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By Laila Kearney
NEW YORK, Sept 30 (Reuters) – The Federal Energy Regulatory Commission directed the largest US grid operator, PJM Interconnection, to postpone and revise its “backstop” procurement proposal to ensure that large energy users like data centers cover the costs associated with the process, according to a filing by the regulator.
Energy-intensive data centers have rapidly expanded in the 13-state Mid-Atlantic and Midwest region covered by PJM, causing electricity demand to rise much faster than new supplies are connected, leaving the region with a more than 6,800 megawatt power supply shortfall.
The backstop process, a one-time electricity procurement designed to bring new power supplies onto the grid, is aimed at closing that supply gap.
FERC partially approved PJM’s proposal, but ultimately delayed its start time, which was expected to begin on Wednesday.
“We are prepared to promptly act on a subsequent proposal that addresses the concerns raised … the region’s reliability hangs in the balance,” FERC Chairman Laura Swett said in a statement included with the order.
The regulator accepted core elements of the proposal but suspended it for five months while opening further proceedings on cost allocation and certain other provisions.
FERC said PJM’s proposal needs to do more to make sure that large energy users like data centers pay for costs associated with securing power through the program.
“Existing customers should not be left paying costs attributable to new demand,” Commissioner Lindsay S. See wrote in a concurring statement.
PJM is working on incorporating FERC’s directives, spokesman Jeff Shields said.
“We remain focused on advancing solutions that maintain reliability, appropriately allocate costs to the customers driving those costs, and protect consumers as the region navigates significant demand growth,” Shields said in an email.
As part of its order, the energy regulator also asked PJM to improve its forecasting of data center energy demand, saying it should rely on more up-to-date load forecasts when determining how costs are allocated.
Data center electricity requests have overwhelmed US grids, but many of those requests are considered speculative, making it harder for grids and utilities to plan for the costly infrastructure needed.
Reporting by Laila Kearney in New York; editing by David Gaffen
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