FERC Allows Data Centers to Connect Directly to Power Plants

The Federal Energy Regulatory Commission issued a unanimous order on December 18, 2025, permitting technology companies to bypass traditional grid queues by connecting massive data centers directly to power plants via colocation agreements. The regulatory shift follows requests from the Trump administration to expedite energy access for artificial intelligence and domestic manufacturing.

The order specifically targets the mid-Atlantic grid territory, where data center expansion currently outpaces new power source development. This imbalance risks electricity shortages for approximately 65 million people. The decision was triggered by a dispute between Amazon Web Services and the owner of the Susquehanna nuclear power plant in Pennsylvania.

PJM Interconnection must now establish the rates and conditions for these colocation scenarios. While the Trump administration and power plant owners support the move, electric utilities and consumer advocates warn that the policy could increase energy prices and shift grid maintenance costs onto regular ratepayers.