FERC Set the PJM Behind-the-Meter Netting Threshold at 50 Megawatts, Leaving Commercial-Scale Systems Below the Line

The Federal Energy Regulatory Commission found on December 18, 2025 that PJM Interconnection’s treatment of retail behind-the-meter generation was no longer just and reasonable. It subsequently accepted PJM’s proposal to set the materiality threshold for that practice at 50 megawatts. On April 16, 2026, the Commission partially accepted and partially rejected PJM’s compliance filing. PJM refiled on May 18. A rehearing order issued in June largely sustained the original findings. The docket remains open.

The reform has been reported in headline form as a tightening of behind-the-meter generation rules generally. The threshold that came out of it describes a class of resource that almost no commercial building operates.

The mechanism. PJM’s retail behind-the-meter generation rules have historically permitted network customers to net an unlimited amount of load at a given electrical location. Output from an on-site resource never enters the transmission system, so the customer’s measured peak demand, which is the billing determinant that drives transmission cost assignment, falls by whatever the resource was producing in that interval. The result is a reduction in transmission charges rather than a separate credit or payment. Law firm analyses of the docket from Akerman and Day Pitney describe the practice in those terms.

That structure is unremarkable for a building running a few hundred kilowatts of on-site capacity. It became contested when the same rule was applied to loads measured in hundreds of megawatts sited next to dedicated generation, which is the configuration the Commission addressed in December.

The December finding. FERC held that the arrangement, as it operated for large co-located loads, could no longer be sustained as just and reasonable, and directed PJM to propose a threshold defining how much netting would be treated as material. The finding established the principle. It did not fix the number, which was left to the compliance process.

The threshold. PJM proposed 50 megawatts, and FERC accepted that level. Fifty megawatts is the scale of generation paired with a hyperscale data center campus, which is the arrangement that prompted the proceeding. It bears no relationship to the electrical service of an office tower, a hospital, a distribution warehouse or a hotel, where on-site resources are ordinarily specified in hundreds of kilowatts.

The compliance track. The proceeding did not close with the threshold. FERC partially accepted and partially rejected PJM’s compliance filing on April 16, 2026. PJM submitted a revised filing on May 18. The Commission issued a rehearing order in June that largely sustained its earlier findings. The docket is still open, and further compliance rounds are possible.

Below the line. The practical effect for building-scale storage inside PJM is that the netting benefit is untouched. A behind-the-meter battery in a New Jersey office building, a Chicago hospital or a Northern Virginia retail portfolio operates orders of magnitude below the 50 megawatt threshold. Its output continues to reduce the peak demand figure against which PJM-zone transmission costs are assigned, which is a material component of the savings case for commercial storage in PSE&G, ComEd, PECO, BGE and Dominion territory.

This is an inference from the threshold rather than a holding directed at commercial customers, and it carries the limits of one. Commercial-scale behind-the-meter systems were not participants in the proceeding, were not the conduct the Commission examined, and have no standing in the calibration that resulted. The reform reached past them because of where the line was drawn, not because anyone argued on their behalf.

Two other dockets. Customer-sited resources drew regulatory attention elsewhere in the same fortnight, in both cases through tariff and settlement rules rather than incentive budgets.

At an August 9 stakeholder session, MISO members endorsed stricter performance requirements for demand response resources while pressing the regional transmission organization to register new entrants carefully, according to RTO Insider. The reforms target fraudulent or unverifiable demand response registrations that clear in the capacity market without delivering during events. Performance verification favours resources whose response is metered and provable over commitments to curtail load.

On its August 6 agenda, the Minnesota Public Utilities Commission took up dockets E002/RP-24-67 and E002/CN-23-212 and directed Xcel Energy to develop a tariff supporting customer-owned thermal batteries, with a tariff filing to follow, per a Stoel Rives regulatory summary. The same agenda carried a site permit item for a battery system accompanying the 200 megawatt Summit Lake Solar Facility under docket IP7153/ESS-25-88. The technology in the thermal storage item is not electrochemical, so there is no product overlap with battery systems, but the instrument is a customer-owned-storage tariff, and Xcel operates across eight states including Colorado and Wisconsin. Tariff templates travel between jurisdictions in a way that discretionary programme budgets do not.

Across three footprints in two weeks, the direction is toward defined eligibility written into tariffs and settlement rules. Tariff terms are more durable than programme budgets, and they are also more precise about who falls inside them.

What is unsettled. The risk to commercial-scale behind-the-meter netting in PJM is not the current figure. It is that a materiality threshold is a calibration, and a calibration can be revisited in a later filing without disturbing the underlying finding. FERC settled the principle in December and the number afterward. The compliance docket remains open following PJM’s May 18 refiling and the June rehearing order, which means the number retains the status of an accepted proposal in an active proceeding rather than a closed question.

For now, commercial storage in PJM sits below a threshold set with a different class of customer in view. That is a favourable position, and a contingent one.

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