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The Grid

Regulators Send Back the Grid’s Data-Center Plans

Federal regulators suspended PJM’s emergency procurement and rejected its proposed data-center curtailment framework, as the grid faces a shortfall in future capacity commitments.

WASHINGTON, Oct. 17 — The country’s largest power grid is heading into winter with its proposed new framework for serving data centers unsettled, after federal regulators delayed one plan and rejected most of another ten days later. On Sept. 29 the Federal Energy Regulatory Commission accepted the PJM Interconnection’s proposed emergency procurement of about 6.8 gigawatts of new capacity for filing, but suspended its effectiveness until Feb. 28, 2027, subject to refund and further proceedings. On Oct. 9 it rejected PJM’s rules under which data centers that brought no new power of their own would have been curtailed early in a grid emergency, ahead of customers paid to cut back.PJMPJM operates the grid and runs its capacity auctions for more than 67 million people in 13 states and the District of Columbia. It expects demand to grow by up to 70 gigawatts by 2038, driven largely by data centers.

The commission retained two pieces, effective Oct. 12: PJM’s definition of a large load, one with a peak of 50 megawatts or more at a single site, and a registry of current and prospective large loads. It turned down the rest, including the “bring your own new capacity” rules by which a data center that contracted for new supply could have escaped curtailment.

The rulings matter because PJM is short of capacity for the years ahead, and someone has to pay to fix that. PJM’s July auction, which buys commitments of supply for a future year, hit its price cap for the third time in a row, at $325 a megawatt-day, and still came up 6,831 megawatts short of what reliability requires.CapacityA capacity auction pays power plants, and customers who agree to cut their use, to be available in a future year. PJM normally holds them three years or more ahead; the last two were held less than two years ahead. PJM’s reserve margin for 2028–29 stands at 14.7 percent, against a target of 20. In PJM’s simulation using the submitted offers without the cap or floor, the price across most of the region was $554.72 a megawatt-day; the ComEd zone in northern Illinois was higher.

The Capacity Auction

Three Straight Auctions at the Cap

PJM’s RTO reference capacity clearing price, in dollars per megawatt-day of unforced capacity, by delivery year.

The last three auctions cleared at the temporary collar cap, marked by the rule; before 2026/27 the collar was not applicable. Ghosted columns show PJM simulations without the cap or floor, using the offers actually submitted; sellers might have offered differently. They give $388.57 for 2026/27, $529.80 for 2027/28 and $554.72 for 2028/29. In some years, including 2025/26, constrained zones cleared above the RTO reference price.

PJM Interconnection, base residual auction reports for 2026/27 (July 22, 2025), 2027/28 (Dec. 17, 2025) and 2028/29 (July 14, 2026); simulated prices from the 2028/29 report’s appendix.

The cost reaches households through their bills, if indirectly: capacity is a fraction of wholesale costs, PJM says, and wholesale costs make up a portion of retail bills. But the price has climbed from $28.92 a megawatt-day for 2024–25 to the cap. The backstop was to buy the missing megawatts at a weighted average of no more than $555 a megawatt-day. The commission found PJM’s plan for dividing that cost, among other terms, possibly unjust and unreasonable.

“This Commission will not be forced into accepting a deeply flawed, eleventh-hour procurement mechanism with billion-dollar implications for consumers,” FERC’s chairman, Laura Swett, said in a concurring statement.

On Oct. 7 the Department of Energy filed a “statement of position” at FERC, which Utility Dive said appeared to be the department’s first there in at least five years. It urged PJM to adopt the commission’s fixes so that the costs of serving new data centers “are not unfairly shifted to PJM’s existing ratepayers.”

Who Goes First

The Oct. 9 order turned on who loses power first. The commission found that PJM’s curtailment plan, called Interim Resource Adequacy Service, intruded on the states’ authority over retail rates and appeared to discriminate against large loads. “States have a crucial role to play in this challenge by designating which retail customers must be curtailed when the system is stressed,” the order said.

Commissioner David Rosner, concurring, was blunter. In an emergency, he wrote, “data centers not serving critical functions should be shut off before ordinary customers,” though he would leave the rules to state regulators. He said such measures should come only when needed to keep the system reliable, after voluntary demand response had been exhausted.

The question is not abstract. On Oct. 13 and 14, in unseasonable warmth and with some 61,000 megawatts of generation out of service, mostly for planned work, PJM called on demand response. An Energy Department emergency order, in effect Oct. 13 to 16 and the ninth such order this year according to PJM, let it send data centers onto their backup generators as a last resort; PJM said on Oct. 15 that it had not used that power. Customers may notice more such procedures, David Souder, PJM’s executive director of system operations, wrote on Oct. 15, “until the necessary generation and transmission can be placed in-service, which is not expected to occur in the immediate future.”

This Commission will not be forced into accepting a deeply flawed, eleventh-hour procurement mechanism with billion-dollar implications for consumers.

— Laura Swett, chairman of the Federal Energy Regulatory Commission

The Uprates

On Oct. 6, Google and Constellation Energy announced a 20-year power purchase agreement through which Google is to fund 890 megawatts of uprates at 11 Constellation reactors in PJM.GOOGLNasdaq279.84▼3.98−1.4%Alphabet · Friday’s session An uprate raises a working reactor’s output with new equipment. The work, at six sites in Illinois, Pennsylvania and New Jersey, is expected to deliver its first megawatts by 2028, the companies said; Google says all 890 will be online before the end of 2032. Constellation puts its investment at more than $4.3 billion. The companies described the deal as a response to PJM’s “Bring Your Own Power” proposal. FERC rejected the proposed bring-your-own-new-capacity rules three days later, but neither company had said whether these uprates would be registered under them, POWER reported on Oct. 7. Google had itself argued that FERC should accept only the registry and sever the rest of PJM’s proposal, the order records.New SupplyPJM’s July auction cleared 524.7 megawatts of new, uprated and reactivated generation across its whole territory, in its accredited measure, down from 774.3 megawatts the auction before.

On Sept. 30, Amazon and Constellation had announced a 20-year deal for 690 megawatts from Constellation’s Calvert Cliffs plant in Maryland, including about 190 megawatts of uprates expected between 2030 and 2032.

Jefferies analysts see the owners of existing plants as potential beneficiaries. In a client note on Oct. 12, reported by Utility Dive, they said the ruling could keep capacity prices higher for longer, favoring independent power producers such as Constellation, NRG Energy, Talen Energy and Vistra; “the latest development is positive for existing generation/IPPs,” they wrote.Who CollectsConstellation said in a securities filing that it cleared 18,875 megawatts in the July auction. Utility Dive put its resulting capacity revenue for 2028–29 at about $2.2 billion.

Those who wait are the developers. “There’s a point at which it becomes challenging to wait longer,” Mary Yang, a former regulatory counsel at PJM who is now chief operating officer of 804 Advisory, told Latitude Media. She said she was seeing, anecdotally, many people saying they would go to “a different region that’s got more certainty.”The QueueOn Sept. 28, 617 proposed power projects totaling nearly 169 gigawatts entered the first phase of PJM’s new interconnection process, a review designed to take one to two years.

PJM holds a special meeting of its members on Oct. 22 and plans to refile the backstop plan by Oct. 29, rather than wait out a hearing that runs through February. The next base auction, for 2029–30 and the fourth under the price collar PJM set with its states’ governors, opens Dec. 9 and closes Dec. 15. Results are due Dec. 22.

Sources

  1. Federal Energy Regulatory Commission, “Order Accepting Reliability Backstop Procurement and Establishing Further Procedures, 196 FERC ¶ 61,245 (Docket Nos. ER26-3380-000, EL26-108-000), with Chairman Swett’s concurrence,” Sept. 29, 2026.
  2. Federal Energy Regulatory Commission, “Order Accepting Tariff Revisions in Part and Rejecting Tariff Revisions in Part, 197 FERC ¶ 61,019 (Docket No. ER26-3515-000), with Commissioner Rosner’s concurrence,” Oct. 9, 2026.
  3. Federal Energy Regulatory Commission, “Commissioner Rosner’s concurrence, PJM Interconnection, L.L.C., Docket No. ER26-3515-000,” Oct. 9, 2026.
  4. Utility Dive, “FERC rejects most of PJM’s large load interconnection plan,” Oct. 12, 2026.
  5. Latitude Media, “FERC rejected PJM’s data center curtailment plan. What’s next for BYOC?” Oct. 13, 2026.
  6. Utility Dive, “FERC chair slams PJM ‘mess’ as country’s largest grid operator delays power auction,” Sept. 30, 2026.
  7. PJM Inside Lines, “FERC Accepts PJM Reliability Backstop Proposal,” Sept. 30, 2026.
  8. American Public Power Association, “FERC Accepts PJM Proposed Reliability Backstop Procurement, But Suspends It for Five Months,” Oct. 2, 2026.
  9. Utility Dive, “DOE presses PJM on ratepayer protections from large load costs,” Oct. 8, 2026.
  10. U.S. Department of Energy, “Notice of Intervention and Statement of Position of the United States Department of Energy (Docket Nos. ER26-3380-000, EL26-108-000),” Oct. 7, 2026.
  11. U.S. Department of Energy, “Federal Power Act Section 202(c): PJM Interconnection, L.L.C. (PJM) Order No. 202-26-50,” Oct. 12, 2026.
  12. PJM Interconnection, “2028/2029 Base Residual Auction Report,” July 14, 2026.
  13. PJM Interconnection, “2027/2028 Base Residual Auction Report,” Dec. 17, 2025.
  14. PJM Interconnection, “2026/2027 Base Residual Auction Report,” July 22, 2025.
  15. PJM Inside Lines, “PJM Capacity Auction Procures 138,318 MW of Generation Resources as Work Continues To Address Growing Electricity Demand,” July 14, 2026.
  16. PJM Interconnection, “RPM Auction Schedule.”
  17. Utility Dive, “PJM capacity prices hit price cap, reserve shortfall grows,” July 15, 2026.
  18. Constellation Energy Corp. (SEC Form 8-K), “Current Report on Form 8-K: PJM capacity auction results for the 2028-2029 planning year,” July 14, 2026.
  19. PJM Inside Lines, “Providing Reliable Electricity in a New Reality,” Oct. 15, 2026.
  20. PJM Inside Lines, “Operations Update: PJM Extends Maximum Generation Alert to Oct. 14, Calls on Demand Response,” Oct. 13, 2026.
  21. PJM Inside Lines, “Over 600 Projects Enter Phase I of PJM’s New Interconnection Process,” Sept. 30, 2026.
  22. Constellation Energy, “Google and Constellation Announce Landmark Agreement to Bring 890 MW of New Nuclear Capacity to PJM Grid as Part of Long-Term Power Deal,” Oct. 6, 2026.
  23. Google, “Why we’re backing America’s existing nuclear plants,” Oct. 6, 2026.
  24. POWER, “Google Deal Backs 890 MW of Constellation Nuclear Uprates at 11 PJM Reactors,” Oct. 7, 2026.
  25. Constellation Energy, “Constellation and Amazon Announce 20-Year Power Purchase Agreement Adding 190 Megawatts of Nuclear Capacity at Calvert Cliffs,” Sept. 30, 2026.