Data centers found a shortcut: park next to a generator and drink power without waiting years for grid upgrades. On Dec. 18, FERC doubled down—unanimously—ordering PJM to rewrite its tariff so co-located mega-load can’t stay “invisible” to planning, service definitions, and cost responsibility.
The immediate fight now shifts from whether co-location is allowed to how PJM will operationalize and price new contract-demand and non-firm pathways—especially for customers that claim they’ll only lean on the grid occasionally. The backdrop is deteriorating adequacy signals in PJM’s own markets, sharpening regulators’ core worry: if co-located load can dodge grid charges and studies while still depending on grid backstop, everyone else absorbs higher bills or higher blackout risk.
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People Involved
Laura V. Swett
Chairman, Federal Energy Regulatory Commission (FERC) (Leading FERC as it tries to regulate the data-center load shock without breaking reliability)
Manu Asthana
President & CEO, PJM Interconnection (Running PJM through a reliability crunch as co-located load rules are rewritten)
Joseph Dominguez
CEO, Constellation Energy (Pushing for clear, workable rules for nuclear-adjacent data-center deals)
Joseph Bowring
Market Monitor lead, Monitoring Analytics (PJM Independent Market Monitor) (Warning that co-location can worsen resource adequacy if it pulls supply off-system)
Organizations Involved
FE
Federal Energy Regulatory Commission (FERC)
Federal Agency
Status: Ordering PJM to rewrite tariff rules for co-located load and behind-the-meter generation
The federal regulator that sets and enforces wholesale power market and interstate transmission rules.
PJ
PJM Interconnection, L.L.C.
Regional Transmission Organization (RTO)
Status: Must rewrite tariff and interconnection rules for co-located load arrangements
The largest U.S. grid operator, running markets and reliability planning across 13 states and D.C.
PJ
PJM Transmission Owners
Utility Consortium
Status: Key stakeholders arguing over cost responsibility, reliability modeling, and tariff definitions
The utilities that own major transmission assets in PJM and fight over who pays for upgrades and services.
CO
Constellation Energy Generation, LLC
Power Generator (Competitive Supplier)
Status: Filed complaint arguing PJM rules lacked a clear pathway for certain co-location configurations
A major generator that helped trigger FERC’s PJM co-location proceeding via complaint.
MO
Monitoring Analytics, LLC
Independent Market Monitor
Status: Scrutinizing whether co-location undermines PJM planning and resource adequacy
The independent watchdog for PJM markets and reliability incentives.
AM
Amazon Web Services (AWS)
Cloud Infrastructure Provider
Status: High-profile case study for co-located load after the Susquehanna dispute
A flagship example of Big Tech trying to secure massive power quickly through co-location.
TA
Talen Energy
Independent Power Producer
Status: Central participant in the Susquehanna co-location dispute that shaped the broader debate
A generator owner whose nuclear-adjacent data-center arrangement became a national test case.
AD
Advanced Energy United
Trade Association
Status: Publicly endorsed FERC’s co-location order as a path to clearer rules and consumer safeguards, while pressing for expanded flexibility, demand response, and interconnection reforms.
Industry association representing advanced energy companies (e.g., storage, renewables, demand response, DERs).
Timeline
FERC orders PJM to rewrite co-location tariff and create contract-demand services
Order
FERC found PJM’s tariff unjust and unreasonable and required new transmission service options plus BTMG reforms.
Commissioners’ remarks underscored urgency, consumer protection, and “speed-to-power” framing for AI-driven large loads as PJM moves into compliance and paper-hearing phases.
Advanced Energy United backs FERC’s co-location order, urges broader flexibility and interconnection reforms
Reaction
The group said the order could improve certainty and affordability if paired with faster interconnection, demand response, and other flexibility measures—arguing co-location clarification alone won’t solve PJM’s reliability squeeze.
PJM capacity prices hit a record as data-center demand outruns supply
Market Signal
A record auction price reinforced the core fear: load is arriving faster than new capacity and wires.
Stakeholders pile in—responses due on co-location proposals
Filing
Interested parties filed reactions to PJM and transmission-owner positions, setting up FERC’s December decision.
PJM and transmission owners respond to FERC’s 38-question challenge
Filing
PJM convened stakeholder processes and filed responses outlining options and highlighting state-law constraints.
FERC opens PJM show-cause proceeding on co-location
Investigation
FERC consolidated the record and demanded PJM justify its tariff or propose fixes for co-located load service.
Post-conference comments lock the industry fight into the record
Filing
Stakeholders filed written views for the AD24-11 docket, shaping the later PJM show-cause proceeding.
Constellation files a complaint: PJM rules are too fuzzy for co-location
Legal
The complaint argued PJM lacked clear tariff rules for certain co-located configurations, forcing ad hoc decisions.
FERC convenes technical conference on large co-located loads
Hearing
Commissioners pulled in grid operators, utilities, generators, and states to surface reliability and cost-shift risks.
FERC blocks a high-profile Amazon-linked co-location interconnection amendment
Order
Regulators rejected an amended agreement tied to a nuclear-adjacent data center, citing reliability and cost concerns.
Utilities ask FERC for declaratory clarity on co-location
Legal
A declaratory-order petition put co-location jurisdiction and service obligations directly in front of FERC.
PJM updates the guidance—then it becomes evidence
Policy
The updated guidance later became a lightning rod: practice existed, but tariff text didn’t fully match it.
PJM publishes its first co-located load guidance
Policy
PJM issued guidance describing how co-located load should be treated and metered, foreshadowing a tariff fight.
Scenarios
1
PJM Complies Fast: Contract-Demand Service Becomes the New Normal for Co-Located Load
Discussed by: Utility-sector analysts, energy legal analysts, and RTO stakeholder groups tracking PJM’s compliance pathway
PJM files a compliance tariff that cleanly defines co-located load interconnection steps, rewrites behind-the-meter generation rules, and operationalizes the new menu of transmission services. FERC’s paper hearing settles the rate design for firm and non-firm contract-demand products, creating a “pay-for-what-you-actually-withdraw” model that keeps co-located projects alive while reducing cost-shift risk. If this happens, PJM becomes the template other regions borrow—or get forced to adopt.
2
Tariff War: Generators and Data-Center Developers Challenge the New Charges and Limits
A coalition argues the new services (and BTMG transition rules) either overcharge co-located load or function as a de facto ban on behind-the-meter configurations. Rehearing requests pile up; litigation follows; and PJM is left managing projects under interim rules that satisfy no one. The trigger is a compliance filing that sharply raises effective transmission or ancillary costs for co-located projects compared with the “shortcut” economics investors were underwriting.
3
National Spillover: FERC Turns PJM’s Case Into a U.S.-Wide Co-Location Rulebook
Discussed by: FERC watchers, RTOs outside PJM, and industry trade associations planning for precedent risk
FERC decides PJM can’t be the only region with a bespoke answer and launches broader action—either through additional show-cause proceedings in other regions or a generic rulemaking. The trigger is simple: copycat co-location proposals multiply, and disputes over “invisible load” and backup reliance show up across multiple RTOs. PJM’s contract-demand construct becomes the anchor concept—how to serve new load quickly without pretending the grid isn’t involved.
Historical Context
Net Metering and Distributed Solar Rate Reforms (U.S. states)
2013–2023
What Happened
As rooftop solar grew, utilities argued that behind-the-meter customers still used the grid but paid less for it. States rewrote tariffs—introducing fixed charges, demand charges, or lower export credits—to reduce cost shifting while keeping adoption viable.
Outcome
Short Term
Policy fights became intensely local and highly technical, with frequent rule changes.
Long Term
Rate design shifted toward charging for capacity and grid availability, not just energy consumed.
Why It's Relevant Today
Co-located data centers are the industrial-scale version of the same fight: who pays for the grid you still rely on?
FERC Order No. 2003 (Standardized Generator Interconnection Rules)
2003–2005
What Happened
After years of project-by-project disputes, FERC standardized interconnection procedures and agreements to reduce chaos, speed investment, and clarify cost responsibility for upgrades and reliability studies.
Outcome
Short Term
Interconnection became more predictable, but queues still grew as demand surged.
Long Term
Standardization became the baseline expectation for scaling new generation.
Why It's Relevant Today
Today’s co-location surge is forcing the same institutional move: from bespoke deals to standardized rules.
PJM Capacity Performance Reforms After the Polar Vortex
2014–2016
What Happened
Severe winter stress exposed how market incentives failed to ensure performance when it mattered. PJM tightened obligations and penalties to keep resources reliable during emergencies.
Outcome
Short Term
Generators faced higher compliance costs and stronger incentives to winterize and secure fuel.
Long Term
PJM embedded “stress events” and performance risk into market design.
Why It's Relevant Today
FERC’s co-location move is another reliability-driven redesign: rules change when stress reveals hidden fragility.
