{"document":{"slug":"rehearing-er26-3380-firstenergy","title":"Request for Rehearing of FirstEnergy Service Company","issued":"2026-10-29","accession":"20261029-5270","docket":"ER26-3380-001","group":"Rehearing of FERC's PJM Reliability Backstop Procurement order","filer":"FirstEnergy Service Company","kind":"request for rehearing","file":"sources/originals/20261029-5270_FE RBP Request for Rehearing 10.29.2026.pdf","url":"https://elibrary.ferc.gov/eLibrary/filelist?accession_number=20261029-5270","sha256":"4ff9f7e26485e1021643b3cf68775c9f6f14343d698cce4fca7a9f9edbe2569e","pages":18,"tokens":5206,"emptyPages":[]},"pages":[{"page":1,"startToken":0,"endToken":269,"text":"1\nUNITED STATES OF AMERICA\nBEFORE THE\nFEDERAL ENERGY REGULATORY COMMISSION\n) \nPJM Interconnection, L.L.C. \n) \nDocket Nos. ER26-3380-000 \n) \n                     EL26-108-000 \n) \nREQUEST FOR REHEARING OF\nFIRSTENERGY SERVICE COMPANY\nPursuant to Section 313 of the Federal Power Act (\"FPA\"), 16 U.S.C. § 825l(a), and Rule \n713 of the Rules of Practice and Procedure of the Federal Energy Regulatory Commission \n(\"Commission\" or \"FERC\"), 18 C.F.R. § 385.713 (2025), FirstEnergy Service Company \n(\"FirstEnergy\"),1 respectfully submits this Request for Rehearing of the Commission's order issued \non September 29, 2026 in the above-captioned proceedings, which accepted and suspended the \nReliability Backstop Procurement (\"RBP\") proposal of PJM Interconnection, L.L.C. (\"PJM\"), \nestablished a paper hearing, and instituted a proceeding under FPA Section 206.2  This request is \ntimely because it is filed within thirty days of issuance of the September 29 Order. \nRehearing is necessary because the September 29 Order, while correctly identifying several \nof the defects in PJM's filing, does not fully reject PJM's proposal on the bases FirstEnergy raised \n1\nFirstEnergy intervened in this proceeding as agent for its franchised public utility and transmission-\nowning public utility affiliates Ohio Edison Company; The Cleveland Electric Illuminating Company; The \nToledo Edison Company; FirstEnergy Pennsylvania Electric Company; and the FirstEnergy Transmission \nOwners (collectively, Jersey Central Power & Light Company; Monongahela Power Company; The \nPotomac Edison Company; American Transmission Systems, Incorporated; Keystone Appalachian \nTransmission Company; Mid-Atlantic Interstate Transmission, LLC; and Trans-Allegheny Interstate Line \nCompany). PJM Interconnection, L.L.C., 196 FERC ¶ 61,245, at App. B n.344 (2026) (\"September 29 \nOrder\").\n2\nSeptember 29 Order at P 1 & Ordering Paras. (A)-(C)."},{"page":2,"startToken":269,"endToken":654,"text":"2\nin its Comments and Protest (\"FirstEnergy Protest\").3  Instead, the September 29 Order accepts the \nfiling, declares that every aspect of the RBP other than three discrete topics set for paper hearing \nis just and reasonable,4 and then either summarily dismisses, or never addresses, the arguments \nFirstEnergy raised on those very aspects. FPA Section 205 places the burden of proof on PJM, and \nthe Commission may accept PJM's proposal only if the record shows that PJM carried that burden.5\nThe Commission's obligation to engage in reasoned decision-making likewise requires that it \nrespond meaningfully to the objections raised before it.6  The September 29 Order falls short of \nboth requirements with respect to several of the issues raised in the FirstEnergy Protest. \nSpecifically, the September 29 Order: (1) accepts PJM's levelized, MW-weighted average-\nprice framework without responding at all to FirstEnergy's showing that it permits sellers to \"front \nload\" contract prices onto customers, a plainly unacceptable outcome when affordability concerns \nare already at the forefront; (2) rejects FirstEnergy's protest that the procurement should prioritize \nthe resources that most effectively address reliability without engaging with the record evidence \nFirstEnergy submitted; (3) finds PJM's supplier shortfall charges and seller collateral requirements \njust and reasonable without addressing FirstEnergy's showing that customers are unprotected \nagainst supplier underperformance after commercial operation; and (4) accepts PJM's demand \nresponse gating criteria without resolving the ambiguity FirstEnergy identified as to whether \n3\nComments and Protest of FirstEnergy Service Company, Docket No. ER26-3380-000 (filed Aug. \n21, 2026) (\"FirstEnergy Protest\").\n4\nSeptember 29 Order at P 23 (\"Aside from the three issues discussed directly below, we find that \nthe other aspects of PJM's RBP proposal are just and reasonable, as discussed in this order.\").\n5\n16 U.S.C. § 824d(a)-(b); Constellation Mystic Power, LLC v. FERC, 45 F.4th 1028, 1035 (D.C. \nCir. 2022); NorthWestern Corp. v. FERC, 884 F.3d 1176, 1182-84 (D.C. Cir. 2018); City of Winnfield v. \nFERC, 744 F.2d 871, 876-77 (D.C. Cir. 1984). See FirstEnergy Protest at 1-2.\n6\nSee FCC v. Prometheus Radio Project, 592 U.S. 414, 423 (2021); Me. Pub. Utils. Comm'n v. FERC, \n520 F.3d 464, 471 (D.C. Cir. 2008), rev'd on other grounds, 558 U.S. 165 (2010). See FirstEnergy Protest \nat 2 n.6."},{"page":3,"startToken":654,"endToken":958,"text":"3\neligible demand response must be supported by binding contractual commitments.  Each of these \ndeterminations is arbitrary and capricious, unsupported by substantial evidence, and contrary to \nlaw, and thus rehearing should be granted.  Although FirstEnergy understands that PJM is planning \nto submit a new filing pursuant to FPA Section 205, consistent with the Commission’s invitation \nto do so, rehearing is still warranted to ensure these issues are preserved and appropriately decided \nin the context of any new filing made by PJM. \nI. \nBACKGROUND\nBecause the September 29 Order is the culmination of an expedited process that unfolded \nover approximately nine months, several major events are relevant to this request.  On January 16, \n2026, the National Energy Dominance Council and the governors of all thirteen PJM states issued \nthe Statement of Principles, urging PJM to \"[p]rovide 15-year price certainty for new capacity \nresources\" through a reliability backstop auction and to allocate the costs of new capacity to LSEs \nwith data centers that have not self-procured new capacity or agreed to be curtailable.  Shortly \nthereafter the PJM Board announced its decision in the Critical Issue Fast Path (\"CIFP\") process \naddressing large load additions, which included accelerating a backstop capacity procurement.  In \nApril the PJM Board initiated a targeted CIFP process to develop the RBP. On June 30, 2026, the \nPJM Members Committee voted on thirteen RBP proposals. Only one—sponsored by a coalition \nof Electric Distributors and the Data Center Coalition (\"Joint Proposal\")—received the two-thirds \nsector-weighted support needed for endorsement.  PJM's own proposal did not.  Then on July 14, \n2026, PJM announced that the 2028/2029 Base Residual Auction (\"BRA\") cleared short of the \nPJM Region's reliability requirement.  In response, on July 27, 2026, the PJM Board adopted PJM's \nproposal, with three \"targeted changes,\" rather than the Joint Proposal.  PJM filed its RBP proposal"},{"page":4,"startToken":958,"endToken":1267,"text":"4\n(\"July 31 RBP Proposal\" or \"Transmittal\"), as supplemented, on August 14, 2026.  The foregoing \nevents are more thoroughly described in the September 29 Order and the FirstEnergy Protest.7\nPJM describes the RBP as a one-time procurement of new capacity to address resource \nadequacy challenges primarily driven by an influx of large loads.8  Under PJM's proposal, \nPJMSettlement, Inc. would act as counterparty on behalf of LSEs to procure commitments from \nnew \"RBP Resources\" for fixed terms of up to fifteen years, starting no earlier than the 2028/2029 \ndelivery year and ending no later than the 2042/2043 delivery year.9  PJM proposed to procure \ncapacity equal to the 6,831 MW shortfall in the 2028/2029 BRA (the \"Initial RBP Target\"), \nadjusted downward for qualifying offset capacity and for load that qualifying Electric Distributors \nelect to opt out of the RBP.10 PJM proposed to select offers on a pay-as-bid basis, subject to a \nmaximum willingness to pay $555/MW-day calculated as a MW-weighted average of the levelized \ncost of all selected offers over all delivery years.11  PJM proposed to allocate the costs to Electric \nDistributor zone/areas based on each zone/area's pro rata share of the difference between \nforecasted Load Adjustments for the 2026/2027 and 2028/2029 delivery years, fixed for the \nfifteen-year term, with further allocation to LSEs left to states and Relevant Electric Retail \nRegulatory Authorities (\"RERRAs\").12  And PJM proposed to require LSEs to post collateral equal \nto $1.5 million per committed RBP MW.13\n7\nSeptember 29 Order at PP 1, 6-7, 9, 12-14; FirstEnergy Protest at 1, 2 n.8, 3-4.\n8\nSeptember 29 Order at PP 1, 15.\n9\nId. at PP 15-16.\n10\nId. at P 16.\n11\nId. at PP 55-57, 60.\n12\nId. at PP 99, 110.\n13\nId. at P 183."},{"page":5,"startToken":1267,"endToken":1553,"text":"5\nFirstEnergy agreed that new generation is needed, but demonstrated that fundamental \nelements of PJM's proposal could not be approved consistent with FPA Section 205.14  FirstEnergy \nshowed, among other things, that: (1) PJM's levelized contract framework permits suppliers to \n\"front load\" contract prices and creates unnecessary affordability risks; (2) the RBP should be \nlimited to the resources (namely, dispatchable resources) that most effectively address reliability \nneeds; (3) the Commission should direct PJM to strengthen supplier performance and credit \nrequirements; and (4) the Commission should direct PJM to clarify that its gating criteria require \nbinding contractual commitments for eligible demand response resources.15  FirstEnergy asked the \nCommission to reject PJM's filing, institute an FPA Section 206 proceeding, and establish \nsettlement procedures, following the model the Commission used when PJM first proposed the \nReliability Pricing Model (\"RPM\").16\nThe September 29 Order did not reject the filing.  It accepted PJM's proposed tariff \nrevisions and Reliability Assurance Agreement (\"RAA\") revisions for filing, suspended them for \nfive months to become effective February 28, 2027, subject to refund, and established paper \nhearing procedures limited to three topics: cost allocation, Transmission Owner exit rules, and \nLSE collateral requirements.17  The September 29 Order found that \"the other aspects of PJM's \nRBP proposal are just and reasonable,\"18 instituted a proceeding in Docket No. EL26-108-000 on \nthe preliminary finding that PJM's existing Tariff may be unjust and unreasonable,19 anticipated \n14\nFirstEnergy Protest at 1.\n15\nId. at 2.\n16\nId. at 6-7, 22 (citing PJM Interconnection, L.L.C., 117 FERC ¶ 61,331 (2006)).\n17\nSeptember 29 Order at PP 1, 23-24 & Ordering Paras. (A)-(B).\n18\nId. at P 23.\n19\nId. at PP 27, 29-31, 214 & Ordering Para. (C)."},{"page":6,"startToken":1553,"endToken":1958,"text":"6\nthat it may impose a replacement rate under Western Resources, Inc. v. FERC following the paper \nhearing,20 and repeatedly encouraged PJM to submit a new FPA Section 205 filing \"without delay,\" \nnoting that the Commission would likely hold the paper hearing in abeyance if PJM did so within \nthirty days.21  On October 13, 2026, PJM filed a motion to hold the paper hearing in abeyance \npending resolution of PJM’s forthcoming Section 205 filing.22  The Commission granted that \nmotion extending the deadline for initial briefs in the paper hearing Docket No. EL26-108-000 \nfrom November 13, 2026 to January 11, 2027, and the deadline for reply briefs from December 3, \n2026 to January 26, 2027.23\nII. \nSTATEMENT OF ISSUES AND SPECIFICATIONS OF ERROR\nThe following Statement of Issues and Specifications of Error is provided pursuant to Rule \n713(c)(1) and Rule 713(c)(2), 18 C.F.R. § 385.713(c)(1)-(2). \nA. \nThe September 29 Order is arbitrary and capricious, fails to engage in reasoned \ndecision-making, and is unsupported by substantial evidence because it accepts \nPJM's levelized, MW-weighted average maximum willingness to pay $555/MW-\nday without responding to FirstEnergy's showing that the framework permits sellers \nto front-load contract prices into the initial delivery years, exposing customers to \nunnecessary affordability risk. 16 U.S.C. § 824d(a); FCC v. Prometheus Radio \nProject, 592 U.S. 414 (2021); Me. Pub. Utils. Comm'n v. FERC, 520 F.3d 464 (D.C. \nCir. 2008); NorthWestern Corp. v. FERC, 884 F.3d 1176 (D.C. Cir. 2018). \nB. \nThe September 29 Order is arbitrary and capricious, fails to engage in reasoned \ndecision-making, and is unsupported by substantial evidence because it finds PJM's \nresource eligibility and selection rules just and reasonable without considering the \nrecord evidence FirstEnergy presented that firm, dispatchable resources provide the \nessential reliability services needed to address the reliability shortfall that is the \n20\nId. at PP 25-26 (citing W. Res., Inc. v. FERC, 9 F.3d 1568, 1579 (D.C. Cir. 1993) (\"Western \nResources\")).\n21\nId. at PP 3, 24, 28, 158, 160.\n22\nPJM Interconnection, L.L.C., Motion for Abeyance of PJM Interconnection, L.L.C., Docket Nos. \nER26-3380-000, et al. (filed Oct. 13, 2026)[submitted Oct. 12, a holiday, so not filed until Oct. 13-DK]. \n23\nPJM Interconnection, L.L.C., Notice Addressing Motion to Hold Proceeding in Abeyance, Docket \nNos. ER26-3380-000 et al. (Oct. 23, 2026)."},{"page":7,"startToken":1958,"endToken":2338,"text":"7\nstated purpose of the RBP. 16 U.S.C. § 824d(a); FCC v. Prometheus Radio Project, \n592 U.S. 414 (2021); NorthWestern Corp. v. FERC, 884 F.3d 1176 (D.C. Cir. \n2018). \nC. \nThe September 29 Order is arbitrary and capricious, fails to engage in reasoned \ndecision-making, and is unsupported by substantial evidence because it finds PJM's \nRBP UCAP MW shortfall charges and seller collateral requirements just and \nreasonable without addressing FirstEnergy's showing that those provisions protect \ncustomers only against construction and development risk, and not against supplier \nunderperformance during the balance of the fifteen-year commitment term, and \nwithout explaining the asymmetry between the protections afforded suppliers and \nthose afforded customers. 16 U.S.C. § 824d(a)-(b); FCC v. Prometheus Radio \nProject, 592 U.S. 414 (2021); NorthWestern Corp. v. FERC, 884 F.3d 1176 (D.C. \nCir. 2018); Ala. Elec. Coop., Inc. v. FERC, 684 F.2d 20 (D.C. Cir. 1982). \nD. \nThe September 29 Order is arbitrary and capricious and fails to engage in reasoned \ndecision-making because it finds PJM's gating criteria for Demand Resources and \nDER Capacity Aggregation Resources just and reasonable without resolving the \nambiguity FirstEnergy identified—that the criteria may be satisfied by a mere \n\"plan\" for enabling infrastructure rather than a binding commitment to provide the \nMWs sold into the RBP—and without addressing FirstEnergy's request that PJM \nclarify that eligible demand response resources must be supported by binding \ncontractual commitments. 16 U.S.C. § 824d(a); FCC v. Prometheus Radio Project, \n592 U.S. 414 (2021); NorthWestern Corp. v. FERC, 884 F.3d 1176 (D.C. Cir. \n2018). \nIII. \nARGUMENT\nA. \nThe Commission Erred in Accepting PJM's Levelized Average-Price \nFramework Without Responding to FirstEnergy's Showing That It Permits \nFront-Loaded Contract Prices.\nPJM proposes that the levelized procurement cost of all selected RBP Sell Offers not \nexceed $555/MW-day on a MW-weighted average basis over all delivery years of the RBP.24  PJM \ncharacterizes this as a \"budget approach\" that \"allows for potentially fluctuating offers across the \n15 delivery years of the RBP term,\" and contends that prices above $555/MW-day \"in some \n24\nSeptember 29 Order at P 55; FirstEnergy Protest at 10 n.28 (citing July 31 RBP Proposal at 61-64; \nProposed Tariff, Attachment DD, § 18.5(f))."},{"page":8,"startToken":2338,"endToken":2638,"text":"8\ndelivery years may nevertheless be appropriate.\"25  Levelized cost is calculated using a discount \nrate equal to a 9.5% after-tax weighted average cost of capital.26\nFirstEnergy explained that the predictable consequence of this flexibility is that sellers will \nfront-load their costs into the initial years of their contracts.  A seller could, for example, offer \n$1,000/MW-day for the first several years of the contract and balance that out with sub-market \nprices in the later years, forcing customers to bear extremely large increases in capacity costs in \nthe initial delivery years—during a period of acute concern, including among members of this \nCommission, about affordability.27  FirstEnergy further demonstrated that a levelized structure that \nauthorizes the front loading of payments is not needed: the Statement of Principles calls for fifteen-\nyear price certainty; significant new generation is being built by vertically integrated utilities with \nstraight-line, fixed-value cost recovery; and experience under PURPA shows that non-incumbent \ninvestors are generally willing to build new generation on a straight-line, fixed-value basis.28\nThe September 29 Order does not respond to this argument.  The Commission instead finds \nthat a maximum willingness to pay \"set at the MW-weighted average of the levelized procurement \ncost over the RBP commitment term reasonably balances the need to expeditiously procure \ncapacity . . . with ensuring that the average procurement price does not exceed load's maximum \nwillingness to pay,\" and that $555/MW-day is a reasonable proxy for load's maximum willingness \nto pay.29  Those findings address the average level of the cap, but not the temporal distribution of \npayments that the averaging methodology permits.  That temporal distribution—and the resulting \n25\nSeptember 29 Order at PP 55-56.\n26\nId. at P 60.\n27\nFirstEnergy Protest at 10-11.\n28\nId. at 11.\n29\nSeptember 29 Order at P 74."},{"page":9,"startToken":2638,"endToken":2879,"text":"9\nnear-term affordability risk—was the basis of FirstEnergy's objection.  The September 29 Order \nalso accepts PJM's pay-as-bid structure while acknowledging that sellers in a pay-as-bid auction \nare \"less likely to offer near their marginal costs.\"30  The combination of pay-as-bid pricing and an \naverage-only constraint is precisely what invites strategic front-loading, yet the September 29 \nOrder does not consider that interaction. \nThe risk is compounded by other features of the proposal the September 29 Order accepted. \nUnder PJM's proposal, a resource that does not reach commercial operation and provide any RBP \nUCAP MW for three consecutive delivery years has its commitment rescinded for the remainder \nof the term.31  A resource that collects front-loaded payments and then ceases performance before \nthe later, lower-priced years leaves customers having paid a premium without receiving the \noffsetting discount.  Intervenors identified this very risk, noting that ratepayers could pay more \nthan $555/MW-day if any resource fails to materialize or ceases operation prior to the end of the \nRBP term.32  The September 29 Order does not address it.  Because the Commission accepted the \nlevelized framework without responding to FirstEnergy's showing, its determination is arbitrary \nand capricious.  The Commission should grant rehearing and reject the levelized framework or, in \nthe alternative, require that RBP offers be priced on a straight-line, fixed-value basis or subject to \nan annual price cap. \n30\nId. at P 75.\n31\nId. at P 79.\n32\nId. at P 64."},{"page":10,"startToken":2879,"endToken":3176,"text":"10\nB. \nThe Commission Erred in Finding PJM's Resource Eligibility and Selection \nRules Just and Reasonable Without Considering FirstEnergy's Evidence \nRegarding the Reliability Value of Dispatchable Resources.\nPJM justifies the RBP as an extraordinary measure necessary to address the approximately \n6,831 MW capacity shortfall identified in the 2028/2029 BRA and to preserve resource adequacy \nin the PJM Region.33  FirstEnergy demonstrated that, because the stated purpose of the \nprocurement is to address a reliability need, the Commission should ensure that it prioritizes \nresources that provide firm and dependable capacity.34  FirstEnergy supported that showing with \nrecord evidence from the North American Electric Reliability Corporation (\"NERC\"), which has \nidentified that conventional generators provide much of the essential reliability services that \nsupport reliable operation of the grid; that wind and solar resources lack the spinning mass and \ntraditional excitation systems that provide voltage control and stability; and that dispatchable \ngenerators provide system inertia, dynamic reactive support, and frequency response for stable \ngrid operation.35  FirstEnergy further showed that PJM's selection process is designed to select the \n\"least-cost set of resources\" without sufficient consideration of the relative reliability value of \ndifferent resource types.36\nThe September 29 Order finds PJM's eligibility requirements and selection process just and \nreasonable.37  It disposes of the argument that the selection process should value dispatchable \ngeneration's reliability attributes in a single sentence, stating that the Commission does \"not find \nsuch additional valuation metrics to be necessary for PJM's proposal to be just and reasonable\" \n33\nFirstEnergy Protest at 15 (citing July 31 RBP Proposal at 31, 68).\n34\nId.\n35\nId. at 15-16 (citing NERC, 2024 Long-Term Reliability Assessment, at 22, 29-30).\n36\nId. at 16 (citing July 31 RBP Proposal at 78).\n37\nSeptember 29 Order at PP 48-51, 74, 77."},{"page":11,"startToken":3176,"endToken":3463,"text":"11\nbecause PJM's Effective Load Carrying Capability (\"ELCC\") accreditation already captures such \nattributes.38  The September 29 Order acknowledges FirstEnergy's position in a footnote and does \nnot discuss the NERC evidence on which that position rests.39  Nor does the September 29 Order \nexplain how ELCC accreditation—a measure of a resource's contribution to resource adequacy—\naccounts for the inertia, dynamic reactive support, frequency response, and voltage control that \nNERC identified as needed for reliability.  The September 29 Order similarly dismisses the \nconcern that four-hour storage and stand-alone solar resources are poorly matched to around-the-\nclock data center demand on grounds that the same energy must-offer requirements apply to RBP \nResources as to other resources of their type,40 which does not answer whether a fifteen-year, \ncustomer-funded procurement justified on reliability grounds should prioritize resources that \nprovide the greatest reliability value.  The September 29 Order’s conclusory statement ignores the \nrecord evidence and thus is not reasoned decision-making.   \nThe Commission should grant rehearing and require PJM to demonstrate that the RBP \nframework appropriately prioritizes firm and dependable capacity resources.41  In this era of acute \naffordability concerns, no better exemplified than by the inflated capacity costs that ratepayers in \nPJM are already forced to shoulder even before implementation of an RBP, it is inappropriate to \nrequire customers to pay even more for resources that are unable to provide the dispatchability and \nother operational characteristics that are essential to meeting the needs of the moment.  Data center \nand other large load customers overwhelmingly need and desire on-demand service.  The resources \n38\nId. at P 77.\n39\nId. at P 66 n.96 (citing FirstEnergy Protest at 15-17).\n40\nId. at PP 36, 49.\n41\nSee FirstEnergy Protest at 16-17."},{"page":12,"startToken":3463,"endToken":3735,"text":"12\nprocured, and paid for by ratepayers, must meet these needs.  To do otherwise would be to impose \nmanifestly unjust and unreasonable costs on ratepayers. \nC. \nThe Commission Erred in Finding PJM's Supplier Performance and Credit \nProvisions Just and Reasonable Without Addressing the Risk of Post-\nCommercial Operation Underperformance.\nFirstEnergy demonstrated that the Commission should ensure that customers are \nadequately protected against supplier non-performance over the full fifteen-year commitment \nterm.42  PJM's proposed protections are directed primarily toward construction risk and the risk \nthat a resource fails to come online in the first instance: PJM proposes an RBP UCAP MW shortfall \ncharge when a committed resource fails to achieve commercial operation, and rescission of the \ncommitment if the resource fails to provide any committed RBP UCAP MW after three \nconsecutive delivery years.43  As FirstEnergy showed, those provisions do not protect customers \nagainst the possibility that a resource satisfies its initial commercial operation obligations and then \nunderperforms during the balance of its commitment term—even though LSEs, and ultimately \nretail customers, remain responsible for funding the commitment throughout that term.44\nFirstEnergy further showed that the asymmetry is particularly striking because PJM proposes \nsubstantial, and unnecessary, collateral requirements to protect suppliers against the risk of \ncustomer non-payment, and asked the Commission to require enhanced performance assurance \nrequirements, ongoing credit support, or other mechanisms ensuring that resources receiving long-\nterm RBP commitments remain accountable to customers throughout the commitment period.45\n42\nFirstEnergy Protest at 20.\n43\nId. (citing July 31 RBP Proposal at 60-61, 80-81, 116-118).\n44\nId. at 20-21 (citing July 31 RBP Proposal at 61-64, 76-78).\n45\nId. at 21."},{"page":13,"startToken":3735,"endToken":4030,"text":"13\nThe September 29 Order does not address FirstEnergy’s argument.  The Commission \ninstead finds PJM's shortfall charges just and reasonable because they \"will deter speculative \nresources from seeking to participate in the RBP auction without creating an undue barrier to \nentry,\" and because those penalties, together with the pay-as-bid approach and up to fifteen years \nof revenue certainty, \"will incentivize developers of RBP Resources to deliver their RBP UCAP \nMW.\"46  That reasoning confirms FirstEnergy's point rather than answering it: the shortfall charge, \nby PJM's design, applies only when a committed RBP Resource \"has not reached commercial \noperation,\" and \"[o]nce an RBP Resource has achieved commercial operation, . . . RBP UCAP \nMW shortfall charges will end.\"47  Likewise, seller collateral reflects only three years of shortfall \ncharges and is returned once the resource no longer gives rise to credit exposure.48  The September \n29 Order finds that seller collateral requirement just and reasonable because it reduces risks \n\"associated with non-payment of RBP Shortfall Charges,\"49 but offers no explanation of what \nprotects customers after commercial operation, when shortfall charges no longer apply. \nThe September 29 Order's observation that LSEs pay RBP Charges \"for only the RBP \nUCAP MW delivered\"50 is not responsive to FirstEnergy's showing.  The Commission \nacknowledges that, under that structure, \"the risk for customers is that they end up paying for less \nRBP capacity than they anticipated,\" and that PJM's 120% offer quantity cap means PJM may \nprocure \"20% more capacity on paper than what eventually materializes.\"51  In other words, the \n46\nSeptember 29 Order at P 84.\n47\nId. at PP 79, 84.\n48\nId. at P 183.\n49\nId. at P 203.\n50\nId. at P 85; see also id. at PP 17, 35.\n51\nId. at PP 52, 85."},{"page":14,"startToken":4030,"endToken":4294,"text":"14\nSeptember 29 Order accepts that customers bear the reliability and replacement-cost consequences \nof supplier underperformance, and relies on the incentives of the shortfall charge—which ends at \ncommercial operation—to mitigate that risk.52  The Independent Market Monitor similarly showed \nthat PJM's proposal shifts accreditation and performance risk from generators to load and that \nPJM's shortfall charges are far narrower than the RPM's deficiency charges, which apply to a \nfailure to satisfy a commitment \"for any reason.\"53  The September 29 Order dismisses those \ncomparisons on the ground that the RBP is a stopgap measure,54 but a fifteen-year, customer-\nfunded commitment is not a stopgap from the perspective of the customers who must pay for it. \nThe September 29 Order also does not address the asymmetry in PJM’s proposal that \nFirstEnergy identified.  Customers are asked to post collateral of $1.5 million per committed RBP \nMW to protect suppliers for up to fifteen years,55 while suppliers post collateral covering only \nthree years of development-period shortfall charges.56 Parties showed that the LSE requirement is \nmany times larger than the seller requirement even though sellers have the most control over \ndevelopment and non-performance risk.57  Treating suppliers' long-term performance obligations \nso differently from customers' long-term payment obligations, without explanation, is not reasoned \ndecision-making.  The Commission should grant rehearing and direct PJM to strengthen supplier \n52\nId. at P 85.\n53\nId. at PP 80-81.\n54\nId. at P 86.\n55\nId. at P 183; FirstEnergy Protest at 7.\n56\nSeptember 29 Order at P 183.\n57\nId. at P 188 & n.308."},{"page":15,"startToken":4294,"endToken":4571,"text":"15\nperformance assurance and credit requirements so that they extend through the full RBP \ncommitment term.58\nD. \nThe Commission Erred in Accepting PJM's Demand Response Gating \nCriteria Without Resolving Whether Eligible Demand Response Must Be \nSupported by Binding Contractual Commitments.\nFirstEnergy demonstrated that PJM's proposed gating criteria for demand response \nresources appear to require only a contract or agreement evidencing a \"plan or evidence of \ndeployed enabling infrastructure,\" not a contract or agreement demonstrating a clear and binding \ncommitment to provide the MWs sold into the RBP.59  If demand response resources may satisfy \nthe gating criteria based merely on a \"plan,\" rather than a binding commitment for the underlying \ndemand response capability, the proposal risks treating speculative resources as equivalent to \ncommitted resources—a result that would defeat the purpose of the RBP and require data centers \nto pay for capacity that has not genuinely been procured.60  FirstEnergy therefore asked the \nCommission to require PJM to clarify that eligible demand response resources must be supported \nby binding contractual commitments.61\nThe September 29 Order summarizes FirstEnergy's argument,62 but does not resolve it.  \nThe Commission finds PJM's gating criteria just and reasonable because they purportedly \"will \nhelp to deter speculative resources from bidding into the RBP auction and ensure that the selected \nRBP Resources are those most likely to go into service.\"63  The September 29 Order's analysis of \n58\nSee FirstEnergy Protest at 21.\n59\nFirstEnergy Protest at 21 (citing July 31 RBP Proposal at 74-75).\n60\nId. at 21-22.\n61\nId. at 22.\n62\nSeptember 29 Order at P 67 & n.99 (citing FirstEnergy Protest at 21).\n63\nId. at P 76."},{"page":16,"startToken":4571,"endToken":4880,"text":"16\nthe demand response criteria, however, addresses only the requirement that Demand Resources \nand DER Capacity Aggregation Resources provide evidence of executed customer agreements or \nbinding commitments with identified locations and customer names.64  It does not address the \nseparate requirement that the seller show it can effectuate the offered load reduction through an \n\"[e]quipment procurement plan or evidence of deployed enabling infrastructure such as metering, \ntelemetry, load control, [Supervisory Control and Data Acquisition]/dispatch systems, or DER \nmajor equipment as applicable\"65—the very language FirstEnergy challenged.  The record reflects \nthat the ambiguity is real: while FirstEnergy asked PJM to clarify that binding commitments are \nrequired, another intervenor asked PJM to \"confirm . . . that a procurement plan, rather than \ninfrastructure already installed and operational at the time of the offer, is sufficient.\"66  The \nSeptember 29 Order does not resolve either request. \nThe September 29 Order's rationale underscores why rehearing or clarification is required.  \nThe Commission accepted the gating criteria precisely because the criteria are intended to deter \nspeculative resources and ensure that selected resources are those most likely to go into service.67\nA criterion that can be satisfied by a mere plan for the infrastructure necessary to deliver the offered \nload reduction does not serve that purpose, and the September 29 Order does not explain how it \ndoes.  Because the September 29 Order accepts the criteria without resolving an ambiguity \nsquarely raised in the record, it fails to engage in reasoned decision-making.  The Commission \nshould grant rehearing or, in the alternative, clarify that Demand Resources and DER Capacity \nAggregation Resources must be supported by binding contractual commitments to provide the \n64\nId. at PP 76, 59.\n65\nId. at P 59 (quoting Proposed Tariff, Attachment DD, § 18.5(f)(i)(11)).\n66\nId. at P 67 (quoting AEU Comments at 21).\n67\nId. at P 76."},{"page":17,"startToken":4880,"endToken":5128,"text":"17\nMWs sold into the RBP, including the enabling infrastructure necessary to effectuate the offered \nload reduction. \nIV. \nCONCLUSION\nFor the reasons set forth herein, FirstEnergy respectfully requests that the Commission \ngrant rehearing of the September 29 Order on the issues specified above.  Specifically, the \nCommission should reject PJM's RBP filing, proceed under the Section 206 proceeding it has \ninstituted in Docket No. EL26-108-000, and establish settlement procedures.  In the alternative, \nand at a minimum, the Commission should: (1) reject PJM's levelized average-price framework; \n(2) direct PJM to strengthen supplier performance assurance and credit requirements for the full \ncommitment term and to clarify that eligible demand response resources must be supported by \nbinding contractual commitments; (3) reject PJM’s shortfall charge proposal because it fails to \nensure that customers are adequately protected against supplier non-performance over the full \nfifteen-year commitment term; (4) vacate its preliminary findings that PJM's eligibility \nrequirements and selection process are just and reasonable; and (5) expand the scope of the paper \nhearing to encompass the arguments identified herein that the September 29 Order did not address. \nRespectfully submitted, \n/s/ Morgan E. Parke\n/s/ Michael Kunselman\nMorgan E. Parke \nMichael Kunselman \nVice President, Associate General Counsel \nNicholas J. Cicale \nFirstEnergy Service Company \nDavis Wright Tremaine LLP \n341 White Pond Drive \n1301 K Street, NW \nAkron, OH 44320 \nSuite 500 East \nTel: (330) 620-9585 \nWashington, DC 20005 \nmparke@firstenergycorp.com \nTel: (202) 973-4295 \nmichaelkunselman@dwt.com \nnicholascicale@dwt.com \nOctober 29, 2026                  Counsel for FirstEnergy Service Company"},{"page":18,"startToken":5128,"endToken":5206,"text":"CERTIFICATE OF SERVICE\nI hereby certify that I have caused the foregoing document to be served upon all the parties \nlisted on the official service list for the above-referenced proceedings, pursuant to the requirements \nof Rule 2010 of the Commission's Rules of Practice and Procedure. \nDated at Washington, D.C. this 29th day of October, 2026. \n/s/ Nicholas J. Cicale \nNicholas J. Cicale \nDavis Wright Tremaine LLP \n1301 K Street NW, Suite 500 East \nWashington, D.C. 20005"}],"sections":[{"p":1,"at":0,"title":"Opening text","method":"opening text","endPage":3,"endAt":541,"startToken":0,"endToken":735},{"p":3,"at":541,"title":"I. BACKGROUND","method":"printed heading","endPage":3,"endAt":545,"startToken":735,"endToken":736},{"p":3,"at":545,"title":"BACKGROUND","method":"printed heading","endPage":6,"endAt":700,"startToken":736,"endToken":1671},{"p":6,"at":700,"title":"II. STATEMENT OF ISSUES AND SPECIFICATIONS OF ERROR","method":"printed heading","endPage":6,"endAt":907,"startToken":1671,"endToken":1710},{"p":6,"at":907,"title":"A. The September 29 Order is arbitrary and capricious, fails to engage in reasoned","method":"printed heading","endPage":6,"endAt":1548,"startToken":1710,"endToken":1812},{"p":6,"at":1548,"title":"B. The September 29 Order is arbitrary and capricious, fails to engage in reasoned","method":"printed heading","endPage":7,"endAt":167,"startToken":1812,"endToken":1992},{"p":7,"at":167,"title":"C. The September 29 Order is arbitrary and capricious, fails to engage in reasoned","method":"printed heading","endPage":7,"endAt":967,"startToken":1992,"endToken":2114},{"p":7,"at":967,"title":"D. The September 29 Order is arbitrary and capricious and fails to engage in reasoned","method":"printed heading","endPage":7,"endAt":1695,"startToken":2114,"endToken":2227},{"p":7,"at":1695,"title":"III. ARGUMENT","method":"printed heading","endPage":7,"endAt":1710,"startToken":2227,"endToken":2229},{"p":7,"at":1710,"title":"A. The Commission Erred in Accepting PJM's Levelized Average-Price","method":"printed heading","endPage":10,"endAt":3,"startToken":2229,"endToken":2880},{"p":10,"at":3,"title":"B. The Commission Erred in Finding PJM's Resource Eligibility and Selection","method":"printed heading","endPage":12,"endAt":158,"startToken":2880,"endToken":3488},{"p":12,"at":158,"title":"C. The Commission Erred in Finding PJM's Supplier Performance and Credit","method":"printed heading","endPage":15,"endAt":110,"startToken":3488,"endToken":4311},{"p":15,"at":110,"title":"D. The Commission Erred in Accepting PJM's Demand Response Gating","method":"printed heading","endPage":17,"endAt":118,"startToken":4311,"endToken":4897},{"p":17,"at":118,"title":"IV. CONCLUSION","method":"printed heading","endPage":17,"endAt":123,"startToken":4897,"endToken":4898},{"p":17,"at":123,"title":"CONCLUSION","method":"printed heading","endPage":18,"endAt":0,"startToken":4898,"endToken":5128},{"p":18,"at":0,"title":"CERTIFICATE OF SERVICE","method":"printed heading","endPage":18,"endAt":474,"startToken":5128,"endToken":5206}]}