Risk Management

Emerging Risks and New Tools

Risk management at PJM is a shared effort across all stakeholders to adapt to changing trends in the electricity industry. In 2025, PJM identified emerging risks and engaged in sustained, deliberate activities to protect market participants and strengthen functions across PJM markets, planning and operations.

Updated Minimum Capitalization Requirements

In PJM, market participant capitalization is considered an indicator of the ability to meet financial obligations, absorb unexpected costs and protect against default.

To protect PJM markets and market participants from such risks, PJM stakeholders in the Markets and Reliability Committee overwhelmingly approved updated minimum capitalization rules. These new standards update rules that were unchanged since 2011.

Following PJM endorsement at the Members Committee in January 2026, PJM filed proposed changes to FERC. Before participants will be eligible to transact in PJM markets, PJM proposed they demonstrate that they meet the new minimum capitalization requirements.

The approved proposal states:

  • Tangible net worth must be greater than zero.
  • Initial $1 million threshold of tangible net worth for non-FTR Market Participants is to increase $200,000 annually for next five years.
  • Final thresholds set at $2 million are to increase at a 3% annual fixed rate.
  • Initial $2 million threshold of tangible net worth for FTR Market Participants is to increase at a 3% annual fixed rate.

Know Your Customer

PJM updated the definition of “Principal” to include market participant Board members and those with authority over funds and decision-making. This crucial change assists PJM to understand and assess market risk and identify decision-makers within often-complex corporate structures. PJM also completed reviews of 750 current market participants with a newly developed risk-rating framework. This due diligence is expected to be completed in early 2026. Together, this cross-functional effort sharpens PJM’s visibility into market participant ownership structures for greater understanding of potential risk.

Capacity Market Seller Creditworthiness

Reliability Pricing Model (RPM) Seller Credit is a form of unsecured credit available to market participants with a history of being net sellers, on average, over the last 12 months. The RPM Seller Credit amounts to twice the participant’s average total net monthly PJM bills over that time period. It may be used solely to satisfy the RPM auction credit requirement.

Reform sought by PJM promotes the review of a market participant’s creditworthiness in keeping with comprehensive risk strategy. This would replace the current granting of unsecured credit automatically via formula without the review of a market participant’s creditworthiness. The proposal strongly endorsed by PJM Members promotes consistent, proactive credit risk management across the PJM Tariff. If approved by FERC, PJM sought an effective date of Feb. 11, 2026.

State Policy & Reliability

PJM’s primary purpose is to maintain grid reliability amid an ever-evolving landscape of state and federal energy policies. In 2025, PJM's Governmental and Member Services Division worked with states to understand and address policies that could potentially put some capacity resources needed for grid reliability on paths to early retirement. In doing so, PJM strengthened relationships with state policymakers as they worked together to analyze and act on policy considerations with the potential to affect grid reliability.

In New Jersey, these efforts enabled several dozen fossil-fuel generators, which would have otherwise retired in 2027, to continue operations.

In Illinois, PJM is collaborating with state officials to manage challenges created by the Climate and Equitable Jobs Act and advocate for operational safeguards required for grid reliability.

2025 Security Symposium: Risk and Artificial Intelligence

The PJM 2025 Security Symposium, “Securing Reality: Trust, Threats and Truth in the Age of AI” took place in the fall. The event drew 250 cybersecurity and physical security professionals from PJM Member companies, as well as federal and state partners, ISO/RTO affiliates and PJM employees. Presenters explored the risks and realities of AI, focusing on the growing threat of deepfakes and broader security concerns surrounding AI technologies.

Vinod D’Souza, Director, Office of the CISO – Google Cloud, was the keynote speaker and highlighted AI and cloud implications for energy infrastructure and a vision for advanced digital capabilities. A panel discussion represented by industry and federal agencies discussed real-world cases and defense strategies for deepfakes, with Thomas Freeman, Director – Sikich; Joseph J. Januszewski III, Senior Cyber Security Analyst, Watch Operations – Electricity Information Sharing and Analysis Center; and Dave Shackleford, IANS Research and CEO – Voodoo Security.