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FERC ER24-2172: The Talen-Amazon Order, Annotated

Citation: PJM Interconnection, L.L.C., 189 FERC ¶ 61,078, Docket Nos. ER24-2172-000 and ER24-2172-001 (Nov. 1, 2024), Order Rejecting Amendments to Interconnection Service Agreement.

Source: Full PDF of the order at https://www.ferc.gov/sites/default/files/2024-11/20241101-3061_ER24-2172-000.pdf. All quotations in this page are taken verbatim from that PDF; paragraph and page citations refer to the slip opinion. The dissent and concurrence quoted below are reproduced from the same PDF, which contains them as separate statements attached to the majority order.

Why This Order Matters

For most of 2024 the dominant narrative around AI-era electricity was that hyperscalers had found a clever workaround for the multi-year interconnection queue at PJM and the other RTOs: rather than wait for transmission to be built to a greenfield site, they would put the data center directly next to an existing power plant and consume its output "behind the meter," bypassing the grid altogether. The Talen-Amazon deal at the 2,520 MW Susquehanna nuclear plant in Luzerne County, Pennsylvania, was the leading example. Amazon paid $650 million in March 2024 for the Cumulus data-center campus adjacent to the plant, and PJM filed an amended Interconnection Service Agreement (ISA) on June 3, 2024, that would have lifted the authorized co-located load from 300 MW to 480 MW.

The amended ISA was the first co-location filing of this scale to come before the Commission for explicit approval. Industry treated it as a test case. A 2-1 majority of the Federal Energy Regulatory Commission rejected it on November 1, 2024. The order itself is short and procedurally narrow — the holding is that PJM failed to meet its burden to justify "non-conforming" deviations from the pro forma interconnection agreement — but the dissent (Chairman Phillips), the concurrence (Commissioner Christie), and the protest record together capture the entire policy fight: who pays for the grid when a 480 MW load sits on the generator side of the meter but remains synchronously connected to the system; whether nuclear baseload pulled out of the wholesale market raises capacity and energy prices for everyone else; and whether the Commission should reach those questions in a Section 205 proceeding at all.

The order did not, on its face, ban behind-the-meter co-location. It rejected one filing. But the practical consequence is that the Talen-Amazon transaction had to be restructured — which it was, on June 11, 2025, as a "front-of-the-meter" retail PPA — and that PJM was eventually directed, in a December 18, 2025 follow-up order (Docket EL25-49), to overhaul its tariff to create explicit transmission services for co-located loads. ER24-2172 is the moment the regulatory regime stopped treating behind-the-meter as a clever exemption and started treating it as a category that needed its own rules.

Procedural History

The amended ISA was filed under section 205 of the Federal Power Act, 16 U.S.C. § 824d. The filing party was PJM Interconnection, L.L.C., on behalf of the three-party ISA among PJM, Susquehanna Nuclear, LLC, and PPL Electric Utilities Corporation. PJM described the change as a substantial revision of the existing Service Agreement No. 1442 (referred to in the order as the "Existing ISA"), increasing authorized Co-Located Load from 300 MW to 480 MW and adding terms governing back-up generation, capacity resource obligations, separation protection, and the explicit declaration that the Co-Located Load is "not Network Load."

The order notes that the underlying configuration was not new in kind, only in scale. Earlier delegated letter orders had accepted a 2023 ISA permitting "up to 150 MW of co-located load behind each of Susquehanna's two generating units" (P 22, citing the 2023 ISA). Those earlier orders were issued without protest. The June 2024 filing was the first to draw a formal opposition record.

Protestants: Exelon Corporation and American Electric Power Service Corporation (AEP) filed a joint timely protest. Public Service Electric and Gas, Old Dominion Electric Cooperative, Southern Maryland Electric Cooperative, the PJM Independent Market Monitor (Monitoring Analytics), the Organization of PJM States, the Pennsylvania Public Utility Commission, and the New Jersey Division of Rate Counsel either protested or filed answers opposing the filing.

Supporters: PJM, PPL, Susquehanna/Talen, Constellation, Vistra, and Calpine filed answers urging acceptance. Pennsylvania Governor Josh Shapiro filed out-of-time comments that, in effect, sided with the protestants on the cost-allocation question while urging the Commission not to disrupt Pennsylvania's leadership on data-center development.

Commission staff issued a deficiency letter on August 2, 2024, the same day the Commission announced a Commissioner-led technical conference on large co-located load in Docket AD24-11-000. PJM responded September 3, 2024. Protests of the deficiency response were due September 24, 2024.

The vote was 2-1. Commissioner Mark Christie and Commissioner Lindsay See voted to reject; Chairman Willie Phillips dissented. Commissioners David Rosner and Judy Chang did not participate. Christie filed a concurrence; Phillips filed a dissent. (Some press accounts described the vote as 2-1 "with two abstaining"; the order itself records the two non-participations.) The order issued November 1, 2024.

The Holding: Verbatim

The substantive holding is contained in a remarkably compact "Discussion" section. The Commission applies the Order No. 2003 framework for non-conforming interconnection agreements:

"In accordance with Order No. 2003, the Commission requires interconnection agreements that do not conform to the transmission provider's pro forma interconnection agreement to be filed with the Commission. The Commission analyzes such non-conforming filings to ensure that operational or other reasons make a non-conforming agreement necessary. The Commission has recognized that non-conforming interconnection agreements may be necessary in a small number of extraordinary circumstances. The Commission recognizes that non-conforming agreements may be necessary for interconnections with specific reliability concerns, novel legal issues, or other unique factors. Thus, a transmission provider seeking a case-specific deviation from its pro forma interconnection agreement bears a high burden to justify and explain that its changes are not merely 'consistent with or superior to' the pro forma agreement, but are necessary changes." (P 85, internal footnotes omitted, citing Order No. 2003, 104 FERC ¶ 61,103 at P 914; El Paso Elec. Co., 177 FERC ¶ 61,212 at P 24; Renewable World Energies, LLC, 176 FERC ¶ 61,140 at P 20.)

The Commission then finds:

"We find PJM has failed to meet the high burden to demonstrate the non-conforming provisions are necessary. For example, PJM insists that the proposed amendments were developed to address the circumstances of this particular interconnection and that approval could thus be limited to these circumstances. However, significant aspects of the proposed non-conforming provisions rely heavily on a generally applicable document, the PJM Guidance Document. This raises questions regarding whether PJM intends to offer these terms to all similarly situated interconnection customers. We conclude that these provisions demonstrate that PJM has not met its burden to show that these provisions are necessary for any interest unique to the interconnection of the Susquehanna Customer Facility. Indeed, the record indicates that other parties are interested in pursuing similar arrangements wherein a large load co-locates with an existing generator. Therefore, we find that the proposed non-conforming provisions that mirror provisions that PJM has included in the PJM Guidance Document, do not meet the requisite standard." (P 86, footnotes omitted.)

This is the entire ratio decidendi. The Commission then explicitly declines to reach the larger questions:

"This filing leaves multiple important questions unresolved. Nevertheless, given that we have already found that PJM has failed to meet its burden, as described above, we need not further opine on whether PJM has met that burden with regard to the proposed non-conforming provisions herein, or otherwise address the Amended ISA. Therefore, we decline to do so here." (P 87.)

The order's response to the dissent is direct:

"The dissent disagrees with our finding, arguing that because the Amended ISA is the 'first of its kind' it presents the sort of 'specific reliability concerns, novel legal issues, and other unique factors' that justify accepting a non-conforming interconnection agreement. But the former is not necessarily evidence of the latter, and the dissent does not explain why it believes the Commission erred in its application of the legal standard that governs the issue before us. Additionally, the dissent's statement that provisions of the PJM Guidance Document may not apply to every co-location agreement does not mean that the provisions are not generally applicable. The dissent makes generalized claims about alleged adverse impacts that the order will have on reliability and national security, but offers no details about how the order will impinge on either. Reliability and national security are, of course, central to the Commission's mission, but the generalized concerns highlighted by the dissent do not undermine our finding on the specific question before us that PJM has not demonstrated that the proposed non-conforming provisions in the Amended ISA are necessary deviations from the pro forma ISA. So we remain mindful of the 'forest,' but in this context and on this record, we cannot conclude that the non-conforming provisions are necessary and otherwise meet the high standard for Commission approval." (P 88.)

The disposition is one line:

"The Amended ISA is hereby rejected, as discussed in the body of this order." (Ordering paragraph, slip op. at 42.)

The Cost-Shift Argument in the Record

The order itself never adjudicates the cost-shift question, but the protest record it summarizes is detailed and is the source most often cited in policy debates. The protestants' core economic claim, repeated at multiple points in the order:

"Based on analysis by affiants Mr. Reed and Ms. Powers, Exelon and AEP contend that the cost shift arising from this arrangement could be as much as $140 million per year. Affiants stated that they calculated this figure based on a high-level analysis of the costs to serve up to Co-Located Load of 480 MW at a 98% load factor, using the PPL Electric Utilities LP-5 tariff rate and including the cost of transmission, distribution, PPL specific riders, certain services provided by PJM for which PPL incurs costs, and taxes." (P 38.)

The protestants framed the issue not as one of physical reliance but of jurisdictional category:

"Exelon and AEP question why a Co-Located Load that they assert is receiving benefits from the transmission system would not pay transmission rates. Exelon and AEP state that the Commission has long resisted customers' attempts to allocate only portions of their load to the transmission system or to evade transmission fees based on unique or intermittent usage of the transmission system." (P 37, citing Amtrak, 171 FERC ¶ 61,237 at PP 13-14.)

And on the structural argument that PJM's tariff did not authorize a third category:

"Exelon and AEP state that under PJM's tariff there are only two types of recognized load: (1) Network Load; and (2) load that must make its own arrangements for Point-To-Point Transmission Service. ... Furthermore, Exelon and AEP assert that the Amended ISA violates PJM's tariff as the tariff does not provide for a type of transmission service that is not Point-to-Point Transmission Service or NITS. Exelon and AEP assert that in Amtrak the Commission rejected the ad hoc creation of a third, alternative category of service for an individual customer as inconsistent with the PJM tariff." (P 41, footnotes omitted.)

The Independent Market Monitor's submission, which the order describes at length, raised the systemic claim:

"The Market Monitor asserts that any benefits to the Co-Located Load come at the expense of other customers in the PJM markets, and, if extended to all nuclear plants in PJM, would cause extreme impacts. Specifically, the Market Monitor argues that: (1) power flows on the grid would change significantly because the grid was built based on the use of nuclear energy; (2) energy prices would increase significantly as low-cost nuclear energy is displaced; (3) capacity prices would increase as the supply of capacity to the capacity market is reduced; and (4) emissions would increase as thermal resources are dispatched to replace nuclear energy to meet load." (P 70.)

The protestants also flagged a real-world incident — a Susquehanna unit outage in November 2023 — as evidence that the "behind-the-meter" isolation was an accounting fiction rather than a physical reality. Talen's own answer effectively conceded the event:

"Susquehanna states that Exelon and AEP are correct that in November 2023, one of the Susquehanna units experienced an outage that inadvertently 'caused the co-located facility to draw grid power for several hours rather than drawing power from the other Susquehanna unit as intended.' However, Susquehanna states that it paid the local Transmission Owner the applicable charges for the services used as a result of this event and, due to this experience, Susquehanna modified its configuration and installed additional equipment and developed other protective measures with the local Transmission Owner to ensure that the Co-Located Load cannot inadvertently draw power from the grid again." (P 81.)

Talen's economic rebuttal, summarized at P 76 of the order, is worth quoting because it lays out the alternative theory of cost shift:

"Susquehanna asserts that Exelon and AEP's claim of $140 million in consumer harm is not accurate. Susquehanna explains that $140 million is the cost to service a 480 MW load at 98% capacity factor under PPL's LP-5 retail tariff rate. Susquehanna argues, in other words, that this is how much the utility would get paid for providing distribution electric service to the Co-Located Load if it was directly connected to the distribution system. Susquehanna states that this cost will not be shifted to retail customers, and at most, this amount represents lost opportunity costs for PPL. Susquehanna states that PPL has not constructed any facilities in preparation to deliver power to the Co-Located Load and thus there are no such costs in PPL's rate base that will be potentially shifted to retail customers."

In other words, the protestants treated $140 million as cost shifted onto other ratepayers; Talen treated it as revenue PPL never had any entitlement to in the first place. The Commission, having decided the case on burden-of-proof grounds, never picks between these accounts.

The Phillips Dissent

Chairman Phillips' dissent is the single most quoted document in news coverage of the order. The relevant passages, verbatim:

"I respectfully dissent from today's order because it is a step backward for both electric reliability and national security. The amended Interconnection Service Agreement among PJM, Susquehanna Nuclear, LLC and PPL (Amended ISA), represents a 'first of its kind' co-located load configuration that presents precisely the sort of specific reliability concerns, novel legal issues, and other unique factors that should have justified the filing of a non-conforming interconnection agreement. I would have accepted the Amended ISA and also required PJM to submit regular informational filings to provide transparency into the arrangement's operations over time, including certain of the issues in dispute, such as back-up service. That approach would also have allowed PJM to go through a further stakeholder process for tariff revisions and decide on generic next steps regarding these important issues in the months ahead. In failing to accept the agreement, we are rejecting protections that the interconnected transmission owner says will enhance reliability while also creating unnecessary roadblocks to an industry that is necessary for our national security." (Phillips dissent, P 1, footnotes omitted.)

On reliability:

"Electric reliability is the Commission's job number one. And I believe that PJM addressed those issues comprehensively in its filing. PJM supports its application with a detailed analysis of the reliability implications of adding an incremental 180 MWs on top of the already-allowed-for 300 MWs, and concludes that up to 480 MWs, no transmission upgrades are required. In addition, the application adds several important, reliability-based belts and suspenders. Those include installing a protection scheme to ensure that the Co-Located Load separates in the event of loss of generation output to ensure no power flows from transmission facilities to the Co-Located Load, providing certain generator shutdown and automatic tripping data to PPL, and notifying PJM and PPL in the event of any equipment malfunction." (Phillips dissent, P 2.)

On national security and AI:

"Today's order also creates a national security risk. There is a clear, bipartisan consensus that maintaining U.S. leadership in Artificial Intelligence (AI) is necessary to maintaining our national security. Maintaining our nation's leadership in this 'era-defining' technology will require a massive and unprecedented investment in the data centers necessary to develop and operate those AI models. And make no mistake: access to reliable electricity is the lifeblood of those data centers. I am deeply concerned that in failing to demonstrate regulatory leadership and flexibility we are putting at risk our country's pole position on this critically important issue. That is simply unacceptable." (Phillips dissent, P 3, footnotes omitted; footnote 5 cites the White House Memorandum on Advancing the United States' Leadership in Artificial Intelligence, October 24, 2024.)

And the closing — which has been quoted in nearly every trade-press story about the order:

"At the end of the day, I am concerned that the arguments the Commission relies on to reject the Amended ISA lead it to miss the forest for the trees. We are on the cusp of a new phase in the energy transition, one that is characterized as much by soaring energy demand, due in large part to AI, as it is by rapid changes in the resource mix. Ensuring reliable and affordable supplies of electricity throughout the coming period of increasing demand and changing supply will require pragmatic leadership that facilitates that transition. If we instead throw up roadblocks to that transition, as I am concerned today's order does, we will only deprive our country of the resources needed to ensure our continued economic prosperity and national security." (Phillips dissent, P 6.)

Note that Phillips concedes the cost-allocation point as something that should be worked on — "I am particularly concerned about issues of affordability, particularly ensuring that data centers, like every other customer, pay their fair share of the costs of maintaining a reliable electric grid" (P 5) — but treats it as a generic question to be resolved in other proceedings, not a reason to reject this specific ISA.

The Christie Concurrence

Commissioner Christie's concurrence is brief but, of the three statements in the docket, the one that most clearly states what is at stake. It deserves to be reproduced nearly in full because it became the template for how the Commission would think about co-location for the next year.

"I join this order because PJM has failed to meet its burden of proof on this record. I emphasize that PJM's filing is rejected without prejudice. Speaking for myself, I have an open mind about the many serious issues pertinent not just to this particular proposal, but also to the issues that may be relevant to other co-location proposals. The specific co-location arrangement proposed here may make sense and be acceptable under the Federal Power Act, but on this record that claim simply has not been proven. I concur to make the following points." (Christie concurrence, P 1.)

The framing paragraph:

"Co-location arrangements of the type presented here present an array of complicated, nuanced and multifaceted issues, which collectively could have huge ramifications for both grid reliability and consumer costs. Indeed, this Commission has already acknowledged the importance and complexities of these issues, which is why we held a technical conference to explore them. That technical conference was timely and necessary, as these co-location arrangements are a fairly new phenomenon that entails huge ramifications for grid reliability and consumer costs. Given these ramifications, the Commission truly needs to 'get it right' when it comes to evaluating co-location issues." (Christie concurrence, P 2, footnotes omitted.)

The precedential warning — the sentence that did the most work in shaping subsequent reporting:

"And make no mistake. Were we to approve this proposal at this time, as the dissent advocates, we would be setting a precedent that would be used to justify identical or similar arrangements in future cases. Further, to claim, as the dissent does, that failure to approve this specific proposal at this specific time endangers 'reliability,' and even 'national security,' is simply unproven on this record." (Christie concurrence, P 3.)

Christie's footnote 1 is also significant. Rather than write his own characterization of the consumer-cost stakes, Christie quotes the Market Monitor's answer at length, treating it as the canonical statement of the structural concern:

"While the proposed amendment to the ISA is creative, its benefits to the co-located load come at the expense of other customers in the PJM markets. If this approach were extended to all the nuclear plants in PJM, the impact on the PJM grid and markets would be extreme. Power flows on the grid that was built in significant part to deliver low cost nuclear energy to load would change significantly. Energy prices would increase significantly as low cost nuclear energy is displaced by higher cost energy on the overall supply curve. Capacity prices would increase as the supply of capacity to the market is reduced. Emissions would also be expected to increase as thermal resources that are next in the supply curve are dispatched to meet load to replace the nuclear energy. Establishing this precedent would undermine PJM reliability and PJM competitive markets." (Christie concurrence, footnote 2, quoting Market Monitor Answer at 6-7.)

The concurrence is doing two things simultaneously: it is voting to reject on narrow procedural grounds (PJM failed to carry its Section 205 burden), and it is using the footnotes to telegraph that the substantive economic concerns are real, are properly raised in this case, and would have weighed against approval even if PJM had filed a more complete record.

The June 2025 Restructuring as Response

Talen and Amazon did not appeal. They restructured. On June 11, 2025, Talen Energy announced an expanded relationship with Amazon Web Services that fundamentally changed the legal form of the transaction.

Key terms, from the Talen press release of June 11, 2025 (Talen Energy Investor Relations) and from contemporaneous reporting in Utility Dive, the RTO Insider, and World Nuclear News:

  • A power purchase agreement for 1,920 MW of carbon-free nuclear power from Susquehanna to AWS through 2042, with options to extend.
  • Power deliveries ramp over time: 840-1,200 MW by 2029; 1,680-1,920 MW by 2032; full volume by 2032 at the latest.
  • Expected lifetime revenue of approximately $18 billion (per Utility Dive's reporting; not disclosed in the Talen press release itself).
  • AWS separately committed to "the largest private sector investment in [Pennsylvania] state history — $20B," per AWS Vice President Kevin Miller.

The structural change is the most important detail and the one directly responsive to ER24-2172. From the Talen press release:

"the existing Susquehanna co-located load arrangement between Talen and Amazon will transition to a 'front-of-the-meter' arrangement after the completion of transmission reconfigurations expected in the Spring of 2026. ... Susquehanna will provide its carbon-free power to the PJM grid, Talen will act as the retail electric generation supplier to Amazon."

That is the structural concession. Under the new model, Susquehanna's output goes onto the PJM transmission system; PPL Electric Utilities is the wires company; Amazon is a retail customer paying retail-tariff transmission and distribution charges; and Talen is the generation supplier. The $140 million cost-shift argument that Exelon and AEP advanced before FERC effectively disappears, because Amazon is now paying the LP-5 (or analogous) tariff charges the protestants said it was avoiding.

In exchange, Talen got what it wanted: a long-dated, large-volume offtake contract that locks in nuclear revenue through 2042 and creates a financing foundation for additional nuclear builds. The June 2025 announcement also commits the parties to exploring Small Modular Reactor (SMR) development within Talen's Pennsylvania footprint, plus uprates at Susquehanna itself.

For the broader hyperscaler co-location playbook, the message of the restructuring was: if you want speed (skipping the queue), you'll have to accept retail-rate cost recovery; if you want behind-the-meter avoidance of transmission charges, expect to fight a regulatory battle you may lose on burden-of-proof grounds without ever reaching the merits.

The December 2025 Follow-Up Order

On December 18, 2025, the Commission acted on the larger questions ER24-2172 had ducked. The order in Docket EL25-49-000, et al., directed PJM to overhaul its tariff to create explicit transmission services for co-located loads, ending the binary "Network Load vs. Point-to-Point" framework that the Exelon/AEP protest had argued was being violated.

The principal directives, summarized from the FERC fact sheet and the order itself:

  • PJM's existing tariff is unjust and unreasonable because it lacks provisions for transmission services that reflect that Eligible Customers may take service on behalf of co-located loads that can limit their withdrawals from the transmission system.
  • PJM must create two new transmission services: a Firm Contract Demand Transmission Service and a Non-Firm Contract Demand Transmission Service. Each charges the co-located load for transmission service based on its actual net withdrawals from the system rather than its gross load.
  • PJM must also create an interim non-firm service allowing co-located loads to interconnect quickly while network upgrades to support firm service are constructed.
  • PJM must file conforming tariff amendments within 60 days (by February 16, 2026), with a paper hearing schedule running through April 17, 2026.

This is, in effect, the framework Christie's concurrence had pointed toward — the Commission "get[ting] it right" by creating a generic rule rather than approving non-conforming ISAs one at a time. It also vindicates the Amtrak-line argument that the protestants made in ER24-2172: the PJM tariff did not have a category for what the Talen-Amazon configuration was doing, and the right cure was a tariff revision through Section 206, not a non-conforming Section 205 filing.

Commissioner Rosner and Commissioner Chang — who had not participated in ER24-2172 — both filed concurrences in EL25-49. The trade-press summaries (Baker Botts, Morgan Lewis, Day Pitney, Blank Rome) all treat the December 2025 order as the direct sequel to ER24-2172, and as the regulatory event that finally moved the locus of decision from one-off ISA fights to a systematic tariff regime.

Why It Matters Going Forward

Three durable lessons from ER24-2172.

First, "behind the meter" is not a regulatory escape hatch. The order's narrow procedural holding obscures the fact that the entire substantive record — protests, answers, Market Monitor analysis, Christie's footnotes — treats co-location as a configuration that necessarily implicates the transmission system. The November 2023 Susquehanna outage during which the Amazon load drew grid power "for several hours" is the empirical hinge: if the load can physically draw from the grid even once, the claim that it is fully isolated is an accounting position, not an engineering one. The December 2025 follow-up order codifies that view by requiring transmission charges based on actual withdrawals.

Second, the queue is still the binding constraint. What Talen and Amazon were trying to buy with the original ISA was not really 180 MW of additional power — Susquehanna already had it — but a way around the PJM interconnection queue and the associated transmission upgrade costs. The June 2025 restructuring acknowledges that the queue cannot be bypassed indefinitely; the parties accept a "transmission reconfiguration" window into Spring 2026 and a ramp through 2032. For hyperscalers, this means that even nominally "co-located" deals are now sized around the timeline of transmission upgrades, not around the timeline of data-center construction.

Third, the procedural posture mattered enormously. A 2-1 majority that decides the case on burden of proof and explicitly declines to "further opine" on substantive questions (P 87) does much less doctrinal work than a 2-1 majority that decides those questions. ER24-2172 left almost every contested issue formally open. That is what allowed the policy fight to migrate into the AD24-11 technical conference, into EL25-49, and into the broader rulemaking discourse on large-load interconnection. The order is consequential less for what it held than for what it refused to decide and the institutional process it set in motion.

For an AI-capex research wiki, ER24-2172 is the document that converts an abstract debate ("can hyperscalers just bypass the grid?") into a specific record of who said what, with what evidence, and on what jurisdictional theory. The full PDF — 42 pages, $140 million per year on one side of the ledger, "national security" on the other, decided on a paragraph about whether PJM's Guidance Document is "generally applicable" — is worth reading in its entirety. The link is at the top of this page.

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