Pennsylvania Wrote a Data-Centres-First Curtailment Order on a PJM Tariff That FERC Then Rejected
Pennsylvania’s draft rule to cut data centres first depends on a PJM tariff that FERC rejected eight days later, leaving the order of curtailment to state rulemakings. Utilities, regulators, data-centre owners and lenders in PJM are exposed through 2028.
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The consensus holds that flexibility is now the price of grid access: new data centres will be cut first in a shortage. Beneath it, the rule has no legal home. Pennsylvania’s tentative order makes its duties conditional on FERC approving PJM’s Interim Resource Adequacy Service (IRAS) “as proposed” (Pennsylvania PUC order, 01/10/2026). Eight days later FERC rejected IRAS: provisions “appear to dictate which retail customers taking retail service will be curtailed” (FERC, 09/10/2026). The wholesale call that was to start the cuts is gone; the state rule that would replace it is unwritten. The decision point falls in 2027 to 2028.
Signal Identification
A regulatory pivot: the curtail-first principle survives, but its instrument does not. FERC kept a Large Load defined at “a cumulative peak of 50 MW” and a registry (FERC, 09/10/2026). Pennsylvania’s draft reaches sites from 25 MW (Pennsylvania PUC order, 01/10/2026).
What's Changing
FERC’s order kept the 50 MW definition and a registry, rejected the rest of PJM’s package, and required a compliance filing “within 30 days” (FERC, 09/10/2026). Commissioner Rosner said, “We need state regulators to establish clear rules for which customers should be curtailed first” (Utility Dive, 12/10/2026).
Pennsylvania drafted first. Its commission voted 4-0 for a tentative order under which certain large new loads “would be subject to curtailment before other customers” (Pennsylvania PUC, 01/10/2026). The draft’s site test starts at 25 MW, PJM’s accepted definition at 50 MW; the market monitor counts 26.8 GW, or 28.5% of data-centre peak load, below that line (market monitor, 03/09/2026). In August NRDC’s Claire Lang-Ree said few, if any, other states had taken explicit steps to align with PJM’s pending proposals (Canary Media, 20/08/2026).
The monitor puts the 2028/2029 shortfall at 6,831.3 MW and says data-centre load “has resulted in adding $29.4 billion to the cost of capacity” (market monitor, 03/09/2026). On 22 July about 3,800 MW of load moved to back-up power after a line fault, “the largest load transfer PJM has experienced” (PJM, 31/07/2026).
Where the rule stands, and the dated path ahead
Source basis: FERC order, Pennsylvania PUC order and the market monitor (dated above). Steps are in date order, not to scale.
Disruption Pathway
Our reading is that the pathway has three stages. Through early 2027 PJM files only the definition and registry (Troutman Energy Report, 21/10/2026), while Pennsylvania takes comments and plans a final order for 28 January 2027 (Pennsylvania PUC order, 01/10/2026). Through 2027 a choice forms: PJM refiles a design that fits FERC’s finding, or states lead a revival, which Jefferies expects (Utility Dive, 12/10/2026). Commissioner Rosner wants any refile to “justify curtailing IRAS load on a mandatory basis” (Troutman Energy Report, 21/10/2026). In 2028 the shortfall year tests whichever order exists.
Stress concentrates at three points. The trigger: with IRAS rejected, our reading is that the Pennsylvania draft has no wholesale call to start its cuts, and the order is silent on a rejection (Pennsylvania PUC order, 01/10/2026). The threshold: 25 MW against 50 MW leaves sites that state and PJM treat differently (market monitor, 03/09/2026). The loads: a July fault moved large loads to back-up power unprompted (PJM, 31/07/2026). Two adaptations follow: commissions write interruptible tariffs that stand without a PJM call, and developers write curtailment terms into interconnection agreements site by site.
Why This Matters Now
State commissions, utility regulatory teams, hyperscale power buyers and project lenders hold this decision. Plans for PJM sites that assume one curtail-first rule should be re-read: its source now differs by state, and today it exists only as a Pennsylvania draft (Pennsylvania PUC order, 01/10/2026). Operators should map planned sites against the 25 MW and 50 MW lines, treat curtailment clauses as state-specific, and comment on Pennsylvania’s draft within 30 days of its Bulletin publication.
Decision-action posture for this signal: Prepare: site maps and state-specific clauses can be built now, while capital that assumes one PJM-wide rule should wait for Pennsylvania’s final order or a refiled tariff.
Counter-Argument
The strongest objection is that this is delay, not defect. FERC offered “guidance on how PJM could modify its proposal” (FERC, 09/10/2026), Jefferies expects the proposal to be “minimally revived in future iterations” (Utility Dive, 12/10/2026), and Pennsylvania’s duties are drafted to bind the day a tariff is approved (Pennsylvania PUC order, 01/10/2026).
Delay is the signal. The conditional draft binds nothing until a tariff exists, and the market monitor argues PJM “improperly defers to the states and EDCs the critical determinations of which customers will be subject to” curtailment (market monitor, 03/09/2026). Our reading is that a refile leaving the choice to states invites the same objection.
Implications
This is a durable change in who writes the rule, with transient mechanics. On the available evidence the inflection window runs from Pennsylvania’s planned final order on 28 January 2027 to the 2028/2029 shortfall year. States and utilities that publish a tested curtailment order early gain a usable position; owners and lenders that priced one PJM-wide term lose, as do sites between 25 MW and 50 MW that the two texts cover unevenly. FERC’s order is the canonical text (FERC, 09/10/2026).
Early Indicators to Monitor
- PJM files a modified curtailment proposal at FERC naming a role for state commissions before 30 June 2027.If this happens: The wholesale route is reviving; treat state rules as inputs to a tariff and move toward Decide once FERC accepts it.
- Pennsylvania’s final order, planned for 28 January 2027, keeps its duties conditional on FERC approval of IRAS.If this happens: The state rule stays dormant until a tariff exists; carry Pennsylvania curtailment terms as open in plans and loan terms.
- A second PJM state commission opens a docket on the curtailment order for large loads before 31 December 2027.If this happens: A patchwork is forming; map each state separately and do not assume the Pennsylvania text travels.
- Pennsylvania’s final order keeps its 25 MW computational-load threshold, below PJM’s 50 MW.If this happens: Sites between the two lines face state curtailment without PJM’s registry; add them to the site map and contract review.
- A PJM-area data-centre developer’s securities filing names a state curtailment order as a term or risk before 30 June 2027.If this happens: Lenders are pricing the order; expect curtailment clauses to become standard in project finance for PJM sites.
Disconfirming Signals
- FERC accepts a refiled PJM curtailment proposal within wholesale authority before 31 December 2027.
- PJM states agree one curtailment-priority text that commissions adopt unchanged.
- Pennsylvania’s final order takes effect with duties no longer conditional on IRAS.
- A rehearing or court decision reverses FERC’s finding that the provisions intrude on retail regulation.
- PJM’s next capacity auction clears with no reliability shortfall.
Strategic Questions
- Should PJM site contracts carry a state-specific curtailment clause now, or wait for Pennsylvania’s final order?
- Do we underwrite PJM load on a PJM-wide curtail-first rule, or on the least favourable state outcome?
- Which of our current activities looks least wise if this signal lands?
Keywords
Large-load curtailment; Interim Resource Adequacy Service (IRAS); PJM; FERC jurisdiction; retail customers; Pennsylvania Public Utility Commission; data-centre interconnection; state utility regulation; capacity shortfall
Bibliography
Source tiers: Tier 1, governments, regulators and intergovernmental bodies. Tier 2, think-tanks, academic institutes, major consultancies and quality data providers. Tier 3, quality journalism and specialist trade press. Tier 4, vendor, company and practitioner sources, used only as directional corroboration.
- Tier 1 Order Accepting Tariff Revisions in Part and Rejecting Tariff Revisions in Part, ER26-3515-000. PJM Interconnection (eTariff, FERC order) (09/10/2026).
- Tier 1 Tentative Order on Interim Resource Adequacy Service (M-2026-3064961). Pennsylvania Public Utility Commission (01/10/2026).
- Tier 1 PUC Advances Consumer Safeguards as Data Center Growth Adds New Demands to Electric Grid. Pennsylvania Public Utility Commission (press release) (01/10/2026).
- Tier 1 July 22 Dominion Load Transfer Event. PJM Interconnection (System Operations Committee) (31/07/2026).
- Tier 2 Protest of the Independent Market Monitor, ER26-3515-000. Monitoring Analytics (Independent Market Monitor for PJM) (03/09/2026).
- Tier 3 Pennsylvania data-centre order and PJM curtailment proposal. Canary Media (20/08/2026).
- Tier 3 FERC rejects most of PJM's large load interconnection plan. Utility Dive (12/10/2026).
- Tier 3 FERC Accepts PJM's Large Load and Large Load Registry Definition but Rejects Interim Resource Adequacy Service Proposal. Troutman Energy Report (21/10/2026).