FERC Orders PJM to Revise Cost Allocation Plan for Data Center Power Demand
nashnova research
The Federal Energy Regulatory Commission halted PJM's one-time power-procurement plan, demanding that data centers — not residential ratepayers — bear the costs of the new electricity they are driving.
What exactly happened?
FERC on September 30 partially approved PJM's "backstop procurement" plan but suspended it for five months, ordering revisions to cost-allocation terms.
Backstop procurement — a one-time, large-scale emergency mechanism to buy new power — was set to launch that day. It has now been delayed.
This means → regulators agree new power must be bought, but who pays for it is still unresolved.
Why did regulators hit the brakes?
PJM covers 13 states across the U.S. Mid-Atlantic and Midwest. Data centers have expanded rapidly in the region, and demand growth far outpaces new supply.
The region currently faces a power-supply gap of more than 6,800 megawatts. In plain terms = enough missing capacity to serve millions of households.
Commissioner Lindsay S. See stated plainly: "Existing customers should not pay for costs driven by new demand."
This reflects regulators' bottom line — costs created by data centers must not fall on ordinary residents.
Are data-center power requests reliable?
FERC also ordered PJM to improve its forecasting methods for data-center power demand, using more timely load projections for cost allocation.
Regulators noted that data-center interconnection requests have overwhelmed grids across the country, and many are considered speculative.
This means → some data centers may be reserving capacity without firm plans to build, injecting significant uncertainty into grid infrastructure planning.
What comes next?
A PJM spokesperson said the company is implementing FERC's directive, "focused on solutions that allocate costs fairly to the users driving them and protect consumers."
FERC Chair Laura Swett said the commission is prepared to "act quickly" on a revised proposal, warning that "reliability in the region is at stake."
Whether PJM can deliver a satisfactory revised plan when the five-month suspension expires will be the critical test for the region's grid reliability.
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