FERC Halts PJM's Data-Center Power Auction Hours Before Launch

On September 29, the Federal Energy Regulatory Commission accepted — and simultaneously suspended for five months — PJM Interconnection's plan for a backstop capacity auction designed to close a power shortfall driven largely by data center growth. PJM, which runs the grid serving roughly 65 million people across 13 Mid-Atlantic and Midwest states, pulled the auction the next morning, hours before bidding was due to open. Its new effective date is now February 28, 2027.

The numbers at stake are sizable. PJM had targeted about 6,831 megawatts of emergency capacity, with a weighted-average offer cap of $555 per megawatt-day — more than 70% above the $325/MW-day that Talen Energy locked in for 10,180 MW of ordinary capacity in PJM's regular 2028/2029 base residual auction just two months earlier, per the company's own results disclosure. Some load-serving entities, including Northern Virginia Electric Cooperative, faced collateral requirements estimated near $2 billion simply to participate in the backstop process.

"This commission will not be forced into accepting a deeply flawed, eleventh-hour procurement mechanism with billion-dollar implications." — Laura Swett, Chairman, Federal Energy Regulatory Commission

Commissioner Lindsay See focused on who would ultimately pay, finding that PJM "did not adequately ensure that the procurement's costs will be allocated to the customers who drive its need" — a pointed reference to the data centers clustering in PJM's Northern Virginia corridor. PJM spokesman Jeffrey Shields struck a more conciliatory note, saying the grid operator "is reviewing the order and intends to work quickly to address the commission's remaining concerns," framing the suspension as a workable path rather than a rebuke.

Power, not chips, is now the constraint

The episode captures a broader shift: securing electricity, not silicon, is increasingly the binding constraint on AI buildouts. PJM only agreed to run a backstop auction after Swett and Trump administration officials pressured its board in May to accelerate a procurement originally slated for March 2027 — and even that accelerated version has now slipped five more months. Demand isn't waiting: this month Vertiv agreed to pay up to $2.6 billion, including performance targets, to acquire UtilityInnovation Group, a deal explicitly built around helping data center operators line up power faster.

"Power becomes an increasingly critical constraint on data center growth." — Giordano Albertazzi, CEO, Vertiv