*

Constellation seeks rules on connecting onsite data

centers to

directly to power plants

*

Co-location criticized for potential grid reliability

risks

*

Rival Exelon ( EXC ) says it supports fair policies for

co-location

projects

(Adds Exelon comment, new details from the complaint

throughout)

Nov 26 (Reuters) - Constellation Energy ( CEG ) is

asking U.S. regulators to make new rules for connecting

customers directly to power plants, saying insufficient guidance

has let electric utilities unfairly thwart attempts to site, or

co-locate, data centers at its nuclear facilities.

In a complaint filed against grid operator PJM

Interconnection with the Federal Energy Regulatory Commission on

Friday, Constellation asked for a fast-tracked review to set

rules that would govern connecting fully isolated co-located

customers.

Constellation, the largest operator of U.S. nuclear

power plants, said that some of its own projects to develop data

centers at power plant sites are being stymied by the lack of

clarity.

Its Limerick site in Pennsylvania is being threatened by

the lack of rules governing co-location by PJM, the largest U.S.

grid operator that oversees supply in a 13-state region, it

added.

Co-location allows energy-intensive customers like data

centers to quickly access large amounts of electricity directly

from power plants instead of waiting in lengthy lines to connect

to the broader grid.

The arrangements have promised to expedite Big Tech's

generative artificial intelligence expansion and have propelled

company shares of Constellation this year on the prospect of

signing multiple co-located power deals.

Co-location has also drawn recent criticism from utilities

and regulators, which have warned that the deals create power

reliability risks by diverting electricity from the grid and

threaten to raise power bills.

FERC earlier this month rejected an agreement to increase

the power capacity of an Amazon ( AMZN ) data center connected

directly to Talen Energy's ( TLN ) Susquehanna nuclear power

plant in Pennsylvania, citing risks to grid reliability and a

rise in costs for consumers.

Constellation backed Talen in that regulatory battle brought

by utilities Exelon ( EXC ) and American Electric Power ( AEP ).

"Utilities have taken the law into their own hands and are

unilaterally blocking co-location projects unless the future

data center customers accede to utility demands," Constellation

said in its complaint.

Those demands include requiring the projects take certain

transmission and distribution services from the utility or its

affiliates, Constellation said.

It said Exelon ( EXC ) refused to complete interconnection work

at the LaSalle nuclear plant in Illinois for a new co-located

data center. Constellation said the refusal could cost it $15

million to $19 million.

Blocking or delaying data center power supply could set back

the U.S. technology industry in the global race to dominate AI

and threaten national security, Constellation argued.

Exelon ( EXC ) told Reuters on Tuesday that it would participate in

the FERC proceeding and advocate for policies that were fair,

support reliability and affordable power prices.

"Exelon ( EXC ) fully supports efforts to foster innovation and

enhance national security, and supports customers' rights to

co-locate with generators safely, reliably, and in compliance

with established rates," Exelon ( EXC ) said in an email.

PJM and Constellation did not immediately respond to

requests for comment.