PJM Proposes Rules to Prioritize Residential Power Over New Large Data Centers During Shortages

PJM Seeks New Curtailment Authority

PJM Interconnection, the electricity grid operator for 67 million people across 13 states and Washington, D.C., has filed a request with the Federal Energy Regulatory Commission (FERC). The proposal seeks approval for rules that would allow PJM to prioritize cutting power to new data centers over households during periods of electricity supply shortages. This move comes after two consecutive capacity auctions failed to secure adequate generation for the region.

Impact on New Large Data Centers

The proposed 'Interim Resource Adequacy Service' would apply only to new loads of 50 MW or more at a single site that connect without bringing their own electricity generation or otherwise securing supply by June 1, 2027. These facilities would face curtailment before PJM implements Pre-Emergency Load Management, which involves paying other customers to reduce consumption. Existing data centers are not affected by these proposed rules.

Addressing Capacity Shortfalls

PJM's board projects approximately 70 GW of new large load by 2038, while about 15 GW of generation has been retired since 2022. This imbalance has led to concerns about grid reliability. The proposal aims to mitigate future shortages by requiring new, large energy consumers to contribute to their own power stability.

New Registry and Implementation

A new Large Load Registry would track the location and power draw of all 50 MW-plus sites within PJM's territory, noting whether they have their own supply. Affected customers would receive compensation at a FERC-approved hourly rate, set at 50% of the penalty rate PJM pays existing demand-response resources during full grid emergencies. While PJM lacks direct authority to curtail individual sites, it would rely on utilities and state governments to implement reductions, sharing registry data to establish load-shedding priorities. Virginia, a major data center hub, has already mandated that operators pay for dedicated grid infrastructure.

Precedent and Future Implications

Data centers in PJM's territory have previously faced curtailment under a Department of Energy emergency order in May, which allowed PJM to call on large loads with backup generation as a last resort to prevent rolling blackouts. This filing would formalize that one-off emergency authority into a standing mechanism. The July capacity auction for the 2028/29 delivery year reached its price cap but still fell short by approximately 6,800 MW of PJM's reliability target.