk
of investment on those making the investments and away from loads who have no control over
those investments.41
Additionally, PJM’s proposal to limit the shortage penalty to 20% of the offer price for
the capacity is also unjust, unreasonable and unduly discriminatory and preferential in favor of
suppliers. The objective of such penalties should be to protect the load that will suffer from the
capacity shortages in the region. Electric generation capacity is a fundamental financial and
41 See, e.g., Wholesale Competition in Regions with Organized Electric Markets, Order No. 719, 125 FERC 61,071
at P 1 (2009) (Effective wholesale competition protects consumers by providing more supply options, encouraging
new entry and innovation, spurring deployment of new technologies, promoting demand response and energy
efficiency, improving operating performance, exerting downward pressure on costs, and shifting risk away from
consumers. National policy has been, and continues to be, to foster competition in wholesale electric power
markets.”).
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health necessity for residential, commercial and industrial consumers in today’s economy,
especially for hospitals, schools, nursing homes and residential homes that have family members
living on electric-operated life support facilities. PJM’s proposal to limit the proposed shortage
penalty to only 1/5th of the cost of the capacity sell offer seriously undervalues the reliance load
places on resource adequacy. FERC should reject PJM’s proposed penalties for failure of
suppliers to live up to their capacity commitments when bidding planned resources into the RBP
auctions as fundamentally insufficient to protect consumers in Ohio and elsewhere in PJM.
C. The IMM proposed approach to resource adequacy in PJM will ensure
direct allocation of the risk and costs of needed new generation to the
responsible AI and large data center loads in the region.
On June 30, 2026, Monitoring Analytics, the PJM IMM, posted on its website its
proposal for resolving the resource inadequacy concerns created by the shortages in the
2027/2028 and 2028/2029 Delivery Years. The IMM submitted this proposal to the PJM Critical
Issue Fast Path stakeholder process as an alternative to the PJM RBP proposal.42 As the IMM
states, “[t]he most important criterion for evaluating proposals to address how to reliably serve
new data center load is the assignment of the costs and risks associated with LSEs serving data
center load.”43 The IMM explains that “the failure to exclude new data center load from the
BRAs [RPM base residual auctions], as PJM proposes, would by definition impose significant
costs on other customers and therefore violate the basic principle that data center costs should
not be imposed on other customers.”44
By including AI and large data center loads in the RBP and other RPM auctions, PJM is
placing all existing consumers in the region at risk of paying for the capacity shortages because
42 IMM RBP Proposal at 1.
43 Id.
44 Id.
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the costs of RPM and the proposed RBP auctions are to be spread across all consumers in the
regions that are short regardless of the driving cost causers for those shortages. Those costs and
risks include not only the cost of the procured generation, but the risks that both the new
generating capacity and the forecasted AI and large data center loads will not materialize.
In contrast, the IMM proposes that LSEs serving the new AI and large data center loads
enter into 15-year bilateral contracts in which the risks and costs of the new generation to be
acquired to serve those loads are allocated only to the parties to those contracts.45 The IMM
explains that this proposal is analogous to the program in which Fixed Resource Requirements
customers opt-out of the RPM auctions.46 In essence, this proposal establishes a Bring Your
Own New Generation approach to solve the dire resource inadequacy concerns raised by the
exponential growth in AI and large data center loads on the PJM system in recent years.47
To the extent that the affected LSEs do not enter into such contracts, the IMM proposes a
RBP construct that would “run a full single clearing price auction using the RPM capacity
market clearing model for just data center load.”48 In other words, the IMM proposal would
create an auction limited to new generating capacity supplies and new AI and large data center
loads, thus shielding existing consumers from the associated costs and risks imposed by these
unprecedent new loads. In contrast to PJM’s RBP proposal, existing loads are not affected in any
way by the auction clearing process.
Also unlike the PJM proposed RBP, the IMM proposed RBP would include the location
and MW of the proposed generation that participates, and be based on expected loads for
45 Id.
46 Id.
47 Id.
48 Id. at 2.
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individual AI and large data center customers.49 The resulting contracts between the generation
supplier and the AI/large data center loads would not allow for transfer of any of the risks or
costs to existing consumers.50 Thus, in contrast to PJM’s proposal, “the qualifying bilateral
contracts assign all risks to the bilateral counterparties, and no risks are assignable to EDCs,
LSEs, PJM or any other customers.”51 The IMM proposal contains additional proposed rules to
address market power mitigation concerns and other details associated with the auction clearing
mechanism.
OCC supports the IMM’s proposal as a just, reasonable, and not unduly discriminatory or
preferential solution to the recent resource inadequacy concerns associated with the explosion in
AI and data center load growth on the PJM system. Unlike PJM’s proposal, the IMM’s approach
will restrict risks and costs to those entities driving the need for new generating capacity on the
system. This in turn better comports with the Seventh Circuit’s cost allocation mandate that
costs must be allocated in a manner roughly commensurate with cost causation and beneficiaries
of the proposed new infrastructure.52 Unlike the PJM RBP proposal, the IMM RBP proposal
provides no loopholes for new generating capacity and AI and large data center loads to escape
the risks and costs of their ventures, and no recourse to subsidized support from existing
consumers in PJM.53
49 Id. at 3.
50 Id. at 4.
51 Id. at 5.
52 Ill. Commerce Comm’n v. FERC., 576 F.3d 470, 476 (7th Cir. 2009) (“ICC I”) (FERC is “not authorized to
approve a pricing scheme that requires a group of utilities to pay for facilities from which its members derive no
benefits, or benefits that are trivial in relation to the costs sought to be shifted to its members”); Ill. Commerce
Comm’n v. FERC, 756 F.3d 556, 564 (7th Cir. 2014) (“ICC II”) (remanding the case a second time, finding that on
remand, FERC had still not justified that costs would be allocated in a manner remotely related to cost causation).
53 IMM Proposal at 5.
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FERC also should consider in any evidentiary and/or settlement proceedings established
in this case the additional proposed solution to PJM’s resource adequacy concerns related to AI
and large data center loads submitted to the PJM Powering Reliability Through Market Design
Workshop by the Ohio Energy Group (“OEG”) on July 15, 2026.54 That proposal would
establish a bifurcated auction design where existing generation would be paid short-term
capacity pricing with caps and floors under the current RPM auction construct and new
generation needed to serve AI and large date center loads would be paid a long-term capacity
price necessary to provide revenue certainty for financing.55 OEG’s proposed modification to
PJM Path A, Option 2 would establish a new, PJM-administered long-term capacity market
without price caps or floors.56 The payments to new generators would not be paid to existing
generators, for whom such payments would just be a windfall and result in excessive costs to
consumers.57
OCC does not support every element of the OEG proposal. For example, the proposal to
charge existing consumers a blended Legacy Auction and Reliability Auction price,58 would still
shift some costs to existing consumers associated with AI and large data center loads. However,
the proposal retains elements of the IMM proposal to bifurcate auctions for existing and new
large loads in order to charge most of the costs of new generating capacity to serve the new loads
54 Bifurcated Capacity Market Under PJM Path A, Option 2, submitted on behalf of the Ohio Energy Group to the
PJM Powering Reliability Through Market Design Workshop, and prepared by Michael L. Kurtz, Partner, Boehm,
Kurtz & Lowry (Jul. 15, 2026). This proposal is available at https://www.pjm.com/-/media/DotCom/committees-
groups/workshops/prtmdw/2026/20260714/20260714-item-04b---bifurcated-capacity-market-under-pjm-path-a-
option-2---michael-kurtz-presentation.pdf (“Ohio Energy Group Resource Adequacy Proposal”).
55 Id. at Slide 4.
56 Id. at Slide 7.
57 Id. at Slide 8.
58 Id. at Slide 9.
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to those causing the costs to be incurred. Consequently, the OEG proposal could be vetted
further in a FERC Settlement Judge-led settlement process.
III.
CONCLUSION
FERC may accept or reject a utility filing under section 205 of the Federal Power Act, 16
U.S.C. 824d, depending on whether the utility has demonstrated that its proposal is just,
reasonable, and not unduly discriminatory or preferential.59 However, as PJM notes in its RBP
Application, FERC may not modify substantial elements of the proposal without PJM’s
consent.60
Although OCC seeks rejection of PJM’s proposal in this case, OCC agrees that
something must be done soon to address the resource adequacy concerns in the PJM region over
the next few years. Consequently, OCC urges that if FERC accepts the filing, it should do so
subject to refund and set the filing for hearing and/or settlement proceedings with directives that
the parties use the IMM RBP proposal as a starting point.
Such a process will provide stakeholders an opportunity, subject to Settlement Judge
oversight, to develop a just, reasonable and not unduly discriminatory or preferential solution
that will protect existing consumers in Ohio and elsewhere from the unreasonable shift of AI and
large data center load risks and costs to them, and from excessive, unjust, unreasonable and
unduly discriminatory and preferential rates.
59 NRG Power Mktg., LLC v. FERC, 862 F.3d 108 at 114 (D.C. Cir. 2017) ("Under Section 205, FERC reviews
the proposed rate scheme filed by a utility or Regional Transmission Organization and determines whether the
proposal is just and reasonable. FERC may accept or reject the proposal.” (“NRG Power Mktg.”).
60 Id. (“Although FERC may not unilaterally impose a new rate scheme under Section 205, this Court has held that
FERC has some authority to propose modifications to a utility's proposal if the utility consents to the
modifications.”).PDF page 21
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WHEREFORE, OCC respectfully requests that FERC protect Ohio consumers by
rejecting PJM’s Reliability Backstop Procurement proposal in this case, or in the alternative, set
this matter for evidentiary and/or settlement proceedings.
Respectfully submitted,
Maureen Willis
Ohio Consumers’ Counsel
/s/ Angela O’Brien
Angela O’Brien
Deputy Consumers’ Counsel
Office of the Ohio Consumers’ Counsel
65 East State Street, Suite 700
Columbus, Ohio 43215
Telephone: (614) 466-9531
angela.obrien@occ.ohio.gov
/s/ Denise C. Goulet
Denise C. Goulet, Esq.
McCarter & English, LLP
1301 K Street, N.W.
Suite 1000 West
Washington, D.C. 20005
(202) 753-3400
dgoulet@mccarter.com
Special Counsel to the Ohio Office of the Attorney
General for the Office of the Ohio Consumers’
Counsel
DATED: August 21, 2026
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CERTIFICATE OF SERVICE
I hereby certify that I have on this date served a copy of the foregoing document via
electronic mail upon all parties of record on the Commission’s official service list in this
proceeding. Dated in Columbus, Ohio this 21st day of August, 2026.
/s/ Denise C. Goulet
Denise C. Goulet
McCarter & English, LLP
1301 K Street, N.W.
Suite 1000 West
Washington, D.C. 20005
(202) 753-3400
dgoulet@mccarter.com