FERC on Nov. 1 rejected a proposed amendment to Talen Energy’s interconnection service agreement (ISA) with PJM and PPL that would have allowed for the expansion of co-located load at its Susquehanna nuclear plant in Pennsylvania (ER24-2172).

The amendment would have let a 300-MW data center owned by Amazon Web Services — already operating behind the fence at the nuclear plant — expand from 300 MW to 480 MW. Controversy around the proposed expansion contributed to FERC hosting a technical conference on co-located load Nov. 1. (See related story, FERC Dives into Data Center Co-Location Debate at Technical Conference.)

The order was approved by only Commissioners Mark Christie and Lindsay See: Chair Willie Phillips dissented, while Commissioners David Rosner and Judy Chang did not participate. The majority found that the changes would have led to reliability concerns and novel legal issues. FERC can accept ISAs that do not conform with Order 2003, but parties filing such deals face a high legal burden to justify and explain that the changes are necessary, they said.

Many of the nonconforming provisions of the proposal relied heavily on the generally applicable PJM Guidance Document, which is not part of the RTO’s tariff, so FERC has not approved it, the majority said. In a footnote, the commissioners said they made no determination on whether the document is just and reasonable.

“This raises questions regarding whether PJM intends to offer these terms to all similarly situated interconnection customers,” FERC said. “We conclude that these provisions demonstrate that PJM has not met its burden to show that these provisions are necessary for any interest unique to the interconnection of the Susquehanna customer facility.”

The record indicates other data centers are considering similar deals with other nuclear plants, which shows the provisions from the document do not meet FERC’s standards for alternatives to Order 2003.

“This filing leaves multiple important questions unresolved,” FERC said. “Nevertheless, given that we have already found that PJM has failed to meet its burden, as described above, we need not further opine on whether PJM has met that burden with regard to the proposed nonconforming provisions herein, or otherwise address the amended ISA.”

Phillips argued that because the ISA is the first of its kind, it presents the sort of specific reliability concerns and novel legal issues that justify its acceptance.

“In failing to accept the agreement, we are rejecting protections that the interconnected transmission owner says will enhance reliability while also creating unnecessary roadblocks to an industry that is necessary for our national security,” Phillips wrote.

PJM showed that the extra 180 MW of demand would not require any transmission upgrades and the provisions included “several important, reliability-based belts and suspenders,” Phillips said. Those provisions would have ensured that no power flowed from the grid to the data center, provided generator shutdown and automatic tripping data to PPL, and notified PJM and PPL of equipment malfunctions.

Phillips also argued that failing to approve the amended deal puts national security at risk, as there is a clear bipartisan consensus that maintaining leadership in artificial intelligence is vital to the national interest.

“Maintaining our nation’s leadership in this ‘era-defining’ technology will require a massive and unprecedented investment in the data centers necessary to develop and operate those AI models,” Phillips wrote. “And make no mistake: Access to reliable electricity is the lifeblood of those data centers. I am deeply concerned that in failing to demonstrate regulatory leadership and flexibility, we are putting at risk our country’s pole position on this critically important issue. That is simply unacceptable.”

Data center co-location brings up a host of challenging, multifaceted issues that FERC will have to wrestle with, which is why it held the technical conference, Phillips wrote. “But the technical conference casts a far wider net than the matter that is before us today and was never intended to defer judgment on this application, which I believe has thoughtfully and creatively addressed the factors that justify approval of these nonconforming provisions. …

“We are on the cusp of a new phase in the energy transition, one that is characterized as much by soaring energy demand, due in large part to AI, as it is by rapid changes in the resource mix. Ensuring reliable and affordable supplies of electricity throughout the coming period of increasing demand and changing supply will require pragmatic leadership that facilitates that transition. If we instead throw up roadblocks to that transition, as I am concerned today’s order does, we will only deprive our country of the resources needed to ensure our continued economic prosperity and national security.”

In a concurrence, Commissioner Christie emphasized the rejection was without prejudice and that Phillips’ arguments about national security are unproven by the record before FERC.

He agreed that co-location arrangements present complicated issues that could have huge impacts on reliability and consumer costs, which is why FERC held its technical conference.

“Given these ramifications, the commission truly needs to ‘get it right’ when it comes to evaluating co-location issues,” Christie said. “And make no mistake. Were we to approve this proposal at this time, as the dissent advocates, we would be setting a precedent that would be used to justify identical or similar arrangements in future cases.”