On June 18, 2026, FERC accepted in part and rejected in part requests for rehearing of its December 18, 2025, order (December Order) directing PJM Interconnection, L.L.C. (PJM) to revise its Open Access Transmission Tariff (Tariff) to clarify and establish certain rates, terms, and conditions of service applicable to Interconnection Customers in PJM seeking to serve Co-Located Load (June Order). The Commission also accepted certain rates, terms, and conditions for the three new transmission services applicable to Co-Located Load in PJM and accepted in part and rejected in part PJM’s compliance filing in response to the December Order.

In February 2025, FERC initiated a new proceeding in Docket No. EL25-49-000 to examine whether PJM’s Tariff remained just and reasonable and not unduly discriminatory or preferential without provisions addressing with sufficient clarity or consistency the rates, terms, and conditions of service applicable to co-location arrangements. FERC defined Co-Located Load as a “configuration [that] refers to end-use customer load that is physically connected to the facilities of an existing or planned Customer Facility on the Interconnection Customer’s side of the Point of Interconnection to the PJM Transmission System” and a Co-Location Arrangement as both Co-Located Load and its associated generator (see February 25, 2025, edition of the WER).

After extensive briefing, FERC issued its December Order, finding PJM’s Tariff unjust and unreasonable because the absence of co-location provisions leaves entities unable to determine what steps they must take to effectuate Co-Location Arrangements and creates uncertainty that has resulted in disparate treatment in PJM because transmission owners have taken different approaches to performing the necessary steps that apply to Interconnection Customers seeking to serve Co-Located Load through a Co-Location Arrangement. FERC also found PJM’s Tariff unjust and unreasonable because it does not include transmission services that reflect Eligible Customers taking service on behalf of Co-Located Loads that are willing and able to limit their energy withdrawals from the transmission system under certain conditions. Lastly, FERC found PJM’s existing retail Behind the Meter Generation (BTMG) rules to be unjust and unreasonable.

FERC directed PJM to (1) establish terms that an Interconnection Customer seeking to serve Co-Located Load must follow when effectuating a Co-Location Arrangement; (2) clarify the scope and potential of interconnection service when interconnecting new generation to serve Co-Located Load; and (3) require that a customer taking transmission service on behalf of Co-Located Load take one of three new transmission services—(i) Network Integration Transmission Service (NITS), including a new interim, non-firm transmission service available until all Network Upgrades necessary to provide the requested NITS are complete (Interim NITS); (ii) a new Firm Contract Demand (FCD) transmission service; or (iii) a new Non-Firm Contract Demand (NFCD) transmission service. FERC also established paper hearing procedures to determine the rates, terms, and conditions for such new transmission services (see December 22, 2025, edition of the WER). PJM submitted its compliance filing pursuant to the December Order in February 2026.

In its June Order, in response to requests for rehearing, FERC sustained its finding that PJM’s Tariff is unjust and unreasonable because it does not contain provisions addressing with sufficient clarity or consistency the rates, terms, and conditions of service applicable to Interconnection Customers serving Co-Located Load and Eligible Customers taking transmission service on behalf of Co-Located Load. FERC explained that the lack of sufficient clarity leaves entities unable to determine what steps they can or must take to effectuate or administer Co-Location Arrangements of various configurations, creates regulatory uncertainty that undermines a central purpose of the Federal Power Act, and introduces the risk that costs related to Co-Location Arrangements may not be allocated consistent with cost causation principles.

FERC also explained that requiring Eligible Customers taking transmission service on behalf of Co-Located Load to take NITS, without any alternative, is economically inefficient and creates the risk of more costly Network Upgrades that would be unnecessary if Eligible Customers were willing and permitted to take a transmission service reflecting their ability to limit energy withdrawals. FERC set aside the December Order in part, explaining that it was persuaded that requiring Eligible Customers taking transmission service on behalf of load with BTMG to take NITS, without any alternative, is unjust and unreasonable for the same reasons such arrangement is unjust and unreasonable for Eligible Customers taking transmission service on behalf of Co-Located Load. Lastly, FERC continued to find that PJM’s BTMG netting rules are unjust and unreasonable.

In response to the record developed in the paper hearing, FERC established as just and reasonable certain rates, terms, and conditions for the three new transmission services directed in the December Order (i.e., Interim NITS, FCD, and NFCD). Lastly, FERC accepted in part and rejected in part PJM’s compliance filing, directing further compliance related to BTMG rules, including revising the materiality threshold to be load-based, rather than based on generator nameplate capacity, and establishing the Qualifying Facility cogeneration exemption process; transmission service, including study procedures and the extension of new services to BTMG loads; and the Necessary Study process, including study procedures.

Commissioner Chang filed a concurrence expressing her concern that Co-Located Loads taking little or no transmission service could create cost shifts to other transmission customers if such loads do not contribute meaningfully to transmission cost recovery. She expressed support for the Commission’s decision to defer the question of an additional “grid reliance” charge pending concrete experience with the new transmission services, while noting that she stands ready to consider Federal Power Act section 205 filings or section 206 complaints—including sua sponte action—should problematic cost shifts materialize.

FERC’s order, issued in Docket No. EL25-49-002, is available here.