FERC Blocks PJM’s Data Center Curtailment Rules, Citing State Jurisdiction

Key points

• FERC rejected PJM’s IRAS framework on Oct. 9, 2026, citing intrusions into state jurisdiction and discriminatory treatment of retail customers.
• The rejected rules would have allowed large loads to connect without matching new capacity in exchange for involuntary curtailment during emergencies.
• FERC approved PJM’s proposal to define large loads and create a registry tracking facility location, ramp schedules, and capacity supply.
• Independent power producers, including Constellation Energy and Vistra, are expected to benefit from prolonged high capacity prices due to the rejection.
• FERC emphasized that states must decide which retail customers are curtailed first, urging PJM to adjust operations to this state-led paradigm.

Background

This decision follows a series of regulatory tensions in the PJM region regarding data center demand. In September 2026, FERC halted a backstop capacity auction due to cost allocation flaws. Earlier in the year, PJM faced disputes over interconnection studies, including the removal of Oklo’s nuclear project. Recent major power purchase agreements, such as Google’s $4.3 billion deal with Constellation Energy to add 890 MW by 2028, highlight the growing strain on the grid as data centers seek dedicated power supplies. The current ruling reinforces the shift of curtailment authority from the grid operator to state regulators.

Why it matters

The rejection of PJM’s IRAS framework creates uncertainty for large load developers who relied on these rules to secure grid access without immediate generation commitments. It may lead to higher capacity prices for longer, benefiting existing power producers but potentially increasing costs for ratepayers. The decision also clarifies the regulatory boundary between federal and state authorities, placing the burden of curtailment prioritization on state regulators. This could slow the integration of new data centers unless states develop clear, uniform rules for managing demand during grid stress.

What to watch

PJM is reviewing the FERC order to determine how to comply with federal requirements while respecting state responsibilities. States, particularly Ohio and Pennsylvania, are expected to take a leading role in developing curtailment rules. PJM may attempt to revive modified versions of its proposals in future iterations. The outcome will influence how large loads secure power in the PJM region and could impact the pace of data center expansion across the grid.