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FERC Finds Current PJM Behind the Meter Generation Netting Unreasonable Due To Shifting Costs To Other Customers
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FERC has issued an order concerning co-location issues in PJM that, among other things, creates several new transmission products, and finds that the current netting of behind the meter generation under PJM rules is no longer just and reasonable
FERC's order addresses several proceedings related to co-located load, including a complaint brought against PJM by Constellation
Among other things, FERC found that PJM's current tariff is unjust and unreasonable because it does not include transmission services that account for the scenario of an
Eligible Customer taking service on behalf of a Co-Located Load which is willing and able
to limit its energy withdrawals from the transmission system under certain conditions.
FERC ordered PJM to offer new transmission products including a Firm Contract Demand transmission service and a Non-Firm Contract
Demand transmission service that a co-located load may take instead of NITS
"These new transmission service options
reflect a Co-Located Load’s ability to limit withdrawals from the transmission system
and potentially avoid costly and inefficient transmission system buildout that may not be
necessary," FERC said
Additionally, FERC directed PJM to offer a service allowing a Co-Located Load seeking NITS to, at the customer's option, take a new
interim, non-firm transmission service until all Network Upgrades necessary to provide
NITS are complete.
Customers serving Co-Located Load that seek to rely on the
transmission system to the same extent as Network Load customers will continue to be
eligible to take NITS, billed on a gross demand basis.
All Eligible Customers taking
NITS or one of the new transmission services on behalf of Co-Located Load must be
assessed charges for regulation and black start services on a gross demand basis,
regardless of which transmission service they select, to ensure that Co-Located Load
contributes to cost recovery for such services, FERC ordered
FERC said that, without this change, the current tariff could allow Co-Located Loads to benefit from regulation and black start
services without contributing to cost recovery for such services
FERC affirmed that
states retain the exclusive authority through state franchise laws to regulate which entities
may make retail sales within their borders, and thus the states determine which entities
are legally permitted to provide electricity to retail customers in Co-Location
Arrangements.
"Nothing in this order changes who may provide, and bill for, retail
service to a Co-Located Load," FERC said
FERC declined, however, to "comprehensively address" jurisdictional
matters regarding the interconnection of retail loads served through a Co-Location
Arrangement to the interstate transmission system. FERC concluded that
the Commission has jurisdiction to oversee the interconnection of generating facilities,
including the generators that are used to serve Co-Located Load, to the interstate
transmission system, as well as jurisdiction over the provision of transmission service in
interstate commerce used by an Eligible Customer to serve Co-Located Load. "We find
that these determinations are sufficient to resolve the issues in this proceeding," FERC said
Regarding current Behind the Meter Generation (BTMG) rules in PJM, FERC found the existing BTMG rules in the PJM Tariff to be unjust and
unreasonable.
"[U]nder the existing Tariff, loads with BTMG are not
fully accounted for in resource adequacy planning. As such, the existing BTMG rules
may lead to both reliability and resource adequacy risks because PJM, per its Tariff, is
obligated to serve transmission customers using BTMG but does not consider such
customers in transmission and resource adequacy planning," FERC said
Specifically, FERC said that PJM’s
existing BTMG rules do not limit the amount of qualifying load that a Network Customer
may net by using BTMG. Current BTMG rules, "do not provide any protections against this potential
transmission and resource adequacy planning problem or against the costs of maintaining
sufficient resources to serve these loads being shifted onto other customers," FERC said
FERC directed PJM to
propose a new MW threshold for the amount of load at a particular electrical location that
Network Customers may net by using BTMG.
FERC declined to establish the new BTMG MW threshold in the order
However, FERC observed, "as points of reference," that
PJM requires any generator larger than 10 MW to be individually metered and that the
Commission’s definition of a small generator is 20 MW
FERC also recognized the impact that the new MW limit on netting for BTMG generation would have on current BTMG customers
As such, FERC ordered PJM to maintain the
current BTMG rules for customers that fall below a new MW materiality threshold for
the amount of load at a particular electrical location that Network Customers may net
using BTMG.
For the new BTMG rules, FERC also directed PJM to implement a two-part transition process for retail
BTMG, including: (1) the establishment of a three-year transition
period; and (2) the ability to grandfather certain entities with existing contracts
Regarding BTMG grandfathering, FERC said, "To the
extent an entity is a party to an existing contract for such a purpose, we find that it is appropriate to grandfather such entity so that it may continue using BTMG for the current
term remaining under the existing contract."
FERC ordered that PJM shall, "grandfather entities with existing contracts for the specific purpose of effectuating a
BTMG arrangement for the current term remaining under the existing contract."
FERC did not direct PJM to change its rules for non-retail BTMG, because non-retail BTMG is already capped
In light of the changes adopted by FERC, the Commission said that there is insufficient evidence in the record to find that the existing Tariff
provisions governing capacity market rules, reliability, and resource adequacy are unjust
and unreasonable or unduly discriminatory or preferential.
FERC further said that there is not sufficient evidence to conclude that additional Tariff changes
regarding Interconnection Customers electing to use their generating facilities to serve
Co-Located Load are needed with respect to capacity market rules, reliability, and
resource adequacy to ensure that the PJM Tariff remains just and reasonable.
FERC Docket EL25-49-000 et al.
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Orders Creation Of New Transmission Services In PJM Recognizing Certain Co-located Loads Agree To Curtail
December 18, 2025
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Copyright 2025 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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