Key Takeaways
- • FERC issued a show cause order on June 18, 2026, directing NYISO to revise its tariff within 60 days (by August 17, 2026) to address large load interconnection procedures, cost allocation mechanisms, and transmission service offerings for data centers and similar facilities.
- • NYISO must establish clear definitions, application processes, and study procedures for large loads (preliminarily defined as 50 MW+ commercial or industrial customers at single sites interconnecting at voltages above 69 kV), with studies to be completed in 60–90 calendar days.
- • FERC mandates pro forma cost recovery agreements requiring large load customers to bear all network upgrade costs and other transmission service expenses, with financial security requirements to prevent cost-shifting to other wholesale transmission customers.
- • NYISO must provide transparent, publicly accessible data on proposed large load additions, planned network upgrades, and cost estimates on a searchable website, and file an informational report within 30 days on resource adequacy proposals.
- • FERC directs NYISO to develop flexible transmission service options and specialized generator interconnection processes for electrically proximate or co-located large loads, permitting generators to limit output to match large load demand and potentially reducing unnecessary network upgrades and interconnection delays.
Summary
On June 18, 2026, the Federal Energy Regulatory Commission issued an order finding that New York Independent System Operator's tariff appears unjust and unreasonable in its treatment of large load customers seeking transmission service. The order addresses fundamental gaps in NYISO's framework for managing the rapid growth of large data center and similar high-demand industrial facilities. FERC has directed NYISO and its transmission owners to justify the existing tariff or propose comprehensive revisions within 60 days, with an additional 30-day window for NYISO to file an informational report on generation adequacy.
The Commission preliminarily defines "large load" as a new commercial or industrial customer at a single site with peak demand of 50 MW or greater, interconnecting at voltages exceeding 69 kV and not part of a co-location arrangement. FERC found that NYISO's existing load interconnection procedures, which apply to projects exceeding 10 MW at 115 kV or above (or 80 MW+ below 115 kV), lack sufficient tariff clarity and specificity. The Order requires NYISO to establish transparent application processes accepting rolling submissions, implement escalating readiness requirements with non-refundable application fees to deter speculative requests, and mandate information disclosures regarding load characteristics and duplicate requests. Study processes must be completed within 60–90 calendar days and must evaluate alternative transmission technologies alongside traditional network upgrades, with clear documentation of why alternatives are infeasible when traditional upgrades are selected. Additionally, NYISO must establish ongoing operational requirements including hourly forecasts, telemetry data, and ramp rate specifications, with large load customers bearing equipment installation costs for monitoring and emergency disconnection capabilities.
FERC emphasized that cost-shifting among transmission customers poses a material risk, particularly where large load projects fail to materialize or operate below forecasted levels. The Commission directs NYISO to establish pro forma cost recovery agreements binding NYISO, transmission owners, and large load customers, ensuring that customers bear responsibility for all transmission costs including network upgrades. FERC preliminarily finds that contribution levels should reflect the MW of jurisdictional transmission service requested, though it acknowledges alternative methods accounting for timing differences between cost incurrence and load energization. Financial security requirements sufficient to cover customer obligations are mandatory, though security posted under retail agreements may be credited to avoid duplication. FERC also mandates robust, searchable public disclosure of network upgrade costs, including aggregate large load additions, equipment types, and cost estimates by transmission request. This transparency is intended to inform state and local policymakers addressing affordability impacts of large load integration.
The Order addresses gaps in NYISO's treatment of co-location arrangements—where on-site generation serves large loads—and flexible transmission services for loads willing to limit withdrawals under specified conditions. FERC found that absence of clear provisions for co-location rates, terms, and conditions creates risk that such customers avoid paying for wholesale transmission services, violating cost causation principles. NYISO must clarify how interconnection customers may use generator interconnection processes for co-location, designate eligible customers responsible for charges, ensure co-located loads pay for regulation and black start services on a gross demand basis, and address behind-the-meter generation netting arrangements. The Commission also directs NYISO to offer interim non-firm network service and contract-demand-based transmission services designed for flexible loads that can limit withdrawals, reflecting operational reality and reducing unnecessary network upgrades.
FERC further determined that NYISO's tariff fails to address generator interconnection for electrically proximate large loads—defined as loads located no more than two substations from the generating facility—or co-located loads. The Commission directs NYISO to develop specialized generator interconnection processes allowing generators to commit to output matching hourly forecasts of such loads or limiting output via control technologies and protection schemes to prevent transmission system injection. FERC cited Southwest Power Pool's High Impact Large Load Generator Assessment process as one example model. These operational procedures could substantially reduce network upgrade requirements and accelerate commercial operation for generation serving large loads. The Commission also directed NYISO to address whether generators serving co-located or electrically proximate loads may participate in energy and ancillary services markets and how such facilities would be treated for resource adequacy and capacity market participation purposes.
The Order permits NYISO and transmission owners to seek limited abeyance of up to 90 days to develop tariff revisions through stakeholder processes under Section 205 of the Federal Power Act. Interested entities may submit responsive comments within 30 days of NYISO's filings, and FERC also posed additional briefing questions regarding implementation timelines, protection of existing commercial arrangements, regional and local transmission planning impacts, cost recovery agreement structures, and advanced transmission technology evaluation. All five FERC Commissioners issued concurrences emphasizing consumer protection, reliability safeguards, enhanced transparency, innovation promotion, and the need for partnership with state regulators while respecting jurisdictional boundaries.
The Commission preliminarily defines "large load" as a new commercial or industrial customer at a single site with peak demand of 50 MW or greater, interconnecting at voltages exceeding 69 kV and not part of a co-location arrangement. FERC found that NYISO's existing load interconnection procedures, which apply to projects exceeding 10 MW at 115 kV or above (or 80 MW+ below 115 kV), lack sufficient tariff clarity and specificity. The Order requires NYISO to establish transparent application processes accepting rolling submissions, implement escalating readiness requirements with non-refundable application fees to deter speculative requests, and mandate information disclosures regarding load characteristics and duplicate requests. Study processes must be completed within 60–90 calendar days and must evaluate alternative transmission technologies alongside traditional network upgrades, with clear documentation of why alternatives are infeasible when traditional upgrades are selected. Additionally, NYISO must establish ongoing operational requirements including hourly forecasts, telemetry data, and ramp rate specifications, with large load customers bearing equipment installation costs for monitoring and emergency disconnection capabilities.
FERC emphasized that cost-shifting among transmission customers poses a material risk, particularly where large load projects fail to materialize or operate below forecasted levels. The Commission directs NYISO to establish pro forma cost recovery agreements binding NYISO, transmission owners, and large load customers, ensuring that customers bear responsibility for all transmission costs including network upgrades. FERC preliminarily finds that contribution levels should reflect the MW of jurisdictional transmission service requested, though it acknowledges alternative methods accounting for timing differences between cost incurrence and load energization. Financial security requirements sufficient to cover customer obligations are mandatory, though security posted under retail agreements may be credited to avoid duplication. FERC also mandates robust, searchable public disclosure of network upgrade costs, including aggregate large load additions, equipment types, and cost estimates by transmission request. This transparency is intended to inform state and local policymakers addressing affordability impacts of large load integration.
The Order addresses gaps in NYISO's treatment of co-location arrangements—where on-site generation serves large loads—and flexible transmission services for loads willing to limit withdrawals under specified conditions. FERC found that absence of clear provisions for co-location rates, terms, and conditions creates risk that such customers avoid paying for wholesale transmission services, violating cost causation principles. NYISO must clarify how interconnection customers may use generator interconnection processes for co-location, designate eligible customers responsible for charges, ensure co-located loads pay for regulation and black start services on a gross demand basis, and address behind-the-meter generation netting arrangements. The Commission also directs NYISO to offer interim non-firm network service and contract-demand-based transmission services designed for flexible loads that can limit withdrawals, reflecting operational reality and reducing unnecessary network upgrades.
FERC further determined that NYISO's tariff fails to address generator interconnection for electrically proximate large loads—defined as loads located no more than two substations from the generating facility—or co-located loads. The Commission directs NYISO to develop specialized generator interconnection processes allowing generators to commit to output matching hourly forecasts of such loads or limiting output via control technologies and protection schemes to prevent transmission system injection. FERC cited Southwest Power Pool's High Impact Large Load Generator Assessment process as one example model. These operational procedures could substantially reduce network upgrade requirements and accelerate commercial operation for generation serving large loads. The Commission also directed NYISO to address whether generators serving co-located or electrically proximate loads may participate in energy and ancillary services markets and how such facilities would be treated for resource adequacy and capacity market participation purposes.
The Order permits NYISO and transmission owners to seek limited abeyance of up to 90 days to develop tariff revisions through stakeholder processes under Section 205 of the Federal Power Act. Interested entities may submit responsive comments within 30 days of NYISO's filings, and FERC also posed additional briefing questions regarding implementation timelines, protection of existing commercial arrangements, regional and local transmission planning impacts, cost recovery agreement structures, and advanced transmission technology evaluation. All five FERC Commissioners issued concurrences emphasizing consumer protection, reliability safeguards, enhanced transparency, innovation promotion, and the need for partnership with state regulators while respecting jurisdictional boundaries.
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.