Federal regulators have turned down a plan aimed at compelling data centers and other large electricity consumers to reduce power usage during grid emergencies. This adds complexity to the management of the rising demand driven by artificial intelligence in these centers.
On October 9, the Federal Energy Regulatory Commission (FERC) rejected parts of PJM Interconnection’s proposal that would have enabled the grid operator to mandate consumption reductions from major electricity customers during urgent situations, particularly if they failed to secure additional power generation. However, regulators did approve another measure that will allow PJM to monitor significant electricity users as demand continues to threaten to exceed available supply.
“PJM proposed IRAS [Interim Resource Adequacy Service] to confront the escalating challenge of electricity reliability, where demand is growing more rapidly than new generation can be brought online,” Jeff Shields, a senior manager at PJM, mentioned.
This decision is particularly pertinent as PJM faces a potential electricity shortage that could jeopardize grid reliability across the 13 states and Washington, D.C., it serves, largely due to the unprecedented demand from expanding data centers.
When asked for their perspective, FERC directed inquiries back to its order that rejected PJM’s suggestions. They noted, “While we acknowledge the pending capacity shortfall in PJM, we have determined that two crucial aspects of PJM’s proposal — IRAS and BYONC [Bring Your Own New Capacity] — either fall outside the Commission’s authority or have not been convincingly shown to be just, reasonable, and free from undue discrimination or favoritism,” in their October 9 regulation.
The proposed measures that were declined included IRAS, which aimed to urge certain large electricity users to cut their power consumption during emergencies, and BYONC, which was intended to motivate major customers to secure additional power generation to accommodate their increasing demand.
The grid serving 13 states and D.C. is in emergency mode tonight. PJM says warm October weather and maintenance work have tightened supply. While there are no blackouts currently planned, they have requested extra emergency authority from the Energy Department through Friday. It is October, not August. Perhaps we should reconsider shutting down power plants before ensuring enough replacements are built.
— Gunther Eagleman™ (@GuntherEagleman) October 14, 2026
PJM warned in its submissions that it anticipates falling short of adequate capacity to satisfy its regional reliability obligations starting in the 2027–2028 delivery year. This expectation arises especially due to the increasing demand from data centers and the speed at which they connect to the grid.
“The idea is that existing customers should not have to bear the consequences of this imbalance, requiring data centers and large loads to uphold the commitments made through the Ratepayer Protection Pledge, which are aimed at supporting the reliability and affordability of the electric grid,” Shields explained.
The registry PJM plans to establish will gather information about significant electricity users, detailing their locations, expected demand, and anticipated connection dates. This will enhance PJM’s ability to forecast future electricity needs, according to FERC’s order from October 9.
“We concur with PJM that the proposed Large Load Registry will empower PJM to better predict load growth and efficiently plan and manage its transmission system,” FERC noted.
The commission also indicated that there remains a possibility for PJM to submit a revised proposal that addresses the regulatory shortcomings highlighted in the order.
If you are located within the outlined region, know that your power grid is currently under emergency alert. This is due to the hot October weather combined with many power plants offline for seasonal maintenance. You need not take any action.
— Ryan Hall, Y’all (@ryanhallyall) October 14, 2026
In their final order, the commission made it clear that they did not take the decision lightly. “Given the notable discrepancies between PJM’s proposal and the details outlined in its transmittal letter, along with insufficient justification for many aspects of IRAS and BYONC, we cannot conclude that these elements are just and reasonable,” FERC stated.
Thus, while PJM gains more insights into the region’s growing demand for electricity, it is left without the proposed mechanisms to compel certain new large users to reduce their consumption during emergencies.
“FERC’s acceptance of our Large Load Registry and the definition of Large Loads represents progress in this direction,” Shields concluded.
