Federal Regulators Reject Largest US Grid Operator’s Plan To Cut Power To Data Centers

Federal regulators rejected a plan to force data centers and other major electricity users to cut power during grid emergencies, complicating efforts to manage the centers’ surging artificial intelligence-driven demand.

The Federal Energy Regulatory Commission (FERC) rejected portions of PJM Interconnection‘s proposal on Oct. 9 that would have allowed the grid operator to require certain large electricity customers to reduce consumption during emergencies if they failed to secure additional power generation. Regulators approved a separate measure allowing PJM to track major electricity users as demand threatens to outpace available supply.

“PJM proposed IRAS [Interim Resource Adequacy Service] to address the growing electricity reliability challenge where electricity demand is increasing faster than new generation is coming online,” Jeff Shields, senior manager of external communications at PJM, told the Daily Caller News Foundation.

The decision comes as PJM faces a looming electricity shortage that could threaten grid reliability across the area it serves — 13 states and Washington, D.C. — as rapidly expanding data centers drive demand beyond available power supplies.

When asked for comment, FERC referred the DCNF to its order rejecting PJM’s proposal.

“While we recognize the imminent capacity shortfall in PJM, we find that two key aspects of PJM’s proposal — IRAS and BYONC [Bring Your Own New Capacity] — are either outside of the Commission’s authority or have not been sufficiently demonstrated to be just and reasonable and not unduly discriminatory or preferential,” FERC wrote in its Oct. 9 order.

The rejected proposals included IRAS which would have required certain large electricity users to reduce power consumption during grid emergencies, and BYONC) a framework designed to encourage major electricity customers to secure additional power generation to support their growing demand.

PJM warned in its filing that it expects to fall short of sufficient capacity to meet its regional reliability requirements beginning with the 2027–2028 delivery year, particularly because of data center demand and the pace at which those facilities connect to the grid.

“It is based on the concept that existing customers should not bear the consequences of that imbalance and would require data centers and other large loads to fulfill the commitments they made, through the Ratepayer Protection Pledge, to help maintain the reliability and affordability of the electric grid,” Shields told the DCNF.

The registry will allow PJM to collect information about large electricity users, including their locations, projected demand and expected connection dates, giving the grid operator greater visibility into future electricity needs, according to FERC’s Oct. 9 order.

“We agree with PJM that its proposed Large Load Registry will enable PJM to better forecast load growth and to plan and manage its transmission system,” FERC wrote.

The commission also left open the possibility that PJM could submit a revised proposal addressing the regulatory deficiencies identified in the order.

“We do not take this decision lightly,” the commission wrote in the order. “But given the significant discrepancies between PJM’s transmittal letter description of its proposed IRAS framework and its proposed Tariff revisions, as well as the lack of justification for many aspects of IRAS and BYONC, we cannot find that these elements of PJM’s proposal are just and reasonable.”

The decision leaves PJM with additional information about the region’s growing electricity demand but without its proposed mechanism for requiring certain new large users to reduce consumption during emergencies.

“FERC’s acceptance of our Large Load Registry and definition of Large Loads is a step in that direction,” Shields told the DCNF.

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