FERC to RTOs: Expedite Interconnection of Large Electric Loads

---

Written by John Egan for IIR News Intelligence (Sugar Land, Texas)

---

Summary

The U.S. Federal Energy Regulatory Commission (FERC) on June 18 ordered six regional grid management groups to either reform or justify tariffs they use to connect large energy users such as data centers to the regional electric grids.

---

FERC Orders Seek to Get Large Loads Connected Faster

Following a directive last October from the U.S. Department of Energy, the Federal Energy Regulatory Commission (FERC) on June 18 issued "show cause" orders for six regional transmission organizations (RTOs) to either reform or justify their tariffs for connecting large energy users, such as data centers, to regional electric grids.

Industrial Info Resources is tracking 2,310 U.S. data center projects planned to start construction between January 2026 and December 2028, valued at US$2.2 trillion. The nation already has about 1,817 operating data centers.

FERC is concerned that the policies and procedures used by the grid managers might unduly delay connecting planned large electric loads to the grid. Most regional managers wait for years for connecting new loads or resources to the grids they manage.

The six affected regional grid operators are: PJM Interconnection LLC (PJM); Midcontinent Independent System Operator Incorporated. (MISO); Southwest Power Pool Incorporated (SPP); California Independent System Operator Corporation (CAISO); ISO New England Incorporated (ISO-NE); and New York Independent System Operator Incorporated (NYISO).

The orders do not apply to a seventh transmission operator, the Electric Reliability Council of Texas (ERCOT), which manages Texas' in-state bulk power market. FERC only has jurisdiction over bulk power markets in interstate commerce.

The orders require the regional transmission groups to provide a progress report in 30 days and a final report in 60 days.

The orders focus on interconnecting large electric loads, which include data centers as well as cryptocurrency mines, oil and gas production and processing, petrochemical plants and advanced manufacturing, such as semiconductor manufacturing facilities.

Each tailored order lists 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.

If the RTOs fail to address large-load concerns identified by FERC, the agency will dictate the solutions, FERC Commissioner David LaCerte said at the agency's June 18 meeting.

Said FERC Chairman Laura Swett: "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."

Planned Data Center Growth Explodes

The orders were tailored for each transmission group to reflect their different conditions. For example, hundreds of data centers have been built, and are scheduled to be built, in the PJM footprint, mainly in Northern Virginia. By contrast, some states, such as Maine, Nebraska, Montana and Massachusetts, have only a single-digit number of data centers scheduled to be constructed over the 2026-2028 period.

According to Industrial Info Resources data, the states with the greatest dollar value of proposed data center construction starts over the 2026-2028 period are Texas, Virginia, Georgia and Ohio. Construction is slated to start this year on about 664 data center projects valued at approximately US$551 billion. In 2027, construction is slated to begin on an estimated 942 projects with total investment value of roughly US$ 851 billion. An estimated 704 data center projects are scheduled to begin construction in 2028, worth about US$694 billion.

Industrial Info Resources does not believe all planned U.S. data centers or other large electric loads will be constructed on schedule. But the data center industry is in a "gold rush" phase to site facilities in a future economy where artificial intelligence (AI) plays an ever-larger role.

Planned Growth of Large Loads Create Concerns

The explosion of plans to build new data centers has created far-reaching concerns about electric generation adequacy, electric reliability, pollution, water use and retail electric prices paid by all customers. For related information, see May 7, 2026, article - NERC Issues Heightened Alert Over Data Center Loads on U.S. Power System and February 16, 2026, article - Planned Data Centers Drive Up WEC Proposed Capex-Again.

To ensure homeowners don't cross-subsidize data centers or other large loads, some Big Tech companies and data center developers have pledged to build onsite generation on their proposed campuses. But even so-called "islanded" loads must be connected to the grid. Those companies face the same supply-chain challenges facing utilities in terms of obtaining gas turbines and other equipment, which in some cases have waiting lists of up to five years.

The explosion of planned data centers and other large electric loads has triggered widespread public pushback against those facilities. For more on that, see April 8, 2026, article - Data Center Opposition Growing Across States.

David Pickering, Industrial Info Resources' senior vice president of research for the Industrial Manufacturing segment, emphasized that not all planned large electric load facilities will be built as planned. "There will be some shakeout as realities increasingly intrude on plans. But which facilities will be delayed or cancelled, and which will more forward, is the trillion-dollar question."

Brit Burt, Industrial Info Resources' senior vice president of research for the Electric Power sector, said: "Although I don't expect this to happen right away or all at once, I do expect that the capital construction plans of electricity providers will be going down as rapidly as they have gone up in recent years, as large loads are delayed or cancelled."

Key Takeaways

• FERC wants six regional electric transmission managers to expedite revision of their tariffs for interconnecting large electric loads.
• The FERC orders add another dimension to an increasingly complex system of issues surrounding construction of data centers and, to a lesser degree, other large electric loads.
• Regional transmission groups are connected with each other, so problems in one area could cascade into other areas.

---

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).