PJM Board Directs FERC Filing On Reliability Backstop Procurement And Interim Resource Adequacy Service

On July 27, the PJM Board of Managers issued a “decisional letter” that directed PJM to file proposals for a Reliability Backstop Procurement and Connect and Manage—renamed “Interim Resource Adequacy Service”—with FERC in the next few days. This letter follows an intensive stakeholder process that explored ways to address the resource adequacy threats in the region. The key elements of PJM’s proposal are:

• A “Large Load Registry,” which will be maintained by PJM and is intended to improve load forecasts and support the Reliability Backstop Procurement and Interim Resource Adequacy Service. “Large Load” is defined as an end-use customer with a peak load of 50 MW or more at a single point of interconnection or multiple points of interconnection within a one-mile radius.
• A Reliability Backstop Procurement that will begin in September 2026 and is aimed at addressing the capacity shortfall identified in the Base Residual Auction. The procurement target will be adjusted to reflect bilateral contracts and self-supply arrangements for new load. These arrangements are being encouraged through a facilitated matchmaking process that began in June and has now closed to responses. There will also be limited opt-out options developed in response to stakeholder concerns. Results are anticipated to be released by December.
• A new Interim Resource Adequacy Service will be required for new Large Loads that do not have sufficient capacity (i.e., do not “Bring Your Own Capacity”) to serve their needs as of June 1, 2027. These customers would have load reduction triggered before other emergency load management is implemented.
• A compensation rate for Large Load customers that are directed to reduce their consumption that will be administered by Electric Distributors in coordination with states.

More detail on the Reliability Backstop Procurement is available here.

More detail on the Interim Resource Adequacy Service, the Large Load Registry, and the compensation rate is available here.

It remains to be seen how stakeholders will respond to PJM’s imminent FERC filing. Stakeholders raised many concerns and alternatives during the stakeholder process, but there is an urgency to these reforms. As expected, PJM’s 2028/2029 Base Residual Auction, the results from which were announced just a couple of weeks ago, again came in short.