FERC Advances New Oversight Framework for Large Loads and Co-Located Generation

At its June 18, 2026, Open Meeting, the Federal Energy Regulatory Commission (FERC or the Commission) took a series of coordinated actions addressing the rapid growth of large electrical loads, including data centers, advanced manufacturing facilities and other energy-intensive customers. The actions focus on how these loads interconnect to, rely on and pay for the interstate transmission system.

The meeting marked a significant escalation in FERC's oversight of large load development. Although the Commission did not adopt a single nationwide tariff regime at this meeting, it moved from general policy development toward concrete, region-specific proceedings that will require each organized market to justify whether its existing tariff rules remain just and reasonable in light of accelerating load growth.

The Commission's principal actions included:

• issuing six new Section 206 show-cause proceedings (Docket Nos. EL26‑67‑000, EL26‑68‑000, EL26‑69‑000, EL26‑70‑000, EL26‑71‑000, EL26‑72‑000) directed to each regional transmission organization/independent system operator (RTO/ISO)
• issuing a significant order on rehearing, compliance and paper hearing in the PJM Interconnection co‑located load docket (EL25‑49‑002)

Together, these actions signal that FERC is no longer treating large load and co-location issues as isolated project-specific disputes. Instead, the Commission is developing a broader regulatory framework focused on consumer protection, reliability, transparency and nondiscriminatory access to transmission service.

Key Commission Actions

The central premise underlying the show-cause proceedings is that existing transmission planning and interconnection frameworks were not designed for the current scale, speed and concentration of new large load development. FERC's actions recognize that delays or uncertainty in connecting large loads can affect reliability, investment decisions and the allocation of transmission upgrade costs.

Across the show-cause proceedings, the Commission is focused on expedited and transparent study processes, treatment of flexible or curtailable loads, cost responsibility for network upgrades, and the interaction between large load interconnection and co-located generation arrangements.

6 New RTO/ISO Show-Cause Proceedings

FERC initiated six parallel proceedings under Section 206 of the Federal Power Act, directing each RTO/ISO and its transmission owners to show cause why their existing tariffs remain just and reasonable in light of the challenges presented by large load growth or alternatively to propose tariff revisions addressing the Commission's concerns.

The proceedings are organized by market and docket number as follows:

The show-cause orders preliminarily find that the existing RTO/ISO tariffs appear to be unjust and unreasonable because they do not adequately address the challenges associated with integrating large and co-located loads onto the transmission system. Each order is tailored to the respective RTO/ISO and reflects the Commission's approach of recognizing the need for regional flexibility.

The Commission identified five categories of reforms that each RTO/ISO and its transmission owners must address: 1) transmission service application and study processes, including consideration of alternative transmission technologies, 2) preventing cost shifting and requiring transparency into transmission costs, 3) co-location arrangements and behind-the-meter generation, 4) new transmission services for flexible large loads and 5) processes to study generating facilities serving electrically proximate large loads and large co-located loads.

The orders direct the RTOs/ISOs and transmission owners to respond within 60 days, including responses to the Commission's briefing questions, and file an informational report regarding resource adequacy within 30 days. The Commission materials also state that an RTO/ISO and its transmission owners may request abeyance within 45 days and that interested parties may respond to RTO/ISO and transmission owner filings within 30 days. The Commission expressly encouraged RTOs/ISOs to work with transmission owners and regional stakeholders to submit Federal Power Act Section 205 filings that could address the Commission's concerns.

The Commission also expressed that the show-cause orders and potential tariff changes are not intended to disrupt existing commercial agreements and rather are intended as prospective changes.

PJM Co-Located Load Order on Rehearing, Compliance and Paper Hearing

FERC also issued an important order in the PJM co-located load proceeding in Docket No. EL25-49-002. The Commission validated PJM's general direction toward structured co‑located load service – i.e., that co‑located load must be served through defined transmission service products and that those products must reflect different levels of reliance on the grid. However, no transmission service product was "fully finalized," and all service constructs (including Firm and Non‑Firm Contract Demand and interim service) are subject to clarification, revision and further tariff development. PJM has 60 days to submit its next compliance filing.

Commissioner Statements

FERC Chairman Laura Swett characterized the orders as "historic action" intended to advance fair cost allocation, transparency for ratepayers, respect for state authority, efficient markets and "speed to power." Her remarks emphasized that individualized show-cause orders are intended to be a legally durable and regionally responsive path forward, rather than a single, one-size-fits-all rule.

FERC Commissioner Lindsay See's remarks similarly supported the orders as a means of providing clearer processes, better information and faster analysis for large load additions. Commissioner See emphasized that large and flexible loads can materially affect system operations, near-term planning needs, upgrade requirements and cost allocation. Commissioner See also stressed that FERC's role should complement, rather than displace, the work of states, utilities, RTOs/ISOs and other federal agencies.

Commissioner David Rosner described the orders as organized around four broad pillars: 1) protecting consumers, 2) safeguarding reliability, 3) enhancing transparency and 4) fostering innovation. Commissioner Rosner's remarks highlighted the importance of cost recovery agreements to prevent costs associated with large load infrastructure from being shifted to residential customers if a planned large load fails to materialize as expected.

Commissioner David LaCerte also emphasized the importance of proactive Federal Power Act Section 205 filings, urging public utilities outside RTO/ISO regions to consider Section 205 proposals addressing similar large-load, co-location, cost-shift, transparency and reliability concerns, signaling that the show-cause orders may serve as a road map for voluntary tariff reforms beyond organized markets.

The commissioner statements reinforce several themes that are likely to shape the next phase of these proceedings, that the Commission is focused on timely interconnection but not at the expense of reliability, cost causation, consumer protection or state regulatory prerogatives.

Key Regulatory Impacts

The Commission's actions have several immediate regulatory implications. First, the show-cause orders shift the burden to each RTO/ISO and its transmission owners to justify existing tariff structures or propose reforms for large and co-located loads on accelerated timelines.

Second, the orders focus the next round of tariff development on five concrete reform categories: transmission service application and study processes, cost-shift protections and cost transparency, co-location and behind-the-meter generation, flexible-load transmission services and study processes for generating facilities serving electrically proximate large loads and large co-located loads.

Third, the orders preserve regional flexibility, meaning that reforms may differ materially across PJM, Southwest Power Pool (SPP), New York Independent System Operator (NYISO), Midcontinent Independent System Operator (MISO), California Independent System Operator (CAISO) and ISO New England (ISO-NE).

Fourth, the Commission's emphasis on cost recovery agreements, transparency and resource adequacy reporting confirms that ratepayer protection and reliability will be central to any acceptable tariff response.

Fifth, the PJM co-located load order separately confirms that tariff clarity is essential where co-located generation and load rely on jurisdictional transmission service, while leaving core retail-load questions to the states.

Lastly, the gas pipeline and storage certificate order signals a meaningful shift in how FERC applies the National Environmental Policy Act in certificate proceedings, particularly if the final order confirms that the Commission will no longer conduct cumulative-effects review for an applicant's project.

What This Means

The Commission's June 18 actions make clear that FERC expects RTOs/ISOs and transmission providers to develop clearer rules for large load interconnection and service. Stakeholders pursuing data center, advanced manufacturing, hydrogen, crypto mining or other energy-intensive projects should assume that interconnection strategy, transmission service design and cost responsibility will be central diligence items from the earliest stages of project development. Importantly, FERC did not assert any new or expanded jurisdiction over retail load or co‑located load in a broad or preemptive sense. Instead, the Commission reaffirmed and carefully cabined its existing jurisdiction while explicitly leaving core retail‑level questions to the states.

A recurring theme across the Commission's actions is that large loads should not impose unjustified costs on existing customers. Stakeholders should expect greater emphasis on direct assignment of network upgrade costs, cost recovery agreements, financial security, withdrawal penalties and mechanisms designed to protect customers from stranded costs if a large load project is delayed, downsized or abandoned.

Further, the PJM order shows that FERC expects co-located structures to be translated into tariff-based rights and obligations. Stakeholders should carefully evaluate whether a co-located load will require transmission service, how its maximum grid reliance will be measured, whether it can credibly commit to curtailment or limited withdrawals and how service obligations will be documented.

FERC's decision to initiate individualized show-cause proceedings suggests that near-term reforms may vary by market. Projects in PJM, MISO, SPP, CAISO, ISO-NE and NYISO may face different timelines, study requirements, cost allocation rules and compliance obligations. Therefore, stakeholders will need to evaluate project risk on a market-specific basis rather than assuming that a single national rule will apply uniformly.

Next Steps

Those with pending or planned large load projects should consider the following near-term actions:

• Identify all projects that may qualify as large loads or involve co-located load and generation arrangements.
• Review applicable RTO/ISO tariff provisions, pending stakeholder processes, and any existing interconnection or service requests.
• Assess potential exposure to network upgrade costs, stranded cost obligations, security requirements and withdrawal penalties.
• Evaluate whether project designs can support credible flexibility, curtailment or staged energization commitments.
• Monitor the six show-cause proceedings and PJM's 60-day compliance obligations for tariff language that may affect project timelines, commercial terms or financing assumptions.

Conclusion

FERC's June 18, 2026, Open Meeting represents an important inflection point in the federal regulation of large load interconnection and co-located load arrangements. The Commission is not yet imposing a single comprehensive national framework, but it is using Section 206 show-cause proceedings and PJM compliance directives to move toward more formal and standardized oversight.

The message is clear: Large load projects will increasingly require integrated regulatory, commercial and technical planning. Project sponsors should be prepared to demonstrate how proposed arrangements will protect reliability, avoid undue cost shifts, comply with applicable tariff requirements and provide sufficient certainty for transmission providers, customers and regulators.

For more information or questions, please contact the authors.

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