Key Takeaways
- • FERC issued show cause orders to six major RTOs/ISOs (PJM, MISO, SPP, CAISO, ISO-NE, NYISO) requiring them to justify or reform tariff provisions governing large load and data center interconnections within 60 days, addressing preliminary findings that existing tariffs may be unjust and unreasonable.
- • The orders identify five reform categories: streamlining transmission service application and study processes, addressing cost-shifting and transmission cost transparency, accommodating co-location arrangements and behind-the-meter generation, creating flexible load services, and establishing transparent processes for studying generation serving large loads.
- • RTOs/ISOs must also submit 30-day informational reports detailing generation capacity availability for existing and new large loads, including relevant stakeholder proposals and milestone schedules, recognizing acute electricity demand pressures from data center expansion.
- • FERC preserved regional flexibility rather than imposing a single national tariff, acknowledging that each RTO/ISO operates under different market designs, geography, and existing progress on large-load reforms (notably SPP's already-developed High Impact Large Load processes).
- • The orders advance the Secretary of Energy's October 2025 ANOPR objectives to accelerate "speed to power" for large loads while maintaining grid reliability and consumer protections, and explicitly preserve state retail customer authority and existing large-load agreements.
Summary
The Federal Energy Regulatory Commission issued landmark show cause orders on June 18, 2026, to six regional transmission operators and independent system operators—PJM, MISO, SPP, CAISO, ISO-NE, and NYISO—directing substantial tariff reforms to accommodate the surging demand from data centers and other large electrical loads. Acting under Section 206 of the Federal Power Act, FERC preliminarily determined that existing tariff structures across these jurisdictions are potentially unjust and unreasonable because they lack clear, consistent provisions tailored to large-load integration. The orders represent FERC's most comprehensive regulatory response to date on large-load interconnection policy and align with the Secretary of Energy's October 2025 ANOPR framework aimed at accelerating deployment timelines while preserving grid reliability and affordability.
FERC identified specific tariff deficiencies that existing structures fail to address adequately: timing and sequencing of transmission service studies, network upgrade cost allocation, co-location scenarios between loads and generation, behind-the-meter configurations, flexible load operational capabilities, and cost-shifting burdens on other ratepayers. Each RTO/ISO and its transmission owners must file responsive tariff submissions within 60 days, either defending current tariffs as just and reasonable or proposing targeted revisions. The Commission outlined five substantive reform categories for consideration: enhanced efficiency in transmission service applications and studies (including alternative technologies to reduce upgrade needs), greater transparency and cost allocation clarity for transmission services supporting large loads, co-location and behind-the-meter arrangement protocols, new transmission service offerings for flexible large loads capable of demand management, and transparent study processes for generation facilities serving electrically proximate large loads.
Recognizing operational and market diversity across regions, FERC explicitly rejected a one-size-fits-all national approach. The order acknowledges that SPP has already developed High Impact Large Load and generation assessment processes, PJM is addressing co-location issues in separate proceedings, and CAISO operates without physical transmission service offerings. Regional flexibility extends to how each RTO/ISO defines "large load" thresholds and establishes operational requirements. Concurrently, FERC imposed a 30-day reporting deadline for generation capacity assessments and issued a 45-day abeyance window for parties seeking additional time, with 30-day response periods for interested stakeholders and open proceedings on the Secretary of Energy's ANOPR docket for potential further action.
The orders explicitly preserve state regulatory authority over retail customer protections and clarify that FERC's jurisdiction centers on transmission service and cost-shifting prevention. FERC stated that existing large-load agreements and those nearing completion will not be disrupted, with reasonable transition periods required in any tariff revisions. This balanced approach aims to address critical grid integration bottlenecks created by data center demand growth while maintaining jurisdictional boundaries and market continuity for already-contracted arrangements.
FERC identified specific tariff deficiencies that existing structures fail to address adequately: timing and sequencing of transmission service studies, network upgrade cost allocation, co-location scenarios between loads and generation, behind-the-meter configurations, flexible load operational capabilities, and cost-shifting burdens on other ratepayers. Each RTO/ISO and its transmission owners must file responsive tariff submissions within 60 days, either defending current tariffs as just and reasonable or proposing targeted revisions. The Commission outlined five substantive reform categories for consideration: enhanced efficiency in transmission service applications and studies (including alternative technologies to reduce upgrade needs), greater transparency and cost allocation clarity for transmission services supporting large loads, co-location and behind-the-meter arrangement protocols, new transmission service offerings for flexible large loads capable of demand management, and transparent study processes for generation facilities serving electrically proximate large loads.
Recognizing operational and market diversity across regions, FERC explicitly rejected a one-size-fits-all national approach. The order acknowledges that SPP has already developed High Impact Large Load and generation assessment processes, PJM is addressing co-location issues in separate proceedings, and CAISO operates without physical transmission service offerings. Regional flexibility extends to how each RTO/ISO defines "large load" thresholds and establishes operational requirements. Concurrently, FERC imposed a 30-day reporting deadline for generation capacity assessments and issued a 45-day abeyance window for parties seeking additional time, with 30-day response periods for interested stakeholders and open proceedings on the Secretary of Energy's ANOPR docket for potential further action.
The orders explicitly preserve state regulatory authority over retail customer protections and clarify that FERC's jurisdiction centers on transmission service and cost-shifting prevention. FERC stated that existing large-load agreements and those nearing completion will not be disrupted, with reasonable transition periods required in any tariff revisions. This balanced approach aims to address critical grid integration bottlenecks created by data center demand growth while maintaining jurisdictional boundaries and market continuity for already-contracted arrangements.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.