Post: Regulator directs PJM to launch AI connection rules

Regulator directs PJM to launch AI connection rules

FERC has directed PJM to establish transparent rules to facilitate service of AI-driven data centers and other large loads co-located with generating facilities. 

On February 20, 2025, FERC initiated a show cause proceeding into whether the sections of PJM’s tariff that govern co-location of generation with loads (including data centers and industrial facilities) are just, reasonable, and not unduly discriminatory or preferential. The show cause order raised concerns that PJM’s tariff lacks clarity on rates, terms, and conditions that would apply to co-location arrangements.

In the order, published on December, 18. FERC said PJM’s tariff was “unjust and unreasonable” due to a lack of clarity and consistency in the rates, terms, and conditions that apply to interconnection customers serving co-located load and eligible customers taking transmission service on behalf of co-located loads.

FERC directed PJM to revise its tariff to require its eligible (transmission) customers serving co-located load to choose from several transmission service options. It said “clear and fair regulations must keep pace to support [technological] advancement, help prevent price volatility, and promote competition, ultimately benefiting consumers by keeping electricity costs manageable”.

FERC also directs PJM to report, by January 19, 2026, on the status of its proposals to speed up the addition of generating capacity, including:

• expedited interconnection process for shovel-ready projects
• changes to PJM’s reliability backstop mechanism for resource shortfalls
• enhanced load forecasting and demand flexibility measures to identify new capacity needed for system reliability