A NEWSLETTER FROM ADVANCED ENERGY UNITED |
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PJM Board and PJM States, Alongside the White House, Propose Separate but Similar Solutions to Address Data Center Load Growth and Affordability in PJM
On January 16, in an unexpected and unprecedented move, the Trump administration, through the Department of Energy (DOE), along with governors of all 13 PJM states, asked PJM to hold a one-time emergency auction intended to shield customers from the cost of new generation needed to serve data centers.
The proposal's statement of principles calls for PJM to: -
Hold a special auction, separate from PJM's regular Base Residual Auction (BRA, PJM's capacity market auction), that would provide a 15-year price lock; a separate DOE press release claims the auction will support $15 billion in new power plants.
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Ensure that the costs of this auction are allocated to data centers through their load-serving entities, whether the data centers use the power or not (with the Governors agreeing to work with their utility commissions to ensure appropriate cost allocation at the state level).
- Implement a two-year extension of the capacity market price collar that has been in place for the last two auctions but is not currently in effect for the 2028/29 auction, scheduled for June 2026.
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Enact further reforms to load forecasting, generator interconnection, and the capacity market.
PJM did not participate in developing the proposal and was not invited to the White House for the announcement. PJM is under no obligation to implement the proposal, and any emergency auction, along with other proposal elements, would need to be approved by the Federal Energy Regulatory Commission (FERC). FERC Chair Laura Swett said at the January 22 FERC open meeting, "This is a monumental moment… I want to recognize this historic agreement reached between the administration and a bipartisan coalition of 13 governors who represent the customers of PJM."
Separately but almost concurrently, the PJM board issued its long-awaited proposal stemming from PJM's Critical Issue Fast Path (CIFP) stakeholder process to address large load additions, which began back in August and produced 12 proposals, none of which achieved a consensus stakeholder vote. In December, the PJM Board Chair indicated that PJM would file its CIFP proposal with FERC in January, addressing issues related to future large-load additions. FERC formally requested an update on PJM's CIFP by January 20 as part of its colocation order (see story below).
The PJM Board ultimately released the framework for its CIFP plan late on January 16, followed by a formal filing of the CIFP plan with FERC. The proposal emphasizes the Board's commitment to reliability and competitive markets and reflects concepts outlined in various stakeholder proposals. The plan includes a half-dozen proposals: some to be filed directly with FERC, some that entail changes in PJM's policies and procedures that can be made immediately, and some that will involve stakeholder processes to inform the Board and further flesh out critical details.
These include: - An immediate initiation of a backstop auction to secure more power supplies after falling 6.6 GW short in their December auction, failing to meet standards aimed at preventing blackouts—similar to the Governors' proposal but with different proposed parameters, with work to develop the auction to start immediately.
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Voluntary Bring Your Own New Generation (BYONG), along with an Expedited Interconnection Track that would allow certain resources above 250 MW to connect outside of PJM's interconnection cluster process (to be filed with FERC as soon as this month). The Board's proposal did not include any reforms to the standard interconnection queue, as requested by the Governors' proposal.
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A "connect and manage" curtailment framework to address shortfalls between new load and new generation, whereby PJM would give notice to LSEs (Load Serving Entities) and TOs (Transmission Owners) of potential load reductions (PJM notes that it cannot direct individual retail loads to curtail).
- Potential extension of the price collar for the next two capacity auctions—but unlike the Governors, the Board raised pros and cons and is seeking stakeholder feedback before moving forward.
- A focused review of the capacity market to assess whether its design is appropriate for prevailing investment conditions and provide the incentives needed to attract timely new supply is to be conducted by PJM staff in conjunction with stakeholders in 2026. This element aligns with the Governors' request that PJM initiate immediate reforms to the capacity market.
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Significant Load Forecasting Improvements (as discussed further below, PJM has recently revised down its load forecast)—this aligns with the Governors' request.
Key Takeaways:
Whether a new auction within PJM to address load growth will be fair, competitive, and effective at incentivizing significant new generation development and shielding other customers from cost and reliability impacts will depend on details of the plan that will need to be worked out by PJM and approved by FERC—and on cost allocation provisions that will need to be ironed out at the state level.
What is clear is that States, the White House, PJM, and FERC all agree that urgent and unprecedented action is needed—and they are at least somewhat aligned on the solution set. And while much of the initial focus has been on the idea of a separate auction to address the influx of new large loads, that does not make any less urgent, the need to implement durable solutions such as fixing the backlogged interconnection queue, building smarter regional and interregional transmission, pursuing market reforms to reflect the shifting resource mix, and adopting new technologies to bring PJM's grid into the 21st century.
CIFP Next Steps from David Mills – PJM Board Chair and Interim CEO:
David Mills, PJM Board Chair and Interim CEO, provided an update on CIFP and participated in Q&A with PJM stakeholders at the January 22 Member's Committee meeting. Mills characterized the DOE/Governors' proposal as an unexpected and unprecedented state-federal intervention into PJM activities. Mills did not address that proposal directly but instead focused on the PJM proposal and next steps; however, he acknowledged and seemed to accept the September timeline for a new backstop reliability auction to address data center load, as outlined in the DOE/Governors' letter. Mills outlined an "accelerated" stakeholder process that was "already underway" and indicated he would not initiate a formal CIFP process.
Mills' top priorities include: - Reliability Backstop Auction
- Developing a "connect and manage" process for large loads.
- Holistic redesign of PJM power markets beyond just the capacity market.
Jacob Finkel, representing PA Governor Josh Shapiro, admonished Mills in the meeting for not taking the DOE/Governor's proposal more seriously, and specifically for not addressing affordability by adopting the price cap extension.
For its part, PJM issued a request to stakeholders to respond to the questions via a survey available at this link. The survey will close at 5:00 pm on Friday, January 30. All feedback will be posted publicly, with attribution, on the CIFP-LLA webpage.
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Key PJM Updates & Policy Developments |
PJM Ratchets Down Projected Load Forecast
On January 14, PJM released an updated forecast of future electricity demand from large users, including data centers. PJM has indicated that the revised forecast moderates earlier projections and provides a "reality check" on assumptions that utilities and developers are currently using to plan for load growth. PJM lowered its demand forecast because some of the projects incorporated into its previous outlook — primarily data centers — don't yet have firm electric service or construction commitments.
To date, PJM's long-term forecasts have projected an unprecedented surge in peak electricity demand, estimating the need for approximately 32,000 MW of new generation, battery storage, and demand response between 2024 and 2030. Nearly 30,000 MW of that projected growth was attributed to data center demand. By contrast, PJM's total generating capacity increased by only about 2,000 MW (roughly 1%) over the past year.
The updated forecast reduced PJM's peak load forecast for this summer by 0.7% from large loads, 0.5% from economic activity, and 0.1% from EVs compared to the last long-term load forecast report, PJM said in a press release.
PJM uses its annual load forecast for transmission planning and to help determine how much capacity it should buy in its capacity auctions. PJM's next base capacity auction, for the 2028/29 delivery year, is set to start on June 30. The new forecast cuts PJM's peak demand forecast for the summer of 2028 by 4.4 GW, or 2.6%. It also lowered its forecast for the summer of 2027 by about 4 GW, reducing a reserve margin shortfall for that capacity year to about 2.6 GW from 6.6 GW. As FERC Commissioner David Rosner noted last year, when utilities are forecasting hundreds or thousands of megawatts of growth, "improving forecasts by even a few percentage points—up or down—can impact billions of dollars in investments and customer bills." Why PJM Is Reassessing Forecasts:
In December, PJM Chief Operating Officer Stu Bresler stated that PJM's overall power demand forecast for the year beginning in mid-2027 is expected to be "appreciably lower" than current projections.
PJM has cited the need for more concrete evidence on the pace and scale at which new data centers can realistically be built, particularly given constraints on semiconductor supply, electrical equipment availability, and specialized construction labor. PJM has emphasized that forecast accuracy is critical in both directions: -
Overestimating load growth risks burdening consumers with billions of dollars in unnecessary infrastructure and capacity costs.
- Underestimating load growth increases the risk of power shortages and blackouts.
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PJM December Capacity Market Auction Hits Price Cap, Falls Short of Meeting Reliability Requirement
On December 17, PJM announced the results of its 2027/2028 Base Residual Auction (BRA), securing 134,479 MW of capacity from generation and demand response to meet projected electricity needs. The price came in at the FERC-approved cap of $333/MW-day across the entire PJM footprint, a slight increase (+1.3%) from the 2026/2027 Base Residual Auction.
As a result of the cap, consumer prices are expected to remain largely unchanged. This is the final auction under the cap negotiated by the Shapiro administration as part of the PA lawsuit settlement with PJM; the upcoming June 2026 auction for the 2027/2028 delivery year will be uncapped.
Despite clearing at the price cap, the auction failed to meet PJM's reliability requirements. Total capacity procured fell 6,623 MW short of the level needed to maintain PJM's target 20% reserve margin, indicating that supply did not keep pace with projected demand growth.
PJM Chief Operating Officer Stu Bresler underscored the role of large load growth in the outcome, stating that "data centers' demand for electricity continues to far outstrip new supply," and that addressing the issue will require coordinated action among PJM, stakeholders, state and federal partners, and the data center industry.
PJM's forecast peak load for the 2027/2028 Delivery Year is approximately 5,250 MW higher than the forecast used for the 2026/2027 auction. Nearly 5,100 MW of that increase—almost the entire growth—is attributable to data center demand, highlighting the pace at which large loads are reshaping PJM's reliability outlook. |
Updates on Ongoing PJM Proceedings |
Regional Transmission Expansion Plan (RTEP) Update
PJM presented its 2026 Regional Transmission Expansion Plan (RTEP) to stakeholders last week. The annual RTEP identifies transmission projects needed to address reliability requirements across the PJM footprint. The proposed plan includes $11.6 billion in transmission upgrades—more than double the amount approved in recent years and the largest single-year investment in large reliability projects in PJM's history.
By comparison, PJM approved approximately $5 billion in RTEP upgrades in 2024 and $6 billion in 2025. Notably, the proposed projects were not competitively bid, and—if approved—costs would be allocated broadly to all PJM ratepayers. PJM is targeting the Board of Managers' approval in the first quarter of 2026. |
PJM Sub-Annual Capacity Markets Senior Task Force (SACMSTF) Report Released—but Next Steps Remain Uncertain
In August, PJM convened the Sub-Annual Capacity Markets Senior Task Force (SACMSTF) to evaluate whether transitioning to a sub-annual capacity market could improve market efficiency and reduce costs. The task force was initiated in response to an issue charge from the Pennsylvania Governor's Office, submitted as part of a July 2025 update, which urged PJM to accelerate its move away from an annual-only capacity market construct. PJM retained Analysis Group to manage and coordinate the task force's work.
On January 6, the group released its initial assessment report, which failed to identify quantifiable cost savings associated with a sub-annual capacity market, but suggested that such a market structure could provide benefits. According to the original issue charge, the task force's work was intended to conclude in time to allow for potential implementation before the 2030/2031 Base Residual Auction, currently scheduled for May 2027. PJM staff subsequently deemed the issue charge complete and stated that a new issue charge would be required to proceed with any formal market redesign.
Despite previously stating its intention to move toward a sub-annual market design, PJM didn't seem inclined to implement that new issue charge, and it remains to be seen whether Pennsylvania or another stakeholder will pursue further action to advance sub-annual capacity market reform. |
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The Federal Energy Regulatory Commission is an important independent agency that regulates interstate transmission of electricity, natural gas, and oil. As the agency that oversees regional transmission authorities such as PJM, it is important to know what FERC is working on and how this may impact consumers in your state. Read more FERC PJM Insights below. |
PJM December 2025 FERC Order 1920 (Long Term Transmission Planning) Compliance Filing
On December 12, PJM submitted its initial compliance filing with the Federal Energy Regulatory Commission implementing FERC Order No. 1920, which requires transmission providers to adopt a more proactive, long-term regional transmission planning framework.
PJM's filing focuses on changes to the transmission planning process itself, outlining how the region would identify and evaluate long-term transmission needs and solutions. More complex and controversial compliance elements—particularly those related to cost allocation and a proposed state opt-out mechanism—will be addressed in a separate, joint filing by PJM Transmission Owners and PARSEC (the PJM Area Relevant State Entities Committee), due on June 12, 2026.
(On October 17, FERC issued notice granting PJM-related entities an extension of time to comply with Order No. 1920.
Key Elements of PJM's Proposed Long-Term Planning Framework:
Among other provisions, PJM's compliance filing proposes to: - Establish a Long-Term Regional Transmission Plan conducted on a five-year cycle and based on a 20-year planning horizon.
- Develop at least three plausible and diverse long-term scenarios, each incorporating factors across seven categories defined by FERC, including load growth, public policy, and resource changes.
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Identify a comprehensive set of long-term transmission needs (reliability, public policy, market efficiency, retirements, and interconnection), with PJM proposing to distinguish between "core" and "additional" needs—a distinction not expressly required by Order No. 1920 that may affect project selection and cost allocation.
- Conduct competitive solicitation windows similar to PJM's existing regional processes under Order 1000.
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Require developers to demonstrate consideration of four Alternative Transmission Technologies (ATTs)—as identified in the Order 1920 Final Rule—when proposing regional transmission facilities.
- Evaluate whether regional transmission solutions can address interconnection-related needs, rather than defaulting to local or supplemental upgrades.
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Coordinate with transmission owners to assess "right-sizing" opportunities, allowing existing facilities that might otherwise be replaced to be upgraded or expanded more cost-effectively to meet long-term needs.
- Apply specified selection criteria to determine which transmission facilities PJM will recommend to the PJM Board of Managers for inclusion in the Regional Transmission Expansion Plan (RTEP).
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Allow voluntary funding by states or third parties for proposals not preliminarily selected, and provide states with a potential path to opt out of cost allocation, subject to mechanisms still under development in the separate cost-allocation compliance filing.
Activity and Schedule: - Comments on PJM's compliance filing are due January 21.
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PJM Transmission Owners and PARSEC are expected to submit their cost-allocation and opt-out compliance filings on June 12, 2026.
Why This Matters:
Significant investment in our outdated transmission grid is needed to maintain reliability and bring new, affordable, clean energy online. Today, much of PJM's transmission spending is directed toward local, near-term reliability projects, rather than interstate transmission that would bring regional benefits. This "just-in-time" and poorly coordinated approach to transmission development is a key reason FERC issued Order No. 1920. Historically, PJM's regional transmission planning has largely excluded state public policy needs, contributing to:
- Chronic under-building of regional transmission,
- Long interconnection queues for new resources, and
- Billions of dollars in costly local and supplemental upgrades borne by customers.
Order No. 1920 represents an important step toward correcting these shortcomings—but strong compliance and effective implementation by PJM, supported and reinforced by active state engagement, will be essential to realizing its full benefits. Advanced Energy United has developed a guide for states on how to engage in the Order 1920 compliance and planning process, available on its website.
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Docket No. EL25-20-000 - FERC Issues "Show Cause" Order on PJM Co-location of Large Loads
As large energy users—particularly data centers—seek faster connections to the PJM grid, co-location with generation resources and flexible operating arrangements have emerged as potential solutions to address rapid load growth.
On December 18, FERC issued an order in a PJM "show cause" proceeding that could potentially provide greater regulatory certainty for large load customers, while establishing safeguards to ensure that co-location won't negatively impact the electric rates and system reliability of all other customers. The Order directs PJM Interconnection to develop new tariff pathways for co-located loads and for large energy users willing to limit their reliance on the transmission system.
These requirements could improve speed-to-power and grid flexibility, protecting consumers from price increases while better ensuring grid reliability. The Commission acknowledged when issuing the Order that clarifying co-location arrangements is only part of the solution to addressing load growth while maintaining reliability and affordability, and that further reforms to generator interconnection, market rules, and demand response and distributed energy resource (DER) participation will be required to take full advantage of the contributions of advanced energy technologies.
How We Got Here:
The Order follows a February 2025 Commission decision to initiate a "show cause" proceeding to examine whether PJM's Tariff is unjust and unreasonable because it lacks provisions governing rates, terms, and conditions for: Interconnection customers serving co-located load. Eligible customers taking transmission service on behalf of co-located load—the proceeding consolidated issues raised in Docket No. EL25-20-000, with the Order also issued in EL25-49-000 and AD24-11-000.
What the Order Says: Jurisdictional Findings The Commission found no regulatory "gap," but rather a regulatory overlap: - States retain jurisdiction over retail rates, retail sales, and generation resource mix decisions, including siting authority.
- FERC retains jurisdiction over:
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Interconnection of generating facilities (including those serving co-located load) to the interstate transmission system; and
- Transmission service in interstate commerce used by eligible customers to serve a co-located load.
Tariff Revisions Required Consistent with its jurisdiction, the Commission directed PJM to revise its Tariff to address service applicable to: -
Interconnection customers (generation or storage resources) serving co-located load; and
- Eligible customers taking transmission service on behalf of a co-located load.
Specifically, the Order requires PJM to: - Require interconnection customers serving co-located load to identify an eligible customer that will take transmission service on behalf of that load; and
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Establish three new transmission service products for eligible customers willing and able to limit withdrawals from the transmission system:
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Interim, non-firm Transmission Service (available until required Network Upgrades are completed): Temporary, interruptible access to the transmission system that allows a customer to use grid power on a limited basis while longer-term transmission upgrades are still being built. Service can be reduced or cut off if the grid becomes constrained.
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Firm Contract Demand Transmission Service: Guaranteed transmission service up to a pre-set maximum level of demand. The customer commits to a defined cap on grid usage and, in return, receives reliable, priority access to the transmission system at that level.
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Non-Firm Contract Demand Transmission Service: Transmission service up to a defined demand limit that can be interrupted during periods of system stress. The customer accepts lower priority access in exchange for greater flexibility and potentially lower costs.
The Commission also initiated a paper hearing to determine the appropriate rates, terms, and conditions for these new services. It set forth eleven questions (Paragraph 219 of the Order) to be addressed in briefs. Responses to PJM are due March 18. Activity and Schedule: -
January 20, 2026: Tariff clarifications related to interconnection customers seeking to use new generating facilities to serve co-located load, available here.
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January 20, 2026: Informational report (available here) on the Critical Issues Fast Path (CIFP), including:
- Status of expedited interconnection for shovel-ready generation;
- Modifications to PJM's reliability backstop mechanism; and
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Development of enhanced load forecasting and demand flexibility measures.
- February 17, 2026: Compliance Filings regarding
- Revisions to the GIA and common service provisions to identify eligible customers;
- Establishment of new firm and non-firm transmission service products;
- Revisions to Behind-the-Meter Generation (BTMG) rules;
- Establishment of necessary study procedures; and
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Initial briefs addressing rates, terms, and conditions for the new services
- Responses due: March 18, 2026
- PJM reply brief due: April 17, 2026
Stakeholder Engagement:
On January 9, PJM hosted the first in a series of stakeholder workshops to discuss compliance with the Show Cause Order. Additional workshops are scheduled as follows: - January 23, 2026: Behind-the-Meter Generation
- January 26, 2026: Interconnection Study Procedures
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February 5, 2026: New Transmission Service Products (including rates, terms, and conditions)
PJM also acknowledged that it must file an informational report on the status of the CIFP proceeding related to large load interconnection. |
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Governance & Leadership Updates |
Manu Asthana Officially Steps Down as PJM Continues CEO Search PJM Interconnection continues its search for a permanent chief executive officer following the resignation of Manu Asthana, who announced on April 14 that he would step down effective at the end of 2025. With a replacement not yet identified, David Mills, Chair of the PJM Board, has assumed the role of interim President and CEO while the search process continues. In a statement announcing the transition, Mills emphasized the Board's focus on leadership continuity and long-term fit, noting that "the Board is committed to finding the best candidate to lead PJM through the numerous challenges facing the industry, and that meticulous process continues." |
OPSI Executive Director Position Open Organization of PJM States, Inc. (OPSI) has opened a search for a new Executive Director, with applications due February 6, 2026. The Executive Director serves as OPSI's chief spokesperson and liaison to PJM Interconnection and the Federal Energy Regulatory Commission, supporting coordination among PJM states on wholesale markets, transmission planning, and regulatory engagement. The position requires significant experience in state utility regulation, PJM processes, and federal energy policy. The targeted start date is March 2026. Additional details, including qualifications and application instructions, are available in the position announcement. |
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Upcoming Events & Opportunities |
As 2026 begins, several annual and seasonal convenings will shape discussions on transmission planning, capacity markets, reliability, and state–federal coordination. These forums offer important opportunities for engagement, alignment, and information sharing. |
State & Federal Policymaker Convenings:
National Association of State Energy Officials — 2026 Energy Policy Outlook Conference
Washington, DC | February 3-6, 2026
As states continue to navigate evolving federal energy policies and priorities, this year's meeting will include sessions focusing on the implementation of these policies and programs in this dynamic energy environment as well as in-depth discussion on ways in which state-federal coordination can address various energy system challenges such as rising power demand, reliability concerns, evolving economic and workforce needs, and increasing physical security and cybersecurity threats. National Association of Regulatory Utility Commissioners — Winter Policy Summit
Washington, DC | February 8-11, 2026
A key annual forum for state utility commissioners and stakeholders, with expected focus on transmission planning, large load growth, reliability, and FERC Order implementation. National Governors Association — Winter Meeting
Washington, DC | February 19-21, 2026
Governors and senior advisors convene to discuss economic development, infrastructure, and energy priorities, including transmission siting and permitting. National Conference of State Legislatures — Energy Policy Meetings
Various locations | Throughout 2026
The NCSL Task Force on Energy brings together state legislators and staff to discuss evolving energy policy challenges, including grid reliability, load growth, and transmission investment. |
PJM & Regional Coordination Meetings: PJM Interconnection — Annual Members Meeting
Baltimore, MD | May 11-13, 2026
An annual opportunity to hear from PJM leadership on system conditions, planning priorities, and market developments.
Organization of PJM States, Inc. (OPSI) — Spring Meeting
Wilmington, DE | April 12-14, 2026
Convenes PJM state commissions and consumer advocates to coordinate on transmission planning, cost allocation, and market reforms.
Organization of PJM States, Inc. (OPSI) — Annual Meeting
Traverse City, Michigan | October 19-22, 2026
Convenes PJM state commissions and consumer advocates to coordinate on transmission planning, cost allocation, and market reforms.
Mid-Atlantic Conference of Regulatory Utilities Commissioners (MACRUC) — Annual Meeting
Columbus, Ohio | June 15-18, 2026
Regional forum for utility commissioners and stakeholders to discuss shared regulatory and infrastructure challenges. |
Cross-Regional & Long-Term Planning Forums:
Northwestern Electricity Dialogue - Load Generation and Transmission: Planning in a Time of Uncertainty
Chicago, IL | April 13-15, 2026
A cross-regional forum exploring long-term electricity system planning, governance, and coordination. While outside the PJM footprint, discussions often inform national transmission and planning debates. Northwestern Electricity Dialogue - Second Annual Meeting: Markets Chicago, IL | June 29-30, 2026
A cross-regional forum exploring long-term electricity system planning, governance, and coordination. While outside the PJM footprint, discussions often inform national transmission and planning debates.
Federal Energy Regulatory Commission — Technical Conferences & Open Meetings
Washington, DC / Virtual | Ongoing
FERC technical conferences and monthly open meetings will continue to address transmission planning, large load integration, and market reforms relevant to PJM stakeholders. Additional details, agendas, and registration information will be shared as they become available. |
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Featured Reports & Resources |
PJM Issues 2025 Year in Review Report
On January 8, PJM released its 2025 Year in Review report, Planning Prepares for Burgeoning Electricity Demand. The report highlights PJM’s assessment of growing electricity demand—particularly from large loads such as data centers—and outlines how planning, operations, and market functions are adapting to emerging reliability and infrastructure challenges.
Key themes include projected load growth, resource adequacy pressures, transmission planning needs, and the role of coordination across planning and market processes as PJM prepares for a more electricity-intensive future. |
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