The PJM Interconnection on Monday asked federal regulators to approve changes to its retail behind-the-meter generation rules as part of an effort to facilitate colocating generating resources with data centers.
PJM also proposed three new transmission services for colocated loads — with the rates, terms and conditions for those services expected in a future filing at the Federal Energy Regulatory Commission.
The new transmission services are interim network integration transmission service, firm contract demand transmission service and non-firm contract demand transmission service.
The filing is in response to FERC’s Dec. 18 order directing PJM to revamp its colocation and behind-the-meter rules, which were established in 2004. The rules allow facilities with behind-the-meter generation to net out their load, which reduces transmission and other grid charges.
In a move that affects combined heat and power, or cogeneration, facilities at industrial sites, PJM’s proposal would establish a 50-MW threshold for behind-the-meter facilities that would fall under the proposed requirements, set a three-year transition period for putting the threshold in place and grandfather entities with existing behind-the-meter contracts through the life of the contracts.
New loads larger than 50 MW would be ineligible for netting, according to PJM’s proposal. Also, backup generation wouldn’t count towards the 50-MW threshold.
“PJM continues to work with its members to support efforts to accelerate the speed and increase the scale with which the United States can build the next generation of AI infrastructure, especially the necessary capacity to support this load while also ensuring reliability and fair treatment for all users of the grid,” the grid operator said in its proposal.
Industrial groups weigh in
Separately, the PJM Industrial Customer Coalition and the Industrial Energy Consumers of America — trade groups for industrial energy users — contend FERC’s December order could harm behind-the-meter operations in PJM.
“Without key clarifications, the Order threatens to weaken some of the largest manufacturers in the PJM region, render hundreds of megawatts — if not more — of existing retail behind-the-meter generation uneconomic, stall new projects, and further stress the resource adequacy of the electric grid at an inopportune time,” the trade groups said in a Jan. 20 filing at FERC.
Transmission and capacity cost savings through netting are a key factor that makes it worthwhile for industrial companies to build and operate generation at their facilities, the groups said.
“Removal of retail BTMG ‘netting’ rules should not be implemented without ensuring retail BTMG customers can access alternatives that enable them to manage capacity and transmission costs in accordance with actual system use,” the groups said.
FERC’s order would eliminate netting for new behind-the-meter arrangements that manufacturers have relied on for decades, according to Paul Cicio, IECA president.
It would effectively eliminate combined heat and power as an option for manufacturers, he said Monday in an interview.
“It damages the economics big time,” Cicio said.
Also, removing behind-the-meter generation as a viable option for manufacturers runs counter to Trump administration goals, according to Cicio.
“This administration, the Department of Energy, is strongly supportive of ensuring that manufacturing behind the meter stays operating,” Cicio said. “If not, it increases generation, because if we don't generate [behind the meter], that means we're going to be buying more power off the grid, which makes things all worse.”
The Pennsylvania Office of Consumer Advocate on Thursday told FERC it supported the trade groups’ filing.
Existing combined heat and power cogeneration facilities in Pennsylvania do not use PJM’s energy or capacity markets or its transmission system, the OCA noted.
“Throughout this proceeding, the Commission should continue its vital focus on addressing new data center large load configurations that shift costs and create transmission and resource adequacy planning problems,” the OCA said.
PJM — the largest U.S. grid operator — runs the grid and wholesale power markets in 13 Mid-Atlantic and Midwest states and the District of Columbia.
