American Electric Power, one of the largest utilities in the country, has put two of the nation’s most important grid operators on notice: fix your interconnection backlogs or we may walk. The warning, directed at both PJM Interconnection and the Southwest Power Pool, marks one of the most aggressive moves yet by a major U.S. utility struggling to keep pace with a tidal wave of electricity demand driven by artificial intelligence data centers.
AEP serves customers across parts of 11 states, from the coal country of West Virginia through Ohio’s industrial corridor and out to the wind farms of Oklahoma and Texas. That footprint straddles both PJM and SPP, the regional transmission organizations responsible for managing the grid and processing requests to connect new power plants and large electrical loads. Both organizations are now buckling under interconnection queues that have ballooned far beyond what their processes were built to handle.
The pressure has reached a point where a sitting commissioner at the Federal Energy Regulatory Commission is using emergency-room language to describe conditions inside the nation’s largest wholesale electricity market.
A federal commissioner calls PJM’s situation an emergency
FERC Commissioner David Rosner issued formal concurrences on proceedings involving both SPP and PJM in recent months, and the language he chose was unusually blunt for a regulatory filing. In his concurrence on PJM’s tariff revisions under docket ER26-1556, Rosner wrote that “PJM is in triage.” That is not boilerplate. It is a federal official saying the grid operator serving 65 million people across 13 states and the District of Columbia cannot process incoming requests fast enough to maintain orderly operations.
Rosner tied PJM’s interconnection reforms directly to reliability and resource adequacy concerns, framing the backlog not as a paperwork problem but as a threat to the stability of the grid itself. His concurrence accompanied a binding FERC order, giving it the weight of an official, on-the-record assessment rather than casual commentary.
In a separate concurrence on SPP’s proceedings, Rosner flagged the timing of SPP’s next queue application window as a concrete pressure point. He treated the delays as a structural obstacle serious enough to push utilities toward drastic action. Taken together, the two concurrences amount to a public warning from inside FERC that the interconnection system is failing under the weight of new demand.
Why data centers have broken the queue
For decades, electricity demand in the United States grew slowly or not at all. Grid operators designed their interconnection processes around that reality, reviewing applications in batches and studying the grid impacts of each proposed project over timelines that could stretch three to five years or longer. The system worked well enough when the queue was populated mainly by conventional power plants and modest renewable projects.
AI changed the math. A single hyperscale data center can consume 100 to 300 megawatts of continuous power, roughly the output of a mid-sized natural gas plant, and tech companies are building dozens of them simultaneously. AEP’s leadership has publicly discussed receiving interest for between 10 and 15 gigawatts of potential data center load on recent earnings calls, a figure that would represent a massive expansion of the company’s generation needs. The Department of Energy has projected that U.S. data center electricity consumption could double or even triple by 2028, depending on the pace of AI deployment.
When a company like AEP signs a contract to serve a data center that will be built in 18 to 24 months, it needs new generation or firm transmission access on a matching timeline. If the interconnection queue takes four or five years to clear, the utility faces an impossible gap. It can lose the customer, try to build outside the organized market structure, or pressure the grid operator to move faster. AEP appears to have chosen the third option, with the implicit threat of the second as leverage.
What leaving an RTO would actually mean
Withdrawing from a regional transmission organization is not as simple as canceling a membership. RTOs manage transmission planning, wholesale electricity markets, and reliability coordination across vast territories. A utility that exits must negotiate the unwinding of cost-sharing agreements, transmission rights, and market participation rules. The process typically requires FERC approval and can take years.
No major utility has left PJM or SPP in the modern era of organized wholesale markets, which makes AEP’s threat all the more striking. The company is not a small municipal utility testing boundaries. It is one of the largest electricity providers in the country, and its departure from either RTO would force a fundamental restructuring of transmission planning and cost allocation across multiple states.
That reality cuts both ways. AEP’s size gives its threat credibility, but it also raises the stakes of following through. Leaving an organized market could expose the company to higher costs for transmission access, reduce its ability to buy and sell power efficiently, and invite regulatory scrutiny from state commissions that depend on RTO membership to keep rates competitive. The threat works best as a catalyst for reform, not as an actual exit strategy.
FERC Order 2023 looms in the background
The interconnection crisis did not catch federal regulators entirely off guard. In 2023, FERC issued Order 2023, a sweeping overhaul of interconnection queue rules designed to clear backlogs and impose stricter deadlines on grid operators and project developers alike. The order introduced “first-ready, first-served” principles, required larger financial deposits to discourage speculative applications, and set firm timelines for completing interconnection studies.
But implementation has been uneven. PJM and SPP are both in the process of incorporating Order 2023’s requirements into their tariffs, and the transition has created its own friction. Legacy applications filed under the old rules still clog the queue, while new applications under the reformed process are only beginning to move through. Rosner’s concurrences suggest that even with Order 2023 in effect, the reforms may not be sufficient to handle the volume and urgency of demand now hitting the system.
That gap between reform on paper and relief in practice is what makes AEP’s position so pointed. The utility is not arguing that FERC has ignored the problem. It is arguing that the fixes are not arriving fast enough to match the commercial timelines its customers are demanding.
What other utilities are watching for
AEP is not the only large utility fielding massive data center requests. Dominion Energy, which operates in PJM’s territory across Virginia, has described similar surges in load growth tied to the data center corridor in Northern Virginia, already the densest concentration of data centers on Earth. Duke Energy, Southern Company, and Entergy have all flagged AI-driven demand as a planning challenge in recent regulatory filings and investor presentations.
If AEP’s threat produces meaningful concessions from SPP or PJM, whether faster study timelines, dedicated processing tracks for large loads, or other accommodations, those changes will set a precedent. Other utilities facing the same bottleneck will push for equivalent treatment. If the threat fails to move the needle, it could accelerate a broader trend of utilities exploring alternatives to RTO membership, including bilateral contracts and self-supply arrangements that bypass the organized market entirely.
For policymakers, the stakes extend beyond any single utility’s frustration. The interconnection queue is the gateway through which every new power plant, battery storage project, and large industrial load must pass to connect to the grid. If that gateway cannot handle the volume of requests generated by the AI buildout, the bottleneck will constrain not just data center growth but the broader energy transition, including the renewable generation and storage projects needed to keep the grid clean and reliable.
How FERC, PJM, and SPP respond to AEP’s challenge over the coming months will reveal whether the nation’s grid governance structures can adapt to a pace of change they were never designed for, or whether the largest utilities in the country will start charting their own course outside the system.
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*This article was researched with the help of AI, with human editors creating the final content.
