In recent months, PJM Interconnection has been at the center of concern and conflict over market planning strategies intended to address the changing landscape of generation and transmission through the country, particularly for the millions of customers in the mid-Atlantic region. At the center of these developments is the potential impact of emerging load growth against a backlogged queue of capacity projects that might serve this load and the increasing trend of early generation retirements, all at a strain on the system that poses significant costs to the customers within the region.

As reported last month in E&E News by Politico, one critical development relates to PJM's efforts to advance reliable generation capacity projects through its Reliability Resource Initiative (RRI). PJM has warned that the need for massive new investment in generation and transmission capacity is necessary to both meet the expected rise in load growth, driven primarily by unprecedented energy requirements of artificial intelligence data centers, the need to respond to emergency weather conditions, and to maintain a healthy reserve margin to ensure reliability. If these warnings prove true, then the PJM system could face imminent risk under "extreme weather" events and the oncoming demand due to emerging data center loads. As explained by E&E News, PJM's RRI plan would present a path for a "round-the-clock" natural gas generator to "jump the queue" over renewable projects waiting for interconnection go-ahead. While this plan may present a partial solution to the reserve margin problem, it obviously is not without controversy. 

That controversy has been expressed by a number of stakeholders, including renewable developers and consumer groups from PJM states. These stakeholders agree that additional generation and transmission capacity is needed, but question PJM's demand projections and argue that PJM's new efforts to rank order proposed projects will hinder the desired movement away from fossil-fuel generation and result in unjust and unreasonable treatment toward long-waiting renewable resources. A significant component of these stated concerns is the projected need for expanding natural gas pipelines to serve natural gas generation, efforts that have recently been forestalled at the federal level. At the same time, however, the advent of the next Presidential administration may portend a renewed confidence in natural gas as a reliable resource that could, over time, prove PJM's initiative to be sound. Thus, the question posed is whether PJM should "step back" and reconsider its reactive approach to emerging trends, as stakeholders suggest, or move forward with its initiative to address the looming capacity crisis. This question will be resolved by the Federal Energy Regulatory Commission (FERC) when it reviews PJM's RRI.

In a separate, related development, Reuters recently reported on a legal challenge to PJM's market cap rules. Specifically, as noted in these articles, Governor Andrew Shapiro, on behalf of the Commonwealth of Pennsylvania, filed a Complaint with FERC alleging that PJM's capacity market price cap is set at an unreasonably high level that will serve to only impose increased costs to ratepayers while not adequately serving to increase grid reliability. Governor Shapiro's Complaint followed PJM's auction results that indicated massively increased payments for power plants (from $28.92 per megawatt-day to an astounding $269.92 per megawatt-day under the 2025-2026 auction, or roughly 900 percent more than paid in the prior year). According to the Complaint, the obvious conclusion is that "PJM's capacity market is currently failing," and that PJM must modify its current market rules to protect consumers. In response to the Complaint, PJM has again cited its fears over pending capacity shortfalls due to emergence of enormous demands driven by data centers located within the region. As referenced above, PJM has also cited recent state and federal policies that "are pushing generators to retire prematurely." As explained in the context of last year's auction results, PJM believes that its "concerns that the supply/demand balance is tightening" are confirmed, and that "the market is sending a price signal that should incent investment in resources."