The U.S. Federal Energy Regulatory Commission (FERC) has directed PJM Interconnection, the grid operator, to revise tariff rules for large consumers who colocate their loads near generation sources. This decision is driven by the growing demand for data centers supporting artificial intelligence tasks and relates to PJM's response to a previously initiated proceeding.
FERC Order to Revise PJM Tariffs
The FERC order, issued on Thursday, applies to PJM's service territory in the Mid-Atlantic region, encompassing 13 states plus Washington, D.C. This area supplies electricity to over 67 million people and has seen a notable increase in applications for large data centers planning to partially source power directly from nearby generators. Consequently, the commission has required PJM to clarify rules for colocating generation and large loads and to propose specific tariff solutions.
Issues with Current PJM Tariffs
FERC found the existing PJM tariffs to be "unjust and unreasonable" because they lack uniform rates, terms, and requirements for customers colocating loads near generators. As a result, developers and electricity consumers do not always understand which interconnection schemes are permitted or how responsibilities and costs are allocated. The proceeding on these matters began in February 2025, and the current order addresses PJM's response to this directive.
FERC's Requirements for PJM
- Update the tariff to clearly describe how customers may use generating facilities to serve colocated loads.
- Provide options for transmission services, including the existing Network Integration Transmission Service and several alternatives.
- Review behind-the-meter generation rules and establish a transition period for changes.
- Maintain the validity of certain existing contracts during the implementation of new rules.
Measures to Ensure Grid Reliability
To address the impacts of rapid load growth, FERC has required PJM to submit an informational report by January 19, 2026. This report must outline measures to accelerate the integration of new generating resources, improve load forecasting, enhance demand flexibility, and propose changes to reliability mechanisms. The goal is to accommodate new types of large loads without compromising grid stability or shifting costs onto other consumers.
Statement from FERC Chair Laura C. Smith
FERC Chair Laura C. Smith explained that the decision aims to remove barriers to investment in large loads while maintaining "just and reasonable rates." This statement reflects the commission's intent to reduce uncertainty for investors while protecting the interests of other grid consumers. The commission left some jurisdictional questions unresolved, particularly those related to retail load interconnections through colocated schemes.
Why This Matters
For miners in Russia, the direct legal impact of this decision is limited to PJM's territory. However, changes in rules in one of the major U.S. regions indicate the direction of regulatory responses to growing demand from AI data centers. FERC's focus on clear tariffs and reliability signals that owners of large loads will face stricter requirements regarding interconnection methods and cost allocation. This influences global investment decisions and competition for energy resources, indirectly affecting the market for mining equipment and services.
Additionally, revising the rules may accelerate generation deployment and improve load forecasting in a region hosting large data centers. Operators considering repurposing farms for computing or cooperating with data centers should monitor these changes closely, as they alter cost structures and capacity availability. More details on regulatory tariff requirements can be found in the related article clarifying tariffs for AI data centers.
What to Do?
- Monitor rule changes and PJM publications if you have plans or contracts in PJM regions—updates may affect interconnection conditions and energy costs.
- Review current contracts and interconnection schemes to understand protections during tariff changes and whether rights under existing agreements are preserved.
- Evaluate backup and nearby generation options; in uncertain grid access conditions, self-generation can reduce downtime risks.
- If considering repurposing farms for AI computing, study market cases and examples to understand energy consumption and grid interaction requirements; see the article on why farms are repurposing for AI.
- Consult with legal or energy specialists as needed to correctly interpret tariff changes and protect your business interests.