PJM at the Inflection: 220 GW Queue, FirstEnergy's Refusal, and the Hull Street Veto

Three PJM market-design events landed inside six calendar days. Taken alone, each is a story. Taken together, they describe an inflection point in how PJM market design 2026 will route capital through the equipment supply chain over the next 24 months.

April 24: PJM’s independent market monitor, Monitoring Analytics, asked FERC to reject Hull Street Energy’s planned 1,267 MW acquisition of two gas peakers from Rockland Capital, arguing that Hull Street’s parallel data-center development business creates structural market-power risk.

April 29 (morning): PJM disclosed the results of Cycle 1 of its reformed interconnection queue. 811 projects. 220 GW. The largest single-cycle queue in U.S. RTO history.

April 29 (afternoon): On FirstEnergy’s Q1 2026 earnings call, CEO Brian Tierney drew a hard line on PJM’s planned 14.9 GW reliability backstop. His exact words: “We are not going to sign contracts where our companies take commodity risk on generation and energy.”

For procurement teams across IOUs, public power, cooperatives, merchant generation owners, and the distributors and integrators that serve them, this is not three separate news cycles. It is one structural story about who pays for the next wave of generation, who buys the equipment, and through which channel.

The three signals decoded

1. Cycle 1: 220 GW says generators believe

The reformed queue is the largest single supply-side commitment PJM has ever recorded. Generation mix in the filing:

• 106 GW gas-fired (48% of total)
• 67 GW battery storage (30%)
• 18 GW nuclear (8%, a record level for any U.S. RTO queue)
• 15 GW solar (7%)
• 9 GW solar plus storage hybrid (4%)
• 5 GW wind (2%)

The “other” category includes biomass, coal, methane, and the first fusion entries ever filed in a U.S. interconnection queue.

The reform itself matters as much as the numbers. PJM replaced first-come, first-served with first-ready, first-served. New entrants have to demonstrate site control and meaningful upfront financial commitment. The target review timeline is 1-2 years per project, down from the 4-7 years that defined the old queue. We covered the Cycle 1 results in detail yesterday, with the full procurement breakdown by equipment category.

What the mix tells us: at $329.17/MW-day capacity prices, generators are voting with checkbooks. Gas peakers and combined-cycle plants pencil. Storage pencils when paired with gas to firm capacity payments. Solar and wind entered at a fraction of their 2022-2024 levels, reflecting OBBBA tax-credit uncertainty and the 728% spike in average interconnection costs.

2. FirstEnergy: a major IOU declines to be PJM’s collection agent

PJM’s 14.9 GW reliability backstop has two phases. Phase 1, in September 2026, is bilateral matchmaking between developers and large load buyers (mostly data centers) with PJM as the intermediary. Phase 2, in March 2027, is a central procurement auction in which local utilities pay for and recover their share of central procurement costs from ratepayers.

Tierney told analysts that Phase 2 design is broken. His objection: power plant developers and builders should contract directly with end-use customers rather than having PJM in between and then another middleman being the electric distribution companies. He called the backstop “a step in the right direction” but signaled FirstEnergy will not participate in Phase 2 as counterparty.

Two reasons that’s significant. First, FirstEnergy operates regulated distribution utilities across PA, OH, NJ, MD, and WV. If FirstEnergy refuses to be the Phase 2 buyer, similar large IOUs (PPL, Exelon’s PECO and BGE, AEP’s PA and OH operating companies, Duquesne) face pressure to take similar positions. Second, Tierney explicitly tied the refusal to upcoming rate cases and his coordination with PA Governor Josh Shapiro and NJ Governor Mikie Sherrill on affordability. Shapiro already negotiated the federally approved PJM capacity-price cap that, in Tierney’s own words, “saved customers and PJM billions of dollars.”

The Phase 2 central auction may be unworkable as currently designed.

3. Hull Street: the first FERC test of generator/data-center vertical integration

Hull Street Energy filed at FERC to acquire the 677 MW Lee County simple-cycle gas plant in Dixon, Illinois and the 590 MW Tait gas/diesel plant near Dayton, Ohio from Rockland Capital. Combined, 1,267 MW. The stated request: FERC approval by June 2, 2026.

Monitoring Analytics filed in opposition on April 24. The market monitor argues that Hull Street’s dual role as generation owner and data-center developer creates a withholding incentive: dedicate plant output to behind-the-meter data-center load, reduce wholesale market supply, drive up capacity and energy prices, and capture the price spread.

The 1,267 MW is roughly 0.7% of PJM’s installed capacity. That’s small in isolation. The case is precedent-setting.

If FERC approves with no mitigation, expect a wave of generation-plus-data-center co-location M&A. Vistra, NRG, Talen, Constellation, and Calpine all have data-center ties and would pursue similar structures. If FERC rejects or imposes mitigation conditions, the wholesale-market channel holds and utility-side procurement remains the primary equipment demand path.

Why the three connect

The same underlying question runs through all three: when 220 GW of new generation interconnects to a stressed PJM grid to serve data-center-led load growth, who is the counterparty for the equipment that connects it?

Three live answers, all in conflict:

• Central planning (PJM Phase 2 backstop): EDCs sign capacity contracts on behalf of ratepayers and recover through rates. Equipment procurement runs through utility frame contracts.
• Bilateral contracting (FirstEnergy and the developer-direct model): Generation owners and large load buyers contract directly. EDCs handle only their distribution-side interconnect work. Equipment procurement bifurcates between utility distribution gear and developer-purchased substation packages.
• Vertical integration (Hull Street): Generation owner and data-center developer are the same entity. Equipment procurement runs through the developer’s EPC and bypasses the utility-side cost-recovery channel entirely.

FERC is the arbiter on each. The three rulings will define the procurement architecture across the 13-state footprint through 2030.

What it means for distribution equipment procurement

The conflict matters for procurement teams because each resolution path shifts which buyer holds the purchase order for which class of equipment.

HV transformers and substation step-up gear. Cycle 1’s 106 GW of gas implies roughly 100-plus generator step-up transformers in the 138/13.8 kV to 230/13.8 kV class over the next five years. Lead times from Hitachi Energy, GE Vernova (with Prolec GE fully consolidated as of Q1 2026), Hyundai, and Mitsubishi are running 100-130 weeks for 500 kV-class GSUs. Whether utilities or developers hold the PO depends on which market-design model wins. The aggregate volume does not change; the buyer does.

MV switchgear and collector substation equipment. 67 GW of battery storage typically connects via 34.5 kV collector then 230/345 kV step-up. That’s collector substations, MV switchgear lineups, distribution transformers, and protection schemes for a procurement program that won’t slow regardless of how FERC rules on Phase 2. Eaton, Hitachi, S&C, and Hubbell compete for that work today.

Distribution gear at host utilities. Even when a generation project is developer-owned, the host utility handles station service, distribution-side ties, and any local interconnect. FirstEnergy’s stance signals that distribution-side capex (substation upgrades, distribution transformers, smart meters, AMI 2.0, vegetation management equipment) stays intact and may even accelerate as the company defers more politically exposed transmission and generation-side capex. That is the cheapest, lowest-political-risk capex category, and it’s the category most exposed to PA and NJ affordability politics in a positive way.

Behind-the-meter and customer-owned substation packages. If FERC clears Hull Street, expect more private substations, customer-owned step-up transformers, paralleling switchgear at data-center sites, and direct purchasing relationships between hyperscalers, their EPCs (Bechtel, Black & Veatch, Burns and McDonnell, Kiewit), and tier-1 OEMs. Smaller distributors face squeeze risk on those projects. Mid-tier domestic suppliers gain on the utility-side projects FirstEnergy and peers continue to defend on affordability grounds.

What to watch over the next 90 days

The June 2 decision on Hull Street is the first definitive read. FERC could approve, reject, or impose mitigation (most likely: required capacity offers into PJM auctions at $0). Each outcome reshapes the IPP M&A pipeline.

The September 2026 launch of Phase 1 backstop matchmaking is the next test of FirstEnergy’s posture. Watch whether other PA, OH, NJ, and MD IOUs join the refusal or break with FirstEnergy.

PA’s affordability politics are the spillover variable. Shapiro’s governors-collaborative coordination with NJ’s Sherrill and the broader 13-state group will shape rate-case treatment of any utility that does sign on as a Phase 2 counterparty. The states are, in effect, pricing the political risk of cost socialization.

For procurement teams in PJM territory, the practical posture is unchanged from what we’ve recommended for two years: lock 2027 and 2028 substation transformer slots, aggregate switchgear orders across projects to compress lead times, audit ambient-adjusted ratings before specifying network upgrades, and read the PJM AAR go-live implications carefully. The 220 GW queue, the data-center-driven backstop, and the broader $1.4 trillion utility capex wave all point in one direction. The market-design fight is about who pays and who buys, not whether the equipment gets built.

The June 2031 backstop deadline is binding. The transformer lead times are binding. The capacity prices are binding. The market-design fight is just deciding which P.O. number ends up on the spec sheet.

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Our Intelligence Reports go deeper, with manufacturer capacity analysis by class, lead time tracking, and procurement strategy recommendations specific to PJM territory and the resolution scenarios above. Get the full report.

Related Reading

• PJM Reopens Its Queue: 220 GW Across 800 Projects
• Data Center Grid Costs and the PJM Backstop Fight
• PJM Goes Live on FERC Order 881 Ambient-Adjusted Ratings
• The $1.4 Trillion Utility Capex Wave