FERC Moves to Speed Interconnection of Data Centers and Other Large Loads

Key Takeaways

• What’s Happening: On June 18, 2026, the Federal Energy Regulatory Commission (FERC) issued six show cause orders under section 206 of the Federal Power Act directed at the six Commission-jurisdictional Regional Transmission Organizations (RTOs)/Independent System Operators (ISOs): PJM, the Midcontinent Independent System Operator (MISO), the Southwest Power Pool (SPP), the California Independent System Operator (CAISO), ISO New England, and the New York Independent System Operator (NYISO). The orders preliminarily find that existing tariffs may be unjust and unreasonable because they do not adequately address the integration of large loads and co-located loads, including data centers, manufacturing facilities, and other large energy users. The orders direct the affected ISOs and RTOs to file tariffs responding to the FERC orders within 60 days. In addition, the orders direct the affected ISOs and RTOs.
• Who’s Impacted: RTOs/ISOs, transmission owners, large load customers, data center developers, manufacturing facilities, generators seeking to serve large or co-located loads, transmission customers, and entities concerned with transmission cost allocation and resource adequacy.
• How to Respond and When: RTOs/ISOs and transmission owners must respond or identify tariff changes by August 17, 2026. They must submit informational reports on generation adequacy by July 20, 2026, and abeyance requests by August 3, 2026. Interested parties should file a notice of intervention or move to intervene by July 9, 2026, and may respond to RTO/ISO and transmission owner filings within 30 days after their filings.
• How it Affects the Pacific Northwest: The Pacific Northwest is not covered by an ISO or RTO. However, the region’s major transmission operator, the Bonneville Power Administration (BPA), is undertaking a major process, the Grid Access Transformation Project, to reform the agency’s processes governing transmission upgrades and interconnection. BPA may well use processes developed by the ISOs or RTOs as models for reforms of the BPA transmission system.

Summary of the Orders

Establish a Region-Specific Framework for Large Load Interconnection. FERC’s orders respond to rapid demand growth driven in large part by data centers, advanced manufacturing, and other large commercial and industrial loads, often referred to as “hyperscalers.” Rather than issue a single nationwide rule, FERC recognizes that a one-size-fits-all approach is unlikely to adequately address conditions in every region and has therefore opened individual show-cause proceedings for each RTO/ISO, allowing each market to justify existing tariff provisions or propose its own reforms.

Address Five Categories of Tariff Reform. FERC has identified five core areas in which RTO/ISO tariffs may require additional provisions.

Application and study processes. The orders direct attention to transmission service application and study processes for large loads, including whether tariffs should define large loads, establish readiness requirements, deter speculative requests, and require timely studies. FERC also emphasizes consideration of alternative transmission technologies where they may reduce costs or accelerate service.

Cost shifting and transparency. Large loads may shift transmission-upgrade costs to other transmission customers if projects do not materialize or operate at levels below forecast. The orders contemplate additional public reporting on large-load-driven network upgrades and pro forma cost recovery agreements to ensure that large load customers bear appropriate costs.

Co-location and behind-the-meter generation. The orders reflect FERC’s concern that existing tariffs may lack clear rules governing how co-located loads and associated generation interact with transmission service, ancillary services, wholesale market participation, and cost responsibility.

New transmission services for flexible large loads. These services could recognize that some large loads are willing and able to limit withdrawals from the transmission system under certain conditions. FERC suggests that such flexibility may reduce or defer network upgrades and allow large loads to come online more quickly while preserving reliability.

Generating facilities that serve electrically proximate large loads or large co-located loads. FERC suggests that studying load and generation together may better reflect actual system impacts, reduce unnecessary network upgrades, and accelerate the deployment of new generation intended to serve large load demand.

Advance “Bring Your Own Generation” and Resource Adequacy Review. FERC has directed each RTO/ISO to submit an informational report on how it intends to ensure that the region has adequate generation is available to serve existing and new large loads. This requirement reflects FERC’s concern that large load growth may outpace the addition of new generation, creating reliability, resource adequacy, and affordability risks.

The orders may create opportunities for “bring your own generation” arrangements. However, FERC has signaled that these arrangements must be studied and structured carefully to avoid reliability risks, cost shifts, or inappropriate avoidance of transmission and ancillary service obligations.

Preserve Regional Flexibility and Encourage Section 205 Filings. FERC encourages RTOs/ISOs and transmission owners to work with stakeholders and submit FPA section 205 filings that address the Commission’s concerns. Section 205 filings would allow regional markets and transmission owners to propose their own rates and terms of service rather than wait for FERC to impose tariff provisions through FPA section 206 proceedings.

Key Deadlines and Procedural Steps

RTOs/ISOs must file informational reports on resource adequacy within 30 days of issuance of the orders. Requests for abeyance are due within 45 days of issuance and may seek to pause all or part of a show cause proceeding for up to 90 days while stakeholders develop section 205 proposals. Show cause responses or proposed tariff remedies are due within 60 days of issuance. Interested parties may respond to those filings within 30 days.

Practical Implications for Large Loads, Generators, and Transmission Customers

The orders could materially affect how large loads secure transmission service and energize new facilities. Developers may face new application and study requirements, readiness milestones, operational requirements, cost recovery commitments, or other tariff-based requirements.

Generators paired with large loads may see new opportunities for expedited interconnection. At the same time, such arrangements may receive closer scrutiny.

Transmission customers and state regulators may receive more information about large-load-driven network upgrades and cost responsibilities. These transparency measures could affect state-level proceedings, retail rates, large load tariffs, and cost recovery issues.

In addition, the orders are likely to have significant implications for regions lacking an RTO or ISO. For example, BPA’s ongoing Grid Access Transformation Project aims to address many of the same issues as the FERC orders and therefore may use approaches developed in the FERC process as guidance for the reforms adopted for the Pacific Northwest’s transmission system.

About B&D

Beveridge & Diamond is a national leader in energy matters and regularly represents energy developers and large industrial consumers alike. If you have any questions about FERC’s RTO/ISO show cause orders or would like assistance participating, please contact us at your convenience.

Beveridge & Diamond’s Data Center, Electric Power, Manufacturing, Pipelines, and Renewable Energy practice groups provide comprehensive environmental regulatory, litigation, and transactional support to clients in the energy, industrial, and infrastructure sectors. For more information on this development, please contact the author(s).