--- title: "FERC rejects PJM's data-center shortcut, and capacity prices pinned at $325 a megawatt-day carry the bill" description: "FERC killed most of PJM's plan to let data centers connect without paying for new generation. What is left is prepaying for the grid at the state level or paying through a capacity auction pinned at its cap, and either way the money lands with the owners of existing power plants." publisher: "The Inference" section: "Power" published: 2026-10-13T13:24:40.349Z modified: 2026-10-13T13:24:40.349Z canonical: https://theinference.org/article/ferc-rejects-pjm-s-data-center-shortcut-and-capacity-prices-pinned-at-325-a-megawatt-day-carry-the-bill language: en keywords: "FERC, PJM, Data Centers, Capacity Markets, Electricity" --- # FERC rejects PJM's data-center shortcut, and capacity prices pinned at $325 a megawatt-day carry the bill > FERC killed most of PJM's plan to let data centers connect without paying for new generation. What is left is prepaying for the grid at the state level or paying through a capacity auction pinned at its cap, and either way the money lands with the owners of existing power plants. On October 9 the Federal Energy Regulatory Commission rejected the core of PJM Interconnection's [plan for connecting data centers and other large loads](https://www.utilitydive.com/news/ferc-pjm-large-load-interconnection-iras-byonc/832716/) to the largest U.S. power grid, a network spanning 13 Mid-Atlantic and Midwest states plus Washington, D.C. [1][2] The rejection decides who pays for AI's grid access: the cheapest route in is closed, and the bill lands on state-approved prepayments and on PJM capacity prices, which investment bank Jefferies expects to stay higher for longer [3]. The plan, called Interim Resource Adequacy Service, would have let big new loads connect without matching new generation if they accepted being switched off ahead of grid emergencies, through interim service and "bring your own new capacity" rules [1]. FERC kept only a definition of large loads and a registry listing who they are [1]. PJM expects [data-center demand on its system to triple by 2030, to about 29 GW](https://www.tradingview.com/news/seekingalpha:8a6480948094b:0-ferc-rejects-most-of-pjm-s-temporary-curtailment-plan-to-manage-data-centers/) [3]. ## The regulator called it a state matter The tariff appears "to place obligations directly on eligible new large loads," mostly retail customers, and its compensation framework "appears to establish a retail rate," FERC said [1]. States should decide which customers are cut first when the system is stressed, and PJM must justify switching data centers off before other large users [3]. Commissioner David Rosner warned the plan could make the capacity market signal a surplus while the region sheds thousands of megawatts on an involuntary basis [1]. FERC rejected not the data centers but the terms that would have let them connect ahead of other users without paying for new supply [1]. ## Two doors remain: prepay, or the cap One door is bilateral. On October 7, Duke Energy's two North Carolina utilities [settled with the state's consumer advocate](https://dailyenergyinsider.com/news/54059-duke-energy-utilities-reach-large-load-payment-settlement-with-north-carolina-staff/), joined by [Amazon](https://theinference.org/markets/companies/amazon), Google, [Meta](https://theinference.org/markets/companies/meta), [Microsoft](https://theinference.org/markets/companies/microsoft) and the U.S. Department of Defense: loads of 50 MW and up pay nonrefundable, upfront costs for facilities serving only them, and a state commission ruling is expected by mid-November [4]. The other door is the auction, where generators are paid per megawatt-day to promise power when the grid is stressed, and it is already rationed by cap. PJM's 2028/29 capacity auction [cleared at $325 per megawatt-day, the third straight at the ceiling](https://www.aol.com/articles/ai-boom-power-problem-3-150644000.html); uncapped bidding would have settled above $500 [5]. ## 6.8 gigawatts short, through a backstop FERC half-rejected PJM still needs 6.8 GW for that year through [a backstop purchase, an emergency buy outside the auction](https://theinference.org/article/amazon-bought-20-years-of-nuclear-power-the-day-pjm-s-backstop-auction-failed-to-open) [2]. FERC [partly rejected it on September 29](https://www.utilitydive.com/news/pjm-delays-backstop-procurement-ferc-data-center/831751/); its offer cap stands at $555, and PJM aims to refile by October 29 [2][6]. *Chart: **PJM's capped auction hides a market willing to pay $500 and up** Bar chart of three PJM capacity price signals in dollars per megawatt-day: the price cap where the last three auctions cleared at 325, the uncapped clearing level above 500, and the 555 offer cap for the delayed backstop procurement.* *PJM capacity price signals, dollars per megawatt-day. The Base Residual Auction price cap, where the last three auctions cleared; the level uncapped bidding would have exceeded (estimated); and the offer cap for the backstop procurement FERC partly rejected on September 29. Sources: 24/7 Wall St. via AOL; Utility Dive. [2][5]* ## Existing generators collect either way The ruling could mean capacity prices higher for longer in PJM, favorable to the independent power producers Constellation Energy, [NRG Energy](https://theinference.org/markets/companies/nrg-energy), Talen Energy and [Vistra](https://theinference.org/markets/companies/vistra), Jefferies analysts told clients [3]. Vistra chief executive [Jim Burke](https://theinference.org/markets/people/jim-burke) says large-load customers are "interested in [contracting at a premium with existing](https://theinference.org/article/amazon-scrapped-its-maryland-data-center-and-bought-the-nuclear-plant-s-power-anyway) because it's still a discount to what new build costs" [5]. NRG is the sharpest expression: a fleet roughly doubled to 25 GW with 13 GW bought from LS Power, more than 6 GW of gas-build potential for data centers, and a 1.2-GW Texas plant under a 15-year hyperscaler contract [7][8]. Analyst price targets run from $157 at [Morgan Stanley](https://theinference.org/markets/companies/morgan-stanley) to $197 at [Goldman Sachs](https://theinference.org/markets/companies/goldman-sachs), averaging $202.1, with 11 of 17 analysts at Buy [8]. ## The curtailable lane likely returns, led by states The caveat comes from Jefferies itself: the curtailable lane likely returns, "minimally revived," and led by states, with Ohio and Pennsylvania first [1]. Watch North Carolina's ruling by mid-November [4], PJM's refiled curtailment plan [3], and the 2029/30 auction in early December [2]. ## Takeaway Data centers will reach the PJM grid through state-approved prepayments or an auction pinned at $325 a megawatt-day, and the owners of existing plants collect either way. ## Sources 1. [Utility Dive, "FERC rejects most of PJM's large load interconnection plan," October 12, 2026](https://www.utilitydive.com/news/ferc-pjm-large-load-interconnection-iras-byonc/832716/) 2. [Utility Dive, "FERC chair slams PJM 'mess' as country's largest grid operator delays power auction," September 30, 2026](https://www.utilitydive.com/news/pjm-delays-backstop-procurement-ferc-data-center/831751/) 3. [Seeking Alpha via TradingView, "FERC rejects most of PJM's temporary curtailment plan to manage data centers," October 12, 2026](https://www.tradingview.com/news/seekingalpha:8a6480948094b:0-ferc-rejects-most-of-pjm-s-temporary-curtailment-plan-to-manage-data-centers/) 4. [Daily Energy Insider, "Duke Energy utilities reach large-load payment settlement with North Carolina staff," October 9, 2026](https://dailyenergyinsider.com/news/54059-duke-energy-utilities-reach-large-load-payment-settlement-with-north-carolina-staff/) 5. [24/7 Wall St. via AOL, "The AI Boom Has a Power Problem. These 3 Utilities Are Getting Paid to Solve It," September 17, 2026](https://www.aol.com/articles/ai-boom-power-problem-3-150644000.html) 6. [Utility Dive, "DOE presses PJM on ratepayer protections from large load costs," October 8, 2026](https://www.utilitydive.com/news/doe-pjm-ferc-ratepayer-protection-large-load-data-center/832479/) 7. [POWER Magazine, "The POWER Interview: NRG's Case for Bring Your Own Power and the Labor to Build It," August 5, 2026](https://www.powermag.com/the-power-interview-nrgs-case-for-bring-your-own-power-and-the-labor-to-build-it/) 8. [Stocktwits, "NRG Energy Stock Heads For Best Week In A Month: CEO Flags Early Stages Of 'Demand Supercycle'," March 2026](https://stocktwits.com/news-articles/markets/equity/nrg-stock-ai-power-demand-supercycle-analyst-upgrades-data-centers/cZ3rAucRIjp) --- FERC rejects PJM's data-center shortcut, and capacity prices pinned at $325 a megawatt-day carry the bill — The Inference. Canonical: https://theinference.org/article/ferc-rejects-pjm-s-data-center-shortcut-and-capacity-prices-pinned-at-325-a-megawatt-day-carry-the-bill