FERC Complaint Asks Federal Regulators to Reallocate PJM Transmission Costs Driven by Data Center Buildout

A complaint filed at the Federal Energy Regulatory Commission on May 8 argues that PJM Interconnection’s existing transmission cost allocation rules have been rendered unfair by the disproportionate transmission expansion now driven by data centers, with the burden falling on legacy load classes rather than the new entrants causing the upgrades.

The filing arrives one day after the Oregon Public Utility Commission, in docket UM 2377, ordered Portland General Electric to absorb data center customers above 20 MW into a new rate class under the state’s POWER Act, protecting other customer classes from cross-subsidization.

Two filings, two days, two layers of regulatory geography. The state-level fight over who pays for data center growth has now reached federal jurisdiction.

The state pattern. Oregon becomes the fifth state where regulators or legislators have walled off commercial and industrial ratepayers from data center cost recovery. The pattern began in California, where CPUC procurement reviews started flagging hyperscaler-driven capacity costs in 2024. Virginia followed. Pennsylvania PUC issued similar guidance. Maryland enacted the RELIEF Act on April 14 of this year, barring data center grid costs from utility rate cases and prohibiting RTO costs from being recovered from non-data-center classes. Each action shares an underlying premise: the load that triggers the infrastructure should pay for the infrastructure.

The Oregon ruling itself stems from months of pressure by the state’s Citizens’ Utility Board and the Alliance of Western Energy Consumers. PGE’s earlier filing, advocates argued, had effectively socialized data center growth across residential and commercial bills.

The federal escalation. What the May 8 FERC complaint adds is jurisdictional reach. State PUCs control retail rate design, but transmission cost allocation across PJM is a federal matter. PJM’s transmission rate base feeds the demand-charge component of bills for tens of thousands of commercial and industrial customers across thirteen states and the District of Columbia. A federal reallocation would not require thirteen separate state proceedings.

The complaint did not name a single utility or single project. Its argument is structural: that PJM’s existing methodology for spreading transmission costs was designed for a load profile and a customer-class distribution that no longer reflects the system being built.

PJM has acknowledged the disruption obliquely. A PJM-commissioned report released May 7 called for a holistic market overhaul rather than the patch-by-patch tariff filings of the last eighteen months. The transmission cost allocation question sits inside that overhaul.

The mechanism for commercial customers. Demand charges in PJM territory are not a single line. They embed transmission service charges, capacity charges, and ancillary service costs, with transmission representing a meaningful and growing share. A typical commercial customer in PSE&G GLP, BGE Schedule GL, or PEPCO General Service territory sees transmission-related demand components of $4 to $9 per kW-month, depending on rate class and zone. As PJM’s transmission expansion plan grows to accommodate large-load interconnection requests, that component rises.

If FERC opens the question and reallocates a portion of transmission cost responsibility toward the loads driving the buildout, the demand-charge inflation curve for commercial buildings in Mid-Atlantic territories moderates. Not eliminated. Moderated.

For commercial buildings already economically marginal on peak shaving, that matters in a way that a 20 percent demand-charge component still matters. Behind-the-meter battery storage that captures a percentage of demand-charge savings produces less revenue when the demand charge falls, and produces more revenue when it rises. The state-level rate-class isolations push in opposite directions on different parts of the bill: data center cost insulation lowers one component, capex-driven rate base inflation raises another.

The net direction in PJM territory still points up. The Lawrence Berkeley National Laboratory transmission cost forecasts and the EEI capital expenditure plans both project commercial demand-charge components rising through 2030 even with full data center cost reallocation. The reason is that the physical transmission still gets built. The question the FERC complaint poses is who pays for it on the back end.

The procedural reality. FERC complaints follow a well-defined timeline. PJM has typically thirty days to answer. Intervenor filings will follow. The Commission will likely set a paper hearing or technical conference. A decision on the complaint itself, depending on procedural posture, could take twelve to eighteen months. A decision that requires PJM to file new tariff language adds another six to twelve months. Implementation effects on commercial bills lag further.

What changes immediately is the framing. Until May 8, the data center cost-shift fight was a state matter. Five states had picked a side. The forty-five states without similar rulings were largely silent. A FERC complaint puts every state in the PJM footprint into the same proceeding regardless of whether their legislatures have acted. Pennsylvania, Maryland, and Virginia ratepayers already had state-level protection. New Jersey, Delaware, Ohio, West Virginia, Kentucky, North Carolina, Tennessee, Indiana, Illinois, Michigan, and the District of Columbia did not. Now they are coupled to the same federal docket.

The CAISO comparison. California’s $700 million 500-kV transmission award to California Grid Holdings on May 7, advancing the state’s $7 billion 2025-2026 Transmission Plan, illustrates the scale of buildout the cost-allocation question applies to. CAISO transmission expansion serves both Imperial Valley resource development and Silicon Valley load growth. The cost recovery for that build flows into PG&E, SCE, and SDG&E rate bases and ultimately into commercial demand charges. California’s Public Advocates Office has already begun probing whether hyperscaler load should bear a higher share of transmission allocations in CAISO territory.

The questions FERC is now being asked about PJM are the same questions California is asking about CAISO. The outcomes may diverge by jurisdiction, but the framework is converging.

Where it leaves commercial buildings. A building owner in PJM territory looking at on-site storage economics today is making a bet on the trajectory of demand charges over a ten-year horizon. The case for storage strengthens when demand charges rise and weakens when they fall. The May 8 filing introduces a downside scenario for the demand-charge component that did not exist on May 7. It does not change the upside scenario, which is driven by capex inflation independent of cost allocation.

Building owners in territories where the question has been decided at state level have already absorbed the news. Building owners in the rest of PJM now have a reason to read FERC dockets.

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