Data centers found a shortcut: park next to a generator and drink power without waiting years for grid upgrades. In December 2025, FERC ordered PJM to rewrite its tariff so co-located mega-load can't stay invisible to planning and cost responsibility. In June 2026, FERC expanded the push, ordering six grid operators to justify or overhaul how they connect AI data centers.
PJM, the largest of the six, faces a second front: a July 2026 FERC technical conference on its governance and transparency, with a new CEO, David Mills, at the helm. The fight over who pays for co-located load - and who carries the reliability risk - is now a national one.
Questions about this story
Free account needed to ask — your question is kept and asked for you right after sign-up. Answers are public.
No questions yet — be the first to ask.
Key Indicators
6
Grid operators ordered to rewrite AI connection rules
FERC's June 2026 show-cause order (RM26-4-000) gave six RTOs/ISOs 60 days to revise large-load interconnection rules.
2026-02-16
FERC paper-hearing briefs due on contract-demand service terms
The fight shifts from 'should this exist' to 'how much does it cost.'
Voices
Curated perspectives — historical figures and your fellow readers.
Sign up to generate historical perspectives on this story.
16 events
Latest: July 23rd, 2026 · 4 months ago
Showing 8 of 16
JK to step
Tap a bar to jump to that date
Jump to
July 2026
FERC technical conference examines PJM governance and independence
LatestHearing
Officials including Deputy Energy Secretary James Danly and White House council member Peter Lake pressed for board independence, longer terms, and transparency. New CEO David Mills suggested six- to nine-year board terms.
June 2026
FERC issues show-cause order to six grid operators on AI data center connections
Order
FERC ordered PJM, MISO, SPP, CAISO, ISO-NE, and NYISO to explain or revise large-load interconnection rules within 60 days (docket RM26-4-000).
December 2025
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.
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.
Scenarios
1
PJM Complies Fast: Contract-Demand Service Becomes the New Normal for Co-Located Load
Likely
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
Possible
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.
4
FERC mandates independent PJM board and longer-term protections
Possible
Resolves by Q2 2027
Discussed by: Energy analysts and regulatory observers following the RM26-4-000 rulemaking
FERC adopts reforms from the July 2026 governance conference, requiring an independent PJM board with multi-year terms and public voting records, to insulate decisions from member pressure. This would change how PJM sets market rules and approves large-load connections.
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.
