FERC Rejects Most of PJM's Plan to Connect Data Centers Without Matching Capacity
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. Interim Resource Adequacy Service would have let large loads connect without matching new capacity if they agreed to be curtailed ahead of grid emergencies.
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. 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. FERC approved PJM's large-load definition and the registry that would record a facility's location, ramp schedule, capacity supply and related details.
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." 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.
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.