Limited Protest of Sierra Club et al. to one aspect of PJM Interconnection, LLC’s proposed Reliability Backstop Procurement
Read topic-matched comments in ER26-3380
Topics in the text: Cost allocation · Reliability and curtailment · Retail and wholesale authority
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Opening text
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1 UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION PJM Interconnection, LLC ) ) ) Docket No.Read this passage
Introduction
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For example, PJM is admirably candid about the fact that the capacity shortfalls are “primarily driven by the unprecedented addition of large loads, most notably data centers.”5 PJM also takes seriously and attempts to realize the Ratepayer Protection Pledge, in which the nation’s largest data…Read this passage Filed comments: Cost allocation
Background
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BackgroundRead this passage
I. PJM’s capacity market is facing reliability and affordability concerns as PJM struggles to meet data center load growth.
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Its market was built for predictable, gradual load growth where new generation resources could be built within the market’s three- 5 year forward timeline.13 However, as load growth, generation retirement, and supply chain development time have all increased in the past few years, PJM has…Read this passage Filed comments: Cost allocation
A. PJM’s capacity market faces increased reliability risks as data center load grows too quickly for PJM’s supply.
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While developers can typically build hyperscale data centers within 18 to 17 Id. at 3; Jonathan Koomey et. al, Bipartisan Pol’y Ctr. & Koomey Analytics, Electricity Demand Growth and Data Centers: A Guide for the Perplexed, 10 (Feb. 2025),…Read this passage
B. PJM’s capacity market faces high capacity prices, causing increases in ratepayers’ bills.
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PJM’s capacity market faces high capacity prices, causing increases in ratepayers’ bills.Read this passage Filed comments: Cost allocation
II. PJM’s Reliability Backstop Proposal should be accepted with modifications to better achieve the RBP’s objectives.
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Specifically, the Commission should accept PJM’s proposal, but only on the conditions that PJM either require RBP supply to be located near to large loads, which will help ensure that new supply can come online timely, and that reliability risks or costs associated with delivering new RBP capacity…Read this passage Filed comments: Cost allocation
Discussion
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DiscussionRead this passage
I. The Commission Should Only Modify PJM’s RBP Filing to Better Accomplish PJM’s Objectives.
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The RBP Filing invokes the Ratepayer Protection Pledge’s commitment that large loads will pay the “full 41 RBP Filing, supra note 2, at 52. 42 Id. at 22 n.69 (quoting PJM Board July 2026 Decisional Letter at 2). 43 Id. at 51. 44 Id. at 42. 45 Id. at 51 (requiring new capacity to be online no later…Read this passage Filed comments: Cost allocation
A. Objective One: Procure the Correct Amount of Capacity
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Objective One: Procure the Correct Amount of Capacity The RBP’s quantity of procured megawatts is set by administrative decision, not by market clearing.Read this passage
B. Objective Two: Procure New Capacity
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The need for genuinely new supply is recognized by the PJM Board, the Governors’ Principles, and the Ratepayer Protection Pledge.Read this passage Filed comments: Cost allocation
C. Objective Three: Procure New Capacity on Time
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This means that PJM is willing to pay a higher price for capacity that arrives sooner.52 Timeliness of projects is also important because PJM proposes to reset the trigger for the Tariff’s pre-existing Reliability Backstop Auction so that no such auction can occur unless BRAs clear short for three…Read this passage
D. Objective Four: Ensure That the Large Loads That Require New Capacity Bear Its Costs.
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Because these new costs are so clearly and uniquely caused by the massive expansion of data centers and similar new large loads, cost causation principles require that the RBP allocate costs to those new large loads.Read this passage Filed comments: Cost allocation
II. The Commission should modify the RBP by requiring RBP supply to be located new large loads in order to minimize delays and the risk of cost-shifting.
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To ensure that PJM accomplishes its objectives to procure the (1) correct amount of (2) new capacity (3) on time to meet the 2028/2029 shortfall and (4) allocate the costs of that capacity to new data center load, PJM must include a locational deliverability requirement for RBP Sell Offers.Read this passage Filed comments: Cost allocation
A. PJM’s proposal to exclude a locational requirement for RBP generation bids could lead to reliability risks.
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RBP Filing, supra note 2, at 38–40. 62 Yamit Lavi et. al, Unlocking the Grid, NRDC (Apr. 7, 2026), https://www.nrdc.org/resources/unlocking-grid. 63 Devin Leith-Yessian, PJM Receives 811 Interconnection Requests in Queue Cycle 1, RTO Insider (Apr. 29, 2026),…Read this passage Filed comments: Cost allocation
B. PJM’s proposal will unjustly and unreasonably shift costs to other interconnection customers or ratepayers.
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PJM’s proposal will unjustly and unreasonably shift costs to other interconnection customers or ratepayers.Read this passage Filed comments: Cost allocation
1. The RBP will likely shift costs of network upgrades to other interconnection customers and to all PJM load.
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In this scenario, higher network upgrade costs from a network upgrade that ensures load deliverability from an RBP resource to a zone with an RBP allocation means higher shared costs for every resource in that cluster. 81 See White House Ratepayer Protection Pledge; see also Order Instituting…Read this passage Filed comments: Cost allocation
2. The RBP will likely shift the costs to study RBP resources to other interconnection customers.
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Under Order No. 2023, costs of cluster studies are shared between interconnection customers on a per capita and pro rata MW basis.85 Order No. 2023’s study cost allocation requirements acknowledge that cluster study costs are affected by the number of interconnection requests and the size of the…Read this passage
3. PJM’s proposal will unjustly and unreasonably shift costs to all PJM customers through RTEP.
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As a result, the costs of any reliability-driven upgrades that are caused by any transmission constraints associated with RBP resources and identified through RTEP will be unjustly and unreasonably socialized to all load in PJM, which fails to achieve PJM’s objective to allocate RBP costs to LSEs…Read this passage Filed comments: Cost allocation
4. The RBP risks cost shifts that are inconsistent with the Ratepayer Protection Pledge and the Commission’s Large Load Orders.
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The RBP risks cost shifts that are inconsistent with the Ratepayer Protection Pledge and the Commission’s Large Load Orders.Read this passage Filed comments: Cost allocation
a. Cost-shifts in the RBP violate the Ratepayer Protection Pledge and the Commission’s June 18th Large Load Orders.
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To allow data centers to carry out this promise, PJM’s RBP must include a locational element to mitigate the study costs assigned to other generators, or PJM must assign the increased study costs caused by RBP resources to those resources. 98 PJM, Joint EDCs and Data Center Coalition Reliability…Read this passage Filed comments: Cost allocation
b. Cost-Shifts in the RBP violate the Commission’s June 18 Large Load Order.
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As described in the Commission’s June 18 Large Load Order, the Commission has a duty to address the risk of cost shifting among transmission customers that may result in unjust and unreasonable rates.99 PJM’s current RBP proposal will likely result in unjust and unreasonable rates by shifting RBP…Read this passage Filed comments: Cost allocation
III. The Commission should encourage PJM states to do their part in allocating costs to data centers.
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The Commission has acknowledged states’ role in cost allocation as well, stating in its June 18 Large Load Order that “states determine how Commission-approved rates are collected among the relevant retail consumers along with the rates for state-jurisdictional matters.”103 The PJM Governors…Read this passage Filed comments: Cost allocation
Conclusion
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Conclusion PJM’s RBP filing generally presents a just and reasonable mechanism to procure capacity for large loads that are currently causing a shortfall in PJM’s capacity market and to facilitate the allocation of costs to large loads while respecting state jurisdiction over retail rates.Read this passage
CERTIFICATE OF SERVICE
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CERTIFICATE OF SERVICE I hereby certify that the foregoing has been served in accordance with 18 C.F.R. § 385.2010 upon each party designated in the official service list compiled by the Secretary in this proceeding, by email. /s/ Aaliyah Adkins Aaliyah Adkins Earthjustice 1400 L St NW Lobby 2,…Read this passage