FERC lets AI data centers plug straight into power plants

The Federal Energy Regulatory Commission has ruled that data centers can wire themselves directly to power plants rather than wait in line for a grid connection. On December 18, FERC found that PJM Interconnection’s existing tariff was legally deficient, ruling that it “does not include transmission services for an eligible customer to take service on behalf of a co-located load, and for that customer to be able to limit its energy withdrawals from the transmission system under certain conditions.” The order was issued after PJM’s own capacity auction closed short of its reliability target, a gap regulators have linked directly to surging AI power demand.

The practical effect is to legalize and formalize what several data center developers were already trying to do: sit an AI campus next to a nuclear or gas plant and draw power before it ever reaches the shared grid. FERC’s fix is procedural rather than symbolic. It orders PJM to create three new categories of transmission service, firm, nonfirm, and interim nonfirm, so that colocated customers can be billed and scheduled without simply riding free on services like black-start and frequency regulation that keep the wider system stable.

Co-location is framed by its regulators as a tool for meeting AI demand while minimizing the impact on the grid and consumers, not a workaround for the grid itself.

That framing is doing a lot of work. The order does not touch the harder jurisdictional question of who ultimately governs a load that never leaves the fence line of a power plant, an issue left for a separate rulemaking pushed by the Department of Energy. It applies only to PJM for now, but the commission has sent parallel directives to grid operators in New York, California, New England and the central United States, effectively asking every major market to explain why it isn’t doing the same thing. The queue that generators and ordinary consumers have waited years to clear is being redrawn, quietly, around whoever can get a data center built next to a reactor first.