Alex Fulling
Associate Attorney
FERC Rejects PJM’s Curtail-First Plan, Handing Pennsylvania the Pen on Large-Load Curtailment
Alex Fulling, Associate Attorney
October 28, 2026 - On October 9, the Federal Energy Regulatory Commission (FERC) rejected key provisions of PJM Interconnection’s (PJM) proposal to connect data centers and other large new loads to the grid before sufficient new generation capacity is available to serve them. FERC accepted two pieces of the filing: a definition of a "large load" as 50 megawatts (MW) or more at a single site, and a registry of existing and new large loads that captures, among other things, each load's location, peak load and ramp schedule, and backup generation. It rejected the rest, including the Interim Resource Adequacy Service (IRAS), which would have curtailed new large loads first when the grid runs short.
The decision shifts responsibility for establishing curtailment priorities to the states. FERC determined that decisions about which retail customers should lose power first fall within state jurisdiction, and Pennsylvania is already developing its own framework. On October 1, the Pennsylvania Public Utility Commission (PUC) issued a Tentative Order built around PJM’s proposed Interim Resource Adequacy Service (IRAS), which would prioritize curtailment of large new loads, including data centers, that have not secured sufficient new generation capacity. With FERC’s rejection of IRAS, the PUC’s Final Order, targeted for January 28, 2027, takes on greater significance for new data center campuses and the battery energy storage systems (BESS) supporting them. The central question is what qualifies as “sufficient new capacity.” For battery developers, the answer could determine whether BESS qualifies as capacity that allows data centers to avoid being among the first customers curtailed during grid emergencies.
What PJM Proposed
PJM operates the wholesale electric grid serving Pennsylvania, 12 other states, and the District of Columbia. Each year it runs a capacity auction, called the Base Residual Auction (BRA), to secure commitments from power plants and other resources to be available three years ahead. The auction held in July 2026 came up 6,831 MW short of PJM's reliability requirement for the 2028/2029 delivery year. PJM attributes the gap largely to data center demand growing faster than new supply.
On August 13, PJM asked FERC to approve a package of rules (Docket No. ER26-3515) to manage that gap:
- IRAS. New large loads entering service after June 1, 2027 could connect without matching new capacity. In exchange, they would be curtailed ahead of other customers, once PJM had declared an Energy Emergency Alert Level 1 (EEA1) but generally before it called on pre-emergency demand response.
- Bring Your Own New Capacity (BYONC). A new large load could avoid IRAS curtailment if its electricity supplier designated new capacity at least equal to the load's peak demand.
- Auction changes. Loads subject to IRAS would be left out of the demand that PJM's capacity auction seeks to buy, beginning with the 2029/2030 delivery year.
- A definition and a registry. A "large load" would be defined as 50 MW or more at a single site, and PJM would keep a registry of them.
What FERC Decided
FERC accepted the definition and the registry, finding that they could stand on their own. It rejected everything else. Its reasons fall into three groups.
1. Jurisdiction. Most large loads are retail customers of a local utility, and states regulate retail service. FERC found that the proposed tariff appeared to place obligations directly on those retail customers, to dictate which of them would be curtailed, and to set a retail rate through its compensation terms. The Federal Power Act generally reserves such choices to the states.
2. Justification. FERC cited significant gaps between how PJM described IRAS and what its tariff language actually said. It found that PJM had not shown IRAS and BYONC to be just, reasonable, and not unduly discriminatory. FERC also found that PJM had not sufficiently justified treating utilities and load-serving entities differently based on the characteristics of their retail customers, nor locking in the capacity accreditation of BYONC resources for the life of a BYONC arrangement.
3. Market signals. In a concurring statement, Commissioner David Rosner warned that removing IRAS loads from auction demand could leave the market signaling a surplus while the region sheds load involuntarily. He agreed that non-critical data centers should go offline before homes, hospitals, and schools in an emergency. He added that states should set that priority order, and that curtailment should follow, not precede, voluntary demand response.
FERC offered guidance on how PJM could refile, and PJM says it is reviewing the order. Jefferies analysts told Utility Dive the ruling could keep PJM capacity prices higher for longer, presumably because new large loads now remain in the demand PJM's auction seeks to buy.
Pennsylvania Moves First
Pennsylvania moved before FERC did. On October 1, the PUC voted 4-0 to issue a Tentative Order (Docket No. M-2026-3064961) proposing new emergency load-control rules for the Commonwealth's electric distribution companies (EDCs), the utilities that deliver power to homes and businesses. The order followed a September 10 motion by Vice Chair Kimberly Barrow and Governor Josh Shapiro's August 18 Executive Order 2026-05, which urged the PUC to curtail new data centers before any other customer unless they secure new capacity for their entire demand. The PUC also cited an independent study it commissioned from Synapse Energy Economics, which found that, under the study's reference scenario, the region fails PJM's reliability planning standard in every year from 2027 through 2030.
The Tentative Order would require each EDC to:
- Keep a large-load registry. Track all large loads, existing and new, share that information with PJM, and report it to the PUC each year.
- Curtail data centers first. When PJM issues an IRAS action request, shed load from "computational load" customers that have not secured new capacity for all of their demand before shedding load from anyone else. The order defines these as data centers with an anticipated peak demand of 25 MW at a single point of interconnection, or 50 MW across multiple points on one feeder.
- End critical-load exemptions for data centers. Data centers could not be classified as critical load exempt from curtailment. New tiers would protect hospitals, public safety, critical infrastructure, and residential customers first, with a narrow exception for data centers that provide real-time service to those facilities.
What FERC's decision changes. The first curtailment tier in the Tentative Order, curtailment during a pre-emergency "IRAS event," depends on a PJM service that FERC has now rejected. The order defines IRAS to include any "successor service" FERC approves, so that tier now has no trigger unless PJM refiles.
The order's other tiers do not depend on IRAS. Curtailing data centers during a declared Energy Emergency Alert (EEA) and treating them as non-critical during forced outages rest on the PUC's own authority over utility load-control procedures. FERC's order reinforces that authority rather than limiting it.
The curtailment tier uses different thresholds from PJM's 50 MW large-load definition, so the PUC's Final Order will need to (1) set its own trigger for curtailing computational load and (2) establish its own test for when a load has secured "sufficient new capacity." The Tentative Order defers a fourth task to a later proceeding, after a technical conference scheduled for November 17.
What This Means for BESS Projects and Ratepayers
For ratepayers, a state-led framework keeps the core protection intact: in a shortage, new loads that have not brought their own capacity go offline before existing homes and businesses. That matters in a state where affordability is already strained. The Pennsylvania Accelerated Transmission and Energy Redevelopment (PATER) study, led by Team Pennsylvania with the PUC and the Shapiro Administration, reports that Pennsylvania retail electricity prices rose 46.1% from 2018 to 2025, faster than in Ohio, Virginia, and the rest of PJM. Storage that a new large load pays for to meet the sufficient new capacity test would be capacity that ratepayers do not have to fund.
For data center developers, regulatory risk now runs through Harrisburg rather than DC. A new campus that wants to avoid being first in line should expect to need either new capacity that counts toward its demand or a way to ride through a curtailment call without shutting down.
For BESS projects, the decision raises the stakes of how Pennsylvania defines "sufficient new capacity." Batteries are the fastest new capacity to build. PATER puts four-hour battery storage at about 12 months of construction, compared with 22 to 23 months for a gas plant, before turbine lead times. A battery at a data center campus can do two jobs at once:
- It adds new capacity, counted at its current accredited value, against the site's peak demand.
- It provides stability for the site's computing load during a curtailment call.