On April 10, 2025, FERC addressed arguments on rehearing that clarified, but did not modify the outcome of, a November 1, 2024, order (“Rejection Order”) rejecting PJM Interconnection, L.L.C.’s (“PJM”) proposal to increase the co-located data center load at a Susquehanna Nuclear, LLC (“Susquehanna”) nuclear generating facility. FERC again found that PJM’s amended Interconnection Service Agreement’s (“ISA”) non-conforming provisions were not necessary deviations from the pro forma ISA. However, FERC did clarify that the Rejection Order did not prevent other entities from filing non-conforming ISAs to address issues relating to co-located data center load.
Under the amended ISA at issue in FERC’s Rejection Order, PJM sought to increase existing co-located data center load at Susquehanna from 300 MW to 480 MW and included other terms and conditions that did not conform to the standard ISA in the PJM Open Access Transmission Tariff. PJM argued that that the “first-of-its-kind Co-Located Load configuration between an existing nuclear power plant and a large data center” fit into the “small number of extraordinary interconnections where reliability concerns, novel legal issues, or other unique factors would call for the filing of a non-conforming interconnection agreement.”
In the Rejection Order, however, FERC found that PJM failed to meet FERC’s “high burden” to demonstrate that the proposed non-conforming ISA provisions were necessary deviations from PJM’s pro forma ISA to address specific reliability concerns, novel level issues, or other unique factors (see November 16, 2024, edition of the WER). For example, FERC took issue with the fact that “significant aspects’ of the non-conforming provisions relied heavily on a generally applicable PJM guidance document, which raised the question of whether PJM intends to offer similar terms to all other similarly situated customers.
Susquehanna sought rehearing of the Rejection Order, arguing that FERC wrongly applied the “necessary” standard for non-conforming ISAs and instead applied a new “unique interest” legal standard in rejecting the amended ISA because some of the provisions might also be attractive to other market participants. Vistra Corp. (“Vistra”) also requested clarification that the Rejection Order did not intend to impose a blanket limit on interconnection service to generators co-located with data centers or prevent the use of non-conforming ISAs to obtain such service.
In the order, FERC affirmed the outcome of the Rejection Order, again finding that the non-conforming provisions in the amended ISA were not necessary deviations from the pro forma ISA. FERC also explained that it has “consistently” evaluated uniqueness as an essential factor in applying the necessary standard. In response to Vistra’s request for clarification, FERC confirmed that the Rejection Order does not prevent entities from filing non-conforming interconnection agreements to address matters related to a generator serving co-located load, nor does the Rejection Order prejudice any future similar filing. The Rejection Order only found that PJM, under the record of the proceeding, did not carry its burden to demonstrate that its proposed non-conforming ISA provisions were necessary.
The Rejection Order was issued with a 2-1 majority, with Republican Commissioners Mark Christie and Lindsay See in the majority and Democratic Chairman Phillips dissenting (note that Commissioner Christie has since been named Chairman). Democratic Commissioners Rosner and Chang did not participate. In his dissent from the Rejection Order, then-Chairman Phillips explained that he would have accepted the amended ISA but ordered PJM to submit regular informational filings to provide transparency into operations.
Commissioner Phillips again dissented from the order, incorporating the reasoning from his original dissent and stating that he hopes FERC’s recent order directing PJM to show cause why its tariff remains just and reasonable and not unduly discriminatory or preferential given the absence of provisions addressing generally applicable rates, terms, and conditions of service that apply to co-location arrangements will soon result in solutions to address what he sees as “unnecessary roadblocks to the continued maturing of an industry that is vital to our economic prosperity and national security” (see February 25, 2025, edition of the WER).
FERC’s order, issued in Docket No. ER24-2172-002, can be accessed here.
