FERC issued a long-awaited order on co-location of load and generation in PJM, which is meant to facilitate service for data centers while preserving grid reliability for consumers (EL25-49).
“Today’s order is a monumental step toward fortifying America’s national and economic security in the AI revolution, while ensuring we preserve just and reasonable rates for all Americans,” FERC Chair Laura Swett said in a statement. “I look forward to tackling more of these critical national issues with my colleagues in the New Year.”
The case dates to 2024 when Talen Energy and Amazon Web Services tried to expand an existing data center plugged into the IPP’s Susquehanna nuclear plant and FERC rejected that request. (See FERC Rejects Expansion of Co-located Data Center at Susquehanna Nuclear Plant.)
Then in February 2025, FERC launched a show-cause proceeding looking into the issues around co-location in PJM that led to the order issuing new rules. (See FERC Launches Rulemaking on Thorny Issues Involving Data Center Co-location.)
The rules require that any existing plant used to serve co-located load can start such a contract only after completion of any needed transmission upgrades to ensure reliability after the capacity is withdrawn from the grid, which Swett told reporters will ensure reliability.
FERC asked PJM for a report within 30 days on the ways it is considering maintaining resource adequacy in its Critical Issue Fast Path stakeholder process. FERC met just a day after PJM’s capacity market cleared short of its reserve margin target, so each of the commissioners mentioned resource adequacy concerns in their comments. (See PJM Capacity Auction Clears at Max Price, Falls Short of Reliability Requirement.)
“PJM has great momentum in addressing currently in their stakeholder process, various approaches to getting shovel-ready generation to the front of their process,” Swett said. “And we didn’t want that momentum to stop, which is why we are requiring this informational filing within 30 days, and that will include detailed scheduling proposals, and we’re going to keep a close eye on that to ensure that we have enough reliability.”
The order found PJM’s tariff unjust and unreasonable because it was unclear on the rates, terms, and conditions that applied to customers seeking co-located service. PJM now must revise its tariff to require eligible transmission customers serving co-located load to choose from several transmission service options.
Eligible customers can pick from four options — network integration transmission service (NITS), a new and interim non-firm service customers use while waiting for NITS, a new firm contract demand transmission service, and a new non-firm contract demand service.
The firm contract demand transmission service and non-firm contract demand transmission service are the subject of a paper hearing that FERC will use to determine their just and reasonable rates, terms and conditions. PJM’s initial briefs for that hearing are due Feb. 16, 2026.
The order also found the RTO’s rules on behind-the-meter generation (BTMG) no longer are just and reasonable so they will have to be updated, with a transition period and grandfathering for existing contracts.
The order declines to address jurisdictional matters on the interconnection of retail loads served by a co-location agreement. That issue is in front of FERC in Energy Secretary Chris Wright’s ANOPR on the interconnection of large loads.
