ECM Executive Market Insights
Power Access & Grid Intelligence- Article 2 of 4 part mini series
Executive Insight
In Part 1 of this Executive Briefing Series, we examined why PJM launched its Large Load Task Force and why the evolving interconnection process has become an executive business issue—not simply an engineering or utility issue.
This second briefing shifts from the “why” to the “what.”
At the heart of all of this is the need to clarify cost allocations between the Independent System Operator (“ISO”) side of the power grid and the Transmission Owner “TO” / Utility side of the power grid. That division continues to thwart a speedy solution to all these problems because of the parties involved and who will ultimately pay for this progress. FERC controls the ISO side of the power grid and the individual states control the TO’s and the Utilities’ side. For consumers to be protected from the cost of these large upgrades is extremely difficult to navigate and even harder to solve. These issues need to be worked out before local communities will feel comfortable approving permits for the large load developments.
Taken together, the proposals discussed throughout this briefing reflect more than a series of technical market reforms. They illustrate how PJM is responding to one of the most significant shifts in electricity demand in decades.
Although each proposal addresses a different aspect of the large-load challenge—from planning visibility and interconnection flexibility to generation development and long-term reliability—they share a common objective: modernizing the framework used to support significant new electrical demand while preserving the reliability of the bulk electric system.
For executive teams, the most important takeaway is not whether every proposal is ultimately adopted exactly as presented. Stakeholder discussions will continue, and implementation details will almost certainly evolve.
The more important message is that power has become a strategic business issue. Organizations that incorporate energy infrastructure, interconnection strategy, and long-term power planning into early business decisions will be better positioned to navigate an increasingly complex and competitive energy landscape.
While these proposals continue to evolve through the stakeholder process, they provide valuable insight into the direction PJM may take as it responds to unprecedented demand growth from data centers, advanced manufacturing, electrification initiatives, and other large energy users.
The objective of this briefing is not to examine every engineering detail. Rather, it is to help executive decision makers understand what these proposals are, why they are being considered, and how they may influence future project planning, capital investment, operational flexibility, and business strategy.
Understanding the Proposed Reforms
The proposals discussed below address different aspects of the large-load planning and interconnection process. Some focus on improving planning visibility. Others explore new approaches to interconnection, generation development, operational flexibility, or long-term system reliability.
Although each proposal addresses a different challenge, together they represent PJM’s effort to modernize planning and interconnection processes that were developed for a very different pace and scale of electrical load growth. The goal is to create an expedited process for creating new generation and interconnecting large loads.
The following sections summarize the principal concepts currently under discussion and explain what they are, why they matter, and what executive teams should understand as the stakeholder process continues to evolve.
1. Large Load Registry: Improving Planning Visibility for Significant New Electrical Loads
One of the foundational concepts under discussion by PJM’s Large Load Task Force is the creation of a Large Load Registry—a centralized planning and information-sharing process intended to provide PJM, transmission owners, electric distribution companies (EDCs), State Public Service Commissions, and other stakeholders with earlier visibility into significant proposed electrical loads before they enter the formal interconnection process.
The proposed Large Load Registry seeks to establish a structured process for identifying significant new electrical loads earlier in the development cycle. The objective is to improve planning transparency, support more informed transmission planning, and provide greater visibility into where future demand is expected to emerge across the PJM region.
The key benefit to setting up this registry is to identify all the projects that are truly committed to entrance into the PJM markets. By establishing specific parameters of their project (defined in the technical perspective) the developer has to make certain commitments and investments that are significant enough to allow the interconnection to have confidence in the project. This will assist with load forecasting and avoid projects that are still in an exploratory stage and may withdraw prior to the study stage.
Importantly, the Registry is not intended to function as an interconnection queue or approval process. Rather, it is being evaluated as a planning tool designed to improve coordination among PJM, transmission owners, electric distribution companies, and project developers before formal interconnection activities begin.
Proposed Technical Elements
- Large Load Additions (LLA”S) of 50MW’s or more will be required to enter into a registry and provide information regarding proof of ownership or control of property, expected amount of MW’s to be produced, and proof of initial execution of required building permits (application process initiated).
- The developer will have to provide a RAMP schedule which provides finished project dates assuming a 3 to 5 year construction period.
- Developers will be responsible for providing execution of an interconnection agreement with the Transmission Owner or Utility and deliver a proposed Point of Interconnection (POI) for the development of the initial SIS study.
- Projects will be grouped into clusters that follow the same POI’s and similar or closely related transmission lines.
- PJM will assign a specific project manager to each project for the purpose of guiding the developer through the interconnection process.
Earlier visibility into significant future electrical demand will support more informed transmission planning, infrastructure investment, and coordination among regional stakeholders. Better visibility in the possible changes to the system will in turn improve capacity auction results and hopefully avoid procurement of load that is not needed resulting in unnecessary high costs which are passed to the end user. These improvements should expedite both the queue approval process and enhance load forecasting.
2. Connect & Manage: Exploring Greater Flexibility in the Interconnection Process
What is the proposal?
Traditionally, large electrical loads must wait until all required transmission upgrades identified through the interconnection process are completed before receiving full electric service. While this approach has supported system reliability, it can also result in lengthy delays for projects requiring substantial electrical capacity.
The proposed Connect & Manage framework explores whether certain qualifying projects could begin operating before every planned network upgrade is completed, provided reliability can continue to be maintained through defined operational measures.
Rather than treating transmission upgrades as an all-or-nothing prerequisite, the proposal considers whether some projects could receive earlier service under specified operating conditions while longer-term infrastructure improvements continue to be developed.
Proposed Technical Elements
Under the proposal, PJM would continue to evaluate each project through its existing engineering and reliability assessment processes. Where technically feasible, projects may be permitted to operate subject to specific operational limitations designed to maintain overall system reliability. Main components of the Connect and Manage framework are as follows:
-
Acceptance into the program can only begin once the LLA has entered the registry and submitted an application to PJM for participation in the interconnections studies to determine the effect of the project on the transmission system and the completion of cost allocations to upgrade the PJM side of the transmission system and those which will be the responsibility of the TO’s on the retail side of the transmission system.
-
If a LLA decides to participate in Bring Your Own New Generation (BYONG), they can expedite their approval by providing contractual evidence of an agreement with a generator for supply located on the project site or in close proximity to the project site. The generation must be new – it cannot be generation that already exists in the PJM system.
- If a LLA brings new generation but it is less than the full MW commitment of the project, the project can commit to participation in the obligatory Demand Response (DR) programs for a specific MW quantity prior to the evaluation of their deficiency and inclusion into the Connect & Manage program.
- The Connect & Manage Program will use the registry to determine which projects do not supply sufficient DR or BYONG to cover their load. PJM will determine the deficiency of each Load Serving Entity (LSE) for every project in their Transmission Footprint. The amount by which a project is deficient will be subject to Connect and Manage. This means PJM will require any load that is deficient, to preliminary mandatory curtailment in the event of an emergency situation on the PJM system. PJM with notify the appropriate EDC/TO of the action and they will be required to start reductions to those entities within 10 minutes. These reductions will not be eligible for Demand Response Payments.
- As new generation is developed as general assets for the system, the deficiencies for each project will be reduced according to the location of the new generation developed.
The proposal does not represent a relaxation of engineering standards. Rather, it explores whether existing operational tools can safely accommodate earlier project energization while permanent transmission solutions are completed.
3. Reliability Backstop Auction
The first two proposals discussed in this briefing focus primarily on planning for new electrical load, improving interconnection flexibility, and access to available power resources. The proposed Reliability Backstop Auction shifts the conversation to a broader question:
How can PJM continue to maintain overall system reliability as electricity demand grows at an unprecedented pace?
The proposed Reliability Backstop Auction explores one potential approach for procuring additional reliability resources if existing market mechanisms are determined to be insufficient to maintain long-term system reliability.
Proposed Technical Elements
- The Reliability Backstop Auction (RBA) is triggered when PJM is unable to procure enough capacity from the regular Reliability Pricing Model “RPM” Auction which places PJM in a Resource Adequacy deficiency which needs to be corrected before the year of flow.
- In response to Stakeholder input, PJM will act as “confidential intermediary” to match LSE’s needing capacity for their loads and new generation projects that are not matched to any load projects.
- This process will provide the ability for load and generation that is not located in proximity to each other to match up by submitting to a bilateral contract.
- Projects that do not match up during the 6 to 9 month submission period will be allowed to participate in the actual Reliability Backstop Auction held after the “matching” period.
- The matching process is an addition to the already federally approved process of the Reliability Backstop Auction – this is a process intended to protect system reliability while helping LLA’s to expedite their interconnection process by securing new generation coverage.
4. Executive Actions to Consider
While PJM’s stakeholder discussions continue to evolve, executive teams do not need to wait for final decisions before taking action. Organizations planning significant electrical load growth can begin strengthening their readiness today by incorporating power strategy earlier into capital planning and project development.
Executive leadership teams should consider:
- Evaluate Project Readiness Early
Develop realistic electrical load forecasts, project milestones, and development timelines early enough to support strategic discussions with utilities, PJM, and other stakeholders.
- Incorporate Power Strategy into Capital Planning
Power availability should increasingly be viewed alongside land acquisition, securing community support, financing, permitting, and construction planning—not after those decisions have already been made.
- Monitor PJM Policy Developments
The Large Load Task Force proposals continue to evolve through the stakeholder process. Organizations with significant future electrical demand should remain informed as implementation details continue to develop.
- Evaluate Operational Flexibility
Future interconnection options may provide greater flexibility than has historically been available. Executive teams should understand how phased operations, temporary operating limitations, or integrated infrastructure strategies could affect project economics.
- Explore Long-Term Energy Infrastructure Strategies
Future competitive advantage may depend not only on securing sufficient electrical capacity but also on evaluating generation resources, storage, demand flexibility, and wholesale market participation as part of a comprehensive energy strategy.
- Build Cross-Functional Alignment
Power strategy increasingly affects finance, operations, real estate, engineering, sustainability, and executive leadership. Organizations that align these functions early are often better positioned to make informed investment decisions as projects advance
Executive FAQ
Frequently Asked Questions About PJM’s Proposed Large Load Reforms
- Are these PJM reforms final?
No. The proposals discussed throughout this briefing remain under review through PJM’s stakeholder process. Implementation details, timelines, and even the proposals themselves may continue to evolve before any final decisions are made. - Why is PJM considering these proposals now?
PJM is responding to a Show Cause Order from FERC requiring that PJM provide options to Large Load Additions that reflect fair and equitable transmission options while protecting end users and other stakeholders. The Department of Energy (DOE) has ordered that these types of programs be provided to states located in the PJM footprint. - Which organizations should pay the closest attention?
These proposals are particularly relevant for organizations planning significant electrical load growth, including:- Data center developers and operators
- Advanced manufacturing facilities
- Industrial campuses
- Commercial real estate developers
- Large institutional energy users
- Utilities and transmission owners
- Will these proposals shorten interconnection timelines?
PotentiallyThe intention of these proposals is to shorten interconnection timelines by providing specific details and proof of more than just casual commitment. The more complete the information provided by the developer, the faster the project can move to the SIS Study phase which has also been overhauled to be completed within a 60 to 90 day period.
Several proposals explore earlier planning, greater operational flexibility, and additional generation options. Whether an individual project benefits will ultimately depend on the final rules, project characteristics, location, and system conditions. - Does the proposed Large Load Registry reserve transmission capacity or guarantee interconnection?
No.The Registry is intended to improve planning visibility and coordination. It is not an interconnection queue, transmission reservation mechanism, or project approval process. - Does Connect & Manage eliminate required transmission upgrades?
No.The proposal explores whether qualifying projects could begin operating under defined conditions before all planned transmission upgrades are complete. Existing engineering studies, operational requirements, and PJM reliability standards would continue to apply. - Does Bring Your Own New Generation (BYONG) allow customers to bypass PJM’s interconnection process?
No.Any project which provides their own new generation will need to be evaluated for its effect on the larger transmission system as well as synchronized to the transmission system for Network Transmission. Including the new generation in the PJM interconnection coordination process ensures that it will function properly when the PJM system adds new generation to adequately meet its capacity needs. Additionally, Data Centers desiring Firm Point to Point transmission will need to have their generation assets studied by PJM. - Will the Reliability Backstop Auction replace PJM’s existing capacity market?
No.The Reliability Backstop Auction already exists as a tool for PJM if they project a resource adequacy deficiency. What will change is that the Auction will provide a preliminary assessment of proposed LLA’s and proposed Generation desiring to participate in the auction to connect and enter into PPA’s directly without taking the risk of participating in the Auction and not securing the power necessary. - What should executive teams be doing today?
Organizations do not need to wait for final rulemaking before preparing. Executive teams can strengthen project readiness, improve long-term power planning, engage earlier with utilities and other stakeholders, and monitor PJM developments as the stakeholder process continues. - What is the biggest takeaway from these proposals?
Although each proposal addresses a different aspect of planning, interconnection, generation, or reliability, they all point toward the same conclusion: power strategy is becoming a strategic business issue. Organizations that integrate energy infrastructure planning into broader business, capital investment, and development decisions will be better positioned as PJM’s large-load framework continues to evolve.
The proposals discussed throughout this briefing represent important milestones in PJM’s ongoing stakeholder process. As discussions continue and implementation approaches become more defined, executive teams will need to understand not only what may change—but also when those changes may occur and how they could influence future project decisions.
Looking Ahead
This briefing examined several of the principal proposals currently under discussion through PJM’s Large Load Task Force and explained what they may mean for executive decision makers.
In Part 3 of this Executive Briefing Series, we will examine how the stakeholder process continues to evolve, where industry consensus is emerging, and what executive teams should watch as PJM moves from proposal development toward implementation.
Stay Ahead of PJM Changes
Receive ECM’s Executive Brief when PJM finalizes its Large Load reforms.
