New Data Centers Go First When the Grid Runs Short

Power

Published 30 July 2026 | Last updated 30 July 2026

On 27 July 2026 the board of PJM Interconnection, the largest grid operator in the United States, directed staff to ask federal regulators for a new rule: when there is not enough electricity to go around, new large electricity users that have not brought their own power supply get their consumption cut before the grid reaches for customers who are paid to reduce demand.

The deadline for a new large user to avoid that queue is 1 June 2027. Nothing takes effect until the Federal Energy Regulatory Commission approves it.

What is PJM, and where does it operate?

PJM Interconnection is a regional transmission organization, which means it runs the high-voltage grid and the wholesale electricity markets for a large chunk of the eastern United States without owning a single power plant or transmission line. Its job is dispatch and coordination: deciding which generators run, and keeping supply matched to demand.

According to FERC's own description of the market, PJM coordinates wholesale electricity in all or part of 13 states plus the District of Columbia: Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, and West Virginia. PJM's board letter puts the population served at 67 million. The territory runs to roughly 369,000 square miles per PJM's own fact sheet.

The name is a fossil. PJM began in 1927 as a power pool of three utilities in Pennsylvania and New Jersey, and became the Pennsylvania-New Jersey-Maryland Interconnection in 1956 when two Maryland utilities joined. It now has more than 1,100 members and covers a region that includes Northern Virginia, the densest concentration of data centers on earth.

Does this apply to you?

If you live in one of those 13 states or the District of Columbia, you are inside the system this decision governs. That does not mean your lights are at stake. The point of the proposal is the reverse: PJM is trying to make sure that new large users do not degrade reliability for households and existing businesses, and that existing customers do not pay the capacity costs those new users create.

If you operate or are planning a large facility in the region, the 1 June 2027 date is the one to diary. Under the proposal a new large load that arrives without securing its own supply does not get the same firm service everyone else gets. It gets an interim service, and interim means interruptible.

If you are neither, the part that reaches your bill is the cost allocation, not the curtailment. That thread runs through our earlier reporting on data center costs appearing on power bills and on who actually pays for AI data centers.

What did PJM's board actually decide?

It directed staff to file two separate proposals with FERC by the end of July. The board's decisional letter, signed by chair Paula Conboy, sets out four elements.

A Large Load Registry. Electric Distributors will have to report the location and size of large loads so PJM can forecast demand accurately and administer the two new programs. PJM's newsroom summary defines a large load as a cumulative peak of at least 50 MW at a single site behind one or more delivery points inside a one-mile radius. Registry information becomes public where confidentiality rules allow.

A Reliability Backstop Procurement. A one-time purchase of capacity starting September 2026, targeted at the shortfall from the 2028/2029 Base Residual Auction and reduced by whatever new supply gets contracted privately first. PJM's summary puts the procurement window at 30 September to 21 October, results in early December, commitments running up to 15 years, and a cap of $555 per MW-day on accepted offers, with eligible resources required online no later than 1 June 2032.

An Interim Resource Adequacy Service. This is the curtailment mechanism, and it was called Connect and Manage until this letter renamed it. Electric Distributors must implement it for new large loads that, as of 1 June 2027, do not bring enough capacity to cover their own resource adequacy needs and cannot be served at the 1-in-10 reliability standard, meaning a grid designed to fail no more than once in 10 years. Load reductions under the service occur, in the letter's words, "prior to the deployment of Pre-Emergency Load Management".

Compensation for reduced load. Distributors must implement a FERC-approved compensation rate for large load customers directed to cut consumption, paid on verified performance. Whether a particular large load is entitled to that compensation, or waives it, and which retail customers fund it, is left to state authorities.

Why does the ordering matter more than the date?

Because of what Pre-Emergency Load Management is. It is the program under which customers agree in advance to cut consumption when the grid is stressed, and are paid for doing it. Putting new large loads ahead of that program in the queue means a new data center without its own generation gets reduced before the grid calls on the customers who are being compensated to reduce. In practical terms, the proposal creates a class of electricity user that is first to be turned down and last to be treated as firm. That is a structural change in what connecting to this grid buys you, and it is a bigger fact than any single date.

What did the coverage get wrong?

The story circulated on 28 and 29 July as a decision to cut power to data centers of 50 MW or more starting in June 2027. Three parts of that do not survive the primary document.

As reported	What the record says	As of
Curtailment begins June 2027	1 June 2027 is the deadline by which a new large load must bring its own capacity. It is a qualifying date, not a start date.	2026-07-27
Applies to data centers of 50 MW or more	50 MW is the registry definition of a large load. The service applies to new large loads that have not secured supply, not to existing facilities.	2026-07-27
PJM will cut off data centers	Electric Distributors are required to implement the service. PJM is proposing the rule, and FERC has not ruled on it.	2026-07-27
Nowhere. No outlet reviewed covered this.	Curtailed large loads are to be compensated at a FERC-approved rate based on verified performance.	2026-07-27
Nowhere. No outlet reviewed covered this.	The board rejected a stakeholder proposal that had more than two-thirds sector-weighted member support.	2026-07-27

Reported claims drawn from TechCrunch, 28 July 2026, and Gadget Review, 28 July 2026. Record column drawn from the PJM board decisional letter of 27 July 2026 and PJM's newsroom summary of the same date.

What did the board overrule?

This is the part that went unreported. A coalition proposal for the backstop procurement cleared more than two-thirds sector-weighted member support in the stakeholder vote, and the board declined to file it. Its stated reason was that a voluntary subscription framework gave no assurance that capacity equal to the near-term shortfall would actually be bought. The board acknowledged the proposal had constructive elements and went with a mandatory central procurement instead. Appendix A of the letter lists 13 pieces of correspondence the board received during the process, from state legislators in the PJM footprint, a governors' collaborative, public power entities, consumer advocates, and the utility commissions of West Virginia, Ohio, and Virginia, the last filing jointly with the Data Center Coalition.

Why can PJM not simply bill the data centers?

Jurisdiction. FERC's own guide to the market draws the line: wholesale electricity sales inside PJM cross state lines and FERC sets those rates, while the retail sale from your local utility to your house is not FERC's business. PJM operates on the wholesale side, so it can allocate costs to Load Serving Entities, but it cannot reach through to an individual customer's retail bill.

The board says this directly: because PJM lacks jurisdiction to allocate retail costs to individual data centers, state action will be essential, and PJM will support that by handing states the registry data. So the affordability half of this announcement is a request, not a rule. It also explains why the piece of it PJM can do unilaterally is a forecasting change: the board will exclude incremental new large loads from the demand used in capacity auctions from the 2029/2030 delivery year, so existing customers are not charged for capacity those new loads created. The letter notes that adjustment is for load forecasting purposes only.

What are the dates that matter?

Date	What happens	As of
August 2026	First matches expected in PJM's bilateral contracting process, launched 9 June 2026	2026-07-27
30 Sept to 21 Oct 2026	Reliability Backstop Procurement runs	2026-07-27
December 2026	Procurement results, then the capacity auction for the 2029/2030 delivery year	2026-07-27
1 June 2027	Deadline for a new large load to bring sufficient capacity or fall under the interim service	2026-07-27
2029/2030 delivery year	New large loads excluded from auction demand begin re-entering as their own supply is offered	2026-07-27
1 June 2032	Latest online date for resources winning the backstop procurement	2026-07-27

Every date above is a proposal pending FERC review. PROJECTION

How does this connect to what came before?

It is the next step in two threads. In June PJM added a capacity-shortage alert as demand outran supply, which we covered in AI Data Centers Push the Largest US Grid to Shortage Alerts. Separately, FERC ordered six grid operators including PJM to justify or rewrite their rules for connecting large users, covered in FERC Orders Grid Operators to Justify Data Center Connection Rules. This board decision is not PJM's answer to that order. The letter says so in a footnote: the renamed Interim Resource Adequacy Service does not address how load connects to the system, which is the subject of a separate proceeding, Docket No. EL26-67-000.