FERC Grapples With Surging Reliability and Interconnection Demands From Data Centers

After years of relative stability, U.S. electricity demand is growing at a staggering rate, driven in large part by the rapid growth of data centers. According to the North American Electric Reliability Corporation (NERC), data center growth in several grid operator footprints is expected to exceed 120% by 2027, with demand growth “higher than at any point in the past two decades.” Regulatory bodies and grid operators are racing to respond. 

On October 23, 2025, the U.S. Department of Energy (DOE) invoked a rarely used authority under Section 403 of the DOE Organization Act to direct the Federal Energy Regulatory Commission (FERC) to initiate rulemaking to accelerate and standardize the interconnection of large loads. At the same time, Regional Transmission Organizations (RTOs), including PJM Interconnection, L.L.C. and Southwest Power Pool, Inc. (SPP), are actively developing their own proposals to manage reliability and operational challenges associated with the connection of large loads. These proposals are composed of creative mechanisms to expedite process, such as accelerated study procedures, conditional curtailable service, independent interconnection queues and partnering with dedicated, associated generation.

The reliability issues posed by large loads remain top of mind for NERC, which has created the Large Load Task Force to create guidance for industry participants on reducing the impact of large loads on the reliability of the Bulk Power System. 

This article outlines key federal and regional initiatives that are currently before FERC—or soon will be—relating to data center interconnections to the interstate transmission system.

The DOE Directs FERC to Develop Rules Addressing Interconnection of Large Loads

The DOE’s directive came in the form of an Advanced Notice of Proposed Rulemaking (ANOPR) that outlines principles for FERC to consider in preparing a final rule, including:

• Jurisdictional scope limited to new loads greater than 20 MW and co-located hybrid facilities directly connected to the transmission system.
• Standardized procedures that study loads and hybrid facilities together.
• Expedited studies (60 days) for flexible and curtailable loads.
• Assigning 100% network upgrade cost responsibility to large load customers. 

The ANOPR clarifies that the interconnection of large loads to the interstate transmission system falls squarely within FERC’s jurisdiction, thereby resolving a dispute that had been pending before FERC for over a year. Underscoring the need for urgency, the DOE directed FERC to issue a final rule by April 30, 2026.

In response to the DOE directive, FERC initiated a rulemaking proceeding, with comments due by November 21, and reply comments due by December 5, 2025. While many of the concepts proposed in the ANOPR may be addressed or incorporated into the final rule, FERC is not bound by the ANOPR and may consider alternative or additional principles for large load interconnections.

Grid Operators Struggle to Address Emergent Reliability Issues

Long before the DOE’s directive to FERC, RTOs recognized the urgent need for rules for the connection of large loads. Some RTOs, such as SPP and PJM, are developing proposals to expedite large load interconnections to the grid. These proposals seek to balance the need for speedy solutions with measures to ensure reliable operation of the transmission grid.

SPP’s High Impact Large Loads Proposal:

On October 24, 2025, SPP filed with FERC its proposed High Impact Large Load (HILL) interconnection process together with a process to evaluate associated generation resources through a High Impact Large Load Generation Assessment (HILLGA) (see FERC Docket No. ER26-247-000). The HILL-HILLGA proposal defines HILL as any new commercial or industrial load at a single site that is either (i) 10 MW or greater if connected at 69 kV or below or (ii) 50 MW or greater if connected at 69 kV or above. Energy storage resources are excluded from SPP’s proposed definition of HILL. The HILL-HILLGA process integrates the study of both the large load and its designated generator concurrently within a 90-day window.

The process includes:

• Transmission service for HILL owners through SPP’s existing mechanisms or a new provisional load option, allowing non-firm, conditional service with potential curtailment until the HILL secures a designated resource and firm transmission.
• The HILLGA proposal provides a fast-track study process for generation and storage resources specifically designated to serve a HILL. The interconnection studies would be narrower in scope than standard interconnection studies and limited to assessing the impact of the generation or storage facility serving the identified large load.
• Delivery point evaluation if a HILL owner requests the creation or modification of a delivery point. SPP will evaluate the impact of the large load to the transmission system at the Point of Interconnection.

HILL participants must comply with existing reliability and operational requirements set forth in the SPP tariff. SPP has requested that FERC issue an order on the HILL proposal by January 8, 2026, with an effective date of January 15, 2026. The filing remains pending before FERC

PJM Critical Issue Fast Path (CIFP) Initiative

PJM’s CIFP Initiative, currently under stakeholder review, similarly seeks to address challenges posed by large loads. One early concept, the Non-Capacity Backed Load (NCBL) framework, would require large loads to accept priority curtailment during grid emergencies in exchange for exemption from capacity market charges. PJM stakeholders and data center developers strongly opposed the proposal, citing concerns about incompatibility with the need for continuous, reliable service to data centers, its discriminatory treatment of data centers compared to other large industrial loads, jurisdictional overreach by PJM and potential market distortions.

Alternative stakeholder proposals include:

• Bring Your Own Generation (BYOG): Allows large load owners to contract for or construct dedicated generation, with incentives such as expedited interconnection and relief from capacity obligations and mandatory curtailment.
• Expedited Interconnection Track (EIT): Establishes a separate, fast-track queue for state-sponsored generation projects capable of achieving commercial operation within three years. Open to all fuel types, including natural gas, nuclear, battery storage and renewables. Eligibility would require demonstration of full site control, a $10,000/MW readiness deposit and 100% cost responsibility for all identified network upgrades. The EIT would be limited to ten projects per year.
• Voluntary Load Management Programs: Enables large loads to participate in demand response programs to voluntarily reduce load during emergencies in exchange for credits. PJM would remove the dynamic retail rate and replace it with an energy market offer price.

PJM intends to submit a comprehensive proposal to FERC by the end of 2025, with the goal of implementing new rules in time for PJM’s 2028/2029 base capacity auction, scheduled for June 2026.

Large Loads Become Top Priority For NERC

In September, the NERC Large Load Task Force issued a “Level 2 Alert,” highlighting grid disturbances, inadequate modeling, insufficient technical interconnection requirements and a lack of operating protocols to address the influx of large loads (a Level 2 Alert is an Industry Recommendation from NERC to address significant reliability risks to the Bulk Power System). The alert provided recommendations to NERC-registered entities to mitigate risks to the bulk power system resulting from the integration of large loads, including:

• Transmission owners should establish clear facility design and performance criteria in their interconnection requirements for large loads.
• Transmission providers and planning coordinators should establish a comprehensive interconnection and system-wide study process using steady state, dynamic and short-circuit models to assess reliability impacts of large loads.
• Transmission owners should enhance load commissioning activities to ensure a comprehensive commissioning process for operational readiness of large loads.
• Transmission owners should establish operating protocols and the necessary communication infrastructure to support reliable ongoing operations after large load facilities enter commercial operation.
• Transmission planners, resource planners and planning coordinators should work with regulatory bodies to identify and implement a process to include large loads into their long-term and near-term transmission planning forecasts.

NERC-registered entities identified in the alert must respond to the questions by January 28, 2026. Separately, the Large Load Task Force recently issued a paper on “Characteristics and Risks of Emerging Large Loads,” evaluating the reliability impacts of large loads on the bulk power system. The paper, together with the registered entity responses to the alert, could form the basis of new or revised reliability standards applicable to large loads.

Takeaways

The rapid growth in U.S. electricity demand driven by data centers requires urgent, coordinated efforts among regulatory bodies and industry stakeholders to ensure ongoing reliability of the grid. The DOE, FERC, NERC and RTOs are now engaged in a coordinated, multilayered effort to ensure the timely and reliable connection of large loads to the interstate transmission system.

In the coming months, we expect additional guidance from FERC rulemaking in response to the DOE’s Section 403 directive, FERC’s review of the SPP HILL-HILLGA proposal, a PJM proposal filed with FERC and further NERC guidance, including potential reliability standard development.