Amazon is preparing to draw power directly from the Susquehanna Steam Electric Station in Pennsylvania under a co-location arrangement that would let the company tap nuclear generation without routing it through the regional grid. The deal, filed with federal regulators under FERC docket ER24-2172, sits at the center of a growing fight over whether hyperscale data center operators should be allowed to claim dedicated output from existing power plants. Pennsylvania Governor Josh Shapiro has framed the broader Amazon investment as a $20 billion commitment that will create 1,250 jobs, but grid operators and consumer advocates are watching the energy side of the arrangement for signs it could raise costs for everyone else on the PJM wholesale market.
Why the Susquehanna co-location deal matters right now
The core tension is straightforward: when a single buyer contracts for a large share of a nuclear plant’s output and takes that load off the wholesale market, the remaining grid participants lose access to that generation during capacity auctions. PJM Interconnection, the regional transmission organization that manages the grid across 13 states, must then procure replacement capacity from other, often more expensive, sources. The question is whether that shift will push capacity auction clearing prices higher for utilities and, by extension, for residential and commercial ratepayers.
A competing hypothesis holds that if FERC approves the co-location model, dedicated load exiting the wholesale market could actually reduce demand in PJM capacity auctions, pulling clearing prices down within a couple of delivery years. The logic is that Amazon’s data centers, once served behind the meter at Susquehanna, would no longer bid for capacity through the auction at all. That scenario depends on whether the generation removed from the auction is larger or smaller than the load removed. If both generation and load leave at roughly the same scale, the net effect on clearing prices could be minimal. But if the arrangement sets a precedent that encourages other tech companies to lock up existing nuclear or gas plants, the cumulative loss of supply from the auction pool could tighten the market and drive prices up rather than down.
The FERC docket for the Susquehanna proposal centralizes the Commission’s related public documents, including dissents and concurrences from individual commissioners. Those filings show that regulators themselves are divided on how to weigh grid reliability against the economic benefits of co-location. Some comments emphasize the potential for dedicated on-site generation to improve reliability for large, always-on data centers, while others warn that shifting existing nuclear output away from the shared market could undermine regional resource adequacy.
What the filings and state records actually show
The Susquehanna plant’s Unit 1 holds a license from the U.S. Nuclear Regulatory Commission that runs through July 17, 2042. That long-duration license gives Amazon and plant operator Talen Energy a substantial runway for any power purchase agreement tied to the facility, at least from a regulatory perspective. The plant, located in Luzerne County, Pennsylvania, consists of two boiling water reactor units and has historically been a major source of baseload generation in the PJM region.
On the state side, Governor Shapiro’s office announced that Amazon plans to invest at least $20 billion in Pennsylvania data centers, a figure the governor’s press release described as the largest capital investment in state history. The same announcement projected 1,250 new jobs tied to the data center buildout, including positions in construction, operations, and ancillary services. Those numbers frame the political context: Pennsylvania officials have strong incentives to support the deal because of the jobs and tax revenue it promises, even as federal regulators weigh its effects on the broader grid and on neighboring states that share PJM’s transmission network.
The FERC proceeding, docketed as ER24-2172, specifically addresses PJM’s proposal for how co-located load at Susquehanna should be treated under the regional tariff. A central issue is whether Amazon’s data centers will be classified as behind-the-meter load, which would exempt them from certain transmission charges and capacity obligations, or whether they must continue to participate in the wholesale market like other large industrial consumers. PJM has asked FERC to bless tariff language that would define how such co-located arrangements are modeled in system planning studies and how they appear in capacity market settlements.
In parallel, state-level economic development agreements and local zoning and tax decisions will shape how the Susquehanna site is built out. While those documents are not part of the FERC record, they intersect with the federal questions because the scale and timing of the data center buildout will determine how much load is ultimately removed from the PJM capacity auctions and how quickly any market impacts materialize.
Unresolved questions around grid costs and precedent
Several gaps in the public record make it difficult to assess the full impact of this arrangement. No primary NRC or FERC document in the available filings states the exact 1.92 gigawatt volume or a specific spring activation date that have been cited in some media accounts; those figures appear only in secondary reporting. The distinction matters because the precise megawatt commitment determines how much generation is effectively removed from PJM’s capacity pool and how large the potential cost shift to other ratepayers could be. Without definitive numbers, analysts are left to work from plant nameplate capacity and generic utilization assumptions rather than contract-specific details.
PJM has not released a public operational impact study or cost-shift analysis specific to the Susquehanna co-location. Without that data, claims about whether the deal will raise or lower wholesale electricity prices for other customers are based on structural reasoning rather than modeled outcomes. Consumer advocates in the PJM footprint have argued that any arrangement pulling large blocks of low-cost nuclear power out of the auction will leave remaining ratepayers exposed to higher-cost replacement generation, potentially from gas-fired peakers or imports from neighboring regions. Supporters counter that co-location agreements attract billions in private investment, can reduce the need for new long-distance transmission lines, and may help keep existing nuclear plants financially viable by providing them with a stable revenue stream.
The Pennsylvania attorney general has been referenced in connection with related filings, largely because of the office’s traditional role in monitoring utility rates and competition. However, no extracted public statements or docket entries from that office specifically address the Susquehanna co-location proposal in ER24-2172. That absence leaves open questions about how state-level consumer protection authorities might respond if FERC approves a tariff structure that appears to raise costs for non-participating customers.
Another unresolved issue is precedent. If FERC signs off on PJM’s approach, other regional transmission organizations could follow with their own co-location frameworks. Large cloud and artificial intelligence companies have already signaled interest in long-term, firm power contracts, particularly with nuclear and hydroelectric plants that offer carbon-free baseload output. A wave of similar deals could, in aggregate, carve out substantial portions of existing generation from organized markets, complicating resource adequacy planning and potentially shifting more of the reliability burden to remaining plants and demand response providers.
Critics also worry about transparency. Traditional wholesale market purchases are visible through auction results and system operator reports, allowing regulators and consumer advocates to track how much customers are paying for capacity and energy. By contrast, bilateral co-location contracts are often confidential, making it harder to evaluate whether the public is getting a fair deal when a key asset like a large nuclear plant effectively becomes the dedicated supplier to a single corporate customer.
For now, the Susquehanna case functions as a test bed for how regulators, utilities, and major power buyers will balance decarbonization goals, economic development, and grid reliability. The plant’s long NRC license horizon, the scale of Amazon’s promised investment, and the absence of detailed public modeling all raise the stakes of FERC’s decision. Until the Commission rules on ER24-2172 and PJM publishes more granular analysis, policymakers and ratepayers across the region will be left to debate the risks and rewards of letting one of the country’s largest data center operators plug directly into one of its largest nuclear stations.
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*This article was researched with the help of AI, with human editors creating the final content.
