Publication
Publication
On June 18, 2026, the Federal Energy Regulatory Commission issued orders directing six regional transmission organizations and independent system operators to improve and accelerate processes for integrating large energy users, such as data centers and manufacturing facilities, onto the electric grid. FERC focuses on five categories of reforms, and the RTOs must respond to these issues by August 17, 2026. While the orders are limited to the six RTO regions, FERC left the door open to undertaking additional action addressing utilities outside RTO regions in the future.
The rapid growth of data centers and other “large loads” such as manufacturing facilities has driven several challenges for the electric system, including planning for and reliably integrating these large loads in a timely manner while appropriately managing associated costs. There have been different approaches to these challenges in various regions. For instance, in December 2025, the mid-Atlantic region of PJM Interconnection, L.L.C. was directed by FERC to, among other things, better accommodate and potentially expedite large loads like data centers that are co-located with generators, including establishing new transmission services that may better suit their expected operations, and PJM developed responsive changes earlier this year. In the Southwest Power Pool, Inc. region, FERC recently accepted new rules for interconnecting certain large commercial and industrial loads and associated generation. Some other regions and utilities outside RTOs are in earlier stages of addressing these issues.
In October 2025, the U.S. Department of Energy issued a proposal directing FERC to consider a national rulemaking that would establish standardized rules for interconnecting large loads such as manufacturing facilities and data centers to the transmission system, emphasizing the current and expected growth of these facilities and the need for reforms. FERC received comments on the DOE proposal from a broad range of stakeholders.
Following DOE’s proposal, on June 18, 2026, FERC issued orders directing six RTOs to develop improvements (or defend not doing so) to better integrate large energy users, focusing on five categories of reforms.
FERC did not mandate a single national approach. The June 18 Orders recognize regional differences between RTOs and contemplate region-specific responses and proposals. For some RTOs, a portion of FERC’s concerns may be addressed under their current rules – SPP established rules for interconnecting certain large loads and associated generation, and PJM has been addressing co-location arrangements in a separate proceeding – while other RTOs may determine that broader reforms are needed. The June 18 Orders also do not impose requirements on utilities outside RTO regions.
Applicable state requirements are also important. The June 18 Orders push for cost recovery and transparency reforms, such as developing standard agreements to help mitigate cost shifting risk by requiring contributions toward certain large load-driven costs. However, state and utility rules, e.g., large load retail electric tariffs, may also impact processes and cost implications for connecting large loads.
FERC is looking to move quickly. The RTOs must file reports by July 20, 2026, describing how they will ensure sufficient generation to meet expected demand including anticipated large loads, and by August 17, 2026, they must file substantive responses to the concerns raised in the June 18 Orders. These are relatively aggressive timelines, and the Chairman’s concurrence explains that FERC pursued the more tailored approach of the June 18 Orders, rather than a national rulemaking, in large part because it allows FERC to act more quickly than is typically possible under the rulemaking process.
FERC could also take further action. The June 18 Orders do not address utilities outside RTO regions. They also do not establish standard national rules. However, the Chairman’s concurrence explains that the June 18 Orders do not foreclose a future rulemaking or further action with respect to utilities outside RTO regions.
The June 18 Orders do not apply to large loads connected within the Electric Reliability Council of Texas region. However, on June 18, 2026, the Public Utility Commission of Texas approved a transitional process under which ERCOT will evaluate certain large load (i.e., 75 MW or greater) connection requests that meet eligibility requirements in a batch framework, which is intended to avoid delays experienced under the prior individual study framework and to better allow ERCOT to evaluate connection requests and allocate capacity on a system-wide basis. This transitional batch – referred to as “Batch Zero” – is expected to commence in summer 2026. ERCOT is also expected to develop additional revisions to implement an ongoing Batch Study process, and it says that applications for connection in the next Batch Study, i.e., Batch 1, are expected to be accepted in Summer 2027.