Full Breakdown
FERC Issues Show-Cause Orders to Overhaul Large-Load Interconnection Rules
6/23/2026, 11:54:35 PM
FERC’s Show-Cause Orders Target Large-Load Interconnection
On June 18, 2026, the Federal Energy Regulatory Commission (FERC) issued six show-cause orders to the nation’s major regional transmission organizations (RTOs) and independent system operators (ISOs)—PJM Interconnection, Midcontinent Independent System Operator (MISO), Southwest Power Pool (SPP), California ISO (CAISO), ISO-New England (ISO-NE), and New York ISO (NYISO). Each entity must justify how its tariffs accommodate “large loads” such as AI data centers and propose rule changes within 60 days, or request a 90-day extension. The directive follows a Department of Energy (DOE) request to address rising electricity demand, cost-shifting concerns, and grid reliability.
Background & Context
Data-center construction accelerated sharply beginning in 2024, creating a surge in electricity demand after years of flat growth. The DOE issued an advanced notice of proposed rulemaking (ANOPR) in October 2025, prompting FERC to develop a response that attracted more than 3,500 pages of public comments. Stakeholders cited rising residential rates and grid stress as drivers for regulatory action. FERC’s orders aim to improve transparency of transmission-upgrade costs and to prevent utilities from passing large-load expenses onto other ratepayers.
Key Figures & Groups
- Laura Swett, FERC Chair (concurring statement)
- David Rosner, FERC Commissioner (cost-recovery focus)
- Judy Chang, FERC Commissioner (flexible-load services)
- David LaCerte, FERC Commissioner (alternative transmission technologies)
- Jane Rueger, Perkins Coie data-center co-chair (developer perspective)
- Mona Dajani, Cooley partner (legal analysis)
- Allison Clements, ASG partner (consumer-advocacy view)
- Nick Guidi, Southern Environmental Law Center senior attorney (environmental-advocacy)
- The six RTO/ISO entities listed above, plus non-RTO utilities serving roughly one-third of U.S. customers.
Timeline
- Oct 2025 – DOE issues ANOPR on large-load interconnection.
- Apr 2026 – FERC pledges “quick, efficient, legally durable” response.
- Jun 18 2026 – Show-cause orders issued.
- Jul 9 2026 – Intervention deadline for interested parties.
- Jul 20 2026 – Resource-adequacy reports due.
- Aug 3 2026 – RTOs may request up to 90-day abeyance.
- Aug 17 2026 – Show-cause filings due.
- Sep 16 2026 – Stakeholder comment deadline.
Data & Statistics
- Over 3,500 pages of comments submitted to FERC.
- Roughly 200 million customers (two-thirds of U.S. households) are served by the six RTOs/ISOs.
- A 2025 lightning event caused 60 data centers to shed 1,500 MW of demand in Virginia.
- ERCOT recorded five loss incidents exceeding 100 MW between Oct 2023-Oct 2024.
- Approximately one-third of Americans live outside RTO jurisdictions.
- 4,000 Sierra Club comments were filed during the earlier public-comment period.
Why It Matters / Impact
The orders seek to safeguard residential rate-payers from cost-shifting, accelerate interconnection of AI-related loads, and preserve grid reliability amid expanding high-intensity demand. By allowing regional solutions, FERC hopes to balance state authority with federal oversight while supporting the United States’ competitive position in AI and advanced manufacturing.
Official Statements & Responses
FERC Chair Swett emphasized that the orders “guard against cost-shifting among transmission customers” while preserving state control over retail rates. Commissioners Rosner and LaCerte highlighted the need for “cost-recovery agreements” and the use of “alternative transmission technologies” to unlock existing capacity. The DOE, via Secretary Chris Wright, directed FERC to address large-load impacts on grid stability. PJM, MISO, and other RTOs have been tasked with detailing generation adequacy and proposing tariff revisions, with the agency indicating willingness to impose solutions if voluntary reforms are insufficient.
Criticism & Opposition
Consumer-advocacy groups argue the regional approach leaves non-RTO areas without comparable protections, risking “costs spreading throughout the whole customer base.” Nick Guidi noted the orders are “not as ambitious as what Secretary Wright asked.” Allison Clements warned that “punting on the tougher jurisdictional questions” leaves some customers without transparency. Several stakeholders described the 60-day deadline as “aggressive” and warned of “relatively cursory reports.”
Conflicting Reports & Gaps
The orders apply only to RTO/ISO jurisdictions, creating uncertainty for the roughly 33 % of U.S. customers served by non-RTO utilities. While FERC asserts it will not intrude on state authority, critics contend that the lack of a national standard may lead to inconsistent cost-allocation outcomes across regions.
Verbatim Quotes
- “We take historic action to push our country’s electric markets and economy into the future — a future of fair cost allocation, unprecedented transparency for the American ratepayer, respect for states’ rights, efficient markets and speed to power,” — Laura Swett, FERC Chair
- “The era of one national standard for data center interconnection is over before it began,” — Mona Dajani, Co-chair, Cooley’s infrastructure, energy and real estate practice
- “By punting on the tougher jurisdictional questions, FERC has left these customers without the cost and transparency protections that will be made available to families in RTO regions,” — Allison Clements, Partner, ASG
- “The ability to curtail or operate flexibly could become one of the most valuable tools for getting new projects connected faster,” — Robert Montejo, Data-center partner, Duane Morris
- “It is requiring grid operators to design contracts that ensure that if new transmission infrastructure is built to serve a data center, “and that data center doesn’t show up, other customers, especially regular consumers, will not be on the hook for those costs,” Commissioner David Rosner said at the meeting.” — David Rosner, FERC Commissioner
- “This product is not as ambitious as what Secretary Wright asked them to do,” — Nick Guidi, Senior attorney, Southern Environmental Law Center
What’s Next
RTOs/ISOs must file show-cause responses by August 17, 2026, followed by a stakeholder comment period ending September 16. The Commission may issue further orders or enforce tariff revisions if voluntary proposals are inadequate. Non-RTO utilities are encouraged to submit proposals under FPA Section 205, though no deadline has been set. Monitoring of subsequent FERC filings will determine whether a de-facto national framework emerges.
