What's Happening?
The Federal Energy Regulatory Commission (FERC) is set to make a decision regarding the PJM Interconnection's rules for colocating large loads, such as data centers, at power plants. This decision, expected
to be announced at FERC's open meeting on December 18, 2025, could significantly impact nuclear and gas plant owners who aim to contract with data centers behind-the-meter to avoid full grid charges. The issue has created a divide between utilities and independent power producers, with companies like Exelon, FirstEnergy, and PPL Corp. urging FERC to dismiss a request from Constellation Energy Generation for a quick decision. PJM has also requested FERC to delay any order until a proposal from its board on interconnecting large loads is considered. The decision is part of a broader review initiated by FERC in response to a rejected interconnection service agreement involving a colocated Amazon data center.
Why It's Important?
The outcome of FERC's decision could have significant implications for the energy sector, particularly for utilities and data centers. If FERC allows colocating large loads at power plants, it could enable data centers to operate more cost-effectively by bypassing full grid charges. This could lead to increased competition between utilities and independent power producers, potentially affecting electricity prices and resource adequacy. The decision also aligns with broader policy priorities, including the integration of artificial intelligence and other technologies in energy management. Stakeholders such as utilities, data center operators, and energy consumers could experience shifts in operational costs and service delivery, influencing the economic landscape of the energy market.
What's Next?
Following FERC's decision, PJM will likely have up to 60 days to respond with updated tariff language, incorporating stakeholder input. A comment period will follow, after which FERC could approve the compliance plan by the second quarter of the next year. This process will determine how quickly and effectively new colocation arrangements can be implemented. Stakeholders, including utilities, data centers, and regulatory bodies, will closely monitor the developments to adapt their strategies and operations accordingly.
