On April 28, 2026, FERC accepted PJM Interconnection, L.L.C.’s (PJM) Open Access Transmission Tariff (Tariff) revisions to establish a price cap and floor for all Reliability Pricing Model (RPM) auctions for the 2028/2029 and 2029/2030 Delivery Years, finding that the price cap and floor will allow PJM to signal the need for additional resources while protecting customers from higher prices.

PJM conducts annual Base Residual Auctions (BRA) three years in advance of a Delivery Year to procure sufficient resource commitments for the region. PJM clears BRAs using a single-price auction in which all resources are paid the marginal clearing price that is set by the offer that is one megawatt (MW) above the offer that clears the market. In running the auction, PJM first creates an administratively determined downward-sloping demand curve with a maximum price (price cap), as well as a slope that is designed to reflect the declining value of increased capacity and to provide a price signal as to whether additional Capacity Resources are needed (Variable Resource Requirement Curve). Next, PJM creates an upward sloping supply curve based on the offers made by Capacity Resources. PJM determines the market clearing price at the point at which the supply and demand curves intersect. If the supply offers do not intersect the demand curve, PJM draws a vertical line from the point where the supply curve ends to the point at which the vertical line intersects the demand curve, and PJM then sets the price at that intersection.

In February 2025, PJM filed proposed Tariff revisions to reduce the price cap from approximately $500/MW-day to approximately $325/MW-day and to establish a price floor of approximately $175/MW-day for all RPM auctions for the 2026/2027 and 2027/2028 Delivery Years. FERC accepted the Tariff revisions, finding that the price cap and floor—referred to as a “price collar”—would operate together to narrow the range of potential capacity price outcomes, which would reduce price volatility under the Variable Resource Requirement Curve.

In February 2026, PJM proposed to extend the existing price collar (i.e., floor of $175/MW-day and cap of $325/MW-day) for two additional Delivery Years (the 2028/2029 and 2029/2030 Delivery Years), with annual adjustments to both the cap and floor to account for the level of accreditation of the Reference Resource. PJM argued that the price collar was necessary because the 2028/2029 and 2029/2030 Delivery Years face tight supply and demand conditions due to rapid load growth, generator retirements, state and federal policies that significantly affect the economics of the existing resource fleet and potential replacement capacity, and slow new entry of replacement generation resources. PJM also stated that the price collar would be applied while PJM and its stakeholders explore holistic reforms to PJM’s energy and capacity market rules. PJM argued that applying the collar would allow auction clearing prices to continue to signal the need for existing resources to stay in the market while protecting customers from higher-than-required prices given the confluence of events faced by PJM’s capacity market.

In April 2026, FERC accepted PJM’s Tariff revisions to extend the existing price cap and floor, explaining that the time-limited price collar extension is designed to mitigate price volatility in the market and provide stable market outcomes in the near term as PJM considers a comprehensive set of reforms and fundamental market design changes to address resource adequacy challenges and better reflect the needs of investors and customers.

FERC’s order, issued in Docket No. ER26-1556, is available here.