PJM's electricity pricing system undergoes a major overhaul as FERC orders regulatory reforms

The Federal Energy Regulatory Commission (FERC) has ordered PJM Interconnection (the major grid operator in North America’s Eastern region) to undertake a comprehensive review of power grid regulations. This decision is driven by the rapidly increasing impact of large-scale power users such as AI data centers on the load of the transmission network.

Current Regulations Deemed “Unjust and Unreasonable”

FERC finds that PJM’s current tariff rules impose unfair burdens on market participants and has called for revisions. In particular, issues with the tariff structure affecting large consumers located near power generation facilities are highlighted. This assessment is based on the rising electricity demand from AI infrastructure.

Key Items PJM Needs to Address

The directive requires PJM to implement the following:

Transparency in Tariff Structure
Clarify the current ambiguous tariff standards and reform them into a format easily understandable by market participants.

Provision of Multiple Transmission Service Options
Propose four different transmission service models and establish a system that allows users to select according to their needs.

Submission of Reliability Reports
By January 2026, submit detailed reports to FERC regarding the maintenance of grid reliability.

Ripple Effects on the Entire Energy Market

This reform marks a significant shift in the operational foundation of PJM Interconnection. As new large-scale demand sources like data centers increase, existing tariff rules are proving insufficient to address emerging challenges. It also prompts a re-evaluation of how the connection pool is managed and how the entire transmission network can be optimally utilized.

As the integration of energy markets and technological infrastructure accelerates, industry watchers are closely monitoring how FERC’s decision will translate into practical changes.