FERC Examines PJM Governance After 7 GW Auction Deficit

The Federal Energy Regulatory Commission (FERC) is holding a technical conference on the governance of PJM Interconnection, the largest US electricity market, on July 23. This follows its 2026-2027 capacity auction falling short of reliability targets by nearly 7 gigawatts (GW) and attracting only 500 megawatts (MW) of new generation supply.

FERC Chair Laura Swett described the results as "alarm bells calling for action at PJM" and characterized the stakeholder process as "slow where it needs to be fast, opaque where it should be transparent, and vulnerable to vetoes," according to Utility Dive. Commissioner David LaCerte had previously stated that the status quo at PJM is "unsustainable."

The conference comes after more than a year of pressure from the governors of Pennsylvania, Delaware, Illinois, Maryland, and New Jersey. Since December 2024, they have pushed for reforms to the operator's capacity market. The most recent auction cleared at a price of $329.17 per MW-day, raising total capacity costs to $16.1 billion, which is 22% higher than the previous cycle, according to PJM data. Growing demand from data centers and slow interconnection of new generation have strained the supply-demand balance across the 13 states covered by PJM.

According to Latitude Media, governors are proposing a "jump ball" mechanism, inspired by the regional committee of ISO New England (ISO-NE). This would allow states to submit competing proposals to FERC when they disagree with PJM. They also demand direct access to the operator's board of directors and a formal role in nominating its members.

Generators and large electricity consumers, including Google, oppose expanding the authority of both PJM management and state governments. They warn that bypassing stakeholder votes risks market predictability and discourages private investment. The National Environmental Legislators Caucus, which includes nearly 100 legislators in the PJM footprint, has asked FERC to codify an explicit public interest mandate covering consumer costs and alignment with state policies.

Swett anticipates that the conference will yield proposals offering "a clearer path forward for PJM." Stakeholder comments and commissioner interventions will determine which reforms move to FERC's formal docket in the coming weeks, setting precedents for capacity market design beyond PJM's footprint.

This note was drafted with AI assistance from verified sources and reviewed by a human editor before publication.