FERC Rejects Most of PJM's Data Center Curtailment Plan

The Federal Energy Regulatory Commission dealt a significant blow to PJM Interconnection's strategy for managing the surge in data center power demand, rejecting the core mechanism the grid operator had proposed while approving only a partial piece of its plan. FERC did sign off on PJM's registry of data centers—a database meant to track these massive new loads as they connect to the grid—but it struck down the temporary curtailment scheme that would have allowed PJM to reduce power flowing to those facilities during periods of grid stress.

The curtailment plan was central to PJM's approach. The idea was straightforward: when the grid faced tight conditions, PJM could temporarily dial back electricity to data centers that had agreed to participate, buying time and reducing pressure on the system. It was meant to be a tool for managing the unprecedented wave of demand from artificial intelligence operations and other large computing facilities seeking to plug into the grid. By rejecting this mechanism, FERC has left PJM without one of its primary levers for handling what has become one of the most pressing challenges facing the nation's power infrastructure.

The decision reflects deeper tensions about who bears the cost of accommodating these massive new loads. The Department of Energy has been pressing PJM hard on this question, demanding stronger protections for ordinary ratepayers—the households and small businesses whose electricity bills could climb if they end up subsidizing the infrastructure upgrades needed to serve data centers. The DOE's intervention signals that the stakes extend beyond grid management into questions of fairness and economic burden.

PJM's registry approval gives the grid operator at least some visibility into where data centers are connecting and how much power they will draw. That information matters for planning and forecasting. But without the curtailment authority, PJM loses the ability to actively manage demand in real time. The grid operator will need to find other ways to handle the load—likely through more traditional approaches like building additional generation and transmission capacity, which takes years and costs billions.

The rejection also raises questions about what comes next. PJM may attempt to redesign its curtailment proposal in ways that address FERC's concerns, or it may pursue alternative mechanisms altogether. The grid operator could seek to negotiate voluntary agreements with data centers, though those lack the binding force of a regulatory mandate. Meanwhile, the data center industry continues to expand its footprint across PJM's territory, adding pressure to a system already straining to keep up with demand growth.

The broader picture is one of regulatory caution colliding with infrastructure urgency. FERC's decision suggests the commission is not yet convinced that temporary curtailment is the right tool, or that the safeguards around it are sufficient. But the alternative—allowing data center connections to proceed without any demand management mechanism in place—creates its own risks. PJM and the industry now face the task of threading that needle: finding an approach that manages grid reliability and protects ratepayers without unnecessarily constraining the data center buildout that many see as essential to economic competitiveness.