AINEWS
The Federal Energy Regulatory Commission has until September 2026 to decide if PJM, the country's largest competitive power market, can reform itself, or if the agency has to impose the fix.
Northern Virginia already hosts the densest cluster of data-center load in the country, and Ohio utility American Electric Power is preparing to plug a multi-gigawatt data-center campus into the grid outside Columbus. The transmission lines that have to carry those new loads are not yet built. The federal regulator that has to decide who pays for them is on a short clock.
The Federal Energy Regulatory Commission (FERC) is the federal agency that regulates interstate transmission and wholesale electricity markets. It is also the agency that has to write the rules for PJM, the regional grid operator that runs the country's largest competitive wholesale power market. FERC Chair Laura Swett, citing a recent agency technical conference, said PJM is "facing a grave legitimacy crisis" and warned that some transmission owners are "openly discussing leaving the RTO altogether" (Utility Dive; FERC press release). An Aug. 3 RTO Insider column framed the data-center buildout as a force that may transform FERC itself, not just the grid it regulates (RTO Insider). RTO is industry shorthand for a regional transmission organization, the multi-state grid pool that runs most U.S. competitive wholesale markets.
PJM's footprint covers 13 Mid-Atlantic and Midwest states plus the District of Columbia, serving more than 67 million Americans. Its governance is under fire from states, utilities, and its own independent market monitor because the market has, for two consecutive capacity auctions, failed to attract significant new generation even as data-center demand surges. PJM's capacity market is the once-a-year auction that pays power plants to be available years in advance. When the auction under-clears, generators stop committing to build, and the next auction clears at a higher price. A prior capacity-price spike already pushed rate increases above 20% for some Mid-Atlantic utilities, putting governors and state lawmakers on notice.
FERC has now put the market on a leash. The agency set an end-of-September 2026 deadline: if PJM does not agree to governance and stakeholder reforms on its own, FERC will impose them. FERC Commissioner LaCerte described the dynamics inside PJM's sector-weighted voting, a structure in which two of PJM's interest sectors can block a measure, as a "cultural quagmire." PJM states currently lack Section 205 filing rights at FERC, the legal pathway that lets a utility file a rate or rule change with the federal regulator. The states are pushing for two formal channels: a state utility-regulators panel and a policymakers panel, plus a wider role for PJM's own filing rights.
In December 2025, FERC issued a co-location order directing PJM to write transparent rules for AI-driven data centers that want to connect directly to the grid, and required PJM to report by January 19, 2026 on interconnection, reliability backstops, and load-forecasting (FERC press release). The order lands on a system whose last two capacity auctions failed to clear enough new megawatts, and whose members are publicly weighing exit.
American Electric Power has said it is considering leaving PJM. PSEG and other utilities back major governance changes, including a shift to an advisory stakeholder model along the lines of MISO, the neighboring regional grid operator (Utility Dive). PJM itself has so far held to the existing structure, on the grounds that states and the independent market monitor already have standing. The deadline is FERC's lever. States, utilities, and the operator are all on the record, and rate increases will follow whichever reform package the agency accepts.
The next seven weeks will decide whether FERC absorbs the demand growth on its own terms or is reshaped by it. If PJM does not produce a reform package FERC can accept by the end of September 2026, the agency will write the rules itself, and the states that have been kept out of the process will have the new shape imposed on them. The transmission line to that Ohio data-center campus still needs to be built. The load will still arrive. The bill will still be paid. The question is by whom.