PJM shelves its 6.8-gigawatt data center power auction after FERC calls the plan a "mess"

PJM Interconnection, which runs the largest electric grid in the US, suspended on Wednesday a one-time auction meant to buy emergency power supply for the data center boom, Bloomberg reported. The move came less than a day after the Federal Energy Regulatory Commission approved most of the plan but refused to let it start until several parts are fixed.

Offers were due to open on Wednesday, September 30, and run to October 21, with winners picked between October 22 and December 2, according to Utility Dive. PJM said a new timetable has not been set.

What FERC objected to

The commission's September 29 order accepted the bulk of the design, including an offer cap of $555 per megawatt-day on a weighted-average basis. RTO Insider reported that FERC suspended implementation for five months while it examines the rest. The problems it named:

• Cost allocation. PJM did not show its method for charging the cost to customers was "just and reasonable," or that it would land on the parties actually causing the cost. FERC suggested allocating on updated load forecasts instead.
• Opt-outs. PJM wanted to let qualifying cooperatives and municipal utilities skip the process. FERC said that would discriminate against other utilities with data centers in their territory.
• Collateral. Northern Virginia Electric Cooperative said it would have had to post roughly $2 billion under the proposed rules.

FERC Chair Laura Swett said the commission "will not be forced into accepting a deeply flawed, eleventh-hour procurement mechanism with billion-dollar implications for consumers," and said there was no time "to rehabilitate the mess we received," according to Utility Dive.

The number behind "billion-dollar implications"

The auction targeted 6.8 gigawatts of new capacity to cover the shortfall PJM found in its auction for the 2028/29 delivery year. At the $555 cap, that is 6,800 megawatts times $555 a day, or about $3.8 million a day and about $1.38 billion a year. That is a ceiling, not a forecast: the cap is a weighted average, the auction could clear below it, and PJM had said it might shrink the target as other new supply arrives. But it shows why the cost-sharing rule is the whole fight. Whoever is assigned that bill carries it for the length of the delivery period.

Who this actually hits

PJM covers all or part of 13 Mid-Atlantic and Midwest states plus Washington, D.C. Capacity costs flow into the supply portion of retail electric bills, so a business on a commercial rate in the region is exposed to how FERC settles this, even though no bill changes this year. The delay cuts both ways for them. It postpones a cost that might have been spread across everyone, and FERC's push to tie charges to the load that causes them is the version most favorable to customers who are not building data centers. It also leaves the 6.8-gigawatt gap unfilled for now.

Energy-heavy trades such as restaurants, running coolers and cooking equipment all day, feel capacity charges first.

605,380 independent restaurants are listed on CheckThisBiz, a directory of 7,704,724 independent US businesses, including 79,108 in CA, 54,058 in TX, 51,387 in NY. Chains and franchises are excluded from that count, so these are the owner-operated businesses that actually apply for funding.

Power stocks

Independent power producers that sell into PJM traded lower on Wednesday. As of 3:52 p.m. Eastern, Constellation Energy was down 3.9% at $254.15, Vistra down 2.0% at $138.02 and Talen Energy down 0.7% at $312.66, according to Nasdaq data. We did not find a statement from those companies tying the move to the order.

PJM said it "intends to work quickly to address the commission's remaining concerns." Its regular capacity auction for 2029/30 is still scheduled for early December. Related: the Energy Department's $1.9 billion grid program and Texas pausing data center permits.

Sources: Bloomberg; Utility Dive; Federal Energy Regulatory Commission order (eLibrary accession 20260929-3099); RTO Insider; Nasdaq market data; CheckThisBiz business counts. This is market information, not investment advice.