The Federal Energy Regulatory Commission largely rejected PJM Interconnection’s plan for connecting data centers and other large loads to the grid, including proposed interim service and “bring your own new capacity” rules. FERC approved PJM’s large-load definition and a registry for such facilities, but rejected the core Interim Resource Adequacy Service framework, saying several provisions appeared to place obligations directly on retail customers, dictate which customers would be curtailed, and establish a retail rate.
PJM said it is reviewing the order with an eye toward fulfilling FERC’s requirements while recognizing state responsibilities and protecting existing customers from higher costs or decreased reliability. FERC said states have a crucial role in designating which retail customers must be curtailed when the system is stressed. Commissioner David Rosner warned that excluding these loads from PJM’s capacity auction demand curve could distort the market, making it appear PJM has enough capacity while the region sheds thousands of megawatts involuntarily.
Jefferies analysts said the ruling is positive for existing independent power producers such as Constellation Energy, NRG Energy, Talen Energy, and Vistra, and could lead to higher capacity prices for longer. They also said the proposal could be minimally revived in future iterations, likely led by states, with Ohio and Pennsylvania as key states to watch. Rosner added that non-critical data centers should be shut off before homes, hospitals, and schools in an emergency, but state regulators should set curtailment priorities and such measures should come only after voluntary demand response resources are exhausted.