FERC Orders Six Grid Operators to Justify or Rewrite Data Center Interconnection Rules

The Federal Energy Regulatory Commission took its most direct shot yet at the data center power-access problem last week, and the mechanism it chose tells you a lot about where the legal risk sits.

On June 18, FERC voted unanimously to issue tailored show-cause orders to the six regional grid operators under its jurisdiction: PJM, the Midcontinent Independent System Operator, Southwest Power Pool, the California ISO, ISO New England, and the New York ISO. Each one now has 60 days to prove its current tariffs for connecting large energy users are just and reasonable, or file proposed changes. A separate 30-day deadline requires each operator to submit a resource adequacy report explaining how it plans to keep enough generation available for both existing customers and new large loads.

Texas is not in the picture. ERCOT operates outside FERC's jurisdiction, and the orders do not reach it, even though Texas is one of the fastest-growing data center markets in the country.

The commission deliberately avoided a Notice of Proposed Rulemaking, the standard regulatory path that routinely takes years to finish. According to FERC's own press release, it used Section 206 of the Federal Power Act to issue targeted show-cause orders instead, a procedural choice that shifts the legal burden onto the grid operators. Their existing tariffs stand only if they can successfully defend them. FERC doesn't have to prove the current rules are broken; the operators have to prove they aren't.

That choice was not accidental. As reported by E&E News, Grid Strategies president Rob Gramlich noted that FERC went right up to the line of its jurisdiction rather than accept the broader rule Energy Secretary Chris Wright had originally requested. Wright directed FERC in October 2025 to consider reforms after arguing that interconnection delays threatened U.S. competitiveness in AI. The commission reviewed more than 3,500 pages of public comments before acting.

The underlying numbers explain why this got federal attention. As reported by TechCrunch, data centers will be responsible for paying their own interconnection costs under the orders, a consumer-protection condition that the commission embedded explicitly. FERC Chair Laura Swett framed the orders in terms of speed and cost protection simultaneously, telling reporters the commission was "holding grid operators accountable with tight, ambitious deadlines."

The five areas FERC identified for potential reform, per Data Center Knowledge, include transmission service application and study processes, cost-allocation mechanisms to prevent existing customers from subsidizing large-load upgrades, and co-location arrangements between data centers and on-site generation. That last point matters for what's already happening in the market: utilities, power producers, and hyperscalers are actively pairing data center campuses with nearby gas, nuclear, and renewable generation. FERC's focus on co-located generation signals that regulators see those arrangements as part of the solution, not a workaround.

The jurisdiction question isn't settled. State regulators have been vocal about their concerns. The National Association of Regulatory Utility Commissioners filed comments in April warning that federal large-load rules would impede states' ability to protect retail customers and adapt to region-specific conditions. FERC's region-by-region approach, rather than a single national standard, is a direct response to that pressure. It's also a litigation hedge. A uniform national rule would have been a cleaner target for state-level legal challenges.

The 60-day window is real process, not a formality. Each grid operator's filing enters its own docket, where intervenors, state commissions, and load-serving entities can contest the operator's position before FERC acts. What comes out the other end will vary by region. PJM has said it views the orders as a continuation of work already underway. For data center developers waiting on interconnection studies, the practical question is whether that work produces faster, clearer processes before their contracted in-service dates arrive.

Sources cited:
- FERC press release (ferc.gov) (https://www.ferc.gov/news-events/news/ferc-launches-aggressive-targeted-action-speed-large-load-integration)
- E&E News by POLITICO (https://www.eenews.net/articles/ferc-acts-to-force-us-markets-to-protect-electricity-ratepayers/)
- TechCrunch (https://techcrunch.com/2026/06/18/ai-data-centers-just-got-a-government-mandated-fast-lane-to-the-grid/)
- Data Center Knowledge (https://www.datacenterknowledge.com/build-design/ferc-targets-grid-rules-for-data-centers-and-large-loads)
- Engineering News-Record (https://www.enr.com/articles/63195-ferc-orders-grid-operators-to-rework-data-center-power-rules)
- American Action Forum (https://www.americanactionforum.org/insight/ferc-data-center-orders-accelerate-grid-connection/)
- Mgrid.org (https://mgrid.org/2026/06/18/ferc-orders-all-six-grid-operators-to-justify-or-rewrite-large-load-tariffs-within-60-days/)