FERC Approves PJM Capacity Price Collar Extension through 2030 to Protect Ratepayers

FERC Approves PJM Capacity Price Collar Extension through 2030 to Protect Ratepayers

To mitigate the rapid repricing of electricity driven by AI data center load growth, the Federal Energy Regulatory Commission (FERC) has extended the capacity market price collar through the 2029/2030 planning year. This collar is designed to limit severe bill volatility for households and businesses while PJM Interconnection works to reform its interconnection process and procure new generation resources.¹

The 2028/2029 capacity auction and price collar limits

PJM is set to open its annual Base Residual Auction (BRA) for the 2028/2029 Delivery Year on June 30, 2026, with the offer window closing on July 7, 2026. The results of this highly anticipated auction will be posted after 4 p.m. on July 14, 2026.

This auction will operate under the newly extended price collar, which establishes:

• Price Cap: Approximately $325/MW-day
• Price Floor: Approximately $175/MW-day

The extension of these parameters was supported by a coalition of governors from all 13 PJM states. The price collar acts as a critical circuit breaker following the previous 2027/2028 capacity auction, which cleared at the maximum FERC-approved cap, threatening to shift billions in capacity costs onto regional ratepayers.

Underlyings remain unresolved

While the price collar limits short-term price spikes and consumer bill volatility, PJM officials explicitly warn that it does not resolve the fundamental supply-demand imbalance. As Adam Keech, Senior Vice President of Market Services at PJM, noted in June 2026:

"While the price cap and floor may reduce volatility, they do not solve the underlying supply-demand imbalance. Addressing that challenge requires either bringing more resources onto the system or moderating the pace of demand growth."

The tightening balance is driven by the rapid development of data centers, which can be constructed two to three times faster than the new electricity generation assets required to serve them.

PJM's multi-pronged response

To address these structural challenges, PJM is moving forward with a series of parallel regulatory and market initiatives, including:

1. Critical Issue Fast Path (CIFP) Filings: Scheduled for July 2026, these filings will seek FERC approval for a central "Reliability Backstop Procurement" process in September/October 2026 to target capacity shortfalls, and a "Connect and Manage" framework to track large loads and assign service priority when the grid is stressed.
2. Bilateral Matching Services: Launched on June 9, 2026, PJM is facilitating long-term (10+ years) bilateral agreements between large load customers and generation providers to secure supply from new generation, storage, or demand-side resources.
3. Interconnection Streamlining: Collaborating with technology partners (such as Google's Tapestry) to leverage AI to reduce interconnection study timelines.

These measures represent a major shift in grid governance, as PJM transitions from a purely market-clearing mechanism to a more structured, managed framework that coordinates large-load interconnection with reliability backstops.