FERC Orders “Aggressive Targeted Action” to Speed Power to Support Data Centers

The Federal Energy Regulatory Commission (FERC) issued orders under Section 206 of the Federal Power Act to the six regional power grid operators in its jurisdiction, directing them to reform rules governing how data centers and other large energy consumers connect to the power grid, according to a release by FERC.

“The orders mark one of the most significant actions the Commission has taken to modernize the nation's electric markets and push the economy into the future by speeding integration of large energy users like data centers onto the grid with additional rigorous consumer safeguards,” according to FERC.

FERC said it is moving to ensure transmission reliability and an uninterrupted supply of electricity by requiring RTOs and ISOs and grid operators to either defend or revise their tariffs. The order was a 5-0 unanimous bipartisan vote. 

The RTOs and ISOs under FERC jurisdiction affected here are PJM Interconnection, LLC (PJM); Midcontinent Independent System Operator, Inc. (MISO); Southwest Power Pool, Inc. (SPP); California Independent System Operator Corporation (CAISO); ISO New England Inc. (ISO-NE); and New York Independent System Operator, Inc. (NYISO).

“We are setting the stage for a resilient, reliable, and forward-thinking grid that empowers communities and safeguards consumers by transforming the way large energy users access the grid. It also is critical that FERC provide certainty for investors by directing the markets to protect existing deals and unlock opportunities for technological advancement and economic expansion. We can facilitate both, which is exactly what we did today,” said FERC Chairman Laura V. Swett.

FERC's action focuses on the unique operational profiles of large energy users, including those co-located with their own generation, and on the distinct challenges each regional grid operator faces in meeting soaring demand from the proliferation of large loads, according to FERC’s release.

Under the orders, each RTO/ISO, and its transmission owners have 60 days to either justify why their current tariffs remain just and reasonable without provisions tailored to large loads, or to file tariff changes that address the issues the Commission identified.  Each tailored order provides five categories of reform for the grid operators to address:

• Developing efficient transmission service application and study processes, including consideration of alternative transmission technologies
• Preventing cost shifting and requiring transparency into transmission costs
• Accommodating co-location agreements and behind-the-meter generation
• Providing new transmission services for flexible large loads
• Developing a process to study generating facilities that serve electrically proximate large loads and co-located loads

In response, the Consumer Energy Alliance commended FERC for taking action on large load interconnections, saying the action would provide customer protections.

“Over the past year, there has been a lot of angst over how to address consumer concerns around potential cost shifts associated with connecting large energy users, including artificial intelligence data centers, to the grid,” said CEA Executive Vice President for Public Policy and State Affairs Marc Brown. “We look forward to reviewing the final order. FERC appears to have recognized the importance of avoiding a one-size-fits-all approach to large load interconnections, which is consistent with CEA’s position.”

CEA’s release said opposition to data centers based on concerns about water or electricity supply was “unsubstantiated fear-mongering.”

“[D]ata centers play an increasingly important role in America’s national security, economic competitiveness, and digital infrastructure, and legitimate consumer concerns should be addressed through facts and transparency,” according to the CEA release.

Gretchen Kershaw, a former FERC lawyer currently with Grid Strategies, said FERC did not take the step of asserting jurisdiction over the rates, terms, and conditions of retail service to these new large loads as suggested by Energy Secretary Wright’s letter to FERC that initiated this action. Instead, the Commission went “right up to the line” of the traditional jurisdictional boundary as Chair Swett had indicated they would. 

“Going beyond simply considering advanced transmission technologies as the Commission had required in recent orders (1920 on transmission planning and 2023 on generator interconnection), in this action according to the Commissioners’ oral statements at the open meeting this morning, the Commission requires actual analysis, public reporting or results, and an explanation of why the utility did not use them. This should help make sure we maximize the use of the existing grid before more expensive actions are taken,” according to Grid Strategies.

Jackson Ewing, director of energy and climate policy at Duke University’s Nicholas Institute for Energy, Environment & Sustainability, said the FERC ruling emphasizes getting more from existing infrastructure broadly and gives runway for flexible interconnection options specifically.

“States and transmission organizations should prioritize these pathways. If they fail to do so, it will likely accelerate deployment of behind-the-meter gas generation operating as primary supply rather than reliability backstop,” Ewing said.

Much of the action in the wake of FERC’s large load pronouncements will center on where its jurisdiction starts and stops, Ewing said.

“That is important, but equally important is the degree to which the FERC show cause orders drive utilities, RTOs and regulators to implement flexible interconnection.” Ewing said.

Meanwhile, JP Morgan has reported that roughly 60% of planned 2027 data center capacity has yet to begin construction, while at least 20 projects representing nearly $42 billion in investment were canceled in the first quarter of 2026 due to permitting and infrastructure challenges.

One of the major hurdles J.P. Morgan highlights is the ability of tech companies to secure the massive amounts of electric power required from utilities.