The Federal Energy Regulatory Commission (FERC) has directed major U.S. electric grid operators to review how they connect exceptionally large power users, including data centers, as electricity demand surges across the country. Announced on June 18, the regulator issued draft “show cause” orders requiring six regional grid operators under its jurisdiction, excluding Texas, to either defend their existing frameworks or propose reforms that would allow large customers to gain access to power more efficiently while maintaining grid reliability and controlling costs for consumers.
The move comes as data centers continue to drive electricity consumption to unprecedented levels, creating challenges for power systems in multiple regions. According to FERC, the objective is to establish clearer procedures for connecting major energy users and ensuring that the infrastructure required to serve them is funded appropriately. The regulator said the review is intended to support faster deployment of facilities tied to artificial intelligence development while reducing risks to grid stability. FERC Chairman Laura Swett described the issue as a national priority, stating, “This is the biggest priority our country is facing at the moment.” Referring to efforts to expand AI-related infrastructure, she added, “This is a race against time, and we are going to win.”
Under the orders, grid operators and transmission owners have 60 days to explain why their current approaches remain appropriate or outline potential revisions across five key areas. These include creating transparent procedures for connecting large electricity users and determining how infrastructure expenses should be allocated. The review of Data Center Power Rules also encourages grid operators to consider frameworks that allow large customers to develop dedicated power sources, including their own generation facilities, and to deploy advanced technologies that improve the efficiency of existing networks.
Industry stakeholders broadly welcomed the initiative. Robert Montejo, a partner at Duane Morris representing data center developers and power companies, said, “The grid and prior policy were not built for the pace and scale of demand we’re seeing from AI infrastructure, and FERC is signaling that standing still is no longer an option.” Environmental groups also responded positively. The Sierra Club stated, “We are energized that there is a clear path forward to adopt responsible large load interconnection policies that safeguard reliability, improve transparency, and embed affordability and ratepayer protections for American households.” Alongside the review of Data Center Power Rules, FERC said it would no longer automatically assess cumulative environmental impacts in rulemaking conducted under the National Environmental Policy Act. Swett said, “We are no longer going to waste valuable staff and applicant time and money doing an analysis that is not necessary under the law.”