The Federal Energy Regulatory Commission (FERC) issued its long-awaited order on December 18, 2025 (the Order), directing PJM Interconnection, LLC to reform its Open Access Transmission Tariff (Tariff) rules for generators co-located with large loads, most notably data centers, after finding the current Tariff lacks sufficient clarity and consistency regarding applicable rates, terms, and conditions of service.
The move by FERC caps a sustained show cause proceeding where industry stakeholders pressed the agency on the operational complexity and regulatory concerns arising from the proliferation of large-scale co-location arrangements in PJM. Although co-location is not a new concept, the scale and operational complexity of today’s large data center campuses present new wrinkles to familiar regulatory concerns related to jurisdiction, cost allocation, reliability, and more.
Notably, the Order directs PJM to:
- Revise its generation interconnection procedures applicable to interconnection customers who will use a generator to serve co-located load
- Create three new transmission service options to facilitate co-located load, including both temporary and permanent alternatives to existing services that could better facilitate large load interconnections to the grid
- Revise existing behind-the-meter generation (BTMG) rules to address reliability and resource adequacy risks identified by the Commission
The Order also addresses core concerns raised by stakeholders in the show cause proceeding concerning, among other things, the Commission’s jurisdictional authority to address arrangements involving co-located generators and data centers.
While these reforms provide a framework for addressing evolving co-location and large-load interconnection challenges in PJM, the Order’s influence is expected to extend nationally, though significant questions remain as other regions adapt these directives within varied regulatory environments.
Read more about FERC’s order and the changes it expects PJM to implement to better serve large, co-located loads in the future here.