{"document":{"slug":"rehearing-er26-3380-joint-consumer-advocates","title":"Request for Rehearing of the Joint Consumer Advocates (DE, DC, IL CUB, IL AG, MD, NJ) of the September 29, 2026 backstop order","issued":"2026-10-29","accession":"20261029-5262","docket":"ER26-3380-001","group":"Rehearing of FERC's PJM Reliability Backstop Procurement order","filer":"Joint Consumer Advocates (DE, DC, IL CUB, IL AG, MD, NJ)","kind":"request for rehearing","file":"sources/originals/20261029-5262_ER26-3380 JCA Request for Rehearing.pdf","url":"https://elibrary.ferc.gov/eLibrary/filelist?accession_number=20261029-5262","sha256":"f4c344f0dcde13afdfd88b0ac9781903eb29caa7ac3b69cc49324509416b230c","pages":35,"tokens":11656,"emptyPages":[]},"pages":[{"page":1,"startToken":0,"endToken":249,"text":"UNITED STATES OF AMERICA \nBEFORE THE \nFEDERAL ENERGY REGULATORY COMMISSION \n \nPJM Interconnection, L.L.C. \nDocket No. ER26-3380-000 \nREQUEST FOR REHEARING OF THE JOINT CONSUMER ADVOCATES \nPursuant to section 313 of the Federal Power Act (FPA)1 and Rule 713 of the \nFederal Energy Regulatory Commission’s (Commission or FERC) Rules of Practice and \nProcedure,2 the Delaware Division of the Public Advocate, District of Columbia Office of \nPeople’s Counsel, Illinois Citizens Utility Board, Office of the Illinois Attorney General, \nMaryland Office of the People’s Counsel, and New Jersey Division of Rate Counsel \n(collectively, Joint Consumer Advocates) respectfully request rehearing of PJM \nInterconnection, L.L.C., 196 FERC ¶ 61,245 (2026) (RBP Order or Order).  \nPJM Interconnection, L.L.C.’s (PJM) underlying Reliability Backstop Procurement \n(RBP) proposal is meant to enable the procurement of sufficient “new capacity to address \nsignificant resource adequacy challenges primarily driven by an influx of large loads.”3 \nThe proposal, however, is fundamentally flawed because it permits the unmitigated \nexercise of seller-side market power and its design seems guaranteed to ensure that PJM \nprocures more resources than are necessary, at costs higher than are warranted.4 \nNotwithstanding the Commission’s concerns with several aspects of the proposal, the \n \n1 16 U.S.C. § 825l.  \n2 18 C.F.R. § 385.713. \n3 RBP Order P 1.  \n4 See, e.g., Protest, Motion to Reject, and Alternative Request for the Imposition of Conditions of Joint \nConsumer Advocates at 5-7 (Aug. 21, 2026), eLibrary No. 20260821-5183 (JCA Protest)."},{"page":2,"startToken":249,"endToken":545,"text":"- 2 - \n \nCommission accepted without alteration many deeply flawed components of the proposed \nRBP framework. In doing so, the Commission erred in numerous respects and failed to \nmeet its statutory obligation to protect PJM’s already over-burdened ratepayers from unjust \nand unreasonable charges.  \nFirst. The Order accepts RBP without requiring reasonable market power screens \nor mitigation,5 while acknowledging (1) that the RBP’s pay-as-bid structure makes it \n“theoretically less likely [that sellers will] offer near their marginal costs,”6 and (2) PJM’s \nadmission that sellers are instead more likely to offer the expected clearing price.7 In doing \nso, the Order ignores over 50 years of judicial and Commission precedent that permits the \nuse of market-based transactions to set just and reasonable rates under the FPA only where \nthere will likely be fair competition based upon marginal cost bids and adequate mitigation \nof seller-side market power. The Order assumes without evidence that mitigation measures \nare unnecessary because: (1) the exercise of market power will be averted if sufficient \nresources choose to participate in the RBP  and drive down prices, and (2) the inclusion of \na proposed megawatt (MW)-weighted average-price cap will “discipline[] costs.”8 But, as \nshown below and as set forth in the JCA Protest, these assertions are legally insufficient, \nfactually unsupported, and at odds with the record evidence.  \nSecond. The Order accepts a price cap of $555/MW-day, on a MW-weighted \naverage basis, finding, without reasoned explanation, “that using the $555/MW-day price \n \n5 RBP Order P 75.  \n6 Id.  \n7 PJM, Reliability Backstop Procurement to Address Resource Adequacy Concerns Stemming from New \nLoad Adjustments, Transmittal at 71 & n.184 (July 31, 2026), eLibrary No. 20260731-5214 (PJM Filing) \n(quoting id., Attach. C, Affidavit of Ms. Danielle Croop ¶ 33 (Croop Aff.)). \n8 RBP Order P 98."},{"page":3,"startToken":545,"endToken":999,"text":"- 3 - \n \ncap for the 2028/2029 [Base Residual Auction (BRA)] . . . is a reasonable proxy of load’s \nmaximum willingness to pay for RBP capacity.”9 The Order ignores Joint Consumer \nAdvocates’ arguments demonstrating that the BRA is not analogous to the RBP and that a \n$555/MW-day average price cap is unjust and unreasonable in the RBP context:  \n• \nThe BRA is a single-clearing-price auction that structurally incentivizes \nsuppliers to offer capacity at the supplier’s marginal cost. In that context, a \nmarket price cap is a second-line protection against unjust and unreasonable \nprices. In the RBP pay-as-bid structure, the incentive to offer at marginal \ncost is missing, and the market average price cap affords bidders the ability \nto exercise market power by gaming their bids around the price cap. And \nwhatever prices are set in the RBP will apply for a much longer period. It is \nessential to ensure that any RBP price cap is set at an appropriate level to \nensure just and reasonable rates. \n• \nThe BRA sets capacity auction clearing prices for commitment periods of a \nsingle year, offering little long-term price certainty. In contrast, the RBP \nsets prices for terms up to 15 years. As both PJM and FERC acknowledge, \ngreater price certainty reduces supplier risk and costs.10 RBP’s greater \nrevenue certainty therefore argues for a lower price cap in the long-term \nRBP than the cap that applies in the annual, single-year BRAs. \n• \nThe $555/MW-day is borrowed from Point 1 of the Variable Resource \nRequirement (VRR) curve that would have applied in the BRA for the \n2028/2029 Delivery Year but for PJM’s request and the Commission’s \napproval to apply a temporary price collar with a lower cap. While Point 1 \nof the VRR is a reference cost grounded in the estimated levelized Cost of \nNew Entry (CONE) for a combustion turbine (CT) reference resource,  the \nRBP has no reference resource or VRR curve and there is no evidence that \na $555/MW-day price cap will reflect the production costs of the resources \nthat the RBP will procure. \n• \nThe RBP proposal borrowed a BRA price cap that was not in effect for the \n2028/2029 Delivery Year because it was replaced by price collar with a \nlower cap. As the Order acknowledges, that cap—accepted by the \nCommission as just and reasonable—was just $325/MW-day.11 The Order \nfails to explain how it also could be just and reasonable to accept an RBP \n \n9 Id. P 74. \n10 See id. P 76 (“As PJM explains, long contract terms create revenue certainty for RBP Resources and \ngenerally can reduce financial and development risk and may improve financing opportunities through \nlower capital costs or more favorable financing terms.”). \n11 Id. P 13."},{"page":4,"startToken":999,"endToken":1312,"text":"- 4 - \n \nprice cap that is 70% higher and will be applied to commitment periods up \nto 15 times longer than was the case for the 2028/2029 BRA.     \nThird. The RBP Order accepts without explanation the requirement that resources \nprocured through the RBP be subject to a 15-year commitment despite PJM’s admission \nthat a resource procurement “of at least five years is capacity that will address the reliability \nshortfall.”12 The Order acknowledges but fails to address Joint Consumer Advocates’ \nargument that it is “unjust and unreasonable to charge ratepayers for the acquisition of \nyears of capacity that is not needed to address the reliability shortfall and serves no cost-\nefficiency or other economic purpose.”13 The Order’s acceptance of RBP’s 15-year \nprocurement terms could unjustly and unreasonably saddle captive ratepayers with some \n$13 billion in excessive and unnecessary RBP costs. \nFourth. Finally, the RBP Order is arbitrary and capricious because it fails to engage \narguments that RBP’s lack of locational constraints renders it unjust and unreasonable. The \nOrder finds that “the volume of capacity that PJM will procure through the RBP auction—\nup to 6,831 MW—is relatively small compared with total existing supply in PJM (149 \n[gigawatts (GW)]), so even if RBP Resources are not located in the exact same Locational \nDeliverability Areas [(LDAs)] as new loads, the effect of any locational constraints should \nbe limited.”14 But downplaying the capacity volumes, in this context, cannot be squared \nwith the Order’s premise that a BRA shortfall of the same magnitude is a dire reliability \ncrisis.15 Nor does the Order explain why the absence of locational constraints in the RBP \nis immaterial when (1) the Commission’s acceptance of the BRA structure was predicated \n \n12 PJM Filing, Transmittal at 39. \n13 RBP Order P 63 & n.90 (citing JCA Protest at 16). \n14 Id. P 97. \n15 Id. PP 3, 5."},{"page":5,"startToken":1312,"endToken":1611,"text":"- 5 - \n \nupon the inclusion of locational constraints; and (2) history shows that zonal capacity price \nseparation can increase costs to ratepayers by hundreds of millions of dollars. The RBP \nresources selected without regard to location may not serve the reliability needs of the \nzones where load growth is expected. And under RBP, those resources will participate in \nthe BRA as price takers and will thereby diminish the effect of the BRA’s locational price \nsignals for up to 15 years. The Commission cannot dismiss the concerns of Joint Consumer \nAdvocates (and others) that the RBP’s lack of locational constraints risks burdening \nratepayers with additional capacity, transmission and energy costs that could otherwise be \navoided based on the unsubstantiated and vague contention that such costs will be limited.16 \nFor the above reasons, and as explained in greater detail in Part II of this filing, \nbelow, Joint Consumer Advocates respectfully request that the Commission (1) grant \nrehearing of the RBP Order; (2) find unjust and unreasonable the four elements of the RBP \nframework identified herein by Joint Consumer Advocates; and (3) direct PJM to \nincorporate changes to those elements in any subsequent FPA section 20517 filing PJM \nproposes.   \nI. \nSTATEMENT OF ISSUES AND SPECIFICATION OF ERRORS \nIn accordance with Commission Rules of Practice and Procedure 713(c)(1) and \n(c)(2),18 the Joint Consumer Advocates provide the following enumerated statement of \nissues and specification of errors, including citations to representative Commission and \ncourt precedent on which they rely:  \n1. The RBP Order errs as a matter of law and is arbitrary and capricious and not based in \nsubstantial evidence in accepting a market-based rate auction structure that exceeds the \n \n16 JCA Protest at 29.  \n17 16 U.S.C. § 824d. \n18 18 C.F.R. §§ 385.713(c)(1)-(2)."},{"page":6,"startToken":1611,"endToken":2253,"text":"- 6 - \n \nCommission’s statutory authority and is unjust and unreasonable because it permits the \nunmitigated exercise of seller side market power. PJM has admitted, and the Order \nfinds, that pursuant to the RBP’s pay-as-bid structure, sellers are more likely to offer \nthe expected clearing price than their marginal costs. Accordingly, the RBP \nprocurement is unlikely to produce competition between sellers based upon their \nmarginal costs of production and will result instead in unjust and unreasonable rates \nthat reflect the exercise of seller-side market power and resource offers that game the \nRBP’s market price cap. The Commission seeks to defend RBP based upon the number \nof potential sellers, but a large number of uncompetitive offers is not the same as \ncompetition. Without incentives for sellers to offer at prices approximating their costs, \nthere is no reason to expect this auction structure to yield a just and reasonable rate that \napproximates what would be produced by fair competition based on the marginal \nproduction costs of the resources bidding into the market.19   \n2. The RBP Order errs as a matter of law and is arbitrary and capricious and not based in \nsubstantial evidence by accepting a market-based price cap of $555/MW-day absent \nevidence that this cap is just and reasonable for the long-term product being procured \nand appropriately reflects the financing and other costs minus the expected revenue \nstreams of resources that will provide capacity in response to RBP (not BRA) price \nsignals. The RBP Order fails to provide a reasoned explanation based on the record \nevidence for accepting an average-weighted $555/MW-day price cap. Instead, it \narbitrarily and capriciously relies upon the market price cap at which resources would \nhave cleared in the 2028/2029 BRA (but for the imposition of a price collar), even \nthough the BRA and RBP auction designs are fundamentally dissimilar in numerous \nmaterial respects.20 \n3. The RBP Order errs as a matter of law and is arbitrary and capricious in failing to \nrespond to Joint Consumer Advocates’ objection that it is unjust and unreasonable to \nrequire ratepayers to pay for 15-year procurements when there is uncontroverted record \nevidence that 5-year procurements are sufficient to meet PJM’s needs and RBP’s \npurpose of satisfying a near-term resource adequacy shortfall. RBP’s acquisition of 15-\nyear capacity commitments is unjust and unreasonable because it may increase \nratepayer acquisition costs by as much as $13 billion for no justifiable purpose and \nwithout any commensurate consumer benefit.21  \n \n19 5 U.S.C. § 706(2); 16 U.S.C. § 824d; FPC v. Texaco Inc., 417 U.S. 380, 400 (1974); Gulf States Utils. Co. \nv. FPC, 411 U.S. 747, 758-59 (1973); Elizabethtown Gas Co. v. FERC, 10 F.3d 866, 870 (D.C. Cir. 1993); \nTejas Power Corp. v. FERC, 908 F.2d 998, 1004 (D.C. Cir. 1990); NCAA v. Bd. of Regents of the Univ. of \nOkla., 468 U.S. 85, 109 n.38 (1984); see also Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 27 n.46 \n(1984).   \n20 5 U.S.C. § 706(2); 16 U.S.C. § 824d; La. Intrastate Gas Corp. v. FERC, 962 F.2d 37, 44 (D.C. Cir. 1992); \nMich. Wis. Pipe Line Co. v. Fed. Power Comm’n, 520 F.2d 84, 89 (D.C. Cir. 1975); Motor Vehicle Mfrs. \nAss’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983); Elizabethtown Gas Co., 10 F.3d \n866 at 870. \n21 5 U.S.C. § 706(2); 16 U.S.C. § 824d; State Farm, 463 U.S. 29; TransCanada Power Mktg. Ltd.  v.  FERC, \n811 F.3d 1, 12 (D.C. Cir. 2015); Constellation Mystic Power, LLC v. FERC, 45 F.4th 1028, 1058 (D.C. Cir. \n2022); Citadel FNGE Ltd. v. FERC, 77 F.4th 842, 856 (D.C. Cir. 2023)."},{"page":7,"startToken":2253,"endToken":2651,"text":"- 7 - \n \n4. The RBP Order errs as a matter of law and is arbitrary and capricious and is unjust and \nunreasonable in accepting an RBP procurement structure that does not incorporate \nlocational constraints for offering resources. This constitutes an impermissible \ndeparture from the Commission’s approval of the BRA (which required such \nconstraints), is not reasoned decision making, and is likely to result in excessive \ncapacity costs due to the non-deliverability of the resources to areas of need, related \nand unnecessary increases in energy and transmission costs, and the acquisition of \nresources not suited to meet the region’s reliability needs.22  \nII. \nREQUEST FOR REHEARING \nA. \nThe Commission’s approval of RBP exceeds its authority to rely \non competition to set just and reasonable market-based rates \nbecause RBP permits and incents the exercise of seller-side market \npower. \nThe RBP Order finds that PJM’s “pay-as-bid”23 auction “process for selecting RBP \nResources . . .  [is] just and reasonable.”24 The Order accepts this pay-as-bid approach \ndespite RBP’s “lack of direct market power screens or mitigation.”25 The Commission’s \ndetermination is unsustainable because the RBP’s pay-as-bid resource selection process \npermits—and will likely result in—the unmitigated exercise of seller-side market power. \nIn “a pay-as-bid procurement [such as RBP] each selected resource is compensated \nbased on its individual offer rather than a market-clearing price established by the marginal \nresource.”26 As proposed, RBP nowhere requires sellers to bid their own production costs \nand nothing prevents them from “offer[ing] the expected clearing price” of $555/MW-\n \n22 5 U.S.C. § 706(2); 16 U.S.C. § 824e; Encino Motorcars, LLC v. Navarro, 579 U.S. 211, 212-13 (2016); \nState Farm, 463 U.S. 29; PJM Interconnection L.L.C., 117 FERC ¶ 61,331, P 68 (2006) (RPM Order), \ngranting reh’g in part, 119 FERC ¶ 61,318, reh’g denied, 121 FERC ¶ 61,173 (2007), pet. for review denied \nsub nom., Pub. Serv. Elec. & Gas Co. v. FERC, 324 Fed. Appx. 1 (2009); PJM Interconnection, L.L.C., 197 \nFERC ¶ 61,019, P 109 (2026); Citadel FNGE Ltd, 77 F.4th at 856. \n23 RBP Order P 57; see also Croop Aff. ¶ 6. \n24 RBP Order P 74. \n25 Id. P 98. See also PJM Filing, Transmittal at 66 (“[n]o direct market power screens or mitigation are being \nproposed for the RBP”).  \n26 PJM Filing, Transmittal at 68 & n.171 (quoting Croop Aff. ¶ 32)."},{"page":8,"startToken":2651,"endToken":3033,"text":"- 8 - \n \nday.27 Indeed, PJM’s own supporting witness concedes that, “[i]n a pay-as-bid approach, \nunlike a uniform clearing price construct where sellers are expected to offer a marginal \ncost, sellers are more likely to offer the expected clearing price.”28 The academic and \nregulatory literature is to like effect: “pay-as-bid auctions create the incentive for all \nsuppliers to bid the expected market-clearing price, rather than submitting bids reflecting \neach facility’s individual marginal costs.”29  Tellingly, the Order agrees: “as both PJM and \nprotesters note, sellers are theoretically less likely to offer near their marginal costs in a \npay-as-bid auction.”30 \nThe Commission’s approval of RBP violates basic tenets governing the use of \ncompetitive procurement to set just and reasonable rates under the FPA. The Supreme \nCourt has held that “the Commission lacks the authority to place exclusive reliance on \nmarket prices,”31 explaining that the “prevailing price in the marketplace cannot be the \nfinal measure of ‘just and reasonable’ rates mandated by the [FPA].”32 The Supreme Court \nhas also found that the “directives contained in [sections] 205 [and] 206,” to ensure the \njustness and reasonableness of any sale of electric energy for resale in interstate commerce, \n \n27 Id. at 71 & n.184 (quoting Croop Aff. ¶ 33). \n28 Id. (emphasis added). As the Order explains PJM intends to run the RBP procurement mechanism with a \n“levelized procurement cost of all selected RBP Sell Offers not [to] exceed a maximum willingness to pay \nof $555/MW-day, on a MW-weighted average basis over all delivery years of the RBP.” RBP Order P 56; \nsee also Croop Aff. ¶ 6. \n29 Susan Tierney, Ph.D., Todd Schatzki, Ph.D. and Rana Mukerji, Uniform-Pricing versus Pay-as-Bid in \nWholesale Electricity Markets: Does it Make a Difference? at 18, Analysis Group (Mar. 2008) (original \nemphasis), \nhttps://www.nyiso.com/documents/20142/2268609/uniformpricing_v_payasbid_tierneyschatzkimukerji_20\n08.pdf/7b93c886-e3ce-82cc-2dfc-b36ae96efa21;  see also Electricity market design, European Commission \n(last visited Oct. 20, 2026) (“In the pay-as-bid model, producers (including cheap renewables) would simply \nbid at the price they expect the market to clear, not at zero or at their generation costs.”),  \nhttps://energy.ec.europa.eu/topics/markets-and-consumers/electricity-market-design_en. \n30 RBP Order P 75. \n31 FPC v. Texaco Inc., 417 U.S. at 400. \n32 Id. at 397."},{"page":9,"startToken":3033,"endToken":3419,"text":"- 9 - \n \ninclude the “responsibility to consider . . . the anticompetitive effects of regulated aspects \nof interstate utility operations.”33 Accordingly, and as the D.C. Circuit has explained, it is \nonly “when there is a competitive market [that] [the Commission] may rely upon market-\nbased prices in lieu of cost-of-service regulation to assure a ‘just and reasonable’ result.”34 \nIn other words, market-based procurement is not an end in itself, but is permissible only in \ncircumstances that make it “rational to assume” that competition will produce a price “close \nto marginal cost, such that the seller makes only a normal return on its investment.”35 \nThe Order does not identify, nor does the record contain, supporting evidence \nmaking it reasonable to assume that the resulting RBP procurement prices will be the result \nof true price competition or will reflect the marginal cost of the resources to be procured. \nThe Order cites no judicial or Commission precedent in support of its approval of RBP as \na pay-as-bid auction36 where sellers “are . . . likely to offer the expected clearing price” as \nopposed to their marginal cost.37 The Order does not address Joint Consumer Advocates’ \nobjection that the RBP is an unlawful market-based rate when measured against the \nstandards of Texaco, Elizabethtown, and their progeny.38 While the Order dismisses these \nobjections to RBP as “theoretical,” it is beyond purview that sound economic theory \n \n33 Gulf States Utils. Co. v. FPC, 411 U.S. at 758-59. \n34 Elizabethtown Gas Co., 10 F.3d at 870. \n35 Id. (quoting Tejas Power Corp., 908 F.2d at 1004). See also PJM, Revisions to Reliability Pricing Model, \nTransmittal Letter at 74 & n.225, PJM Interconnection, L.L.C., Docket No. ER25-682 (Dec. 9, 2024), \neLibrary No. 20241209-5207 (“The Commission uses a market-based approach to wholesale electric \nregulation, reasoning that, in a ‘competitive market, where neither buyer nor seller has significant market \npower, it is rational to assume that the terms of their voluntary exchange are reasonable, and specifically to \ninfer that price is close to marginal cost, such that the seller makes only a normal return on its investment.’” \n(quoting Tejas Power Corp., 908 F.2d at 1004)). \n36 RBP Order P 75. \n37 PJM Filing, Transmittal at 71 (quoting Croop Aff. ¶ 33). \n38 Cf. RBP Order P 75 with JCA Protest at 17-25."},{"page":10,"startToken":3419,"endToken":3810,"text":"- 10 - \n \npredictive of anticompetitive behavior is centrally relevant to the Commission’s exercise \nof its ratemaking authority to ensure just and reasonable and not unduly discriminatory \nrates.39 The Order fails to demonstrate that RBP will be a fair and competitive procurement \nprocess free of the exercise of seller-side market power.40 \nRBP’s shortcomings are manifest when compared against PJM’s standard auction \ncapacity procurement mechanism, the BRA. In contrast to the RBP, “the objective of [the \nBRA is] to procure the least-cost, competitively-priced combination of resources necessary \nto meet the region’s reliability objectives.”41 The Commission has found the BRA design \nto be just and reasonable because it is intended to ensure competition and mitigate seller-\nside market power by myriad means.42 The BRA includes must-offer resource obligations, \nmarket seller resource offer caps, a market price cap, and oversight of bids/bidding by the \nIndependent Market Monitor (IMM), designed to discipline seller-side market power.43 A \ncentral premise of the design is that capacity sellers are expected to bid their own marginal \ncosts. In accepting the BRA construct and its single clearing price model, the Commission \n \n39 See, e.g., Transmission Pol’y Study Grp. v. FERC, 225 F.3d 667, 689 (D.C. Cir. 2000), aff’d sub nom., \nN.Y. v. FERC, 535 U.S. 1 (2002). \n40 RBP Order P 75. \n41 N.J. Bd. of Pub. Utils. v. FERC, 744 F.3d 74, 101 (3d Cir. 2014). \n42 See RPM Order P 76. \n43 The forward-looking BRA was the product of a settlement with “design features [intended to] discourage \nthe exercise of market power and market manipulation generally. Specific mitigation rules and increased \ncompetition from new entry are the most important design elements in this regard.” Id. P 6. It must be \nemphasized that Joint Consumer Advocates do not concede that the Reliability Pricing Model (RPM) is at \npresent competitive or just and reasonable. As a subset of the Joint Consumer Advocates have shown in their \npending complaint in FERC Docket No. EL25-18-000, there is inadequate new entry to mitigate the market \npower of incumbent resources and inadequate measures to mitigate that market power. Among other things, \ndemand-side resources should be subject to a must-offer obligation to avoid the exercise of physical and \neconomic withholding. RBP fails to provide even the less-than-acceptable protections in the current \nRPM/BRA structure."},{"page":11,"startToken":3810,"endToken":4254,"text":"- 11 - \n \nfound that “under this model, the generator has the proper incentive to bid the lowest price \nthat covers its marginal cost.”44 \nThe RBP includes none of the BRA’s approved mitigation measures. In something \nof an understatement, the Order acknowledges that RBP “lack[s] . . . direct market power \nscreens or mitigation.”45  In fact, there is nothing in the approved design that requires RBP \nsellers to bid their own production costs and nothing that prevents them from “offer[ing] \nthe expected clearing price.”46 A seller’s ability to bid successfully unconstrained by its \ncompetitors’ cost of production is a paradigmatic example of the exercise of seller-side \nmarket power.47 Here, every resource eligible to offer into the RBP can bid to raise prices \nto the $555/MW-day average-price cap regardless of its marginal cost or that of its \ncompetitors. In short, resources bidding into the RBP will be engaged in a gaming strategy \nrather than price competition. \nThe Order proffers a series of assertions purporting to show that the RBP construct \nis just and reasonable and “the exercise of market power is unlikely.”48 None are \nconvincing. \n \n44 RPM Order P 141 n.101 (quoting 113 FERC ¶ 61,278, P 43); see also Croop Aff. ¶ 33 (in a “uniform \nclearing price construct” such as the BRA “sellers are expected to offer [at their] marginal cost”). \n45 RBP Order P 98. See also PJM Filing, Transmittal at 66 (“[n]o direct market power screens or mitigation \nare being proposed for the RBP”).  \n46 PJM Filing, Transmittal at 71 (quoting Croop Aff. ¶ 33). \n47 A seller that can bid the market price rather than its own marginal cost of production possesses “[m]arket \npower [because it has] the ability to raise prices above those that would be charged in a competitive \nmarket.” NCAA v. Bd. of Regents, 468 U.S. at 109 n.38; see also Jefferson Parish Hosp. Dist. No. 2, 466 \nU.S. at 27 n.46 (“As an economic matter, market power exists whenever prices can be raised above levels \nthat would be charged in a competitive market.”); William M. Landes & Richard A. Posner, Market Power \nin Antitrust Cases, 94 Harv. L. Rev. 937, 939 (1981) (“A simple economic meaning of the term ‘market \npower’ is the ability to set price above marginal cost.”). The Commission’s position is to like effect. A \n“resource[] [that can] increase prices in a specific area . . . [has] the ability to exercise market power.” \nFERC Office of Energy Policy and Innovation, Energy Primer A Handbook for Energy Market Basics at 72 \n(Dec. 2023), https://www.ferc.gov/media/energy-primer-handbook-energy-market-basics.  \n48 RBP Order P 98. See also id. P 75."},{"page":12,"startToken":4254,"endToken":4646,"text":"- 12 - \n \nFirst, the Order dismisses the “theoretical drawback” of sellers offering the \nexpected clearing price as opposed to their marginal costs of production based upon “the \nCharles River Associates Survey Results indicating strong seller interest in the RBP \nauction.”49 Even if true, this is a legally insufficient response. The Supreme Court has held \nthat Commission cannot rely upon competition alone as the basis for finding the RBP just \nand reasonable.50 That is particularly true here, where the design of the “market” facilitates \nuncompetitive conduct. \nThe Order’s dismissal of market power concerns rests entirely upon a single \nassertion in PJM’s transmittal filing that “the exercise of market power is unlikely if even \na portion of the more than 130 GW of supply identified in the Charles River Associates \nSurvey Results decides to participate and drive down prices.”51 But this is pure surmise \nand is contradicted by PJM’s own statement two pages later that bidders are “more likely \nto offer the expected clearing price.”52 A collection of uncompetitive offers, no matter how \nnumerous, does not constitute competition capable of producing just and reasonable prices. \nMoreover, any supposition that the number of potential suppliers will drive down \noffer prices, because suppliers will want to make sure their offers clear, ignores other \n \n49 Id. P 75. The Charles River Associates (CRA) Survey Results (RBP Order P 11 & n.17) refers to a seven-\npage slide deck summarizing the results of CRA’s request for information (RFI) concerning PJM’s proposed \nreliability backstop procurement. Charles River Associates, PJM Reliability Backstop RFI Summary (May \n27, \n2026) \n(CRA \nRFI \nSummary), \nhttps://www.pjm.com/-/media/DotCom/committees-groups/cifp-\nrbp/2026/20260527/20260527-informational-only---reliability-backstop-rfi-summary---charles-river-\nassociates.pdf.    \n50 FPC v. Texaco Inc., 417 U.S. at 400; accord Elizabethtown Gas Co., 10 F.3d at 870. PJM admits that \nRBP’s design leaves it powerless to protect against the exercise of seller-side market power. “Given offers \nwill likely have less variation and information underlying offers it can be difficult and ineffective to \ndetermine offers exhorting market power.” PJM Filing, Transmittal at 71 (quoting Croop Aff. ¶ 33). But this \nis no defense where the “difficult[y]” PJM faces is a consequence of its having proposed an inherently anti-\ncompetitive procurement structure.  \n51 See RBP Order P 98. See also PJM Filing, Transmittal at 69. \n52 PJM Filing, Transmittal at 71."},{"page":13,"startToken":4646,"endToken":5073,"text":"- 13 - \n \naspects of the RBP auction structure. The RBP, as proposed, does not clear resources \nstrictly in offer price order. Rather, it prioritizes offers for resources that can interconnect \nand become commercially operational quickly—a significantly more limited set of \nresources.53 According to the CRA presentation, most potential supply resources are still \nin the early permitting stages and are targeting commercial operation dates in the early \n2030s.54 Only about 80 projects had anticipated commercial operation dates from 2026 \nthrough 2029, compared to more than 260 from 2030  through 2033.55 So, even if these \nforecasts are correct, they demonstrate that resources that can be built quickly will be in \nshort supply. And because the RBP includes no resource offer caps, suppliers may offer \nthose resources at prices well above $555/MW-day and still be confident of clearing if \nother resources offer at prices below $555/MW-day.  \nThe Order also ignores other record evidence that undermines reliance on the CRA \nRFI data to claim that the RBP will function as a competitive solicitation. One of PJM’s \nwitnesses alleged that the RFI’s identification of a “large set of potential supply to \nparticipate in the RBP . . . allows the RBP to function more like a competitive \nsolicitation.”56 The phrase “more like” is an implicit concession that the RBP will not be a \n \n53 The set is even more limited than it otherwise would be because the RBP Order unreasonably accepts \nPJM’s disqualification of resources—such as demand resources—that could come on line quickly but may \nnot be able to commit to remain operational through the 2042/2043 delivery year. See RBP Order P 32 \n(“Demand Resources and [Distributed Energy Resources] Aggregators without identified sites and a 15-\nyear agreement in place cannot be RBP Resources.”). \n54 CRA RFI Summary at slide 6; see also RBP Order P 94 (“[Joint Consumer Advocates] states that only \nabout 80 of the 397 projects identified in the Charles River Associates Survey Results claim an ability to \nachieve commercial operation by the 2028/2029 delivery year and only 3% of all projects are under \nconstruction.”). \n55 Id. \n56 Croop Aff. ¶ 35 (emphasis added). The witness fails to explain why she believes there will be a large set \nof potential bidders in the RBP. The RBP will secure resources by order of delivery year (and then cost) \nwith priority beginning in the 2028/2029 Delivery Year. PJM Filing, Transmittal at 75. Only about 80 of \nthe 397 projects identified by CRA claim an ability to achieve commercial operation by this date and only"},{"page":14,"startToken":5073,"endToken":5397,"text":"- 14 - \n \nprice-competitive solicitation. Regardless of whether RBP attracts many bidders or few, \nthe record provides no support for the Order’s supposition that these will be competitive \nbids. The record evidence points in one direction only. Whatever resources can fill the \nimmediate need, those with marginal costs less than $555/MW-day will have every \nincentive to bid somewhere around the expected clearing price as opposed to their marginal \ncosts. 57 According to the PJM IMM, the “RBP’s use of a pay as bid approach coupled with \nthe failure to include market power mitigation will result in the exercise of market \npower.”58 \nSecond, the Order contends that “PJM’s proposed average-price cap of $555/MW-\nday further disciplines costs by increasing the risk that high offers do not clear.”59 Far from \nbeing a mitigation measure, the $555/MW-day average-price cap is integral to the ability \nof RBP bidders to game the procurement with offers targeted at the price cap and thereby \nexercise seller-side market power. The average-price cap permits offers at—or above—\nthat price, and in no way guarantees price competition among resources whose marginal \ncosts are below that price. Indeed, the Order concedes that sellers are “less likely to offer \nnear their marginal costs in a pay-as-bid auction than in a single-price auction.”60 \nAs explained in the next section, the Order also fails to show that the $555/MW-\nday “maximum willingness to pay” benchmark is itself just and reasonable or will lead to \n \n3% of all projects are under construction. CRA RFI Summary at 6. And the eligibility of those projects to \nbid into the RBP is unknown, as is the accuracy of the information provided to CRA. \n57 PJM Filing, Transmittal at 71 (quoting Croop Aff. ¶ 33). \n58 Protest of the Independent Market Monitor for PJM at 25 (Aug. 21, 2026), eLibrary No. 20260821-5317 \n(IMM Protest). \n59 RBP Order P 98. See also id. P 75. \n60 Id. P 75."},{"page":15,"startToken":5397,"endToken":5683,"text":"- 15 - \n \njust and reasonable auction prices. What the Commission must—but fails to—show is that \nthere is a meaningful relationship between PJM’s proposed $555/MW-day average-price \ncap and the actual costs of the resources that will be procured. “[T]he prevailing price in \nthe marketplace cannot be the final measure of ‘just and reasonable’ rates mandated by the \n[FPA].”61 The Order makes no showing that the RBP as approved, including the \n$555/MW-day average-price cap, will create meaningful cost-based price competition \nbetween and among offering resources.62 PJM itself admits that this is unlikely, as it is in \nthe economic self-interest of bidders to offer somewhere around the expected clearing \nprice.63    \nIn summary, the Commission’s approval of RBP exceeds its statutory authority to \napprove market-based rates for wholesale sales of capacity. RBP leaves consumers at the \nmercy of suppliers who, unconstrained by resource price competition or any other \nmeaningful mitigation measures, have every incentive and opportunity to bid as close to \nthe price cap as possible. And bidders will be operating in an admittedly supply-constrained \nenvironment, subject only to a wholly arbitrary “willingness to pay” provision at an \naverage (and potentially higher) $555/MW-day capacity price untethered to any selected \nresource’s actual cost minus its energy and ancillary services revenues. On the instant \nrecord, the Order’s approval of RBP exceeds the Commission’s authority under the FPA \nto authorize market-based rate transactions. RBP is demonstrably unjust and unreasonable, \n \n61 FPC v. Texaco, 417 U.S. at 397. \n62 See Elizabethtown Gas Co., 10 F.3d at 870 (it is only “when there is a competitive market [that] [the \nCommission] may rely upon market-based prices”). \n63 PJM Filing, Transmittal at 71 (quoting Croop Aff. ¶ 33)."},{"page":16,"startToken":5683,"endToken":6020,"text":"- 16 - \n \ncontrary to controlling precedent, an invitation for the abuse of seller market power, and a \nburdening of ratepayers with billions in unjust capacity charges. \nB. \nThe Order provides no reasoned explanation for approving \nPJM’s proposed $555/MW-day price cap. \nThe RBP Order asserts that “in establishing the value for the maximum willingness \nto pay in the RBP, PJM reasonably relied on the value of the RPM price cap that the \nCommission accepted in January and reaffirmed in July.”64 “[T]here is no question the \nCommission may attach precedential, and even controlling weight to principles developed \nin one proceeding and then apply them under appropriate circumstances in a stare decisis \nmanner.”65 But application of precedent is warranted only if “the factual composition of \nthe case to which the principle is being applied bear[s] something more than a modicum of \nsimilarity to the case from which the principle derives.”66 There is no “modicum of \nsimilarity” between PJM’s BRA and RBP. Accordingly, the Commission’s reliance on \nPJM’s borrowing of the recent BRA market price cap for purposes of RBP is unjustified \nand inadequately reasoned. Because the Order provides no other explanation for its \nacceptance of the price cap it fails to “articulate a satisfactory explanation for its action, \nincluding a ‘rational connection between the facts found and the choice made.’”67 \nPJM proposed the $555/MW-day average-price cap as just and reasonable because \nit corresponds to the “uncollared price cap based on Point 1 of the VRR curve for the \n \n64 RBP Order P 74. \n65 La. Intrastate Gas Corp. v. FERC, 962 F.2d at 44 (alteration in original) (quoting Mich. Wis. Pipe Line \nCo., 520 F.2d at 89). \n66 Id. (alteration in original) (quoting Mich. Wis. Pipe Line Co., 520 F.2d at 89); see also Me. Pub. Serv. \nCo. v. FERC, 964 F.2d 5, 9 (D.C. Cir. 1992). \n67 State Farm, 463 U.S. at 43 (quoting Burlington Truck Lines v. United States, 371 U.S. 156, 168 (1962))."},{"page":17,"startToken":6020,"endToken":6332,"text":"- 17 - \n \n2028/2029 Delivery Year BRA.”68 PJM asserted that the “willingness to pay for a 15-year \ncommitment should not exceed the amount that load would be willing to pay for a single-\nyear commitment under the RPM framework.”69 The Order agrees and finds that this price \ncap represents a proper balance of resource acquisition needs and ratepayers’ willingness \nto pay.70   \nBut in fact, as Joint Consumer Advocates argued in their Protest, the willingness to \npay for a 15-year commitment—and the price that resources should be willing to accept, if \nguaranteed for 15 years—should be substantially less than the corresponding amounts for \na one-year commitment.71 That is true as a general matter, as 15-year price certainty \nreduces supplier risk and eases financing.72 But it is particularly true where the reliability \nneed is concentrated in the early part of the period, when the one-year commitment would \noccur. In that context, the one-year commitment reflects a scarcity price that simply should \nnot be expected to apply across the full 15-year term. The Order nowhere addresses Joint \nConsumer Advocates’ argument nor explains why a willingness to pay for a one-year \ncommitment when scarcity is greatest should be commensurate with the willingness to pay \nfor a 15-year commitment that may extend well beyond the end of any supply crisis. \nAdditionally, the BRA and RBP price caps are fundamentally different. As it is \nused in the BRA structure, Point 1 of the VRR curve for the 2028/2029 Delivery Year is a \n \n68 PJM Filing, Transmittal at 62. \n69 Id. at 64. \n70 RBP Order P 74. \n71 JCA Protest at 25. \n72 RBP Order P 76 (“As PJM explains, long contract terms create revenue certainty for RBP Resources and \ngenerally can reduce financial and development risk and may improve financing opportunities through \nlower capital costs or more favorable financing terms.”)."},{"page":18,"startToken":6332,"endToken":6640,"text":"- 18 - \n \nhard cap. Load would never under any outcome pay more than the $555/MW-day fixed \nprice cap. And it is a fail-safe measure employed in the context of a single-price-auction \nthat incentivizes resources to offer prices close to their marginal costs. In contrast, as used \nin the RBP, the $555/MW-day price is likely harmful to ratepayers because it allows sellers \nto exercise market power and bid the cap price as opposed to their marginal cost of \nproduction. And it is a “soft” price cap that binds only on average, meaning that ratepayers \nare subject to paying a selected resource’s “as bid” offer price even if it exceeds $555/MW-\nday and no matter by how much it exceeds the resource’s marginal costs. Moreover, it is \nplausible that ratepayers may pay more than $555/MW-day for RBP-acquired capacity, \neven on average. This is because the RBP’s actual $/MW-day average-price cap will \nincrease to the extent any resource or combination of resources that bid less than \n$555/MW-day fail to enter commercial operation or cease operation prior to the end of \ntheir RBP commitment term. \nAs Joint Consumer Advocates explained, the possibility that ratepayers may pay \nmore than an average acquisition price of $555/MW-day is a matter of simple mathematics \nand can be shown through the following example.73 Assume, for simplification purposes, \nthat the RBP procures a total of 5,000 MW at an average price of $555/MW-day. Assume \nfurther that 1,000 MW of load has bid in at a price of $400/MW-day: a price higher than \nthe 2028/2029 Delivery Year $325/MW-day price collar but sufficiently below the \n$555/MW-day average price to facilitate being selected. Assume further that the selected \nlow-price load does not enter commercial operation. The loss of this load would cause the \n \n73 JCA Protest at 26-27."},{"page":19,"startToken":6640,"endToken":7129,"text":"- 19 - \n \nactual RBP average price to increase to $593.75/MW-day.74 This outcome is not \nimplausible; PJM recognizes that RBP committed resources may fail to achieve \ncommercial operation for sundry legitimate reasons including the lack of necessary \nNetwork Upgrades.75 Over the 15-year RBP commitment term, the price increase in this \nexample results in roughly $850 million in gross costs beyond what “load would be willing \nto pay” as measured against PJM’s own standard.76 Again, the Order nowhere to comes to \ngrips with Joint Consumer Advocates’ showing that the BRA’s hard price cap is \nfundamentally different and more ratepayer protective than the RBP’s soft price cap. \nThe Commission’s approval of PJM’s borrowing of Point 1 of the VRR curve is \nlikewise inapposite because it is a reference cost grounded in the estimated CONE for a \nCT, and is the market price cap in the BRA where bidders are expected to offer at their \nmarginal cost of production.77 By comparison, the RBP has no reference resource or VRR \ncurve, nor is it anticipated that bidders will bid their cost of production.78  Unlike the BRA, \n \n74 An RBP acquisition of $555/MW-day multiplied by 5,000 MW equals $2,775,000 per day in capacity \ncharges. Removing 1,000 MW of committed resources at $400/day results in $2,375,000 per day in capacity \ncharges ($2,775,000 minus $400,000), now spread over 4,000 MW of resources. This results in a \n$593.75/MW-day average price: an increase of $38.75/MW-day over the soft cap of $555/MW-day. \n75 PJM Filing, Attach. D, Affidavit of Ms. Gwen Kelly ¶¶ 10-11 (Due to a variety of RBP project development \nrisks, “PJM concluded that resources seeking RBP commitments present risks that a committed resource may \nfail to achieve commercial operation or experience delays in reaching commercial operation.”); see also PJM \nFiling, Transmittal at 60 (excusing from RBP shortfall charges RBP resources that fail to meet their \ncommercial operation dates solely because of Network Upgrade issues). \n76 While in some circumstances there may be charges imposed on resources that fail to achieve commercial \noperation, those charges are limited, and such shortfall charge amounts are unlikely to overcome the cost \nincrease described here. \n77 “PJM states that the choice of a CT plant as the Reference Resource is consistent with criteria that PJM \nhas used in previous Periodic Reviews, including: (1) feasibility to build; (2) whether the resource is an \neconomic source of incremental capacity; and (3) whether the resource’s Net CONE can be accurately \nestimated. [The Commission] find[s] that PJM reasonably supports its conclusion that a CT plant meets these \ncriteria because it is feasible to build and offers an economically viable source of incremental capacity.” PJM \nInterconnection, L.L.C., 194 FERC ¶ 61,049, P 16 (footnote omitted), on reh’g, 196 FERC ¶ 61,007 (2026). \n78 PJM Filing, Transmittal at 71 (quoting Croop Aff. ¶ 33)."},{"page":20,"startToken":7129,"endToken":7446,"text":"- 20 - \n \nPJM will not undertake to ascertain whether any RBP offer reflects the resource’s cost of \nproduction.79 A review of PJM’s proposed gating criteria confirms that PJM’s offer review \nwill be limited to a “demonstrat[ion] that the proposed resource will be successfully \ncompleted and able to provide capacity.”80  \nThe Order’s sole justification for the RBP’s $555/MW-day price cap is that “PJM \nreasonably relied on the value of the RPM price cap that the Commission accepted” for the \n2028/2029 BRA.81 But that reliance is not reasonable. There is nothing reasonable—let \nalone consistent with record evidence—about plucking a figure from the BRA construct \nand applying it to the dissimilar context of the RBP. The Order fails to show any rational \nconnection between the 2028/2029 BRA price cap and its application to the RBP, including \nthat a $555/MW-day price bears any meaningful relationship to the marginal costs of \nproduction of the resources RBP will procure.82 Worse, the Order takes from the BRA \nconstruct a price cap that was not even made effective for the BRA itself. The Order does \nnot grapple with the Commission’s own finding that a $325/MW-day price cap is just and \nreasonable, much less explain why the RBP price cap should be 70% higher despite RBP \nproviding a more than a decade of additional price certainty beyond what the BRA offers. \nAs the Order itself recognizes, long-term revenue certainty reduces supplier risk and \nfinancing costs.83 While the implication of that (correct) assertion is obvious, the Order \ndoes not come to grips with the corollary that any cost-based price cap should be lower (or \n \n79 Id. at 66 (“No direct market power screens or mitigation are being proposed for the RBP.”). \n80 Id. at 71. \n81 RBP Order P 74. \n82 Elizabethtown Gas Co., 10 F.3d 866 at 870. \n83 RBP Order P 76."},{"page":21,"startToken":7446,"endToken":7826,"text":"- 21 - \n \nat the very least no higher) in the longer-term RBP than the cap actually applied in the far \nshorter-term BRA. \nC. \nThe Order is arbitrary and capricious in failing to address why it \nrequires 15-year RBP resource commitments when PJM admits \nthat 5-year contracts eliminate the need for RBP procurement. \nAn agency’s action is arbitrary and capricious if it “entirely fail[s] to consider an \nimportant aspect of the problem” before it or fails to establish a reasonable connection \nbetween the decisions made and the facts found.84 That is the case here. The problem to be \naddressed by the RBP is a near-term capacity shortfall. The Order points to what it \ndescribes as “grave resource adequacy concerns” based on the last two BRAs, for the \n2027/2028 and 2028/2029 Delivery Years, having cleared 5% less capacity than the PJM \ntarget reserve margin.85 The RBP is intended to make up this shortfall as soon as possible, \nnot to address future capacity procurement concerns, and therefore prioritizes the clearing \nof resources based on how quickly they can reach commercial operation.86 And consistent \nwith this focus on near-term resource adequacy, PJM contemplates that bilateral capacity \nprocurement with a contract term of just five years will eliminate the need for RBP \nprocurement and will justify reducing the RBP Target by the amount procured bilaterally.87 \nDespite the near-term nature of the reliability need and an absence of evidence that \nthe BRA will need RBP supplementation in the long term,88 the Order nonetheless accepts \n \n84 State Farm, 463 U.S. at 43. \n85 RBP Order PP 5, 13, 29-30. \n86 Id. P 61 (“PJM explains that, in selecting resources from the offer stack, it will first look to RBP \nResources expected to reach commercial operation in the 2028/2029 delivery year,” followed by “resources \noffered with an expected commercial operation date in the 2029/2030 delivery year, and will continue \niteratively, up to and including the 2032/2033 delivery year, until the set of offers selected meets the Final \nRBP Target.”). \n87 Id. P 125. \n88 The Order notes that “RBP is a one-time procurement.” Id. P 1.  No additional RBP procurements are \nproposed nor has the Commission set the issue of possible additional kindred procurements for hearing or"},{"page":22,"startToken":7826,"endToken":8154,"text":"- 22 - \n \nPJM’s proposal to require a lengthy minimum RBP commitment term—up to 15 years \ndepending on the resource’s commercial operations date. The Order approves requiring \nRBP resources to agree to commitments through the 2042/2043 Delivery Year.89 This \nproduces two unnecessary, adverse consequences. First, it disqualifies resources that could \nattain commercial operation quickly but may not be able to commit to such a long \ncommitment period. By disqualifying these resources, the Order arbitrarily shrinks the pool \nof resources that can compete to satisfy the near-term resource adequacy need to which \nRBP is meant to respond. Second, the unsupported minimum term requirement forces \nratepayers to pay supra-competitive RBP prices for an unnecessarily long time, further \nburdening ratepayers that are already paying enormous BRA capacity costs. \nThe Order acknowledges Joint Consumer Advocates’ argument that RBP is unjust \nand unreasonable because “PJM’s assertion that a five-year contract is sufficient to satisfy \nthe RBP’s short-term reliability need cannot be squared with a proposal requiring 15-year \ncommitments to meet the same need.”90 But it does not meaningfully respond to that \nobjection, and instead finds the RBP’s 15-year procurement term eligibility requirements \njust and reasonable.91 Thus, the Order fails to come to grips with the material evidentiary \ncontradiction at the heart of RBP. Although the Order has set PJM’s Load Adjustment \nprocess (which includes bilateral offset capacity) for hearing, it does not address that PJM’s \n \nsuggested PJM make an FPA section 205 filing to address that issue. Id. P 3. The Commission has sought \nadditional briefing or a further PJM section 205 filing only to address: (1) the proposed municipal and co-\noperative opt out provision, id. P 152; (2) PJM’s proposed cost allocation, including its reliance on Load \nAdjustments for that purpose, id. PP 156-57; (3) the assignment of RBP costs to exiting TOs, id. P 179; and \n(4) PJM’s proposed buyer-side collateral requirements, id. P 206. \n89 Id. P 50. \n90 Id. P 40. \n91 Id. P 48."},{"page":23,"startToken":8154,"endToken":8447,"text":"- 23 - \n \nas-filed proposal undercuts the notion that 15 years of payments are needed to address the \nshortfall.92 The proposal is express that Load-Serving Entities can fulfill their share of the \nRBP capacity obligation outside of the auction by procuring 5-year bilateral contracts. \nProposed Tariff, Attachment DD, section 18.2(c) explains that “Evidence of Qualifying \nRBP Offset [Unforced Capacity (UCAP)] MW” can include “[s]igned bilateral contracts \n. . . for at least five Delivery Years with a commercial operation date prior to the start of \nthe 2032/2033 Delivery Year.” In its Transmittal Letter, PJM calls a five-year term \n“balanced,”93 explaining:94  \nCapacity with a bilateral contract of at least five years is \ncapacity that will address the reliability shortfall and is not \ntransitory. Furthermore, a five-year term is not so lengthy as \nto undermine the flexibility needed for commercial \ncontracting or to pose a significant barrier to eligibility for \nQualifying RBP Offset UCAP MW, in recognition of the \nfact that bilateral agreements may not need to be longer than \nfive years to develop new capacity. \nIn accepting PJM’s proposed 15-year RBP term, the Order ignores and has no answer for \nPJM’s own determination that procurements “of at least five years is capacity that will \naddress the reliability shortfall.”95 \nThe Order itself makes no independent determination that 15-year RBP \nprocurement terms are necessary to redress PJM’s near-term resource adequacy shortfall. \nIndeed, PJM does not contend as much. PJM only supports this facet of the proposal by \npointing to the January 16, 2026, Statement of Principles Regarding PJM that was signed \nearlier this year by federal officials on behalf of the White House National Energy \n \n92 Id. PP 150-56. \n93 PJM Filing, Transmittal at 39. \n94 Id. at 39-40. \n95 Id. at 39."},{"page":24,"startToken":8447,"endToken":8727,"text":"- 24 - \n \nDominance Council and the governors of all thirteen PJM states (but not the Mayor of the \nDistrict of Columbia), referencing the document’s call to “[p]rovide 15-year price certainty \nfor new capacity resources.”96 PJM offers no analysis comparing the ratepayer cost of a \n15-year term against shorter alternatives. And the CRA RFI survey information PJM relies \nupon shows that there are resources willing to agree to shorter terms. Roughly 1/5 (21%) \nof the supply-side response projects would agree to terms of 10 years or shorter, and \nanother 13% of respondents were “flexible” as to term.97 Though Joint Consumer \nAdvocates identified all of these issues in their protest, the RBP Order addresses none of \nthem in accepting PJM’s proposal.98  \nIt is beyond question that requiring ratepayers to pay for 15-year procurements \nwhen PJM has admitted that five-year procurements are sufficient to meet its resource \nadequacy needs is a material issue. The amount of RBP charges for PJM’s proposed \nprocurement total of 6,831 MWs at a rate of $555/MW-day x 365 days x 15 years would \nbe $20,756,847,375. That same procurement for a term of five years would be some \n$13 billion less, $6,918,949,125. Given the magnitude of ratepayer charges at issue, the \nCommission cannot, in approving 15-year procurement terms, simply airbrush away PJM’s \nadmission that five-year procurements are adequate to meet its reliability needs for \npurposes of RBP.  \n \n96 Id. at 48 (quoting National Energy Dominance Council, Statement of Principles Regarding PJM at 1 \n(Jan. 16, 2026) (Statement of Principles), https://www.energy.gov/documents/statement-principles-\nregarding-pjm).  \n97 CRA RFI Summary at 5.  \n98 JCA Protest at 14-16."},{"page":25,"startToken":8727,"endToken":8991,"text":"- 25 - \n \nIt is no answer to say that the lengthy minimum term is justified in exchange for \nthe revenue certainty that RBP will provide.99 If a shorter term were permitted, the period \nof revenue certainty would be commensurately shorter too. The minimum term \nrequirement is the independent variable. The period of revenue certainty is a function of \nthe RBP term, not the other way around. The Order offers no basis for concluding that a \n15-year minimum term is necessary to meet the reliability need, as even PJM, the \nproposal’s proponent, admits that a shorter term will meet the same need, and in a \n“balanced” fashion. \nIt is unjust and unreasonable to charge ratepayers for the acquisition of 10 years of \ncapacity that is not needed to “address the reliability shortfall” and serves no \ncost-efficiency or other economic purpose. In Citadel FNGE Ltd. v. FERC, the D.C. Circuit \nexplained that the “application of [a PJM auction rule] was unjust and unreasonable not \njust because of how much it increased the wholesale rate, but because it caused that increase \nfor no justifiable purpose” and “without any commensurate [consumer] benefit.”100 That \n“comfortably fits the definition of unjust and unreasonable.”101 Where a price increase \n“serv[es] no good purpose,” the absence of a reasoned justification for it makes it “unjust \nand unreasonable in its own right.”102 The Order acknowledges Joint Consumer \nAdvocates’ reliance upon Citadel in objecting to 15-year RBP procurement terms based \n \n99 RBP Order P 50.  \n100 Citadel FNGE Ltd., 77 F.4th at 856. \n101 Id. \n102 Id. at 857."},{"page":26,"startToken":8991,"endToken":9302,"text":"- 26 - \n \nupon PJM’s concession that five-year resource acquisitions are sufficient but fails to \nexplain why 15-year terms are necessary or provide any ratepayer benefit.103 \n“It is well established that the Commission must ‘respond meaningfully to the   \narguments   raised   before   it.’”104  In accepting PJM’s proposed 15-year RBP procurement \nterms while ignoring Joint Consumer Advocates’ objection that the length of these terms \nis overly long and unnecessary based upon PJM’s own admission, the Order is arbitrary \nand capricious. \nD. \nThe RBP Order errs by failing to require that the RBP \nincorporate locational constraints. \n While PJM “recognizes there are locational considerations at large for resource \nadequacy, and these constraints are modeled in the Reliability Pricing Model[,]”105 RBP \nincludes no locational procurement signal.106 The Order nonetheless “find[s] that the \nproposal’s lack of locational constraints does not render PJM’s overall proposal unjust and \nunreasonable.”107 The RBP Order dismisses Joint Consumer Advocates’ (and others’)108 \nobjections that the absence of locational criteria for RBP poses unjustified cost risks for \nratepayers by pointing to the amount of capacity to be procured through RBP:109 \nSpecifically, the volume of capacity that PJM will procure \nthrough the RBP auction—up to 6,831 MW—is relatively \n \n103 RBP Order P 63 & n.90 (citing JCA Protest at 16). \n104 TransCanada Power Mktg. Ltd., 811 F.3d at 12 (quoting Pub. Serv. Comm'n v. FERC, 397 F.3d 1004, \n1008 (D.C. Cir. 2005)); Constellation Mystic, 45 F.4th at 1058 (the Commission “entirely failed to address \n[petitioner’s] argument,” and the “failure to respond meaningfully . . . renders its decision arbitrary and \ncapricious.” (internal quotations and citation omitted)). \n105 Croop Aff. ¶ 8. \n106 Id. ¶ 7. \n107 RBP Order P 97. \n108 See, e.g., IMM Protest at 7-8, 11; see also RBP Order P 92 (summarizing objections to lack of locational \nconstraints). \n109 RBP Order P 97."},{"page":27,"startToken":9302,"endToken":9582,"text":"- 27 - \n \nsmall compared with total existing supply in PJM (149 GW), \nso even if RBP Resources are not located in the exact same \nLocational Deliverability Areas as new loads, the effect of \nany locational constraints should be limited. \n \nThat is a strange argument, to say the least, when the same “relatively small” shortfall is \nthe justification for implementing the RBP procurement—and its commitment of \nratepayers to 15 years of excessive prices—in the first place. The Order makes no effort to \ngrapple with the contradiction. \nMoreover, the Order’s conclusion that the absence of locational constraints will \nhave “limited” effect is unwarranted speculation that fails to respond meaningfully to the \nconcern raised by Joint Consumer Advocates that RBP’s lack of locational constraints risks \nburdening ratepayers with additional new transmission and energy costs (if the large load’s \narrival on the grid creates congestion) that could otherwise be avoided.110 Significantly, \nthe RBP Order does not deny Joint Consumer Advocates’ concern—instead, it merely \nsupposes that any additional burden would be minimal. But that is no answer. Even \nassuming, arguendo, that the Commission’s supposition proves accurate, a design \ncomponent does not become just and reasonable because the unjustified burden placed on \nratepayers is “limited.” \nIn any event, there is no basis for assuming that any such effect will be small. If \nRBP Resources cannot reach the LDAs with new large loads, price separation is possible \n(if not likely), in which case ratepayers would be burdened with potentially hundreds of \nmillions of dollars in increased capacity costs as well as additional new transmission and \nenergy costs that could be avoided or ameliorated through the use of a locational \n \n110 JCA Protest at 29."},{"page":28,"startToken":9582,"endToken":9853,"text":"- 28 - \n \nprocurement signal.111 In the 2024/2025 BRA, price separation in the Delmarva Power and \nLight Zone resulted in “PJM spend[ing] an additional $182.8 million to procure just 1.9 \nper cent more capacity.”112  \nThe Commission knows that the absence of locational considerations for purposes \nof resource acquisition can result in otherwise avoidable adverse rate and reliability \nconsequences. In approving the current RPM construct, the Commission found “that the \nlocational pricing phase-in provisions of the settlement as proposed are just and \nreasonable.” These BRA locational pricing provisions “address[ed] the Commission’s \nconcerns that appropriate price signals are available to provide incentives to construct \nfacilities necessary for regional reliability by assuring that the market value of resources \nused to meet the capacity requirements reflect actual deliverability and availability of the \ncapacity resource within the specific region relying on that resource.”113 Yet the RBP Order \nwill nullify the very locational price signals that the Commission has found important to \nthe BRA. RBP resources will participate in the BRA as price takers. Consequently, the \nroughly seven GW of non-locationally-procured RBP capacity will displace a \ncorresponding amount of BRA capacity responding to locational price signals.  \nIn its recent order addressing PJM’s Interim Resource Adequacy Service (IRAS) \nproposal the Commission expressed “concern[] that PJM’s proposal does not take into \n \n111 See, e.g., Answer and Motion for Leave to Answer of the Independent Market Monitor for PJM at 27-28 \n(Sep. 25, 2026), eLibrary No. 20260925-5208 (IMM Answer) (quoted infra). \n112 Md. Off. of People’s Couns. v. FERC, 164 F.4th 920, 925 (D.C. Cir. 2026). \n113 RPM Order P 68."},{"page":29,"startToken":9853,"endToken":10153,"text":"- 29 - \n \naccount locational or deliverability considerations for [Bring Your Own New Capacity \n(BYONC)] resources.”114 \n[U]nder PJM’s existing Tariff, PJM identifies LDA \nReliability Requirements, which require sufficient capacity \nto be inside or deliverable to the LDA based on transmission \nconstraints. Under PJM’s proposal, the New Large Load \nwould not be subject to IRAS, and its load would not be \ncounted towards the Eligible New Large Load amount for its \n[Electric \nDistribution \nCompany \n(EDC)] \nzone/area, \nregardless of transmission constraints between the New \nLarge Load and the BYONC resource, which could \nexacerbate the resource adequacy shortfall in the New Large \nLoad’s zone.115 \n \nThe IMM raised these same concerns in this proceeding.116 \nPJM will continue to conduct [Capacity Emergency Transfer \nObjective (CETO)/Capacity Emergency Transfer Limit \n(CETL)] analysis for each capacity market auction. If the \nRBP results in procuring capacity that cannot be delivered to \nthe data center load in such a way that the LDA reliability \nneeds are met, the LDA where the data center is located \nwould be forced to procure more capacity in the capacity \nmarket auction. If the new capacity is not available, the LDA \nwith the data center would pay the maximum price for \ncapacity (shortage pricing). \n \n* * * \n \nUnder the RBP Filing, a data center load in [Baltimore Gas \n& Electric (BGE)] would be allowed to procure capacity \nlocated in a distant LDA, e.g. [Commonwealth Edison \nCompany (ComEd)]. BGE, located within the [Southwest \nMid-Atlantic Area Council (SWMAAC)] LDA has been one \nof the constrained LDAs in PJM. In this scenario, BGE \nLDA’s load would increase without offsetting generation \nand without additional transmission capacity to import \npower from outside BGE under emergency conditions. In \nthis scenario, BGE’s reliability requirement would not be \n \n114 197 FERC ¶ 61,019 P 109. \n115 Id. \n116 IMM Answer at 27-28."},{"page":30,"startToken":10153,"endToken":10438,"text":"- 30 - \n \nsatisfied and BGE customers would pay the maximum price \nfor capacity as a result. \n \nAllowing capacity and load to be added without accounting \nfor locational resource adequacy would also result in higher \nenergy market prices and increased transmission costs. In the \nexample, in the BGE LDA with higher load and lack of \noffsetting generation and transmission capacity to import \npower would result in higher prices in the energy market. \nThis would trigger transmission upgrades. \n    \nThe Order wrongly dismisses these concerns in the RBP context even as it treated \nparallel concerns as significant to the BRA and as a reason to reject PJM’s IRAS proposal. \nThe Order’s refusal to require locational procurement constraints in the RBP is thus an \nunexplained departure from precedent.117 While the IRAS decision postdates the RBP \nOrder, the Commission on rehearing must explain why it dismissed the concern in the RBP \ncontext while crediting it in the IRAS context. \nThe Order gestures at an argument that locational requirements are not needed \nbecause the RBP responds to an aggregate resource adequacy deficiency, not location-\nspecific needs. According to the Order, “the RBP is designed to address the PJM Region’s \ncapacity shortfall, such that it is addressing an effectively region-wide problem.”118 But \neven assuming arguendo that this is correct, the Order’s failure to impose RBP locational \nconstraints cannot be reconciled with the inclusion of locational constraints in the modeling \nfor PJM’s RPM, which is likewise a region-wide procurement to ensure resource adequacy.  \nMoreover, the Order’s characterization of RBP as responsive to aggregate region-\nwide load growth is contrary to PJM’s characterization of its proposal, which makes crystal \n \n117 Encino Motorcars, LLC, 579 U.S. at 212-13. \n118 RBP Order P 97."},{"page":31,"startToken":10438,"endToken":10811,"text":"- 31 - \n \nclear that RBP is intended to address the enormous amount of projected load growth from \nnew data centers that is outpacing new supply.119 \nPJM hosts the largest concentration of data center load in the \nworld.s “PJM’s load forecast predicts peak load growth of \n32 gigawatts [(“GW”)] from 2024 to 2030, 30 GW of which \nis projected to be from data centers.” Year-over-year, the \nshortfall of capacity supply needed to meet demand (plus a \nreasonable reserve margin) has grown despite a net increase \nof 1,294.4 MW Installed Capacity (“ICAP”) of supply \nbetween the 2027/2028 and 2028/2029 BRA. In other words, \nthe addition of new supply has not kept pace with rapid large \nload demand growth, thus giving rise to the significant \ntightening of the capacity market in recent years and the \nsubsequent resource adequacy shortfalls. To mitigate the \npotential reliability risks associated with resource adequacy \nshortfalls, PJM is proposing this RBP as a one-time, \nsupplementary mechanism to procure additional supply to \nmeet the resource adequacy needs of the PJM Region. \nAnd there is nothing mysterious about the locations of this load growth. Everyone knows \nwhere the new data center load has materialized within PJM and where it is projected to \ngrow. And the RBP, in responding to this new large load growth, is addressing even more \nconcentrated, location-specific load growth than the BRA generally does. If anything, the \nRBP context makes locational considerations more, not less, important, than they are in the \nBRA—a reality recognized by PJM’s proposal to allocate RBP costs to zones based on \ntheir large load forecasts.120  \nThe Order’s apparent contention that RBP is necessary to meet diverse aggregate \nregion-wide load growth cannot be reconciled with its own statements to the contrary and \nthe record evidence. The Commission accepts RBP, in part, because “PJM’s ordinary \n \n119 PJM Filing, Transmittal at 6-7 (footnotes omitted) (emphasis in original). \n120 “The initial allocation of RBP UCAP MW to each Electric Distributor zone/area will be based on Load \nAdjustments, as set forth in PJM Table B9b from the 2026 PJM Load Forecast, and each zone/area’s share \nof the Initial RBP Target of 6,831.3 MW.” Croop Aff. ¶ 46 (with chart of zonal allocations)."},{"page":32,"startToken":10811,"endToken":11116,"text":"- 32 - \n \ninstrument for procuring sufficient capacity to meet PJM’s reliability requirement, the \nRPM, has failed to keep pace with the unprecedented influx of large load into the PJM \nregion in recent years.”121 In excusing RBP’s lack of locational constraints, the Order \napparently ignores the transparent and compelling evidence that PJM’s resource adequacy \nshortfall is driven by new data center load and that load growth is projected to occur in \nspecific zones within PJM. The Order itself states that “[t]he largest driver of the shortfall \nwas 5,250 MW of load growth forecast for [the 2027/2028 Delivery Year], nearly 5,100 \nMW of which was due to data centers.”122 The IMM has found that it is new data center \nload that is the causal driver of increased capacity prices within PJM.123 \nWhile data center growth has occurred over five or more \nyears, PJM has failed to address the impact of data centers \non the PJM Capacity Market over the last four capacity \nauctions. PJM has made its RBP Filing only under direct \npressure from the Commission and the White House and the \nPJM governors, among others. It is clear that the current \nsituation and the current tariff in PJM are untenable and \ntherefore unjust and unreasonable. The addition of data \ncenter load has resulted in adding $29.4 billion to the cost of \ncapacity, higher energy costs, higher transmission costs, and \na significant degradation of system reliability. \n \nThe White House’s National Energy Dominance Council’s Statement of Principles \nRegarding PJM likewise points to new data center load as the causal driver of PJM’s \nresource adequacy needs and provides that “PJM should allocate the cost of any new \ncapacity procured through the aforementioned Reliability Backstop Auction to load serving \n \n121 RBP Order P 29. \n122 Id. P 5. \n123 IMM Protest at 5."},{"page":33,"startToken":11116,"endToken":11399,"text":"- 33 - \n \nentities (LSEs) with new data centers that have not self-procured new capacity or agreed \nto be curtailable.”124 \n  Contrary to the Order’s determination that the resource adequacy problem is \nregion-wide, PJM has provided uncontroverted record evidence of the zones where new \nlarge loads are projected.125 Indeed, the Order recognizes the zonal nature of the problem \nin observing that126 \nit may be just and reasonable for PJM to allocate RBP costs \nbased on updated load forecast information. PJM could base \nthe RBP allocation on the difference between the actual load \nfor 2026/2027 delivery year in each Electric Distributor \nzone/area with the most recent 2028/2029 delivery year load \nforecast for each Electric Distributor zone/area. \nFinally, the Order seeks to defend the absence of locational constraints based on \nthe “reasonabl[e] assum[ption] that RBP Resources will include anticipated Network \nUpgrade costs in their RBP Sell Offers.”127 This assumption is unfounded and stands \nreality on its head. Because RBP has no locational constraints, offering resources can bid \nregardless of where they are located and, in doing so, seek to avoid Network Upgrade \ncosts—without regard to whether siting in that location will materially aid PJM in serving \nnew large loads. Indeed, it is in the economic self-interest of offering resources to do so. \nPlainly, the Commission seeks to have PJM pay generators regardless of where they are \nlocated, with no assurance that these resources will meet the resource adequacy needs of \nLDAs with forecasted new large loads, while knowing that the failure to impose locational \n \n124 Statement of Principles at 1.   \n125 Croop Aff. ¶ 46 (with chart of zonal allocations). \n126 RBP Order P 159. \n127 Id. P 97."},{"page":34,"startToken":11399,"endToken":11590,"text":"- 34 - \n \nconstraints is likely to increase unnecessarily ratepayer capacity, energy, and transmission \ncapacity costs. \nCONCLUSION \nWHEREFORE, for the foregoing reasons, Joint Consumer Advocates respectfully \nrequest that the Commission: (1) grant rehearing of the RBP Order; (2) find unjust and \nunreasonable the four elements of the RBP framework identified herein by Joint Consumer \nAdvocates; and (3) direct PJM to incorporate changes to those elements in any subsequent \nFPA section 205 filing PJM proposes.   \nRespectfully Submitted, \n   /s/ Susan L. Satter        \n \n \n/s/ Scott H. Strauss \nSusan L. Satter \nChief, Public Utilities Bureau \nScott Metzger \nPublic Utilities Policy Counsel \nKimberly B. Janas \nCounsel to the Attorney General \nILLINOIS ATTORNEY GENERAL’S OFFICE \n115 South LaSalle Street, 25th Floor \nChicago, IL 60603 \nsusan.satter@ilag.gov \n \nCounsel for the Office of the Illinois \nAttorney General \n \nScott H. Strauss \nPeter J. Hopkins \nJeffrey A. Schwarz \nLauren L. Springett \nSPIEGEL & MCDIARMID LLP \n1818 N Street, NW, 8th Floor \nWashington, DC 20036 \nscott.strauss@spiegelmcd.com \n \nCounsel for Delaware Division of the \nPublic Advocate, District of Columbia \nOffice of People’s Counsel, Illinois Citizens \nUtility Board, Maryland Office of People’s \nCounsel and New Jersey Division of Rate \nCounsel \nOctober 29, 2026"},{"page":35,"startToken":11590,"endToken":11656,"text":"CERTIFICATE OF SERVICE \nI hereby certify that I have this day caused the foregoing document to be served \nupon each person designated on the official service list compiled by the Secretary in this \nproceeding. \nDated on this 29th day of October, 2026 \n/s/ Lauren L. Springett \nLauren L. Springett \n \nLaw Offices of: \nSPIEGEL & MCDIARMID LLP \n1818 N Street, NW \n8th Floor \nWashington, DC 20036 \n(202) 879-4000"}],"sections":[{"p":1,"at":0,"title":"Opening text","method":"opening text","endPage":5,"endAt":1266,"startToken":0,"endToken":1508},{"p":5,"at":1266,"title":"I. Statement of Issues and Specification of errors","method":"PDF bookmark","endPage":7,"endAt":662,"startToken":1508,"endToken":2353},{"p":7,"at":662,"title":"II. Request for Rehearing","method":"PDF bookmark","endPage":7,"endAt":690,"startToken":2353,"endToken":2357},{"p":7,"at":690,"title":"A. The Commission’s approval of RBP exceeds its authority to rely on competition to set just and reasonable market-based rates because RBP permits and incents the exercise of seller-side market power.","method":"PDF bookmark","endPage":16,"endAt":171,"startToken":2357,"endToken":5708},{"p":16,"at":171,"title":"B. The Order provides no reasoned explanation for approving PJM’s proposed $555/MW-day price cap.","method":"PDF bookmark","endPage":21,"endAt":123,"startToken":5708,"endToken":7467},{"p":21,"at":123,"title":"C. The Order is arbitrary and capricious in failing to address why it requires 15-year RBP resource commitments when PJM admits that 5-year contracts eliminate the need for RBP procurement.","method":"PDF bookmark","endPage":26,"endAt":543,"startToken":7467,"endToken":9069},{"p":26,"at":543,"title":"D. The RBP Order errs by failing to require that the RBP incorporate locational constraints.","method":"PDF bookmark","endPage":34,"endAt":121,"startToken":9069,"endToken":11413},{"p":34,"at":121,"title":"CONCLUSION","method":"PDF bookmark","endPage":35,"endAt":0,"startToken":11413,"endToken":11590},{"p":35,"at":0,"title":"CERTIFICATE OF SERVICE","method":"printed heading","endPage":35,"endAt":408,"startToken":11590,"endToken":11656}]}