Key Takeaways
- • FERC issues sweeping "show cause" order to PJM Interconnection on June 18, 2026, requiring the regional transmission operator to justify or revise its tariff within 60 days (by August 17, 2026) to accommodate large load customers, primarily data centers seeking 50 MW+ capacity at voltage levels exceeding 69 kV.
- • Cost-shifting protection mandated: FERC directs PJM to establish pro forma cost recovery agreements requiring large load customers to bear 100% of network upgrade costs, with robust public transparency on aggregate large load additions, planned upgrades by equipment type, and cost estimates posted on PJM's website.
- • Accelerated study timelines required: PJM must establish application and study procedures completing large load transmission service evaluations within 60–90 calendar days, with escalating non-refundable application fees and readiness requirements at distinct study phases to deter speculative requests.
- • New flexible transmission service options mandated: FERC preliminarily finds PJM's existing transmission services (network integration and point-to-point) insufficient for loads willing to limit withdrawals; directs PJM to offer interim non-firm network service and contract-demand-based transmission services aligned with actual usage patterns.
- • Generator interconnection reform for co-located and electrically proximate loads: FERC directs PJM to develop generator interconnection processes allowing output to be matched to large load forecasts or limited to zero net injection, reducing network upgrade requirements and accelerating commercial operation timelines for dedicated generation resources.
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Summary
On June 18, 2026, the Federal Energy Regulatory Commission issued a formal order to PJM Interconnection, L.L.C. (195 FERC ¶ 61,211), finding PJM's transmission tariff "unjust and unreasonable" in multiple respects and directing the regional transmission operator to show cause within 60 days why it should not be required to revise its rules. The order addresses a critical infrastructure challenge: the rapid influx of large commercial loads—principally data centers—seeking firm transmission capacity at scale. FERC's action represents an assertion of federal jurisdiction over transmission service processes previously governed inconsistently across state and regional frameworks.
The Commission preliminarily identifies four deficiencies in PJM's tariff. First, PJM lacks a sufficiently clear application and study process for transmission service to large loads, defined as new commercial or industrial customers at single sites with peak demand of 50 MW or greater interconnecting at voltage levels exceeding 69 kV. FERC mandates that PJM establish rolling-basis application procedures with non-refundable application fees and escalating readiness requirements—including meaningful financial commitments and milestone achievements—to deter duplicative or speculative requests. Study processes must culminate in cost assignments and network upgrade identifications within 60–90 calendar days. Additionally, study reports must evaluate alternative transmission technologies (static synchronous compensators, advanced power flow control devices, transmission switching, and dynamic line ratings) as potential solutions and justify in writing why traditional network upgrades are necessary when alternatives are rejected.
Second, FERC identifies inadequate cost-shifting protections. The Commission directs PJM to require pro forma cost recovery agreements between PJM, relevant transmission owners, and large load customers, ensuring that large load customers bear 100% responsibility for all network upgrade costs incurred to provide their requested transmission service. FERC mandates that PJM publish "robust, accurate, systematic, and searchable" data on its website covering aggregate proposed large load additions in the PJM footprint, planned network upgrades by equipment type and transmission service request, and cost estimates. This transparency is intended to inform state and local regulators on affordability impacts and to protect other wholesale transmission customers from "stranded" costs resulting from projects that fail to materialize or operate below anticipated demand levels.
Third, FERC finds PJM's tariff lacks sufficient ongoing operational requirements and pro forma transmission service agreement provisions. The Commission requires that transmission customers serving large loads provide hourly load forecasts, telemetry data, and other real-time operational visibility data to PJM. Transmission owners must install—at the large load customer's expense—monitoring equipment capable of detecting fast-ramping demand patterns and disconnect equipment to preserve grid reliability. Study procedures must also address ramp rate and ride-through requirements, control technologies, and protection systems tailored to large load characteristics.
Fourth, FERC directs PJM to develop new flexible transmission service options. The Commission concludes that existing network integration transmission service and firm/non-firm point-to-point service do not adequately serve loads willing and able to limit energy withdrawals under certain conditions. PJM must justify its current service offerings or propose interim non-firm network service and permanent contract-demand-based (firm or non-firm) transmission services designed for flexible loads, allowing cost structures to align with actual usage patterns.
FERC also asserts jurisdiction over generator interconnection processes to facilitate paired large load and generation resources. The order directs PJM to establish interconnection procedures allowing generating facilities serving "electrically proximate large loads" (loads located no more than two substations away) or co-located loads to limit output to match hourly load forecasts or achieve zero net injection to the transmission system. The Commission cites Southwest Power Pool's High Impact Large Load Generator Assessment (HILLGA) process as a model and notes that such coordination can reduce network upgrade requirements and accelerate commercial operation. PJM must address whether generators serving co-located loads may participate in energy, ancillary services, and capacity markets, and how such resources are credited for resource adequacy planning.
Within 30 days of the June 18 order, PJM must file an informational report addressing how it intends to ensure adequate generation capacity to serve existing and new large loads. Within 60 days, PJM and its transmission owners must respond with justifications of existing tariff language or proposed revisions. Interested parties have 30 days to submit comments on PJM's response. The Commission permits PJM to seek limited abeyance of up to 90 days to allow stakeholder collaboration on proposed tariff amendments filed under Section 205 of the Federal Power Act.
The concurrent orders issued to Midcontinent Independent System Operator (MISO) and Southwest Power Pool (SPP) address similar deficiencies but reflect region-specific circumstances. MISO faces additional requirements regarding co-location arrangements and transmission service rate clarity; SPP, having recently adopted its High Impact Large Load transmission study process in 2026, faces narrower requirements focused on alternative transmission technology evaluation and pro forma transmission service agreement provisions. Commissioners' concurrences emphasize the stakes: Chairman Swett highlights market inflexibility; Commissioner Rosner stresses consumer protection, reliability safeguards, and transparency; Commissioner See underscores affordability and the need for federal-state partnership; Commissioner Chang emphasizes consumer protection and balanced cost-reliability trade-offs; and Commissioner LaCerte signals willingness to exercise broad jurisdictional authority if RTOs/ISOs submit deficient responses, characterizing the moment as "an inflection point in the history of American energy infrastructure."
The Commission preliminarily identifies four deficiencies in PJM's tariff. First, PJM lacks a sufficiently clear application and study process for transmission service to large loads, defined as new commercial or industrial customers at single sites with peak demand of 50 MW or greater interconnecting at voltage levels exceeding 69 kV. FERC mandates that PJM establish rolling-basis application procedures with non-refundable application fees and escalating readiness requirements—including meaningful financial commitments and milestone achievements—to deter duplicative or speculative requests. Study processes must culminate in cost assignments and network upgrade identifications within 60–90 calendar days. Additionally, study reports must evaluate alternative transmission technologies (static synchronous compensators, advanced power flow control devices, transmission switching, and dynamic line ratings) as potential solutions and justify in writing why traditional network upgrades are necessary when alternatives are rejected.
Second, FERC identifies inadequate cost-shifting protections. The Commission directs PJM to require pro forma cost recovery agreements between PJM, relevant transmission owners, and large load customers, ensuring that large load customers bear 100% responsibility for all network upgrade costs incurred to provide their requested transmission service. FERC mandates that PJM publish "robust, accurate, systematic, and searchable" data on its website covering aggregate proposed large load additions in the PJM footprint, planned network upgrades by equipment type and transmission service request, and cost estimates. This transparency is intended to inform state and local regulators on affordability impacts and to protect other wholesale transmission customers from "stranded" costs resulting from projects that fail to materialize or operate below anticipated demand levels.
Third, FERC finds PJM's tariff lacks sufficient ongoing operational requirements and pro forma transmission service agreement provisions. The Commission requires that transmission customers serving large loads provide hourly load forecasts, telemetry data, and other real-time operational visibility data to PJM. Transmission owners must install—at the large load customer's expense—monitoring equipment capable of detecting fast-ramping demand patterns and disconnect equipment to preserve grid reliability. Study procedures must also address ramp rate and ride-through requirements, control technologies, and protection systems tailored to large load characteristics.
Fourth, FERC directs PJM to develop new flexible transmission service options. The Commission concludes that existing network integration transmission service and firm/non-firm point-to-point service do not adequately serve loads willing and able to limit energy withdrawals under certain conditions. PJM must justify its current service offerings or propose interim non-firm network service and permanent contract-demand-based (firm or non-firm) transmission services designed for flexible loads, allowing cost structures to align with actual usage patterns.
FERC also asserts jurisdiction over generator interconnection processes to facilitate paired large load and generation resources. The order directs PJM to establish interconnection procedures allowing generating facilities serving "electrically proximate large loads" (loads located no more than two substations away) or co-located loads to limit output to match hourly load forecasts or achieve zero net injection to the transmission system. The Commission cites Southwest Power Pool's High Impact Large Load Generator Assessment (HILLGA) process as a model and notes that such coordination can reduce network upgrade requirements and accelerate commercial operation. PJM must address whether generators serving co-located loads may participate in energy, ancillary services, and capacity markets, and how such resources are credited for resource adequacy planning.
Within 30 days of the June 18 order, PJM must file an informational report addressing how it intends to ensure adequate generation capacity to serve existing and new large loads. Within 60 days, PJM and its transmission owners must respond with justifications of existing tariff language or proposed revisions. Interested parties have 30 days to submit comments on PJM's response. The Commission permits PJM to seek limited abeyance of up to 90 days to allow stakeholder collaboration on proposed tariff amendments filed under Section 205 of the Federal Power Act.
The concurrent orders issued to Midcontinent Independent System Operator (MISO) and Southwest Power Pool (SPP) address similar deficiencies but reflect region-specific circumstances. MISO faces additional requirements regarding co-location arrangements and transmission service rate clarity; SPP, having recently adopted its High Impact Large Load transmission study process in 2026, faces narrower requirements focused on alternative transmission technology evaluation and pro forma transmission service agreement provisions. Commissioners' concurrences emphasize the stakes: Chairman Swett highlights market inflexibility; Commissioner Rosner stresses consumer protection, reliability safeguards, and transparency; Commissioner See underscores affordability and the need for federal-state partnership; Commissioner Chang emphasizes consumer protection and balanced cost-reliability trade-offs; and Commissioner LaCerte signals willingness to exercise broad jurisdictional authority if RTOs/ISOs submit deficient responses, characterizing the moment as "an inflection point in the history of American energy infrastructure."
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