US Regulator Froze PJM's Data Center Power Auction for Five Months

PJM, the largest power grid in the U.S., pulled an auction it was set to open on Sept. 30. A day earlier, the Federal Energy Regulatory Commission had accepted the auction rules but suspended them for five months.

The auction was meant to secure new power plants for fast-growing data center demand. PJM serves 67 million people across 13 states and Washington, D.C.

The next day, Constellation Energy fell 4.2% and NRG fell 2.25%.

The Gap Surfaced in July

PJM runs an annual capacity auction for a delivery year several years out. Plants commit to being available, and they are paid for that commitment. In the July 2026 auction for 2028/29, prices reportedly hit the cap and cleared 6,831 megawatts short of the requirement.

Data centers drive the gap. PJM expects new large-load demand to reach about 70 gigawatts by 2038.

The call for a fix came in January from the White House and the region's 13 governors. They proposed 15-year commitments for new baseload plants. The costs would fall mainly on data centers that do not bring their own capacity.

PJM filed on July 31. The cap was $555, and plants had to be online by June 1, 2032.

What the Regulator Said, and What It Did

This is an action, not a statement. FERC's Sept. 29 order is binding: the rules were accepted, and the effective date moved to Feb. 28, 2027.

FERC set three issues for further review: how costs are allocated, exit rules for transmission owners, and collateral for load-serving entities. Chairman Laura Swett was blunt:

"This commission will not be forced into accepting a deeply flawed, eleventh-hour procurement mechanism with billion-dollar implications for consumers."

Commissioner Lindsay See said PJM did not adequately ensure that costs would land on the customers who drive the need. Northern Virginia supplied the concrete case. Northern Virginia Electric Cooperative said the original design would have required about $2 billion in collateral.

The order is not about the calendar.

It is about the address on the bill.

How the Bill Adds Up

Capacity payments are made per megawatt, per day. Apply the cap to the whole gap and the size of the bill appears.

These contracts are the revenue guarantee a plant developer takes to the bank. Because the term is long and the price is high, who pays matters as much as the financing itself.

If the bill is spread across all customers, household power bills carry demand created by data centers. If it lands on data centers, the local utility serving them must post collateral for the life of the contract. The Virginia co-op's $2 billion figure is the cost of that second route.

Why Power Producers Fell

For plant owners in the region, the auction was a new 15-year revenue stream.

TD Cowen's John Miller wrote that the delay creates "renewed (and acute) uncertainty" for generators exposed to PJM.

Causality needs care here. The same day, the 10-year Treasury yield rose to 5.28%. Rate-sensitive power stocks were under pressure for that reason too. All three companies were already down between 21% and 42% year to date. On rates and bonds: Interest Rates and Bonds.

Constellation over the past three months:

The Calendar Got Longer

The delay means generators will bid into the next base capacity auction without knowing what the backstop procured. That is the other half of the sector story: the power need is known, the payer is not. We covered a similar fight in our pieces on Texas and Berkshire.

The broad market over the same stretch:

This piece draws on PJM's official account of FERC's Sept. 29 order (Inside Lines); Sept. 30 reports from Utility Dive, RTO Insider and Bloomberg; Akin Gump's summary of the January White House-governors statement; and Yahoo Finance's report on the TD Cowen note. The $20.8B total is an upper-bound calculation that applies the cap to the full gap for 15 years; actual payments depend on auction results. The July auction cap price and the stock moves are from secondary reports.