The U.S. Department of Energy has called on PJM Interconnection to revise its reliability backstop procurement plan to ensure that costs associated with new data center loads are not passed on to existing ratepayers. The DOE’s statement, filed with the Federal Energy Regulatory Commission, highlights concerns over the current cost-allocation framework and urges PJM to implement reforms as recommended by FERC. The agency emphasized that large energy loads, such as data centers, should bear the cost of infrastructure needed to serve them, not existing consumers.
PJM is set to file a revised proposal with FERC by October 29, following the agency’s recent decision that parts of its original plan may be unjust and unreasonable. The grid operator plans to consult with stakeholders through special committee meetings before submitting its updated plan. The reliability backstop procurement was initially intended to address a capacity shortfall driven by data center demand forecasts, but was delayed after FERC raised concerns about cost allocation and other aspects of the proposal.
The DOE supports FERC’s findings that PJM’s cost allocation model may not fairly distribute costs to the consumers responsible for them. The department stressed the importance of using updated load forecasts to accurately track the development of large load projects and ensure proper cost attribution. Without this data, PJM risks flawed cost allocation and an inability to adjust its procurement targets as needed. The DOE also noted that PJM’s tariff may fail to account for large loads already included in its baseline demand forecast, further complicating cost distribution.
The Ratepayer Protection Pledge, which many utility companies in PJM’s footprint have signed, requires large energy loads to fund the infrastructure they need. The DOE reiterated its support for FERC’s recommendations, urging PJM to adopt changes that align with the pledge’s principles. The agency’s filing marks its first such action at FERC in at least five years, underscoring the significance of the issue for both consumers and the energy market.