The Federal Energy Regulatory Commission has blocked the core of PJM Interconnection's plan for connecting data centers and other large loads. In an order dated 9 October, reported by Utility Dive on Monday, FERC rejected the Interim Resource Adequacy Service framework and the related bring-your-own-new-capacity rules. It kept PJM's definition of large loads and a proposed large-load registry.
The ruling comes about five weeks after FERC suspended key pieces of PJM's reliability backstop procurement. Together, the two decisions leave the largest U.S. grid operator without either its preferred emergency capacity buy or its preferred path for interconnecting loads that arrive faster than new plants.
What IRAS would have done
Interim Resource Adequacy Service would have let large loads connect without matching new capacity if they agreed to be curtailed ahead of grid emergencies. PJM also proposed excluding those IRAS loads from the capacity auction demand curve and setting compensation rules for curtailed megawatts.
FERC said several tariff provisions appeared to place obligations directly on eligible new large loads, which are mostly retail customers; to dictate which retail customers would be curtailed; and to establish what looked like a retail rate. Those functions, the Commission said, sit with the states.
FERC said states have a central role in designating which retail customers must be curtailed when the system is stressed, and it encouraged states to keep that work going, Utility Dive reported. The point is jurisdictional: federal wholesale rules cannot quietly become state retail curtailment policy.
What survived
FERC approved PJM's large-load definition and the registry that would record a facility's location, ramp schedule, capacity supply and related details. That registry is the piece DOE had pressed for in its 7 October statement of position on the backstop docket: project-level tracking so costs and forecasts can follow real campuses rather than anonymous load growth.
PJM spokesman Jeffrey Shields told Utility Dive on Monday that the grid operator is reviewing the order "with an eye toward how we can fulfill FERC's requirements while recognizing the responsibilities FERC indicated belong to the states and honoring the concept that existing electricity customers should not be unfairly burdened by new, energy intensive customers in the form of higher costs or decreased reliability."
Market reading
Jefferies equity analysts told clients on Monday that the ruling is positive for independent power producers such as Constellation Energy, NRG Energy, Talen Energy and Vistra, because it points to higher capacity prices for longer inside PJM. They said the proposal could be "minimally revived" later under state leadership, with Ohio and Pennsylvania as states to watch.
Commissioner David Rosner, in a concurrence reported by Utility Dive, warned that excluding IRAS loads from the capacity demand curve could leave the market signaling surplus capacity while the region sheds thousands of megawatts of demand involuntarily. That would be economically inefficient and would slow the rebalancing of supply and demand, he said. In an emergency, non-critical data centers should shed before homes, hospitals and schools, but states should set those priorities, and PJM should adjust operations only after voluntary demand response is exhausted.
Why it matters now
PJM's last two base capacity auctions left a shortfall that the backstop was meant to fill. Large-load interconnection rules were meant to manage the same demand growth from the other side. With both packages constrained, the near-term path is a mix of state curtailment rules, the approved registry, and whatever revised section 205 filing PJM brings on cost allocation for the backstop by the end of October.
For data center developers, IRAS would have been a bridge: energize first, build matching capacity later, accept curtailment risk in return. That bridge is closed at the federal tariff level. Host states that want campuses will have to write the curtailment stack themselves. Host states that fear ratepayer backlash have FERC language on their side.
For generators, a longer period of tight capacity pricing is the immediate implication. For households, the question is whether the next design still socializes large-load costs or finally pins them to the loads that create the need.
The registry that survived is not a consolation prize. Once facilities must list ramp schedules and capacity supply, PJM and state commissions can test announced megawatts against interconnection queues and construction permits. Campuses that slip or cancel become visible as forecast errors rather than permanent demand. That visibility is what DOE asked for when it told PJM to track whether projects enter service, delay or disappear before assigning backstop costs.
Bring-your-own-new-capacity rules were the other half of the rejected package. Developers that could pair a load with a new plant on a matching timeline would have had a clearer federal path. Without those rules in the tariff, co-location and behind-the-meter arrangements fall back to the December 2025 co-location compliance track and to whatever individual transmission owners will study. That is slower, and it pushes more of the negotiation into bilateral utility contracts and state certificate processes.
None of this freezes data center growth in Loudoun, central Ohio or northern New Jersey. It changes the order of operations. Loads that hoped to energize on curtailment commitments must now wait for state curtailment stacks or for matching capacity that clears an auction or a revised backstop. Generators that feared IRAS would peel demand out of the capacity curve keep that demand in the market for longer. Ratepayer advocates who argued that federal tariffs were about to set retail shed priorities have an order that agrees with them on jurisdiction, if not on every detail of who pays next winter's capacity bill.
What to watch
Three clocks are running. PJM's revised backstop filing, due by 29 October, will show how far cost causation goes without IRAS as a safety valve. State commissions in Virginia, Ohio, Pennsylvania and New Jersey will show whether retail curtailment priorities for data centers arrive before the next summer peak. The large-load registry, once live, will show how many announced megawatts are real enough to schedule. Until those pieces land, PJM is connecting large loads under older rules while the Commission and the states argue over who may turn them off.