NEW YORK, Nov 1 (Reuters) - U.S. energy regulators

rejected an amended interconnection agreement for an Amazon ( AMZN ) data

center connected directly to a nuclear power plant in

Pennsylvania, a filing showed on Friday.

Members of the Federal Energy Regulatory Commission said the

agreement to increase the capacity of the data center located on

the site of Talen Energy's Susquehanna nuclear generating

facility could raise power bills for the public and affect the

grid's reliability.

As Big Tech races to grow its data centers needed to

expand technologies like generative artificial intelligence,

locating centers directly on power plant sites has become an

attractive option to power up quickly.

"Co-location arrangements of the type presented here

present an array of complicated, nuanced and multifaceted

issues, which collectively could have huge ramifications for

both grid reliability and consumer costs," FERC Commissioner

Mark Christie said in the order.

The Talen agreement, however, would divert large amounts

of power currently supplying the regional grid, which FERC said

raised concerns about how that loss of supply would affect power

bills and reliability. It was also unclear how transmission and

distribution upgrades would be paid for.

FERC Chairman Willie Phillips dissented from the vote,

indicating that it could slow U.S. dominance in the global

contest over artificial intelligence.

"It is a step backward for both electric reliability and

national security," Phillips said.