The Federal Energy Regulatory Commission (FERC) has officially rejected a proposal from PJM Interconnection, a regional transmission organization that manages the electric grid across parts of the Midwest and East Coast. PJM had sought authorization to implement a policy that would allow the grid operator to curtail power to large-scale data centers during emergency supply shortfalls.

By denying this request, federal regulators have effectively declined to set a uniform federal standard for how data centers should be prioritized or deprioritized when the grid faces capacity constraints. Instead, the commission’s decision leaves the authority to regulate these power allocations in the hands of individual state governments.

Proponents of the PJM proposal argued that such measures were necessary to maintain grid stability as the rapid growth of artificial intelligence and cloud computing creates unprecedented demand for electricity. Critics of the plan, which included various industry stakeholders, expressed concerns regarding the reliability of data center operations and the potential for economic disruption if power were cut unilaterally by a grid operator. The decision highlights the ongoing tension between the rapid expansion of energy-intensive technology infrastructure and the physical limitations of existing power grids. As states now take the lead, it remains to be seen whether a patchwork of different regulations will emerge across the PJM footprint, potentially complicating operations for companies that span multiple state lines.