Energy Regulators Halt Emergency Power Auction Over Unfair Consumer Costs

Energy Regulators Halt Emergency Power Auction Over Unfair Consumer Costs

2026-10-02 economy

Washington, Thursday, 1 October 2026.
Federal regulators halted PJM Interconnection’s emergency power auction until February 2027, preventing billions in unfair potential costs to households from rapid data center expansion.

Energy Regulators Halt Emergency Power Auction Over Unfair Consumer Costs

Federal regulators halted PJM Interconnection’s emergency power auction until February 2027, preventing billions in unfair potential costs to households from rapid data center expansion [1][3]. The Federal Energy Regulatory Commission (FERC) issued a partial approval of PJM’s proposed procurement plan on September 29, 2026, citing major concerns regarding cost allocation and data center demand spikes [1][6]. This decision raises policy and operational challenges for energy reliability and infrastructure expansion across 13 eastern states [1][2].

Regulatory Intervention and Auction Delay

PJM Interconnection, the largest regional electric grid operator in the United States, had planned to accept offers for backstop power supplies from September 30 through October 21, 2026 [1][3]. However, following the FERC decision, the auction was delayed, and the grid operator has not determined a new timeline for the procurement process [1][4]. FERC suspended the implementation of the reliability backstop procurement for five months while it investigates whether several aspects fall short of being just and reasonable [2][4].

Cost Allocation and Data Center Demand

The PJM proposal aimed to address a capacity shortfall, specifically seeking 6.8 GW of new capacity to cover deficits identified in the 2028/29 delivery year auction [1][3]. FERC identified potential issues with cost allocation, transmission owner exit rules, and load-serving entity collateral requirements [1][3]. The agency denied PJM’s request to allow municipal utilities and cooperatives to opt out of the procurement process, citing potential discrimination against load-serving entities hosting data centers [3][6].

Market Implications and Future Timeline

PJM has until February 28, 2027, to refile and address FERC’s deficiencies regarding the procurement mechanism [3][4]. The grid operator’s standard capacity auction for the 2029–30 delivery year is expected in early December 2026 [3][6]. Industry analysts suggest the delay makes project revenue expectations less certain for generators, battery projects, gas-fired plants, and possibly nuclear life-extension or uprate projects [3][6].

Sources


Energy Policy Power Grid