FERC Rejects PJM's Plan to Curtail Data Centers First When the Grid Is Stressed

The Federal Energy Regulatory Commission issued an order on October 9 rejecting a proposal from PJM Interconnection, the grid operator serving 13 Mid-Atlantic and Midwest states plus Washington, D.C., that would have let the grid curtail large flexible electricity loads — including AI data centers — ahead of other customers during periods of grid stress. The order, in Docket ER26-3515-000, sends the plan back to PJM for revisions rather than approving or permanently blocking the curtailment concept itself.

What PJM was trying to do

PJM's proposal was built around a category of large loads, data centers prominent among them, that would agree to be curtailed first in exchange for faster interconnection to the grid: rather than waiting years in PJM's standard queue for a new connection, a data center could get online sooner if it accepted that its power could be cut when the system is strained. The idea was meant to let data center construction keep pace with electricity demand without forcing an equivalent buildout of new generation and transmission capacity on the same timeline.

FERC's rejection doesn't kill that bargain outright, but it does mean PJM has to go back and address the commission's concerns about how the plan was structured before any curtail-first mechanism can take effect. In the meantime, data center developers in PJM's territory are left without a finalized version of the fast-track option they were counting on.

Why this matters beyond one grid operator

PJM is the largest grid operator in the United States by both geography and the sheer volume of data center interconnection requests sitting in its queue, so how it resolves the curtailment question is widely watched as a template other regions may follow. The core tension the rejected plan was trying to manage isn't going away: data center operators want speed and certainty, grid operators want to avoid overbuilding infrastructure for peak loads that may not materialize as forecast, and regulators are being asked to referee that tradeoff in real time as AI-driven electricity demand continues climbing faster than new generation can be built. FERC's order effectively says PJM's first attempt at that referee role needs more work, without offering its own substitute framework.

For now, the practical effect is continued uncertainty rather than a clear win or loss for either data center developers or incumbent ratepayers who worry about being asked to subsidize new transmission and generation built to serve AI load growth. PJM will need to refile a revised proposal, and until FERC acts on that filing, the question of who gets curtailed first when the grid is under strain remains open in the country's largest wholesale electricity market.