FERC Conditional Approval for PJM Reliability Backstop Procurement (RBP)

FERC accepted most of PJM’s one-time RBP, but suspended it until February 28, 2027, over concerns with cost allocation, transmission owner exit rules, and load-serving entity collateral requirements. The September 30 bid window did not open as planned. The elements of RBP related to sell offers were largely approved, and developers now have additional time to prepare for submitting into the RBP in the coming months.

On September 29, 2026, the Federal Energy Regulatory Commission (FERC) conditionally approved PJM’s Reliability Backstop Procurement (RBP), citing concerns over several elements being just and reasonable. As a result, PJM has postponed the Central Procurement bid window that was scheduled for September 30, 2026. A new timeline has not been established. 

The RBP is a one-time procurement mechanism designed by PJM to close the 6.8 GW shortfall from the 2028/2029 Base Residual Auction. 

PJM submitted its proposal on the last possible day to allow a September 30 procurement window, leaving FERC no time to modify the proposal without disrupting the schedule. FERC took issue with several of the mechanics related to how RBP costs would ultimately be allocated to load. Rather than reject the proposal outright, FERC accepted the parts that advance capacity procurement and gave guidance to PJM for a prompt resubmission. 

What FERC Wants Fixed

• Cost Allocation: PJM processed a “snapshot” load adjustment to assign RBP obligations and costs to load-serving entities (LSEs). FERC found that it would not capture forecasted large load growth, meaning some load-serving entities could pay costs that do not match the benefits they receive. FERC suggested basing the adjustment on the difference between each LSE’s actual 2026/2027 load and the latest 2028/2029 load forecast.

• Transmission Owner Exit Rules: PJM would have required a transmission owner leaving PJM before the RBP commitments ended to ensure the remaining commitments in its territory are satisfied. FERC argues that obligations should remain with the LSEs in that zone.

• LSE Collateral Requirements: PJM proposed requiring collateral for 50% of the estimated contract value. Northern Virginia Electric Cooperative estimated it would have to post about $1.95 billion. FERC found PJM had not shown a reasonable cause to justify the requirement. Collateral requirements for generators were found appropriate.

The core procurement design was not contested, and the key mechanics related to generator and storage sell offers were accepted, including:

• Price Limit: A MW-weighted average cap of $555/MW-day across all offers.

• Procurement Target: Roughly 6.8 GW of unforced capacity (UCAP), reduced by bilateral agreements between large loads and new supply in place before the Central Procurement.

• Long-Term Commitments: Terms of up to 15 years, covering the 2028/2029 through 2042/2043 Delivery Years.

• Pay-as-Bid Structure: Selected resources receive their offered price for each Delivery Year rather than a market clearing price, settled as a contract for difference against the RPM clearing price.

• Eligibility: New resources only, including uprates and repowering, that can demonstrate commercial operation by June 1, 2032. Resources that cleared in the 2028/2029 BRA or earlier are not eligible.

• PJM Resubmission: FERC encouraged PJM to file a revised proposal within 30 days addressing its concerns. The commission said it would view requests for deadline extensions with great disfavor.

• Urgency: FERC commissioners wrote briefs urging PJM to act quickly. PJM said it is reviewing the order and intends to address FERC’s concerns immediately.

There are several takeaways from FERC’s conditional approval:

• Stay Ready to Act: Given the sense of urgency put on PJM by FERC, expect the rescheduled window to move quickly once one is set. Offers that were prepared for the original window should be kept current and ready to file. Asset owners now have more time to prepare for RBP credit requirements and to compile RBP offer submission packages.

• Implications for the 2029/2030 BRA: PJM originally planned to announce RBP results prior to the 2029/2030 BRA in December. That timeline is now disrupted. Developers should watch PJM’s RBP resubmission carefully to understand how it may impact the 2029/30 BRA.

• Price-in Your Risk: Under pay-as-bid, there is no uniform clearing price to rely on. Offers need to account for network upgrade costs, future ELCC ratings, and missed CODs.

• RBP and BYONC Are Mutually Exclusive: Resources that clear an RBP obligation cannot pursue the Bring Your Own New Capacity (BYONC) path. Resources that offer but do not clear can still pursue BYONC.

The RBP is a rare opportunity to secure long-term capacity revenue, but the window is short, and the penalties are steep. SYSO helps developers and asset owners navigate PJM market participation, from offer preparation through daily asset scheduling, market settlement, and capacity market management. Contact us today to discuss whether the RBP is the right fit for your project.