The PJM Interconnection regional transmission organization, which manages the electric grid in Virginia, has postponed a supplement auction intended to acquire additional generation assets because of objections raised by the Federal Energy Regulatory Commission (FERC).
PJM’s proposal for the auction was submitted to FERC at the end of July and included several rules changes from previous auction rounds. FERC accepted some of the changes but raised issues with some, warning they might prove to be unjust and unreasonable. FERC Chairwoman Laura Swett in a written concurrence to the full FERC order termed the proposal a mess needing rehabilitation.
Designated a “reliability backstop procurement”, the supplemental auction was scheduled for this fall because the last annual “base reliability auction” in December 2025 had fallen short of meeting PJM’s projected energy needs for the July 2027-June 2028 period.
The shortfall and the belief the data center industry was the reason sparked a January agreement between President Trump’s White House and the 13 PJM states’ governors to add an auction by September of this year, aimed mainly at serving data center demand.
The January agreement between the White House and the PJM state governors “urged PJM to allocate the costs of any new capacity procured to load-serving entities with data centers that have not self-procured new capacity or agreed to be curtailable, with any remaining costs allocated to load-serving entities based on their remaining net-short positions,” according to the FERC order.
PJM hoped to open the auction process Wednesday seeking an additional 6.8 gigawatts of power supply. The FERC Order delayed that until late February 2027, but PJM has said it will seek to amend its process and satisfy FERC’s concerns, and the timing is still up in the air. Another base reliability auction is also coming soon.
The December 2025 PJM capacity auction was the third in a row to set an extremely high price for the backup capacity being secured to serve the 13 states in PJM. It was the second to fail to meet the projected capacity needs, meaning energy shortfalls on high demand days would be more likely.
In Virginia, only Appalachian Power Company serving about 540,000 western Virginia customers has enough generation capacity of its own to serve its expected demand. Dominion Energy Virginia, with its 2.7 million customers, does not. PJM requires Dominion to secure outside contracts from other utilities or independent generators within PJM to cover the shortfall. Before the last three auctions, the cost was minimal.
Where the two previous base auctions had a capped price of $333.44 per megawatt-day, this auction set the cap at $555 per megawatt-day. PJM’s proposed method for allocating those costs to individual companies was one of the issues flagged by FERC. Dominion and some of the regional cooperatives which are also in the PJM transmission zone would lead the list of load-serving entities falling short due to data centers.
The data center demand growth has challenged future forecasting of energy needs within PJM, but PJM has complained that supply has also been constrained by state-level decisions to retire existing generation facilities for policy concerns. The Virginia Clean Economy Act led Dominion to retire coal plants in the state which were viable.
