PJM Interconnection (PJM) is currently a focal point in the energy and utility spheres. Earlier this year, the White House Energy Dominance Council and all 13 PJM state governors urged PJM to secure additional capacity and protect residential ratepayers’ affordability. This summer, PJM reached a new peak load during record-breaking weather. Most recently, the Federal Energy Regulatory Commission (FERC) held a technical conference on July 23, 2026, to discuss potential reforms to PJM’s governance and stakeholder processes.
The pressures behind PJM's capacity shortfall — rapid load growth, backlogged interconnection queues, supply chain constraints, and permitting delays — are running through every RTO. Governance reform operates on a narrower set of variables.
While PJM faces governance and stakeholder challenges, these issues facing PJM are broader than that and not unique to PJM. Markets nationwide are struggling to accommodate rapid load growth, primarily driven by data centers. Interconnection queues remain backlogged, delaying new resources from connecting to the grid. Additionally, supply chain constraints and permitting delays affect projects across all the Regional Transmission Organizations (RTOs). Understanding PJM’s position within this national context is essential before identifying reforms specific to PJM.
Shared headwinds, different institutions
The top three rows are common to every market. The bottom two are structural, and they are what make the same shock land differently in each one.
| Pressure or structural feature | PJM13 states + DC | MISO15 states | ERCOT1 state | NYISO1 state |
|---|---|---|---|---|
| Data center–driven load growth | ||||
| Interconnection queue backlog | ||||
| Supply chain and permitting delays | ||||
| Centralized capacity market sets the investment signal | Yes | Yes, but also traditional planning | No — energy-only | Yes |
| Customers largely served by merchant supply rather than a vertically integrated utility | Mostly | Mostly not | Mostly | Mostly |
Note: Exposure ratings are a NewGen assessment of relative pressure across markets, not a measured index. Structural rows describe the predominant arrangement in each footprint; all four markets contain exceptions.
PJM has led or participated in many of the same reform initiatives as other RTOs. They have also complied with FERC orders on long-term transmission planning (Order No. 1920) and generation interconnection queue reform (Order No. 2023). PJM was proactive in adopting new transmission service procedures for large load interconnections, following FERC directives issued specifically to PJM before similar orders were issued to other RTOs. PJM was also the first RTO to implement a one-time, fast-track interconnection queue (the Resource Reliability Initiative), which others later adopted.
In the capacity market sphere, PJM implemented comprehensive resource accreditation reforms for its 2025-26 capacity auction and improved its risk modeling for setting capacity requirements. Although FERC has not mandated changes, markets nationwide have adopted similar reforms to ensure adequate resource capacity and appropriate measurement of different technologies. Many markets have also shifted to sub-annual constructs, which PJM is considering.
Three and a half years of near-continuous reform
A compressed record of the PJM market and process changes described in this article, and the external scrutiny running alongside them.
PJM publishes Energy Transition in PJM: Resource Retirements, Replacements & Risks
Highlights trends that could lead to future capacity shortfalls, focused on the shift from traditional thermal generation to intermittent renewables and batteries.
Compliance with FERC orders
Generation interconnection queue reform, and long-term transmission planning.
Large load procedures and a fast-track queue
New transmission service procedures for large load interconnections, following FERC directives issued to PJM before other RTOs; and the Resource Reliability Initiative, the first one-time fast-track interconnection queue, which others later adopted.
Resource accreditation reform and improved risk modeling
Comprehensive accreditation reforms and better risk modeling for setting capacity requirements — neither mandated by FERC.
Price collar, RMR inclusion, must-offer exemption removed
A price collar, effectively a price cap, now extended through 2030; the inclusion of reliability must-run units; and the removal of a must-offer exemption for non-traditional plants.
External scrutiny arrives
The White House Energy Dominance Council and all 13 PJM state governors urge PJM to secure additional capacity and protect ratepayer affordability; PJM reaches a new peak load during record-breaking weather.
FERC technical conference on PJM governance
The Commission discusses potential reforms to PJM's governance and stakeholder processes.
PJM board announces two filing packages
A one-time backstop capacity auction to address the current shortfall, and limits on new large loads without their own capacity during periods of grid stress.
Note: Timeline compiled from the reform actions and events described in this article. Auction labels refer to delivery years, not auction dates.
Despite these efforts, PJM’s capacity auctions for 2027-28 and 2028-29 both resulted in significant shortages. PJM anticipated this risk, as outlined in its early 2023 report, “Energy Transition in PJM: Resource Retirements, Replacements & Risks,” which highlighted trends that could lead to future capacity shortfalls. While the report focused on the shift from traditional thermal generation to intermittent renewables and batteries, this large load growth exacerbated PJM’s concerns. In response, PJM implemented several changes for the 2026-27 auction, including a price collar (effectively a price cap, now extended through 2030), the inclusion of reliability must-run units, and the removal of a must-offer exemption for non-traditional plants.
A decade of cheap capacity, then a repricing
PJM Base Residual Auction clearing price, RTO-wide, in dollars per megawatt-day, by delivery year.
Sources: PJM Base Residual Auction results, RTO-wide clearing price by delivery year. Prices through 2026/2027 are auction results. The 2027/2028 and 2028/2029 auctions, discussed in the text, each cleared at the price collar cap; because the cap is readjusted slightly from year to year, those two years are drawn dashed and carried flat from 2026/2027 rather than plotted to the exact cleared value. The collar has been extended through 2030. Locational prices in constrained zones differ from the RTO-wide value shown here.
The price collar illustrates PJM’s unique challenges as compared to other RTOs. As a multi-state RTO with mostly deregulated states, PJM is at the center of the data center expansion. PJM states depend on the capacity market to incentivize new supply, and ratepayers are directly affected by capacity price spikes. In contrast, the Midcontinent Independent System Operator (MISO) also experienced capacity shortages and price increases. Still, its traditionally regulated utilities shield customers from wholesale market volatility and provide greater revenue certainty for new generation through retail rates.
- Position
- A multi-state RTO at the center of the data center expansion.
- What incentivizes new supply
- PJM states depend on the capacity market.
- Who feels a price spike
- Ratepayers, directly.
- Position
- Also experienced capacity shortages and price increases.
- What incentivizes new supply
- Retail rates provide greater revenue certainty for new generation.
- Who feels a price spike
- Regulated utilities shield customers from wholesale market volatility.
Following the FERC technical conference, the PJM board announced plans to file packages for a one-time backstop capacity auction to address the current shortfall and to limit new large loads without their own capacity during periods of grid stress. This approach serves both as an operational tool to prevent grid emergencies and as an incentive for large loads to contribute additional capacity.
A recurring theme in PJM discussions is the need for greater state involvement in reforms. Unlike single-state markets, such as New York or Texas, PJM spans 13 states with diverse perspectives. States have already begun to exert more influence, as seen in the price collar settlement between PJM and Pennsylvania. The latest reform packages also reflect PJM’s recognition of the need to coordinate with states on managing large loads.
“According to some, greater regulatory certainty and stability are needed to address the supply shortfall rather than a more rapid pace for reform.”
Numerous reform packages have led to significant changes in PJM over a short period. Stakeholders have held differing views and advocated for their own interests, resulting in a complex process similar to those in other markets. When consensus was lacking, the PJM board exercised discretion to implement reforms it felt were necessary. Some argue PJM should accelerate reforms to keep pace with technological advancements, while others believe the rapid changes have created uncertainty for long-term generation investments. According to some, greater regulatory certainty and stability are needed to address supply shortfall rather than a more rapid pace for reform.
The reform surface is smaller than the problem
Drivers of PJM's capacity shortfall, positioned by how much sits inside PJM's control and how much governance reform alone could address.
Note: A NewGen assessment. Positions are analytical judgments intended to show relative placement, not measurements. The shaded region marks the drivers that governance and stakeholder-process reform can plausibly move on its own.
While PJM’s stakeholder and governance processes could benefit from reform, such changes alone will not address the underlying structural challenges or broader trends affecting all RTO markets. States may need a greater role, the PJM board could require more independence, and certain practices from other RTOs might be worth adopting. However, with scrutiny from governors, the White House, and FERC, it is clear that governance reform alone will not provide the solutions they seek.
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FERC technical conference. Federal Energy Regulatory Commission technical conference on PJM governance and stakeholder processes, held July 23, 2026.
FERC Order No. 1920 (long-term transmission planning) and Order No. 2023 (generation interconnection queue reform).
PJM Interconnection, Energy Transition in PJM: Resource Retirements, Replacements & Risks (early 2023).
PJM Resource Reliability Initiative, the one-time fast-track interconnection queue.
Capacity auction results. PJM Base Residual Auction reports, RTO-wide clearing prices by delivery year.
Price collar. Settlement between PJM Interconnection and the Commonwealth of Pennsylvania, subsequently extended through 2030.
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