FERC Denies Plan That Would Shield Energy Customers

Data centers compete with regular customers for energy, but the Federal Energy Regulatory Commission has rejected a proposal that would have shielded them.  

PJM is the largest grid operator in the country, covering 13 states, of which West Virginia is a member. It covers 67 million customers.  

In June, FERC ordered all six major grid operators to justify or reform the rules that govern how data centers, manufacturing facilities, and other large energy users connect to the electric grid.  

PJM proposed an Interim Resource Adequacy Service (IRAS), which would have required data centers to pay for their own new power supply and protected other customers from reliability issues when data centers demand more power than the grid can provide. 

In an order filed last week, FERC determined that PJM can develop a database to track data centers that are driving up the cost of energy.  

But FERC denied the lager part of PJM’s proposal of temporarily shutting off power ⁠to the server warehouses to avoid blackouts in times of high energy demand. 

FERC said that PJM could submit a revised curtailment plan but would need to address various issues, including why data centers would be temporarily shut off from the grid before other large energy users. 

“FERC’s decision leaves the public exposed to rolling blackouts and higher bills caused by data center electricity demand,” Claire Lang-Ree, at the Natural Resources Defense Council said. “In denying PJM’s proposal, FERC disregarded the White House’s Ratepayer Protection Pledge, where major tech companies promised to pay for the infrastructure their data centers need. Instead of requiring data centers to bring their own new capacity, FERC’s decision will force the public to continue paying for data center’s power supply. FERC also ordered PJM to continue providing uninterrupted service to new data centers beyond what the grid can handle, further degrading reliability.” 

According to reporting from The Hill, FERC rejected PJM’s proposal, saying it may violate the Federal Power Act. The commissioners wrote that the law “leaves to the states alone ‘any other sale’ — most notably any retail sale” of electricity.