NERC joined a wide range of industry stakeholders responding to FERC’s investigation of co-located large loads and their effect on grid reliability and costs for customers, while other stakeholders provided feedback on PJM’s suggested approaches to co-location (EL25-49, AD24-11).
FERC launched the inquiry in February after rejecting an agreement the previous November between Amazon Web Services and Talen Energy to expand a data center co-located with the Susquehanna nuclear plant in Pennsylvania by modifying the generator’s interconnection service agreement to reduce its output to PJM. (See FERC Launches Rulemaking on Thorny Issues Involving Data Center Co-location.)
Along with ordering PJM and its transmission owners to determine whether the RTO’s tariff needed updates to accommodate the arrangements, the commission also sought comments on the larger issues. FERC is concerned the arrangements could be developed in a way that is not fair for other customers, and that co-location could cause issues for reliability and resource adequacy similar to an event in July 2024 in which a transmission line fault in Virginia led to 1,500 MW of load reduction, all from data centers. (See NERC Report Highlights Data Center Load Loss Issues.)
In its comments, NERC highlighted the ERO’s efforts to address the reliability challenges of co-located large loads. The organization cited its report on the 2024 event as well as its creation of the Large Loads Task Force (LLTF) in August 2024. Reporting to the Reliability and Security Technical Committee, the LLTF has a goal of creating two research papers and one reliability guideline before June 2026 on the identification and mitigation of risks, along with guidance for “improvements in modeling, analyses, coordination and data collection, real-time monitoring and event analysis.”
Discussing the recent testimony of NERC Chief Engineer Mark Lauby at FERC’s April open meeting, where topics included the 2024 incident as well as similar events in Virginia and Texas, NERC observed that co-located large loads may provide benefits to reliability as well as risks. The presentation was attached to NERC’s filing as an appendix.
“Proximity between large loads and power generation sources can reduce energy loss while improving transmission reliability [and fostering] improved coordination, leading to better load management and reduced strain on the” grid, NERC said. “Grid stability may also be enhanced if the proximity created flexibility to adjust demand during critical conditions.”
The ERO’s filing also mentioned the risks posed by co-location, such as the possibility that system operators may not have visibility into a co-located large load, leaving them unable to perform reliability analysis. This could lead to “risk of thermal overloads and voltage or stability issues.” Large loads can also experience fluctuations during faults or switching that operators may not be able to anticipate.
NERC noted that its Board of Trustees solicited input from the Member Representatives Committee and industry stakeholders ahead of a panel on large loads at its February meeting. In response to the panel discussion and input, the board directed NERC to develop an action plan to identify and address the risks of large loads. This action plan will be due at the board’s next meeting May 8.
Other respondents shared NERC’s reliability concerns. Consumers’ Research, a nonprofit consumer advocacy group, cited NERC’s 2025 Long-Term Reliability Assessment, which said many parts of North America could face resource adequacy challenges in the next 10 years, along with FERC Chair Mark Christie’s warnings that “America is facing a reliability crisis driven by the dangerous pace of retirements of dispatchable generation units.”
The group urged FERC to ensure that co-location is accomplished without exaggerating these reliability issues. Measures to achieve this goal could include requiring the parties involved to maintain a reserve capacity of dispatchable power for ratepayers, and that they “have no targets or commitments for net zero or any related low-carbon goals.” CR said such commitments “harm consumers by artificially weakening the market for dispatchable power.”
A joint comment by Suzanne Glatz of Glatz Energy Consulting and Abraham Silverman, a research scholar at Johns Hopkins University, referred to NERC’s 2023 Reliability Risk Priorities Report, which warned that “new loads,” including data centers, cryptocurrency mining and artificial intelligence, “can emerge and grow faster than generation and transmission can be built.” They suggested FERC “strongly consider a co-location ‘safety valve’ that ensures that co-location does not drive PJM into shortage conditions.”
Modifications Suggested to PJM’s Approaches
PJM filed its initial response to FERC’s investigation in March, laying out three approaches to co-locating load already permissible under the RTO’s tariff and outlining five more that could be developed under more possible configurations or limitations imposed by state laws.
Multiple stakeholders responded to PJM’s comments with their own takes on the RTO’s plans, or on the theme of co-location in general. The Data Center Coalition commented that co-located load configurations can allow large consumers to avoid long interconnection delays by not relying on congested transmission infrastructure. It argued that many of the issues raised around co-location are more related to tightening capacity supply and demand.
“Co-location can reduce transmission congestion, avoid costly infrastructure buildouts and enable the more efficient interconnection of new resources. But amid tightening margins, it has become a stand-in for deeper anxiety about supply adequacy and planning accuracy,” the coalition wrote.
It requested the commission initiate settlement judge proceedings to allow for more thorough discussions and stay the investigation for 90 days. It also recommended PJM make several changes to its load forecasting, including verifying the commercial readiness of large load additions and increasing transparency to ensure that such additions do not create reliability issues.
Constellation Energy argued that requiring data centers to be classified as network load in front of generators’ meters has led to interconnections taking years to complete and has exposed data centers to moratoriums on new load interconnections, as seen in Ohio. While many consumers will prefer the reliability offered by PJM in exchange for being subject to transmission charges, the company said many are willing to forgo the reliability of full grid service in exchange for speedier interconnection.
In some cases, Constellation said, those customers might be willing to accept backup service from the grid once network upgrades have been completed.
Responding to several paradigms PJM laid out for the commission to explore in the RTO’s comments, Constellation said it is opposed to the “bring your own generation” route, which would prioritize generation interconnections part of a co-located load configuration. The company argued that would discriminate against existing generation and undermine capacity market incentives.
Under options in which the load is behind the generator’s meter, Constellation said it may be appropriate for it to pay some ancillary services, such as regulation and black start, but subjecting the load to network integration transmission service charges would require it to use services it would not otherwise. (See PJM Responds to FERC Co-located Load Investigation.)
The company asked the commission to either accept modified variants of the co-located options proposed by PJM or initiate a time-limited settlement judge proceeding to consider alternatives.
PJM stressed in its March filing that while the options it presented are routes the commission could explore, it does not view them all as equal or feasible. It was particularly skeptical of two configurations exempting co-located load from transmission charges when protective mechanisms have been installed to prevent the load from receiving energy from the grid. Such mechanisms could fail, the RTO wrote, and the load nonetheless would continue to consume ancillary services, such as regulation.
Echoing the Data Center Coalition, Constellation said co-located load is being blamed for broader issues with PJM’s capacity market and generation interconnection process. It said the RTO’s Reliability Resource Initiative bolsters resource adequacy by adding 50 projects to the next queue cycle that can bring capacity to market quickly, and further improvements can be made to the interconnection study process.
“The commission should determine whether there are additional tools to address near-term capacity needs while reinforcing PJM’s capacity market, which is already sending strong signals for new entry (or for delaying retirement of existing resources),” it wrote.
Constellation encouraged the commission to establish a flexible set of rules for developers to follow when pursuing co-located configurations, saying there are many ways that load and generation can be combined.
“Allowing load to select a configuration that best serves its needs will enhance national security and national economic competitiveness by speeding connection for those new customers who need to connect quickly and will save existing customers money by minimizing system upgrades,” the company wrote.
Generation developer BrightNight said the commission should establish a pro forma agreement and process for co-located configurations that allows flexibility for the three configurations that may be pursued: fully islanded generation and load; flexible load or demand response; and load that may rely on the grid for backup service when on-site generation is unavailable.
“Data center developers, generation developers and system planners cannot make long-term decisions without understanding what co-location arrangements the commission will accept,” BrightNight wrote. “Standardizing procedures and agreements would give developers and planners certainty, reduce opportunities for undue discrimination or preference, reduce disputes and, hopefully, expedite the development of data centers and needed generation.”
Public Interest Organizations Warn of Consumer Costs
Several public interest organizations jointly argued that certain co-location configurations could push network upgrade costs to consumers and cause reliability issues if they fall through cracks in PJM’s load forecasting.
The comments were signed by Appalachian Voices, Clean Air Task Force, Earthjustice, the Environmental Defense Fund, PennFuture and the Sierra Club.
They wrote that the three processes PJM uses to identify transmission violations prompted by co-located configurations — necessary studies, TO load integration studies and the Regional Transmission Expansion Plan — fail to take a holistic look at projects’ impacts. The necessary studies exclusively look at changes to the generator’s interconnection service agreement, while the latter two assign any identified upgrades to network load.
They also highlighted that PJM has not allowed batteries to go through the necessary studies process because the charging cycle can act like load, but the RTO has proposed to apply it to co-located configurations.
The organizations wrote that accelerated data center load is expected to cause wholesale costs to rise significantly, and co-located load configurations sought by developers would further shift costs to consumers. They also argued it could create opportunities for generators to engage in market power manipulation by withholding capacity from PJM to supply co-located load.
“The commission cannot ignore the current realities in PJM: already sky-high capacity prices, as well as an extremely backlogged interconnection queue, supply chain issues for new resources (both generation and transmission) and limited available transmission capacity that further drives up the cost of interconnection,” they wrote.
“Each of these conditions makes new entry challenging, and if left unaddressed, very expensive. Allowing the key drivers of the tight supply margins — large load customers — to avoid and exacerbate these challenges and associated costs by sequestering access to existing generation would be a cost shift of extreme magnitude.”
TOs, cooperatives and municipal providers opposed changes to PJM’s tariff, jointly commenting that existing processes may not be preferable for co-located configurations, but they are not discriminatory or unjust and unreasonable and therefore changes cannot be compelled by FERC using a Federal Power Act Section 206 investigation. The comments were submitted by Exelon; American Electric Power; the city of Hamilton, Ohio; Southern Maryland Electric Cooperative; Duke Energy; and Dominion Energy, among others.
“Those end-use load connection processes, governed by the states and fully consistent with the PJM tariff, are available to all, and those processes work. Moreover, the transmission service provided to co-located load under the PJM tariff is available to all on a non-discriminatory basis,” they wrote. “Nowhere in the record is there an allegation —let alone evidence — that the current PJM tariff impedes the development of or service to any load, co-located or otherwise.”
They also argued that co-located configurations should be prohibited from being classified as behind-the-meter generation, citing PJM’s statements that the ruleset was designed for smaller configurations and the load would not be properly measured by the RTO, even though it uses the transmission system.
