Interim PJM Interconnection President and CEO David Mills opened a conversation with stakeholders Jan. 22 about how PJM will approach directives from the PJM Board of Managers, the White House and the 13 governors in the PJM footprint to design and implement a backstop auction in the near term.
The White House and governors released a joint Statement of Principles this month, shortly before the PJM Board published its decision on connecting data centers and other large loads reliably and affordably.
PJM’s action followed a four-month stakeholder process studying how best to integrate energy-hungry data centers, which can be built faster than generation and transmission needed to support them.
The documents align on a number of recommendations, PJM said.
Mills engaged stakeholders for two hours at the Members Committee meeting about the path forward, beginning with the question of whether it is feasible to conduct a “backstop auction” in September, as directed by the federal and state officials.
PJM’s governing documents allow for PJM to take special measures to procure generation under specific conditions; both the statement of principles and the PJM Board letter call for a backstop procurement process as soon as possible, without necessarily meeting those same conditions.
Mills said he viewed the fact that 13 governors had signed the letter as a commitment on the part of the states.
“With that comes the responsibility of things contained in that letter,” Mills said, including helping Load Serving Entities site and permit their transmission facilities.
“We’re all in this together now to the extent that we probably have never been,” Mills said. “And there’s going to be an expectation; there’s going to be the requirement that people engage and take ownership for some part of this equation. Because PJM on our own, we can do a lot, but we can’t do this without you all.”
He said the White House and governors’ letter envisions an auction whereby data centers would pay for new generation on a 15-year contract basis, a structure that would insulate traditional consumers from the cost.
Short of some generator uprates and upgrades in the works, new generation procured in any type of auction probably would not be operational until 2032 or 2033, Mills said.
He cited financing, supply chain issues, permitting challenges and an uncertain Tariff landscape as factors causing interconnection delays.
Mills said one idea to consider is a subscription service that would have significant financial commitment on the part of the buyers to protect from overbuilding the system.
“There should be significant penalties if you say you’re coming with your load … and we match you up with a generator and you decide not to show up. Those costs should not be born back to the RTO,” Mills said.
Mills suggested a schedule of four to six weeks of focused stakeholder meetings to identify how an emergency auction could be held. The structure of the process has not been decided; PJM is scheduling a series of meetings to begin implementing and/or working with stakeholders on various aspects of its plan.
