Over the past year, all eyes have been on PJM and how it plans to support the rapid build-out of data centers while keeping the lights on for everyone else. We now have meaningful clarity, as PJM submitted its second and final FERC-required compliance filing this past Monday, February 23.

While the first filing, submitted in January, addressed interconnection procedure adjustments, Monday’s filingtackles some of the most consequential questions in the industry right now: How should large loads physically connected to power plants be regulated? What options will large loads have to receive transmission service? And what happens to the behind-the-meter arrangements that manufacturers and institutions have relied on for decades?

Monday’s filing addresses three main topics:

  • Behind-the-Meter Generation (BTMG) Reform. PJM is establishing a new 50 MW nameplate capacity threshold for Retail Behind-the-Meter Generation. Generators at or below 50 MW may continue operating under existing netting rules. Those above 50 MW will no longer qualify as Retail BTMG going forward, subject to a three-year transition period ending December 18, 2028, unless they fall under one of several protected categories, most notably, existing arrangements under contracts in effect as of December 18, 2025. Backup generation is excluded from the threshold calculation entirely, a deliberate policy choice to avoid discouraging reliability-enhancing investments.
  • Three New Transmission Service Options. Co-located load customers would no longer simply connect to a generator and avoid PJM’s transmission framework. Going forward, eligible customers must choose from four options:
    • Existing Network Integration Transmission Service (NITS)
    • (New) Interim NITS, for the period before required transmission upgrades are in place
    • (New) Firm Contract Demand Transmission Service
    • (New) Non-Firm Contract Demand Transmission Service

The rates and full terms for the three new services are still being determined through a concurrent FERC paper hearing process, meaning the tariff language filed Monday is a placeholder pending that outcome.

  • Clearer Interconnection Rules for Existing Generators. Any existing power plant seeking to serve co-located load must now go through a formal Necessary Studies process, reduce its Capacity Interconnection Rights (CIRs) accordingly, and execute a new Generation Interconnection Agreement before a single megawatt of co-located load can be served. The developer bears all costs for required network upgrades.

The impact of these changes, if approved by FERC, extends well beyond the data center industry. The new 50 MW threshold will affect any customer with a large load supported by on-site generation, including industrial manufacturers and institutional energy users who have operated under existing BTMG arrangements for years. The new transmission service options, while still not fully defined, will fundamentally change how large co-located loads are structured and priced going forward.

What Comes Next?

Despite this filing, a final decision and implementation remain some time away. Several issues are expected to draw stakeholder protests, including the still-unresolved rates for the new transmission services and the interpretation of key definitions in the tariff. In the near term, expect an active comment period at FERC in March and April 2026, followed by FERC questions and responsive briefing. A FERC order on the compliance filing is unlikely before mid-to-late 2026, and full tariff language governing the new transmission services,  which cannot be finalized until after the paper hearing concludes, is realistically a 2027 timeframe.

Interested in discussing how these changes might affect your assets or development pipeline? Feel free to contact our Consulting team through our website : https://ces-ltd.com/