On June 18, 2026, the Federal Energy Regulatory Commission (FERC) issued show cause orders to each of the six FERC-jurisdictional Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs) to demonstrate that their transmission tariffs and related rules adequately address the interconnection of large loads — such as data centers — or to propose reforms.
These orders stem in large part from a rulemaking initiated by the Secretary of Energy in October 2025 to facilitate the timely and reliable interconnection of large loads to the transmission grid, responding to the call for “speed to power” from an industry that is leading the rapid growth in electricity demand in the United States.
Previous Steps to Address Large Load Interconnection Challenges
As we previously highlighted, several RTOs and ISOs have already taken steps to address large load interconnection challenges.
- Recent Rule Changes
- In December 2025, FERC directed PJM Interconnection (PJM) to adopt transparent tariff rules for loads co-located with generating facilities. In response, PJM adopted three new transmission service options for co-located loads (interim non-firm service, firm contract demand service and non-firm contract demand service). PJM also clarified how generators can use provisional and surplus interconnection service to serve co-located load and revised its behind-the-meter generation rules to reflect cost causation principles.
- More recently, in June 2026, FERC approved PJM's tariff revisions establishing an Expedited Interconnection Track (EIT) for certain resources. The EIT creates a temporary, stand-alone process under which PJM may evaluate up to 10 interconnection requests per calendar year for new or uprated capacity resources of at least 250 MW that can achieve commercial operation within three years. Eligibility requires 100% site control, a commitment from the relevant state siting authority regarding the construction schedule, a $500,000 study deposit and a $15,000/MW readiness deposit. PJM expects approximately 10 months between the filing of an EIT request and execution of a generator interconnection agreement. The EIT process is scheduled to expire at the end of 2027.
- Similarly, in January 2026, FERC accepted Southwest Power Pools (SPP) proposed High Impact Large Load (HILL) study process and High Impact Large Load Generation Assessment (HILLGA), establishing new study and operational requirements for large loads connecting to SPP’s transmission system. The HILL framework is designed to support interconnection decisions within 90 days. The HILLGA expedites the interconnection of generation resources paired with large loads through a new Load Limited Resource Interconnection Service, which matches generator output to the forecasted hourly load of the nearby large load it serves.
- In June 2026, FERC also approved SPP’s Conditional High Impact Large Load Service (CHILLS), providing a path for large loads to receive non-firm transmission service for up to seven years while the network upgrades needed for firm service are constructed.
- Transmission Security Agreements
- Beyond regional tariff reforms, individual transmission owners have increasingly relied upon bilateral Transmission Security Agreements (TSAs) to address the costs of serving large load customers. For example, in November 2025, FERC approved a TSA between PECO and Amazon Data Services governing Amazon’s payment obligations for grid upgrades needed to service a planned data center in Pennsylvania. In March 2026, FERC approved five TSAs between Commonwealth Edison and data center developers.
- These TSAs generally include provisions designed to ensure that existing ratepayers are insulated from costs caused by large loads, such as customer readiness obligations, credit and financial security requirements, committed revenue contributions, shortfall payments and termination fees.
- The financial security requirements of these agreements have been significant, representing expected costs of energy to serve the planned large load over an initial service term, often 10 years.
- However, FERC Commissioner Chang cautioned that reliance on bilaterally-negotiated agreements may not be sufficient to protect customers against unjust cost shifts, underscoring the need for a more systematic pro forma cost recovery agreement framework.
FERC’s Directives
In its show cause orders, FERC preliminarily found that the large load interconnection rules developed by each of the RTOs/ISOs may be unjust, unreasonable or unduly discriminatory or preferential.
Accordingly, FERC directed each RTO and ISO, and its constituent transmission owners to address the following in their responses:
- Creation of efficient and fair application and study procedures, as well as ongoing operational requirements for customers seeking transmission service for large loads
- Greater transparency on costs for network upgrades needed to provide transmission service to large load customers, including a pro forma cost recovery agreement
- Rates, terms and conditions of transmission service that apply to large loads served by dedicated, co-located generation
- Transmission services for flexible large loads that are willing and able to adjust their use of the transmission system under certain conditions
- Rules governing transmission services for generation owners requesting transmission service to serve nearby or adjacent large loads
FERC acknowledges that transmission services and tariffs vary significantly across RTOs/ISOs and does not propose to mandate a uniform framework for interconnecting large loads. However, FERC proposes to define a large load as a commercial or industrial customer located at a single site behind one or more points of interconnection that has a peak load of at least 50 MW, connects to the transmission grid at a voltage of at least 69 kV, and is not part of a co-location arrangement.
Next Steps
- Rule changes. The RTOs and ISOs must respond to FERC’s orders within 60 days by August 17, 2026. Interested parties, including existing and potential transmission customers, will then have 30 days to comment on whether the existing tariffs are just and reasonable or what changes should be implemented. Alternatively, within 45 days of the show cause orders by August 3, 2026, RTOs/ISOs and/or their transmission owners can request that these proceedings be held in abeyance for up to 90 days to develop and file with FERC reforms addressing FERC’s concerns.
- Informational Reports. Recognizing that electricity demand from large loads appears to be outpacing the addition of new generation resources, FERC also directed each RTO and ISO to submit an informational report within 30 days of the show cause orders by July 20, 2026. The informational report should explain how sufficient generation will be available to serve existing and new large loads. The informational reports must: identify relevant stakeholder proposals, provide milestones for stakeholder or board action, describe ongoing efforts to accelerate the connection of additional electric generation, provide an estimate of when any proposals will be filed with FERC.
Conclusion
The show cause orders represent FERC's most comprehensive effort to date to establish a consistent regulatory framework for accommodating rapidly growing electricity demand from data centers and other large loads. Although FERC has not prescribed uniform tariff requirements, the issues identified in the orders — including study procedures, cost recovery mechanisms, co-located generation, flexible load service and generation-to-load transmission arrangements — are likely to shape transmission policy across organized markets. Developers, large load customers, generators, transmission owners and financing parties should closely monitor these proceedings, as the resulting tariff reforms could materially affect project development timelines, commercial arrangements, credit requirements and the allocation of transmission upgrade costs.