PJM refiles its backstop procurement for March 2027 with lower collateral

PJM Interconnection asked the Federal Energy Regulatory Commission on October 29, 2026 to approve a reworked Reliability Backstop Procurement, its one-time purchase of new capacity, on commitments of up to 15 years, for the 2028/2029 shortfall, and plans to open it on March 1, 2027 if FERC accepts the changes. The amended filing, in new docket ER27-330-000, rewrites the three pieces FERC's September 29 order sent to a paper hearing: how costs are allocated, how much collateral load-serving entities post, and who keeps paying if one leaves PJM. Load-serving entities (LSEs) are the regulated entities that buy or manage power supply for end-use customers, and the buyers PJM procures this capacity for. PJM asks FERC for an order by January 29, 2027 and for a 32-day comment period ending November 30, 2026.

The start has slipped five months. With the July 31 version, PJM had said it would open bids on September 30, 2026, if FERC accepted the filing without significant revisions, and announce results a few days before the 2029/2030 Base Residual Auction opened on December 9, 2026, as The Duck Curve reported when FERC suspended the rules. PJM's Inside Lines summary now has the bid window closing March 28, the final procurement target and supply amounts set on April 28, and results posted on May 10. The offer window grows from three weeks to four, which PJM says lets developers in its cycle 01 interconnection study see phase 1 results, scheduled to post by March 26, 2027.

So a procurement built for the 2028/2029 shortfall will now run after the 2029/2030 auction. PJM says it considered rebasing the target on that auction and decided doing so "could drive additional market uncertainty." If the December auction clears short, PJM also asks FERC to waive the tariff's requirement to investigate and recommend corrective action and, should that make three short auctions in a row, the requirement to declare a capacity shortage and file for a Reliability Backstop Auction. Another investigation "will likely yield the same conclusions as the two recent reports," PJM argues, meaning its shortfall reports on the 2027/2028 and 2028/2029 auctions.

Who pays, and how much

Each zone's share of the bill now rests on the large-load growth its electric distributor reports, from the actual 2026 summer peak to the expected 2028/2029 summer peak, and stays fixed for the 15-year term. Distributors outside a Fixed Resource Requirement area must report that growth in Large Load, end-use load of 50 MW or more at one site under the definition FERC accepted on October 9, no later than seven days before the procurement opens, name the loads backed by an electric service obligation, construction commitment or equivalent agreement, and explain any deviation from their load-forecast data. The July 31 version used each zone's share of growth in forecasted Load Adjustments between the 2026/2027 and 2028/2029 delivery years, and FERC worried that some large loads sit in PJM's underlying forecast instead. The rules stop at the wholesale bill: PJM "does not propose, and lacks authority, to dictate how any LSE subsequently allocates or recovers those costs from retail customers."

The target is still the 2028/2029 shortfall, approximately 6,800 MW (6,831 MW out of the auction), recalculated with the 2028/2029 load forecast due on or before February 1, 2027 and accreditation factors due in February 2027, then capped at the UCAP equivalent of the large-load growth distributors report. PJM does not expect the cap to bind: its 2026 load forecast shows approximately 9,000 MW of large load growth against the approximately 6,800 MW shortfall, according to Danielle Croop's affidavit for PJM. The Market Monitor's answer, as FERC's order summarized it, put the shortfall at 3,055 MW once cancelled and delayed data centers are counted.

Collateral moves the most. The July 31 rate was $1.5 million per committed MW, about 50% of the payment obligation, and FERC faulted it for lacking quantitative support such as a probability of default. PJM now sets it at 40% of the net present value of the total payment obligation, the level its analysis finds minimizes the combined cost of posting collateral and of socialized defaults, assuming a 4.05% probability of default for load-serving entities rated BBB on weighted average. At the $555/MW-day maximum price, Gwen Kelly's affidavit for PJM puts it at an illustrative $686,000 per MW, or "approximately 3.4 years of undiscounted RBP payments per MW," and PJM calls it the highest possible rate. PJM concedes the cut trades away some of the coverage that protects other members if a load-serving entity defaults. Load-serving entities get at least 75 days to post, up from 15, because distributors' optional allocation reports move to 120 days before the 2028/2029 delivery year, from 60, and surety bonds join cash and letters of credit as accepted collateral.

The exit rule shifts from transmission owners to load-serving entities. FERC read its 2008 Duquesne precedent as putting capacity costs on load-serving entities, so a load-serving entity that withdraws from PJM would now be "responsible for the remainder of the RBP Charges allocated to it," subject to a rate filing at FERC, and free to seek redress from the entity whose departure forced its own. "To date, no LSEs have indicated an intention to withdraw from PJM," the filing adds.

The smaller changes, and the old docket

Fewer customers can step outside the bill. The filing removes the opt-out for municipal utilities and cooperatives whose rates no state regulates, which FERC had said may be unduly discriminatory. Load used for the remaining Peak Shaving Adjustment opt-out must be committed to the program for at least five years, matching the five-year minimum for bilateral offset contracts.

For sellers, the paperwork loosens and the offsets tighten. Sellers get five calendar days from a deficiency notice to cure an offer, even past the window's close, and projects already under or through an interconnection study skip the separate three-year site control showing. Offsets must be physically located in PJM, and demand response or DER offsets cannot rest on locations that supported a Demand Resource in the 2026/2027 delivery year unless they add capacity from new generation or storage.

The paper hearing on the July design is still on the calendar. PJM asked on October 13 for abeyance; FERC's October 23 notice instead extended initial briefs from November 13, 2026 to January 11, 2027 and reply briefs from December 3, 2026 to January 26, 2027. The last briefs on the old design are due three days before the date PJM wants an order on the new one.

Outlook

If FERC holds to PJM's dates, comments close November 30, 2026, leaving about 60 days before a January 29 order, by PJM's count. With PJM's large-load figure above the shortfall, and the recalculation waiting on February 2027 forecasts, the cap reads as a safeguard more than a limit, so the procurement's size turns on the recomputed shortfall, which nothing in the record yet places nearer PJM's 6,831 MW or the Market Monitor's 3,055 MW.