Citing unprecedented electricity demand stemming from data centers and related domestic manufacturing, the US Secretary of Energy submitted a letter and proposed rulemaking to the Federal Energy Regulatory Commission (FERC). If implemented, the rule would convey expanded jurisdiction to FERC over interstate transmission in order to provide for expedited grid access for large industrial customers.
Regulatory Actions To Date
The rise in artificial intelligence, powered by data centers and hyperscalers, has led to a cascade of increasing load growth forecasts in virtually all regions of the US power market. At this juncture, there is not yet a standardized regulatory regime. In one aspect, the sheer magnitude and speed of data center development has outpaced the existing rules and policies of transmission owners and regional grid operators under FERC’s jurisdiction. Further, the unique characteristics of large loads require a careful and thorough assessment from a reliability perspective.
For context, please refer to our articles within the past year:
- Grid Operators Propose Innovative Measures to Manage Electricity Demand from Data Centers (August 2025): A review of approaches proposed by three regional grid operators — PJM Interconnection, L.L.C. (PJM), Southwest Power Pool, Inc. (SPP), and Electric Reliability Council of Texas (ERCOT) — to accommodate the influx of large load interconnection requests through new initiatives or programs.
- Note: Following publication, the PJM proposal was strongly opposed by stakeholders, including technology companies, and has been substantially revised.1 The alternative proposal now emphasizes voluntary demand response by data centers in order to provide for some measure of load flexibility. It would also establish a process by which data centers can utilize on-site backup generators more readily. PJM is still likely to file its plan with FERC by the end of 2025.
- NERC Tees Up Plan to Assess Grid Risks Associated with Data Centers (April 2025): An overview of activities conducted, and to be conducted, by the North American Electric Reliability Corporation (NERC) associated with potential grid reliability impacts of large loads, as well as the need for enhanced data on operational and technical characteristics of data center interconnection.
- FERC Orders Review of Co-Located Generation for Data Centers in PJM (February 2025): A procedural history of FERC items with respect to co-located generation in the PJM market and a preview of a new proceeding initiated to evaluate certain issues addressing co-location of large loads with generation as provided for (or not yet provided for) in the language of the PJM Tariff.
Current and Emerging Issues
Additionally, FERC convened its Annual Reliability Technical Conference in mid-October (Technical Conference), featuring a significant focus on the connection of large loads to the bulk power system and potential impacts to reliability.2 The panelists and experts from across the industry generally offered consensus on the existing primary issues.
From a state and utility perspective, load growth due to data centers is nearly universal: for instance, in the state of Georgia, there were 63 data centers as of 2023, which is expected to quadruple within the decade; and, in the region of Northern Illinois, the existing cluster of large load study applications for one utility is nearly 40 GW in total, with subsequent clusters to come. Each of the aforementioned examples requires some degree of commitment by the data center developers (i.e., demonstration of site control, financial readiness in the form of $1 million security deposits, and/or contractual agreements with the incumbent utility for a minimum term and/or amount). Industry participants typically agree that speculative projects may still enter the interconnection queue, which clouds forecasting and modeling for the transmission owners, such that it is vital to structure the study requirements in a manner that encourages economically and geographically viable projects.
Possible flexibility of large loads — such that the data centers can reduce their demand when prompted and/or shift to on-site backup generation if allowed — remains a key point across stakeholders. To the latter point, certain on-site backup types (such as diesel generators) require permitting for air and noise control, beyond the bounds of FERC and state public utility commission jurisdiction. The utilization of the data center comes into play, as certain configurations (e.g., artificial intelligence inference and cloud facilities) may not be as capable to scale back, whereas other configurations (e.g., artificial intelligence learning) may be capable, effectively offering some measure of flexibility when overall load demand is abnormally high across a service area. Certain parties, such as developers and data center operators, advocated for incentives to engage in flexibility rather than a strict mandate or regulatory mechanism.
As contemplated in prior proceedings before FERC, and as a part of the ongoing NERC review, it is critical that load forecasting account for large loads in a precise fashion. During the Technical Conference, most panelists agreed that improved communication and data transparency — between the data center developers themselves and the transmission owners — would help to manage potential scenarios of stress on the grid. The behavior of data centers is not monolithic or uniform across regions, so potential contingencies such as reserve margin planning could yield reliability benefits.
NERC also indicated that a reliability guideline is forthcoming soon, with a potential Reliability Standard to follow in 2026. A reliability guideline would leverage the findings and analysis conducted by NERC to this point and confer a best practice for the management of large loads. If NERC then adopts a Reliability Standard, it would be able to audit large load operators (if required to be Registered Entities, which is likely) and mandate compliance with certain operational and procedural requirements aimed at maintaining the security of the bulk power system.
DOE Directive for FERC Rulemaking
In light of the confluence of the factors above, on October 23, 2025, the US Department of Energy (DOE) issued a letter instructing FERC to initiate a new rulemaking proceeding in order to “rapidly accelerate the interconnection of large loads.”3 According to DOE, the proposed rule would enable customers to file joint, co-located load and generation interconnection requests to FERC directly, in addition to reducing study times and grid update costs. The current regulatory regime is somewhat dislocated: interconnection processes for new generating facilities are under FERC jurisdiction while the interconnection of large loads is conducted at the state level.
In the letter, the Secretary of Energy concedes that, historically, FERC “has not exerted jurisdiction over load interconnections,” but that the interconnection of large loads directly into the interstate transmission system should be under FERC’s purview.4 Accordingly, pursuant to Section 403 of the Department of Energy Organization Act, the Secretary directed FERC to consider a proposed rule and act by no later than April 30, 2026.
DOE attached an Advanced Notice of Proposed Rulemaking (ANOPR), entitled “Ensuring the Timely and Orderly Interconnection of Large Loads,” to set forth a number of potential reforms and provisions to ensure timely and non-discriminatory access to the transmission system for large industrial loads and data centers.5 The ANOPR alludes to prior orders issued by FERC, most recently Order No. 1920, which expanded and reformed electric transmission planning and cost allocation, as well as Order Nos. 888, 890, and 1000 in previous decades. Similarly, the ANOPR points to Order No. 2023 with respect to revisions of the pro forma generator interconnection procedures under FERC’s jurisdiction.
In asserting expanded legal authority to FERC over interconnections for large loads, the ANOPR outlines the following justification:
- As a “critical component of open access transmission service,” large load interconnections should be classified in the same manner as generator interconnections and, therefore, require “minimum terms and conditions to ensure non-discriminatory transmission service.”6
- Given that FERC holds jurisdiction over wholesale electricity rates under the Federal Power Act (FPA), FERC has the mandate to ensure that wholesale rates are just and reasonable, which should be extended to large loads and data centers.
- No authority vested to the states is infringed on, as the ANOPR “does not exert jurisdiction over any retail sales” nor does it govern the siting, expansion, or modification of generation facilities, such that the states retain that jurisdiction under Section 201(b)(1) of the FPA.
- Per the “core purposes” of the FPA, FERC has exclusive jurisdiction over transmission in interstate commerce and “any large load that seeks to interconnect […] does so to obtain transmission services and the appurtenant benefits of such.”
The ANOPR purports to limit the scope to interconnections that are directly tied to transmission facilities, consistent with the seven-factor test (i.e., FERC’s technical and operational review to determine if the primary function of a facility is transmission or distribution).7 Citing alignment with the pro forma generator interconnection procedures, the ANOPR proposes a threshold of 20 megawatts (MW) and greater to be applied for both new and hybrid (i.e., co-located) large load facilities. At the Technical Conference, participants noted that modern data centers are well beyond that sizing. For example, in PJM, a large load is classified as 50 MW or greater in load forecasting, and a data center developer panelist stated that utilities already consider 25 MW to 75 MW facilities as large load. Consequently, this proposed threshold may not be necessary, which is indeed contemplated in the ANOPR.8
With respect to study processes — a major contributor to the interconnection queue backlog addressed in Order No. 1920 — the ANOPR raises an approach for load and hybrid facilities to be included with generating facilities, thereby allowing “efficient siting” and “minimiz[ing] the need for costly network upgrades.”9 The ANOPR states that potentially siting a large load facility near or at the same point of interconnection of a new generating facility could “reduce the network upgrades needed.”
For facilities that agree to flexible and curtailable, the ANOPR states that the corresponding interconnection studies should be expedited, “through a serial interconnection study process or by some other means.” The ANOPR aims for a 60-day timeframe for competition of such studies in order to integrate flexible large loads into transmission systems in a prompt manner. It is worth noting that the current SPP proposal (for conditional large load interconnection service) would complete a similar study within 90 days; it remains to be seen if comments on the ANOPR will find the 60-day timeline as feasible or propose to extend it.
The ANOPR stipulates that large load and hybrid facilities would be responsible for 100 percent of the network upgrade costs assigned through the interconnection studies.10 Under the (common) circumstance where the interconnection customer is not also the transmission owner, the interconnection customer would retain the same rights as generators in directly funding network upgrades, rather than paying the electric utility to do so.
Certain components of the proposal are already being evaluated or reviewed by the regional grid operators and/or electric utilities. For instance, the ANOPR outlines certain requirements — standardized study deposits, readiness requirements, and withdrawal penalties — that have been effectuated as part of Order No. 1920 or are under current appraisal by PJM and SPP, among others, as part of their respective proposals. Additionally, the ANOPR seeks comment on minimum technical requirements which would likely be conveyed by the various assessments being performed by NERC through its Large Loads Task Force. The ANOPR asks NERC to “review its reliability standards,” which has been an ongoing process for over a year at the time of issuance.
Timeline & Outlook
Given the relatively quick turnaround requested by DOE in promulgating a rule — approximately 6 months from the time of issuance to April 30, 2026 — it is expected that stakeholders across the sector will contribute substantive and varied comments.
Earlier in October, FERC welcomed two new Commissioners and is now comprised of 3 Republicans and 2 Democrats, with a newly-appointed Republican chair. FERC retains some discretion in guiding the rulemaking proceeding once initiated at the agency and, ultimately, may or may not adopt any or all of the provisions in accordance with the priorities and stated goals of the DOE proposal.
1 LARGE LOAD ADDITIONS: STAKEHOLDER FEEDBACK, PJM Interconnection, L.L.C. (Presented on September 15, 2025). Available at: 20250915-item-04---stakeholder-feedback-on-large-load-additions---pjm-presentation.pdf.
2 NOTICE OF RELIABILITY TECHNICAL CONFERENCE, Docket No. AD25-8-000, Federal Energy Regulatory Commission (Issued on May 14, 2025). Available at: https://www.ferc.gov/media/notice-docket-no-ad25-8-000.
3 SECRETARY WEIGHT ACTS TO UNLEASH AMERICAN INDUSTRY AND INNOVATION WITH NEWLY PROPOSED RULES, Department of Energy (Published on October 24, 2025). Available at: https://www.energy.gov/articles/secretary-wright-acts-unleash-american-industry-and-innovation-newly-proposed-rules.
4 SECRETARY OF ENERGY’S DIRECTION THAT THE FEDERAL ENERGY REGULATORY COMMISSION INITIATE RULEMAKING PROCEDURES AND PROPOSAL REGARDING THE INTERCONNECTION OF LARGE LOADS PURSUANT TO THE SECRETARY’S AUTHORITY UNDER SECTION 403 OF THE DEPARTMENT OF ENERGY ORGANIZATION ACT, US Department of Energy (Issued on October 23, 2025). Available at: https://www.energy.gov/sites/default/files/2025-10/403%20Large%20Loads%20Letter.pdf.
5 ENSURING THE TIMELY AND ORDERLY INTERCONNECTION OF LARGE LOADS – ADVANCE NOTICE OF PROPOSED RULEMAKING, Federal Energy Regulatory Commission (Draft Issued on October 23, 2025). Available at: https://www.energy.gov/sites/default/files/2025-10/403%20Large%20Loads%20Letter.pdf.
6 Id. at PP 9-10
7 Id. at P 10.
8 Id. at P 11.
9 Id.
10 Id. at PP 12-13.
White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.
This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.
© 2025 White & Case LLP
