US energy regulator the Federal Energy Regulatory Commission (FERC), has rejected a request by energy company Talen to reconsider a decision to block Amazon Web Services (AWS) from finalising a power purchase agreement for its data centre that is colocated with a Talen nuclear plant in Pennsylvania.

FERC in November rejected the agreement, expressing concerns over the transparency of the deal and arguing it could raise consumer prices.

The regulator also denied a rehearing request, leading Talen to file a lawsuit over the matter in the Fifth Circuit Court of Appeals in January.

Bypassing the grid

FERC rejected Talen’s latest request for a rehearing last week, Reuters reported, citing government filings.

The unusual deal is one of many being sought by tech companies as they seek to secure the massive power requirements for data centres running generative AI applications.

The agreement would have seen Amazon buying power directly from the colocated plant, rather than from the utility grid.

Soon after the deal was announced, however, two utilities in regional power transmission operator PJM asked for it to be blocked.

They argued the deal could set a dangerous precedent that could see large corporate customers bypassing costs associated with the regional power grid, thus passing grid maintenance costs on to other customers, including consumers.

Talen currently supplies the data centre with 300 megawatts of power, but its proposed amended agreement would have supplied the AWS data centre with up to nearly 1,000 MW, or 1 GW, from its Susquehanna nuclear facility, roughly enough to power all homes in Philadelphia.

FERC argued the method of rerouting power away from the regional grid could worsen supply and demand imbalance in parts of the country’s electricity system.

Talen sold AWS the data centre early last year.

Nuclear-powered data centres

Amazon has also reached agreements with other nuclear power providers, including three deals announced last October for the provision of power from small modular reactors (SMRs), which have a reduced physical footprint and can be built closer to the grid.

SMRs are a new technology and none have as yet been built in the US.

Google last year signed what it called the world’s first corporate agreement to buy power from multiple SMRs, saying it would said it would buy power from Kairos Power in a move that would send a demand signal to the market, while making a long-term investment in the industry to accelerate its commercialisation.

Google said it would buy a total of 500 megawatts of power from six to seven reactors, which it said should go online from 2030 to 2035.

Microsoft is working with Constellation Energy to restart a portion of the Three Mile Island nuclear plant in Pennsylvania, the site of the worst-ever US nuclear accident in 1979, while Meta signed an SMR power deal last December.