FirstEnergy Analyzes PJM Connect-and-Manage Costs and September Backstop Auction in Q2 2026

Assessment of PJM connect-and-manage cost allocation proposals and the September reliability backstop auction (who pays, who provides credit)

1) Connect-and-manage / interconnection cost allocation proposals: what’s implied and what matters

From the provided excerpt, the discussion of PJM’s “connect and manage” proposals is largely framed around process speed and interconnect approvals rather than a detailed description of cost-shares or allocation mechanics. Management explicitly welcomes anything that speeds up approval for transmission and generation interconnects, and says PJM has “made some strides there.” ¹

Interpretation (based on what was actually said):

• The core positive PJM can deliver on this front is faster interconnection approvals—which management views as beneficial to overall execution and timelines. ¹
• The core unknown / sensitivity appears elsewhere in the excerpt: management highlights that for the reliability-backstop procurement the “crux” is not only the auction design but who pays and who provides credit support, and then emphasizes the same dynamic—risk allocation—is what matters most in the reliability context. ¹
• For connect-and-manage specifically, the excerpt does not give the detailed “who pays” mechanics for the connect-and-manage cost allocation. So an evidence-based conclusion is limited to supporting faster approval while acknowledging the excerpt provides no explicit allocation percentages or credit arrangements for connect-and-manage. ¹

2) September reliability-backstop auction: what the proposal is and why the allocation/credit details are decisive

Management describes the September reliability backstop procurement as a situation where they are not surprised PJM chose its own proposal over a joint utility proposal. ¹ They then stress that the key open items to watch are:

1. What PJM files (noted as “likely to file on Friday”). ¹
2. What FERC approves. ¹
3. And—most importantly—“who pays for the auctions and who provides the credit support for the auctions.” ¹

2.1 Who provides credit support (and why management thinks it must map to “ratepayer protection pledges”)

The excerpt states that utilities have signed up for the “ratepayer protection pledge,” and that “end use AI customers” (data center customers) have also signed up for the rate protection pledge. ¹

It further frames this as “a significant component” of determining:

• who pays for the auction capacity, and
• who provides the credit support for the auctions. ¹

Assessment:

• The credit-support mechanism is treated as the central credit-risk transfer lever: management is effectively saying that the party (utilities vs. AI/data center load) that bears financial responsibility/pledged protection should also bear the related credit support obligations in the backstop auction. ¹
• The excerpt therefore supports the view that credit support is expected to be contractually tied to the pledge arrangements already signed by utilities and end-use AI customers. ¹

2.2 Who pays / allocation impact on PJM zones (and why FirstEnergy says its exposure appears limited)

Management adds an important allocation observation: looking at PJM’s allocation for the backstop auction zones, FirstEnergy gets “less than 4%” of the “680 or 900 megawatts” expected to be allocated. ¹

Assessment (evidence-based):

• Management interprets this as favorable for customers, arguing the “most important part” is customer protection—and cites the small allocation share (<4%) as evidence of a “good outcome for our customers.” ¹
• The excerpt does not quantify total auction payments FirstEnergy (or its ratepayers) will make; it only gives a zone allocation share and ties that to affordability/customer impact. ¹

3) Bottom-line evaluation: what’s favorable, what’s uncertain, and the practical takeaway on payment/credit

Favorable elements (supported by the excerpt)

• Process improvement: PJM’s strides in speeding interconnect approvals are explicitly welcomed by management. ¹
• Potential customer protection in the reliability backstop: FirstEnergy indicates its zone allocation share is <4% of the auction MW (out of 680 or 900 MW), describing that as a positive affordability/customer outcome. ¹
• Pledge framework exists: both utilities and end-use AI/data center customers have signed ratepayer protection pledges, and management views this as a key component in determining who pays and who provides credit support. ¹

Key uncertainties / decisive factors (supported by the excerpt)

• The excerpt identifies the decisive unknowns as:
  • PJM’s filing details (timed to a Friday filing expectation), and
  • FERC’s ultimate approval, especially around auction payment responsibility and credit support responsibility. ¹
• So, any “assessment” must emphasize that the auction’s economic and credit-risk allocation will be determined by the combination of PJM’s filing and FERC’s approval, not merely by the existence of the auction concept itself. ¹

Direct answer to “including who pays and who provides credit support”

Based on the excerpt, the most direct statements are:

• Who provides credit support: The parties expected to provide credit support are tied to those who signed the ratepayer protection pledge—specifically utilities and end-use AI/data center customers (both groups are cited as having signed pledges). ¹
• Who pays for the auctions: The excerpt states that the allocation of who pays for the capacity from the auction should be significantly shaped by the same pledge framework (utilities and end-use AI customers). ¹
• Where this will be finalized: The details of who pays and who provides credit support are described as the “crux” and depend on what PJM files and what FERC ultimately approves. ¹

If you want the same style of assessment specifically for the “connect-and-manage cost allocation initiatives” in terms of payment shares, the provided excerpts do not include the concrete allocation mechanics (percentages, rate treatment, or credit assignment) for those initiatives; they only contain a process/timing approval view. ¹