By Laila Kearney

NEW YORK, Nov 21 (Reuters) - Talen Energy has asked federal regulators to rehear its rejected agreement to ramp up power to an Amazon data center located on the site of Talen's Pennsylvania nuclear plant, according to a filing on Thursday.

The Federal Energy Regulatory Commission this month struck down Talen's interconnection deal to increase the capacity of the Amazon data center beyond 300 megawatts.

The decision was seen as a blow to Talen and other independent electricity generators whose company shares had risen this year on the prospect of striking similar deals to connect Big Tech data centers directly to their power plants.

"With only a few cursory paragraphs of flawed analysis, the (FERC) erroneously rejected a privately negotiated agreement that was supported by all signatories and in so doing damaged U.S. economic and national security interests," Talen said in its rehearing request.

Talen said FERC failed to apply the correct legal standard in making its decision, and that it did not take into account all of the recorded evidence or adequately explain why the pact was rejected.

Amazon bought the data center connected directly to Talen's Susquehanna nuclear power plant, in an arrangement known as co-location, early this year.

Co-located arrangements are seen as a way to fast-track the build-out of data centers, some of which require the amount of electricity needed for entire cities. By placing the centers at the power source, they can power up more quickly than waiting in queues to connect through a utility.

Regulated utilities American Electric Power and Exelon challenged the data center's interconnection agreement and asked FERC to either reject it or hold a hearing for more information.

The utilities said Talen's agreement could have forced the broader public to pay for costly upgrades related to connecting the data center. The data center would also divert power currently supplied to the broader grid, which the utilities said raised reliability concerns.

Talen and its supporters say any upgrades would be privately funded. The company also said that its data center was not connected to the broader grid, which would block cost shifting and reliability problems.

FERC, in an order issued on Nov. 1, sided with AEP and Exelon and blocked the interconnection agreement.

(Reporting by Laila Kearney; Editing by Chizu Nomiyama)

((Laila.kearney@thomsonreuters.com; (917) 809-0054;))