PJM Interconnection, the US’s largest Regional Transmission Operator (RTO), has asked the Federal Energy Regulatory Commission to approve changes to its retail behind-the-meter (BTM) generation rules, part of a broader effort to address the rapid growth of colocated generation and large data center loads.

The filing was made in response to FERC’s December order, which directed PJM to overhaul its colocation and BTM framework, which has been in effect since 2004. The rules had allowed facilities with onsite generation to “net” their load, effectively offsetting consumption from the grid with self-supply, in turn reducing transmission and other grid-related costs.

The new proposal would establish a 50MW threshold for BTM facilities. The RTO said it intends to bring the new rules in over a three-year transition period. Under the proposal, new loads larger than 50MW would be ineligible for netting, with backup generation not counting towards the cap.

PJM also proposed three new transmission services tailored to colocated loads. These include an interim network-integration transmission service, a firm contract demand transmission service, and a non-firm contract demand transmission service. The rates, terms, and conditions for those offerings are expected to be submitted in a later filing.

The proposal also specifically referenced that the RTO was working with members to support the buildout of AI-driven data center infrastructure while maintaining reliability and ensuring equitable cost allocation among grid users.

FERC ordered a review of colocated loads in February of last year, following a high-profile case regarding a proposed behind-the-meter agreement between AWS and Talen Energy. The companies proposed an amended interconnection agreement that would have allowed the data center to increase its behind-the-meter power usage from the Susquehanna nuclear plant in Pennsylvania. FERC ultimately rejected the ISA, citing concerns about reliability and cost impacts on other ratepayers. Subsequently, the two firms inked a front-of-meter Power Purchase Agreement to supply AWS with 1.92GW of power from the 2.5GW plant.

In response, industry groups have expressed negative views.

The PJM Industrial Customer Coalition and the Industrial Energy Consumers of America argued that the order could undermine existing BTM agreements. The groups contended that eliminating retail BTM netting for new arrangements would weaken large manufacturers, render hundreds of megawatts of existing onsite generation uneconomic, and deter new projects at a time when grid resource adequacy is already under pressure.