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. This matters especially for customers claiming they'll only lean on the grid occasionally. Deteriorating adequacy signals in PJM's markets have sharpened regulators' core worry: if co-located load dodges grid charges and studies while depending on grid backstop, everyone else absorbs higher bills or higher blackout risk.
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.
April 2025
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.
March 2025
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.
February 2025
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.
December 2024
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.
November 2024
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.
September 2024
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.
April 2024
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.
March 2024
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.
Historical Context
3 moments from history that rhyme with this story — and how they unfolded.
1 of 3
2013–2023
Net Metering and Distributed Solar Rate Reforms (U.S. states)
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.
Then
Policy fights became intensely local and highly technical, with frequent rule changes.
Now
Rate design shifted toward charging for capacity and grid availability, not just energy consumed.
Why this matters now
Co-located data centers are the industrial-scale version of the same fight: who pays for the grid you still rely on?
2 of 3
2003–2005
FERC Order No. 2003 (Standardized Generator Interconnection Rules)
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.
Then
Interconnection became more predictable, but queues still grew as demand surged.
Now
Standardization became the baseline expectation for scaling new generation.
Why this matters now
Today’s co-location surge is forcing the same institutional move: from bespoke deals to standardized rules.
3 of 3
2014–2016
PJM Capacity Performance Reforms After the Polar Vortex
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.
Then
Generators faced higher compliance costs and stronger incentives to winterize and secure fuel.
Now
PJM embedded “stress events” and performance risk into market design.
Why this matters now
FERC’s co-location move is another reliability-driven redesign: rules change when stress reveals hidden fragility.
