PJM's Plan to Curtail Data Centers First Draws Its Comments at FERC: Most States Say Yes, Virginia and the Data Centers Say No

The Virginia State Corporation Commission filed its comments on PJM’s newest data center proposal on Tuesday, September 8, five days after the deadline, with a motion asking FERC to take them anyway ^[9]. Its explanation for the delay was an attempt to coordinate positions with the other PJM states ^[9]. It did not end up where most of them did. Eleven state commissions, filing through the Organization of PJM States, support the core of PJM’s plan to curtail new large loads that bring no capacity of their own ^[5]. Virginia’s commission asks FERC not to approve it as filed ^[9].

What PJM filed

PJM filed the proposal at FERC on August 13 in Docket ER26-3515-000 under Section 205 of the Federal Power Act ^[1]. It has four parts ^[1]:

• Interim Resource Adequacy Service (IRAS). In a delivery year when the capacity auction has cleared short, PJM could direct each utility zone to reduce load up to the megawatts attributable to Eligible New Large Loads there, meaning new loads not covered by new capacity. PJM would issue the call before Pre-Emergency Load Management, at the start of a NERC Energy Emergency Alert Level 1. IRAS would be available beginning June 1, 2027.
• A Large Load Registry kept by PJM, built from information that load-serving entities and utilities report.
• Definitions. A Large Load is end-use load with “a cumulative peak load of 50 megawatts [(“MW”)] or greater at a single electrical site,” counting affiliated facilities within a one-mile radius as one site. A New Large Load is one that goes into service, or crosses 50 MW, after June 1, 2027.
• A demand-curve change. Starting with the 2029/2030 delivery year, PJM would remove New Large Loads without new capacity from the capacity auction’s demand curve, which it says will “protect residential customers from capacity price increases.”

The escape route is called Bring Your Own New Capacity. New megawatts arranged for a New Large Load must offer into PJM’s capacity auctions as a price taker, at $0, for 10 consecutive delivery years ^[1]. A load can also be covered by capacity allocated through the Reliability Backstop Procurement, the separate backstop procurement PJM filed in Docket ER26-3380 ^[1].

PJM’s case rests on two auctions. The 2028/2029 Base Residual Auction cleared 6,831.3 MW of unforced capacity short of the reliability requirement at the $325/MW-day cap; the 2027/2028 auction cleared 6,623 MW short ^[1]. PJM attributes the shortfalls “primarily” to large loads, “most notably data centers” ^[1]. It asked FERC to make the tariff changes effective October 12, 2026 ^[1].

Who pays, and who gets paid

This is the part the states fought over.

PJM proposes that a curtailed load be paid up to 50% of its Non-Performance Charge Rate, the rate already used for demand response that underperforms ^[1]. A load could accept less in its retail rate, or waive payment, in which case the wholesale rate drops to zero ^[1]. PJM presents the zero option as consistent with the White House’s Ratepayer Protection Pledge, which 38 data center companies had signed by PJM’s count ^[1].

The Organization of PJM States asked FERC to clarify that compensation and, if the answer does not satisfy it, to sever it while letting the rest take effect ^[5]. Its reasoning is short: IRAS already lets new loads connect when capacity is short, so “Compensating them further is not just and reasonable” ^[5]. Ohio’s Office of the Federal Energy Advocate took no position on the 50% figure but asked FERC to affirm that states can set compensation lower, “even zero” ^[4].

The Joint Consumer Advocates, a group of six offices from Delaware, the District of Columbia, Illinois, Maryland and New Jersey, went further ^[7]. They want loads without their own capacity placed on non-firm transmission service with no payment, which they say is what PJM had discussed with stakeholders before it filed ^[7]. They also flagged a gap: as filed, a load could reduce its curtailment exposure by buying capacity that already cleared an earlier auction, adding load without adding supply ^[7].

Where the states and the industry stand

The state split is about authority, not about whether data centers should go first.

OPSI’s members support the sequence. “Calling on IRAS first appropriately places the initial operational consequences of a capacity shortfall on the amount of demand associated with NLLs,” they wrote, using PJM’s abbreviation for New Large Loads ^[5]. The supporting members were the commissions of Delaware, the District of Columbia, Illinois, Indiana, Maryland, Michigan, New Jersey, North Carolina, Pennsylvania, Tennessee and West Virginia; Kentucky, Ohio and Virginia abstained ^[5].

Ohio abstained inside OPSI but filed on its own through its Federal Energy Advocate, which supports IRAS and wants it narrower ^[4]. PJM’s definition sweeps in any 50 MW site. Ohio asks FERC to limit it to data centers and cryptocurrency miners. PUCO Chair Jenifer French said it is “counterproductive to place additional constraints on traditional manufacturers and other non-data center large loads” ^[3].

Virginia’s commission says the customers to be curtailed are retail customers, and that the Federal Power Act leaves their rates, terms and conditions to the states ^[9]. It wants FERC to direct PJM to work with state efforts to write large load tariffs and curtailment procedures instead ^[9]. On compensation, it says retail rates “are set by state commissions under power exclusively retained by them under the FPA, full stop” ^[9].

The Data Center Coalition makes the same jurisdictional argument from the industry side and asks FERC to reject IRAS ^[6]. It also says the proposal is unduly discriminatory: utilities serving these loads would pay the same transmission and capacity charges as everyone else and still be cut ahead of capacity-backed demand response ^[6]. And it says the filing gives new loads “a window of less than ten months” to procure new capacity, with no transition ^[6]. The coalition says it backs state interruptible tariffs and proposed a state opt-in framework during PJM’s stakeholder process ^[6].

PJM’s market monitor, Monitoring Analytics, also asks FERC to reject the filing, calling it unjust and unreasonable and warning of damage to PJM markets ^[8].

PJM saw some of this coming. It told FERC it consents to having any element modified or severed, and said the compensation program “may be resolved later” because IRAS does not start until June 1, 2027 ^[1].

What I’m watching

PJM asked for an October 12 effective date ^[1]. FERC has already moved quickly once: in a one-paragraph notice on September 2 it denied OPSI’s request to push the comment deadline to September 14, with Google and the Pennsylvania commission supporting the extension ^[2]. Whether an order comes by October 12, and whether it severs the compensation rate as OPSI asked, is the first thing to watch.

The second item is the 50 MW line. If FERC accepts PJM’s definition as filed, a steel mill and a data center campus of the same size sit in the same queue for curtailment. If it accepts Ohio’s narrower version, the registry PJM wants built would have to sort loads by what they do rather than by how much they draw.