On July 28th, Beijing time, the PJM Board selected a temporary resource adequacy service and reliability backstop procurement scheme for new large loads on the previous day. They plan to submit related proposals to the Federal Energy Regulatory Commission (FERC) by the end of the month. TechCrunch reported this decision at 15:42 UTC. The framework aims to address potential capacity shortages in the regional power system, with PJM's services covering 67 million people.
Conditions for Application and Execution Order
According to the framework proposed by PJM, new large loads that do not bring sufficient additional capacity, have not obtained backup procurement capacity offsets, and cannot supply power according to a once-in-ten-years reliability standard will be subject to interim resource adequacy service. This does not mean all data centers will be disconnected from power; it is merely a proposal for specific conditions of new large loads that has yet to be reviewed by FERC. Reaching the 50 MW threshold itself does not necessarily lead to load reduction.
The actual load reduction under interim resource adequacy service will occur after non-fixed transmission services are cut and before emergency pre-load management, reducing only the megawatts needed for real-time shortages. Qualified sites can switch to on-site backup resources with approval, which does not mean the entire facility will be completely powered down. PJM plans to add corresponding alerts, warnings, and action procedures in Manual 13 to maintain system or regional reserves and transmission limits; specific customers and execution processes are coordinated by local distribution companies and relevant states.
Registration Thresholds and Planning Basis
PJM plans to create a register for large loads and allocate obligations by region. The service targets new large loads that have not been put into use by June 1, 2027, and meet other conditions; large loads are defined as terminal user loads with cumulative peak demand of at least 50 MW within a one-mile radius around a single site. Local distribution companies must register capacity, commissioning time, backup generation, and new supply information before the new load is commissioned, after which PJM calculates regional responsibilities based on rules; previously commissioned large loads must be registered by March 1, 2027.
PJM states that both base residual auctions for delivery years 2027/2028 and 2028/2029 are below system reliability requirements, with shortages expanding. The board also expects new large load demand of about 70 GW by 2038 and notes that approximately 15 GW of generation capacity has retired within its range since 2022. These figures and resource adequacy assessments come from PJM planning documents; TechCrunch's publicly available subscription source titles and summaries have not independently recalculated them.
Capacity Procurement and Compensation Framework
Reliability backstop procurement and conditional load reduction are two related but distinct mechanisms: the former seeks new supply commitments, while the latter specifies how qualified new large loads reduce grid power consumption during capacity shortages. PJM plans to advance central procurement and bilateral matching in parallel, with central processes starting in September; bidding and target adjustment windows run from September 30th to October 21st, with selection and result publication scheduled for October 22nd to December 2nd. Commitment terms can be up to 15 years, with a weighted maximum willingness-to-pay of $555 per megawatt-day.
For verified interim resource adequacy service load reductions, local distribution companies plan to implement compensation arrangements and coordinate with state regulatory bodies. Compensation is based on the actual completed and verified reduction; PJM proposes an hourly rate equal to 50% of existing performance assessment interval rates. Who funds projects, which large loads are eligible for or can waive compensation remains determined by state laws and relevant retail regulatory agencies; official documents do not provide specific site amounts.
Scope Differences and Regulatory Process
TechCrunch's headline focuses on potential temporary power cuts for data centers, while PJM's official documents cover qualified new large loads and allow sites to switch to on-site backup resources with approval as long as related power consumption is removed from the PJM system. The board also did not adopt a voluntary subscription framework that received more than two-thirds industry-weighted member support, citing its inadequacy in ensuring recent capacity gaps are filled; ultimately choosing mandatory backstop procurement and conditional load reduction services.
PJM plans to submit documents to FERC by the end of July. Regulatory review results, final terms, specific site lists, duration and frequency of reductions, compensation amounts, and retail cost allocation have yet to be determined. Existing documents cannot prove that the scheme will lower electricity prices, avoid all power outages, or procure sufficient capacity on time; nor can they confirm any data center will be reduced in load. States still need to decide on retail costs and compensation eligibility, with when and how the plan takes effect depending on FERC documents and subsequent state-level implementation arrangements.