{"document":{"slug":"filing-20260821-5281","title":"The Ohio Consumers' Counsel submits Protest and Request for Rejection of Filing or in the Alternative for Evidentiary Hearings and/or Settlement Proceedings re PJM Interconnection, L.L.C.’s Reliability Backstop Procurement filing","issued":"2026-08-21","accession":"20260821-5281","docket":"ER26-3380-000","group":"PJM filings","filer":"Office of the Ohio Consumers' Counsel","kind":"request","file":"sources/originals/20260821-5281_01.pdf","url":"https://elibrary.ferc.gov/eLibrary/filelist?accession_Number=20260821-5281","sha256":"8bc2954ddf4f790bdb8c9238083c8395cf07a4639e3c97c66938db5f8110cee1","pages":22,"tokens":6428,"emptyPages":[]},"pages":[{"page":1,"startToken":0,"endToken":120,"text":"UNITED STATES OF AMERICA \nBEFORE THE \nFEDERAL ENERGY REGULATORY COMMISSION \nPJM Interconnection, L.L.C.  \n) \nDocket No. ER26-3380-000 \nPROTEST AND REQUEST FOR REJECTION OF FILING  \nOR IN THE ALTERNATIVE FOR EVIDENTIARY HEARINGS \nAND/OR SETTLEMENT PROCEEDINGS BY \nOFFICE OF THE OHIO CONSUMERS’ COUNSEL \nMaureen Willis  \nOhio Consumers’ Counsel \nAngela O’Brien \nDeputy Consumers’ Counsel  \nOffice of the Ohio Consumers’ Counsel \n65 East State Street, Suite 700 \nColumbus, Ohio 43215 \nTelephone: (614) 466-9531 \nangela.obrien@occ.ohio.gov\nDenise C. Goulet \nMcCarter & English, LLP \n1301 K Street, N.W. \nSuite 1000 West \nWashington, D.C. 20005 \n(202) 753-3400 \ndgoulet@mccarter.com\nSpecial Counsel to the Ohio Office of the Attorney \nGeneral for the Office of the Ohio Consumers’ \nCounsel \nAugust 21, 2026"},{"page":2,"startToken":120,"endToken":359,"text":"UNITED STATES OF AMERICA \nBEFORE THE \nFEDERAL ENERGY REGULATORY COMMISSION \nPJM Interconnection, L.L.C. \n) \nDocket No. ER26-3380-000 \nPROTEST AND REQUEST FOR REJECTION OF FILING  \nOR IN THE ALTERNATIVE FOR EVIDENTIARY HEARINGS \nAND/OR SETTLEMENT PROCEEDINGS BY \nOFFICE OF THE OHIO CONSUMERS’ COUNSEL \nPJM Interconnection, L.L.C.’s (“PJM’s”) application in this case to implement a one-\ntime Reliability Backstop Procurement (“RBP”) program to acquire new generating capacity \nneeded to serve forecasted Artificial Intelligence (“AI”) and other large data center loads should \nnot be adopted.1 It will unreasonably shift the risks and costs associated with acquiring that new \ncapacity from the data center loads to existing consumers in Ohio and elsewhere in PJM.  The \nFederal Energy Regulatory Commission (“FERC”) should reject the filing because it fails to \nprotect Ohio consumers and other consumers in PJM from the risks associated with this new \nforecasted load, and from the associated costs of serving these loads.  PJM’s proposal will result \nin excessive, unjust, unreasonable and unduly discriminatory and preferential rates for existing \nconsumers.   \nIn the alternative, FERC should set PJM’s filing for evidentiary hearings and/or \nsettlement proceedings so that PJM and stakeholders can adequately consider and vet alternative \nproposals for acquiring needed new supply for AI and other large data center loads, including \n1 This Protest is submitted pursuant to Rule 211 of the Federal Energy Regulatory Commission Rules of Practice \nand Procedure, 18 C.F.R. § 385.211."},{"page":3,"startToken":359,"endToken":671,"text":"2 \nproposals prepared by the Independent Market Monitor for PJM (“IMM”) and other consumer \nrepresentatives.  Unlike PJM’s proposal in this case, the IMM’s and other parties’ competing, \nwell-founded proposals would properly guard against such unreasonable costs shifts and \nexcessive rates for existing consumers in Ohio and elsewhere in PJM.      \nThe Office of the Ohio Consumers’ Counsel is the statutory representative of millions of \nOhio residential utility consumers, per R.C. Chapter 4911.  OCC actively advocates for Ohioans \nin numerous state and federal regulatory proceedings, including proceedings before FERC. OCC \ntimely intervened in this case on August 14, 2026.2 Ohio residential consumers may be adversely \naffected if FERC accepts PJM’s filing in this case. PJM’s proposal would require them to pay for \nresource inadequacy risks and related costs that they did not cause, i.e., risks and costs associated \nwith obtaining adequate generating capacity to satisfy the loads of new AI and large data center \ncustomers.   \nI.\nBACKGROUND \nPJM submitted in this docket on July 31, 2026, a proposal for implementing a one-time \nprocurement of new generating capacity that PJM represents is needed to address “resource \nadequacy challenges” in the PJM region.3  PJM states these shortages are associated with \ninsufficient commitments of capacity in the Reliability Pricing Mechanism (“RPM”) auctions for \nthe 2027/2028 and 2028/2029  Delivery Years.4  PJM further represents that the insufficiency of \nresources in these RPM auctions is “primarily driven by the unprecedented addition in recent \n2 Doc-less Motion to Intervene in PJM Interconnection, L.L.C., Docket No. ER26-3380-000, filed by Office of the \nOhio Consumers’ Counsel, available on FERC’s e-library website as Accession Document No. 20260814-5066.   \n3 Reliability Backstop Procurement to Address Resource Adequacy Concerns Stemming from Large Loads, PJM \nInterconnection, L.L.C., Docket No. ER26-3380-000, available on FERC’s e-library website as Accession \nDocument No. 20260731-5214 (“RBP Application”). \n4 RBP Application at 1."},{"page":4,"startToken":671,"endToken":1017,"text":"3 \nyears of large loads, most notably AI and other data centers, in the PJM region.”5  PJM states \nthat the proposal is consistent with the following goals agreed to by the National Energy \nDominance Council (“NEDC”) and 13 governors of the PJM states: \n\nprocure new capacity resources through a backstop auction; \n\nthat auction should commence no later than September 2026; \n\nthe auction should provide 15-year price certainty for new capacity resources;  \n\nthe program should “allocate the cost of any new capacity procured through the \nbackstop auction to Load Serving Entities (“LSEs”) with new data centers \nlocated in their regions that have not self-procured new capacity or agreed to be \ncurtailable;6 and \n\nthe program should allocate any remaining costs associated with the shortage to \nLSEs based on their remaining net shortages.7\nPJM states that its region hosts the largest concentration of data center load in the world, \nand that its forecasted load is expected to increase by 32 gigawats (“GW”) between 2024 and \n2030, with 30 GW driven solely by the large load data centers.  It also asserts that the shortfall in \ncapacity cleared to meet the resource adequacy needs of the region has grown for each of the \npast three RPM auction Delivery Years, which includes the 2028/2029 Delivery Year auction, \nrun in July of this year.8\nPJM proposes to implement a one-time auction along the lines of its existing RPM \nbackstop auction process to secure the difference between the RPM auction results for the \n5 Id.\n6 Id. at 2 (emphasis in original); see also Statement of Principles Regarding PJM, National Energy \nDominance Council, 1 (Jan. 16, 2026), available at https://www.energy.gov/documents/statement-principles-\nregarding-pjm[https://perma.cc/35HJ-W56E].  This document is referred to in the RBP Application as “NEDC/PJM \nGovernors’ Principle.” PJM states that the governors support includes the 13 states of Delaware, Illinois, Indiana, \nKentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, and West \nVirginia, and the District of Columbia. \n7 RBP Application at 2, 9 (emphasis added).. \n8 Id. at 6-7."},{"page":5,"startToken":1017,"endToken":1317,"text":"4 \n2028/2029 Delivery Year and the amount needed to serve forecasted load for that year. The \nauction would obtain commitments of new capacity from eligible resources for a fixed term of \nup to 15 years, starting with the 2028/2029 Delivery Year and ending with the 2042/2043 \nDelivery Year.9 The commitment term for the resources acquired in the auction that are \nscheduled to commence service after the 2028/2029 Delivery Year will be shortened by a \ncommensurate number of years, as no commitment will extend beyond the 2042/2043 Delivery \nYear.10 In effect, PJM proposes to allow planned new generating resources to participate in the \nauction even if their in-service date in beyond the 2028/2029 Delivery Year, so long as those \nresources are in-service by June, 2032.11\nPJM proposes to limit the auction to new load coming on-line in 2028/2029 that does not \nbring its own capacity resources sufficient to serve its needs.12  “In other words, the RBP is a \none-time mechanism that will only procure the capacity necessary to cover any remaining \nshortfall from the 2028/2029 BRA after PJM has accounted for new capacity being brought by \nnew load or that otherwise qualify for a limited opt-out from the RBP.”13\nThe proposed auction will use a RTO region-wide target, and PJM would enter into long-\nterm agreements with the suppliers to purchase that capacity.14  PJM proposes to pay each seller \nits offer bid, less any revenues the seller is entitled to receive for commitment of the same \ncapacity in the regular RPM auctions.15  New loads can acquire their own capacity by entering \n9 Id. at 8. \n10 Id.\n11 Id. at 51. \n12 Id. at 26. \n13 Id.\n14 Id. at 28-29, 31.   \n15 Id. at 29."},{"page":6,"startToken":1317,"endToken":1635,"text":"5 \ninto bilateral contracts for new supply, so long as that new supply is not already committed in an \nRPM auction.16  Sellers into the auction will be responsible for all actual Network Upgrade costs \nincurred to interconnect their resources to the grid.17\nPJM is not proposing to match acquired supply to individual new large loads but rather \nproposes to allocate costs to Electric Distributor Company (“EDC”) zones where the new large \nloads are located, and then to LSEs within that zone that are short of supply commitments.18\nPJM then relies on the states to allocate these costs to retail customers within those LSE areas.19\nIf a state does not report obligations for new load within LSE regions in their jurisdictions, then \nthe zonal RBP charges will be to all consumers within the relevant zone.20\nIf generators bidding in new supply fail to bring their new resources on-line as promised \nin the offer, PJM proposes to impose a penalty on those entities equal to 20% of the proposed bid \nprice.21  If the new resources cannot come on-line within three years of the auction in which they \ncleared, PJM will cancel the contract with that supplier. 22  PJM proposes that the shortage \npenalties will be allocated to load.23 If LSEs default on payments, then PJM proposes that other \nLSEs in the same EDC zone as the defaulting LSE that are short in that same year will pay the \namounts due.24\n16 Id. at 33. \n17 Id. at 56.   \n18 Id. at 96. \n19 Id. at 97-104. \n20 Id. at 99 (“[I]f no allocation is reported by the relevant Electric Distributors with allocated RBP UCAP MW, PJM \nwill allocate RBP Charges based on the Peak Load Contribution submitted to PJM for the LSEs in the relevant \nzone/area.”).\n21 Id. at 60. \n22 Id. at 61.   \n23 Id.\n24 Id. at 89."},{"page":7,"startToken":1635,"endToken":2023,"text":"6 \nII.\nPROTEST \nOCC protests PJM’s filing because it will not minimize costs for consumer, nor \naccomplish its objectives of acquiring new generating capacity in the region in a manner that \nallocates risks and costs for the new capacity to those causing the costs to be incurred, i.e., AI \nand large data center loads.  Instead, the proposal will result in shifting these risks and costs to \nexisting consumers who have not caused the need for new generating capacity and who are \nunlikely to use the generating capacity provided by these new resources.  The risks and costs \ninclude the realistic uncertainty that either generating capacity or the forecasted AI or large data \ncenter loads will not show up.  Moreover, the proposal inappropriately and unreasonably relies \non state laws and regulations, that may not exist in many states, to ensure that these costs and \nrisks in fact are borne by the AI and large data center loads.  \nOhio has no statutes governing allocation of large load-related generation capacity costs \namong retail customers.  And while there is one case in which the Public Utilities Commission of \nOhio (“PUCO”) has directed allocation of some of these large load driven costs and risks to the \nlarge load data center customers, there are no uniform regulations and tariffs that apply to all \nutilities and LSEs in the state.25  Thus, PJM’s proposed RBP program leaves many Ohio \nconsumers at significant risk of bearing costs associated with these new large data center loads.  \nIn contrast, the backstop procurement proposal prepared by the PJM IMM and proposals \ndiscussed by other stakeholders in PJM would directly allocate the risks and costs of this new \n25 In the Matter of the Application of Ohio Power Company for New Tariffs Related to Data Centers and Mobile \nData Centers, Opinion and Order (Jul. 9, 2925), in PUCO Case No. 24-508-EL-ATA; see also In the Matter of the \nApplication of Ohio Power Company for New Tariffs Related to The Standard Service Offer Service for Data Center \nLoad, Finding and Order (Aug. 5, 2026) in PUCO Case No. 26-113-EL-ATA.  While there are additional matters \npending or contemplated to implement specific data center load tariffs for American Transmission Systems, Inc., \nDayton Power and Light Company and Duke Energy Ohio, to date the PUCO has not adopted orders establishing \nprograms for these utilities."},{"page":8,"startToken":2023,"endToken":2324,"text":"7 \ngenerating capacity to the new AI and large data center loads, while fulfilling the resource \nadequacy needs of the region.    \nOCC recognizes that PJM has proposed a myriad of rules for the RBP auction intended to \nmitigate market power and control prices that OCC has not described here.  While OCC is not \naddressing in this protest every serious flaw raised by the PJM RBP proposal, OCC notes that the \noverall RBP design is unlikely to mitigate market power or achieve the intended objective of \nensuring resource adequacy in a manner consistent with cost allocation principles and in a \nmanner that will result in just, reasonable and not unduly discriminatory and preferential rates for \nconsumers.  OCC generally supports the protest submitted in this docket by the Maryland Office \nof People’s Counsel and other consumer advocates on issues not addressed directly in this \nProtest.   \nA. PJM’s RBP proposal will not ensure just, reasonable rates for consumers; \nnor will it prevent unduly discriminatory or preferential rates for consumers. \nPJM’s RBP proposal will not constrain capacity prices resulting from the RBP auction, \nand will not protect existing consumers from the excessive costs and risks associated with those \nauctions.  One example is PJM’s proposed pay-as-bid approach for settling the RBP auction.26\nPJM argues that this proposal is reasonable because the auction will not be procuring a uniform \ncommodity and a single clearing price would “transfer inframarginal rents to every seller priced \nbelow the most expensive accepted offer.”27 These are extraordinary claims in light of PJM’s \nsupport for the existing RPM rules that use a single clearing price approach.   \nFERC has long found the existing offer and clearing price rules for the existing RPM \nauctions just, reasonable, and not unduly discriminatory or preferential.  Those RPM auctions \n26 Id. at 65. \n27 Id. at 65-66."},{"page":9,"startToken":2324,"endToken":2643,"text":"8 \nsimilarly procure non-uniform commodities (new and existing generating capacity, storage \nresources, intermittent resources, demand resources, etc.) as proposed for the RBP auction.  They \nalso pay the single clearing price to all resources clearing at or below the clearing bid, thus \nallowing all inframarginal units to receive payments above their offer bids.  PJM’s purported \nexplanation for different rules for the RBP auctions does not address why it now needs to use a \nclearing approach that is diametrically opposite what it has supported for over 20 years in its \nRPM auctions.  Mere statements as to what the new proposal would accomplish without an \nexplanation for why the disparate treatment is needed or appropriate is not consistent with \njudicial mandates for reasoned departures from existing rules.   \nAdditionally, PJM argues that its proposed “maximum willingness-to-pay cap” will \nprovide “a direct limit on procurement costs even in the absence of offer mitigation.”28\nPJM proposes to set the cap at the maximum price for the existing RPM auctions of \n$555/MW/day, arguing that this mitigates market power for consumers because  \n“competitive dynamics are expected to encourage suppliers to submit competitive offers \nthat more closely reflect their willingness to provide service.”29\nThat too is an extraordinary claim given that PJM is proposing this one-time RBP \nauction because there is a 6,800 MW scarcity of supply in the 2028/2029 Delivery Year.  \nThe $555/MW-day (unforced capacity) offer cap is based on scarcity conditions and is \nsignificantly higher than the clearing price in the 2028/2029 auction of $325/MW-day \nprice cap, which also reflects the scarcity conditions in that auction.30  Exactly what is it \n28 Id. at 68.   \n29 Id. at 68-69. \n30 Id. at 62 for current $555/MW-day offer cap; see also 2028/2029 Base Residual Auction Report at 3 (Jul. 14, \n2026), available at https://www.pjm.com/-/media/DotCom/markets-ops/rpm/rpm-auction-info/2028-2029/2028-\n2029-bra-results-report.pdf."},{"page":10,"startToken":2643,"endToken":2927,"text":"9 \nthat will constrain supplier incentives to bid at the price cap instead of their marginal \ncosts in this auction?  The answer is: nothing.  Current scarcity market conditions in \nPJM’s capacity markets simply do not provide the tempering influence needed to mitigate \nmarket power, and as is anticipated in non-scarce markets.  PJM has not demonstrated \nthat its RBP proposal is designed to sufficiently mitigate market power and produce \nprices for consumers that are just, reasonable, and not unduly discriminatory or \npreferential.  Instead, this market design appears guaranteed to result in excessive electric \ncapacity prices for consumers in PJM that will be allocated the costs of this auction.   \nOne of the most glaring flaws in PJM’s proposal is that by allowing resources that will \nnot come on-line until after the 2028/2029 Delivery Year to participate, it will not ensure \nresource adequacy for the 2028/2029 Delivery Year – the year that new generating capacity is \nmost needed.  PJM proposes to accept offers from planned generating resource owners whose \nplanned generation have commercial operation dates beyond the 2028/2029 Delivery Year, so \nlong as the resources have an in-service date no later than 2032.31  PJM states that it is necessary \nto accept such offers because it is unlikely there are sufficient planned resources with in-service \ndates that line up with the 2028/2029 Delivery Year.32 PJM maintains that allowing resources \nwith in-service dates beyond that Delivery Year to participate in the auction will mitigate \nscarcity in the auction by increasing the otherwise available supply.33  PJM proposes that any \ncapacity shortfalls in the interim will be addressed by curtailment policies being proposed in \n31 RBP Application at 51.    \n32 Id. at 68.   \n33 Id."},{"page":11,"startToken":2927,"endToken":3239,"text":"10 \nnewly filed PJM Docket No. 26-3515-000, i.e., the Interim Resource Adequacy Service \n(“IRAS”) proposal.34\nOCC agrees there is merit in PJM’s concern that scarcity conditions will exist in the RBP \nauction.  It is for this reason that sufficient market power mitigation rules must be in place to \nprotect those paying the costs of this auction.  As explained above, PJM’s proposal fails to \nensure such mitigation.  The proposal’s reliance on planned new generation resources that will \nnot be in-service by the 2028/2029 Delivery Year for market power mitigation does not address \nconcerns that the RBP auction is likely to clear at the extremely high price cap due to shortage \nconditions.  Instead, it means that resources available in the 2028/2029 Delivery Year are still \nlikely to be well short of supply needed for resource adequacy if the forecasted AI and large data \ncenter loads come on-line as forecasted in that timeframe.   \nPJM uses the scarcity concern as its main reason for rushing a FERC decision on the RBP \nproposal.35  However, for the reasons explained in this protest, that proposal is unlikely to result \nin reasonable costs for consumers and unlikely to adequately protect existing consumers from \nexcessive, unjust and unreasonable rates.  PJM’s admits  that its proposal is unlikely to resolve \nthe scarcity conditions for the near future because at least some of the newly-acquired generating \nresources will not be in service in time for the 2028/2029 Delivery Year. So, there is no reason \nfor FERC to rush to put PJM’s proposed RBP auction in place by September 2026 as PJM \nrequests.  Instead, FERC should set PJM’s proposed auction design for evidentiary hearings \nand/or settlement proceedings and provide stakeholders and consumers an opportunity to explore \noptions that would better ensure resource adequacy at just and reasonable rates.  The IRAS \n34 Id. at 48.   \n35 Id. at 3-9."},{"page":12,"startToken":3239,"endToken":3607,"text":"11 \ncurtailment proposal in Docket No. ER26-3515 could better address timing concerns resulting \nfrom delaying implementation of a backstop procurement auction.    \nOCC is also concerned that PJM’s RBP proposal does little to rectify or minimize the \nexcessive costs existing consumers in Ohio and elsewhere in PJM are paying due to RPM \nauctions that have already been run for prior years. The IMM has calculated that data center \ndemand increased capacity costs to other PJM customers by approximately $23.1 billion across \nthe 2025/2026, 2026/2027, 2027/2028 Base Residual Auctions.36  The $23.1 billion figure is not \na mere historical artifact of load growth. It reflects a structural outcome of a capacity market in \nwhich extraordinary new demand (data centers) can raise clearing prices across a much larger \nbase of existing capacity (other customers including residential customers). The result is a \nsystem-wide cost shift that extends far beyond the incremental load that triggered it. The IMM’s \nJune 30, 2026 RBP proposal, discussed in section C below, demonstrates that significant reforms \nto PJM’s RBP proposal are needed to stop the historical subsidies already being provided by \nexisting consumers to AI and large data center loads.    \nAccordingly, the task should be not only to prevent future cost shifts from new data \ncenter load, but also to evaluate whether and how PJM’s market design can better account for the \nmagnitude of subsidies already imposed on existing consumers. Consumer protection requires \nmore than prospective reform. PJM and FERC must confront the substantial costs already borne \nby consumers because data-center demand has been incorporated into prior capacity auctions.37\n36 Monitoring Analytics, Critical Issue Fast Path Proposed Reliability Backstop Auction Proposal (Jun. 30, 2026), \navailable at \nhttps://www.monitoringanalytics.com/reports/Presentations/2026/IMM%20Backstop%20auction%20design%20pro\nposal%20-%20V6%202026.06.19.pdf (“IMM RBP Proposal”). \n37 Similarly, there is concern with the effect that data centers have had on the energy prices in PJM.  Energy prices \nhave significantly increased in large part due to the 24 x 7/365 data center energy use pushing the marginal clearing \nunit higher up in the PJM dispatch stack. In 2023, energy costs across PJM averaged $30.23/MWh.  During the first"},{"page":13,"startToken":3607,"endToken":3917,"text":"12 \nFor transparency regarding the magnitude of the problem, PJM and the IMM should develop a \nstandardized accounting of capacity costs attributable to data center demand in each affected \nBRA for the past three to five Delivery Years. \nPJM and FERC should evaluate whether a legacy data center cost allocation and \nconsumer credit mechanisms could, consistent with cost causation and other rate principles, \nassign identified legacy costs on a forward-looking basis to the load responsible for driving these \ncosts and risks and provide corresponding credits to existing customers that are bearing these \ncosts. Such a mechanism should be grounded in demonstrable cost causation and rate principles.  \nIt should avoid arbitrary assignment of historical costs to unrelated new loads.  And, to the extent \npossible, it should ensure that any recovery amounts are returned to affected non-data center \ncustomers. Where feasible, PJM should consider transitional charges on identifiable responsible \nloads to recover a portion of legacy costs.  The objective is consumer restitution through \nprincipled cost allocation.  \nB. The RBP proposal will unjustly and unreasonably leave existing consumers \nin Ohio and elsewhere in PJM bearing the risks and costs associated with \nthese new AI and large data center load. \nPJM’s RBP proposal does not accomplish the objective of protecting existing consumers \nfrom the risks and costs associated with procuring new generating capacity for AI and large data \ncenter loads.  Instead, the proposal is designed to allocate the costs of the auction to all \nconsumers in the EDC’s zone where the AI and large data center loads that bring insufficient \ngenerating capacity with them are located.38  Yet many of those consumers are no more \nseven months of 2026, energy costs across PJM averaged $72.07/MWh.  PJM and FERC should also confront these \ncosts and should evaluate whether a legacy cost allocation and customer credit mechanism should be adopted.     \n38 Id. at 96-97."},{"page":14,"startToken":3917,"endToken":4244,"text":"13 \nresponsible for the incurrence of these costs than are consumers in regions where there is no \nshortage of capacity for AI and large data center loads.   \nPJM inappropriately relies on state programs to determine allocation among retail \nconsumers within these zones.  In other words, PJM is asking FERC to punt the question of cost \nallocation for these new resources to the states.  However, as indicated earlier in this Protest, not \nall states have statutes that would allocate these costs to the AI and large data centers driving the \ncost incurrence.  As note earlier, Ohio is one such state.  The PUCO has required a special tariff \nto allocate to AI and large data center loads the costs of new generating capacity and other \nresources needed to serve them from only one of four utilities serving retail consumers in Ohio, \ni.e..  American Electric Power.39 No similar protections exist currently for consumers of the three \nother utilities in the state.  There is no guarantee under Oho law that all Oho consumers will be \nprotected against the cross-subsidies inherent in PJM’s proposal. It is fundamentally \nunreasonable for PJM to rely on a system of shared state-federal jurisdiction to resolve a \nproblem raised directly by its proposed wholesale RBP program.     \nPJM’s proposed penalty structure for ensuring that generation suppliers submitting sell \noffers into the RBP auction abide by their offer commitments is similarly unjust, unreasonable, \nand unduly discriminatory and preferential.  While it is reasonable for PJM to propose shortage \npenalties for a supplier’s failure to come on-line by the anticipated commercial operation date \nencompassed in its offer, it is not reasonable for PJM to impose those shortage charges and costs \non all loads in the EDC and LSE zones experiencing shortages.40  The purpose of shortage \npenalties should be to strongly encourage generation capacity sellers to abide by their \n39 Supra, n.25. \n40 RBP Application at 61 (“Shortfall charges assessed to RBP Resources will be allocated to load”)."},{"page":15,"startToken":4244,"endToken":4611,"text":"14 \ncommitments to supply power by a date certain.  OCC understands that events can occur to delay \nsuch commercial operation dates.  But the risks of such events should be borne by those with \nmore direct control over such events, i.e., the suppliers themselves.   \nAllowing those costs to be transferred to load essentially just shifts the risk that a \ngenerating resource will be commercially operational to the parties with no control over those \noperations, i.e., the loads that must bear the costs of the power to be generated.  Moreover, that \nshift in risk and costs shields the generators, the entities with at least some control over the \nprocess of bringing this generation online, from the costs of their actions or inactions.  In the \nevent of a supplier’s failure to reach a targeted commercial operation deadline, existing load is \nalready bearing a significant portion of that risk by having to forego the needed capacity and \nlikely being subjected to curtailment of use.  To impose the shortage charges on those loads, in \naddition to the shortage conditions, is fundamentally unjust, unreasonable and unduly \ndiscriminatory and preferential.  Such a policy allows the suppliers to escape any financial risk or \nresponsibility for their investments.  This violates FERC’s long-held policy of imposing the risk \nof investment on those making the investments and away from loads who have no control over \nthose investments.41\nAdditionally, PJM’s proposal to limit the shortage penalty to 20% of the offer price for \nthe capacity is also unjust, unreasonable and unduly discriminatory and preferential in favor of \nsuppliers.  The objective of such penalties should be to protect the load that will suffer from the \ncapacity shortages in the region.  Electric generation capacity is a fundamental financial and \n41 See, e.g., Wholesale Competition in Regions with Organized Electric Markets, Order No. 719, 125 FERC 61,071 \nat P 1 (2009) (Effective wholesale competition protects consumers by providing more supply options, encouraging \nnew entry and innovation, spurring deployment of new technologies, promoting demand response and energy \nefficiency, improving operating performance, exerting downward pressure on costs, and shifting risk away from \nconsumers.  National policy has been, and continues to be, to foster competition in wholesale electric power \nmarkets.”)."},{"page":16,"startToken":4611,"endToken":4930,"text":"15 \nhealth necessity for residential, commercial and industrial consumers in today’s economy, \nespecially for hospitals, schools, nursing homes and residential homes that have family members \nliving on electric-operated life support facilities.  PJM’s proposal to limit the proposed shortage \npenalty to only 1/5th of the cost of the capacity sell offer seriously undervalues the reliance load \nplaces on resource adequacy.  FERC should reject PJM’s proposed penalties for failure of \nsuppliers to live up to their capacity commitments when bidding planned resources into the RBP \nauctions as fundamentally insufficient to protect consumers in Ohio and elsewhere in PJM.\nC. The IMM proposed approach to resource adequacy in PJM will ensure \ndirect allocation of the risk and costs of needed new generation to the \nresponsible AI and large data center loads in the region. \nOn June 30, 2026, Monitoring Analytics, the PJM IMM, posted on its website its  \nproposal for resolving the resource inadequacy concerns created by the shortages in the \n2027/2028 and 2028/2029 Delivery Years.  The IMM submitted this proposal to the PJM Critical \nIssue Fast Path stakeholder process as an alternative to the PJM RBP proposal.42  As the IMM \nstates, “[t]he most important criterion for evaluating proposals to address how to reliably serve \nnew data center load is the assignment of the costs and risks associated with LSEs serving data \ncenter load.”43  The IMM explains that “the failure to exclude new data center load from the \nBRAs [RPM base residual auctions], as PJM proposes, would by definition impose significant \ncosts on other customers and therefore violate the basic principle that data center costs should \nnot be imposed on other customers.”44\nBy including AI and large data center loads in the RBP and other RPM auctions, PJM is \nplacing all existing consumers in the region at risk of paying for the capacity shortages because \n42 IMM RBP Proposal at 1. \n43 Id.\n44 Id."},{"page":17,"startToken":4930,"endToken":5245,"text":"16 \nthe costs of RPM and the proposed RBP auctions are to be spread across all consumers in the \nregions that are short regardless of the driving cost causers for those shortages.  Those costs and \nrisks include not only the cost of the procured generation, but the risks that both the new \ngenerating capacity and the forecasted AI and large data center loads will not materialize.   \nIn contrast, the IMM proposes that LSEs serving the new AI and large data center loads \nenter into 15-year bilateral contracts in which the risks and costs of the new generation to be \nacquired to serve those loads are allocated only to the parties to those contracts.45  The IMM \nexplains that this proposal is analogous to the program in which Fixed Resource Requirements \ncustomers opt-out of the RPM auctions.46  In essence, this proposal establishes a Bring Your \nOwn New Generation approach to solve the dire resource inadequacy concerns raised by the \nexponential growth in AI and large data center loads on the PJM system in recent years.47\nTo the extent that the affected LSEs do not enter into such contracts, the IMM proposes a \nRBP construct that would “run a full single clearing price auction using the RPM capacity \nmarket clearing model for just data center load.”48 In other words, the IMM proposal would \ncreate an auction limited to new generating capacity supplies and new AI and large data center \nloads, thus shielding existing consumers from the associated costs and risks imposed by these \nunprecedent new loads. In contrast to PJM’s RBP proposal, existing loads are not affected in any \nway by the auction clearing process. \nAlso unlike the PJM proposed RBP, the IMM proposed RBP would include the location \nand MW of the proposed generation that participates, and be based on expected loads for \n45 Id.\n46 Id.\n47 Id.\n48 Id. at 2."},{"page":18,"startToken":5245,"endToken":5594,"text":"17 \nindividual AI and large data center customers.49 The resulting contracts between the generation \nsupplier and the AI/large data center loads would not allow for transfer of any of the risks or \ncosts to existing consumers.50  Thus, in contrast to PJM’s proposal, “the qualifying bilateral \ncontracts assign all risks to the bilateral counterparties, and no risks are assignable to EDCs, \nLSEs, PJM or any other customers.”51  The IMM proposal contains additional proposed rules to \naddress market power mitigation concerns and other details associated with the auction clearing \nmechanism. \nOCC supports the IMM’s proposal as a just, reasonable, and not unduly discriminatory or \npreferential solution to the recent resource inadequacy concerns associated with the explosion in \nAI and data center load growth on the PJM system.  Unlike PJM’s proposal, the IMM’s approach \nwill restrict risks and costs to those entities driving the need for new generating capacity on the \nsystem.  This in turn better comports with the Seventh Circuit’s cost allocation mandate that \ncosts must be allocated in a manner roughly commensurate with cost causation and beneficiaries \nof the proposed new infrastructure.52  Unlike the PJM RBP proposal, the IMM RBP proposal \nprovides no loopholes for new generating capacity and AI and large data center loads to escape \nthe risks and costs of their ventures, and no recourse to subsidized support from existing \nconsumers in PJM.53\n49 Id. at 3. \n50 Id. at 4. \n51 Id. at 5. \n52 Ill. Commerce Comm’n v. FERC., 576 F.3d 470, 476 (7th Cir. 2009) (“ICC I”) (FERC is “not authorized to \napprove a pricing scheme that requires a group of utilities to pay for facilities from which its members derive no \nbenefits, or benefits that are trivial in relation to the costs sought to be shifted to its members”); Ill. Commerce \nComm’n v. FERC, 756 F.3d 556, 564 (7th Cir. 2014) (“ICC II”) (remanding the case a second time, finding that on \nremand, FERC had still not justified that costs would be allocated in a manner remotely related to cost causation). \n53 IMM Proposal at 5."},{"page":19,"startToken":5594,"endToken":5920,"text":"18 \nFERC also should consider in any evidentiary and/or settlement proceedings established \nin this case the additional proposed solution to PJM’s resource adequacy concerns related to AI \nand large data center loads submitted to the PJM Powering Reliability Through Market Design \nWorkshop by the Ohio Energy Group (“OEG”) on July 15, 2026.54  That proposal would \nestablish a bifurcated auction design where existing generation would be paid short-term \ncapacity pricing with caps and floors under the current RPM auction construct and new \ngeneration needed to serve AI and large date center loads would be paid a long-term capacity \nprice necessary to provide revenue certainty for financing.55  OEG’s proposed modification to \nPJM Path A, Option 2 would establish a new, PJM-administered long-term capacity market \nwithout price caps or floors.56 The payments to new generators would not be paid to existing \ngenerators, for whom such payments would just be a windfall and result in excessive costs to \nconsumers.57\nOCC does not support every element of the OEG proposal.  For example, the proposal to \ncharge existing consumers a blended Legacy Auction and Reliability Auction price,58 would still \nshift some costs to existing consumers associated with AI and large data center loads.  However, \nthe proposal retains elements of the IMM proposal to bifurcate auctions for existing and new \nlarge loads in order to charge most of the costs of new generating capacity to serve the new loads \n54 Bifurcated Capacity Market Under PJM Path A, Option 2, submitted on behalf of the Ohio Energy Group to the \nPJM Powering Reliability Through Market Design Workshop, and prepared by Michael L. Kurtz,  Partner, Boehm, \nKurtz & Lowry (Jul. 15, 2026).  This proposal is available at  https://www.pjm.com/-/media/DotCom/committees-\ngroups/workshops/prtmdw/2026/20260714/20260714-item-04b---bifurcated-capacity-market-under-pjm-path-a-\noption-2---michael-kurtz-presentation.pdf (“Ohio Energy Group Resource Adequacy Proposal”).\n55 Id. at Slide 4. \n56 Id. at Slide 7. \n57 Id. at Slide 8. \n58 Id. at Slide 9."},{"page":20,"startToken":5920,"endToken":6233,"text":"19 \nto those causing the costs to be incurred.  Consequently, the OEG proposal could be vetted \nfurther in a FERC Settlement Judge-led settlement process.   \nIII.\nCONCLUSION \nFERC may accept or reject a utility filing under section 205 of the Federal Power Act, 16 \nU.S.C. 824d, depending on whether  the utility has demonstrated that its proposal is just, \nreasonable, and not unduly discriminatory or preferential.59  However, as PJM notes in its RBP \nApplication, FERC may not modify substantial elements of the proposal without PJM’s \nconsent.60\n Although OCC seeks rejection of PJM’s proposal in this case, OCC agrees that \nsomething must be done soon to address the resource adequacy concerns in the PJM region over \nthe next few years.  Consequently, OCC urges that if FERC accepts the filing, it should do so \nsubject to refund and set the filing for hearing and/or settlement proceedings with directives that \nthe parties use the IMM RBP proposal as a starting point.  \nSuch a process will provide stakeholders an opportunity, subject to Settlement Judge \noversight, to develop a just, reasonable and not unduly discriminatory or preferential solution \nthat will protect existing consumers in Ohio and elsewhere from the unreasonable shift of AI and \nlarge data center load risks and costs to them, and from excessive, unjust, unreasonable and \nunduly discriminatory and preferential rates.   \n59 NRG Power Mktg., LLC v. FERC, 862 F.3d 108 at 114 (D.C. Cir. 2017) (\"Under Section 205, FERC reviews \nthe proposed rate scheme filed by a utility or Regional Transmission Organization and determines whether the \nproposal is just and reasonable. FERC may accept or reject the proposal.” (“NRG Power Mktg.”). \n60 Id. (“Although FERC may not unilaterally impose a new rate scheme under Section 205, this Court has held that \nFERC has some authority to propose modifications to a utility's proposal if the utility consents to the \nmodifications.”)."},{"page":21,"startToken":6233,"endToken":6354,"text":"20 \nWHEREFORE, OCC respectfully requests that FERC protect Ohio consumers by \nrejecting PJM’s Reliability Backstop Procurement proposal in this case, or in the alternative, set \nthis matter for evidentiary and/or settlement proceedings.     \nRespectfully submitted, \nMaureen Willis  \nOhio Consumers’ Counsel \n/s/ Angela O’Brien  \nAngela O’Brien \nDeputy Consumers’ Counsel  \nOffice of the Ohio Consumers’ Counsel \n65 East State Street, Suite 700 \nColumbus, Ohio 43215 \nTelephone: (614) 466-9531 \nangela.obrien@occ.ohio.gov\n/s/ Denise C. Goulet  \nDenise C. Goulet, Esq. \nMcCarter & English, LLP \n1301 K Street, N.W. \nSuite 1000 West \nWashington, D.C. 20005 \n(202) 753-3400 \ndgoulet@mccarter.com\nSpecial Counsel to the Ohio Office of the Attorney \nGeneral for the Office of the Ohio Consumers’ \nCounsel \nDATED:  August 21, 2026"},{"page":22,"startToken":6354,"endToken":6428,"text":"21 \nCERTIFICATE OF SERVICE \nI hereby certify that I have on this date served a copy of the foregoing document via \nelectronic mail upon all parties of record on the Commission’s official service list in this \nproceeding. Dated in Columbus, Ohio this 21st day of August, 2026. \n/s/ Denise C. Goulet \nDenise C. Goulet \nMcCarter & English, LLP \n1301 K Street, N.W. \nSuite 1000 West \nWashington, D.C. 20005 \n(202) 753-3400 \ndgoulet@mccarter.com"}],"sections":[{"p":1,"at":0,"title":"Opening text","method":"opening text","endPage":3,"endAt":1040,"startToken":0,"endToken":515},{"p":3,"at":1040,"title":"I. BACKGROUND","method":"printed heading","endPage":3,"endAt":1043,"startToken":515,"endToken":516},{"p":3,"at":1043,"title":"BACKGROUND","method":"printed heading","endPage":7,"endAt":3,"startToken":516,"endToken":1636},{"p":7,"at":3,"title":"II. PROTEST","method":"printed heading","endPage":8,"endAt":897,"startToken":1636,"endToken":2166},{"p":8,"at":897,"title":"A. PJM’s RBP proposal will not ensure just, reasonable rates for consumers;","method":"printed heading","endPage":13,"endAt":1120,"startToken":2166,"endToken":3771},{"p":13,"at":1120,"title":"B. The RBP proposal will unjustly and unreasonably leave existing consumers","method":"printed heading","endPage":16,"endAt":671,"startToken":3771,"endToken":4708},{"p":16,"at":671,"title":"C. The IMM proposed approach to resource adequacy in PJM will ensure","method":"printed heading","endPage":20,"endAt":158,"startToken":4708,"endToken":5944},{"p":20,"at":158,"title":"III. CONCLUSION","method":"printed heading","endPage":20,"endAt":163,"startToken":5944,"endToken":5945},{"p":20,"at":163,"title":"CONCLUSION","method":"printed heading","endPage":22,"endAt":4,"startToken":5945,"endToken":6355},{"p":22,"at":4,"title":"CERTIFICATE OF SERVICE","method":"printed heading","endPage":22,"endAt":440,"startToken":6355,"endToken":6428}]}