December 19, 2025

At the December 18, 2025 open meeting, the Federal Energy Regulatory Commission (Commission) issued an order on a show cause proceeding regarding “Co-Located Load” and generation in the PJM Interconnection L.L.C. (PJM) region.  While the order is specific to PJM and the record in the proceeding, the Commission ordered the creation of three new types of transmission service an Eligible Customer may use to serve Co-Located Load, which could be adopted in other regions in the future:

1. Interim, non-firm transmission service that would be available until all Network Upgrades necessary to provide Network Integration Transmission Service (NITS) are complete;
2. Firm Contract Demand transmission service; and
3. Non-Firm Contract Demand transmission service. 

To serve Co-Located Load, an Eligible Customer may elect Firm Contract Demand and Non-Firm Contract Demand transmission services instead of NITS or interim, non-firm NITS.  The Commission described the new contract demand options as reflecting a Co-Located Load’s ability to limit its demand on the transmission system and potentially avoid unnecessary transmission system buildout.  The Commission clarified that an Eligible Customer must be assessed regulation and black start ancillary services on a gross demand basis, regardless of the transmission service selected, to ensure the Co-Located Load contributes to cost recovery for these services. 

The Commission also established a paper hearing to determine the just and reasonable rates, terms, and conditions for the three new services.  The paper hearing is to address eleven questions and parties should discuss, among other items, the rate for Non-Firm Contract Demand transmission service, i.e., service that is curtailed before firm transmission service and is not considered for resource adequacy, and whether there should be a transmission charge, in addition to regulation and black start charges, when the rate paying entity does not reserve service for a period of time, to reflect that these ancillary services could not be provided without transmission service.  Commissioner Chang in her concurrence put a finer point on this noting that the Commission seeks comments on whether the rates, terms, and conditions for the new Contract Demand  transmission services should reflect a minimum charge that recognizes that, without the transmission system, the Co-Located Load and generators could not operate as envisioned.

For the paper hearing on the rates, terms, and conditions of the new transmission services, the Commission asks the following questions:

1. What are the appropriate rates, terms, and conditions for the new Firm Contract Demand transmission service, including whether it would be just and reasonable to apply the current zonal firm Point-to-Point Transmission Service (PTPS) charges to this new service and whether it would be just and reasonable and consistent with cost causation to include charges for any of PJM’s administrative services?
2. What are the appropriate rates, terms, and conditions for the new Non-Firm Contract Demand transmission service, including whether it would be just and reasonable to apply the current zonal non-firm PTPS charges to this new transmission service and whether it would be just and reasonable and consistent with cost causation to include charges for any of PJM’s administrative services?
3. As noted above, a Co-Location Arrangement is synchronized to the transmission system.  Should the rate paid by an Eligible Customer on behalf of a Co-Located Load taking only the new Non-Firm Contract Demand transmission service that elects to not reserve any amount of that service for a period of time (e.g., one month) reflect not only charges for regulation and black start services, but also an additional charge given that regulation and black start services could not be provided without the transmission system?  If so, how should that additional charge be determined?
4. As noted above, a Co-Location Arrangement is synchronized to the transmission system.  Should the rate paid by an Eligible Customer on behalf of a Co-Located Load taking only a de minimis amount of the new Firm or Non-Firm Contract Demand transmission services reflect not only (i) charges for regulation and black start service and (ii) the transmission service charges for that de minimis amount of service, but also an additional charge reflecting that the Co-Location Arrangement is physically connected and synchronized to the PJM transmission system?  If so, how should that additional charge be determined?
5. What is the appropriate penalty charge or other remedial action that PJM should take to address any unreserved use of the PJM transmission system for an Eligible Customer taking Firm Contract Demand transmission service on behalf of a Co-Located Load?
6. What is the appropriate penalty charge or other remedial action that PJM should take to address any unreserved use of the PJM transmission system for an Eligible Customer taking Non-Firm Contract Demand transmission service on behalf of a Co-Located Load?
7. What are the appropriate mechanisms for an anti-toggling feature for the Firm Contract Demand transmission service, including the appropriate minimum service period and minimum notice period for discontinuing or modifying the level of service?  “Toggling” is the opportunistic switching between compensation structures. 
8. What interconnection requirements and operational practices are necessary for special protection schemes to maintain system reliability (e.g. the need for full redundancy of such schemes) in the event that a Co-Located Load itself or its associated generator trips offline?
9. What communications, alarm, Supervisory Control and Data Acquisition or other requirements are necessary for PJM to monitor Co-Located Load transmission system demand status; ensure that relay settings are consistent with special protection scheme design; and inform system operator action, in order to limit withdrawals from Eligible Customers on behalf of Co-Located Load that exceed the amount of Firm or Non-Firm Contract Demand transmission services?
10. What other eligibility requirements, e.g., interconnection requirements or operational practices, are necessary for an Eligible Customer to take Firm Contract Demand or Non-Firm Contract Demand transmission service on behalf of Co-Located Load?
11. What are the appropriate procedures to govern the circumstances under which PJM curtails an Eligible Customer taking the interim, non-firm transmission service, Firm Contract Demand transmission service, or Non-Firm Contract Demand transmission service on behalf of a Co-Located Load during emergency procedures?  In particular, can PJM shed all or a portion of a Co-Located Load on whose behalf an Eligible Customer takes Non-Firm Contract Demand transmission service while continuing to serve all or a portion of a Co-Located Load on whose behalf an Eligible Customer takes Firm Contract Demand transmission service?