On February 23, 2026, PJM Interconnection, L.L.C. (PJM) submitted a compliance filing in response to an order issued in December 2025 by the Federal Energy Regulatory Commission, which directed PJM to facilitate and clarify the manner in which data centers and other industrial large loads with on-site generation can operate while maintaining grid reliability.1 The filing outlines substantial revisions and additions to the PJM Open Access Transmission Tariff governing Behind-The-Meter Generation (BTMG) associated with load growth due to the rapid expansion of artificial intelligence.
This filing coalesces before FERC the various proceedings regarding co-located load in PJM and, by the requested effective date of July 31, 2026, will aim to deliver some certainty to investors and developers.
Market Developments
In recent months, PJM and the Commission have prioritized developing and incorporating new Tariff provisions and grid services due to unprecedented load forecasts emerging in the Mid-Atlantic region. Stemming mostly from hyperscale data center development, a recent analysis by Wood Mackenzie indicates that electric utilities within the PJM footprint collectively forecast 55 gigawatts (GW) of new large load growth by 2030 and 100 GW by 2037.2 To some degree, these aggregated figures may include speculative "phantom" load, as developers sometimes submit identical interconnection requests across multiple utility study queues to hedge against localized transmission constraints.3 The Wood Mackenzie report highlights a potential supply-demand mismatch, noting that PJM utilities have committed to serve twice as much new large load demand as the region has planned new power generation to support it.
In November 2025, Monitoring Analytics, the independent market monitor for PJM (IMM) argued that all new data centers and large loads should be required to bring their own (new) generation with locational and temporal operating characteristics that match their load profile.4 As the principal economic analyst for PJM, the IMM has often signaled that load forecasting in PJM has been insufficient, and that by obligating new large loads to cover their own generation, the system would not be adversely affected if a planned data center did not materialize. The following graph illustrates PJM's changing load forecast in 2024 and 2025, respectively.
View full image: PJM Projected Demand (in MW)
Regulatory (Un)certainty
Despite exponential interest in artificial intelligence and infrastructure necessary to bolster its growth, regulatory clarity has not kept pace. The Commission initially rejected, in late 2024, an Interconnection Service Agreement related to a co-location proposal of up to 480 megawatts (MW) of data center load at an existing nuclear facility in Pennsylvania,6 finding that the proposal lacked sufficient justification and risked shifting significant transmission costs to retail ratepayers.
The Commission consolidated two existing dockets in February 2025 and initiated a proceeding to evaluate regulatory issues associated with the co-location of data centers and generating facilities in PJM. Please refer to our prior article for additional context: FERC orders review of co-located generation for data centers in PJM | White & Case LLP.
In the Co-Located Load Show Cause Order issued in December 2025, the Commission invoked section 206 of the Federal Power Act (FPA) to find PJM's existing Tariff unjust and unreasonable due to a lack of standardized rules for large-scale BTMG configurations. As a result, the Commission ordered PJM to create a transparent framework for netting generation against load and to implement transmission services that ensure co-located facilities pay for their actual grid utilization. The order instructed PJM to formulate distinct interim and firm service options that allow co-located loads to cap their energy withdrawals, thereby shielding standard ratepayers from undue cost-shifting, and adjust their Capacity Interconnection Rights (CIRs) to accurately reflect their reduced net injection capabilities when serving on-site demand.
PJM Stakeholder Initiative: CIFP on Large Load Additions
The regulatory framework detailed in the PJM compliance filing originates from its Critical Issue Fast Path (CIFP) stakeholder process on Large Load Additions, initiated in August 2025. Following a stakeholder impasse over components of the proposal, including on load forecasting and cost allocation, the PJM Board of Managers issued a Decisional Letter in January 2026 setting forth six principles on how PJM would approach large load additions.7 These principles include load forecasting improvements, the creation of a Bring Your Own Generation (BYOG) expedited track, the reliability backstop procurement, and a holistic review of PJM's market in 2026, particularly from the investment perspective. The Board also defined a large load as an individual addition of 50 MW or more at a single Point of Interconnection, though utilities may request consideration of <50 MW additions on a case-by-case basis.
The resulting framework creates two primary regulatory pathways:
- Expedited Interconnection via Bring Your Own New Generation: Projects utilizing the "Bring Your Own New Generation" mechanism can access expedited procedural tracks for interconnection. This typically requires pairing load with new, firm baseload generation, such as natural gas-fired turbines, or renewable assets coupled with long-duration battery energy storage systems to ensure a high capacity factor.
- "Connect and Manage" Curtailment: Large loads that do not bring sufficient new generation will operate under curtailment protocols. These loads are subject to prioritized interruption if instructed by PJM, requiring data centers to transition to on-site diesel or natural gas backup generators to prevent service disruptions.
As part of the multi-pronged approach originally launched by the CIFP, and building directly on the Board Decisional Letter, PJM submitted a proposal on February 27, 2026 to establish an Expedited Interconnection Track (EIT) for generating facilities.8 PJM requested that the Commission approve this process to accelerate and streamline the interconnection of new generation that has committed to firm commercial in-service dates and is supported by the primary siting authority, or executive officer, in the state in which the facility is to be located. In the proposal, PJM indicated the EIT process would consider up to 10 interconnection requests per calendar year for large new (or uprated) capacity resources. If implemented, PJM would aim to execute Generator Interconnection Agreements for the designated facilities in approximately 10 months. PJM requested that the Commission issue an order on the EIT proposal by May 28, 2026, so the proposal would be effective by July 31, 2026.
Proposed Co-Location Tariff Revisions
In compliance with the Commission's requirements in the December order, PJM's filing details comprehensive revisions to its Tariff,9 including:
Retail BTMG Threshold and Grandfathering
PJM defined (new) uniform criteria for what qualifies as Retail BTMG (i.e., generation that can net against load to reduce transmission charges at a single electrical location).
- Materiality Threshold: Retail BTMG will be capped at a cumulative nameplate rating of 50 MW or less. PJM stated that this threshold also aligns with its own definition for large loads additions as well as stakeholder feedback.
- Emergency Generation Exemption: On-site backup generation will be excluded from this calculation, allowing data centers to maintain large arrays of diesel or natural gas backup generators for facility reliability without triggering BTMG netting restrictions, provided those units do not provide energy for standard retail netting.
- Legacy Grandfathering: Facilities with a cumulative rating greater than 50 MW are eligible to be permanently grandfathered if operating under a contractual arrangement in effect prior to December 18, 2025. The rules would also exempt Qualifying Facilities (per the Public Utility Regulatory Policies Act of 1978) that achieved operational status before this date.
Co-Located Load Transmission Services
PJM proposed Tariff revisions introducing three new, distinct transmission service options for Eligible Customers:10
- Firm Contract Demand Transmission Service: Permits service up to a maximum MW.
- Non-Firm Contract Demand Transmission Service: Allows Eligible Customers to take service on behalf of Co-Located Loads that plan to withdraw energy from the PJM transmission system only on an as-needed and as-available basis.
- Interim Network Integration Transmission Service: Acts as a transitional bridge for Eligible Customers who have formally requested standard Network Integration Transmission Service, by permitting the co-located load to receive transmission service and commence operations on a non-firm, interruptible basis while the transmission upgrades necessary to support long-term, firm service are constructed and placed in service.
As depicted below,11 Figures 2 through 4 represent the new services:
View full image: Co-Located Load Transmission Services
The Commission also convened a concurrent paper hearing to determine the final rates, terms, and conditions for these services. The proceeding focuses on whether co-located loads should pay a "minimum transmission service charge" to recognize their reliance on the grid for backup and synchronization, as well as the formulation of penalty charges for any withdrawals that exceed contract demand limits.
Necessary Studies and CIR Delisting
Existing interconnection customers seeking to serve Co-Located Load must complete formal procedural requirements before operations can commence, including notifying PJM and entering into a Necessary Study Agreement to evaluate thermal, short circuit, and stability impacts.
PJM's compliance filing outlines deliverables for this study phase, whereby interconnection customers submit detailed engineering data, including single-line diagrams, the amount of CIRs to reduce, and comprehensive details regarding control technologies and protection systems. This requirement also includes Remedial Action Schemes required to manage the transition between grid power and on-site fossil fuel or battery generation.
PJM did not include an accelerated or guaranteed timeline for the completion of these studies and developers remain subject to standard "reasonable efforts" timelines. Depending on configuration complexity, these studies typically take 60 to 120 days, but project schedules remain exposed to PJM's broader engineering and interconnection study queue backlogs.
Outlook and Implications
Data center co-location arrangements are now increasingly subject to new planning and operational conditions (and constraints) arising from the integration of PJM's proposed Tariff modifications, the Commission's cost allocation rules, and evolving legislative scrutiny across the PJM states. The need for regulatory certainty mirrors escalating political attention at both the state and federal levels. A month prior to this compliance filing, in January 2026, the White House National Energy Dominance Council and a bipartisan coalition of all 13 PJM state governors issued a joint Statement of Principles demanding that data centers bear the infrastructure costs of their own load growth, rather than shifting those burdens to utility ratepayers. The Statement of Principles also set forth a potential emergency "backstop" auction to incentivize new generation with 15-year terms for price certainty. If the backstop auction were to occur, 100 percent of associated costs would be allocated to data centers and industrial large loads.
- Note: On March 5, 2026, PJM released an update (entitled "Refined Thinking")12 on the potential reliability backstop procurement. PJM now indicates that it may favor an approach whereby it acts as the "administrator and counterparty" of such a program, rather than being comprised of bilateral agreements between new generators and large loads. In that role, PJM would secure the "forward commitment of supply" and allocate costs back to the area in which the load is located. In the Refined Thinking update, PJM clarified that final proposals must demonstrate: 1) measurable reliability benefits; 2) equitable cost allocation; 3) minimal distortion to the PJM capacity market; and 4) a defined sunset or transition criteria. PJM intends to release the final details of the backstop auction in April 2026.
The proposed Tariff revisions provide a regulatory path for backup diesel and natural gas units by exempting them from BTMG materiality caps, but market participants must still satisfy independent state and local regulatory requirements. PJM's rules do not preempt local environmental or land use regulations, such that those governments retain primary jurisdiction over noise ordinances and air quality standards, which can significantly limit the operational runtime and/or physical footprint of backup sources.
Despite the accelerated nature of these changes, the implementation timeline for these Tariff revisions remains unclear. The proposed transmission services rely on non-rate terms currently pending in the paper hearing proceeding. Accordingly, PJM cannot yet commit to a distinct implementation schedule, and submitted the proposed Tariff records to the Commission with a placeholder effective date.
White & Case's Energy Markets and Regulatory team based in Washington, DC continues to monitor PJM stakeholder initiatives and Commission proceedings closely.
1 PJM Interconnection, L.L.C., 193 FERC ¶ 61,217 (2025) (Co-Located Load Show Cause Order).
2 Wood Mackenzie, "US utility large load commitments reach 160 GW amid unprecedented PJM demand surge" (Oct. 27, 2025). Available at: https://www.woodmac.com/press-releases/us-utility-large-load-commitments-reach-160-gw-amid-unprecedented-pjm-demand-surge/.
3 PJM Interconnection L.L.C., 2025 Year in Review: Planning Prepares for Burgeoning Electricity Demand (Jan. 8, 2026).
4 Monitoring Analytics, LLC, CIFP-LLA Executive Summary (published on Nov. 10, 2025). Available at: https://www.monitoringanalytics.com/reports/presentations/2025/IMM_CIFP_Executive_Summary_20251110.pdf.
5 RTO Insider, "Insufficient Data Center Load Forecasting Likely a Big Part of PJM's Problem" (Jul. 27, 2025). Available at: https://www.rtoinsider.com/111002-around-the-corner-insufficient-data-center-load-forecasting/.
6 Utility Dive, "FERC rejects interconnection pact for Talen-Amazon data center deal at nuclear plant" (Nov. 4, 2024). Available at: https://www.utilitydive.com/news/ferc-interconnection-isa-talen-amazon-data-center-susquehanna-exelon/731841/.
7 PJM Interconnection, L.L.C., Board Decisional Letter on Critical Issue Fast Path Large Load Additions (published on Jan. 16, 2026), available at https://www.pjm.com/-/media/DotCom/about-pjm/who-we-are/public-disclosures/2026/20260116-pjm-board-letter-re-results-of-the-cifp-process-large-load-additions.pdf.
8 PJM Interconnection, L.L.C., Proposed Tariff Amendments for Expedited Interconnection Track, FERC Docket No. ER26-1563 (filed Feb. 27, 2026).
9 PJM Interconnection, L.L.C., 60-Day Compliance Filing for Co-Located Load Related Revisions to Open Access Transmission Tariff to Comply with Commission Order in Docket No. EL25-49, et al., Docket No. ER26-5181 (filed Feb. 23, 2026).
10 "Eligible Customer" is defined in PJM Manual 14A: New Services Request Process as "[a]ny electric utility (including any Transmission Owner and any power marketer), Federal power marketing agency, or any person generating electric energy for sale for resale" or "[a]ny retail customer taking unbundled transmission service pursuant to a state requirement that PJM or a Transmission Owner offer the transmission service, or pursuant to a voluntary offer of such service by a Transmission Owner."
11 Co-Located Load Show Cause Order, Concurrence by Rosner, C., available at: https://www.ferc.gov/news-events/news/e-1-commissioner-rosners-concurrence-pjm-co-location.
12 PJM Interconnection, L.L.C., Reliability Backstop Stakeholder Survey Summary & Status Update (published Mar. 5, 2026). Available at: https://www.pjm.com/-/media/DotCom/committees-groups/workshops/rbpw/2026/20260305/20260305-item-01---reliability-backstop-stakeholder-survey-summary-and-status-update---pjm-presentation.pdf.
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