FERC Issues Order Providing Guidance For "Co-Locating" Power Plants With Data Centers Within PJM

Commission directs PJM to provide new types of transmission service designedto "facilitate more rapid interconnection and operation of Co-located Loads"

On December 18, 2025, the Federal Energy Regulatory Commission ("Commission" or "FERC") issued its order in the show cause proceeding¹ ("Co-Location Order" or "Order") to address issues associated with large loads (e.g., AI-driven data centers) co-located at generating facilities in the PJM Interconnection, L.L.C. ("PJM") footprint.² To reduce grid costs and enable faster interconnection of co-located large loads and generators, the Commission directs PJM to offer new types of transmission service based on a large load's net withdrawals from the system, as opposed to requiring co-located loads to be served by traditional front-of-the-meter network transmission service. These new transmission service options—Firm and Non-Firm Contract Demand Service—will reduce the scope of required transmission upgrades thereby