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A NEWSLETTER FROM ADVANCED ENERGY UNITED

AUGUST, 2026

A trusted resource for state leaders on PJM issues impacting reliability, affordability, and the clean energy transition.  

PJM Faces Governance Overhaul  

FERC to impose reforms if PJM stakeholders can’t do it on their own 

On July 23, FERC held a technical conference to address PJM’s governance and stakeholder process. FERC Chair Swett in her opening comments stated: “PJM is facing a grave legitimacy crisis… Some transmission owners are openly discussing leaving the RTO altogether. Put plainly, market participants have lost confidence in PJM’s decision-making abilities.” With PJM failing to attract significant new generation in its last two capacity auctions, PJM is contemplating major changes in the way it operates, according to PJM CEO David Mills. “We are fully committed to rise to the challenge,” including capacity market reform, Mills said. 

After the conference, FERC issued a survey and requested post-conference comments from stakeholders that were filed August 21. PJM issued its own poll and presented results at the August 19 Members Committee meeting: PJM Governance polling results; Governance polling results with member attribution. Many of the voting results varied significantly by voting sector with little consensus on issues across sectors – issues with some consensus are as follows: 

• Support for Board Term Changes 
  • 71% of respondents support changing the Board of Managers' term to a single elected term of nine years, with provisions for replacement members serving partial terms. 
• Expanded Section 205 Rights for PJM 
  • 62% support allowing PJM to make independent Section 205 filings under exigent circumstances (e.g., imminent harm to system reliability or severe economic harm to consumers). 
• State Participation and Rights 
  • 65% support allowing states to vote for informational purposes on all motions before the Members Committee, and 63% support adding state-selected representation to the Nominating Committee. 
• Stakeholder Process Reform 
  • 81% support the continued existence of subcommittees, and 65% support allowing proxy voting in PJM stakeholder processes. 
• Mixed Views on Document Changes 
  • There is no clear consensus on removing certain schedules from the Operating Agreement and placing them only in the Tariff, with support and opposition both around 35-40% for these changes. 

These points reflect the most significant areas of agreement and debate among stakeholders regarding PJM's governance and stakeholder processes. 

FERC intends to hold an Alternative Dispute Resolution (ADR) process that will begin September 1 with PJM stakeholders to develop a governance reform package. According to FERC Chair Swett, if an agreement isn’t reached by the end of September, FERC will impose its own reforms on PJM. Areas for potential reform include: 

• Board Independence: Whether to extend board member terms to 5+ years, impose term limits (e.g., 10 years), require regional residency preferences, and reduce conflict-of-interest cooling-off periods from two years to one. 
• Transparency: Whether to make board votes public, require explanations of board reasoning, and open some board meetings to the public. 
• State Participation: Whether state representatives should have seat(s) on the Board nominating committee, voting roles in stakeholder processes (particularly for resource adequacy and transmission cost allocation), whether OPSI should have enhanced "jump ball" filing rights, and whether and how to involve governor’s offices and legislative representatives more formally at PJM. 
• Filing Rights: Whether PJM should have unencumbered Section 205 filing rights over energy markets, ancillary services, and transmission planning without requiring two-thirds Members Committee approval. 
• Stakeholder Process: Whether to make the stakeholder process purely advisory, lower approval thresholds from two-thirds sector-weighted voting and extend affiliate voting restrictions to lower-level committees. 

For its part, PJM presented its own PJM Governance Mediation Term Sheet at the August 19 Members Committee meeting as a starting point for mediation and asked for Stakeholder input prior to September 1. PJM’s proposal would introduce sweeping changes, including 9-year Board terms and transfer of all filing rights to PJM, which would make the stakeholder process purely advisory. PJM also proposed adding representation for governors’ offices at OPSI and advocating for increased funding for OPSI. 

PJM Board files Reliability Backstop Procurement (RBP) plan at FERC 

The PJM board filed its long-awaited Reliability Backstop Procurement plan at FERC on July 31 (FERC Docket ER26-3380). The PJM board spent nearly a year struggling with the complex and unprecedented issues addressed in this filing which is intended to protect ratepayers from costs associated with data center development in the PJM region. After pressure from FERC, governors, and the White House to hold a procurement in September, PJM filed a plan at FERC on July 31 calling for a one-time reliability backstop procurement for new capacity to serve large loads beginning on September 30 and concluding on December XX. The RBP is intended to fill a 6.8 GW gap from PJM’s last capacity auction via a one-time procurement that will award 15-year contracts to cleared bidders that meet all the eligibility requirements. The RBP is part of a multifaceted plan, which includes an open bilateral contracting process already underway, where data centers and other new large loads can enter into contracts with new capacity resources, along with an Interim Resource Adequacy Service (IRAS) plan discussed below. The RBP capacity target could be reduced to the extent bilateral contracts are reached before the procurement window closes; electric distributors can also earn a partial opt-out if they have a peak shaving program that reduces their capacity obligation. 

The success of the plan in protecting ratepayers from data center related costs depends on states taking steps to protect their retail customers from cost shifts. According to the PJM FERC filing: “The RBP framework relies on each of the PJM states to refine, for purposes of cost allocation, which retail loads - including which ‘large loads,’ as each state defines such loads - should be allocated the costs of resources procured through the RBP.” The backstop auction’s costs will be allocated to PJM zones based on their pro-rata share of the procurement target and then allocated to utilities and other load-serving entities within the zones. PJM proposed a $555/MW-day overall price cap for the auction, up from a $325/MW-day cap for its last Base Residual Auction (BRA). 

Comments and protests on RBP were filed at FERC on August 21. PJM requested an effective date of September 29. 

PJM Board Interim Resource Adequacy Service (IRAS) Plan 

On August 13, shortly after the Reliability Backstop Procurement filing, PJM filed its proposed framework to connect new large load customers that bring their own power supplies at FERC (Docket ER26-3515). The proposal would establish a new Interim Resource Adequacy Service (IRAS) (formerly known as connect and manage) for those new large load customers who do not bring their own power supply. When electricity supply on the grid approaches dangerously low levels, a new emergency procedure would notify utilities to reduce the electricity demand from new large load customers ahead of any action that would call upon emergency demand response or shut off traditional consumers, including residential consumers.  

IRAS would apply to new large loads that have not brought their own new capacity or had their capacity needs covered through the Reliability Backstop Procurement, a special process designed to fill forecasted capacity shortfalls starting in June 2027. PJM would create and maintain a Large Load Registry to track all large loads, existing and new, to provide states, utilities and regulatory agencies with the information they need to apply the IRAS service to large load customers if they choose. The IRAS framework encourages states and the Electrical Distributors that serve their residents to reevaluate and amend the established plans that utilities and other Load Serving Entities (LSEs) follow when directed by PJM to reduce electricity demand, or load. As discussed above, the success of the PJM’s proposed plans in protecting ratepayers from data center related costs depends on states taking steps to appropriately curtail large loads when needed, and then properly allocate costs to protect retail customers from cost shifts. [add mention of system flexibility as a potential solution, e.g., NJ legislation] 

Comments and protests on IRAS are due to FERC on September 3. 

PJM releases “Memorandum of Understanding Framework Between States and PJM Re: Reliability/Resource Adequacy” 

In an apparent attempt to provide clarity around jurisdictional roles and responsibilities between states and PJM, PJM released a Memorandum of Understanding Framework Between States and PJM Re: Reliability/Resource Adequacy that details PJM’s views on respective roles. According to PJM, reliability is “a shared obligation between federal, regional and state entities,” and the MOU is intended “to memorialize the areas of reliability that PJM and the states are responsible for based upon their already-defined jurisdictional boundaries, and to further recommend both PJM and state action to ensure harmony between wholesale and retail actions that will cost-efficiently preserve reliability.” Among the issues highlighted in the MOU: 

• Shared Reliability Responsibilities - Reliability is a joint obligation among federal, regional, and state entities, requiring coordination between wholesale (PJM) and retail (states) authorities to ensure a reliable electric system. 
• Resource Adequacy and Price Formation - PJM commits to operating open, competitive wholesale markets to provide accurate price signals for resource adequacy, while states support long-term commitments and aim to maintain load and supply parity by 2035. 
• Managing Large Load Growth - PJM and states coordinate to facilitate large load growth, with PJM providing interim resource adequacy services and states requiring new large loads to build capacity and establish retail curtailment and cost allocation programs. 
• Resource Adequacy Assessment and Reporting - PJM delivers annual 20-year load forecasts and conducts resource adequacy analyses, while states prepare annual Resource Adequacy Needs Reports detailing projected load growth, new generation, and retirements. 
• Transmission Planning and Siting - PJM conducts annual transmission planning based on future load and generation needs, and states process permitting for new transmission lines within defined timelines, respecting PJM’s determinations under federal preemption while retaining authority over siting and permitting. 

PJM Holistic Market Design Effort Underway to Reform a Dysfunctional Capacity Market 

PJM’s CEO acknowledged early in 2026 that the current capacity market construct is not working in the current high demand growth environment along with longer siting and construction timelines. PJM announced a holistic market redesign process and issued a whitepaper on May 6 (Powering Reliability Through Market Design) articulating market flaws along with a plan for a "holistic market redesign" process that is already underway with stakeholders. PJM held a series of stakeholder workshops and has requested stakeholder papers/comments by August 31. State feedback is requested by Oct. 15, after which the PJM Board will develop proposals and scope, followed by a stakeholder process in early 2027. 

New Jersey Board of Public Utilities Weighs in on PJM’s Capacity Market Failures 

In a related note, The New Jersey Board of Public Utilities (NJBPU) has released an in-depth study finding that the capacity market run by PJM Interconnection (PJM), the regional grid operator, can no longer deliver reliable power at the lowest possible cost, and NJBPU is calling for reforms to improve it. Key recommendations include: 

• Make large new users pay their share. Data centers and similar large loads should bring their own new generation to the grid and those that don’t should accept lower-priority service. New Jersey has already enacted both requirements into state law and the NJBPU has started work on their implementation, ensuring that existing customers are not stuck covering costs they did not create. 
• Modernize PJM's market design. Shift from a single annual auction to a seasonal structure that matches supply to real conditions and consider movement to a "prompt" auction that relies on current forecasts instead of pricing three years out. 
• Expand longer-term contracting options. Reduce the effects of price volatility for ratepayers and offer long-term financial guarantees so energy companies can more easily secure financing to build new generation. 
• Clear the legal path for states to act. Update PJM's governance rules so that states can weigh in on decisions that have reliability and affordability implications on the families and businesses that they have a responsibility to protect. 

New Jersey is already working collaboratively with other states and stakeholders, not only on PJM governance reforms but the processes by which regional transmission lines are planned and paid for. The NJBPU will continue to develop reforms for how businesses and utilities interact with PJM’s markets, not only via new data center rates but through the Virtual Power Plant proceeding and utility business model reform. Over the next year, it will also leverage new statutory authority to regulate local transmission projects, which have driven up rates while often failing to bring in low-cost renewable energy from across PJM’s footprint. 

PJM Releases Details of the Newly Opened Interconnection Queue 

On August 3, PJM released details of the projects in the newly opened interconnection queue. Queue studies for new interconnection requests began on April 27 after the PJM interconnection queue closed for new requests for 4 years beginning in late 2022 while PJM processed a backlog of requests. PJM announced that 715 new generation projects, capable of generating more than 200 GW of electricity, have qualified to be studied in the first Cycle of PJM’s reformed interconnection process. This marks the first group of proposed generation resources to be processed under a new approach designed to reduce speculative projects, improve predictability, and increase the overall pace of interconnection. Projects will be reviewed in the Cycle in what is designed to be a one- to two-year process, depending on the impact of an individual project.  

The newly announced cluster reflects pent-up demand from four years of queue closure:  

• Project count: 715 total projects, led by storage (314), natural gas (147), solar (117), wind (61), solar-storage hybrids (37), nuclear (24), other (10) and hydro (5) 
• Capacity GW: 201.5 GW of nameplate capacity, led by natural gas (99.8 GW), storage (60.0 GW), nuclear (17.3 GW), solar (11.8 GW), solar-storage hybrid (7.5 GW), wind (3.9 GW), other (1.1 GW) and hydro (0.07 GW  

For reference, here’s what the 2022 backlog that led to the four-year queue closure looked like: 

2022 Backlog Details: 

• Total Capacity: 255 GW 
• Active Projects: Over 2,700 generation requests in various study stages 
• Renewable Share: Roughly 95% of the queued capacity consisted of solar, wind, and battery storage projects 

The new queue reflects fewer projects now (700 vs 2,700 in 2022) relative to GWs (200 vs 250 in 2022) – this is due to the much larger concentration of natural gas projects today, and highlights how significant the 2022 queue closure was for clean energy projects (the majority of which withdrew from the queue as interconnection and construction costs increased over time), creating a huge lost opportunity that contributed to PJM’s current capacity and reliability crisis, and effectively stalling the planned clean energy transition. 

PJM previews FERC Show Cause Interconnection Reforms 

PJM previewed proposed interconnection queue reforms driven by the FERC Show Cause proceeding. Interconnection Reform conceptual approach  was presented at the at the July 31st PJM Co-Located Load Order Workshop. The proposed reforms promise to deliver a faster, more efficient process, but could also introduce additional risk and complexity into an already complex generator interconnection process. Ultimately, success will be contingent on the specifics of design and implementation. The proposal calls for a study of load and generation in the same 12-month interconnection process starting in Cycle 2. It would integrate the transmission service for large loads process into the new services request process, and generation interconnection, transmission interconnection, long term firm requests, and new large load would be studied cohesively to determine the most efficient solution for the cluster. While the proposal does take a more integrated approach to planning, PJM’s approach falls short of providing the upfront certainty that SPP’s widely-lauded Consolidated Planning Process offers and thus does not address one core challenge of the generator interconnection process. 

Progress on Surplus Interconnection Service (SIS) Reform  

PJM's surplus interconnection service (SIS) allows a new resource to use unused capacity at an existing point of interconnection (POI) and avoid a lengthy Interconnection queue process. For storage added to an existing solar site, SIS only grants capacity interconnection rights (CIRs) if the storage merges into the solar plant as a single hybrid resource.  The principal commercial barrier to surplus uptake in PJM today is the requirement that projects modeled as a Hybrid Resource operate as a Hybrid Resource in the energy and ancillary services markets or do not receive capacity value at all. Because SIS resources do not have their own CIRs, they must become a Hybrid Resource with the existing technology to obtain capacity value. If storage instead interconnects independently as a co-located resource, it must participate in PJM markets as energy-only—forfeiting all capacity accreditation and preventing SIS from serving as a tool to expedite capacity entry in PJM. Changing this status quo would make many more surplus projects commercially viable. 

Advanced Energy United has been advocating with RMI and other partner advocates to initiate PJM SIS reforms for much of 2026. This has culminated in a PJM staff recognition of these barriers, and PJM working closely with our coalition to propose a solution which was presented for a first-read the August 5th PJM Market Implementation Committee. PJM staff presented a Problem Statement and Issue Charge to discuss market participation rule changes for Hybrid Resources. While the problem statement does not resolve all issues related to SIS capacity market participation, it would open new avenues for at least some projects. The committee will be asked to approve the issue charge at the next Market Implementation Committee meeting on September 9. If approved, a subcommittee will be formed to implement solutions. 

PJM's Presents its Five-Year Planning Process and Strategy 

PJM presented its five-year planning process and strategy at the August 19th Markets Committee meeting. According to PJM, PJM's five-year planning process and strategy is focused on ensuring reliable and cost-efficient power delivery amid accelerating electricity demand and evolving grid challenges. The strategy is built around four main objectives: 

1. Reliably Operate an Increasingly Dynamic Grid
   • Deploy a tech-enabled control room with AI support.
   • Enhance capabilities for managing large load growth and improve grid transparency.
   • Strengthen market coordination, especially between gas and electric sectors.
   • Bolster cybersecurity resilience. 
2. Ensure Durable Market Incentives and State Alignment
   • Align resource adequacy responsibilities with states and stakeholders.
   • Advance capacity and energy market reforms to boost investor confidence.
   • Reform reserve and ancillary services to better address real-time operational needs.
3. Proactively Adapt Planning Processes
   • Streamline new service requests and generator interconnection processes.
   • Improve regional transmission planning and scenario modeling.
   • Develop interim solutions for near-term reliability and synchronize planning processes for efficiency. 
4. Improve Decision-Making Efficiency
   • Enhance stakeholder processes with stronger guardrails and data-driven analysis.
   • Accelerate stakeholder decision-making and implement governance reforms to support timely, independent action.

Pages 5 –8 of PJM's five-year planning process and strategy presentation deck provide timelines for each of the 4 key objectives. 

FERC Grants States an Extension in FERC Order 1920 (LT Transmission Planning) Compliance 

On August 11th, FERC issued a notice granting an extension in Docket No. RM21-17-000 

“Building for the Future Through Electric Regional Transmission Planning and Cost Allocation” (FERC Order 1920 compliance. On August 4, the PJM Area Relevant State Entities Committee (PARSEC), PJM Transmission Owners, and PJM Interconnection filed a joint motion requesting a 30-day extension, until September 10, 2026, for the following:  (1) the Engagement Period; (2) the deadline for PJM Transmission Owners to file their portion of the Order 1920 regional compliance filing, specifically one or more ex ante Long-Term Regional Transmission Cost Allocation Methods to allocate the costs of selected Long-Term Regional Transmission Facilities.  

All parties involved in Order 1920 cost allocation discussions have asked that their deadline be extended from August 11 to September 10, and that FERC “treat the motion as unopposed”. They note “The engagement process with the assistance of Dispute Resolution Services is active and ongoing and the parties believe that process has been productive.” 

PJM is using an AI tool (HyperQ, built with Google's Tapestry) to process the volume of applications and will evaluate its effectiveness through Cycle 1. Since 2020, PJM has processed 300+ GW of projects, yielding just over 100 GW with signed interconnection agreements — but many of those signed projects are stalled by state permitting delays and supply-chain issues, which PJM says it's working with state and federal policymakers to address. Key upcoming milestones: PJM posts its summer peak model Aug. 28, with winter peak/light load cases Sept. 11, and expects more signed agreements after Transition Cycle 2 wraps in early 2027 and Cycle 1 in 2028. 

FERC Filings & Decisions

The Federal Energy Regulatory Commission is an important independent agency that regulates interstate transmission of electricity, natural gas, and oil. As the agency that oversees regional transmission organizations such as PJM, it is important to know what FERC is working on and how this may impact consumers in your state. The following FERC filings and decisions are worth tracking this month.

PJM/PARSEC Order 1920 Extension (RM21-17-000) 

On July 10, 2026, the FERC Dispute Resolution Service filed a status report on the joint extension request of PJM and the PJM Transmission Owners. The report confirms that the Dispute Resolution Service has contacted the parties and that a dispute resolution process is being pursued, as required by the June extension. FERC also granted a request for a two-month extension, until February 12, 2027, to file other Order 1920 compliance. The extension aligns with PJM’s already set deadline to SERTP Jurisdictional Sponsors and expected to be requested by MISO. 

New 2026 Large Load Show Cause (EL 26-67-000) 

On July 20, 2026, PJM submitted an informational report in response to the Commissions June 18, 2026 Show Cause Order, followed by two motions for abeyance filed by PJM and the PJM Transmission Owners on July 28, 2026. The report details PJMs work to ensure resource adequacy for large loads. These efforts include a proposed Critical Issue Fast Path (CIFP) process to address RBP. The requests for abeyance, which were granted on August 14, aim to align the Large Load Order compliance and the Co-Located Load Order compliance. 

Original Co-Located Load Show Cause (EL25-49-002) and Tariff Revisions to Comply with Co-Located Load Order (ER26-1479-000) 

On July 28, 2026, PJM and PJM Transmission Owners filed motions requesting a 90-day extension—until November 16, 2026—for compliance with a June 18, 2026 FERC order, along with expedited review by August 6, 2026. The Commission granted the extension for PJM on August 14, allowing PJM to align compliance for the overlapping directives with the Large Load Order requirements, and avoid inconsistencies. The compliance deadline is now November 16, 2026, for both PJM and PJM transmission owners. PJM will still be required to submit partial compliance on August 17, 2026 addressing defined terms, NITS, Necessary Study process details, and Interim NITS provisions. 

PJM Governance Tech Conference (AD26-7-000): 

On July 30, 2026, FERC requested post-conference comments regarding specific reforms for PJM’s governance—board independence, transparency, state participation, filing rights, and stakeholder processes. On August 10, 2026, FERC detailed the required ADR process, where the Director of Dispute Resolution services will facilitate a confidential discussion among PJM members and stakeholders to develop consensus on governance reforms.  

Backstop Reliability Procurement (ER26-3380)  

On July 31, 2026, PJM filed the RBP proposal, with a requested effective date of September 29, 2026. 

Interconnection Reform from “First Come, First Served” to “First-Ready, First-Served" (ER22-2110)  

On August 14, 2026, PJM filed an informational report providing updates on the processing of New Service Requests under its Transition Period Rules, as required by FERC’s November 29, 2022 order accepting PJM's comprehensive reform of its generation interconnection process. PJM is currently in Phase III of Transition Cycle 2; processing 450 projects, with 270 remaining, and an expected competition date of January 4, 2027. PJM has generally met its timeline targets, with Transition Cycle 2 Phase II completing within the required 180-day period (December 3, 2025 to June 5, 2026). The new Cycle 1 under the reformed interconnection process commenced on April 28, 2026. 

Interim Resource Adequacy Service and a Large Load Registry (IRAS) (ER26-3515-000) 

On August 13, 2026, PJM filed the IRAS proposal, with a requested effective date of October 12, 2026. Comments on this proposal are due September 3, 2026. 

Advanced Energy United

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