PJM Board's Data Connection Plan Includes Backstop Auction

---

Written by Paul Wiseman for IIR News Intelligence (Sugar Land, Texas)

---

Summary

Managing speed of implementation, reliability, and price is the three-legged balancing act faced by today's power grid operators. On Friday, January 16, PJM Interconnection's board, following a White House meeting of governors of many PJM-managed states, issued instructions for dealing with those issues, including a reliability backup auction.

---

Coping with Supply Issues

On Friday afternoon, January 16, PJM Interconnection's board of governors called for a reliability backstop auction (RBA) to address shortages in its most recent auction held in December. While that auction brought record high prices, it fell about 6.6 gigawatts (GW) short of its reliability goal.

A letter from the board addressing this and other issues came shortly after Friday's White House meeting of PJM-state governors asking the operator to address ongoing power issues. For more information, see January 19, 2026, article - White House Meeting Calls for PJM Emergency Power Auction.

While PJM is hardly alone in facing grid reliability issues, its region, particularly Virginia, hosts more data centers, the main source of rising power demand, than any other U.S. location. Grid power has so far been unable to keep pace with new data center construction, creating the need for new coping mechanisms.

The RBA is seen as a temporary solution. In the letter, the board said, "this is a dynamic period in the industry, and as such, the decisions made here can be revisited" based on several factors.

PJM will discuss particulars of the backstop auction at a members' meeting on Thursday, January 22.

Essentially, an RBA is a special, expedited auction that provides 15-year revenue certainty for new power plants, which is different from the typical three-year auction term. Some observers feel that the three-year auction may no longer work.

To cover the costs of such an auction, the board directed PJM staff to seek ways of passing RBA costs to utilities and other load-serving entities whose load growth has surpassed their power resources.

The RBN was a key part of the instructions given by members of Friday's White House meeting.

Speed Is of the Essence

While the PJM board said it "is not taking action to restrict the interconnection of new load through the creation of a dedicated load interconnection queue or through other limiting measures," it acknowledged the need to link new data centers with a "dedicated load interconnection queue or through other limiting measures." It also acknowledged the need to speed the process "to support continued economic and digital-sector growth."

Growing the supply involves incentivizing potential suppliers economically, and the board indicated a need to "provide the appropriate price signals to support the timely development of new capacity resources necessary to serve all load in PJM at the required level of reliability."

Additionally, they want to "create incentives for Load Serving Entities (LSEs), large loads and/or states to bring new capacity resources to offset their load additions consistent with cost causation principles."

On the other end of the spectrum, to reduce the likelihood of load curtailments (rolling brownouts) PJM's Independent Market Monitor on December 1, 2025 had filed a complaint asking the Federal Energy Reliability Council (FERC) to rule that PJM has the authority to hold off on large load interconnections if they would jeopardize transmission security or resource adequacy.

Critical Issue Fast Path

Plans announced Friday follow the board's August 8, 2025 letter stating that it would invoke the Critical Issue Fast Path (CIFP), which allows the board and PJM stakeholders to accelerate power-related decisions due to the rapidly rising demand issues.

Across the nation, consumers are dealing with higher electricity bills due to data center expansion. In September 2025, Bloomberg reported, "Wholesale electricity costs as much as 267% more than it did five years ago in areas near data centers."

Showing new providers they can make money while protecting consumers from those huge rate increases is a major tug-o-war. As part of its CIFP the board is soliciting comments on whether they should extend a temporary price collar on capacity auctions, used on its two most recent offerings.

The challenge is, the board said, that the collar could underprice the market and discourage new suppliers from adding capacity. Yet lifting the collar could cause undue price pressure on consumers in the PJM region.

By the Numbers

• 6.6 GW: power supply shortage from PJM's most recent auction, in December
• Number one in the U.S.: PJM member Virginia's status in data center count/power demand

Key Takeaways

• PJM"s board of directors called for a backstop auction to fill the power availability gap from its December auction.
• The board meets Thursday to map an implementation plan.

---

About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resource's Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).

---