PJM Plan Would Improve Grid Reliability, but Not Electricity Prices
PJM’s filing to FERC stops the bleeding. Now it needs to heal the patient
VALLEY FORGE, PA (July 31, 2026) - PJM, the nation’s largest grid operator, has proposed a two-part plan to manage soaring electricity demand from data centers. The first part, filed with FERC today, will pay up to $20 billion for new power plants to help supply data centers built through 2027. The second part, to be filed August 7, will encourage data centers built after 2027 to bring their own energy supply by potentially limiting service to ones that do not.
The following is a reaction from Tom Rutigliano, senior advocate, Climate & Energy at NRDC (Natural Resources Defense Council):
“PJM made the right decision to prevent future data centers from endlessly raising prices. Requiring future data centers to bring their own power might be the single best thing they could have done to stabilize the grid. But prices won’t drop until data centers built before 2027 pull their weight. Now PJM needs to finish the job by supporting state efforts to manage demand from existing data centers, enabling rapid deployment of energy storage, and accelerating the connection of new energy projects to the grid.
“PJM also proposes to spend up to $20 billion for a new ‘Reliability Backstop Procurement.’ This one-time auction will offer lucrative deals to new power plants, but is biased against the clean storage the region needs. Adding storage to existing power plants is one of the fastest ways to add new capacity to the system, but PJM inexplicably won’t consider that type of project. PJM also ignores the savings from building new storage near data centers instead of fossil plants hundreds of miles away, risking overspending on fossil fuels when there are cheaper, cleaner alternatives.”
Background:
PJM Interconnection manages the transmission and wholesale electricity market for about 67 million people in thirteen states and Washington D.C. In the last several years, electricity prices have surged as PJM has not been able to deliver new supply fast enough to keep pace with the data center boom.
The first part of the proposed plan, covering the Reliability Backstop Procurement, filed with FERC today, opens a three week public comment period. PJM is expected to hold the procurement for new power plants on September 30 and make awards in December. PJM will file the second part of the proposed plan, covering shutting off some data centers when there’s insufficient power, and those rules will take effect in mid-2027.
Read more about this in blogs from Tom Rutigliano and Claire Lang-Ree.
NRDC (Natural Resources Defense Council) is an international nonprofit environmental organization with more than 3 million members and online activists. Established in 1970, NRDC uses science, policy, law and people power to confront the climate crisis, protect public health and safeguard nature. NRDC has offices in New York City, Washington, D.C., Los Angeles, San Francisco, Chicago, Beijing and Delhi (an office of NRDC India Pvt. Ltd).