FERC Orders a Grid Evolution: Standardizing Interconnection for the Data Center Era

On June 18, 2026, the Federal Energy Regulatory Commission (FERC) issued a landmark suite of six “show cause” orders directed at the nation’s major Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs). This action targets the “unprecedented growth” of large loads, such as data centers and industrial electrification, which FERC warns are currently being integrated under “unjust and unreasonable” tariff provisions that threaten both grid reliability and consumer affordability.

While each order is individually tailored to the specific market constructs of PJM, SPP, MISO, CAISO, NYISO, and ISO-NE, they collectively mandate a new regulatory framework to ensure these massive energy users pay their fair share and connect efficiently.

The Challenge of the “Megawatt Surge”

FERC identified several systemic risks across all six jurisdictional regions caused by the rapid influx of large loads:

Inadequate Study Procedures: Current grid planning was designed for gradual, predictable load growth. Large loads, however, are geographically concentrated, more energy-intensive, and often seek interconnection within months rather than years.
Speculative “Queue-Clogging”: Without strict readiness requirements, developers can “shop around” for the cheapest interconnection points, submitting speculative requests that distort load forecasts and delay legitimate projects.
Cost-Shifting to Ratepayers: FERC is “laser-focused” on ensuring that existing customers do not subsidize the costly Network Upgrades required to serve new large loads.
Resource Adequacy Concerns: The speed of large load interconnection is currently outpacing the addition of new generation, creating reliability risks and driving up costs.

Common Mandates for Reform

To address these issues, FERC has directed each grid operator to adopt—or justify the absence of—several key reforms:

Defining “Large Load”: FERC proposed a standard definition: a new commercial or industrial customer at a single site with a peak load of 50 MW or greater, interconnecting at a voltage above 69 kV.
Deterring Speculative Requests: Grid operators must implement non-refundable application fees and escalating readiness requirements (such as financial commitments or site control) to ensure projects in the queue are viable.
Mandatory Transparency: Grid operators must post clear, searchable data on their websites regarding the amount of large load seeking to connect and the estimated costs of associated upgrades.
Pro Forma Cost Recovery Agreements: FERC wants to standardize agreements that hold large loads (or the customers serving them) responsible for the costs of required infrastructure.
Alternative Transmission Technologies (ATTs): Operators must now evaluate technologies like dynamic line ratings and advanced power flow controllers during studies. If they choose traditional upgrades over cheaper ATTs, they must demonstrate why the alternative was not feasible.
Studying Load and Generation Together: Inspired by successful regional models, FERC wants all regions to evaluate proximate load and generation simultaneously to reduce costs and connection timelines.

A Tailored Approach

Despite these common goals, FERC acknowledged that a “one-size-fits-all” rule would be inefficient. The notices reveal significant differences in how each region currently manages these issues:

The “Leaders”: SPP and PJM

SPP (Southwest Power Pool): FERC “applauded” SPP for its proactive HILLGA (High Impact Large Load Generation Assessment) process, which already allows for the simultaneous study of large loads and generation.
PJM: This region was already under separate Commission directives to address co-located loads (load situated behind a generator’s point of interconnection) and had already established services like “interim NITS” (Network Integration Transmission Service) and firm contract demand service.

The “Transmission Owner” Lead: MISO, NYISO, and ISO-NE

MISO and ISO-NE: In these regions, Participating Transmission Owners—rather than the ISO itself—often lead the study process for load interconnection. FERC’s orders are directed at both the ISOs and these transmission owners to ensure their ad hoc processes are moved into official, transparent tariffs.
NYISO: FERC noted that significant portions of New York’s interconnection process are currently housed in non-tariff documents, leading to a lack of clarity regarding responsibility for facility costs.

The Market Outlier: CAISO

CAISO (California): Unlike other regions, CAISO does not offer traditional Order No. 888 transmission services and has no formal application process for transmission service. Consequently, CAISO was given the flexibility to explain how its existing “financial reservation” market model might already address FERC’s concerns.

Netting and Behind-the-Meter Generation (BTMG)

CAISO, ISO-NE, and PJM: FERC preliminarily found their rules for “netting” (using on-site generation to offset load for billing) to be unjust. These regions must show cause why they should not establish a MW materiality threshold to prevent large loads from avoiding regional transmission charges.
MISO: Netting output from BTMG to reduce transmission charges is already prohibited in MISO’s tariff, so FERC did not address this issue in the MISO order.

The Path Forward

All grid operators must submit an informational report on generation adequacy within 30 days. They have 60 days to respond to the Order to Show Cause, either by justifying their current practices or proposing the specific tariff revisions outlined by the Commission. While this is a federal action, FERC emphasized that state regulators remain “essential partners” with exclusive jurisdiction over retail rate allocation and infrastructure permitting.