ER26-3380-000 · 2026-07-31 · PJM Interconnection, L.L.C.
PJM proposes its first reliability backstop procurement
Back to sections and commentaryPDF page 1
UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
PJM Interconnection, L.L.C.
)
Docket No. ER26-____-000
RELIABILITY BACKSTOP PROCUREMENT TO ADDRESS RESOURCE
ADEQUACY CONCERNS STEMMING FROM LARGE LOADS
Craig Glazer
Vice President–Federal Government Policy
PJM Interconnection, L.L.C.
1200 G Street, NW, Suite 600
Washington, D.C. 20005
(202) 423-4743
craig.glazer@pjm.com
Ryan J. Collins
Vivian W. Chum
Wright & Talisman, P.C.
1200 G Street, NW, Suite 600
Washington, D.C. 20005
(202) 393-1200
collins@wrightlaw.com
chum@wrightlaw.com
Chenchao Lu
Associate General Counsel
PJM Interconnection, L.L.C.
2750 Monroe Blvd.
Audubon, PA 19403
(610) 666-2255
chenchao.lu@pjm.com
Attorneys for PJM Interconnection, L.L.C.
July 31, 2026
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TABLE OF CONTENTS
I.
THE RBP IS A LEGALLY DURABLE REFORM THAT
INCORPORATES ONGOING AND FORTHCOMING,
COMPLEMENTARY STATE ACTIONS TO ADDRESS RBP COST
ALLOCATION. ...................................................................................................... 6
A.
The RBP Is a Just and Reasonable, Interim Step to Address
Resource Adequacy Challenges .................................................................. 6
B.
The RBP Is Consistent with the PJM Governors’ Principles ..................... 9
C.
The Success of the RBP Requires State Participation .............................. 10
D.
The RBP Adheres to the Legal Precedent on Jurisdiction ........................ 13
E.
The RBP Requires Cooperation from Numerous Sectors in Order
to Meet the Goals of the NEDC/PJM Governors’ Principles
Document .................................................................................................. 16
II.
BACKGROUND .................................................................................................. 19
A.
The Critical Issue Fast Path Stakeholder Process ..................................... 19
B.
PJM Board Determination ........................................................................ 21
C.
PJM’s Large Load Matters........................................................................ 22
III.
THE PROPOSED REFORMS TO THE TARIFF AND THE RAA ARE
JUST AND REASONABLE AND NOT UNDULY DISCRIMINATORY
OR PREFERENTIAL ........................................................................................... 25
A.
Overview of the RBP ................................................................................ 25
1.
The RBP is a Reliability Backstop solution tailored to meet
a specific challenge in the context of a reliability
requirement shortfall in PJM’s BRAs stemming, in part,
from the influx of large loads, including data centers .................. 27
2.
An ongoing bilateral matching process is a parallel path to
supporting efforts to bring new capacity to PJM in order to
meet the PJM Region Reliability Requirement shortfall .............. 30
B.
The RTO-Wide RBP Target Is Equal to the Initial RBP Target
Minus Qualifying RBP Offset UCAP MW and Opt-Out UCAP
MW (Proposed Tariff, Attachment DD, section 18.1) .............................. 31
1.
Initial and Final RBP Targets ....................................................... 31
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ii
2.
Qualifying RBP Offset UCAP MW (proposed Tariff,
Attachment DD, section 18.2) ...................................................... 35
a.
New load and new demand ............................................... 35
i.
Load (demand) must be new (proposed
Tariff, Attachment DD, section 18.2(c)) ............... 35
ii.
Capacity must be new (proposed Tariff,
Attachment DD, section 18.2(a)) .......................... 35
iii.
Matching new load with new capacity
supports reliability and avoids over-
procurement, under-procurement, and
double-counting (proposed Tariff,
Attachment DD, section 18.2(b)) .......................... 37
b.
Signed bilateral contracts or Self-Supply generation
resources (proposed Tariff, Attachment DD,
sections 18.2(c)(i) and 18.2(c)(ii)) .................................... 39
c.
Loads participating as Annual Demand Resources
or DER Aggregation Resources (proposed Tariff,
Attachment DD, section 18.2(c)(iii)) ................................ 40
d.
Capacity eligible to provide Qualifying RBP Offset
UCAP MW (proposed Tariff, Attachment DD,
section 18.2(b)) ................................................................. 40
e.
Electric Distributors and other entities provide
evidentiary support for Qualifying RBP Offset
UCAP MW (proposed Tariff, Attachment DD,
section 18.2(c)) ................................................................. 42
3.
Opt-out (proposed Tariff, Attachment DD, section 18.1(d)) ........ 44
C.
The Procurement Process: RBP Resources, Offers, RPM Must
Offer, Clearing, Settlement, and Cost Responsibility (proposed
Tariff, Attachment DD, sections 18.4, 18.5, and 18.6) ............................. 46
1.
The scope of the RBP (proposed Tariff, Attachment DD,
section 18.4) .................................................................................. 46
2.
Overview of seller and buyer obligations ..................................... 49
3.
Resources eligible to participate in the RBP must bring new
capacity to PJM (proposed Tariff, Attachment DD,
sections 18.5(a) through 18.5(d)) .................................................. 51
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iii
4.
RBP Sell Offers (proposed Tariff, Attachment DD,
section 18.5(e)) ............................................................................. 54
5.
RBP Sellers Responsible for Actual Network Upgrade
Costs (proposed Tariff, Attachment DD, section 18.5(e)) ............ 56
6.
Must-offer obligation in the RPM for RBP committed
resources (proposed Tariff, Attachment DD,
sections 18.6(a) and 18.6(b)) ........................................................ 56
7.
RBP UCAP MW shortfalls or failure to materialize
(proposed Tariff, Attachment DD, sections 18.6(c) through
18.6(e)) .......................................................................................... 60
8.
Clearing structure (proposed Tariff, Attachment DD,
section 18.5(f)) .............................................................................. 61
a.
The MW-weighted average of the levelized
procurement cost of all selected RBP Sell Offers
shall not exceed $555/MW-day UCAP............................. 61
b.
The proposed maximum willingness is just and
reasonable ......................................................................... 62
c.
The pay-as-bid approach is just and reasonable for
purposes of the RBP.......................................................... 65
d.
No direct market power screens or mitigation .................. 66
e.
Stage 1: gating criteria—ensuring the viability of
the resource to be developed (proposed Tariff,
Attachment DD, section 18.5(f)(i)) ................................... 71
f.
Stage 2: selection assessment........................................... 75
9.
Contract for difference settlement structure (proposed
Tariff, Attachment DD, section 18.5(g)) ...................................... 79
a.
RBP Settlement Credits and RBP Charges ....................... 82
b.
Examples of RBP Resource Settlements .......................... 82
c.
Settlement of RBP Resources with MW Shortfalls,
RBP shortfall charges, RPM Commitment
Deficiency MW, and RPM Commitment Charges
(proposed Tariff, Attachment DD, section 18.6(d)) ......... 86
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iv
d.
Example of RBP Resource Settlements of RBP MW
Shortfalls, RBP shortfall charges, RPM
Commitment Deficiency MW, and RPM
Commitment Charges (proposed Tariff,
Attachment DD, section 18.6(d)) ...................................... 87
10.
Non-payment of RBP Charges and RBP shortfall charges
(proposed Tariff, Attachment DD, section 18.9) .......................... 89
11.
Change in ownership of RBP Resource (proposed Tariff,
Attachment DD, section 18.6(f)) .................................................. 90
D.
Treatment of RBP Commitment in Event of Transmission Owner
Exit During Term of the Commitment (proposed Tariff,
Attachment DD, section 18.7) .................................................................. 90
1.
Committed RBP Resources in exiting Transmission Owner
territory (proposed Tariff, Attachment DD, section 18.7(a)) ........ 92
2.
Load allocated RBP Charges in exiting Transmission
Owner territory (proposed Tariff, Attachment DD,
section 18.7(b)) ............................................................................. 94
3.
Rules governing treatment of RBP Resources or load
allocated RBP Charges in the event of Transmission Owner
exit are appropriately submitted with this filing ........................... 95
4.
The proposed rules governing treatment of RBP Resources
or load allocated RBP Charges in the event of Transmission
Owner exit are appropriately set forth in Tariff,
Attachment DD ............................................................................. 96
E.
Allocation of Costs Associated with Resources Procured Through
the RBP (proposed Tariff, Attachment DD, section 18.3) ........................ 96
1.
The proposed cost allocation methodology .................................. 96
2.
The proposed method of allocating costs to Electric
Distributor zones/areas and LSEs within those zones/areas
is just and reasonable .................................................................. 100
3.
The proposed allocation methodology recognizes that
allocation to retail customers, including data centers, is
within the states’ and/or RERRAs’ purview ............................... 104
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F.
Credit Requirements of RBP Resources and LSEs Commensurate
with Risks (Proposed Tariff, Attachment DD, Section 18.8) and
Management of RBP Defaults (Proposed Tariff, Attachment DD,
Section 18.9) ........................................................................................... 108
1.
Sellers must provide collateral with RBP Sell Offers
(proposed Tariff, Attachment DD, section 18.8(a)) .................... 112
2.
Return of RBP Collateral (proposed Tariff,
Attachment DD, section 18.8(a)(ii)) ........................................... 113
3.
Collateral requirements for RBP Resources traded to a
different entity than the RBP Seller (proposed Tariff,
Attachment DD, section 18.8(a)(v)) ........................................... 113
4.
Buyers (LSEs) allocated cost responsibility for RBP
Charges must provide collateral (proposed Tariff,
Attachment DD, section 18.8(b)) ................................................ 114
a.
Determining the inputs to the RBP credit
requirement ..................................................................... 115
b.
Determining an LSE’s RBP credit requirement.............. 118
c.
Posting and maintenance of RBP Collateral ................... 120
d.
Changes to the RBP credit requirement associated
with intra-Delivery Year transfers of load and RBP
UCAP MW cost responsibility ....................................... 121
5.
Management of defaults of obligations to pay RBP Charges
and RBP shortfall charges (proposed Tariff,
Attachment DD, section 18.9) .................................................... 122
G.
Miscellaneous and Conforming Changes ............................................... 123
1.
Reliability Backstop Auction (Tariff, Attachment DD,
section 16.2) ................................................................................ 123
2.
Planned Generation Capacity Resource (Tariff,
Attachment DD, section 5.5A).................................................... 125
3.
Notice of intent (Tariff, Attachment DD, section 5.5) ................ 127
4.
Minimum Offer Price Rule (proposed Tariff,
Attachment DD, section 5.14(h-2)) ............................................ 129
IV.
CORRESPONDENCE ........................................................................................ 130
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V.
REQUESTED EFFECTIVE DATE AND CONSENT TO
MODIFICATION OR SEVERANCE OF ISSUES ............................................ 130
VI.
DOCUMENTS ENCLOSED .............................................................................. 133
VII.
SERVICE ............................................................................................................ 134
VIII.
CONCLUSION ................................................................................................... 135
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1200 G Street, N.W., Suite 600
Washington, D.C. 20005-3898
Phone: 202.393.1200
Fax: 202.393.1240
wrightlaw.com
July 31, 2026
The Honorable Debbie-Anne A. Reese
Secretary
Federal Energy Regulatory Commission
888 First Street, N.E., Room 1A
Washington, D.C. 20426
Re:
PJM Interconnection, L.L.C., Docket No. ER26-__-000
Reliability Backstop Procurement to Address Resource Adequacy Concerns
Stemming from New Load Adjustments
Dear Ms. Reese:
PJM Interconnection, L.L.C. (“PJM”), pursuant to section 205 of the Federal Power
Act (“FPA”), 16 U.S.C. § 824d, hereby submits revisions to the PJM Open Access
Transmission Tariff (“Tariff”) and the Reliability Assurance Agreement Among Load
Serving Entities (“RAA”) to establish the Reliability Backstop Procurement (“RBP”)—a
one-time procurement of new capacity to address resource adequacy challenges in the PJM
Region1 arising from insufficient commitments of capacity in the 2027/2028 and
2028/2029 Reliability Pricing Model (“RPM”) Auctions, primarily driven by the
unprecedented addition of large loads, most notably data centers, in the PJM Region. The
RBP framework, as the PJM Board of Managers (“PJM Board”) recognized in a
January 16, 2026 letter,2 is one part of a multi-pronged, ongoing effort by PJM to respond
to the challenges stemming from the influx of large loads into the PJM Region. It is also
1 Capitalized terms not otherwise defined herein have the meaning as defined in the Tariff, Amended and
Restated Operating Agreement of PJM (“Operating Agreement”), RAA, and Consolidated Transmission
Owners Agreement (“CTOA”).
2 David E. Mills, PJM Board Chair, Board Decisional Letter on Critical Issue Fast Path - Large Load
Additions, PJM Board (Jan. 16, 2026), https://www.pjm.com/-/media/DotCom/about-pjm/who-we-
are/public-disclosures/2026/20260116-pjm-board-letter-re-results-of-the-cifp-process-large-load-
additions.pdf [https://perma.cc/P57T-ZXYJ] (“January 2026 Board Letter”).
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Honorable Debbie-Anne A. Reese
July 31, 2026
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just one part of a multi-pronged implementation of the Statement of Principles Regarding
PJM issued on January 16, 2026, by the National Energy Dominance Council (“NEDC”)
and the 13 governors of the PJM states.3 The proposed RBP in this filing is consistent with
the NEDC/PJM Governors’ Principles, which urged PJM to, inter alia,
• “procure new capacity resources” through a backstop auction,
• “commencing no later than September 2026,”
• “[p]rovide 15-year price certainty for new capacity resources,” and
• “allocate the cost of any new capacity procured through the aforementioned
[RBP] to [Load Serving Entities (“LSE”)] with new data centers that have
not self-procured new capacity or agreed to be curtailable.”4
The RBP proposal is a just and reasonable means to address the influx of large loads
while maintaining resource adequacy, reliability, and affordability in a manner that respects
the divide between state and federal authorities and avoids disrupting existing commercial
arrangements. Given the pressing resource adequacy concerns arising from the pace and
volume of large load additions in the PJM Region, PJM requests that the Federal Energy
Regulatory Commission (“Commission” or “FERC”) issue an order on this filing, and
make this proposal effective, by no later than September 29, 2026, which is 60 days after
3 Statement of Principles Regarding PJM, National Energy Dominance Council, 1 (Jan. 16, 2026),
https://www.energy.gov/documents/statement-principles-regarding-pjm
[https://perma.cc/35HJ-W56E]
(“NEDC/PJM Governors’ Principles”). The PJM states include 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.
4 Id.
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Honorable Debbie-Anne A. Reese
July 31, 2026
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the date of this filing. Commission action by such date, plus the requested effective date,
will allow PJM to commence the RBP immediately thereafter.5
Each element of this proposal is just and reasonable. Nevertheless, in the event the
Commission deems necessary, and to help facilitate the Commission’s acceptance of this
filing without delay so that the RBP can commence as soon as possible, PJM provides
notice that it consents to the Commission’s exercise of authority to modify and/or sever
any element of the proposed Tariff and RAA language to the extent necessary and
permitted under section 205 of the FPA and NRG Power Marketing, LLC v. FERC,6 where
such modification and/or severance is consistent with PJM’s overarching objectives in this
filing. PJM cautions, however, to the extent that modification and/or severance of specific
provisions of the proposal gives rise to complications, it may delay the opening of the RBP
procurement window, and such delay could cause downstream impacts such as the need to
delay the Base Residual Auction (“BRA”) for the 2029/2030 Delivery Year that is currently
scheduled for December.
As further discussed infra Part V, to the extent the Commission exercises such
authority to modify the proposed Tariff or RAA language herein pursuant to the FPA and
NRG Power Marketing, PJM respectfully requests that the Commission expressly prescribe
5 The RBP procurement window will open if and when a Commission order accepts PJM’s proposed RBP
framework. To the extent the RBP framework is accepted by September 29, 2026, and absent significant
revisions or developments, PJM intends to open the procurement window on September 30, 2026.
6 NRG Power Mktg., LLC v. FERC, 862 F.3d 108 (D.C. Cir. 2017). As the Commission has repeatedly stated,
“[t]he United States Court of Appeals for the District of Columbia Circuit has held that, in certain
circumstances, the Commission has ‘authority to propose modifications to a utility’s [FPA section 205]
proposal if the utility consents to the modifications.’” N.Y. Indep. Sys. Operator, Inc., 188 FERC ¶ 61,051,
at P 22 n.36 (2024) (alteration in original) (citing NRG Power Mktg., 862 F.3d at 114-15); see Midcontinent
Indep. Sys. Operator, Inc., 180 FERC ¶ 61,141, at P 26 n.29 (2022) (same), order on reh’g, 182 FERC
¶ 61,096 (2023); ISO New Eng. Inc., 175 FERC ¶ 61,172, at P 16 n.20 (2021) (same).
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Honorable Debbie-Anne A. Reese
July 31, 2026
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the revised language to provide the “necessary predictability” for PJM to implement such
change(s) even before issuance of an order on compliance.7 PJM’s submittal of any
compliance filing implementing such modifications would further constitute PJM’s
consent and acceptance of the Commission’s modifications. PJM has the authority to
consent to modifications to PJM’s proposal by the Commission, pursuant to the FPA and
NRG Power Marketing. In contrast to the underlying facts in NRG Power Marketing, the
proposal submitted in this filing was authorized by the PJM Board and was not the result
of a stakeholder-endorsed proposal.8
Significantly, while this FPA section 205 filing is focused on the RBP framework,
PJM intends to quickly follow this filing with another FPA section 205 filing to propose
an interim resource adequacy service (“IRAS”). That forthcoming 205 filing will explain
how load in an Electric Distributor’s zone/area that has brought its own new capacity or
has had capacity allocated to it through the RBP framework will be at lower risk of load
reduction through the IRAS structure. Furthermore, IRAS will support ongoing state
7 PJM Interconnection, L.L.C., 175 FERC ¶ 61,137, at P 110 (2021) (first quoting Aera Energy LLC v. FERC,
789 F.3d 184, 190-92 (D.C. Cir. 2015) “affirming the Commission, finding ‘FERC’s conditional acceptance
. . . simply required Kern River to substitute one number for another when allocating costs to the rolled-in
shippers. . . . Because this mechanical change gave Kern River no discretion to adjust its rate models, FERC
provided sufficient notice to ratepayers’”, and then quoting Elec. Dist. No. 1 v. FERC, 774 F.2d 490, 493
(D.C. Cir. 1985) “vacating when the ‘effective date of an order set[] forth no more than the basic principles
pursuant to which the new rates are to be calculated’” (alteration in original)). As the Commission elaborated
further in PJM Interconnection, 175 FERC ¶ 61,137 at P 110, mere “direction” without “sufficient detail on
each element [of the replacement rate] that [customers/market participants] could determine when their
transactions would be subject to [the new rule],” would mean that implementation of the compliance directive
prior Commission approval would violate the filed rate doctrine. Id. (quoting Elec. Dist. No. 1, 774 F.2d at
493 “[P]urchasers of electricity cannot plan their activities unless they know the cost of what they are
receiving, ‘providing the necessary predictability is the whole purpose of the well-established filed rate
doctrine.’” (citing Ark. La. Gas Co. v. Hall, 453 U.S. 571, 577 (1981))).
8 NRG Power Marketing, 862 F.3d at 112 (noting that PJM developed proposed revisions filed with the
Commission through its stakeholder process and that the proposed revisions “received overwhelming support
from PJM’s stakeholders”).
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Honorable Debbie-Anne A. Reese
July 31, 2026
Page 5
efforts to create operational procedures to reduce large loads that have not brought their
own new capacity ahead of residential and traditional industrial customers. The interim
resource adequacy filing will provide further information to the Commission and
stakeholders as to the multipronged PJM initiatives to address large load additions.9
Although the forthcoming IRAS proposal may refer to the RBP, the two filings are
independent of each other. In short, the RBP can and should proceed as requested in this
filing even if the Commission wishes to further examine portions of an IRAS filing that
may be pending before the Commission at the time.
Moreover, the RBP is among the stop-gap solutions being proposed by PJM while
PJM continues to make progress on a broader, holistic review of its capacity market, the
RPM, to identify durable, more permanent solutions to concerns stemming from large load
additions.10
On May 9, 2026, PJM issued a white paper, Powering Reliability Through Market
Design: Addressing Rising Demand and Constrained Supply, and Stimulating Investment
to Support Durable Reliability, which inter alia, posed foundational questions facing
PJM’s capacity market today and proffered three distinct, albeit not mutually exclusive,
9 PJM anticipates that the forthcoming section 205 filing proposing an IRAS will also address the recent
announcement by the PJM Board that “[i]ncremental new Large Loads relative to the forecast utilized for the
2028/2029 BRA will be excluded from the forecast used in future RPM auctions for the 2029/2030 Delivery
Year and beyond unless and until there are new supply resources offered into an RPM auction in sufficient
quantity to cover the new Large Load.” CIFP Framework for Service During Periods of Insufficient
Resource Adequacy – PJM Proposal, PJM Interconnection, L.L.C., 5 (July 27, 2026), https://www.pjm.com/-
/media/DotCom/about-pjm/who-we-are/public-disclosures/2026/20260727-cifp-framework-for-service-
during-periods-of-insufficient-resource-adequacy-executive-summary.pdf [https://perma.cc/46RD-UQBC].
10 See Powering Reliability Through Market Design: Addressing Rising Demand and Constrained Supply,
and Stimulating Investment to Support Durable Reliability (May 9, 2026), https://www.pjm.com/-
/media/DotCom/library/reports-notices/special-reports/2026/20260506-powering-reliability-through-
market-design.pdf [https://perma.cc/3W8Z-M4TQ] (“Powering Reliability Through Markets White Paper”).
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Honorable Debbie-Anne A. Reese
July 31, 2026
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paths forward.11 These foundational questions and proposed paths forward are a starting
point towards more permanent solutions to PJM’s resource adequacy concerns.12 This
ongoing holistic review is in line with the NEDC/PJM Governors’ Principles, which urged
PJM to “embark on a stakeholder process to reform the capacity market to ensure long-
term viability and prevent consumers from bearing excessive ongoing costs,” with an
ultimate goal of returning PJM to market fundamentals.13
I.
THE RBP IS A LEGALLY DURABLE REFORM THAT INCORPORATES
ONGOING
AND
FORTHCOMING,
COMPLEMENTARY
STATE
ACTIONS TO ADDRESS RBP COST ALLOCATION
A.
The RBP Is a Just and Reasonable, Interim Step to Address Resource
Adequacy Challenges.
PJM hosts the largest concentration of data center load in the world.14 “PJM’s load
forecast predicts peak load growth of 32 gigawatts [(“GW”)] from 2024 to 2030, 30 GW
of which is projected to be from data centers.”15 Year-over-year, the shortfall of capacity
11 Id.
12 PJM Interconnection, L.L.C., PJM to Lead Market Reform Effort to Support Generation Investment and
Reliability, PJM Inside Lines (May 6, 2026), https://insidelines.pjm.com/pjm-to-lead-market-reform-effort-
to-support-generation-investment-and-reliability/ [https://perma.cc/J2KW-LRW2].
13 NEDC/PJM Governors’ Principles at 1; see also PJM Interconnection, L.L.C., CIFP Reliability Backstop
Procurement – PJM Proposal, 1 (June 11, 2026), https://www.pjm.com/-/media/DotCom/committees-
groups/cifp-rbp/2026/20260611/20260611-item-04a---pjm-reliability-backstop-proposal---post-meeting-
materials.pdf [https://perma.cc/X7T7-5RPB] (providing background on stakeholder engagement).
14 See, e.g., Laila Kearney, Biggest US power grid operator moving forward with plan to manage data
centers, Reuters (Nov. 20, 2025), https://www.reuters.com/business/energy/biggest-us-power-grid-operator-
moving-forward-with-plan-manage-data-centers-2025-11-19/ [https://perma.cc/7M34-52V4].
15 PJM Interconnection, L.L.C., 195 FERC ¶ 61,211, at P 8 & n.24 (2026) (“June 2026 Order to Show Cause”)
(citing Letter from David E. Mills, PJM Board Chair, PJM Interconnection, L.L.C. to PJM Stakeholders
(Aug.
8,
2025),
https://www.pjm.com/-/media/DotCom/about-pjm/who-we-are/public-
disclosures/2025/20250808-pjm-board-letter-re-implementation-of-critical-issue-fast-path-process-for-
large-load-additions.pdf [https://perma.cc/F9KV-B7HK] (“August 2025 Board Letter”)). Since the issuance
of the August 2025 Board Letter, PJM has published its 2026 Long-Term Load Forecast Report, which
anticipates lower peak demand in the near term due to forecasting improvements, revising the peak load
forecast for 2030 downward by 875 megawatts (“MW”), but confirms significant growth in the next 20 years.
PJM Interconnection, L.L.C., PJM’s Updated 20-Year Forecast Continues to See Significant Long-Term
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Honorable Debbie-Anne A. Reese
July 31, 2026
Page 7
supply needed to meet demand (plus a reasonable reserve margin) has grown despite a net
increase of 1,294.4 MW Installed Capacity (“ICAP”) of supply between the 2027/2028 and
2028/2029 BRA.16 In other words, the addition of new supply has not kept pace with rapid
large load demand growth, thus giving rise to the significant tightening of the capacity
market in recent years and the subsequent resource adequacy shortfalls. To mitigate the
potential reliability risks associated with resource adequacy shortfalls, PJM is proposing
this RBP as a one-time, supplementary mechanism to procure additional supply to meet
the resource adequacy needs of the PJM Region.
The 2028/2029 BRA Report, dated July 14, 2026, indicates PJM’s BRA cleared
short of the PJM Region Reliability Requirement17 for a second consecutive year.18
Specifically, PJM’s BRA for the 2028/2029 Delivery Year, which ran from June 30, 2026,
to July 7, 2026, cleared 6,831.3 MW (in Unforced Capacity (“UCAP”)) short of PJM’s
Regional Transmission Organization (“RTO”)-wide reliability requirement at the market
price cap of $325/MW-day.19
Load Growth, PJM Inside Lines (Jan. 14, 2026), https://insidelines.pjm.com/pjms-updated-20-year-forecast-
continues-to-see-significant-long-term-load-growth/ [https://perma.cc/W3UY-F9HE].
16 2028/2029 Base Residual Auction Report, PJM Interconnection, L.L.C., 8 (July 14, 2026),
https://www.pjm.com/-/media/DotCom/markets-ops/rpm/rpm-auction-info/2028-2029/2028-2029-bra-
results-report.pdf [https://perma.cc/A53K-TXXY] (“2028/2029 BRA Report”).
17 Tariff, Part I, section 1, Definitions – O, P, Q—PJM Region Reliability Requirement (“‘PJM Region
Reliability Requirement’ shall mean, for purposes of the Base Residual Auction, the Forecast Pool
Requirement multiplied by the Preliminary PJM Region Peak Load Forecast, less the sum of all
Preliminary Unforced Capacity Obligations of [Fixed Resource Requirement (“FRR”)] Entities in the PJM
Region; and, for purposes of the Incremental Auctions, the Forecast Pool Requirement multiplied by the
updated PJM Region Peak Load Forecast, less the sum of all updated Unforced Capacity Obligations of FRR
Entities in the PJM Region.”).
18 2028/2029 BRA Report at 3.
19 Id.
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Honorable Debbie-Anne A. Reese
July 31, 2026
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Last year, PJM’s BRA for the 2027/2028 Delivery Year, which ran from
December 4, 2025, through December, 10, 2025, likewise cleared 6,623 MW short of the
PJM Region Reliability Requirement, at the market price cap of $333.44/MW-day
(UCAP).20 As both the Commission and the Department of Energy have recently
highlighted, the pace of “growth [in electricity demand] is now higher than at any point in
the past two decades, driven in part by increasing quantities of large commercial and
industrial load, most notably data centers, connecting rapidly to the transmission system.”21
As proposed, the RBP will commence upon Commission acceptance of this filing
with the goal of obtaining commitments of new RBP UCAP MW from eligible resources,
called RBP 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. The commitment term for
RBP Resources 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. The RBP will aim to procure capacity equal to the
Final RBP Target, which, as discussed below, will initially be based on the observed MW
UCAP shortfall in the BRA for PJM’s 2028/2029 Delivery Year, i.e., the Initial RBP
Target. The Initial RBP Target will be adjusted to reflect qualifying new capacity serving
20 PJM Auction Procures 134,479 MW of Generation Resources, PJM Interconnection, L.L.C., 1 (Dec. 17,
2025), https://www.pjm.com/-/media/DotCom/about-pjm/newsroom/2025-releases/20251217-pjm-auction-
procures-134479-mw-of-generation-resources.pdf [https://perma.cc/A89W-W99B].
21 June 2026 Order to Show Cause, 195 FERC ¶ 61,211 at P 6 & n.18 (citing Interconnection of Large Loads
to the Interstate Transmission System, Secretary of Energy’s Direction that the Federal Energy Regulatory
Commission Initiate Rulemaking Procedures and Proposal Regarding the Interconnection of Large Loads
Pursuant to the Secretary’s Authority Under Section 403 of the Department of Energy Organization Act,
Docket No. RM26-4-000, Advance Notice of Proposed Rulemaking at 2 (Oct. 23, 2025) (“DOE ANOPR”)
(citing 2024 Long- Term Reliability Assessment, Northern American Electric Reliability Corporation, 8 (Dec.
2024,
corrected
July
11,
2025),
https://www.nerc.com/globalassets/our-work/assessments/2024-
ltra_corrected_july_2025.pdf [https://perma.cc/Z4D4-AMQT])).
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Honorable Debbie-Anne A. Reese
July 31, 2026
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new load and certain qualifying Electric Distributors that elect and meet requirements to
opt-out of the RBP.22
B.
The RBP Is Consistent with the PJM Governors’ Principles.
Key aspects of the RBP—including the timing of the RBP, the fixed 15-year term
for newly procured RBP Resources, the Final RBP Target, and cost allocation—are
consistent with and informed by the NEDC/PJM Governors’ Principles. Specifically, the
NEDC and the 13 governors of the PJM states expressly urged PJM to:
• “expeditiously” file revisions to PJM’s Tariff;
• “[p]rovide 15-year price certainty for new capacity resources”;
• hold an “[a]uction to procure new capacity resources commencing no later
than September 2026”;
• “[a]llocate [c]osts to [d]ata [c]enters”;
• “allocate the cost of any new capacity procured through the
aforementioned . . . [a]uction to load serving entities (LSEs) with new data
centers that have not self-procured new capacity or agreed to be
curtailable”; and
• allocate any remaining costs “to LSEs based on their remaining net short
positions.”23
The RBP, as proposed herein, reflects the due consideration given to the NEDC/PJM
Governors’ Principles. At the same time, the RBP reflects the input of stakeholders, as
well as PJM’s judgment and analyses in shaping the specific means to implement the
Principles document. The resulting proposal is a just and reasonable and not unduly
discriminatory or preferential set of reforms aimed at securing new capacity resources to
address the recently observed PJM Region Reliability Requirement shortfall.
22 Since this Spring, PJM has been concurrently facilitating a bilateral matching process to encourage
voluntary, bilateral agreements between supply and demand for new capacity.
23 NEDC/PJM Governors’ Principles at 1.
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Honorable Debbie-Anne A. Reese
July 31, 2026
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C.
The Success of the RBP Requires State Participation.
The PJM states24 will each play a central role in protecting their respective
residential customers from cost shifts. Indeed, as a product of cooperative federalism, the
RBP specifically contemplates a framework in which both PJM and the PJM states have
distinct roles, within the boundaries of their respective jurisdictional authorities.
The proposed RBP framework is the result of a carefully considered effort to
respect the line between federal and state jurisdiction while simultaneously embracing
PJM’s significant role in (1) meeting the region’s resource adequacy needs and
(2) supporting the reliable and orderly interconnection of large loads in the region. As “a
creature of statute,” the Commission “has jurisdiction over only those matters that
Congress has given it authority to regulate. That authority includes jurisdiction over the
wholesale sale and transmission of electricity in interstate commerce, including all
facilities used for such sale and transmission.”25 PJM cannot “confer jurisdiction where
the Commission otherwise lacks jurisdiction.”26
In a letter to PJM on June 30, 2026, Chair of the Virginia State Corporation
Commission (“VA SCC”) Judge Kelsey Bagot and the President and CEO of the Data
Center Coalition (“DCC”) Josh Levi recently highlighted that the goals of the PJM states’
public utility commissions “to ensure reliable electric service, just and reasonable retail
rates, and to protect residential and traditional industrial customers from undue cost shifts,”
24 The District of Columbia did not sign the NEDC/PJM Governors’ Principles.
25 June 2026 Order to Show Cause, 195 FERC ¶ 61,211 at P 46 (citing Atl. City Elec. Co. v. FERC, 295 F.3d
1, 8 (D.C. Cir. 2002); 16 U.S.C. § 824(b)(1)).
26 PJM Interconnection, L.L.C., 114 FERC ¶ 61,191, at P 17 (2006).
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Honorable Debbie-Anne A. Reese
July 31, 2026
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need not be incompatible with the goal of “serving emerging large loads.”27 However, as
the VA SCC and DCC Letter recognizes, serving emerging large loads while meeting the
mandates of the PJM state utility commissions will “require proactive collaboration among
states, industry, and PJM to develop standardized regulatory tools and model retail tariff
structures that individual state commissions may consider as they address the integration
of new large electric loads.”28
Indeed, the RBP framework relies on each of the PJM states to refine, for purposes
of cost allocation, which retail loads—including which “large loads,” as each state defines
such loads—should be allocated the costs of resources procured through the RBP. The
RBP framework furthermore affords the PJM states with the flexibility needed to carry out
the recent pledge of the PJM states’ 13 governors to “[u]se their [a]uthorities to [a]llocate
[c]osts to [d]ata [c]enters and [p]rotect [r]esidential [c]ustomers.”29
Pursuant to the cooperative federalism framework that underpins the FPA, federal
and state counterparts are already working to address challenges in the PJM Region
stemming from the rapid addition of large loads, including data centers. As the
Commission recently noted with approval, “efforts taken by states to reform retail tariffs
to address the potential for retail cost shifting as large loads come online,” have been
“encourag[ing].”30
27 Letter of Chair of Virginia State Corporation Commission, Kelsey Bagot and President and CEO of Data
Center Coalition, Josh Levi to Ms. Paula Conboy, Chair of PJM Board of Managers, and Mr. David Mills,
President and CEO of PJM Interconnection, L.L.C., at 1 (June 30, 2026), https://www.pjm.com/-
/media/DotCom/committees-groups/cifp-rbp/2026/20260630/20260630-written-comments---va-scc-and-
data-center-coalition.pdf [https://perma.cc/S7C6-C86H ] (“VA SCC and DCC Letter”).
28 Id.
29 NEDC/PJM Governors’ Principles at 2.
30 June 2026 Order to Show Cause, 195 FERC ¶ 61,211 at P 69.
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Honorable Debbie-Anne A. Reese
July 31, 2026
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First, in the NEDC/PJM Governors’ Principles, the PJM states’ 13 governors
pledged to:
[u]se all available authorities to ensure that their state public
utility commissions design rate class structures to ensure that
their states’ LSEs allocate their share of the cost to procure
new capacity through the . . . [a]uctions to new data center
loads that have not otherwise procured capacity or agreed to
be curtailable.31
Second, the VA SCC and DCC have agreed to work collaboratively to “develop
model state tariff provisions addressing the retail allocation of costs associated with PJM’s
Reliability Backstop Procurement” by “no later than January 1, 2028.”32 According to the
VA SCC and DCC, the objective of this collaborative effort is to “develop transparent retail
mechanisms that appropriately align reliability backstop costs to the large load customers
whose demand contributes to the need for those procurements, while protecting existing
residential and traditional industrial customers from inappropriate cost shifts.”33
The VA SCC and DCC have also pledged to convene a joint working group with
other states to develop model retail emergency load reduction programs that will establish
the retail mechanisms needed to authorize curtailment of designated large commercial and
industrial customers before the implementation of broader manual load shed, and to
develop retail interruptible service tariffs by “no later than February 1, 2027.”34
31 NEDC/PJM Governors’ Principles at 2.
32 VA SCC and DCC Letter at 3.
33 Id.
34 Id. at 2.
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Honorable Debbie-Anne A. Reese
July 31, 2026
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D.
The RBP Adheres to the Legal Precedent on Jurisdiction.
The jurisdictional divide embedded in the RBP proposal adheres to the relevant
precedent on jurisdiction. First, on October 23, 2025, the Department of Energy issued an
Advanced Notice of Proposed Rulemaking (“ANOPR”), which called on the Commission
to consider “potential reforms to ensure the timely and orderly interconnection of large
loads to the transmission system.”35 The Commission’s subsequent Order Regarding Intent
to Act on the ANOPR (“Order on DOE ANOPR”),36 found, inter alia, that large loads
present an urgent need for reforms to ensure their timely, orderly, and non-discriminatory
connection to the transmission system.37 Nevertheless, “the addition of and service to large
loads” and the associated rates, terms, and conditions “implicate both federal and state
interests.”38 Accordingly, the Commission observed, “resolution of issues related to large
load additions will require the involvement of both federal and state actors, including the
Commission, state public utility commissions, and other state and local entities.”39 Indeed,
35 DOE ANOPR at P 1 (citations omitted).
36 Interconnection of Large Loads to the Interstate Transmission System, 195 FERC ¶ 61,045 (2026).
37 Id. at P 2.
38 June 2026 Order to Show Cause, 195 FERC ¶ 61,211 at P 44; see also PJM Interconnection, L.L.C., 193
FERC ¶ 61,217, at P 165 (2025) (“December 2025 Show Cause Order”) (Issues pertaining to large loads
“implicate both federal and state interests, and their resolution will require the involvement of both federal
and state actors, including the Commission, state public utility commissions, and other state and local
entities.”); PJM Interconnection, L.L.C., 195 FERC ¶ 61,197, concur op. (Commissioner Rosner) at P 2
(2026) (“[P]ublic utility commissioners, governors’ offices, and state legislatures are all necessary partners
in ensuring that energy infrastructure is built at the pace needed to stay ahead of demand and keep energy
affordable and reliable for PJM customers.”).
39 June 2026 Order to Show Cause, 195 FERC ¶ 61,211 at P 44. See also id. at P 48 (Notably, the Commission
has expressly “recognize[d] that states will continue to regulate: (1) the specific terms of retail sales to large
load; (2) which entities may make retail sales within their borders; . . . and (3) any siting decisions and
construction associated with the large load project.” (citations omitted)); December 2025 Show Cause Order,
193 FERC ¶ 61,217 at P 165 (issues pertaining to large loads “implicate both federal and state interests, and
their resolution will require the involvement of both federal and state actors, including the Commission, state
public utility commissions, and other state and local entities.”); PJM Interconnection, 195 FERC ¶ 61,197,
concur op. (Commissioner Rosner) at P 1 (“[P]ublic utility commissioners, governors’ offices, and state
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Honorable Debbie-Anne A. Reese
July 31, 2026
Page 14
as the Commission’s Order on DOE ANOPR points out, in the last several years, the
Commission has accepted proposed tariffs and agreements “related to large loads
connecting to the transmission system . . . while rejecting those that exceed the
Commission’s jurisdiction or failed to reasonably allocate costs.”40
Second, the proposed RBP framework also recognizes that the PJM states and other
PJM stakeholders must also act to address cost allocation concerns stemming from new
large loads.41 The division of authority and responsibility between PJM and the PJM states
is firmly rooted in the Supreme Court’s holding in FERC v. EPSA.42 There, the Supreme
Court held that the Commission’s regulation of demand response “addresses—and
addresses only—transactions occurring on the wholesale market” and takes aim at
“enhanc[ing] the wholesale, not retail, electricity market.”43 The Supreme Court
accordingly held that the Commission’s rules for demand response withstood EPSA’s
jurisdictional challenge by respecting the division of federal/state authority set forth in the
FPA.44 Even though the FPA’s drafters could not have anticipated demand response, its
regulation was nevertheless consistent with the division of jurisdictional authority
legislatures are all necessary partners in ensuring that energy infrastructure is built at the pace needed to stay
ahead of demand and keep energy affordable and reliable for PJM customers.”).
40 Order on DOE ANOPR, 195 FERC ¶ 61,045 at P 2 (citation omitted).
41 PJM recognizes that the Commission’s June 18, 2026 Order to Show Cause in Docket No. EL26-67-000
found that PJM’s Tariff may be unjust and unreasonable and unduly discriminatory or preferential because
it does not include a definition of large load for the PJM Region. June 2026 Order to Show Cause, 195 FERC
¶ 61,211 at P 58. PJM intends to propose a definition of Large Load for the PJM Region in a subsequent
filing. However, for purposes of the RBP framework, “large load,” as used herein, refers broadly to the
recent influx of load, including data centers or, in the context of retail cost allocation, refers to the term to
the extent defined by each of the PJM states.
42 FERC v. Elec. Power Supply Ass’n, 577 U.S. 260 (2016) (“EPSA”).
43 Id. at 282, 287.
44 Id. at 288-91.
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Honorable Debbie-Anne A. Reese
July 31, 2026
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contemplated by the FPA—in which the Commission, and thereby RTOs/Independent
System Organizations (“ISO”), retain authority over wholesale transactions, while states
regulate retail transactions.45
The reforms in this filing address issues that the FPA’s drafters would have
certainly considered science fiction—the impact of large loads, including data centers,
driven primarily by exponential technological advancements in artificial intelligence.
Nevertheless, PJM has taken care to divide responsibilities between PJM and the states in
a manner consistent with the FPA’s basic division of authority. PJM’s resulting proposal
is therefore legally durable.
Third, while the Commission recently noted that it, too, shares concerns “about the
impact that large load additions can have on retail ratepayers, particularly the concern that
other retail ratepayers may be forced to subsidize Network Upgrades needed to add large
loads to the transmission system,” the Commission also recognized that the scope of its
regulatory authority is nevertheless limited.46 “Specifically,” it is the PJM states that “have
authority over how the wholesale costs of providing electricity, including transmission of
such electricity, to those retail customers are recovered through retail rates.”47
Likewise, an order to show cause issued by the Commission on February 20, 2025,
on aspects of the co-location of large loads held that:
states retain exclusive jurisdiction over the terms of retail
sales . . . including . . . how the costs of the wholesale sale
and transmission of electricity assigned to a wholesale
45 See Matthew R. Christiansen, FERC v. EPSA: Functionalism and the Electricity Industry of the Future, 68
Stan. L. Rev. (Apr. 2016), https://www.stanfordlawreview.org/online/ferc-v-epsa/ [https://perma.cc/6QRP-
KXET] (citing EPSA, 577 U.S. at 265-68).
46 June 2026 Order to Show Cause, 195 FERC ¶ 61,211 at P 69.
47 Id.
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Honorable Debbie-Anne A. Reese
July 31, 2026
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customer are allocated among that wholesale customer’s
retail customers. Thus, while a State may not conclude in
setting retail rates that the FERC-approved wholesale rates
are unreasonable, it is within a state’s exclusive jurisdiction
to determine how those FERC-approved rates are collected
among the relevant retail customers.48
At bottom, “exclusive jurisdiction”49 rests with the states to ensure that the
appropriate retail customers, i.e., new large loads, including data centers—and not
residential customers or small industrial customers—are suballocated costs associated with
the wholesale costs of RBP Resources procured through the RBP. As part of the RBP
framework, PJM proposes to allocate the wholesale costs of RBP Resources to wholesale
customers based on longstanding cost allocation principles (see infra Part III.E). But PJM
can only do so much; thus, the PJM states must subsequently allocate the costs allocated
by PJM by dividing them further among the appropriate retail customers, including data
centers and other large loads, in accordance with state policies, laws, and regulatory
authority over retail rates and customers.
E.
The RBP Requires Cooperation from Numerous Sectors in Order to Meet
the Goals of the NEDC/PJM Governors’ Principles Document.
For the PJM Region to address the RBP Target—and more broadly, to meet the
moment—suppliers of capacity must contribute by voluntarily supplying Qualifying RBP
Offset UCAP MW or submitting RBP Sell Offers in the RBP. The success of the RBP also
requires the participation and cooperation of LSEs serving large loads. PJM recognizes
that large loads, including data center developers, have committed to “build, bring, or buy
48 PJM Interconnection, L.L.C., 190 FERC ¶ 61,115 at P 68, order directing compliance, December 2025
Show Cause Order, 193 FERC ¶ 61,217 (2025).
49 Id. (emphasis added).
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Honorable Debbie-Anne A. Reese
July 31, 2026
Page 17
the new generation resources and electricity needed to satisfy their new energy demands”
and to pay “the full cost of those resources.”50
Because the success of the procurement effort turns on them, at least in part, PJM
highlights several of the representations, pledges, and commitments from various entities
that have been made in the past year. First, in its June 2026 Order to Show Cause, the
Commission highlighted the “voluntary efforts by transmission owners to protect retail
ratepayers through cost recovery agreements with large loads” and “the execution of the
President’s Ratepayer Protection Pledge, through which data center developers have
committed to shield retail ratepayers from increased electricity prices.”51
Second, in the President’s Ratepayer Protection Pledge, Amazon, Google, Meta,
Microsoft, OpenAI, Oracle, and xAI pledged, on March 4, 2026, to:
• build, bring, or buy the new generation resources and electricity needed
to satisfy their new energy demands, paying the full cost of those
resources whether by building, or buying from, new or otherwise
additive power plants. Where possible, these companies will also add
more capacity that serves the broader public by increasing supply;52 and
• negotiate new, separate rate structures with their utilities and relevant
State governments wherever they build data centers. Importantly, they
will pay these rates for the power and related infrastructure that are
brought online to service their data centers, whether they use the
electricity or not.53
50
Ratepayer
Protection
Pledge,
The
White
House
(Mar.
4,
2026),
https://www.whitehouse.gov/releases/2026/03/
ratepayer-protection-pledge/ [https://perma.cc/N8PH-K82T] (“Ratepayer Protection Pledge”).
51 June 2026 Order to Show Cause, 195 FERC ¶ 61,211 at P 69.
52 Ratepayer Protection Pledge; see also Fact Sheet: President Donald J. Trump Advances Energy
Affordability
with
the
Ratepayer
Protection
Pledge,
The
White
House
(Mar.
4,
2026),
https://www.whitehouse.gov/fact-sheets/2026/03/fact-sheet-president-donald-j-trump-advances-energy-
affordability-with-the-ratepayer-protection-pledge/ [https://perma.cc/N366-NGF4] (listing the companies
who joined the Ratepayer Protection Pledge).
53 Id.
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Honorable Debbie-Anne A. Reese
July 31, 2026
Page 18
Subsequently, on July 23, 2026, the signatories to the Ratepayer Protection Pledge
expanded to include more than 200 utilities, data center developers, and cooperatives, and
state governors, including the governors of PJM states Tennessee, West Virginia, Ohio,
and Indiana.54
Third, there is robust appetite for new capacity to serve new large loads, as shown
by the representations made by LSEs, large loads, Transmission Owners, and suppliers of
RBP UCAP MW in response to a Request for Information (“RFI”) issued in April of this
year.55 The RFI revealed substantial large load interest from 21 entities representing 47
potential projects in the PJM Region averaging 850 MW each, with a median size of 300
MW.56 The supply-side response to the RFI was also significant, with 397 potential
projects by 87 entities and approximately 136 gigawatt in total potential capacity.57 Of the
supply-side projects, 72% indicated a readiness to engage with their large load counterparts
immediately, while 91% of the large load projects represented a readiness to engage now.58
54 See President Trump’s Ratepayer Protection Pledge Secures American AI Dominance, Protects
Consumers, The White House (July 23, 2026), https://www.whitehouse.gov/releases/2026/07/president-
trumps-ratepayer-protection-pledge-secures-american-ai-dominance-protects-consumers/
[https://perma.cc/9VDB-B4EH] (“Ratepayer Protection Pledge Announcement”).
55 PJM Reliability Backstop RFI Summary, Charles River Associates (May 27, 2026), https://www.pjm.com/-
/media/DotCom/committees-groups/cifp-rbp/2026/20260527/20260527-informational-only---reliability-
backstop-rfi-summary---charles-river-associates.pdf
[https://perma.cc/UM8V-FAC5]
(“Charles
River
Associates Presentation”).
56 Id. at 4.
57 Id. at 5.
58 Id. at 4-5.
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Honorable Debbie-Anne A. Reese
July 31, 2026
Page 19
II.
BACKGROUND
A.
The Critical Issue Fast Path Stakeholder Process
On January 16, 2026, the PJM Board issued a letter announcing its decision on the
Critical Issue Fast Path Process (“CIFP”) addressing large load issues in PJM, which set
forth the roadmap for a multi-pronged approach to addressing resource adequacy
challenges, including “accelerat[ing] and execute[ing]” a backstop capacity procurement
and “address[ing] cost allocation for any such procurement, including consideration of
mechanisms that assign costs to those LSEs that are short as a result of incremental load
growth within their service areas.”59 The NEDC/PJM Governors’ Principles were issued
on the same day.
In a Members Committee meeting convened one week later, on January 22, 2026,
PJM’s President and CEO and the PJM Board raised the RBP with stakeholders and sought
input regarding the timing and process for engaging stakeholders on issues relevant to a
backstop procurement. Based on feedback during the January 22 meeting, PJM’s President
and CEO and the PJM Board initiated a series of discussions about RBP, which began in
early February 2026 and concluded in March 2026.60 Simultaneously, through a survey,
PJM sought and obtained detailed stakeholder feedback on the scope and process of an
RBP.61
59 January 2026 Board Letter at 6.
60
See
Reliability
Backstop
Procurement
Workshop,
PJM
Interconnection,
L.L.C.,
https://www.pjm.com/committees-and-groups/workshops/rbpw [https://perma.cc/6RPD-YPZK] (last visited
July 25, 2026).
61 See Reliability Backstop Procurement Workshop: Survey Responses and Additional Feedback, PJM
Interconnection,
L.L.C.,
https://www.pjm.com/committees-and-groups/workshops/rbpw
[https://perma.cc/6RPD-YPZK] (last visited July 25, 2026).
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Honorable Debbie-Anne A. Reese
July 31, 2026
Page 20
On April 8, 2026, the PJM Board issued a letter initiating the CIFP to engage
stakeholders in the development of an RBP proposal (“RBP CIFP”).62 Subsequently, on
May 19, 2026, the PJM Board issued a second related letter, directing that the scope of the
RBP CIFP be expanded to incorporate a separate stakeholder process to identify and reduce
large load in the PJM Region, when necessary, to maintain required RTO/Zonal Primary
Reserves and Interconnection Reliability Operating Limits within limits if available
economic generation is not sufficient. This “connect and manage” solution, in its new
iteration, is now referred to as an IRAS.63 The PJM Board determined that it would be
appropriate to address both the RBP and IRAS in a single CIFP process in light of the
substantive link between these two proposals.
The expanded scope RBP and IRAS CIFP concluded on June 30, 2026, following
eight days of stakeholder meetings over the course of three months. On June 30, 2026,
Stakeholders submitted advisory votes on 13 different RBP proposals. Of the 13 proposals,
only the voluntary RBP framework proposed by the Joint Electric Distribution Companies
and Data Center Coalition (“Coalition RBP Proposal”) received greater than two-thirds
sector-weighted member support.64
62 Letter of David E. Mills, Interim President and CEO, PJM Interconnection, L.L.C. (Apr. 8, 2026),
https://www.pjm.com/-/media/DotCom/about-pjm/who-we-are/public-disclosures/2026/20260408-cifp-
rbp-initiation-letter.pdf [https://perma.cc/8LM5-9VX3] (stating the intent of the letter was to addresses the
initiation of the Critical Issue Fast Path (CIFP) – Reliability Backstop Procurement (RBP) accelerated
stakeholder process by the PJM Board).
63 See Paula Conboy, PJM Board Chair, Reliability Backstop Procurement / Connect and Manage, PJM
Interconnection, L.L.C., 1 (May 19, 2026), https://www.pjm.com/-/media/DotCom/about-pjm/who-we-
are/public-disclosures/2026/20260519-pjm-board-letter-re-reliability-backstop-procurement-connect-and-
manage-cifp.pdf [https://perma.cc/2CQC-8KYS].
64 PJM Members Committee, MC Voting Results for RBP Proposals Agenda Items 3L through 3X (June 30,
2026), https://www.pjm.com/committees-and-groups/committees/mc [https://perma.cc/5CSQ-DP4K] (scroll
to “Meeting Materials” and search for 2026, click on link for “6.30.2026 Special Meeting,” scroll to MC
Voting Results – Agenda Items 3L to 3X and click on each to view the PDF) (last visited July 29, 2026).
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Honorable Debbie-Anne A. Reese
July 31, 2026
Page 21
B.
PJM Board Determination
The PJM Board reviewed the results of the June 30, 2026 stakeholder advisory
votes.65 Ultimately, “[i]n light of the deteriorating resource adequacy outlook, and
consistent with the PJM Board letter issued to stakeholders on May 19, 2026, the PJM
Board “concluded that a voluntary subscription framework would not provide sufficient
assurance that capacity equal to the identified near-term shortfall would actually be
procured.”66
On July 27, 2026, after weeks of careful deliberation, which considered the merits
of the Coalition RBP Proposal, as well as other stakeholder proposals and various letters
to the PJM Board, the PJM Board issued a decisional letter directing PJM to submit the
RBP proposal set forth in this filing, and to also submit an IRAS proposal.67 PJM intends
to submit the IRAS proposal in a separate FPA section 205 filing in the coming weeks.
As for the RBP proposal that is the subject of this filing, the PJM Board
“determined that PJM must take timely action within its control to begin restoring resource
adequacy.”68 Thus, the PJM Board directed that PJM file with the Commission an RBP
65 As PJM reported in a recent July 20, 2026 informational filing to the Commission, PJM sought additional
feedback on the RBP proposal from stakeholders on specific topics through further polling, which concluded
on July 10, 2026. PJM Interconnection, L.L.C., PJM Informational Report on Stakeholder Processes
Addressing Resource Adequacy for Large Loads, Docket No. EL26-67-000, at 4 (July 20, 2026) (citing PJM
Interconnection, L.L.C., CIFP – Reliability Backstop Procurement / Connect & Manage, Summarized Poll
Results
(2026),
https://www.pjm.com/-/media/DotCom/committees-groups/cifp-rbp/postings/cifp-poll-
results-with-comments.pdf [https://perma.cc/T2X8-NKGD]).
66 Paula Conboy, Chair, PJM Board of Managers, Board Decisional Letter on Critical Issue Fast Path –
Reliability Backstop Procurement and Connect and Manage, 1 (July 27, 2026), https://www.pjm.com/-
/media/DotCom/about-pjm/who-we-are/public-disclosures/2026/20260727-board-decisional-letter-on-cifp-
reliability-backstop-procurement-and-connect-and-manage.pdf
[https://perma.cc/V9Z7-83AH]
(“PJM
Board July 2026 Decisional Letter”).
67 Id.
68 Id.
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Honorable Debbie-Anne A. Reese
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proposal that, unlike the voluntary subscription framework of the Coalition RBP Proposal,
will procure for the identified near-term shortfall.69 At the same time, the PJM Board
adopted various concepts from the Coalition RBP Proposal that received a sector-weighted
majority of stakeholder support. Specifically, the proposed (1) maximum volume weighted
average of all selected RBP Sell Offers, (2) credit requirement for Load Serving Entities,
and (3) opt-out from the RBP Initial Procurement Target all had their roots in the Coalition
RBP Proposal.70 The proposal in this section 205 filing reflects the RBP framework
ultimately approved by the PJM Board on July 27, 2026.
C.
PJM’s Large Load Matters
The RBP proposal is just one of numerous filings that PJM has submitted or will
shortly be submitting to the Commission, pursuant to section 205 of the FPA, to address
the region’s resource adequacy issues.
As of today’s filing, the following matters have already been filed with the
Commission:
• An Expedited Interconnection Track temporary pathway for advanced projects
of significant size interconnected more quickly to address PJM’s urgent need
for additional Capacity Resources by facilitating the interconnection of those
new generation resources—outside of PJM’s Cycle Process—that commit to
69 More specifically, the PJM Board directed that the RBP proposal set “an initial target equal to the capacity
shortfall identified in the 2028/2029 Base Residual Auction, excluding Fixed Resource Requirement load
and supply” and “reduced to reflect documented bilateral contracts and self-supply arrangements for new
capacity serving new load.” PJM Board July 2026 Decisional Letter at 2.
70 Joint EDCs & Data Center Coalition (“Coalition”) Reliability Backstop Procurement Package Executive
Summary, PJM Interconnection, L.L.C., https://www.pjm.com/-/media/DotCom/committees-groups/cifp-
rbp/2026/20260630/20260630-item-02f---joint-edcs-and-data-center-coalition---rbp---executive-
summary.pdf [https://perma.cc/YP8C-ASVB] (last visited July 31, 2026).
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Honorable Debbie-Anne A. Reese
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firm commercial in service dates and have a commitment from the Primary
Siting Authority (or a state executive officer in certain circumstances) to
expedite consideration of applicable siting, which was accepted by the
Commission on June 9, 2026;71
• An extension of a price collar on RPM Auction outcomes through the
2029/2030 Delivery Year, which was accepted by the Commission on April 8,
2026;72
• A one-time, reliability-based expansion, known as the Reliability Resource
Initiative, of the eligibility criteria for PJM’s Transition Cycle #2 of PJM’s
existing interconnection queue, which the Commission accepted73 and resulted
in PJM selecting 51 projects that can come online quickly and provide more
than 9,300 MW of reliable capacity;74
• An extension of the capacity must-offer requirement to all available Existing
Capacity Resources so as to allow RPM Auction outcomes to more accurately
reflect the actual quantity of Existing Generation Capacity Resources, while
continuing to safeguard against the potential exercise of market power that may
71 See PJM Interconnection, 195 FERC ¶ 61,197 at P1.
72 See PJM Interconnection, L.L.C., 195 FERC ¶ 61,076, at P 51 (2026).
73 See PJM Interconnection, L.L.C., 190 FERC ¶ 61,084, reh’g denied, 192 FERC ¶ 61,085 (2025).
74 See PJM Interconnection, L.L.C., PJM Chooses 51 Generation Resource Projects To Address Near-Term
Electricity Demand Growth, PJM Inside Lines (May 2, 2025), https://insidelines.pjm.com/pjm-chooses-51-
generation-resource-projects-to-address-near-term-electricity-demand-growth/
[https://perma.cc/4BBH-
YR3F].
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Honorable Debbie-Anne A. Reese
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be exerted by the withholding of such resources, which was accepted by the
Commission;75 and
• A compliance filing and illustrative Tariff revisions to provide that the Eligible
Customer taking transmission service on behalf of a co-located load may take
a transmission service that reflects the co-located load’s ability and willingness
to limit its use of the transmission system, which, if utilized, would reduce the
amount of capacity required to meet the region’s resource adequacy needs. The
Commission ruled on PJM’s Tariff revisions and directed a future compliance
filing to implement these new transmission services that PJM will soon
submit.76
The following filings aimed at addressing the impacts of new large loads on the
PJM Region are forthcoming:
• An “IRAS” proposal following the CIFP stakeholder process to facilitate the
interconnection and integration of large loads that are not backed by capacity
such that, in certain circumstances, the withdrawals from the transmission
system by some new large loads would be reduced for resource adequacy
purposes;
75 PJM Interconnection, L.L.C., 190 FERC ¶ 61,117, order on reh’g, 191 FERC ¶ 61,221 (2025).
76 See PJM Interconnection, L.L.C., 195 FERC ¶ 61,209 (2026). On July 28, 2026, PJM submitted a motion
to extend its compliance filing with respect to, among other things, the Tariff revisions implementing these
new transmission services to allow for the concurrent development of the compliance language with the
development of a new section 205 filing to propose new transmission services for Eligible Customers taking
transmission services on behalf of large loads that are not part of a co-location arrangement. PJM
Interconnection, L.L.C., Motion for Extension of Time for Specified Compliance Requirements and Request
for Expedited Treatment of PJM Interconnection, L.L.C., Docket Nos. EL25-49-002, et al. (July 28, 2026).
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Honorable Debbie-Anne A. Reese
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• A fulsome FPA section 205 filing addressing the issues the Commission raised
in its June 18, 2026 Order to Show Cause that will set forth the non-rate terms
and conditions for Eligible Customers to take transmission service on behalf of
large loads that are willing and able to limit their energy withdrawals from the
transmission system, which, if utilized, will reduce the amount of capacity
required to meet the region’s resource adequacy needs; and
• Future enhancements to reserve products and updated reserve demand curves
to better account for ramping and uncertainty and better align reserve pricing
with operational practice.77
• In addition, PJM has undertaken the following initiatives:
• Improved load forecasts that include state review of large load additions,
addressing duplicative requests, the use of additional third-party review and
increased transparency;78 and
• Facilitating bilaterals by providing a voluntary matching service that helps
connect potential buyers with sellers of capacity, as further explained below.
III.
THE PROPOSED REFORMS TO THE TARIFF AND THE RAA ARE JUST
AND REASONABLE AND NOT UNDULY DISCRIMINATORY OR
PREFERENTIAL
A.
Overview of the RBP
The RBP is designed to be a one-time mechanism for procuring new capacity (i.e.,
UCAP MW only) to address the PJM Region shortfall observed in the BRA for the
77 See PJM Interconnection, L.L.C., Informational Report on Stakeholder Process Addressing Resource
Adequacy for New Large Loads of PJM Interconnection, L.L.C., Docket No. EL26-67-000, at 8 (July 20,
2026).
78 See January 2026 Board Letter at 2.
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Honorable Debbie-Anne A. Reese
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2027/2028 and 2028/2029 Delivery Years caused by the rapid load growth in the PJM
Region. PJM’s proposed rules governing the RBP are primarily set forth in proposed
Tariff, Attachment DD, section 18, with additional conforming revisions and new
provisions in other sections of: (1) Tariff, Attachment DD; (2) RAA, Article 7,
sections 7.2B and 7.2C; (3) RAA, Schedule 8.1.D; and (4) Tariff, Definitions.
The RBP represents a critical safety net designed to address current resource
adequacy shortfalls. The RBP’s function is limited to procuring the capacity needed to
meet the reliability requirement shortfall observed in the 2028/2029 Delivery Year BRA
and only to the extent that new load coming online in the 2027/2028 or 2028/2029 Delivery
Years do not voluntarily procure sufficient new capacity to address that shortfall.79 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. In this way (among others) it is consistent the NEDC/PJM Governors’ Principles,
which call for a one-time auction followed by a subsequent “return to market
fundamentals.”80
In the context of RBP, this new capacity brought voluntarily by new load is referred
to as Qualifying RBP Offset UCAP MW, a new defined term for capacity that meets
parameters set forth in the proposed Tariff, Attachment DD, section 18.2. Qualifying RBP
Offset UCAP MW is further described in this transmittal letter, below, see infra
79 In addition, as discussed below, PJM is proposing two limited opt-out provisions.
80 NEDC/PJM Governors’ Principles at 1.
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Honorable Debbie-Anne A. Reese
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Part III.B.2. To the extent the Commission accepts this filing, PJM is targeting to
commence the procurement window for the one-time RBP on September 30, 2026.81
1.
The RBP is a Reliability Backstop solution tailored to meet a
specific challenge in the context of a reliability requirement
shortfall in PJM’s BRAs stemming, in part, from the influx of large
loads, including data centers.
According to the Commission, when market design measures alone prove
insufficiently effective, “the Commission is willing to consider specific proposals to
provide an appropriate last resort process such as an RTO/ISO administered auction to
create a long-term commitment which can support cost-effective financing where the
problem is projected to be a long-term one.”82 The RBP is such a proposal.
The current PJM Tariff already contemplates the need for a backstop procurement
when three consecutive auctions fail to procure the reliability requirement.83 But in this
case, as the record reflects, there is a clear need for an RTO/ISO-administered backstop
solution to be implemented now. First, due to a variety of factors,84 the RPM has not
procured sufficient capacity to meet the PJM Region Reliability Requirement two
consecutive Delivery Years in a row. Moreover, given the pace of new supply and the
latest load forecast that will be used in the next BRA, in December 2026, all evidence
points to the December auction also clearing short.
81 In the event the Commission accepts this filing subject to modification, PJM will endeavor to commence
the RBP as soon as practicable, but depending on what the changes are, the commencement date may not
remain September 30, 2026.
82 PJM Interconnection, L.L.C., 107 FERC ¶ 61,112, at P 21 (2004), order on reh’g, 110 FERC ¶ 61,053
(2005).
83 Tariff, Attachment DD, section 16.
84 See 2027/2028 Base Residual Auction Reserve Target Shortfall Report, PJM Interconnection, L.L.C. (Feb.
9,
2026),
https://www.pjm.com/-/media/DotCom/markets-ops/rpm/rpm-auction-info/2027-2028/2027-
2028-bra-reserve-target-shortfall-report.pdf [https://perma.cc/TA3Y-95AX] (“2027/2028 BRA Report”).
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Honorable Debbie-Anne A. Reese
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Second, the undisputed evidence and observable trends to date argue for not simply
waiting for a third auction to clear short . it is well-documented and recognized that supply
and demand in the PJM Region have converged, as a significant portion of PJM’s thermal
generation fleet have retired while replacement resources are arriving at a slower pace than
the unprecedented load growth, particularly in light of the exponential growth in demand
from data centers. Together, these factors have strained the RPM Auction’s ability to
procure sufficient capacity to meet the PJM Region Reliability Requirement in recent
capacity auctions. Third, the NEDC/PJM Governors’ Principles expressly call for a
backstop procurement auction to commence this September. Fourth, the Commission was
“encouraged by” and recently noted that PJM’s efforts to implement the RBP is among the
“processes to ensure resource adequacy and faster interconnection.”85 In short, the
evidence supports a clear need for a one-time RBP.86 Indeed, the NEDC/PJM Governors’
Principles urged PJM to “hold[] a Reliability Backstop Auction” and suggested that PJM
had already received sufficient stakeholder input prior to running a procurement.87
“[B]ackstops to . . . market design based solutions that are required to insure
reliability” are nothing new to PJM.88 In fact, the RBP bears several significant similarities
to the existing Reliability Backstop Auction provisions set forth in Tariff, Attachment DD,
section 16. A Reliability Backstop Auction would similarly “seek commitments of
additional generation resources for a term of up to fifteen years,” where “PJM [would]
85 June 2026 Order to Show Cause, 195 FERC ¶ 61,211 at P 103.
86 PJM is also proposing to reset the Reliability Backstop Auction trigger by revising the Tariff, as discussed
below, in Part III.G.1 of this transmittal letter.
87 NEDC/PJM Governors’ Principles at 1.
88 PJM Interconnection, 107 FERC ¶ 61,112 at P 21.
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Honorable Debbie-Anne A. Reese
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enter into long-term purchase agreements with sellers whose offers are accepted in the
backstop auction.”89 In the Reliability Backstop Auction, “[e]ach accepted seller will be
paid its offer price, less any payments the seller is entitled to receive for commitment of
the same resource through the regular RPM auctions, and less any contributions to the fixed
cost of its resource from the energy or ancillary service markets”90 That said, PJM is not
simply relying on the Reliability Backstop Auction mechanism, which was proposed over
20 years ago but has never once been used.
The proposed RBP, although similar to the Reliability Backstop Auction in its
intent to maintain resource adequacy and reliability for the Region, is tailored to address
the specific circumstances surrounding the PJM Region’s present-day capacity shortfall
stemming from large loads. First, for example, the proposed RBP is intended to occur
concurrently, on a parallel path, with an ongoing bilateral matching process that credits
new capacity being brought by new large loads and therefore guards against double
procurement in the RBP. Second, the RBP recognizes affordability concerns of retail
customers and, as explained below, the proposed RBP includes design features to address
this. Third, the RBP’s cost allocation mechanism has been intentionally developed to
account for the boundary between federal and state jurisdiction and to recognize that, while
the concern about potential cost shifts from large loads to residential and/or traditional
industrial customers is a key and significant issue, the PJM states play a vital role in
determining how to best ensure that costs are appropriately allocated to their respective
89 PJM Interconnection, L.L.C., 115 FERC ¶ 61,079, at 61,245 (2006), order on reh’g, 119 FERC ¶ 61,318
(2007), aff’d sub nom. Pub. Serv. Elec. & Gas Co. v. FERC, 324 F.App’x 1 (D.C. Cir. 2009).
90 Id. at P 55.
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Honorable Debbie-Anne A. Reese
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retail, large load customers. Fourth, the RBP was developed in the context of other
approaches for addressing the issues posed by the rapid growth of large loads, including
the forthcoming “IRAS” construct, a connect and manage-like proposal which
contemplates operational rules for reducing large loads under certain emergency
conditions.
2.
An ongoing bilateral matching process is a parallel path to
supporting efforts to bring new capacity to PJM in order to meet the
PJM Region Reliability Requirement shortfall.
A primary role of the markets PJM operates is to provide a transparent price
reference that informs and supports bilateral trading and Self-Supply activity. Indeed,
throughout the underlying stakeholder process, PJM members have expressed a strong
preference for bringing new capacity to the PJM system voluntarily through bilateral
contracting rather than through the RBP.
To streamline and support the efforts of PJM members to enter into bilateral
arrangements for capacity, PJM, in partnership with PJM consultant Charles River
Associates, has facilitated bilateral arrangements through a bilateral matching process with
the aim of connecting supply of new capacity, i.e., new capacity resources, with new
demand for that capacity, i.e., new load. To be clear, participation in the bilateral matching
process is non-binding and the matchmaking process itself does not impact rates, terms, or
conditions. Rather, the bilateral matchmaking process simply helps to facilitate voluntarily
agreements so no Tariff changes are necessary to allow for this facilitation.
The bilateral matching process is voluntary and iterative. On June 9, 2026, the
bilateral matching process began with a Request for Proposals, and initial matches are
expected to be notified in or around August 2026. PJM is not a party to these bilateral
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Honorable Debbie-Anne A. Reese
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arrangements, nor has PJM placed any restrictions or requirements on the terms of these
agreements. Furthermore, bilateral matching is just one avenue in which supply and
demand may voluntarily enter into arrangements to enable new load to bring their own new
capacity.
Capacity obtained through bilateral matching or other voluntary arrangements for
new capacity, if reported to PJM within the RBP procurement window and supported by
sufficient evidence, may be determined by PJM to be Qualifying RBP Offset UCAP MW.
As discussed further, below, PJM may, as appropriate, based on the relevant evidence,
reduce the Final RBP Target by the Qualifying RBP Offset UCAP MW and by the UCAP
obligation value of load that have successfully requested and obtained an opt-out pursuant
to proposed Tariff, Attachment DD, section 18.1(d).
B.
The RTO-Wide RBP Target Is Equal to the Initial RBP Target Minus
Qualifying RBP Offset UCAP MW and Opt-Out UCAP MW (Proposed
Tariff, Attachment DD, section 18.1).
1.
Initial and Final RBP Targets
The RBP is designed to procure a target UCAP MW value of capacity on a
region-wide basis. The Initial RBP Target is the region-wide 2028/2029 Delivery Year
reliability shortfall observed in the July 2026 BRA for Delivery Year 2028/2029, i.e.,
6,831.3 MW UCAP.91 Fixed Resource Requirement Entities are excluded from the Initial
and Final RBP Targets as well as the RBP.92 The final RTO-wide procurement target, as
91 See 2028/2029 BRA Report at 3 (“The [FRR] committed 10,863.8 MW UCAP to meet the FRR
commitment. The total procured capacity in the RTO, which includes RPM and FRR, is 149,181.6 MW
UCAP or 6,831.3 MW UCAP below the RTO Reliability Requirement.”); proposed Tariff, Attachment DD,
section 18.1(a).
92 Proposed Tariff, Attachment DD, section 18.1(c). The FRR, by design, is an opt-out of RPM, and the RBP
is curing a gap that FRR load and FRR capacity are already removed from. FRR load has already paid for
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Honorable Debbie-Anne A. Reese
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proposed, is determined by subtracting both verified Qualifying RBP Offset UCAP MW
and the unforced capacity obligation value of load with opt-outs.93
Qualifying RBP Offset UCAP MW may be reported to PJM during the bid
submission window, which will close three weeks after the window opening. They must
be accompanied by verified supporting evidence, and must meet the requirements set forth
in proposed Tariff, Attachment DD, section 18.2, and discussed below, see infra Part
III.B.2.
The amount of capacity by which Qualifying RBP Offset UCAP MW may reduce
the Initial RBP Target will be determined by PJM based on the applicable Effective Load
Carrying Capability (“ELCC”) Class Ratings for the 2028/2029 Delivery Year BRA or,
where the relevant resources do not have ELCC Class Ratings, the estimated unit-specific
UCAP values for such resources.94 The amount of capacity by which Qualifying RBP
Offset UCAP MW may reduce the Initial RBP Target will also be capped at the Load
Adjustment for each Electric Distributor zone/area amount of summer 2028 demand as set
forth in the load forecast.95
Additionally, the region-wide Initial RBP Target will be further reduced by Opt-
Out UCAP MW to the extent that an Electric Distributor, whose rates are not regulated by
the state (e.g., cooperatives or municipal utilities), that is unable to allocate costs associated
resource adequacy through the FRR Plan. Allocating RBP Charges to FRR load would, in essence, require
that they pay twice for capacity it has already procured.
93 Proposed Tariff, Attachment DD, section 18.1(b).
94 Proposed Tariff, Attachment DD, section 18.2(d); RAA, Schedule 9.2, section D(1)(b) (on Accredited
UCAP for resources with unit-specific UCAP values).
95 Proposed Tariff, Attachment DD, section 18.2(e).
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with capacity bid submission in the RBP to large loads, submits a request to PJM to opt-
out from the RBP within the bid submission window and provides relevant information
and written support. In addition, an Electric Distributor may also request to opt out of the
RBP for an associated MW quantity of load that participates in a peak shaving adjustment
program where such Electric Distributor’s zone/area addresses their capacity needs through
peak shaving adjustment programs that are codified in state law and meet the requirements
set forth in Tariff, Attachment DD-2.
Just as the driver of the RBP is the resource adequacy shortfall at the PJM Region
level, the Final RBP Target is based on a region-wide shortfall. In other words, PJM is not
proposing to match specific supply to specific demand or apply locational constraints in
the RBP. As Ms. Danielle Croop, Senior Manager in the Market Design group for PJM,
testifies on behalf of PJM, while “PJM recognizes there are locational considerations at
large for resource adequacy, and these constraints are modeled in the [RPM,]” it is also the
case that the “RPM is an annual three-year forward framework, which allows PJM to model
the necessary locational parameters—Capacity Emergency Transfer Objectives (“CETO”)
and Capacity Emergency Transfer Limits (“CETL”)—to accurately capture the locational
needs in the capacity market.”96
By contrast, Ms. Croop testifies, “PJM does not project and calculate these
parameters 15-years out, which is the eligible term of the RBP, because PJM does not have
the information needed to determine such locational parameters for 15-year term capacity
96 Affidavit of Ms. Danielle Croop on Behalf of PJM Interconnection, L.L.C. (Attachment C) ¶ 8 (“Croop
Aff.”).
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commitments.”97 As a result, including locational parameters based on today’s conditions
would inevitably skew the results and lead to either over-procurement or under-
procurement in given zones based on nothing more than speculation as to the state of the
system ten and fifteen years from now. Moreover, inclusion of a speculative locational
parameter at this point would ignore the fact that “PJM’s interconnection process ensures
the initial deliverability of new capacity to the RTO. Going forward, the PJM Regional
Transmission Expansion Plan (“RTEP”) process annually studies and addresses any
transmission upgrades needed to ensure the ongoing deliverability of capacity resources.
Load deliverability is also assessed as part of the RTEP process, which will identify
transmission needs as load patterns change.”98 In short, inclusion of a speculative 15-year
forward locational capacity requirement at this point in time would simply ignore the role
of PJM’s interconnection and planning process as the means to ensure deliverability of
capacity resources to load throughout the PJM Region.
In short, the RBP aims to procure RBP Resources for up to a 15-year fixed term.
Since PJM does not calculate locational parameters 15 years out, procuring resources on a
locational basis would be impractical. Therefore, the Final RBP Target is not so granular
as to assign procurement targets for specific Zones or specific Electric Distributor
zones/areas.99 However, as described below, see infra Part III.E, the Final RBP Target will
serve as an initial input to the RBP cost allocation methodology.
97 Id.
98 Id. ¶ 9.
99 For purposes of cost allocation as discussed below, see infra Part III.E, PJM will allocate cost responsibility
to Electric Distributor zones/areas, to be further suballocated by PJM and the states.
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2.
Qualifying
RBP
Offset
UCAP
MW
(proposed
Tariff,
Attachment DD, section 18.2)
Qualifying RBP Offset UCAP MW is new capacity voluntarily brought on to the
PJM system by new load that meets certain characteristics and parameters set forth in the
proposed Tariff, as supported by evidence verified by PJM.100 Where Electric Distributors
and/or other entities report Qualifying RBP Offset UCAP MW to PJM with the requisite
supporting evidence, PJM may reduce the region-wide Initial RBP Target by the quantity
of Qualifying RBP Offset UCAP MW, where appropriate.101 In other words, the Initial
RBP Target may be decremented by the quantity of Qualifying RBP Offset UCAP MW.
a.
New load and new demand
i.
Load (demand) must be new (proposed Tariff,
Attachment DD, section 18.2(c))
Importantly, Qualifying RBP Offset UCAP MW can offset the RBP procurement
if it serves new load. “New” load, for purposes of the RBP, will be load that has an
executed electric service agreement or transmission service agreement, indicating that the
load will be coming online in the 2027/2028 through the 2028/2029 Delivery Year.
ii.
Capacity must be new (proposed Tariff, Attachment
DD, section 18.2(a))
Just as Qualifying RBP Offset UCAP MW must be supported by a showing that the
load being served is new, supply must likewise demonstrate that it is “new” capacity. To
100 “Qualifying RBP Offset UCAP MW” is also a proposed, new defined term in the Tariff. Proposed Tariff,
Definitions – Qualifying RBP Offset UCAP MW (defining “Qualifying RBP Offset UCAP MW” as the
“unforced capacity that: (i) pursuant to Tariff, Attachment DD, section 18.2, has not received an RPM
commitment or been committed in an FRR Plan as of the commencement of the Reliability Backstop
Procurement, (ii) is supplied by eligible Capacity Resources in accordance with Tariff, Attachment DD,
section 18.2(b), and (iii) is supported by evidence, in accordance with Tariff, Attachment DD, section
18.2(c)”).
101 Proposed Tariff, Attachment DD, section 18.2(c).
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be deemed new, the capacity must have neither previously received a commitment in the
RPM nor been previously committed in an FRR plan, as of the beginning of the RBP in
September, 2026.102
Eligible supply may be: (i) a new build generation resource including new
resources that obtain Capacity Interconnection Rights (“CIR”) transferred from deactivated
resources or resources that have announced deactivation as of April 10, 2026; (ii) the
incremental capacity created by an uprate of existing Generation Capacity Resources, but
only to the extent such incremental capacity is created through an increase in such
Generation Capacity Resource’s installed capacity and increase in CIRs associated with
that Generation Capacity Resource; (iii) the incremental capacity created by the utilization
of Surplus Interconnection Service; (iv) repowering of a deactivated generation resource
that deactivated prior to April 10, 2026; (v) incremental capacity, whether due to greater
Unforced Capacity or a higher level of CIRs, created by an existing Generation Capacity
Resource’s changing fuel type to a more efficient fuel type; or (vi) Planned Demand
Resource or Planned Distributed Energy Resources (“DER”) Capacity Aggregation
Resources, as described in the RAA, Schedule 6 and Schedule 6.2.103
Qualifying RBP Offset UCAP MW provided by new capacity through bilateral
contracts or Self-Supply generation must be, as described in the following section of this
transmittal letter, matched with new load.104 Alternatively, new load that provides its own
Qualifying RBP Offset UCAP MW by participating as an Annual Demand Resource or
102 Proposed Tariff, Attachment DD, section 18.2(a).
103 Proposed Tariff, Attachment DD, section 18.2(b).
104 Proposed Tariff, Attachment DD, sections 18.2(c)(i)-(ii).
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DER Capacity Aggregation Resource must do so “starting in the 2028/2029 Delivery Year
Second Incremental Auction and continuing through the 2032/2033 Delivery Year.”105
However, new load participating as an Annual Demand Resource or DER Capacity
Aggregation Resource is permitted to subsequently replace UCAP MW provided through
participation as an Annual Demand Resource or DER Capacity Aggregation Resource by
purchasing “Qualifying RBP Offset UCAP MW that are eligible generation or storage
resources.”106
iii.
Matching new load with new capacity supports
reliability
and
avoids
over-procurement,
under-procurement, and double-counting (proposed
Tariff, Attachment DD, section 18.2(b))
Decreasing the Initial RBP Target by only the capacity that meets the requirements
of Qualifying RBP Offset UCAP MW prevents double procurement of the capacity
shortfall and avoids situations where load could effectively pay twice for capacity. The
restrictions on Qualifying RBP Offset UCAP MW also help protect against
under-procurement by preventing a decrement to the Initial RBP Target from interfering
with PJM’s ability to maintain reliable operation of the system.
More specifically, requiring Qualifying RBP Offset UCAP MW to be paired with
new load recognizes that the Initial RBP Target, based on the PJM Region Reliability
Requirement shortfall of 6,831.3 MW, is derived from the forecasted demand for the period
from 2027 up through the start of the 2028/2029 Delivery Year (or, for purposes of Demand
Resources and DER Aggregation Resources, through the second Incremental Auction).
105 Proposed Tariff, Attachment DD, section 18.2(c)(iii).
106 Id.
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Thus, the Initial RBP Target should be decremented only by a quantity of capacity
(supply) that was not already counted as supply for the 2027/2028 and 2028/2029 Delivery
Years (i.e., capacity not already committed in PJM RPM). The Initial RBP Target should
also only be decremented by new capacity that serves load (demand) that was counted in
the forecast. A simplified example demonstrates how the new load and new capacity
requirements avoid under- and over-counting the RBP Target:
Included in the Load Adjustment Forecast:
Electric Distributor (ED) A (15 MW of Demand), Including Demand from
Load B
------------------
Initial RBP Target = 10 MW Shortfall (i.e., the MW short of the PJM
Region Reliability Requirement from the 2028/2029 BRA)
Then,
Load B (Within ED zone/area A) Brings Resource C (2 MW
of Supply, commercial operation date 2030)
Resource C has not previously been a PJM capacity resource
or committed in FRR
If Resource C is otherwise eligible to serve as Qualifying
RBP Offset UCAP MW, Initial RBP Target Decremented by
2 MW → Revised RBP Target = 8 MW
When new load that contributed to the capacity shortfall in PJM has brought new
capacity—i.e., capacity not previously counted as part of the calculation of PJM’s capacity
shortfall—the impacts of the new load and the new capacity effectively cancel each other
out. Decrementing the Initial RBP Target by the quantity of Qualifying RBP Offset UCAP
MW allows PJM to “right-size”107 the RBP Target while addressing the systems resource
adequacy.
107 See Building for the Future Through Electric Regional Transmission Planning and Cost Allocation, Order
No. 1920, 187 FERC ¶ 61,068 at PP 10, 34, order on reh’g & clarification, Order No. 1920-A, 189 FERC
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b.
Signed bilateral contracts or Self-Supply generation
resources
(proposed
Tariff,
Attachment
DD,
sections 18.2(c)(i) and 18.2(c)(ii))
Qualifying RBP Offset UCAP MW may be supported by signed bilateral contracts
for at least five Delivery Years108 or by Self-Supply generation that is in a RERRA-
approved or accepted integrated resource plan with either associated generation in the PJM
interconnection queue or signed bilateral contracts for at least five Delivery Years.109
To serve as Qualifying RBP Offset UCAP MW, both signed bilateral contracts and
Self-Supply must be supported by documentation of an expected online date of no later
than June 1, 2032. Furthermore, the evidence must demonstrate that the new capacity is
matched with load that has an executed electric service agreement or transmission service
agreement indicating that the load will be online in the 2027/2028 or 2028/2029 Delivery
Years.
Both signed bilateral contracts for Qualifying RBP Offset UCAP MW and signed
bilateral contracts for new resources by Self-Supply Entities in a RERRA-approved or
accepted integrated resource plan, must have a minimum term of at least five Delivery
Years. A five-year minimum term is balanced. Capacity with a bilateral contract of at
least five years is capacity that will address the reliability shortfall and is not transitory.
Furthermore, a five-year term is not so lengthy as to undermine the flexibility needed for
commercial contracting or to pose a significant barrier to eligibility for Qualifying RBP
¶ 61,126 (2024), order on reh’g & clarification, Order No. 1920-B, 191 FERC ¶ 61,026 (2025), appeals
pending sub nom. Appalachian Voices v. FERC, Nos. 24-1650, et al. (4th Cir. July 16, 2024).
108 Proposed Tariff, Attachment DD, section 18.2(c)(i).
109 Proposed Tariff, Attachment DD, section 18.2(c)(ii).
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Offset UCAP MW, in recognition of the fact that bilateral agreements may not need to be
longer than five years to develop new capacity.
Decrementing the Initial RBP Target by new resources reflected in bilateral
contracts or being developed by Self-Supply Entities that are already in approved
integrated resource plans is appropriate, as these new resources have already been
procured.
c.
Loads participating as Annual Demand Resources or DER
Aggregation Resources (proposed Tariff, Attachment DD,
section 18.2(c)(iii))
In the alternative, Qualifying RBP Offset UCAP MW may be supported by a signed
commitment between a Curtailment Service Provider or DER Aggregator and new load.
In this case, the new load must be supported by an executed electric service agreement or
transmission service agreement that shows that the new load will either support its full MW
quantity by: (a) participating as Annual Demand Resources or DER Aggregation
Resources at new locations starting in the 2028/2029 Delivery Year Second Incremental
Auction and a must-offer requirement in RPM through 2032/2033 Delivery Year or (b)
purchasing eligible replacement Qualifying RBP Offset UCAP MW.
d.
Capacity eligible to provide Qualifying RBP Offset UCAP
MW (proposed Tariff, Attachment DD, section 18.2(b))
The universe of capacity that is eligible to serve as Qualifying RBP Offset UCAP
MW that may decrement the Initial RBP Target is relatively large. Qualifying RBP Offset
UCAP MW may be provided by new generation, Energy Storage Resources, Planned
Demand Resources, or Planned DER Capacity Aggregation Resources.110 Furthermore, to
110 Proposed Tariff, Attachment DD, sections 18.2(b), (c).
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be clear, eligible capacity is not limited to capacity obtained through the recent, concurrent
bilateral matching process, which is explained in Part III.A.2 above. In addition,
Qualifying RBP Offset UCAP MW are not limited to capacity supplied by newly
constructed resources. For example, eligible resources may include incremental capacity
created by an uprate of existing Generation Capacity Resources, incremental capacity from
Surplus Interconnection Service, and repowering of deactivated generation resources that
retired as of April 10, 2026, which is the day that this particular eligibility requirement was
first posted.111
The categories of capacity that may provide Qualifying RBP Offset UCAP MW are
relatively expansive, as decrementing Qualifying RBP Offset UCAP MW avoids
double-counting for load that is included in the Initial RBP Target and planning to bring
its own capacity to the system. That said, the categories of capacity eligible to serve as
Qualifying RBP Offset UCAP MW are not so expansive as to cause PJM to decrement the
Initial RBP Target by UCAP MW that are not “new” or not sufficiently certain to be
available when called upon and reduce the resource adequacy shortfall outside the RBP.
Qualifying RBP Offset UCAP MW must therefore be accompanied by supporting
evidence, which PJM assesses before determining whether new capacity should be deemed
Qualifying RBP Offset UCAP MW and permitted to decrement the initial procurement
target.
111 An April 10, 2026, cutoff date guards against resource owners potentially gaming retirements by, for
example, entering a deactivation notice after this date only to claim that it is being repowered in advance of
the RBP.
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It is also worth noting that Qualifying RBP Offset UCAP MW has been deliberately
designed to be more inclusive than the resources that qualify to sell RBP UCAP MW,
which PJM is proposing to call RBP Resources.112 As discussed below, see infra Part
III.C.3, while resources that bring Qualifying RBP Offset UCAP MW reduce the Final
RBP Target, those resources do not hold any commitment or receive settlement through
PJM in the RBP. In contrast, RBP Resources procured through the RBP will be paid based
on a pay-as-bid basis for a fixed, 15-year term, and have obligations such as a must-offer
requirement for capacity for the term of the commitment. RBP Resource requirements are
more stringent, thus narrowing the universe of resources that may voluntarily sell RBP
UCAP MW to those that have successfully demonstrated a high likelihood of providing
stable, long-term capacity. In exchange, RBP Resources receive price certainty and
stability through the RBP.113 The distinction between Qualifying RBP Offset UCAP MW
and RBP UCAP MW provided by RBP Resources is discussed in greater detail below.
e.
Electric Distributors and other entities provide evidentiary
support for Qualifying RBP Offset UCAP MW (proposed
Tariff, Attachment DD, section 18.2(c))
PJM is proposing to require that Electric Distributors provide reports and evidence
of Qualifying RBP Offset UCAP MW in each of their respective zones/areas under the new
proposed Tariff provisions. As the Commission has previously held, Electric Distributors
serve as “the party with the distribution and metering facilities defining a zone/area and
112 Proposed Tariff, Definitions – RBP Resources (defining “RBP Resources” as “generation resources,
Energy Storage Resources, Demand Resources, or DER Aggregation Resources, as set forth in Tariff,
Attachment DD, section 18.5, offered to provide RBP UCAP MW from the Reliability Backstop
Procurement, in accordance with Tariff, Attachment DD, section 18”).
113 See Croop Aff. ¶¶ 14-16.
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Honorable Debbie-Anne A. Reese
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responsible for reporting load information to PJM.”114 However, so as to not inadvertently
limit sources of relevant and reliable information, PJM will also accept reports and
evidence of Qualifying RBP Offset UCAP MW provided during the RBP bid submission
window by other jurisdictional, as well as non-jurisdictional entities, including, but not
limited to, Transmission Owners, LSEs, interconnecting customers, large loads, and state
regulatory agencies. Commission precedent has previously supported PJM’s decision to
not limit the reporting of Load Adjustments to Electric Distributors.115
PJM acts within its authority to collect, review, and consider information from both
jurisdictional and non-jurisdictional entities to the extent that the information is relevant to
Commission-jurisdictional services and rates. First, such information is “in connection
with” and “directly affecting” wholesale capacity market rates.116 In this case, the
information that PJM seeks to collect will impact the Final RBP Target. Indeed, an
analogous practice can be found in longstanding requirements applicable to demand
resources, as set forth in Order No. 719-A.117 In that order, the Commission prohibited
PJM and other RTOs/ISOs from accepting bids from Curtailment Service Providers that
aggregated demand response of customers of utilities distributing below a MW per hour
threshold unless otherwise permitted by an appropriate retail authority.118 To comply with
Order No. 719-A, the Commission required that PJM and other RTOs/ISOs review
114 PJM Interconnection, L.L.C., 188 FERC ¶ 61,200, at P 40 (2024).
115 Id. at PP 22, 44.
116 EPSA, 577 U.S. at 278-79; FPA section 201(b), 16 U.S.C. § 824(b).
117 Wholesale Competition in Regions with Organized Electric Markets, Order No. 719-A, 128 FERC
¶ 61,059, order on clarification, Order No. 719-B, 129 FERC ¶ 61,252 (2009).
118 Order No. 719-A at P 60; PJM Interconnection, L.L.C., 135 FERC ¶ 61,211, at P 3 (2011).
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Honorable Debbie-Anne A. Reese
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evidence and information concerning end-use customer participation in load response
programs. In PJM’s case, “when an LSE or Electric Distribution Company does not
present evidence that the Retail Authority permits or conditionally permits demand
response activity, the registration will not be processed until evidence of Retail Authority
authorization for the resource’s participation in PJM’s load response programs is provided
to PJM within the established deadlines.”119
Second, in the Commission’s June 2026 Order to Show Cause, the Commission
expressly required PJM and the PJM Transmission Owners to post and regularly update
data and details concerning large load additions, including “detailed information regarding
the extent to which requests for transmission service by Eligible Customers on behalf of
large loads necessitate Network Upgrades to accommodate the transmission service to
Eligible Customers on behalf of large loads.”120 Likewise, under the RBP, PJM is
proposing to collect, review, verify, and evaluate information to determine if the Final RBP
Target should be adjusted downward to reflect arrangements entered into voluntarily by
new loads to obtain new capacity.
3.
Opt-out (proposed Tariff, Attachment DD, section 18.1(d))
The Final RBP Target will also be decremented where an Electric Distributor
zone/area elects to opt-out of procuring through the RBP for a particular zone/area in one
of two specific and narrow circumstances. First, an opt-out may be requested where the
Electric Distributor’s zone/area has rates that are not regulated by the states and is unable
to address cost allocation associated with capacity procured in the backstop. This opt-out
119 PJM Interconnection, 135 FERC ¶ 61,211 at P 3.
120 June 2026 Order to Show Cause, 195 FERC ¶ 61,211 at P 74.
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Honorable Debbie-Anne A. Reese
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request must specify the associated MW quantity of load in the zone/area that will be opted-
out of the Initial RBP Target and be accompanied by supporting documentation
demonstrating an inability to address cost allocation associated with capacity procured in
the backstop, along with written support for such opt-out from the relevant state governor,
RERRA, and interconnection customer(s). This narrow opt-out is designed to address a
limited regulatory gap faced by cooperatives and municipal utilities whose rates are not
regulated by the states. During the stakeholder process, cooperatives raised the concern
that Electric Distributors in a retail choice state not regulated by the state and not otherwise
serving as the LSE for generation to the load, would be forced to have its customers absorb
the costs of an “overbuy” if a particular large load included in the forecast were to fail to
materialize. Unlike a state-regulated, investor-owned utility, cooperatives and municipal
utilities are not governed by a state regulatory authority that would be responsible for
addressing the potential reallocation of RBP costs to either other large loads or other zones
within the state.
Second, PJM is also proposing another narrow opt-out to permit Electric
Distributors to decrement the Initial RBP Target by up to the associated MW quantity of
load that participates in a peak shaving adjustment program codified in state law (e.g., NJ
A796),121 where an Electric Distributor’s zone/area addresses its capacity needs through
such a program. To support an opt-out, the peak shaving adjustments must meet all
applicable requirements established in Tariff, Attachment DD-2.
121 See N.J. P.L.2026, C.32 (July 7, 2026) (to be codified at N.J. Rev. Stat. Title 48); NJ A796, Bill Track 50,
https://www.billtrack50.com/billdetail/1954539 (last updated July 7, 2026).
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Honorable Debbie-Anne A. Reese
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Reducing the Final RBP Target by the quantity of this opt-out is similar to reducing
the target by the quantity of new load contracting for new capacity that would qualify as a
Qualifying RBP Offset UCAP MW. While there is no accreditation value for peak shaving
adjustment, the opt-out effectively recognizes bilateral agreements between load and peak
shaving adjustment programs.
To reflect the UCAP MW of the opt-out, the Initial RBP Target will be decremented
by the amount specified by the Electric Distributor. Importantly, however, even if the
Electric Distributor zone/area qualifies for and receives an opt-out from the RBP, the load
in that zone/area may be subject to load reduction under the forthcoming proposal to
implement an IRAS.
C.
The Procurement Process: RBP Resources, Offers, RPM Must Offer,
Clearing, Settlement, and Cost Responsibility (Proposed Tariff,
Attachment DD, sections 18.4, 18.5, and 18.6)
1.
The scope of the RBP (proposed Tariff, Attachment DD,
section 18.4)
PJM is proposing new Tariff provisions to describe the procurement process under
the RBP and to broadly address: (1) who may participate in the RBP; (2) what the RBP
aims to procure; (3) the length of the procurement term; (4) when the RBP will take place;
and (5) whether and when RBP Resources participating in the RBP may, in the alternative,
enter into arrangements for Qualifying RBP Offset UCAP MW.
First, participants in the RBP are (1) sellers with RBP Sell Offers122 submitted on
behalf of RBP Resources; and (2) PJM Settlement, Inc. (“PJMSettlement”), acting as a
122 Proposed Tariff, Definitions – RBP Sell Offer (defining “RBP Seller Offer” as “an offer to sell RBP
Resources in the Reliability Backstop Procurement”).
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Honorable Debbie-Anne A. Reese
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counterparty on behalf of buyers, i.e., load. PJMSettlement, a non-profit subsidiary of
PJM, handles credit, billing and settlement functions for PJM and acts as a counterparty to
PJM members’ pool transactions in the PJM markets on behalf of the ultimate buyer of the
product.123 There is broad consensus among stakeholders that PJM should serve as the
counterparty that directly procures capacity on behalf of buyers.124 Furthermore, relying
on PJMSettlement as the counterparty mirrors the existing structure of the Reliability
Backstop Auction set forth in Tariff, Attachment DD, section 16.4(a).125
Second, PJM will seek to procure RBP Resources up to the UCAP MW value of
the Final RBP Target.126 RBP Resources are limited to generation, Energy Storage
Resources, Demand Resources, or DER Aggregation Resources that meet the
characteristics described in the proposed Tariff.127 Additional details concerning the
requirements that resources must meet to be RBP Resources are set forth in proposed
Tariff, Attachment DD, sections 18.5(b) through 18.5(e).
123
PJM
Interconnection
Subsidiaries,
PJM
Interconnection,
L.L.C.
(Sep.
5,
2025),
https://pjm.my.site.com/publicknowledge/s/article/PJM-Interconnection-Subsidiaries?language=en_US
[https://perma.cc/B2QA-S7RS].
124 Indeed, as set forth in the PJM RBP Matrix, of the 13 RBP proposals put forth during the CIFP, seven of
the proposals identified PJMSettlement as the counterparty. In addition, two of the proposals took no position
on the matter. See PJM Interconnection, L.L.C., MC Voting Results for RBP Proposals Agenda Items 3L
through
3X
(June
30,
2026),
https://www.pjm.com/committees-and-groups/committees/mc
[https://perma.cc/5CSQ-DP4K] (scroll to “Meeting Materials” and search for 2026, click on link for
“6.30.2026 Special Meeting,” scroll to MC Voting Results – Agenda Items 3L to 3X and click on each to
view the PDF) (last visited July 29, 2026).
125 Tariff, Attachment DD, section 16.4(a) (“PJMSettlement shall be the Counterparty to the capacity
transaction resulting from committed Capacity Resources clearing the Reliability Backstop Auction.”).
126 Proposed Tariff, Attachment DD, section 18.4.
127 Proposed Tariff, Definitions – RBP UCAP MW (defining “RBP UCAP MW” as “unforced capacity that
is eligible to be offered in the Reliability Backstop Procurement, in accordance with Tariff, Attachment DD,
section 18”).
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Third, RBP Sell Offers submitted in the RBP are offers of RBP UCAP MW for a
fixed 15-Delivery Year term128 if the project is expected to commence commercial
operation beginning with the 2028/2029 Delivery Year.129 RBP Resources with a
commercial operation date later than the 2028/2029 Delivery Year will be committed for a
shorter term, representing the remainder of the 15-Delivery Year term of the RBP
commitment period through the end of the 2042/2043 Delivery Year.130 The 15-Delivery
Year term is informed by the NEDC/PJM Governors’ Principles, which seeks “[r]evenue
[c]ertainty to [n]ew [g]eneration” through “15-year price certainty for new capacity
resources.”131
Fourth, the RBP submission window is planned to open upon Commission
acceptance of this submittal (with a targeted date of September 30, 2026) and close three
weeks after, and the subsequent clearing and selection process will take place thereafter
and conclude six weeks following the closing of the offer submission window. PJM will
notify RBP Sellers that have been committed as soon as practicable upon the conclusion
of the RBP.132 Assuming the Commission accepts this FPA section 205 filing within 60
days, i.e., by September 29, 2026, and no new major concerns or hurdles arise, PJM intends
to commence the RBP on September 30, 2026.133 The timing of the commencement of the
128 Proposed Tariff, Attachment DD, section 18.4.
129 Id.
130 Id.
131 NEDC/PJM Governors’ Principles at 1; see also Tariff, Attachment DD, section 16.4(a) (“The Reliability
Backstop Auction shall obtain commitments of additional Generation Capacity Resources (or, as applicable,
additional Base Load Generation Resources) for a term of up to fifteen (15) Delivery Years.”).
132 Proposed Tariff, Attachment DD, section 18.4.
133 Proposed Tariff, Attachment DD, section 18.4.
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RBP is informed by: (1) the NEDC/PJM Governors’ Principles, which urged that the
procurement should occur “no later than September 2026[,]”134 and by (2) the desire for
PJM to finalize selection and commitments of RBP Resources prior to the opening of the
2029/2030 Delivery Year BRA, scheduled for December 2026.
Fifth, RBP Sell Offers are considered binding.135 In other words, RBP Resources
that are the subject of an RBP Sell Offer are not permitted to exit the RBP to enter bilateral
arrangements, either through bilateral matching or otherwise, inclusive of arrangements
that would be considered Qualifying RBP Offset UCAP MW.136 However, to the extent
that the results of the RBP indicate that an RBP Resource was not committed in the RBP,
such resource may subsequently enter into bilateral arrangements for Qualifying RBP
Offset UCAP MW or otherwise.137 In summary, the RBP Sell Offer is a binding offer once
any PJM-identified deficiencies are cured and until the conclusion of the RBP. RBP Sellers
cannot enter into bilateral agreements for the same project unless, following the conclusion
of the procurement process, the project is not committed in the RBP.
2.
Overview of seller and buyer obligations
Table 1, below, provides an overview of seller and buyer responsibilities. Sellers
eligible to participate in the RBP, i.e., RBP Resources or Market Participants selling RBP
UCAP MW of RBP Resources must: (1) meet collateral requirements prior to participating
in the RBP; (2) support eligibility to provide capacity; (3) provide capacity; (4) cover
134 NEDC/PJM Governors’ Principles at 1.
135 See proposed Tariff, Attachment DD, section 18.4.
136 See id.
137 See proposed Tariff, Attachment DD, section 18.2(c).
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penalties for any capacity shortfalls; and (5) bear responsibility for defaults. Likewise,
buyers, i.e., LSEs, must: (1) meet collateral requirements prior to each relevant Delivery
Year; (2) cover the cost of RBP UCAP MW in accordance with the allocation of RBP
Charges; and (3) bear responsibility for defaults.
Table 1. RBP Sellers and Buyers: Payments and Non-payments (Tariff Provisions)
Seller (Supply)
Buyer (Demand)
Credit/Collateral
Requirements
Credit Requirements Prior to
Participation in RBP
(Tariff, Attachment DD
§ 18.8(a))
Credit Requirements Prior to
Delivery Year (Tariff,
Attachment DD § 18.8(b))
Provision of RBP
UCAP MW/
RBP Charges
Eligibility and Obligations to
Provide Capacity (Tariff,
Attachment DD §§ 18.5, 18.6)
UCAP MW Eligible to Settle
as CfD (Tariff, Attachment
DD
§ 18.5(g)(i))
Settlement of RBP Credits
(Tariff, Attachment DD
§ 18.5(g)(ii))
Responsibility to Pay (RAA,
7.2B)
Settlement of RBP Charges
(Tariff, Attachment DD
§ 18.5(g)(iii))
Cost Allocation (Tariff,
Attachment DD
§ 18.3)
RBP UCAP MW
shortfalls, RBP
shortfall charges,
and Associated
Credits to Buyers
Non-payment for RBP UCAP
MW that Seller Is Short
(Tariff, Attachment DD
§ 18.6(c)
RBP shortfall charges for
Failure to Reach Commercial
Operation in Delivery Year
for which RBP Resource
Committed (Tariff,
Attachment DD § 18.6(d))
Allocation of RBP shortfall
credits to LSEs based on pro-rata
share of Final RBP Target
(Tariff, Attachment DD
§ 18.3(b)(iv); RAA, Section
7.2B)
Default
(nonpayment)
Decrease in RBP Credits
Where Nonpayment of RBP
shortfall charges (Tariff,
Attachment DD § 18.9)
Cover Nonpayment of RBP
Charges (Tariff, Attachment DD
§ 18.9)
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3.
Resources eligible to participate in the RBP must bring new
capacity to PJM (proposed Tariff, Attachment DD, sections 18.5(a)
through 18.5(d))
The RBP is focused on procuring new capacity. Thus, to be eligible to be offered
into the RBP, a resource must: (1) never have been committed to provide capacity;138
(2) not have been the subject of a notice of intent to participate in an RPM Auction prior
to and including the 2028/2029 Delivery Year, but if so, must have offered and not cleared
any RPM Auction;139 (3) have a commercial operation date, or other reasonable
expectation of being in service or otherwise be able to provide capacity, by no later than
June 1, 2032;140 and (4) not be supplying Qualifying RBP Offset UCAP MW.141 As further
explained below, neither an RBP commitment nor participation in the RBP will impact the
requirement that a resource that is already the subject of a notice of intent be offered in the
2029/2030 BRA. The capacity is needed and should be offered.
RBP is designed to attract new supplies of capacity (i.e., new ICAP), not merely
incremental resource efficiencies, to address the current capacity shortfall and provide a
stable, long-term source of capacity. Resources procured through the RBP must
demonstrate a high degree of certainty of achieving commercial operation within the next
few years and be available to provide capacity until the end of a fixed, 15-year term. And,
138 See, e.g., proposed Tariff, Attachment DD, section 18.5(a)(ii) (The resource “[h]as not received a capacity
commitment or been committed in an FRR Plan as of the commencement of the Reliability Backstop
Procurement.”).
139 See proposed Tariff, Attachment DD, section 18.5(a)(iv) (The resource “[t]o the extent the subject of a
notice of intent for the 2028/2029 Base Residual Auction, must have offered and not cleared in the 2028/2029
Base Residual Auction.”).
140 See Proposed Tariff, Attachment DD, section 18.5(a)(i).
141 See Proposed Tariff, Attachment DD, section 18.5(a)(iii).
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importantly, resources procured through the RBP will be paid under the RBP framework,
not through bilateral or similar arrangements.
The Final RBP Target, on the other hand, is an input in the RBP, setting the desired
amount of UCAP MW to be procured. Thus, as discussed above, see supra Part III.B.2.d,
reducing the RBP Target by Qualifying RBP Offset UCAP MW guards against
double-counting or procuring twice for the same capacity. As such, the primary purpose
of the RBP Target is to determine how much UCAP MW is needed to meet the reliability
requirement shortfall without over-procuring.
Recognizing that RBP Resources will have longer-term commitments and price
certainty—as compared to resources that provide Qualifying RBP Offset UCAP MW, PJM
is proposing comparatively more restrictive criteria for participating resources to help
ensure that resources participating in the RBP are limited to those that have demonstrated
a high likelihood of success in reaching commercial operation in the near term and
remaining available throughout the commitment period. The RBP provides revenue
certainty to encourage the development of new capacity in PJM, provided by new projects.
Such revenue certainty demands a similar degree of certainty from the recipients of that
revenue. Accordingly, the generation, storage, demand, and DERs allowed to participate
in RBP are a subset of those eligible to provide Qualifying RBP Offset UCAP MW.
To put a finer point on the differences between Qualifying RBP Offset UCAP MW
that may decrement the RBP Target and RBP UCAP MW that may be offered into the
RBP, Ms. Croop describes several categories of resources that are eligible to serve as
Qualifying RBP Offset UCAP MW, but are excluded from the categories of resources
eligible to participate in the RBP.
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First, as Ms. Croop testifies, a resource that increases UCAP by switching fuels and
thus changes ELCC class, which can increase the resource’s accreditation value, is not
eligible to be offered in the RBP. According to Ms. Croop, “[f]uel switching does not bring
new ICAP or new [maximum facility output] on to the system.”142 Further, anticipated
UCAP increase resulting in the resource changing ELCC class is not driven by bringing
new physical capacity to the system. “[T]he potential new UCAP captured from this
resource would require some estimate of the incremental UCAP value, which may require
sensitivity analyses, to determine the delivered incremental UCAP and RBP payment, that
cannot be based on any direct increase in ICAP for the resource. This creates uncertainty
in what capacity will be available to the system in the 15-year term and should be settled
under the RBP.”143
Second, as Ms. Croop testifies, CIR uprates that bring additional UCAP MW to the
PJM system will not qualify to participate in the RBP, because CIR uprates bring neither
new ICAP nor new energy to the system.144 Rather, to qualify, any incremental capacity
created by new CIRs must also be associated with an increase in ICAP.145
Third, resources relying on Surplus Interconnection Service to bring new UCAP
MW on the PJM system do not qualify as RBP Resources, because these resources do not
have any independent rights to the PJM system. As Ms. Croop testifies:
By design, a surplus resource can only operate while the
existing resource is in service, or no more than one year after
the deactivation of the existing resource, and when the
142 Croop Aff. ¶ 19.
143 Id.
144 Id. ¶ 15.
145 Id.; proposed Tariff, Attachment DD, section 18.2(b).
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existing resource is not operating and using the
interconnection service. Given the 15-year term, resources
need to be able to operate independently to provide certainty
of deliverability for a 15-year term. Further, these projects,
while increasing UCAP in a hybrid configuration, do not
have clear contributions of UCAP between the existing
resource and surplus resource creating uncertainty and the
need for sensitivities or estimates in both the increase system
capacity and the RBP settlements.146
Fourth, Demand Resources and DER Aggregators without identified sites and a
15-year agreement in place will not be permitted to participate in the RBP. These
restrictions are necessary, according to Ms. Croop, “to provide assurance that the supply
will be available for the 15-year term and manage the risk of the supply being available for
the full term that PJM is procuring on behalf of load in the RBP.”147 By contrast, the
commitment terms (length, price, etc.) of Qualifying RBP Offset UCAP MW are managed
by the commercial contract between the buyer and seller.
4.
RBP Sell Offers (proposed Tariff, Attachment DD, section 18.5(e))
Sellers participating in the RBP must submit RBP Sell Offers for RBP UCAP MW
in $/MW-day UCAP for each Delivery Year, beginning with the first full Delivery Year in
which the RBP UCAP MW is expected to achieve commercial operation and provide
capacity, and through the end of the fixed 15-year term. Each RBP Sell Offer must include:
i)
the quantity (MW (UCAP)) to be provided by the RBP Resource for
each Delivery Year where the maximum UCAP included in an RBP
Sell Offer shall be limited to no greater than 120% of the resource
type’s most recent maximum Preliminary ELCC Class Ratings for
2028/2029 through the last posted Delivery Year or based on the
resource’s maximum estimated unit-specific ELCC ratings across
146 Croop Aff. ¶ 20.
147 Id.
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such period for resources with no ELCC Class Rating, multiplied by
the resource’s ICAP;
ii)
the price in $/MW-day UCAP for each Delivery Year beginning
with the first full Delivery Year in which the RBP UCAP MW is
expected to provide capacity through the end of the fixed 15-year
term;
iii)
the first full Delivery Year for which such resource will be available;
and
iv)
all relevant documentation necessary for the Office of the
Interconnection to evaluate whether the project satisfies the gating
criteria, as set forth in Tariff, Attachment DD, section 18.5(f)(i).
PJM also proposes to cap the maximum amount of MW (UCAP) offered for any
given resource at “120% of the resource type’s most recent maximum Preliminary ELCC
Class Ratings for 2028/2029 through the last posted Delivery Year.”148 This cap reflects
the fact that a resource’s Accredited UCAP value may change from year to year, based on
the ELCC accreditation approach. Allowing sellers to offer amounts greater than the
UCAP determined through current ELCC modeling allows sellers to offer their expected
UCAP levels in future years while limiting the risk of overestimated expected UCAP
values. In other words, if a seller believes that their resource’s current ELCC rating is
understated relative to what the seller projects for future Delivery Years, the seller would
be free to offer at a level greater than would be estimated today, while simultaneously
incurring the risk that the resource’s final UCAP value for the Delivery Year comes in
below the RBP offered value for such Delivery Year. PJM’s proposed 120% cap level
represents a reasonable balance between providing the seller with flexibility and managing
UCAP risk for load. Indeed, the 120% cap is comparable to Southwest Power Pool, Inc.’s
recently proposed cap to High Impact Large Load Generation Assessment (“HILLGA”)
148 Proposed Tariff, Attachment DD, section 18.5(e)(i).
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Customer’s generating facility’s projected capacity accreditation value (i.e., the higher of
125% or 110% plus the highest approved Planning Reserve Margin) which the
Commission found just and reasonable.149
5.
RBP Sellers Responsible for Actual Network Upgrade Costs
(proposed Tariff, Attachment DD, section 18.5(e))
Sellers of RBP Sell Offers will be responsible for all actual network upgrade costs
as determined through the interconnection process, without any subsequent adjustments to
RBP Sell Offers. Sellers will have the opportunity to reflect on the anticipated cost of any
network upgrades, estimated or final, associated with the RBP Resource’s provision of
capacity in the RBP Sell Offer.
6.
Must-offer obligation in the RPM for RBP committed resources
(proposed Tariff, Attachment DD, sections 18.6(a) and 18.6(b))
A committed RBP Resource must offer its available capacity, up to the total
quantity of committed RBP UCAP MW, into the RPM Auctions as a price taker, i.e.,
$0/MW-day UCAP, beginning with the first RPM Auction following the RBP
commitment, for the applicable offered Delivery Year in which the term of the committed
RBP UCAP MW begins and continuing each subsequent Delivery Year through the end of
the fixed, 15-year term.150 The only exception to this general rule is that if an RBP
Resource has a commitment beginning with the 2029/2030 Delivery Year and is not the
subject of a notice of intent to be offered into the BRA for the 2029/2030 Delivery Year,
149 Sw. Power Pool, Inc., 194 FERC ¶ 61,031 at P 66 (finding that Southwest Power Pool, Inc.’s “proposed
cap on the projected capacity accreditation value helps to ensure that only the generation capacity necessary
to serve the [High Impact Large Load (”HILL”)] is studied through the HILLGA process, while recognizing
that the relevant load responsible entity must secure sufficient resources to cover the Planning Reserve
Margin that it will be required to carry when the HILL receives long-term, firm transmission service”).
150 Proposed Tariff, Attachment DD, section 18.6(a).
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such RBP Resource would be required to be offered into the Second Incremental Auction
for the 2029/2030 Delivery Year.151 This limited exception is necessary because, as further
explained in the section detailing changes to the notice of intent requirement, a Planned
Generation Capacity Resource that is not the subject of a notice of intent to offer would
not have been included in the planning parameters for the 2029/2030 BRA.
Requiring the portion of an RBP Resource that has committed RBP UCAP MW to
be offered into the RPM Auctions as a price taker is appropriate given that such MW with
an RBP commitment are already being paid for by the responsible LSEs so placing a
must-offer requirement on RBP Resources and requiring such offers to be submitted as
price takers during the term of such commitment ensures that load does not double pay for
capacity. That is, if the portion of the committed RBP UCAP MW is not obligated to offer
into the RPM Auction as a price taker, there is a risk that such resource may not clear the
RPM Auction and another resource would need to be committed as capacity in such
auction. Such an outcome would effectively result in over-procuring capacity since a
committed RBP Resource is already retained for resource adequacy purposes while the
RPM Auction procures additional capacity targeted at meeting the reliability requirement.
Beyond the requirement for the committed RBP UCAP MW portion of an RBP
Resource to be offered into the RPM Auction as a price taker, the rules related to exceptions
of the RPM must-offer obligation must also be narrowed for RBP Resources. Specifically,
under the existing rules, an Existing Generation Capacity Resource may be eligible for an
151 See id. The First Incremental Auction for the 2029/2030 Delivery Year was canceled due to the
compressed auction schedule so the Second Incremental Auction is the next auction following the BRA for
the 2029/2030 Delivery Year.
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exception to the RPM must-offer obligation if it “(i) is reasonably expected to be physically
unable to participate in the relevant Delivery Year; [or] (ii) has a financially and physically
firm commitment to an external sale of its capacity . . . .”152 It remains appropriate to allow
any Existing Generation Capacity Resource, including a committed RBP Resource, to not
be offered into the RPM Auction if it is physically unable to participate in the relevant
Delivery Year (e.g., deactivation, long-term physical operational restrictions to the ICAP
of the resource or under other major repair, regulatory proceedings specific to the resource
that will result in the retirement of the resource, or unable to achieve full commercial
operation prior to the relevant Delivery Year)153 because such a resource could not
reasonably be relied upon for capacity during the Delivery Year so it should not be counted
as capacity supply in the RPM Auction. However, even if an RBP Resource is granted an
exception to the RPM must-offer obligation, the RBP Resource will nevertheless still be
subject to RBP shortfall charges, as described below.154
In addition, the owner of a committed RBP Resource should not be allowed to
circumvent the must-offer obligation simply by obtaining a financially and physically firm
commitment to an external sale of capacity. That is, a committed RBP Resource is
procured to provide capacity for a 15-year term, and the resource is paid by the relevant
LSEs within PJM. Such committed RBP Resource should therefore be counted as capacity
in the RPM Auctions and not be allowed to sell capacity outside of PJM and be exempt
from the capacity market must-offer obligations.
152 Tariff, Attachment DD, section 6.6(g).
153 Id.
154 Proposed Tariff, Attachment DD, section 18.6(b).
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To prevent a committed RBP Resource from obtaining an exception to the
must-offer obligation by selling the committed RBP UCAP MW of such resource outside
of PJM, PJM proposes to add language to the Tariff that makes clear that the portion of
any committed RBP UCAP MW of a Capacity Resource “shall not be eligible for an
exception to the RPM must-offer requirement, under Tariff, Attachment DD, section 6.6A,
based on having a financially and physically firm commitment to an external sale of its
capacity.”155 Likewise, a committed RBP Resource should not be allowed to request
removal of Capacity Resource status for the portion of the committed RBP UCAP MW
during the commitment term as such a request could also effectively circumvent the
capacity must-offer obligation. To that end, PJM proposes to add a requirement to the
Tariff that states that the Capacity Resource status of any committed RBP UCAP MW
cannot be removed during the term of such commitment.156 However, if a resource has
excess UCAP MW in addition to the committed RBP UCAP MW quantity, the excess
UCAP MW may be eligible for a capacity must-offer exception. Since the excess UCAP
MW are not committed under the RBP, the RBP Resource may request that Capacity
Resource status be removed for the excess UCAP MW under the existing rules, just like
any other Existing Generation Capacity Resource.
All RBP Resources that offer and clear in the RPM are paid RPM Auction Credits
in accordance with longstanding RPM rules, and then will be settled based on the contract
for difference (“CfD”) design for the RBP UCAP MWs. All load that is allocated RBP
155 Proposed Tariff, Attachment DD, section 6.6(g).
156 Id.
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Charges and participates in the RPM will likewise be charged RPM Charges and be
charged or receive RBP Charges, based on the CfD settlement.
7.
RBP UCAP MW shortfalls or failure to materialize (proposed Tariff,
Attachment DD, sections 18.6(c) through 18.6(e))
PJM is proposing two mechanisms to manage the risk of RBP Resources not
performing: (1) an RBP UCAP MW shortfall charge, and (2) settlement on delivery. An
RBP UCAP MW shortfall occurs when a committed RBP Resources has not reached
commercial operation for the relevant Delivery Year for up to three consecutive years
during the term of the commitment. Once an RBP Resource has achieved commercial
operation, the RBP UCAP MW shortfall charge will no longer be assessed. However, RBP
Resources are not compensated for the amount of RBP UCAP MW that the resources are
short of their RBP commitment.
There is one exception. Namely, as proposed, “[a]n RBP Resource that is a
generation or Energy Storage Resource and is unable to meet [its] expected commercial
operation date solely due to Network Upgrades shall be excepted from RBP shortfall
charges if the RBP Resource successfully demonstrates readiness through test energy and
seeks interim deliverability.”157
RBP shortfall charges will be equal to the committed RBP UCAP MW times a
charge rate equal to 20% of the RBP commitment price of such resource (i.e., RBP shortfall
charge = committed RBP UCAP MW * 20% of RBP commitment price) in the applicable
Delivery Year. RBP shortfall charges are assessed against an RBP Resource that fails to
reach commercial operation and provide capacity for up to three consecutive Delivery
157 Proposed Tariff, Attachment DD, section 18.6(d)(i).
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Years. If the RBP Resource fails to provide any RBP UCAP MW after three consecutive
Delivery Years, the RBP commitment will be rescinded for the remainder of the RBP
Resource’s fixed, 15-year term. Once a commitment is rescinded, the RBP Resource will
neither be eligible to receive compensation for the rescinded RBP UCAP MW nor be
subject to an RBP shortfall charge for the remainder of the 15-year term.
PJM is proposing to allow RBP Resources to retain RBP UCAP MW commitments
for up to three years in recognition of the fact that a resource’s commercial operation date
may be delayed, at times, even where a project is viable. Shortfall charges assessed against
RBP Resources will be allocated to load. Should a project not reach commercial operation
after the first three Delivery Years in which it was expected to be online, the resource
would not be subject to additional RBP shortfall charges. The limitation on RBP shortfall
charges helps reduce the barrier to entry, as RBP shortfall charges over the entire 15-year
commitment term, and the associated credit requirements for such an extended exposure to
the RBP shortfall, could be significant.
8.
Clearing
structure
(proposed
Tariff,
Attachment
DD,
section 18.5(f))
a.
The MW-weighted average of the levelized procurement
cost of all selected RBP Sell Offers shall not exceed
$555/MW-day UCAP.
PJM is proposing that the levelized procurement cost of all selected RBP Sell Offers
not exceed a maximum willingness to pay of $555/MW-day UCAP, on a MW-weighted
average basis over all Delivery Years of the RBP.158 Earlier this year, as part of the
Commission’s order finding that PJM’s Periodic Review of certain inputs into the RPM
158 Proposed Tariff, Attachment DD, section 18.5(f)(ii).
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were just and reasonable, the Commission accepted an estimated, uncollared price cap of
$555/MW-day (UCAP), which is Point 1 on the Variable Resource Requirement (“VRR”)
curve for 2028/2029 Delivery Year BRA.159 In other words, but for the collared price cap,
$555/MW-day (UCAP) would have been the cap for the 2028/2029 Delivery Year BRA.
Given the RBP is starting with an Initial RBP Target of the 2028/2029 Delivery Year
shortfall, $555/MW-day is being proposed as the maximum willingness to pay, i.e., a cap
to what load will pay for RBP capacity. This ‘budget approach’ selection design allows
the procurement to manage cost to load over the fixed, 15-year term of the RBP, while not
restricting Sell Offers to a hard price cap, and also allowing for potentially fluctuating
offers throughout the Delivery Years of the term.
b.
The proposed maximum willingness is just and reasonable.
A maximum willingness to pay set at the MW-weighted average of the levelized
procurement cost not exceeding Point 1 on the VRR curve for the 2028/2029 Delivery Year
BRA, i.e., $555/MW-day UCAP, is just and reasonable. First, the proposed maximum
willingness to pay weighs the need to procure capacity and maintain system reliability,
recognizing that prices above the uncollared price cap based on Point 1 of the VRR curve
for the 2028/2029 Delivery Year BRA may nevertheless be appropriate under scarcity
conditions, while also weighing consumer protection considerations by requiring that,
ultimately, the average procurement price not exceed the uncollared price cap of
$555/MW-day UCAP across the term of the RBP commitment.160
159 PJM Interconnection, L.L.C., 194 FERC ¶ 61,049 at PP 44-45, order addressing arguments raised on
reh’g, 196 FERC ¶ 61,007 (2026).
160 Croop Aff. ¶¶ 26-29.
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Second, relying on a MW-weighted average of the levelized procurement cost
provides sellers with flexibility not afforded by a hard cap on RBP Sell Offers. The simple,
illustrative example, below, demonstrates how price flexibility is permitted under this
approach, without wholly setting aside the price discipline of a cap.
Example: Final RBP Target = 1,000 MW
Offers
MW
Levelized Offer
Unit 1
250
$475
Unit 2
250
$500
Unit 3
250
$525
Unit 4
250
$600
• The MW-weighted average of the levelized procurement cost in this simplified
example would be $525MW-day, i.e., less than the proposed MW-weighted
average of the levelized procurement cost of all selected RBP Sell Offers not
exceeding $555 MW-day. All offers would be committed.
• If instead, Offer 4’s levelized offer was priced at $800, Offer 4 would not be
committed. That is, if Offer 4’s offer was priced at $800, the levelized
procurement cost would be $575 MW-day, which is greater than $555 MW-day.
The proposal to limit the maximum willingness to pay is necessary. The RBP is
not disciplined by direct buy bids that explicitly express willingness to pay.
Simultaneously, as Ms. Croop attests, “it is not reasonable to assume that load should be
obligated to pay an unlimited amount for supply. As with other PJM procurement
mechanisms, an upper bound helps.”161 In comparison to the BRA 1-year commitment,
the proposed RBP will be committing supply for an up to 15-year term. This outcome
161 Id. ¶ 26.
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creates revenue certainty for the supply resources and generally can reduce financial and
development risk and may improve financing opportunities through lower capital costs or
more favorable financing terms. Given these potential benefits, it is reasonable to conclude
that PJM’s willingness to pay for a 15-year commitment should not exceed the amount that
load would be willing to pay for a single-year commitment under the RPM framework for
the targeted Delivery Year.
The Commission has previously found that it is just and reasonable to pair a
pay-as-bid approach to backstop procurement with a maximum willingness to pay. In
transitioning from administrative pricing to competitive, pay-as-bid pricing, California
Independent System Operator Corporation (“CAISO”) paired the transition with a soft
offer cap. The Commission accepted CAISO’s proposed soft offer cap, reasoning that
“because the soft offer cap represents the high end of the range of current resource
adequacy prices, it should not create incentives for load-serving entities to forego bilateral
resource adequacy contracts and, instead, rely on Capacity Procurement Mechanism
(“CPM”) backstop procurement.”162 In the case of the RBP, the proposed maximum
willingness to pay is based on the Commission-approved price cap set administratively
through PJM’s periodic review, equal to Point 1 on the Commission-approved VRR curve,
representing the high end of the range of uncollared clearing prices.
162 Cal. Indep. Sys. Operator Corp., 153 FERC ¶ 61,001, at P 29 (2015).
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c.
The pay-as-bid approach is just and reasonable for purposes
of the RBP
PJM proposes to commit resources in the RBP using a pay-as-bid approach,163
which is more appropriate for a one-time backstop procurement than the single-clear-price
approach used in the RPM. As Ms. Croop attests, the “RBP differs significantly from
PJM’s standard market constructs and warrants a different settlement approach” and, while
“PJM generally supports a single-clearing-price market design and continues to view
uniform clearing prices as the most efficient market outcome,”164 given the unique
circumstances of this procurement, the pay-as-bid structure is more appropriate.
First, the RBP is a backstop procurement that has become necessary due to the
unprecedented capacity shortfall in the PJM Region. As a one-time procurement, Ms.
Croop testifies, a uniform clearing price procurement, which “promotes transparent price
discovery, facilitates forward pricing, and supports competitive market outcomes,”165
would be ill-suited to the RBP. As Ms. Croop states, the RBP “is not designed to be a
durable or repeatable procurement,” and therefore “its pricing outcomes are less likely to
serve as incentive market signals.”166
Second, the RBP will not be procuring a uniform commodity. As Ms. Croop
testifies:
Although the RBP will seek a fixed, 15-year period of time
for procurement and cost allocation of RBP Resources, those
resources may differ based on contract duration (dependent
on the projected in-service date of selected resources),
163 Proposed Tariff, Attachment DD, section 18.5(f).
164 Croop Aff. ¶¶ 21, 22.
165 Croop Aff. ¶ 21.
166 Id. ¶ 23.
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commercial operation dates, and other factors such as
differences in ELCC accreditation and varying UCAP across
the full term of the commitment. These differences create
distinct products rather than a single homogeneous
offering.167
Resource-specific network upgrade costs and commercial operation date risks differ from
resource to resource.
Third, without a “marginal unit” in any meaningful sense of the term, a single
clearing price would transfer inframarginal rents to every seller priced below the most
expensive accepted offer. A uniform clearing price would, according to Ms. Croop,
“require PJM to normalize offers through potentially complex and subjective assumptions.
A pay-as-bid structure avoids those challenges while providing a straightforward and
transparent procurement framework.”168
d.
No direct market power screens or mitigation
No direct market power screens or mitigation are being proposed for the RBP. The
RBP design does, however, minimize the potential for exercise of market power. In the
context of a pay-as-bid structure with a maximum willingness to pay set at $555/MW-day
UCAP, the effectiveness of direct market screens or mitigation is limited.
First, a pay-as-bid structure, unlike a single-clearing price structure, relies on
individual clearing prices rather than a single clearing price. Thus, as Ms. Croop explains,
there is an “inability for one resource to impact the clearing price of any other resource in
a pay-as-bid structure. This is in contrast to a uniform clearing price market where the
167 Id. ¶ 25.
168 Id.
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marginal resource will set the clearing price and all resources will receive that price.”169
Ms. Croop’s affidavit provides the following concrete example:
Seller has a fleet of three resources: A, B, and C and offers accordingly:
Resource A @$10/MW-day
Resource B @$10/MW-day
Resource C @$50/MW-day170
Assuming that Resource C sets the market-clearing price at $50/MW-day in a
single-clearing price structure, Resource A and Resource B would likewise receive the
market-clearing price of $50/MW-day, and thus potentially collect inframarginal rents, i.e.,
economic gains realized where a resource’s costs fall below the market-clearing price. In
a single-clearing price auction, this is one of the key concerns that market mitigation
measures are in place to address.
In a pay-as-bid structure, however, Resource C’s offer price would not affect the
prices of Resource A or Resource B. Each resource committed would receive the price
offered. Resource C would only receive the $50/MW-day, and this offer would not
influence the revenues for Resource A and B.
Second, as discussed, above, PJM is proposing to pair the pay-as-bid structure with
a maximum willingness to pay not to exceed $555/MW-day UCAP. The existence of a
reasonable maximum willingness to pay further discipline costs, where a resource raises
its offer risks, that resource not clearing due to more economical offers and/or the costs
exceeding the set maximum willingness to pay.
169 Croop Aff. ¶ 34.
170 Id.
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Third, in a pay-as-bid procurement in which suppliers voluntarily participate, as
Ms. Croop explains, “the traditional incentive and ability to exercise market power are
substantially reduced” where “each selected resource is compensated based on its
individual offer rather than a market-clearing price established by the marginal
resource.”171 Indeed, the risk of economic withholding is limited here, because “the
procurement is voluntary, meaning suppliers can simply choose to participate or not, and
then further PJM is proposing a maximum willingness-to-pay cap, which provides a direct
limit on procurement costs even in the absence of offer mitigation.”172 PJM’s maximum
procurement target under the RBP is limited to the 2028/2029 BRA shortfall of
6,831.3 MW UCAP. The RFI, administered by CRA, identified over 100 GW of
prospective supply interested in participating in some form through this process.173 This
level of interest indicates there is available supply that will compete to secure an RBP
commitment. PJM expanded the pool of eligible supply by permitting participation from
resources capable of achieving commercial operation beyond the timeframe required for
the 2028/2029 BRA. As a result, there is sufficient prospective supply to satisfy the
identified 2028/2029 reliability need. This expanded supply eligibility mitigates scarcity
conditions that would otherwise exist for the 2028/2029 Delivery Year and indicating the
ability to create meaningful competition among suppliers seeking RBP contracts. In
scarcity conditions, suppliers may have incentives to submit offers at or near the applicable
maximum willingness to pay. However, due to the abundance of eligible supply competing
171Id. ¶ 32.
172 Id. ¶ 34.
173 Charles River Associates Presentation at 5.
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for the limited RBP contracts, competitive dynamics are expected to encourage suppliers
to submit competitive offers that more closely reflect their willingness to provide service.
Under a pay-as-bid structure, such competition should exert downward pressure on
procurement costs and improve the efficiency of the RBP procurement process.174
Fourth, the Commission, under somewhat similar circumstances, has previously
found the pay-as-bid approach to be just and reasonable. The Commission also previously
found that, with respect to the CAISO’s CPM, CAISO’s proposal to transition from an
administratively set, single-clearing price to a pay-as-bid approach, was just and
reasonable.175 The CPM, like the RBP in PJM, is a “voluntary backstop mechanism that
authorizes CAISO to procure capacity to address a deficiency or supplement resource
adequacy procurement by load-serving entities, as needed, to maintain grid reliability.”176
In 2015, the Commission accepted CAISO’s proposal “to implement a competitive
solicitation process and pay designated resources their bid price, rather than paying an
administratively set price, subject to a soft offer cap.”177 In doing so, the Commission held
that, as to the CPM, the “the pay-as-bid approach is appropriate because it is a backstop
procurement mechanism” that is intended “to respond to unexpected reliability needs.”178
Furthermore, as CAISO explained, “a pay-as-bid approach, rather than a single clearing
174 Croop Aff. ¶¶ 35 (citing Charles River Associates Presentation), 36.
175 Cal. Indep. Sys. Operator Corp., 153 FERC ¶ 61,001.
176 Id. at P 2.
177 Id. at P 8.
178 Id. at P 28.
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price, reflects the unique nature of the CPM, which is designed as a rarely used backstop
procurement mechanism to address short-term transitory events.”179
Fifth, unlike CAISO’s CPM,180 the RBP is intended to incentivize and procure new
capacity resources rather than existing resources with established costs. In this respect, the
proposed cap for the RBP is similar to the existing market mitigation rules for Planned
Generation Capacity Resources. As set forth in the Tariff provisions on mitigation for
Planned Generation Capacity Resources,
Sell Offers based on Planned Generation Capacity Resources . . .
shall be presumed to be competitive and shall not be subject to
market power mitigation in any Base Residual Auction or
Incremental Auction for which such resource qualifies as a Planned
Generation Capacity Resource, but any such Sell Offer shall be
rejected if it meets the criteria set forth in subsection (C)
below . . . .181
In subsection (C) of the Tariff provision, Sell Offers of Planned Generation capacity
Resources may be rejected if it exceeds 140% of an average, relevant price.182 In other
179 Id. at P 15; see also Cal. Indep. Sys. Operator Corp., Tariff Amendment and Offer of Settlement Regarding
Capacity Procurement Mechanism Revisions and Request for Waiver of Notice Requirement of California
Independent System Operator Corporation, Docket No. ER15-1783-000, Transmittal at 15 (May 26, 2015)
(stating “compensation on a pay-as-bid approach, rather than a single clearing price, reflects the unique nature
of the CPM and the CPM competitive solicitation process. CPM serves as a rarely used backstop
procurement mechanism to address short-term transitory events. The CAISO typically relies on CPM to
procure an individual resource to respond to unexpected, unplanned-for system conditions or meet unique
reliability needs that might occur at a given point in time. CPM is not a capacity clearing market like those
in place in the eastern ISOs and RTOs, and it is not a process for clearing load and supply in the marketplace.
Backstop capacity generally is non-homogenous (limited interchangeability) because the CAISO typically
designates CPM capacity based on specific characteristics such as location or resource capabilities” (footnote
omitted)).
180 See Cal. Indep. Sys. Operator Corp., CAISO Tariff Amendment and Offer of Settlement Regarding
Capacity Procurement Mechanism Revisions and Request for Waiver of Notice Requirement, Docket No.
ER15-1783-000, Transmittal at 15 (May 26, 2015) (“[T]he CPM backstop is not intended to incentivize new
generation.”).
181 Tariff, Attachment DD, section 6.5(a)(ii)(A).
182 Tariff, Attachment DD, section 6.5(a)(ii)(C) (Sell Offers of Planned Generation Capacity Resources may
be rejected if it exceeds 140% of an average price established around the VRR Curve if “the average of
location-adjusted Sell Offers for Planned Generation Capacity Resources from the same asset class,” “if there
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words, the existing offer cap for Planned Generation Capacity Resources is based on an
average of offers from all Planned Generation Capacity Resources. Similarly, for new
capacity resources in the RBP, the proposed cap, based on a MW-weighted average of the
levelized procurement cost of all selected RBP Sell Offers not exceeding $555/MW-day
UCAP, provides a zone of reasonable prices, much like the volume-weighted average
applied to Planned Generation Capacity Resources as a mitigation measure.183
Notwithstanding the above, the implementation of market mitigation measures in a
pay-as-bid construct can be difficult to verify and ineffective. As Ms. Croop explains, “[i]n
a pay-as-bid approach, unlike a uniform clearing price construct where sellers are expected
to offer a marginal cost, sellers are more likely to offer the expected clearing price. Given
offers will likely have less variation and information underlying offers it can be difficult
and ineffective to determine offers exhorting market power.”184
e.
Stage 1: gating criteria—ensuring the viability of the
resource to be developed (proposed Tariff, Attachment DD,
section 18.5(f)(i))
To ensure that resources selected through the RBP are those most likely to go into
service and provide needed capacity and to deter offers of speculative resources, PJM is
proposing “gating” criteria under which the seller will provide certain evidence designed
to demonstrate that the proposed resource will be successfully completed and able to
provide capacity. As detailed below, the required information should demonstrate that the
is no Asset-Class New Plant Offers for such Delivery Year, the average Asset-Class New Plant Offers for all
prior Delivery Years” or “if there are no Asset-Class New Plant Offers for any prior Delivery Year, the net
[Cost of New Entry] applicable for such Delivery Year in the [locational deliverability area] for which such
Sell Offer was submitted.”)
183 See Tariff, Attachment DD, section 6.5(a)(ii).
184 Croop Aff. ¶ 33.
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resource is likely to be fully developed and the seller has taken all necessary steps (at this
stage) to succeed.
RBP Sell Offers must include the applicable information in order to be considered
valid and advance to the price evaluation stage.185 PJM is proposing different evidence
demonstrating likelihood of successful development for generation/storage resource
developers than from demand resource developers, with each set of requirements tailored
to the specific characteristics of the resource types. However, given the importance of such
information, before failing to advance an offer to the price evaluation stage, PJM will
provide sellers the opportunity to cure any PJM-identified deficiencies. Sellers will have
five calendar days, or up to the close of the bid submission window, to cure.186
For RBP Sell Offers of generation and storage resources, the seller must provide
various types of evidence demonstrating that the project is at a substantially advanced stage
of development and therefore showing that it is not speculative and is likely to provide
capacity corresponding to its commitment. Specifically, the seller must provide the
following evidence:
• Critical path construction schedule (with seller attestation) supporting the
feasibility of commercial operation date of June 1, 2032, or earlier;187
• Applicable interconnection study information and development timeline
appropriate to its interconnection queue study process;188
185 See proposed Tariff, Attachment DD, section 18.5(f)(i).
186 See id.
187 See proposed Tariff, Attachment DD, section 18.5(f)(i)(1) (“A critical path construction schedule and
expected commercial operation date, with attestation, for the Office of the Interconnection to validate that
RBP Sell Offers are for RBP UCAP MW with a feasible commercial operation date of June 1, 2032 or
earlier.”).
188 See proposed Tariff, Attachment DD, section 18.5(f)(i)(1)(A) (“With respect to a project in Transition
Cycle #2 under Tariff, Part VII and earlier, such project must provide study information and timeline from
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• Evidence of 100% site control;189
• Financing plan, showing that the resource has sufficient financial backing
to be successfully completed;190
• Permitting plan, showing that the developer is on track to obtain all
necessary and applicable permits to complete the project;191 and
• Signed memorandum or other documentary evidence that the developer has
or will procure the major equipment necessary to develop the resource.192
In addition, the seller must demonstrate that it is able to actually develop the underlying
resource by providing “[e]vidence of experience having constructed a previous project of
similar size and technology or have contracted with an engineering, procurement, and
construction partner with such experience.”193 A seller offering RBP UCAP MW based on
a natural gas-fired resource must provide evidence that there will be a pipeline delivering
its most current PJM study.”); see proposed Tariff, Attachment DD, section 18.5(f)(i)(1)(B) (“With respect
to a project in Cycle 1 under Tariff Part VIII, the Expedited Interconnection Track under Tariff, Part X, or
not under study, the project must provide study information and timeline from an independent consultant
report.”).
189 See proposed Tariff, Attachment DD, section 18.5(f)(i)(2) (“Evidence of 100% Site Control for each of
the Generating Facility (including the location of the main step-up transformer), the Interconnection
Facilities, and the Interconnection Switchyard (as defined in the PJM Manuals) for a term of at least three
years from the date of submission of the Application. In addition, a certification, executed by an officer or
authorized representative of the Generation Project Developer, verifying that the Site Control requirements
have been met. Further, at Transmission Provider’s request, Generation Project Developer shall provide
copies of landowner attestations or county recordings. The Site Control requirements include an acreage
requirement for the Project, as set forth in the PJM Manuals. Evidence of site control consistent with Tariff,
Part VIII, Subpart A, section 402.”).
190 See proposed Tariff, Attachment DD, section 18.5(f)(i)(3) (“Financing plan, i.e., identified financing
sources and details (e.g., project financing, balance sheets, tax equity, sponsor equity), current status of any
financing commitments or term sheets, and a general description of the capital structure and expected timeline
to financial close.”).
191 See proposed Tariff, Attachment DD, section 18.5(f)(i)(4) (“Permitting plan, e.g., a list of all applicable
permits, current status, and timeline to obtain each.”).
192 See proposed Tariff, Attachment DD, section 18.5(f)(i)(5) (“Signed memorandum for the acquisition of
major equipment, invoices or agreements to acquire major equipment, or other documentary evidence that
major equipment has been procured.”).
193 Proposed Tariff, Attachment DD, section 18.5(f)(i)(6).
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the natural gas to the resource.194 And, finally, to the extent the resource is located outside
the PJM Region, the seller must demonstrate that the resource has sufficiently progressed
through its host region’s interconnection study process to have obtained “a completed
facilities study or [the] equivalent” and, consistent with PJM’s pseudo-tie requirements for
external Capacity Resources in Tariff, Attachment DD, section 5.5A(b), a “long-term firm
point-to-point transmission service, or a confirmed transmission service request with a
completed system impact study, sufficient to deliver capacity to the border of the PJM
Region.”195
For RBP Sell Offers of Annual Demand Resources and DER Capacity Aggregation
Resources, the seller must provide certain evidence demonstrating that the resource will be
capable of providing the offered load reduction over the term of the agreement. To this
end, PJM is proposing that such RBP Sell Offers must be accompanied by the following
evidence supporting the offered load reduction:
• The locations within PJM of the load reduction;196 and
• Executed customer agreements or binding commitments with identified
locations and customer names sufficient to cover the offered MW
quantity.197
194 See proposed Tariff, Attachment DD, section 18.5(f)(i)(7) (“For natural gas-fueled generation resources,
evidence of delivery infrastructure arrangements in the form of a notice of intent or attestation of pipeline
capacity expansion to support the new project.”).
195 Proposed Tariff, Attachment DD, section 18.5(f)(i)(8).
196 See proposed Tariff, Attachment DD, section 18.5(f)(i)(9) (“Locations within the PJM Region by
Zone/Sub-zonal [locational deliverability area] and aggregate capacity for RBP Sell Offers.”).
197 See proposed Tariff, Attachment DD, section 18.5(f)(i)(10) (“Executed customer agreements or binding
commitments covering the proposed RBP UCAP MW commitment, with identified locations, customer
names, and expected curtailment/injection capability per site.”).
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The seller must also show that it will be able to effectuate the offered load reduction
through evidence of an “[e]quipment procurement plan or evidence of deployed enabling
infrastructure such as metering, telemetry, load control, [Supervisory Control and Data
Acquisition]/dispatch systems, or DER major equipment as applicable.”198 Finally, the
seller must demonstrate that it has coordinated with the Electric Distributor to ensure the
resource will meet applicable requirements.199
f.
Stage 2: selection assessment
After PJM has evaluated an RBP Sell Offer’s “gating” criteria evidence
demonstrating that the underlying resource has a high likelihood of successfully delivering
the offered capacity over the 15-year timeframe, PJM will then evaluate the RBP Sell
Offers “based on the first Delivery Year offered in the RBP Sell Offer, levelized cost, and
RBP UCAP MW quantity.200 The selection process will first order all Sell Offers based
on the resource’s identified offered Delivery Year, and then by price, by ordering the RBP
Sell Offers “in least-cost order based on the levelized cost ($/MW-day) of UCAP MW over
the fixed 15-year term.”201 From this stack of offers, PJM will select RBP Sell Offers “until
the Final RBP Target is satisfied.”202
198 See proposed Tariff, Attachment DD, section 18.5(f)(i)(11) (“Equipment procurement plan or evidence of
deployed enabling infrastructure such as metering, telemetry, load control, [Supervisory Control and Data
Acquisition]/dispatch systems, or DER major equipment as applicable.”).
199 See proposed Tariff, Attachment DD, section 18.5(f)(i)(12) (For DER Capacity Aggregation Resources,
“[a]pplicable Electric Distributor interconnection/distribution impact study requirements and a plan to initiate
on a timeline consistent with the proposed delivery date.”); see proposed Tariff, Attachment DD, section
18.5(f)(i)(13) (For Demand Resources, “Electric Distributor coordination requirements for metering,
telemetry, and baseline measurement infrastructure.”).
200 Proposed Tariff, Attachment DD, section 18.5(f)(ii).
201 Id.
202 Id.
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The affidavit of Ms. Croop includes three examples, appended as Exhibit 1 to her
affidavit, which provide step-by-step explanations of how RBP Sell Offers are assessed
and selected by Delivery Year and price of each RBP Resource, as identified in terms of
levelized procurement cost and levelized MW value across the fixed, 15-year term.203 The
first example describes how one resource’s offer price and MW quantity are levelized
across the term.204 The second and third examples demonstrate how a set of offers are
evaluated based on ranked Delivery Year and levelized cost, and provide descriptions of
each step in the selection process.205
As explained above, see supra Part I.A, all RBP commitments terminate with the
2042/2043 Delivery Year, regardless of which Delivery Year the RBP Resource first
offered. Therefore, the levelized cost determination is needed for a comparative evaluation
for each resource for the period between commercial operation and the 2042/2043 Delivery
Year.
Thus, it is necessary to calculate a levelized procurement cost for each RBP Sell
Offer. As Ms. Croop explains, “levelized cost of capacity is an industry standard
evaluation metric used in competitive resource procurements across the country. The
levelized cost calculation for evaluation addresses the fundamental issue of a simple MW-
weighted average cost by accounting for the time value of money, which is critical when
evaluating contracts spanning 15-year terms, as PJM is proposing in the RBP. Levelizing
203 Croop Aff., Exhibit (“Exh.”) 1 (Examples Demonstrating RBP Resource Procurement Process).
204 Id. at 1-2.
205 Id. at 2-7.
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properly discounts future cost streams to a common basis, giving us a true economic
comparison across bids.”206
This period will be considered in the determination of the levelized cost of each
RBP Sell Offer shall be calculated as: “Levelized Cost ($/MW-day) = Net Present Value
(RBP Sell Offer price * UCAP offered)/Net Present Value (UCAP offered), with a discount
rate equal to 9.5% after-tax average weighted average cost of capital (‘ATWACC’).”207
The 9.5% ATWACC is appropriate here, as Ms. Croop attests, as the proposed discount rate
was The Brattle Group-estimated calculated value used in the 2025 Periodic Review of
Variable Resource Requirement Curve Shape and Key Parameters.208
PJM has designed the RBP clearing mechanism to recognize the 15-year timeframe
and that there may be issues with all offered resources having a reasonably expected
commercial operation date by June 1, 2028. First, the Final RBP Target is fixed and is the
target value for each year of the 15-year period. Second, in selecting resources from the
offer stack, PJM will first try to satisfy the Final RBP Target with RBP Resources expected
to reach commercial operation in the 2028/2029 Delivery Year. If the set of resources
offered with expected commercial operation dates in the 2028/2029 Delivery Year is
insufficient to meet the Final RBP Target, then PJM will apply the selection criteria to
consider all resources offered with an expected commercial operation date in the 2029/2030
Delivery Year. PJM will continue to apply the selection criteria iteratively, up to and
206 Croop Aff. ¶ 30.
207 Id. ¶ 31.
208 Id. (citing 2025 Periodic Review of Variable Resource Requirement Curve Shape and Key Parameters,
PJM
Interconnection,
L.L.C.
(Nov.
7,
2025),
https://www.pjm.com/pjmfiles/directory/etariff/FercDockets/9248/20251107-er25-455-000.pdf
[https://perma.cc/87GP-AYL5]).
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including the 2032/2033 Delivery Year, until the set of offers selected meets the Final RBP
Target.
Within this selection process PJM will continue to maintain the maximum
willingness to pay and will not procure a resource that results in the MW-weighted average
of the levelized procurement cost exceeding $555/MW-day. As a result of this constraint,
in the selection process, PJM may skip over a resource with an earlier Delivery Year if
procuring that resource would violate the maximum willingness to pay for the procurement.
Additionally, the selection is prioritizing earlier Delivery Years to address the
shortfall target as soon as possible. As a result, if a resource is skipped in the selection
process because it violates the maximum willingness to pay cap, but a lower-cost resource
is procured that then creates “room in the budget” to select that higher-offer-earlier
Delivery Year resource, the selection process will go back to procure that resource before
continuing down the rank-order of additional offers in later Delivery Years.
PJM’s proposed procurement process also provides for flexibility to select a more
economically efficient solution. In procuring the least-cost set of resources, PJM may clear
an RBP Sell Offer with an offered quantity that exceeds the remaining Final RBP Target if
the solution results in a lower overall cost than the alternative.209 For example, in the course
of clearing, assume the Final RBP Target were 6,000 MW. In this example, an RBP
Resource would put the final RBP procurement at 6,001 MW (i.e., above the Final RBP
Target) but remain within the maximum willingness to pay of $555/MW-day. However,
209 Proposed Tariff, Attachment DD, section 18.5(f)(ii) (“In selecting the least-cost solution that satisfies the
Final RBP Target and the cost of procurement constraint, [PJM] may commit an RBP Sell Offer with an
offered quantity that exceeds the remaining Final RBP Target to the extent such solution provides greater
economic efficiency than an alternative solution that satisfies the requirements and constraints.”).
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higher priced offers for MW quantities within the 6,000 MW target exceed the $555/MW-
day maximum willingness to pay. In this case, PJM may exercise the option to clear 6,001
MW in the RBP, i.e., 1 MW above the procurement target, to maintain a total weighted
average price at or below $555/MW-day. Even though, in this example, PJM procured
above the target, the overall cost was lower. In this way, PJM chooses among alternative
solutions and selects the more economically efficient outcome.
Because the RBP is procuring new capacity and not simply fungible UCAP MW,
PJM is proposing that “RBP Resources shall not be partially cleared.”210 Thus, there exists
the possibility that PJM may clear a set of resources with a cumulative RBP UCAP MW
total that does not exactly match the Final RBP Target. PJM proposes that “[i]n the event
that the Reliability Backstop Procurement cannot meet the Final RBP Target, the
Reliability Backstop Procurement shall clear short of the Final RBP Target.”211
Following the conclusion of the RBP and to the extent consistent with the existing
member confidentiality rules, PJM will post a report that, inter alia, provides a transparent
overview of the aggregate MWs that were procured through the RBP and a weighted
average of the RBP Charges as soon as practicable after the RBP is completed.
9.
Contract for difference settlement structure (proposed Tariff,
Attachment DD, section 18.5(g))
Each committed RBP Resource will individually settle as a CfD. The CfD
settlement structure turns on a committed RBP Resource’s “strike price”—i.e., the RBP
Sell Offer price at which the RBP Resource’s RBP UCAP MW is committed, expressed as
210 Id.
211 Id.
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$/MW-day UCAP. Because the RBP is pay-as-bid, each committed RBP Resource has an
individualized “strike price.”
A committed RBP Resource must offer all committed RBP UCAP MW as a price
taker in the RPM, unless the resource qualifies for an exception under the rules governing
a committed RBP Resource participating in the RPM. The “market price” is the RBP
Resource’s unit-specific weighted average resource clearing price (“WARCP”) of all RPM
Auctions in which the RBP Resource participated for the relevant Delivery Year, expressed
as $/MW-day UCAP.212
If the strike price of the total MW eligible to settle as a CfD is higher than the
market price, the buyer (load) must pay the difference between the strike price and market
price. Alternatively, if the strike price of the total MW eligible to settle as a CfD is lower
than the market price the seller (RBP Resource) must pay back the difference between the
strike price and market price.
The proposed CfD settlement structure is just and reasonable. First, the CfD
structure protects load from paying RBP Resources a windfall, while also protecting RBP
Resources from settling below market prices. Thus, the CfD structure provides stability
during the lengthy term of an RBP Resource commitment and limits the potential risk of
long-term exposure.
Second, the CfD structure operates on the principle that payments for providing
RBP UCAP MW should net out the market revenues from the RPM. In other words, CfD
212 Proposed Tariff, Attachment DD, section 18.5(g)(ii).
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limits payment for RBP UCAP MW to the “missing money” and avoids double payment
for the same capacity—once through the RPM and again through the RBP.
Third, recognizing that the RBP locks in a fixed price for a fixed, 15-year term, the
CfD structure is intentionally “self-correcting.” Loads will fund the actual revenue
shortfall, measured ex post, as opposed to an administrative guess about what that revenue
shortfall might be.
Fourth, the proposed CfD is not purely financial. The total MW eligible to settle
as a CfD will be: (a) the lesser of the RBP Resource’s daily committed RBP UCAP MW,
daily owned UCAP MW; and (b) daily cleared RPM UCAP MW.213 A physical availability
requirement supports reliability, resource adequacy, market participation, and stable
capacity revenue streams for RBP Resources.214 Under the proposed CfD settlement
structure, RBP Credits and Charges will only be assessed to the extent that RBP UCAP
MW are committed in the RPM and physically available for dispatch in the relevant
Delivery Year. To the extent that an RBP Resource fails to deliver the full RBP UCAP
MW committed in the RBP, the RBP Settlement Credits, settled as a CfD, will only credit
the lower of the daily committed RBP UCAP MW, daily owned UCAP MW, and daily
cleared RPM UCAP MW.215
213 Proposed Tariff, Attachment DD, section 18.5(g)(i).
214 Croop Aff. ¶ 39.
215 Proposed Tariff, Attachment DD, section 18.5(g)(i).
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a.
RBP Settlement Credits and RBP Charges
RBP Resources that clear in the RBP are assessed RBP Settlement Credits, a daily
value measured in $/day UCAP,216 which may be positive (indicating a payment to supply)
or negative (indicating a reduction in payment to supply).
Load allocated responsibility for RBP UCAP MW will be allocated RBP Charges,
a daily value measured in $/day UCAP, which may likewise be positive (a reduction in
cost to load) or negative (a cost to load).217
For example, in a settlement where an RBP Resource is assigned a positive
$10,000/Day RBP Settlement Credit, load is assigned a corresponding negative $10,000
RBP Charge.
Likewise, in accordance with the rules in place today, all RBP UCAP MW that
offer and clear in the RPM will be assessed RPM Auction Credits, while load will be
assessed RPM Charges.
b.
Examples of RBP Resource Settlements
Tables 2-4, below, are illustrative examples of how a hypothetical RBP Resource
that clears in both the RPM and the RBP is credited when the RBP price is higher, lower,
or equal to the RPM price. In Table 2, the same quantity of MW clear in the RPM and
RBP. In Table 3, more MW clear in the RPM than in the RBP, and in Table 4, fewer MW
clear in the RPM than in the RBP. The number of MW that clear in the RPM and RBP are
216 Proposed Tariff, Definitions – RBP Settlement Credits (‘“RBP Settlement Credits’ shall mean, for each
day in the Delivery Year in the term of the Reliability Backstop Procurement commitment period, the $/day
value that a resource committed in the Reliability Backstop Procurement receives as a contract for differences
settlement in accordance with Tariff, Attachment DD, section 18.5(g).”).
217 Proposed Tariff, Definitions – RBP Charges (‘“RBP Charges’ shall mean the $/day value of the total RBP
Settlement Credits, positive or negative, of all RBP Resources across the PJM Region.”).
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relevant because, as previously noted, the total MW eligible to settle as a CfD is limited to
the lesser of the RBP Resource’s committed RBP UCAP MW for a Delivery Year, daily
owned UCAP MW, and daily committed RPM UCAP MW. Thus, for example, even if
the resource committed more MW in the RPM than in the RBP, the CfD would still only
be for the lower quantity of MW that committed in the RBP.
Table 2 shows the outcomes of a hypothetical RBP Resource where the quantities
of UCAP MW cleared in the RPM and RBP are equal (50 MW (UCAP)). Table 3 shows
the outcomes where a hypothetical RBP Resource clears more capacity in the RBP (50
MW (UCAP)) than in the RPM (20 MW (UCAP)). Table 4 shows outcomes where a
hypothetical RBP Resource clears less capacity (20 MW (UCAP)) in the RBP than in the
RPM (50 MW (UCAP)). In each table, the “Total Credits” column is the total amount paid
to the RBP Resource. Tables 2-4 represent Resource Settlement. Load Settlement is an
inverse of the RBP Credits, i.e., where Resource Credits are paid to a resource, RBP
Charges are assessed to load to cover the RBP Credits. Together, Tables 2-4 provide
concrete examples of how the CfD settlement structure supports long-term stability and
price-certainty, while also providing a two-sided hedge that blunts potential gains from
speculative offers in a pay-as-bid framework.
As demonstrated in the first row of Table 2, where an RBP Resource clears 50 MW
(UCAP) in both the RBP and RPM, and the RBP price is higher than the RPM price, at
settlement, only the incremental value of the RBP Credits will be counted toward the total
credits. In other words, the 50 MW (UCAP) cleared in the RPM and RBP will not be paid
twice for the same capacity. The 50 MW (UCAP) will be paid the value of the RPM
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Auction Credits plus the RBP Settlement Credits, which is based on the difference between
the RBP and RPM prices.
However, CfD also serves a limiting role. For example, in the second row of
Table 2, the RBP price falls below the RPM price. The RBP Settlement Credits now
represent an incremental decrease in value of the capacity. Thus, the RBP Resource is
ultimately paid its expected RBP Credits.
Table 2. Resource Settlement ($/day)
Where UCAP MW Cleared in RBP and RPM Are Equal
(RPM Cleared MW = 50 MW (UCAP), RBP Cleared MW = 50 MW (UCAP))
RBP and RPM Prices
Expected
RBP
Credits
RPM Auction
Credits
RBP
Settlement
Credits
Total
Credits
RBP
Cleared
MW * RBP
Price
RPM Cleared
MW * RPM
Price+
RBP Cleared
MW * (RBP
Price – RPM
Price+)
RPM
Auction
Credits +
RBP
Settlement
Credits
RBP Price > RPM Price+
RBP Price =$250
RPM Price+ = $200
50 MW *
$250 =
$12,500
50 MW * $200
= $10,000
50 MW *
($250-$200) =
$2,500
$12,500
RBP Price < RPM Price+
RBP Price =$200
RPM Price+ = $250
50 MW *
$200 =
$10,000
50 MW * $250
= $12,500
50 MW *
($200-$250) =-
$2,500
$10,000
RBP Price = RPM Price+
RBP Price =$250
RPM Price+ = $250
50 MW *
$250 =
$12,500
50 MW * $250
= $12,500
50 MW *
($250-$250) =
$0
$12,500
+Or, in the event resource clears in multiple RPM Auctions, RPM WARCP)
In Table 3, the resource clears fewer MW (UCAP) in the RBP compared to the
RPM. As the first row of Table 3 illustrates, where the RBP price is higher than the RPM
price, the resource receives the value of the RPM Auction Credits for all 50 MW in which
the resource clears in the RPM and the CfD for only the 20 MW that clears the RBP. In
row two, where the clearing price of the RBP was lower than the RPM price, the CfD
reduces the total amount credited to the RBP Resource based on the 20 MW that clears the
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RBP. Finally, in row three of Table 3, where the clearing price for the RPM and RBP are
the same and the MW UCAP that clears the RBP is lower than the RPM, the CfD does not
change the total amount credited to the RBP Resource.
Table 3. Resource Settlement ($/day)
Where RBP Cleared MW < RPM Cleared MW
RPM Cleared MW = 50 MW (UCAP), RBP Cleared MW = 20 MW (UCAP)
RBP and RPM Prices
Expected
RBP
Credits
RPM
Auction
Credits
RBP
Settlement
Credits
Total
Credits
RBP
Cleared
MW * RBP
Price
RPM Cleared
MW * RPM
Price+
Lesser of
Cleared MW *
(RBP Price –
RPM Price+)
RPM
Auction
Credits +
RBP
Settlement
Credits
RBP Price > RPM Price+
RBP Price =$250
RPM Price+ = $200
20 MW *
$250 =
$5,000
50 MW * $200
= $10,000
20 MW *
($250-$200) =
$1,000
$11,000
RBP Price < RPM Price+
RBP Price =$200
RPM Price+ = $250
20 MW *
$200 =
$4,000
50 MW * $250
= $12,500
20 MW *
($200-250) =
-$1,000
$11,500
RBP Price = RPM Price+
RBP Price =$250
RPM Price+ = $250
20 MW *
$250 =
$5,000
50 MW * $250
= $12,500
20 MW *
($250-$250) =
$0
$12,500
+Or, in the event resource clears in multiple RPM Auctions, RPM WARCP)
Table 4 demonstrates how resources settle when a resource clears more MW
(UCAP) in the RBP compared to the RPM. Again, the CfD at which the RBP settles will
be the lower of the resource’s cleared MW in the RPM and the RBP. Thus, even though
the expected RBP Credits are based on 50 MW, the CfD at which the RBP settles is based
only on the 20 MW that clears both the RBP and the RPM. In row 1 of Table 4, the RBP
price is higher than the RPM. Only 20 MW clears in the RPM and, thus, the CfD settlement
reflects only 20 MW. While the expected RBP Credits was $12,500, the RBP Resource
only receives $1,000 in the CfD settlement, plus the RPM Auction Credits of $4,000. In
row 2 of Table 4, the RBP price is lower than the RPM. Thus, the CfD results in a reduction
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of the total amount credited to the RBP Resource. Finally, in row 3 of Table 4, where the
RBP and RPM prices are the same, the CfD does not add or subtract from the RPM Auction
Credits.
Table 4. Resource Settlement ($/day)
Where RBP Cleared MW > RPM Cleared MW
RPM Cleared MW = 20 MW (UCAP), RBP Cleared MW = 50 MW (UCAP)
RBP and RPM Prices
Expected
RBP
Credits
RPM
Auction
Credits
RBP
Settlement
Credits
Total
Credits
RBP
Cleared
MW * RBP
Price
RPM Cleared
MW * RPM
Price+
Lesser of
Cleared MW *
(RBP Price –
RPM Price+)
RPM
Auction
Credits +
RBP
Settlement
Credits
RBP Price > RPM Price+
RBP Price =$250
RPM Price+ = $200
50 * $250 =
$12,500
20 MW * $200
= $4,000
20 MW *
($250-$200) =
$1,000
$5,000
RBP Price < RPM Price+
RBP Price =$200
RPM Price+ = $250
50 MW *
$200 =
$10,000
20 MW * $250
= $5,000
20 MW *
($200-250) =
-$1,000
$4,000
RBP Price = RPM Price+
RBP Price =$250
RPM Price+ = $250
50 MW *
$250 =
$12,500
20 MW * $250
= $5,000
20 MW *
($250-$250) =
$0
$5,000
+Or, in the event resource clears in multiple RPM Auctions, RPM WARCP)
c.
Settlement of RBP Resources with MW Shortfalls, RBP
shortfall charges, RPM Commitment Deficiency MW, and
RPM
Commitment
Charges
(proposed
Tariff,
Attachment DD, section 18.6(d))
As noted above, see supra Part III.C.9, the total MW eligible to settle as a CfD will
be: (a) the lesser of the RBP Resource’s committed RBP UCAP MW for a Delivery Year,
daily owned UCAP MW, and daily RPM cleared UCAP MW. Where the RBP Resource
experiences a partial shortfall—meaning the quantity of MW (UCAP) that a resource clears
is greater than the amount the resource actually owns, the CfD settlement will only count
the daily owned UCAP MW. In other words, there is no payment for undelivered RBP
UCAP MW.
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In addition, as described above, see supra Part III.C.7, RBP Resources that fail to
reach commercial operation in a Delivery Year for which the resource has been committed
in the RBP will be subject to RBP shortfall charges unless the RBP Resource qualifies for
one narrow exception. RBP shortfall charges are equal to the product of the RBP
Resource’s committed RBP UCAP MW shortfall and 20% of the RBP price.218 The
resulting shortfall charge will be allocated as a credit to LSEs based on each LSE’s pro-rata
allocation of RBP Charges. Like RBP Charges, the RBP shortfall charges are settled daily.
d.
Example of RBP Resource Settlements of RBP MW
Shortfalls, RBP shortfall charges, RPM Commitment
Deficiency MW, and RPM Commitment Charges (proposed
Tariff, Attachment DD, section 18.6(d))
Table 5, below, demonstrates how shortfalls of capacity procured and committed
in the RBP and RPM can impact the total credits ultimately paid to an RBP Resource. In
Table 5, a hypothetical RBP Resource clears 50 MW in both the RBP and RPM but is
ultimately 5 MW short. In other words, although the RBP Resource cleared in the RBP
for 50 MW, only 45 MW actually reach commercial operation. Because a resource’s
ELCC may vary from year to year, PJM is proposing that RBP shortfall charges not be
assessed to RBP Resources that have reached commercial operation, even if such resources
have only partially reached the full commitment of RBP UCAP MW.
Nevertheless, if an RPM Resource experiences a shortfall of MW cleared in the
RPM, the RPM Resource will be subject to the existing RPM shortfall penalties. In
Table 5, below, the hypothetical resource commits 45 MW in the RPM, which is equal to
218 See Proposed Tariff, Attachment DD, section 18.6(d).
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the resource’s daily owned MW and therefore does not have any deficiency MW in the
RPM.
Table 5. Resource Settlement ($/day)
Where RBP Cleared MW = RPM Cleared MW,
RBP Cleared MW > Daily Owned MW
(RPM Cleared MW = 50 MW (UCAP), RBP Cleared MW = 50 MW (UCAP), Daily
Owned MW = 45 MW (UCAP), RPM Committed MW = 45 MW (UCAP),
RBP Shortfall 5 MW (UCAP), RPM Commitment Deficiency MW = 0 MW (UCAP))
RBP and RPM Prices
Expected
RBP
Credits
RPM Auction
Credits
RBP Settlement
Credits
Total Credits
RBP
Cleared
MW * RBP
Price
RPM Cleared
MW * RPM
Price+
Lesser of
Cleared or
Owned MW *
(RBP Price –
RPM Price+)
RPM Auction Credits +
RBP Settlement Credits
RBP Price > RPM
Price+
RBP Price =$250
RPM Price+ = $200
50 MW *
$250 =
$12,500
50 MW * $200
= $10,000
45 MW * ($250-
$200) = $2,250
$12,250
RBP Price < RPM Price+
RBP Price =$200
RPM Price+ = $250
50 MW *
$200 =
$10,000
50 MW * $250
= $12,500
45 MW * ($200-
$250) =
-$2,250
$10,250
RBP Price = RPM Price+
RBP Price =$250
RPM Price+ = $250
50 MW *
$250 =
$12,500
50 MW * $250
= $12,500
45 MW * ($250-
$250) = $0
$12,500
+Or, in the event resource clears in multiple RPM Auctions, RPM WARCP)
In Table 6, below, the hypothetical RBP Resource experiences a full RBP shortfall.
In addition, the RPM has a lower UCAP available due to a decrease in ELCC. The
hypothetical RBP Resource clears 50 MW in the RBP but only clears and commits 49 MW
in the RPM due to the ELCC decrease.
Ultimately, the daily owned UCAP MW is 0 MW, because the resource has failed
to reach commercial operation. The hypothetical RBP Resource in this example has not,
as yet, failed to reach commercial operation for three consecutive years, and therefore the
RBP commitment has not been rescinded. However, because the RBP Resource has not
reached commercial operation, it is assessed an RBP shortfall charge. In addition, because
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it has not reached commercial operation, the resource is also assessed an RPM
Commitment Deficiency Charge for the 49 MW in the RPM. Ultimately the result is a net
charge (i.e., negative RBP Credit) to the seller.
Table 6. Resource Settlement ($/day)
Where RBP Cleared MW > RPM Cleared and Committed MW > Daily Owned MW
(RPM Cleared MW = 49 MW (UCAP), RPM Committed MW = 49 MW (UCAP),
RBP Cleared MW = 50 MW (UCAP), Daily Owned MW = 0 MW (UCAP), RBP
Shortfall Penalty MW = 50 MW (UCAP), RPM Commitment Deficiency MW = 49 MW)
RBP and
RPM Prices
Expected
RBP
Credits
RPM
Auction
Credits
RPM
Commitment
Charge
RBP
Settlement
Credits
RBP
Shortfall
Charges
Total Credits
RBP
Cleared MW
* RBP Price
RPM
Cleared
MW *
RPM
Price+
RPM Commitment
Deficiency MW *
(120% RPM
Price+)
Lesser of
Cleared or
Owned MW *
(RBP Price –
RPM Price+)
RBP
Shortfall
MW * (20%
RBP Price)
RPM Auction
Credits – RPM
Commitment
Charge
+ RBP Settlement
Credits -RBP
Shortfall Charges
RBP Price >
RPM Price+
RBP Price
=$250
RPM Price+
= $200
50 MW *
$250 =
$12,500
49 MW *
$200 =
$9,800
49 MW * (120% *
$200) =$11,760
0 MW *
($250-$200) =
$0
50 MW *
(20% *
$250) =
$2,500
-$4,460
RBP Price <
RPM Price+
RBP Price
=$200
RPM Price+
= $250
50 MW *
$200 =
$10,000
49 MW *
$250 =
$12,250
49 MW * (120% *
$250) = $14,700
0 MW *
($200-$250) =
$0
50 MW *
(20% *
$200) =
$2,000
-$4,450
RBP Price =
RPM Price+
RBP Price
=$250
RPM Price+
= $250
50 MW *
$250 =
$12,500
49 MW *
$250 =
$12,250
49 MW * (120% *
$250) = $14,700
0 MW *
($250-$250) =
$0
50 MW *
(20% *
$250) =
$2,500
-$4,950
+Or, in the event resource clears in multiple RPM Auctions, RPM WARCP)
10.
Non-payment of RBP Charges and RBP shortfall charges (proposed
Tariff, Attachment DD, section 18.9)
To the extent an LSE defaults and fails to pay an RBP Charge, PJM will allocate
the defaulted amount to all remaining LSEs that have been assigned responsibility for RBP
Charges in the Electric Distributor zone/area based on each LSE’s pro-rata share of the
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total RBP Charges, as allocated based on either the Reliability Backstop Obligation or
PJM’s back-up cost allocation methodology.
Where an RBP Resource that is subject to RBP shortfall charges ultimately defaults
and fails to pay the RBP shortfall charges, LSEs will not be allocated or charged those
corresponding credits. Thus, LSEs that would have otherwise paid for the RBP UCAP MW
will not be responsible for covering the cost of the UCAP MW that were not delivered.
RBP Resource subject to RBP shortfall charges pursuant to proposed Tariff,
Attachment DD, section 18.6(d) defaults on RBP shortfall charges, the corresponding
credits will not be allocated to the LSEs that would otherwise receive the RBP shortfall
credits.
11.
Change in ownership of RBP Resource (proposed Tariff,
Attachment DD, section 18.6(f))
Commitments of RBP UCAP MW follow the RBP Resource. With change in
ownership of the RBP Resource, the commitment of RBP UCAP MW will be conveyed to
the new owner and continue through the end of the fixed 15-year term.
D.
Treatment of RBP Commitment in Event of Transmission Owner Exit
During Term of the Commitment (Proposed Tariff, Attachment DD,
section 18.7)
As RBP commitments will remain in place through the 2042/2043 Delivery Year,
i.e., for a fixed, 15-year term, PJM is also proposing rules that set forth the responsibilities
of various parties in the event a Transmission Owner exits from PJM. While it is true that
no Transmission Owner has formally sought to exit PJM at this time, should such an event
occur during the term of an RBP commitment in an exiting Transmission Owner’s territory,
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clear and enforceable rules will ensure that RBP commitments are honored through the
term of the agreement.
Establishing those rules now, with the RBP proposal, will provide the requisite
notice of how RBP commitments will be honored and recognizes that a primary incentive
for developers to participate in the RBP is the cost certainty afforded developers in a
15-year commitment, which will aid the financing RBP Resources that can be developed
and placed in service quickly. Without this 15-year guarantee, the financing terms and
conditions associated with developing an RBP Resource would likely be significantly
different, alter the total cost to build the resource, and potentially result in fewer resources
being offered into the RBP at higher prices. Therefore, however remote the possibility of
a Transmission Owner exiting PJM during or prior to the 2042/2043 Delivery Year, it is
imperative that rules are in place to ensure that, even in the event of a Transmission Owner
exit, committed RBP Resources will be made whole for the entire term of the commitment.
If a Transmission Owner leaves PJM and the load taken with the Transmission
Owner is commensurate with the RBP Resources that are located in that Transmission
Owner’s territory, the Transmission Owner is expected to honor the remaining term of the
RBP commitment since it would need such resources to serve the loads in its service
territory. However, in the event a Transmission Owner exits PJM and committed RBP
Resources are physically in such Transmission Owner’s service territory, it would be
unreasonable for PJM’s Members to continue paying for such excess RBP Resources if
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they no longer can provide capacity to PJM (e.g., if the resource cannot be pseudo-tied into
PJM as further explained below).219
Similarly, in the event a Transmission Owner exits PJM with the net load that is
removed with the Transmission Owner’s departure, it would be unreasonable for PJM’s
remaining load to pay for the excess committed RBP Resources that remain in the PJM
Region. To address these potential scenarios, proposed Tariff, Attachment DD, sections
18.7(a) and 18.7(b) put committed RBP Resources back in the same position they would
have been in had the associated Transmission Owner not exited PJM.
1.
Committed RBP Resources in exiting Transmission Owner territory
(proposed Tariff, Attachment DD, section 18.7(a))
Where a Transmission Owner exits PJM and committed RBP Resources are
physically in that Transmission Owner’s service territory, the Transmission Owner may,
prior to exiting PJM, enter into a separate agreement with the impacted RBP Resources
that would maintain appropriate rates, terms and conditions of the RBP commitments.220
The Transmission Owner effectively steps into PJM’s role in the RBP context. In this way,
the Transmission Owner that leaves PJM will be responsible for honoring the commitment
to pay the impacted RBP Resources that may be located in such Transmission Owner’s
service territory for the remaining term of the commitment. At the same time, the existence
of such an agreement would relieve PJM of any applicable RBP Obligations (“RBO”) made
to RBP Resources that are subject to such agreements.
219 See Transmittal, Part III.D.
220 Proposed Tariff, Attachment DD, section 18.7(a).
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In the event the exiting Transmission Owner does not enter into such an agreement,
PJM proposes to require the exiting Transmission Owner to cover all costs necessary for
those RBP Resources that exceed the Transmission Owner’s withdrawn load to be pseudo-
tied back into PJM, thus allowing such resources to continue providing capacity to serve
PJM’s load.221 Since the electric distance test may not necessarily be satisfied through
network upgrades or other financial arrangements depending on where an RBP Resource
may be located within an exiting Transmission Owner’s service territory, PJM proposes to
exempt impacted RBP Resources from the electrical distance test to allow for such
resources to be pseudo-tied back into PJM.222 Exempting the electric distance test for the
limited pool of RBP Resources that are impacted should a Transmission Owner leave PJM
will allow such resources to qualify as external capacity resources that can continue to
serve PJM loads even if such resources are physically located beyond the usual electric
distance requirement. All other pseudo-tie requirements to qualify as capacity set forth in
Tariff, Attachment DD, section 5.5A would continue to apply to any RBP Resource that
PJM elects to retain and the Transmission Owner would be expected to pay for any
necessary costs to pseudo-tie such impacted RBP Resources prior to exiting PJM.
Mechanically, PJM would collect such costs from the exiting Transmission Owner and
transfer the collected revenue to the impacted RBP Resources.
In the event PJM does not elect to retain such RBP Resource or the resource is
unable to be pseudo-tied back into PJM, the exiting Transmission Owner would be
obligated to pay for the remaining term of the RBP Resource’s commitment on an
221 Id.
222 Id.
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accelerated basis prior to exiting PJM.223 The exact amount that an exiting Transmission
Owner would owe would be determined through a separate filing with the Commission.
Thereafter, PJM would pay the collected revenues from the Transmission Owner to the
impacted RBP Resource(s) as payments are due under the normal course of the
commitment.
2.
Load allocated RBP Charges in exiting Transmission Owner
territory (proposed Tariff, Attachment DD, section 18.7(b))
In the event that a Transmission Owner withdraws from PJM and net load leaves
with the Transmission Owner, resulting in stranded committed RBP Resources remaining
within the PJM Region, PJM similarly proposes to allow such exiting Transmission Owner,
prior to exiting PJM, to enter into agreements that would maintain appropriate rates, terms
and conditions and preserve the RBP commitments with the owners of the RBP
Resource(s). PJM and PJMSettlement would then be relieved of applicable RBP
Obligations to the RBP Resources.224
Alternatively, absent such an agreement, such Transmission Owner would be
required to pay for all forward obligations associated with the net load that was allocated
RBP Charges, the exact amount which would be determined through a separate filing under
the Federal Power Act with approval from the Commission.225 This will ensure that the
remaining load within the PJM Region will not be stranded with increased costs necessary
to pay for the remaining term of RBP Resources that are not located within the
223 Id.
224 Proposed Tariff, Attachment DD, section 18.7(b).
225 Id.
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Transmission Owner’s service territory. Mechanically, the revenues collected from the
Transmission Owner will be credited to the remaining loads in the PJM Region responsible
for paying RBP Charges. The amount collected from the Transmission Owner and credited
to remaining loads will help offset any cost increases to remaining loads that may be
necessary to continue honoring the commitments of RBP Resources remaining in the PJM
Region through the rest of the 15-year term.
While the exiting Transmission Owner would be initially responsible to pay for the
costs necessary to ensure no RBP Resource becomes a stranded asset, nothing in PJM’s
proposal would preclude such a Transmission Owner from seeking to recover any such
costs from the relevant large loads.
3.
Rules governing treatment of RBP Resources or load allocated RBP
Charges in the event of Transmission Owner exit are appropriately
submitted with this filing.
The NEDC/PJM Governors’ Principles include “15-year price certainty for new
capacity resources.”226 Price certainty includes protections against supply or demand
becoming unavailable to serve the PJM Region as a result of a Transmission Owner’s
decision to exit PJM. The proposed rule provides stakeholders with ample notice. Sellers
of RBP Resources can be assured that the underlying inputs to their financing terms (i.e.,
firm price on a specified term) will not change in the event a Transmission Owner does exit
from PJM during the term of the RBP commitment. Furthermore, setting forth the rules in
the Tariff now, even before the RBP offer window has opened, avoids any potential
226 NEDC/PJM Governors’ Principles at 1.
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arguments that changes to cost allocation associated with the RBP Resources after the
commitments have already made may be impermissibly retroactive.
4.
The proposed rules governing treatment of RBP Resources or load
allocated RBP Charges in the event of Transmission Owner exit are
appropriately set forth in Tariff, Attachment DD.
In the event of a Transmission Owner’s exit from PJM, the treatment of RBP
Resources and load that has been allocated RBP Charges is, at bottom, a matter of close-out
or settlement consequences of the RBP and thus properly addressed in Tariff,
Attachment DD. The departing RBP Resource’s UCAP MW and/or the departing load’s
proportional share of the remaining term CfD are both incident to the RBP framework. In
other words, although the process impacts Transmission Owners, they predominately affect
RBP Resources and load commitments, particularly in relationship to how they interact
with other obligations and assurances provided by suppliers and buyers, and are thus
properly addressed in the Tariff, as part of the rules concerning the RBP framework.227 The
proposed provisions address a substantive aspect of how RBP Resources should be treated
throughout the 15-year commitment.
E.
Allocation of Costs Associated with Resources Procured Through the
RBP (Proposed Tariff, Attachment DD, section 18.3)
1.
The proposed cost allocation methodology
PJM is proposing to allocate daily RBP Charges to relevant Electric Distributor
zones/areas, pro rata, based on the zone/area’s assigned share of the total, region-wide Final
227 See Duquesne Light Co., 189 FERC ¶ 61,181, at P 55 (2024) (finding it not just and reasonable to include
substantive transmission planning procedures in the CTOA, as the provisions do not affect only (or
predominately) the rights and responsibilities of PJM and transmission owners), order addressing arguments
raised on reh’g, 192 FERC ¶ 61,051 (2025).
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RBP Target MW, floored at zero,228 and in accordance with RAA Schedule 8, as revised
in 2024 to incorporate Load Adjustments in equations that “specify that load forecasts will
be adjusted by zone/area and specifically include a variable for Load Adjustments[.]”229
Cost responsibility allocated to a zone/area may be further adjusted where PJM
receives sufficient evidence demonstrating that new capacity has been brought by load to
the relevant Electric Distributor’s zone/area in the form of Qualifying RBP Offset UCAP
MW.230 A zone/area of an Electric Distributor that qualifies for one of the opt-outs set
forth in proposed Tariff, Attachment DD, section 18.1(d), would also have RBP Charges
reduced by the MW quantity of the opt-out.231
For each zone/area to which cost responsibility for RBP Charges has been allocated,
PJM’s methodology sets forth rules for the further allocation of RBP Charges to LSEs
within the relevant Electric Distributor’s zone/area.232 Ms. Croop’s affidavit provides a
step-by-step explanation and example of how the proposed cost allocation methodology is
applied to an Electric Distributor zone/area and then to the LSEs within the zone/area.233
PJM is proposing that cost allocation to LSEs within an Electric Distributor’s
zone/area be based on “the state and/or RERRA-determined allocation of cleared RBP
UCAP MW to LSEs within each Electric Distributor’s zone/area, as reported by each
228 Proposed Tariff, Attachment DD, section 18.3(a).
229 PJM Interconnection, 188 FERC ¶ 61,200 at P 43.
230 Proposed Tariff, Attachment DD, section 18.2(c).
231 Proposed Tariff, Attachment DD, section 18.1(d).
232 Proposed Tariff, Attachment DD, section 18.3(a).
233 Croop Aff. ¶¶ 42-52.
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Electric Distributor to [PJM].”234 PJM has thus created a new defined term, the “RBP
Obligation” or “RBO”, to refer to this state and/or RERRA-determined allocation of RBP
UCAP MW to LSEs within each zone/area.235 The RBO is flexible. For example, it
permits states and/or RERRAs to rely on their own, disparate definitions of data centers
and large loads, and to determine which retail customers should be allocated RBP Charges,
generally. PJM’s authority over wholesale markets does not extend to dictating the
allocation of costs to retail load, data centers and other large loads and, for purposes of cost
allocation to such data centers and other large loads, each state and/or RERRA may have
its own methodology, developed in accordance with its unique needs and considerations.
PJM’s proposal requires that Electric Distributors report, to PJM, the state and/or
RERRA-determined allocations of RBP UCAP MW to LSEs in their zone(s)/area(s). To
the extent that Electric Distributors report RBOs, the RBP Charge assessed daily to an LSE
in the relevant zone/area will equal the LSE’s daily reported RBO MW in the zone/area
divided by the total daily RBO MW in the zone/area, and multiplied by the total, daily RBP
Charges allocated to the zone/area.
In the unexpected event that RBOs are ultimately not reported to PJM, PJM will
still need to proceed with settlement of the RBP Charges. In this case, PJM will rely on a
back-up cost allocation methodology to determine allocation to LSEs. PJM’s back-up
methodology applies PJM’s status quo method for allocating capacity costs pursuant to
234 Proposed Tariff, Attachment DD, section 18.3(b)(iii).
235 Proposed Tariff, Definitions – RBP Obligation (‘“RBP Obligation’ or ‘RBO’ shall mean the state and/or
RERRA-determined allocation of RBP UCAP MW to Load Serving Entities within each Electric
Distributor’s zone/area.”).
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RAA, Schedule 8,236 which incorporates Load Adjustments for purposes of allocating
capacity costs to LSEs. In other words, if 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.
Importantly, PJM is not proposing a backup methodology for how RBP Charges
should be allocated to non-jurisdictional, retail customers served by each of the LSEs in
any Electric Distributor’s zone/area. Even if Electric Distributors do not report any state
and/or RERRA-determined RBOs in their zone(s)/area(s), and even if PJM subsequently
applies the status quo allocation methodology to PJM’s LSE customers, PJM would not,
under the proposed methodology, determine any further allocation to retail customers
served by those LSEs.
PJM and the PJM states and/or RERRAs must cooperate to ultimately allocate
wholesale costs to end use, retail customers. In the Commission’s 2007 order on rehearing
affirming its finding that PJM’s RPM market design was just and reasonable, the
Commission noted that the “question of jurisdiction over resource adequacy is a complex
matter that stands at ‘the confluence of state-federal jurisdiction.’”237 The proposed RBP
methodology recognizes and respects this division of responsibility. While it is within
PJM’s purview to allocate the costs of RBP Resources to LSEs, who are customers of PJM,
the Commission has also recognized that it is beyond the scope of PJM’s authority to
236 Proposed Tariff, Attachment DD, section 18.3(b)(iii) (“If no RBO MW are reported to the Office of the
Interconnection in an Electric Distributor zone/area, PJM will allocate the RBP Charges for that zone/area to
all load in the zone/area using each LSE’s ratio share of the Daily Unforced Capacity Obligation for the
zone/area as determined in RAA, Schedule 8. PJMSettlement shall be the Counterparty to each LSE’s
obligation to pay, and payments of, RBP Charges.”).
237 PJM Interconnection, 119 FERC ¶ 61,318 at P 40.
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“address how LSEs [will subsequently] bill retail customers for such charges” as doing so
would affect the “ability [of the PJM states and/or RERRAs] to allocate such charges.”238
Thus, PJM’s proposed methodology for allocating RBP Charges sets the table for states
and/or RERRAs, by empowering them to make decisions about how to best further allocate
RBP Charges to data centers and other retail customers.
2.
The proposed method of allocating costs to Electric Distributor
zones/areas and LSEs within those zones/areas is just and
reasonable
PJM is proposing to allocate daily RBP Charges to buyers in a manner that reflects
careful consideration of cost causation and cooperative federalism principles, with an eye
towards legal durability.
First, the allocation of daily RBP Charges to relevant zones/areas, and the proposed
back-up allocation methodology to LSEs served in those zones/areas in the absence of a
state-determined methodology, rely on cost allocation methodologies set forth in RAA,
Schedule 8239 that the Commission has already found just and reasonable.
The Commission, in 2024, accepted PJM’s proposed revisions to RAA, Schedule 8
“to better allocate, to zones/areas, localized load adjustments used to determine capacity
obligations for [LSE].”240 These 2024 revisions to the RAA were, as PJM noted at the
238 Commonwealth Edison Co., 133 FERC ¶ 61,118, at P 12 (2010).
239 Proposed Tariff, Attachment DD, section 18.3(b)(iii).
240 PJM Interconnection, 188 FERC ¶ 61,200 at P 1.
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time, “spurred by the recent proliferation of data centers that are contributing to large
additions of forecasted load concentrated within a specific wholesale metering area.”241
The Commission’s 2024 order on those revisions found that PJM’s proposed Load
Adjustments at the zone/area level were “just and reasonable because PJM propose[d] to
assign increases or decreases in forecasted load to the zone/area in which the change
occurs.”242 The proposed equations for allocating Load Adjustments “more accurately
assign capacity obligations to LSEs.”243 The Commission furthermore found that it was
appropriate for the relevant Electric Distributor to serve as “the party with the distribution
and metering facilities defining a zone/area and responsible for reporting load information
to PJM.”244
Second, to the extent that PJM, under the proposed cost allocation methodology,
further refines costs allocated to specific Electric Distributor zones/areas based on evidence
that a zone/area has Qualifying RBP Offset UCAP MW, PJM’s proposal recognizes the
importance of further adjusting allocations in zones/areas to reflect additional, new
capacity to the extent that such capacity was not previously captured by the forecast and
Load Adjustments. Incorporating Qualifying RBP Offset UCAP MW into the allocation
is intended to better align beneficiaries with costs and, in particular, to provide a
mechanism to avoid allocating costs to LSEs that have already paid for new capacity to
241 PJM Interconnection, L.L.C., Proposal to Better Account for Large Load Adjustments in Forecasted
Capacity Obligations of PJM Interconnection, L.L.C., Docket No. ER24-2447-000, Transmittal at 1 (July 1,
2024).
242 PJM Interconnection, 188 FERC ¶ 61,200 at P 37.
243 Id.
244 Id. at P 40.
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support their needs. Thus, the proposed allocation relies on a Commission-accepted
methodology, with adjustments to recognize Qualify New UCAP MW that may reduce the
allocation to a particular zone/area. By reducing allocated load further based on Qualifying
RBP Offset UCAP MW, the proposed methodology guards against assigning costs to those
who will not benefit from the addition of the new capacity procured through the RBP.
Third, the proposed methodology assigns costs roughly commensurate with
benefits to load.245 Cost causation requires that “all approved rates reflect to some degree
the costs actually caused by the customer who must pay them.”246 Indeed, as the courts
have held, “[n]othing requires the Commission to ensure full or perfect cost causation,”247
and the Commission “is not bound to reject any rate mechanism that tracks the cost
causation principle less than perfectly.”248 The load forecast, which reflect Load
Adjustments in each zone/area, as further decremented by Qualifying RBP Offset UCAP
MW, applies the information available to PJM, at the level of granularity that PJM has at
its disposal, based on equations that “allow PJM to allocate a capacity obligation associated
with a load adjustment to the zone/area in which the adjustment occurs.”249 In other words,
PJM relies on the best information available in the short time before the commencement of
245 Ill. Com. Comm’n v. FERC, 576 F.3d 470, 477 (7th Cir. 2009) (requiring “an articulable and plausible
reason to believe that the benefits are at least roughly commensurate with [the costs.]”); Transmission
Planning and Cost Allocation by Transmission Owning and Operating Public Utilities, Order No. 1000, 136
FERC ¶ 61,051, at PP 622, 639 (2011) (requiring costs of regional transmission facilities to be allocated in a
manner that is at least roughly commensurate with estimated benefits), order on reh’g & clarification, Order
No. 1000-A, 139 FERC ¶ 61,132, order on reh’g & clarification, Order No. 1000-B, 141 FERC ¶ 61,044
(2012), aff’d sub nom. S.C. Pub. Serv. Auth. v. FERC, 762 F.3d 41 (D.C. Cir. 2014) (“South Carolina PSA”).
246 K N Energy v. FERC, 968 F.2d 1295, 1300 (D.C. Cir. 1992) (emphasis added); see also Midwest ISO
Transmission Owners v. FERC, 373 F.3d 1361, 1368 (D.C. Cir. 2004).
247 South Carolina PSA, 762 F.3d at 88.
248 Sithe/Indep. Power Partners, L.P. v. FERC, 285 F.3d 1, 5 (D.C. Cir. 2002) (citation omitted).
249 PJM Interconnection, 188 FERC ¶ 61,200 at P 37.
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the RBP on September 30, 2026. PJM has tracked Load Adjustments in zones/areas to the
level of granularity that is feasible. As the United States Court of Appeals for the District
of Columbia Circuit, in South Carolina PSA, held, “feasibility concerns play a role in
approving rates, such that the Commission is not bound to reject any rate mechanism that
tracks the cost-causation principle less than perfectly.”250 The Commission’s approach to
cost allocation is flexible by design.251
The proposed zonal cost allocation methodology roughly assigns RBP Charges to
the zones/areas with reported new load that is not matched with new capacity. These
zones/areas and LSEs can be said to have caused the resource adequacy shortfall reflected
in the 2028/2029 Delivery Year BRA. Applying the methodology set forth in RAA,
Schedule 8, with adjustments for Qualifying RBP Offset UCAP MW, therefore, roughly
assigns zones/areas that caused the shortfall with a share of the RBP Charges. To be clear,
states retain the authority to then further allocate these costs to retail customers, including
data centers and other large loads, consistent with the Ratepayer Protection Pledge. PJM is
addressing the allocation to specific zones but within those zones, the retail customer loads
250 South Carolina PSA, 762 F.3d at 88 (internal quotation marks omitted) (quoting and citing Sithe/Indep.
Power Partners, 285 F.3d at 5); Midwest ISO Transmission Owners, 373 F.3d at 1368-69; Pub. Serv. Comm’n
of Wis. v. FERC, 545 F.3d 1058, 1066-67 (D.C. Cir. 2008); Carnegie Nat. Gas Co. v. FERC, 968 F.2d 1291,
1293-94 (D.C. Cir. 1992) (noting that there is “no requirement in the Act itself that rates precisely match cost
causation and responsibility” and that instead “the Commission may rationally emphasize other, competing
policies and approve measures that do not best match cost responsibility and causation”).
251 See, e.g., Ill. Com. Comm’n, 576 F.3d at 477 (“We do not suggest that the Commission has to calculate
benefits to the last penny, or for that matter to the last million or ten million or perhaps hundred million
dollars.” (citing Midwest ISO Transmission Owners, 373 F.3d at 1369 (“[W]e have never required a
ratemaking agency to allocate costs with exacting precision.”))); Sw. Power Pool, Inc., 178 FERC ¶ 61,087,
at P 30 n.42 (2022) (“Courts have held that the cost causation principle does not require costs to be allocated
with exacting precision, but rather requires that costs be allocated in a manner ‘roughly commensurate’ with
the benefits received.”) (citations omitted).
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which have most contributed to the shortfall can be allocated the RBP costs consistent with
state law as applicable.
3.
The proposed allocation methodology recognizes that allocation to
retail customers, including data centers, is within the states’ and/or
RERRAs’ purview
The proposed cost allocation methodology assigns RBP costs in a manner that
respects the balance of authority between states, the Commission, and PJM.252 Even in its
infancy, the RPM required that the Commission “recognize the traditional role of state and
local entities in regulating resource adequacy” while also remaining “aware of [its]
responsibilities under the FPA to ensure that adequate service is provided, and that
wholesale rates are just and reasonable.”253 Thus, the Commission found that the
appropriate course of action was to “defer to state and local entities’ decisions when
possible on resource adequacy matters, but in doing so . . . not shirk our
congressionally-mandated responsibilities.”254
First, the proposed cost allocation methodology empowers states and/or RERRAs
to submit RBP RBOs, which PJM would then apply to the allocation of RBP Charges to
LSEs. However, under the proposed allocation framework, PJM would retain a back-up
methodology for allocated RBP Charges to LSEs, which would apply if no RBOs are
252 See U.S. Telecom Ass’n v. FCC, 359 F.3d 554, 567 (D.C. Cir. 2004) (“[A] federal agency entrusted with
broad discretion to permit or forbid certain activities may condition its grant of permission on the decision of
another entity, such as a state, local, or tribal government, so long as there is a reasonable connection between
the outside entity’s decision and the federal agency's determination.”); see also PJM Interconnection, 119
FERC ¶ 61,318 at P 40 (Commission noting that it will “defer to state and local entities’ decisions when
possible on resource adequacy matters, but . . . will not shirk our congressionally-mandated
responsibilities.”).
253 PJM Interconnection, 119 FERC ¶ 61,318 at P 40 (i.e., requiring PJM to “allocate costs to data centers”
as urged in the NEDC/PJM Governors’ Principles at 1).
254 Id.
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reported for a particular zone/area. PJM’s proposed Tariff language expressly provides
states and/or RERRAs with the opportunity, within PJM’s proposed cost allocation
framework, to submit state-determined RBOs. This back up cost allocation methodology
is needed, because if no RBOs are reported for a particular zone/area, PJM would still need
to allocate the RBP costs in a manner that is just and reasonable.
PJM’s approach finds support in the Commission’s 2025 order accepting
Midcontinent Independent System Operator, Inc.’s (“MISO”) Revised Expedited Resource
Addition Study (“ERAS”) Proposal.255 In that matter, Commission found that RERRA
participation in the ERAS process was permissible and not an improper delegation of
federal authority to the states, as the participation of RERRA:
would be wholly pursuant to a Commission-jurisdictional
process . . . proposed by MISO and approved by the Commission—
not by state authorities—and under which a [Generator
Interconnection Procedure] is on file with the Commission and any
future revisions would be subject to Commission approval. Further,
the ERAS process would remain subject to the Commission’s
authority pursuant to FPA sections 205 and 206. In contrast, in
Talen, the Maryland Commission established a state program that
operated outside a Commission-jurisdictional process and
“interfered” with the Commission’s authority to establish interstate
wholesale rates.256
Similarly, if accepted, PJM’s proposed cost allocation methodology would be set
forth expressly in its Tariff, approved by and on file with the Commission. The Tariff
would expressly permit states and/or RERRAs to participate in the cost allocation of RBP
255 Midcontinent Indep. Sys. Operator, Inc., Revisions to the Open Access Transmission, Energy and
Operating Reserve Tariff Expedited Resource Addition Study Filing of Midcontinent Independent System
Operator, Inc., Docket No. ER25-2454-000 (June 6, 2025).
256 Midcontinent Indep. Sys. Operator, Inc., 192 FERC ¶ 61,064, at P 99 (2025) (distinguishing Hughes v.
Talen Energy Mktg., LLC, 578 U.S. 150, 163 (2016)), order addressing arguments raised on reh’g, 194
FERC ¶ 61,050 (2026).
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costs to LSEs by reporting RBOs, which would supplant PJM’s backup allocation
methodology of RBP Charges to LSEs. Like MISO’s Revised ERAS Proposal, the
proposed cost allocation methodology would nevertheless remain subject to the
Commission’s authority pursuant to FPA sections 205 and 206.
Second, PJM’s proposed cost allocation methodology hews closely to the
Commission’s most recent articulation of where the boundary between state/RERRA and
federal jurisdiction exists with respect to large loads. Namely, while noting concerns
“about the impact that large load additions can have on retail ratepayers, particularly the
concern that other retail ratepayers may be forced to subsidize Network Upgrades needed
to add large loads to the transmission system[,]” the Commission found that, in this realm,
the scope of its regulatory authority is limited.257 “Specifically,” it is the PJM states that
“have authority over how the wholesale costs of providing electricity, including
transmission of such electricity, to those retail customers are recovered through retail
rates.”258
PJM’s cost allocation framework recognizes the need to protect retail ratepayers
from subsidizing new capacity procured to serve large loads while also recognizing PJM’s
own jurisdictional limitations. As the Commission has found, it is the PJM states and/or
RERRAs that have authority over how wholesale costs of these new capacity resources are
recovered from retail customers through retail rates. In fact, PJM does not have a line of
sight into the retail load and end-use customers served by each relevant LSE. PJM also
recognizes that states may each define “large loads” and “data centers” differently. Thus,
257 June 2026 Order to Show Cause, 195 FERC ¶ 61,211 at P 69.
258Id.
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a cost allocation methodology that provides PJM states and/or RERRAs with the ability to
determine the specific RBOs that should be assigned to LSEs, as well as to cost allocate to
end-use customers in their respective states in accordance with their laws and policies,
supports the NEDC/PJM Governors’ Principles, which include the principle that the cost
of new capacity should be allocated to data centers who have caused the need for additional
capacity in the PJM Region.
Third, PJM’s proposed framework is pragmatic. In the short time remaining before
the September 30, 2026 RBP, it would simply be infeasible for PJM to obtain detailed
information about the large loads and the various LSEs serving such large loads from every
state and RERRA in the PJM Region. States and RERRAs are simply in a better position
to identify and cost allocate RBP Charges to large loads, including data centers, and the
LSEs that serve them. States and RERRAs have granular information about large loads
within their borders. Accordingly, PJM’s proposed cost allocation methodology
deliberately leaves states and RERRAs with the flexibility to protect their own customers
by allocating the costs of the procurement accordingly. Furthermore, PJM’s proposal
recognizes that state laws on the allocation of capacity costs to large loads, including data
centers, are evolving. The proposal recognizes and relies on the pledges of the 13
governors of the PJM states to “[u]se all available authorities to ensure that their state
public utility commissions design rate class structures to ensure that their states’ LSEs
allocate their share of the cost to procure new capacity through the . . . [a]uctions to new
data center loads that have not otherwise procured capacity or agreed to be curtailable.”259
259 NEDC/PJM Governors’ Principles at 2.
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However, to the extent that states and/or RERRAs do not provide such information, PJM
will rely on Commission-approved cost allocation methodologies in place today to properly
allocate costs to Electric Distributor zones/areas and LSEs.
The proposed methodology addresses the consumer protection goals that have been
raised by the National Energy Dominance Council, PJM’s 13 state governors, and other
state and federal entities, while heeding the Commission’s recent articulation of the
boundary between state and federal jurisdiction.
F.
Credit Requirements of RBP Resources and LSEs Commensurate with
Risks (Proposed Tariff, Attachment DD, Section 18.8) and Management
of RBP Defaults (Proposed Tariff, Attachment DD, Section 18.9)
PJM is proposing to require both individual sellers (i.e., RBP Sellers) and buyers
(i.e., LSEs) of RBP UCAP MW to provide RBP Collateral.260 While RBP Sellers must
satisfy credit requirements prior to or simultaneously with submitting an RBP Sell Offer,
LSEs will not be required to post credit until the first Delivery Year in which RBP
Resources are expected to be in service (i.e., 2028/2029), once the allocation of cost
responsibility for RBP UCAP MW has been determined for such Delivery Year. The
proposed RBP credit requirements apply in addition to and separate from existing
collateral requirements, including collateral requirements associated with participating in
RPM Auctions and engaging in RPM bilateral transactions. Thus, PJM proposes to house
the RBP credit rules in new section 18.8 of proposed Tariff, Attachment DD, and not
260 PJM is proposing to add the definition of “RBP Collateral” to make clear the forms of collateral acceptable.
Specifically, RBP Collateral “shall mean: either (1) a cash deposit, including any interest thereon, or (2) a
letter of credit issued for the benefit of PJM or PJMSettlement, in an amount and form determined by and
acceptable to PJM or PJMSettlement as credit support.” Proposed Tariff, Definitions – RBP Collateral.
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alongside PJM’s more long-lasting credit rules in PJM’s Credit Risk Management Policy
in Tariff, Attachment Q.
The proposed RBP credit requirements recognize the inherent risks associated with
procuring new capacity to serve new, incoming load through long-term commitments.
While long-term, 15-year commitments should incentivize the addition of capacity by
providing new capacity resources with revenue certainty, the fact that the commitments are
all for new resources—that require additional capital investment and development and face
a number of other issues, including supply chain and permitting risks—means the risks of
non-performance (i.e., not reaching commercial operation) or delayed delivery is more
meaningful to the PJM Region and likelihood is greater than for resources competing in
RPM Auctions. Accordingly, there is a need for a discrete RBP credit requirement to
support an RBP Sell Offer.
Likewise, the principle, supported by the Ratepayer Protection Pledge,261 that large
loads will cover the costs of the new capacity procured through the RBP—and that the
costs will not become stranded costs, which would ultimately be socialized—requires
collateral to be provided by those LSEs allocated cost responsibility for RBP Resources to
sufficiently guard against default risk. PJM recognizes that evolving markets, supply chain
issues, the unprecedented and unexpected nature of a capacity shortfall stemming from the
influx of large loads, and the pace of change in technology are indicators of risk. Thus,
like the credit requirements imposed on inherently riskier Financial Transmission Rights,
261 Ratepayer Protection Pledge; Ratepayer Protection Pledge Announcement.
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sellers and buyers of RBP UCAP MW are limited to providing RBP Collateral in the form
of either cash deposit or Letter of Credit.262
Nevertheless, PJM has also tailored the proposed RBP Seller credit requirements
to not be so onerous that they unnecessarily discourage RBP participation. The proposed
collateral requirement applied to RBP Sellers and buyers balances covering risks of
non-delivery (whether the RBP Resource fails to materialize or is delayed, or the LSE fails
to pay RBP Charges) and incentivizing the addition of new capacity to the PJM Region.
This is particularly true now as recent RPM Auctions alone have not procured sufficient
capacity to meet the PJM Region’s reliability requirement.
As discussed below, the RBP credit requirement will only apply as needed. The
RBP credit requirement will not attach to RBP Sellers or buyers until the RBP Sellers’ or
buyers’ actions give rise to credit exposure. Thus, RBP Collateral will be required of RBP
Sellers as a condition of submitting RBP Sell Offers263 and must be posted either prior to
submitting or along with RBP Sell Offers. When an RBP Resource no longer gives rise to
credit exposure, the RBP Collateral will be returned upon request. Specifically, RBP
UCAP MW that are offered but do not get committed through the RBP, RBP Resource
commitments that are rescinded for failure to materialize after three Delivery Years, or
RBP Resource that reach commercial operation and are no longer subject to the RBP
shortfall charge may have their RBP credit requirement reduced accordingly.
262 See Proposed Tariff, Definitions – RBP Collateral.
263 Proposed Tariff, Definitions – RBP Sell Offer (“‘RBP Sell Offer’ shall mean an offer to sell RBP
Resources in the Reliability Backstop Procurement.”).
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Buyers of RBP UCAP MW, i.e., LSEs that have been allocated cost responsibility
for RBP Charges pursuant to proposed Tariff, Attachment DD, section 18.3, will be
required to post RBP Collateral to mitigate the risk of potential defaults from non-payment
of RBP Charges, while those LSEs not allocated cost responsibility generally will not have
any credit requirement.264 As explained in the affidavit of Ms. Gwen Kelly, Senior Director
in Credit Risk and Collateral Management for PJM, on behalf of PJM, a buyer’s credit
requirement will start at an amount sufficient to mitigate the long-term risk of the RBP
commitment at the beginning of the commitment term and decrease over time as the term
winds down.265
Such a buyer-side credit requirement is just and reasonable and received strong
Member support in the stakeholder process.266 In any event, PJM has the obligation to
appropriately mitigate risk of default through application of credit requirements and credit
tools. But, as noted above, the RBP’s unprecedented long-term commitment and
corresponding long-term payment requirement are not contemplated by PJM’s existing
264 Proposed Tariff, Definitions – RBP Charges (“‘RBP Charges’ shall mean the $/day value of the total RBP
Settlement Credits, positive or negative, of all committed RBP Resources across the PJM Region.”).
265 Affidavit of Gwen Kelly on Behalf of PJM Interconnection, L.L.C. (Attachment D) ¶ 29 (“Kelly Aff.”)
(“PJM further considered how the payment exposure with the portfolio of committed RBP Resources changes
over the 15-year commitment term. PJM concluded that the remaining payment exposure naturally declines
as remaining, forward RBP payment obligations are satisfied and as committed RBP Resources are removed
from the portfolio through rescinded commitments or other changes affecting the remaining payment
obligations.”).
266 Indeed, as set forth in the PJM RBP Matrix, of the 13 RBP proposals put forth during the CIFP, seven of
the proposals adopted the buy-side credit requirement set forth herein. In addition, two of the proposals took
no position on the matter. See PJM Interconnection, L.L.C., MC Voting Results for RBP Proposals Agenda
Items 3L through 3X, (June 30, 2026), https://www.pjm.com/committees-and-groups/committees/mc
[https://perma.cc/5CSQ-DP4K] (scroll to “Meeting Materials” and search for 2026, click on link for
“6.30.2026 Special Meeting,” scroll to MC Voting Results – Agenda Items 3L to 3X and click on each to
view the PDF) (last visited July 29, 2026).
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credit tools. PJM’s proposed RBP credit rules address that gap and allow PJM to mitigate
the new risks presented by RBP.267
1.
Sellers must provide collateral with RBP Sell Offers (proposed
Tariff, Attachment DD, section 18.8(a))
PJM proposes that sellers provide RBP Collateral in accordance with credit
requirements for each RBP Sell Offer before or concurrently with submitting an offer in
the RBP.268
For each RBP Sell Offer, the credit requirement is the sum of 20% of the RBP Sell
Offer Price * RBP UCAP MW for each of the first three Delivery Years offered. This is
expressed formulaically in the proposed Tariff as:
∑0.2 × (𝑅𝐵𝑃 𝑆𝑒𝑙𝑙 𝑂𝑓𝑓𝑒𝑟 𝑃𝑟𝑖𝑐𝑒 𝑖𝑛
$
𝑀𝑊𝐷𝑎𝑦) 𝑛× (𝑈𝐶𝐴𝑃 𝑖𝑛 𝑀𝑊)𝑛× 365
3
𝑛=1
where n = Delivery Year269
As such, the RBP credit requirement appropriately reflects (and matches) the seller’s ability
to offer an RBP Resource at a different price and different UCAP commitment level for
each Delivery Year for the first three years the RBP Resource is expected to be in service.
This credit requirement is specific to each offered RBP Resource and is designed
to cover three years of RBP shortfall charges for that resource.270 RBP shortfall charges
267 See Kelly Aff. ¶ 19 (“PJM found that its current credit tools do not contemplate the long-term nature of
RBP and the risk of future non-payment that results.”); id. ¶ 24 (“In developing that rate, PJM sought to
establish an initial level of collateral that provides commensurate protection against non-payment while
avoiding full collateralization of the entire 15-year contractual commitment.”).
268 See proposed Tariff, Attachment DD, section 18.8(a).
269 Proposed Tariff, Attachment DD, section 18.8(a)(iv); see also Kelly Aff. ¶ 13.
270 See Kelly Aff. ¶ 14 (“[T]he RBP credit requirement reflects and matches (i) the seller’s ability to offer an
RBP Resource at a different price and different UCAP commitment level for each Delivery Year for the first
three years; and (ii) the requirement that an RBP Resource must reach commercial operation within three
Delivery Years of its target in-service date.”).
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are also based on 20% of the RBP Sell Offer Price and are applicable in the event the RBP
Resource does not achieve commercial operation. Credit requirement at this level covers
the payment of any RBP shortfall charges, while not being so high as to deter entry of
non-speculative RBP Resources. As such, the credit requirement applicable to RBP Sell
Offers will support the success of RBP in attracting the development of new capacity in
the PJM Region.
2.
Return of RBP Collateral (proposed Tariff, Attachment DD,
section 18.8(a)(ii))
Consistent with the risk mitigation logic driving the need for RBP Sellers to post
RBP Collateral, such collateral shall be returned commensurate with reduction in risk.271
First, PJM will return any RBP Collateral associated with “any RBP Resources that do not
receive a commitment through the Reliability Backstop Procurement.”272 Second, PJM
may return RBP Collateral associated with an RBP Resource that secured a commitment
only after the resource achieves commercial operation and then after a one-year look-back,
to allow PJM to confirm that steady commercial operation occurred.273
3.
Collateral requirements for RBP Resources traded to a different
entity than the RBP Seller (proposed Tariff, Attachment DD,
section 18.8(a)(v))
Given the risk of an RBP Resource not achieving commercial obligation and to
incent continued development of committed RBP Resources in the event of a change in
ownership, PJM proposes to retain the original RBP Seller’s RBP Collateral and financial
271 See id. ¶ 15 (“Consistent with PJM’s objective of aligning collateral with the underlying financial
exposure, PJM concluded that collateral should remain in place only while the associated performance risk
continues to exist.”).
272 Proposed Tariff, Attachment DD, section 18.8(a)(iii)(A).
273 Proposed Tariff, Attachment DD, section 18.8(a)(iii)(B).
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responsibility for a committed RBP Resource that is traded until the receiving party (i)
independently posts sufficient credit with PJM and (ii) provides written confirmation to
PJM of its agreement to “fully assume the credit responsibility associated with the
committed RBP Resource.”274 This requirement ensures the credit associated with any
committed RBP Resource that has not yet achieved commercial operation is maintained
and an RBP Seller must consider the ability of the other entity to either (i) post sufficient
credit or (ii) bring the RBP Resource to commercial operation. Both considerations are for
the benefit of the PJM Region and are just and reasonable. This credit requirement for
trading RBP Resources is consistent with the credit requirement for trading Capacity
Resources committed through RPM.275
4.
Buyers (LSEs) allocated cost responsibility for RBP Charges must
provide
collateral
(proposed
Tariff,
Attachment
DD,
section 18.8(b))
PJM is proposing to require that those LSEs allocated RBP cost responsibility for
a given Delivery Year must post credit associated with such obligation.276 Such a credit
obligation is just and reasonable, as it is designed to protect those LSEs not allocated cost
responsibility for RBP Resources from having to pay for such resources. To be clear, LSEs
not allocated cost responsibility for RBP Resources will not have an RBP credit
requirement. This is consistent with the Ratepayer Protection Pledge and cost causation
principles, as explained above.
274 Proposed Tariff, Attachment DD, section 18.8(a)(v).
275 See Tariff, Attachment Q, section VI.B.7 (Credit Responsibility for Traded Planned RPM Capacity
Resources).
276 See proposed Tariff, Attachment DD, section 18.8(b).
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The purpose of the buyer-side credit requirement is to mitigate the risk associated
with RBP commitments through the RBP commitment term. The purpose of LSE credit is
to mitigate potential defaults from non-payment of RBP credit obligations.277 PJM
mitigates risk of default through credit requirements and credit tools. This is particularly
true where a procurement process locks in RBP payments for a fixed, 15-year term.
Given this overall purpose, PJM will first determine the overall credit requirement
needed to address this risk at an aggregate level before then determining an individual
LSE’s credit requirement.278 PJM will determine the cumulative RBP credit requirement
equal to “the product of the RBP Credit Rate multiplied by RBP UCAP MW
committed.”279 That is, one uniform $/MW rate will be applicable to all committed RBP
UCAP MW. Once determined, PJM will apply this rate to set the RBP credit requirement
for each LSE allocated cost responsibility for a given Delivery Year. This approach
appropriately achieves the purpose of mitigating potential defaults from non-payment of
RBP Charges through the commitment term.
a.
Determining the inputs to the RBP credit requirement
As can be seen, an LSE’s RBP credit requirement is a function of two inputs: the
RBP Credit Rate and RBP UCAP MW committed. Initially, the “committed RBP UCAP
277 See Kelly Aff. ¶¶ 19-20 (“PJM evaluated the credit tools needed to mitigate potential defaults from
non-payment of RBP Charges. . . . Based upon that evaluation, PJM determined that only those LSEs
allocated responsibility for RBP Charges should be required to provide RBP Collateral.”).
278 Ms. Kelly testifies that “PJM considered that the relevant financial exposure is created by the portfolio of
committed RBP resources rather than by any individual LSE in isolation,” and therefore “PJM developed a
methodology that first determines the aggregate collateral necessary to address the payment exposure
associated with the portfolio of committed RBP Resources and then allocates that collateral requirement
among the LSEs responsible for payment of RBP Charges.” Kelly Aff. ¶¶ 21-22.
279 Proposed Tariff, Attachment DD, section 18.8(b)(i)(A).
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MW” input will equal the total amount of RBP UCAP MW committed through the
Reliability Backstop Procurement. But, that MW level will change as committed resources
fail to follow through on their commitment and do not achieve commercial operation.
Thus, to the extent any “commitment of RBP UCAP MW that is rescinded pursuant to
Tariff, Attachment DD, section 18.6(e)” that value is subtracted from the input used to
determine the uniform RBP credit requirement.280
The other input to determining RBP credit requirement is the “RBP Credit Rate.”
PJM proposes to set this input initially at $1.5 million. Over time this rate “may be reduced,
for reasons including a change in the total committed RBP UCAP MW, when total posted
RBP Collateral is greater than the total remaining RBP Charges obligations, . . . to an
amount sufficient to cover the total existing RBP Charges obligations.”281
The initial $1.5 million figure is designed to adequately balance mitigating the risk
of defaults from non-payment of RBP Charges associated with the RBP commitments
without unduly burdening those Load Serving Entities serving large loads. The initial $1.5
million figure ensures that PJM holds sufficient collateral to cover approximately 50% of
the notional value of all RBP commitments, which achieves PJM’s objective of
establishing “an initial level of collateral that provides commensurate protection against
non-payment while avoiding full collateralization of the entire 15-year contractual
commitment.”282 This can be seen through the application of a simple formula based on
280 Id. (“[T]he RBP UCAP MW committed amount shall equal the amount of RBP UCAP MW that receives
a commitment through the Reliability Backstop Procurement minus each commitment of RBP UCAP MW
that is rescinded pursuant to Tariff, Attachment DD, section 18.6(e).”).
281 Proposed Tariff, Attachment DD, section 18.8(b)(i)(A).
282 Kelly Aff. ¶ 24.
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the RBP Charge obligation over 15 years, i.e., the commitment term, and a conservative
assumption that all RBP commitments are—on average—at the maximum willingness to
pay, i.e.,15 years * 365 days * $555/MW-Day = $3,038,625. Roughly half of $3,038,625
is $1.5 million, confirming that collateral at this level will cover approximately half the
notional value of the contracted commitment from Day 1. Ms. Kelly also performed a
“check” on the reasonableness of the $1.5 million value through a discount cash flow
model, which took each year’s RBP Charge Obligation, i.e., 1 year * 365 days * $555/MW-
Day = $202,575, discounted to September 2026, when the auction is conducted, using the
discount rate of 9.5%.283 The discount rate is the capacity market Weighted Average Cost
of Capital developed by the Brattle Group as part of PJM’s 2025 periodic review of the
Cost of New Entry of Capacity Resources into the PJM Region.284
Because the risks the RBP Collateral is designed to address will lessen over time,
the $1.5 million per MW figure is an initial value. PJM proposes to reduce this RPM Credit
Rate value to correspond with decreasing risk over time.285 As Ms. Kelly testifies, “PJM
developed a provision permitting reductions to the RBP credit rate when changes in the
underlying RBP commitment portfolio demonstrate that previously required collateral
exceeds the remaining expected payment exposure.”286 The risk could lessen for a number
283 See id. ¶ 27.
284 See id. ¶ 29 (citing The Brattle Group, Brattle 2025 CONE Report for PJM, PJM Interconnection, L.L.C.,
26-34
(Apr.
9,
2025),
https://www.pjm.com/-/media/DotCom/committees-
groups/committees/mic/2025/20250411-special/item-1-02-revised-cone-report-final.pdf
[https://perma.cc/B3VN-EY34]).
285 Proposed Tariff, Attachment DD, section 18.8(b)(i)(A) (“[T]he RBP Credit Rate shall equal $1.5 million,
as may be reduced, for reasons including a change in the total committed RBP UCAP MW, when total posted
RBP Collateral is greater than the total remaining RBP Charges obligations, over time by the Office of the
Interconnection to an amount sufficient to cover the total existing RBP Charges obligations.”).
286 Kelly Aff. ¶ 30.
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of reasons, including a reduction in the total committed RBP UCAP MW—which would
reduce the forward RBP Charge obligations, and as the total posted RBP Collateral
becomes greater than the total remaining forward RBP Charges obligations. This
“approach aligns required collateral with the remaining financial exposure through the
commitment term.”287
b.
Determining an LSE’s RBP credit requirement
PJM proposes that the RBP credit requirement will follow cost allocation for RBP
Resources. In other words, only those LSEs allocated cost responsibility will be assigned
an RBP credit requirement and be required to post RBP Collateral, and the RPM credit
requirement will be based on the level of RBP UCAP MW for which an LSE is allocated
cost responsibility. In this manner, the RBP credit requirement will be aligned with cost
allocation.288
At a high level, an LSE’s RBP credit requirement will equal the product of (1) the
uniform $/MW credit requirement rate and (2) the LSE’s RBP UCAP MW amount. Thus,
for LSEs serving load in an Electric Distributor zone/area in which no RBOs have been
reported,289 an LSE’s “allocated RBP UCAP MW shall equal the Load Serving Entity’s
pro-rata share of the Daily Unforced Capacity Obligation for the zone/area as determined
in RAA, Schedule 8.”290
287 Id.
288 See id. ¶ 20 (“PJM determined that only those LSEs allocated responsibility for RBP Charges should be
required to provide RBP Collateral. Conversely, LSEs not allocated responsibility for RBP Charges do not
present the payment exposure the proposed credit provisions are intended to address and therefore are not
subject to the RBP credit requirement.”).
289 See supra Part III.E.1 for a discussion of RBOs.
290 Proposed Tariff, Attachment DD, section 18.8(b)(i)(B)(1).
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For LSEs serving load in an Electric Distributor zone/area in which RBOs have
been reported, the LSE will be required to post RBP Collateral for its RBO MW (i.e., its
allocated RBP UCAP MW amount). Consistent with the proposed cost allocation rules,291
PJM proposes that “the RBP Obligation MW [will] equal[] the RBP Obligation MW
submitted for the Load Serving Entity by the Electric Distributor and scaled, as necessary,
in the event that the RBP Obligation MW values uploaded by the Electric Distributor do
not sum to the fixed, Final RBP Target MW for the zone/area.”292
While the forgoing should require the provision of adequate credit to mitigate the
risk of paying for the RBP commitments over their term, that approach does not have the
flexibility to address unreasonable credit risk that may arise in the RBP context. Thus,
because PJM is proposing to address RBP credit through rules outside of its Credit Risk
Management Policy, PJM is proposing to include language allowing PJM to “evaluate
whether such Load Serving Entity for unreasonable credit risk under the Unreasonable
Credit Risk provisions of Tariff, Attachment Q, Section II, and require additional RBP
Collateral as appropriate.”293 Such a provision is necessary and reasonable, because it
ensures that PJM has unambiguous authority to manage unreasonable credit risk in the RBP
context. Indeed, while PJM also proposes that “[n]othing in this Tariff, Attachment DD,
section 18 supersedes the provisions of Tariff, Attachment Q,”294 that provision does not
provide clear authority. The Commission has recognized the importance of managing
291 See proposed Tariff, Attachment DD, sections 18.3(b)(i)-(ii).
292 Proposed Tariff, Attachment DD, section 18.8(b)(i)(B)(1).
293 Proposed Tariff, Attachment DD, sections 18.8(b)(i)(B)(1)-(2).
294 Proposed Tariff, Attachment DD, section 18.8.
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unreasonable credit risk to “protect the integrity of the PJM-administered markets, as well
as protect market participants from financial losses that result from unreasonable credit
risks and defaults.”295 And, here, PJM is providing sufficient “clarity and transparency”
by grounding PJM’s evaluation in “the Unreasonable Credit Risk provisions of Tariff,
Attachment Q, Section II.”296
c.
Posting and maintenance of RBP Collateral
PJM is proposing that, “prior to forty-five (45) days before the start of the Delivery
Year,” all LSEs with an RBP credit requirement “must post, or maintain an existing, RBP
Collateral” equal to their RBP credit requirement.297 This allows time for Electric
Distributors to work with their RERRAs in specifying the RBO MW for the relevant
zone/areas, with “the initial allocation reported no later than 60 days prior to the 2028/2029
Delivery Year.”298 As a general matter, an LSE’s RBP credit requirement is not likely
change based on the applicable Delivery Year. Stated another way, a change in Delivery
Year does not necessarily mean a change in RBP credit requirement. Rather, changes in
RBP credit requirement will only occur to the extent (1) the LSE’s allocated RBP UCAP
MW level changes and/or (2) PJM changes the RBP Credit Rate, as discussed above.
Accordingly, an LSE with an RBP credit requirement should have a good degree of
certainty that its requirement will remain relatively constant, and generally only go down
over time, if its allocated RBP UCAP MW does not change. For this reason, PJM is making
295 PJM Interconnection, L.L.C., 171 FERC ¶ 61,173, at P 36 (2020).
296 Id.
297 Proposed Tariff, Attachment DD, sections 18.8(b)(i)(B)(1).
298 Proposed Tariff, Attachment DD, section 18.3(b)(iii).
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explicit that the posted RBP Collateral can be maintained from one Delivery Year to the
next; there is no need to recall and repost any RBP Collateral if the RBP credit requirement
is not changing.
However, to the extent an LSE’s allocated RBP UCAP MW level does change for
a future Delivery Year, it must post the appropriate RBP Collateral at least 45 days in
advance. This timeframe affords PJM’s credit department to work with the LSE to ensure
the LSE meets all applicable requirements.
d.
Changes to the RBP credit requirement associated with intra-
Delivery Year transfers of load and RBP UCAP MW cost
responsibility
Once determined, a credit requirement may be reduced during a Delivery Year to
the extent the RBP UCAP MW allocated to the LSE are also reduced.299 Such a reduction
in allocated RBP UCAP MW cost responsibility could occur where an LSE transfers its
load serving obligations for a certain load to another LSE. In such an event, the transferee
LSE must satisfy the credit requirements associated with taking on such load serving
obligation, including any cost allocation for the RBP UCAP MW associated with such
transferred load. Ms. Kelly explains that “PJM concluded that the underlying payment
exposure associated with transferred RBP payment obligations remains until the receiving
LSE independently satisfies the applicable collateral requirements and assumes
responsibility for the transferred obligations.”300 Thus, PJM proposes that the “[t]ransferee
shall independently post sufficient RBP Collateral directly with the Office of
Interconnection to satisfy the incremental RBP UCAP MW associated with the acquired
299 See proposed Tariff, Attachment DD, section 18.8(b)(i)(A).
300 Kelly Aff. ¶ 32.
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load.”301 The transferring LSE would then “be released from its financial obligations for
amount of RBP Collateral associated with the RBP UCAP MW associated with the
acquired load” and the LSE’s posted RBP Collateral associated with such load shall be
returned once (i) the new LSE has posted the RBP Collateral; and (ii) “any unpaid invoice
amounts associated with such transfer have been paid by the transferor.”302
5.
Management of defaults of obligations to pay RBP Charges and
RBP shortfall charges (proposed Tariff, Attachment DD,
section 18.9)
Consistent with the Ratepayer Protection Pledge and cost causation principles, PJM
proposes to circumscribe the consequences of defaults in the RBP context. There are two
payment obligations on which entities may default: RBP Charges by LSEs, and RBP
shortfall charges by the RBP Seller. First, PJM proposes that, upon any LSE’s default of
RBP Charges, the defaulted amounts shall be reallocated to among the other LSEs allocated
RBP Charges based on their proportional share of the total RBP Charges assessed across
the PJM Region.303 However, the amounts (re)allocated to these other LSEs may be offset
by the RBP Collateral posted by the defaulting LSE.304 Such a rule is just and reasonable
and protects against broad socialization of cost responsibility among not only LSEs not
serving large loads but also the rest of PJM’s Members, as PJM’s Operating Agreement
provides that, in the event a Member defaults on its payment obligations, the other PJM
Members may be required to pay a share of defaulted amounts.305
301 Proposed Tariff, Attachment DD, section 18.8(b)(i)(C)(1).
302 Proposed Tariff, Attachment DD, section 18.8(b)(i)(C)(2).
303 See proposed Tariff, Attachment DD, section 18.9(a).
304 See id.
305 See Operating Agreement, section 15.2.2.
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Second, PJM proposes that, in the event an RBP Resource must pay RBP shortfall
charges and it defaults on payment of such charges, then the LSEs that would have received
corresponding credits will not receive such credits.306 This is reasonable, as there would
be no monies to fund such credits to the LSEs. However, to the extent the RBP Seller’s
posted RBP Collateral has not been returned (e.g., because the resource achieved
commercial operation), then PJM may be able to provide some level of credits to the
appropriate LSEs from such collateral.
G.
Miscellaneous and Conforming Changes
1.
Reliability Backstop Auction (Tariff, Attachment DD, section 16.2)
The RBP bears similarities to the Reliability Backstop Auction, which was
established approximately 20 years prior to cover potential capacity shortfalls, as described
in Tariff, Attachment DD, section 16.2. As noted above, the RBP is a procurement
framework that is specifically tailored to the circumstances of the present-day capacity
shortfall and therefore provides benefits that a generic Reliability Backstop Auction would
not.
Under the current Tariff provisions, a Reliability Backstop Auction is triggered if,
for three consecutive Delivery Years, the BRA “equates to an installed reserve margin that
is more than one percentage point lower than the approved PJM Region Installed Reserve
Margin.”307 The BRAs for the 2027/2028 and 2028/2029 Delivery Years resulted in an
306 See proposed Tariff, Attachment DD, section 18.9(b) (“In the event that an RBP Resource subject to RBP
shortfall charges pursuant to Tariff, Attachment DD, section 18.6(d) defaults on payment of RBP shortfall
charges, the corresponding credits will not be allocated to the Load Serving Entities that would otherwise
receive the RBP shortfall charge credits.”).
307 Tariff, Attachment DD, section 16.2.
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installed reserve margin that was more than one percentage point lower than the approved
PJM Region Installed Reserve Margin. In both the BRA for the 2028/2029 Delivery Year
and the BRA for the 2027/2028 Delivery Year, the RPM cleared 5.6% below the PJM
Region Installed Reserve Margin of 20%.308 Even with the intervention of the RBP, the
2029/2030 Delivery Year BRA may clear short, as new capacity that qualifies for
procurement in the RBP are required to provide evidence of feasibility of commercial
operation by no later than June 1, 2032. Unless the starting point for the three consecutive
Delivery Years is reset, a Reliability Backstop Auction may be triggered and interfere with
the RBP. Thus, PJM is proposing to reset the Reliability Backstop Auction trigger by
revising the Tariff to state that “[n]o Reliability Backstop Auction will be conducted to
address such a shortfall unless it occurs in the Base Residual Auctions for three consecutive
Delivery Years” beginning with the 2032/2033 Delivery Year and thereafter.309 Similarly,
PJM proposes to specify that the existing requirement for PJM to investigate the cause for
clearing short of the reliability requirement and to recommend corrective action be reset to
the 2032/2033 Delivery Year. Doing so avoids posting substantively repetitive reports
should the BRAs continue to clear short in the intervening Delivery Years.310 The revision
to the 2032/2033 Delivery Year will align the trigger of the Reliability Backstop Auction
308 2027/2028 BRA Report at 1 (“PJM Interconnection cleared the 2027/2028 Base Residual Auction with a
reserve margin that is more than one percentage point below the Installed Reserve Margin target, and with
total Unforced Capacity of all Base Load Generation Resources less than the forecasted minimum hourly
load. This confirmed shortfall constitutes a triggering event as defined in the PJM Tariff, mandating an
investigation to determine the root causes of the region’s failure to secure sufficient resource adequacy.”);
2028/2029 BRA Report at 3.
309 Proposed Tariff, Attachment DD, section 16.2.
310 PJM issued its first report in accordance with this requirement after the BRA for the 2027/2028 Delivery
Year cleared short the reserve target on February 9, 2026. See 2027/2028 BRA Report.
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to begin after the RBP Resources come online, allow time to observe the impact of
commercial bilateral contracting whether through PJM’s Bilateral Matching efforts or
otherwise, and the efforts underway that are outlined in PJM’s Powering Reliability
Through Markets White Paper. Revising the Reliability Backstop Auction trigger to the
beginning of 2032/2033 avoids the possibility of an intervention through a Reliability
Backstop Auction, until after all RBP Resources should have reached their respective
commercial operation dates. In addition, revising the Reliability Backstop Auction trigger
provides time for the effects of PJM’s Bilateral Matching and other commercial bilateral
contracting to be felt. Furthermore, it provides time for the effects of PJM’s Powering
Reliability Through Market’s efforts to be felt before potentially triggering a Reliability
Backstop Auction.
Resources procured in the RBP must demonstrate that commercial operation by the
beginning of the 2032/2033 Delivery Year is feasible. Thus, resetting the trigger for the
Reliability Backstop Auction to the 2032/2033 Delivery Year recognizes that, even if the
RBP successfully procures sufficient capacity to cover the shortfall, RBP Resources will
need time to become operational. Resetting the Reliability Backstop Auction thus ensures
that the safeguard will remain in place without interfering with the RBP, which is being
proposed to address a similar resource adequacy concern.
2.
Planned Generation Capacity Resource (Tariff, Attachment DD,
section 5.5A)
The existing rules limit the resources that are eligible to participate into the RPM
Auctions. In particular, a new generation resource would not be allowed to be offered into
the RPM Auctions unless it meets the definition of a Planned Generation Capacity
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Resource. As currently defined, a Planned Generation Capacity Resource must have met
all of the requirements for an approved Decision Point I (for a resource that is 20 MW or
less) or Decision Point II (for a resource that is greater than 20 MW). This limitation exists
to provide a gating criteria so that speculative projects or projects that are unlikely to be in
service by the relevant Delivery Year would not be allowed to be offered into the RPM
Auctions.
For the RBP, there is already a separate and rigorous gating criteria that is detailed
above, see supra Part III.C.8.e, to provide reasonable confidence that a resource committed
through the RBP would be deliverable by the relevant Delivery Year. Additionally, to
avoid double procurement of capacity, the committed RBP UCAP MW must be offered
into the corresponding RPM Auctions as price takers. However, because not all projects
that receive an RBP commitment may have reached Decision Point I or Decision Point II
at the time of the relevant RPM Auctions, they may not currently be eligible to be offered
into the RPM Auctions based on the existing definition of Planned Generation Capacity
Resource. As a result, PJM proposes to amend the existing definition of Planned
Generation Capacity Resource so that any generation resource that is committed in the RBP
would qualify as a Planned Generation Capacity Resource and be allowed to be offered
into the relevant RPM Auctions.311
311 See proposed RAA, Article 1, Definitions – Planned Generation Capacity Resource. The clean version of
the definition for Planned Generation Capacity Resource on which PJM is proposing revisions is the version
the Commission accepted in Docket No. ER24-2398-000. Since that version was accepted there have been
overlapping versions of RAA, Article 1, Definitions that did not carry forward changes accepted in that
docket.
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3.
Notice of intent (Tariff, Attachment DD, section 5.5)
Under the current rules, any Planned Generation Capacity Resource is eligible to
be offered into the RPM Auctions only if it is the subject of a notice of intent to be offered
into the relevant auction. The reason for this requirement is to provide certainty that a
Planned Generation Capacity Resource, which does not have a capacity must-offer
obligation, will be offered into the RPM Auction before it is included in the planning
model. Otherwise, inclusion of Planned Generation Capacity Resources in the planning
models could result in an inaccurate CETL and CETO that is calculated for each locational
deliverability area. Because a committed RBP Resource, including any Planned
Generation Capacity Resource, would be required to be offered into the RPM Auctions,
imposing the requirement for unit owners to submit the same notice of intent to offer into
the RPM Auctions would be superfluous and present a barrier for the resource to be offered
into the RPM Auction if the unit owner missed the deadline to submit the notice of intent
to offer. Therefore, PJM proposes to specify that a notice of intent to offer is not required
for any committed RBP Resource since those resources will be required to be offered into
the RPM Auctions that correspond with the Delivery Year that such resource has an RBP
commitment.312
The only exception to this general rule is that for a Planned Generation Capacity
Resource that is committed as an RBP Resource and that was not the subject of a notice of
intent to offer for the BRA associated with the 2029/2030 Delivery Year, such Planned
Generation Capacity Resource must be offered into the Second Incremental Auction for
312 Proposed Tariff, Attachment DD, section 5.5(b).
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the 2029/2030 Delivery Year.313 The reason for this limited exception is because PJM
would not have included such a Planned Generation Capacity Resource in the planning
parameters for the 2029/2030 BRA so the CETO/CETL may be inaccurately represented
if such resource were to be offered into the 2029/2030 BRA. Thus, a committed RBP
Resource that is a Planned Generation Capacity Resource and happened to have already
submitted a notice of intent to offer into the 2029/2030 BRA would still be required to be
offered into the 2029/2030 BRA since PJM would have included such resource in the
planning parameters. For all other future RPM Auctions, including the 2029/2030 Second
Incremental Auction, PJM will automatically include any committed RBP Resource in the
planning models so a notice of intent to offer would not be necessary.
In the event a committed RBP Resource is not expected to be in-service or
deliverable by the relevant Delivery Year, the unit owner of such resource is required to
notify PJM, and provide supporting documentation, that the resource is not expected to be
deliverable no later than December 1 proceeding a BRA or 90 days prior to the
commencement of an Incremental Auction. Providing such notification by these deadlines,
which are the same as the deadlines for Planned Generation Capacity Resources that are
not committed through RBP to provide notices of intent to offer into the RPM Auctions, is
appropriate because it would provide sufficient time for PJM to exclude from the planning
models any committed RBP Resource that would no longer be expected to be deliverable
by the first Delivery Year. This is necessary so that PJM does not include a resource in the
313 Id. The First Incremental Auction for the 2029/2030 Delivery Year was canceled due to the compressed
auction schedule, so the Second Incremental Auction is the next auction following the BRA for the 2029/2030
Delivery Year.
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planning parameters that will not be in service and available to provide capacity by the
relevant Delivery Year. Of course, a committed RBP Resource would still be subject to
the RBP shortfall charge as discussed above, see supra Part III.C.9, should it submit a
notice to PJM that it would not be expected to be in service by the relevant Delivery Year.
In this way, the RBP shortfall charge acts as a financial disincentive against falsely
notifying PJM that a resource may not be deliverable to avoid the must-offer obligation
into the RPM Auctions.
4.
Minimum Offer Price Rule (proposed Tariff, Attachment DD,
section 5.14(h-2))
Given that any committed RBP Resource is required to be offered into the RPM
Auctions as a price taker for the term of the RBP commitment, such resource must be
offered into the RPM Auction at $0/MW-day. To ensure that this requirement is not
frustrated by the existing Minimum Offer Price Rule, PJM is proposing to exempt, only for
committed RBP Resources, the requirement that a Capacity Market Seller provide a
certification that the underlying resource is not receiving or expected to receive
Conditioned State Support and that the Capacity Market Seller does not intend to submit a
Sell Offer to exercise buyer-side market power.314 Additionally, the proposed Tariff also
clarifies that for committed RBP Resources, the lack of such a certification would not
subject the underlying resource to the Minimum Offer Floor Price.315 These updates will
ensure that a committed RBP Resource will be allowed to be offered into the RPM Auction
as a price taker without violating the Minimum Offer Price Rule. Finally, there is no
314 Proposed Tariff, Attachment DD, section 5.14(h-2)(1)(A).
315 Proposed Tariff, Attachment DD, section 5.14(h-2)(1)(B)(i).
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concern of a potential exercise of buyer-side market power for committed RBP Resources
because such resources are being procured by PJM through the RBP for resource adequacy
purposes and are required to be offered as price takers to avoid double procurement of
capacity.
IV.
CORRESPONDENCE
The following individuals are designated for inclusion on the official service list in this
proceeding and for receipt of any communications regarding this filing:
Craig Glazer
Vice President–Federal Government Policy
PJM Interconnection, L.L.C.
1200 G Street, N.W., Suite 600
Washington, D.C. 20005
(202) 423-4743
craig.glazer@pjm.com
Ryan J. Collins
Vivian W. Chum
Wright & Talisman, P.C.
1200 G Street, N.W., Suite 600
Washington, D.C. 20005
(202) 393-1200
collins@wrightlaw.com
chum@wrightlaw.com
Chenchao Lu
Associate General Counsel
PJM Interconnection, L.L.C.
2750 Monroe Blvd.
Audubon, PA 19403
(610) 666-2255
chenchao.lu@pjm.com
V.
REQUESTED EFFECTIVE DATE AND CONSENT TO MODIFICATION
OR SEVERANCE OF ISSUES
PJM requests that the Commission issue an order on this filing and make this
proposal effective by no later than September 29, 2026, which is 60 days after the date of
this filing. Commission action and an effective date of no later than September 29, 2026,
will allow PJM to commence the RBP immediately thereafter. Upon Commission
acceptance of this filing without modification, PJM intends to commence the RBP on
September 30, 2026.
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As noted above, however, to facilitate Commission approval and prompt opening
of the RBP procurement window, PJM consents to the Commission’s exercise of authority
to modify and/or sever the proposed Tariff and RAA language, as needed and permitted
under the FPA and NRG Power Marketing,316 where such modification is consistent with
PJM’s overarching objectives in this filing.317 Should the Commission require
modifications to the proposed RBP as detailed in this filing, PJM may need to delay the
commencement of the RBP beyond September 30, 2026, to implement the RBP consistent
with such Commission directed changes. In addition, PJM provides the following requests
and observations:
First, should the Commission exercise its authority to modify the proposed Tariff
language herein pursuant to the FPA and NRG Power Marketing, PJM respectfully requests
that the Commission expressly prescribe the revised rate or rule in its order. Prescriptive
revised language from the Commission would provide the “necessary predictability” to
allow PJM to implement such changes to the RBP in a timely manner.318 PJM’s submittal
316 NRG Power Mktg., 862 F.3d at 108. As the Commission has repeatedly stated, “[t]he United States Court
of Appeals for the District of Columbia Circuit has held that, in certain circumstances, the Commission has
‘authority to propose modifications to a utility’s [FPA section 205] proposal if the utility consents to the
modifications.’” N.Y. Indep. Sys. Operator, 188 FERC ¶ 61,051 at P 22 n.36 (alteration in original) (citing
NRG Power Mktg., 862 F.3d at 114-15); see Midcontinent Indep. Sys. Operator, 180 FERC ¶ 61,141 at P 26
n.29 (same); ISO New England, 175 FERC ¶ 61,172 at P 16 n.20 (same).
317 PJM is not, for example, suggesting that the Commission may modify or sever provisions of its proposal
to result in an “entirely different rate design.” NRG Power Mktg., 862 F.3d at 115 (“Our decisions in City of
Winnfield and Western Resources indicate that Section 205 does not allow FERC to suggest modifications
that result in an ‘entirely different rate design’ than the utility’s original proposal or the utility’s prior rate
scheme.”); see also id. at 116 (holding that the Commission’s modifications resulted in an entirely different
rate design where Commission’s modifications: (1) replaced PJM’s proposal to permit exemption where
generators demonstrate on a case-by-case basis that their costs fell below the price floor with one in which
generators can claim exemptions even if they cannot demonstrate that their price falls below the floor; (2)
undid the compromise between LSEs and Generators and thus “eviscerated the terms of the bargain.”).
318 PJM Interconnection, 175 FERC ¶ 61,137 at P 110 (first quoting Aera Energy LLC, 789 F.3d at 190-92
“affirming the Commission, finding ‘FERC’s conditional acceptance . . . simply required Kern River to
substitute one number for another when allocating costs to the rolled-in shippers. . . . Because this mechanical
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Honorable Debbie-Anne A. Reese
July 31, 2026
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of any compliance filing implementing such modifications would constitute PJM’s consent
and acceptance of the Commission’s modifications.
Second, PJM observes that the facts underlying the PJM proposal at issue in NRG
Power Marketing are distinguishable from the facts here. In NRG Power Marketing, the
FPA section 205 filing with the Commission was one in which “PJM asked the
Commission ‘to view this filing, not as a list of discrete Tariff changes, but . . . a hard-
fought compromise package, and to approve it as such.’”319 By contrast, the proposal put
forth here is not a stakeholder compromise package. Unlike NRG Power Marketing, there
is no danger of undoing the compromise between LSEs and Generators and thus
“eviscerat[ing] the terms of the bargain.”320 Rather, this filing is the product of an RBP
proposal that was independently endorsed by the PJM Board following the CIFP
stakeholder process. Moreover, through this pre-emptive grant of authority pursuant to
which the Commission may sever and modify each element of the proposal, stakeholders
are on notice of potential changes to the proposal as filed, and will have the opportunity to
comment as they feel necessary and appropriate.
change gave Kern River no discretion to adjust its rate models, FERC provided sufficient notice to
ratepayers,’” and then quoting Elec. Dist. No. 1, 774 F.2d at 493 “vacating when the ‘effective date of an
order set[] forth no more than the basic principles pursuant to which the new rates are to be calculated’”
(alteration in original)). As the Commission elaborated further in PJM Interconnection, 175 FERC ¶ 61,137
at P 110, mere “direction” without “sufficient detail on each element [of the replacement rate] that
[customers/market participants] could determine when their transactions would be subject to [the new rule],”
would mean that implementation of the compliance directive prior Commission approval would violate the
filed rate doctrine. PJM Interconnection, 175 FERC ¶ 61,137 at P 110 (quoting Elec. Dist. No. 1, 774 F.2d
at 493 “[P]urchasers of electricity cannot plan their activities unless they know the cost of what they are
receiving, ‘providing the necessary predictability is the whole purpose of the well-established filed rate
doctrine.’” (citing Ark. La. Gas Co., 453 U.S. at 577)).
319 NRG Power Mktg., 862 F.3d at 113.
320 Id. at 116.
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Third, although PJM consents to make each element of the proposed revisions to
the Tariff and RAA severable, PJM has demonstrated that each element of its proposal is
just and reasonable. Notwithstanding PJM’s grant of authority to sever, PJM urges the
Commission to accept all revisions as proposed so that the RBP can commence on
September 30, 2026.
To the extent the Commission does sever and modify any element, the Commission
should take care to ensure that its replacement rate appropriately meshes with the other
interlocking parts of the RBP framework to allow for quick and efficient implementation.
The PJM Board has extensively considered the requirements to implement the RBP that
account for risks associated with a fixed, 15-year term of procurement, including risk of
Transmission Owner exit, and coordination with states. In addition, severance of specific
elements of the proposal without a prescriptive replacement rate would not provide the
sufficient detail necessary to promptly implement RBP. Finally, modifications to this filing
could jeopardize the commencement of the RBP in September 2026, which would also
have downstream impacts given that the BRA for the 2029/2030 Delivery Year is currently
scheduled to commence on December 9, 2026.
VI.
DOCUMENTS ENCLOSED
This filing consists of the following:
1.
This transmittal letter;
2.
Revisions to the PJM Tariff (in redlined and non-redlined format (as
Attachments A and B, respectively) and in electronic tariff filing format as
required by Order No. 714);321
321 Electronic Tariff Filings, Order No. 714, 124 FERC ¶ 61,270 (2008), final rule, Order No. 714-A, 147
FERC ¶ 61,115 (2014).
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Honorable Debbie-Anne A. Reese
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3.
Affidavit of Ms. Danielle Croop, Senior Manager in the Market Design group
of PJM Interconnection, L.L.C. as Attachment C; and
4.
Affidavit of Ms. Gwen Kelly, Senior Director in Credit Risk and Collateral
Management of PJM Interconnection, L.L.C. as Attachment D.
VII.
SERVICE
PJM has served a copy of this filing on all PJM members and on all state utility
regulatory commissions in the PJM Region by posting this filing electronically. In
accordance with the Commission’s regulations,322 PJM will post a copy of this filing to the
Commission filings section of its internet site, located at the following link:
https://www.pjm.com/library/filing-order.aspx with a specific link to the newly filed
document, and will send an e-mail on the same date as this filing to all PJM members and
all state utility regulatory commissions in the PJM Region323 alerting them that this filing
has been made by PJM and is available by following such link. PJM also serves the parties
listed on the Commission’s official service list for this docket. If the document is not
immediately available by using the referenced link, the document will be available through
the referenced link within 24 hours of the filing. Also, a copy of this filing will be available
on
the
Commission’s
eLibrary
website
located
at
the
following
link:
http://www.ferc.gov/docs-filing/elibrary.asp in accordance with the Commission’s
regulations and Order No. 714.
322 See 18 C.F.R. §§ 35.2(e), 385.2010(f)(3).
323 PJM already maintains, updates and regularly uses e-mail lists for all PJM members and affected state
commissions.
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Honorable Debbie-Anne A. Reese
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VIII. CONCLUSION
Based on the foregoing, PJM requests that the Commission accept the enclosed
Tariff and RAA revisions by September 29, 2026, at the latest, effective September 29,
2026.
Respectfully submitted,
/s/ Vivian W. Chum
Craig Glazer
Vice President–Federal Government Policy
PJM Interconnection, L.L.C.
1200 G Street, N.W., Suite 600
Washington, D.C. 20005
(202) 423-4743
craig.glazer@pjm.com
Ryan J. Collins
Vivian W. Chum
Wright & Talisman, P.C.
1200 G Street, N.W., Suite 600
Washington, D.C. 20005
(202) 393-1200
collins@wrightlaw.com
chum@wrightlaw.com
Chenchao Lu
Associate General Counsel
PJM Interconnection, L.L.C.
2750 Monroe Blvd.
Audubon, PA 19403
(610) 666-2255
chenchao.lu@pjm.com
July 31, 2026