Power & Sites · United States

PJM’s revised data center backstop procurement plan reduces utility risks: ICF

Credited to Utility Dive · utilitydive.com · 7h ago

Photograph · Utility Dive

The planned procurement could be for as little as 630 MW, down from an initial 6,800-MW target, after utilities in PJM’s footprint lowered their large-load forecasts, Jefferies analysts said.

The PJM Interconnection on Thursday filed a revised reliability backstop procurement, or RBP, proposal with federal regulators, with a goal of beginning the process on March 1 — about seven months later than originally planned.

The revisions come after the Federal Energy Regulatory Commission in late September rejected most of PJM’s initial proposal, which was designed to fill a capacity shortfall driven by data center development. FERC said in its decision that the original plan’s provisions for cost allocation, transmission owner exit rules and load-serving entity, or LSE, collateral requirements may have been unjust and unreasonable.

The proposed revisions were “carefully tailored” to address the issues identified by FERC while keeping the RBP’s fundamental structure and policy objectives intact, PJM said in its recent filing.

Under the new proposal, “PJM is using more current information on large-load growth to improve cost causation, revising the collateral methodology, and, importantly, recognizing that an RBP obligation and its associated collateral can move with the load-serving obligation when a large customer changes LSEs,” Maria Scheller, vice president of energy and planning at the consulting firm ICF International, said in an email to Utility Dive.

The proposal sharply reduces risks for providers of last resort and default service providers — utilities that provide power to customers that don’t buy electricity from power marketers, according to Scheller.

“If a large load initially relies on default service, the [provider of last resort] may temporarily carry significant RBP collateral and liquidity requirements,” she said. “The key credit question is whether state rules provide timely, certain recovery and adequate customer security, so the utility remains an administrative intermediary rather than taking meaningful balance-sheet or stranded-cost risk.”

As a result, the state role is especially important in the process’ outcome, and some state utility regulators may need to craft new rules, according to Scheller.

“Regulators may need to determine customer-specific allocation, establish appropriate security and cost-recovery rules, track changes in suppliers, and decide what happens if the underlying large load shrinks, defaults or disappears,” she said.

The proposal reduces the direct risk to residential and other existing customers, but it does not eliminate it, according to Scheller.

“Administrative costs, collateral and financing costs, regulatory lag, customer default and stranded-cost risk can still create indirect exposure if the state-level mechanisms do not keep the obligation tightly attached to the large load that caused it,” she said.

The planned procurement aims to fill a 6.8-GW capacity shortfall from PJM’s 2028/29 base residual auction.

However, the procurement may shrink significantly from the initial target after PJM recalculates how much capacity is needed, according to equity analysts with Jefferies.

PJM utilities, such as PPL Electric, FirstEnergy and AES Ohio, recently lowered their overall, near-term large load forecasts by 6.5 GW, the analysts said in an Oct. 28 note, citing recent filings to PJM’s Load Analysis Subcommittee. That reduction could reduce PJM’s 2027 load forecast, which would affect the grid operator’s backstop procurement target, they said. With that reduction, the procurement could be for as little as roughly 630 MW, according to the note.

The procurement could also shrink if data center developers enter into bilateral contracts with power suppliers.

Even so, analysis by Charles River Associates discussed Monday by the subcommittee found that PJM could face a roughly 11.5-GW shortfall by 2030. PJM hired CRA to provide an independent data center demand forecast.

Under the proposal, PJM will close the RBP bid window on March 28, with the final procurement target and supply amounts determined on April 28, the grid operator said Thursday. PJM would post the results on May 10.

10 Ways AI Labs Can Limit Antitrust Risks Of Safety Pacts

Credited to Law360 · law360.com6h ago

Useful

Try our Advanced Search for more refined results

The Practice of Law

Business of Law

Deep News & Analysis

Tax Authority

Employment Authority

Insurance Authority

Real Estate Authority

Bankruptcy Authority

Healthcare Authority

Law360 Australia

Law360 is on it, so you are, too.

A Law360 subscription puts you at the center of fast-moving legal issues, trends and developments so you can act with speed and confidence. Over 200 articles are published daily across more than 60 topics, industries, practice areas and jurisdictions.

A Law360 subscription includes features such as

Experience Law360 today with a free 7-day trial.

Already a subscriber? Click here to login

Related Sections

Government Agencies

Get instant access to the one-stop news source for business lawyers

Email (NOTE: Free email domains not supported)

PLEASE NOTE: A verification email will be sent to your address before you can access your trial.

Password (at least 8 characters required)

Law360 may contact you in your professional capacity with information about our other products, services and events that we believe may be of interest. You’ll be able to update your communication preferences via the unsubscribe link provided within our communications. We take your privacy seriously. Please see our Privacy Policy.

Already have access?

You must correct or enter the following before you can sign up:

Law360 takes your privacy seriously. Please see our Privacy Policy.

Original · Law360

Front

Power & Sites · United States

Political opposition to data centers mounts in US and abroad

Credited to Semafor · semafor.com · 22h ago

Photograph · Semafor

A competitive Texas governor’s race could shape the future of one of the biggest US data center markets, as opposition to the AI buildout goes global.

Republican Gov. Greg Abbott has scrambled to revise his earlier pro-data center policies, while his Democratic opponent has pledged a stringent moratorium, which could affect about 29% of the net capacity additions planned nationally for 2028.

While roughly 300-plus state and local moratoriums are threatening the US buildout, governments’ ambitions to harness the AI boom elsewhere are also facing hurdles: The developer of a massive data center in the Australian outback scrapped its construction timeline after the regulator extended its review period, and Singapore-linked projects in Indonesia have run into stiff opposition from environmentally concerned locals.