FERC orders regional grid operators to reform rules for large load grid connections

Key Takeaways

NACo encourages counties to contact their state utility regulator to discuss how changes to grid operations in their region could impact energy prices

Background

On June 18, the Federal Energy Regulatory Commission (FERC) issued show cause orders directing six regional grid operators to justify or reform their rules that govern how large energy users such as data centers and manufacturing facilities connect to the electric grid. The purpose of these orders is to modernize the nation’s electric markets as the demand for energy increases across the country. 

FERC has identified five categories of reform that grid operators should address in their responses:

• Develop efficient transmission service applications and study processes, including consideration of alternative transmission technologies
• Prevent cost shifting and requiring transparency into transmission costs
• Accommodate co-location agreements and behind-the-meter generation
• Provide new transmission services for flexible large loads
• Develop a process to study generating facilities that serve electrically proximate large loads and co-located loads

This action was taken in response to an October 23, 2025 letter to FERC from Department of Energy (DOE) Secretary Chris Wright. In the letter, Sec. Wright urged FERC to initiate rulemaking procedures to accelerate large load interconnections for entities such as data centers to the grid. This letter marked a significant shift in the relationship between the two agencies. While FERC exists within DOE it is an independent agency and has historically not exerted jurisdiction over large interconnections.

What comes next?

The regional grid operators must submit a resource adequacy report detailing how the grid will ensure power for new large loads by July 20. The regional grid operators have until August 17 to justify their current rules or change them to address the reform categories that FERC identified in show cause orders.

The six grid operators subject to the show cause orders are:

• PJM Interconnection, LLC (PJM)
• Midcontinent Independent System Operator, Inc. (MISO)
• Southwest Power Pool, Inc. (SPP)
• California Independent System Operator Corporation (CAISO)
•  ISO New England Inc. (ISO-NE)
• New York Independent System Operator, Inc. (NYISO)

What does this mean for counties? 

Members of Congress have hailed this action as a great first step towards modernizing the nation’s electric grid while also respecting state’s regulatory authority and regional differences. NACo will continue to monitor developments as FERC receives show cause justifications from the six regional grid operators. 

NACO encourages counties to contact their state utility regulator to discuss how changes to the grid operator in their region could affect energy prices.

FERC fact sheet

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