The Nickel Report

On October 23, 2025, the Secretary of Energy, pursuant to his authority under section 403 of the Department of Energy Organization Act (DOE Act), directed the Federal Energy Regulatory Commission (Commission or FERC) to initiate rulemaking procedures and consider an advance notice of proposed rulemaking (ANOPR) that sets forth potential reforms to expedite and facilitate the interconnection of “large loads,”^[1] notably data centers, to the interstate transmission system.

1. Background

The ANOPR states that the significant increase in the United States’ electricity demand is substantially attributable to the rapid growth of large loads. Large loads include, for example, home and vehicle electrification, increasing quantities of large commercial and industrial load, and, most notably, data centers associated with artificial intelligence. The ANOPR asserts that action by the Commission is required to ensure the timely and orderly interconnection of large loads to the transmission system.

As recognized in the Secretary’s directive, the Commission has not historically exerted jurisdiction over load interconnections. At a high level, the Commission’s jurisdiction under the Federal Power Act (FPA) extends to the “transmission of electric energy in interstate commerce and the sale of such energy at wholesale in interstate commerce.” 16 U.S.C. § 824(b)(1). The Commission recently articulated its view of certain basic jurisdictional principles as applied to co-located loads:

• States retain exclusive jurisdiction over the terms of retail sales (and wholesale sales to the extent they are not in interstate commerce), generally including the rate designs that determine how the costs of the wholesale sale and transmission of electricity assigned to a wholesale customer are allocated among that wholesale customer’s retail customers.
• States have authority over their generation resource mix, including through their siting authority.
• The Commission has exclusive authority over the rates, terms, and conditions for the sales from generating resources used to serve co-located loads, as well as the practices directly affecting such sales, provided that they are sales for resale in interstate commerce. If they are not sales for resale—that is, if they are made directly to the end-use consumer—or if they are not in interstate commerce, then the co-located generator’s sales are under state jurisdiction.
• The Commission has exclusive jurisdiction over the provision of transmission service used to serve co-location arrangements, provided that transmission of electricity is in interstate commerce. The Commission historically has not exercised jurisdiction over any and all transmission-level interconnections of retail load.

PJM Interconnection, L.L.C., 190 FERC ¶ 61,115, at PP 66-73 (2025).

FERC has already been considering large load generation co-location issues in the PJM proceeding.  Various FERC-regulated Regional Transmission Organizations have also been developing region-specific proposals to expedite large load additions. The ANOPR appears to represent an effort by President Trump’s administration to accelerate these developments as part of its broader effort to “win the AI race,” including by expediting data center interconnection and ensuring that there is adequate electric power supply to support them. 

2. The Proposal

Section 403 of the DOE Act authorizes the Secretary of Energy to propose rules, regulations, and statements of policy of general applicability with respect to any function within the jurisdiction of the Commission. 42 U.S.C. § 7173(a). Pursuant to that authority, the Secretary directed the Commission to consider the ANOPR’s presentation of potential reforms for the interconnection of large loads to the interstate transmission system.

The ANOPR states that need for reform is predicated on the “unprecedented current and expected growth of large loads seeking to interconnect to the transmission system, and to provide open access and non-discriminatory access to the transmission system, it has become necessary to standardize interconnection procedures and agreements for such loads, including those seeking to share a point of interconnection with new or existing generation facilities (hybrid facilities).”

A. Stated Legal Basis

The ANOPR asserts four legal justifications for the Commission’s jurisdiction over such interconnections:

1. Large load interconnections are a critical component of open access transmission service that require minimum terms and conditions to ensure non-discriminatory transmission service;
2. Large load interconnections fall within the Commission’s authority to ensure wholesale rates are just and reasonable and not unduly discriminatory or preferential;
3. The proposal does not impinge on States’ authority over retail electricity sales because the proposal neither exerts jurisdiction over any retail sales to the large load nor governs the siting, expansion, or modification of generation facilities; and
4. Jurisdiction over large load interconnections is consistent with the core purposes of the FPA.

B. Principles to Inform the Rulemaking

The ANOPR sets forth and requests comments on various principles that it states should inform the Commission’s rulemaking:

1. The Commission’s jurisdiction should be limited to interconnections directly to transmission facilities to avoid encroaching on the States’ jurisdiction over generation facilities.^[2]
2. The reforms should only apply to loads greater than 20 MW.
3. To the extent practicable, load and hybrid facilities should be studied together with generating facilities.
4. Load and hybrid facilities should be subject to standardized study deposits, readiness requirements, and withdrawal penalties.
5. Hybrid facilities should be studied based on the amount of injection and/or withdrawal rights requested.
6. Any hybrid interconnection shall be required to install the system protection facilities necessary to prevent unauthorized injections or withdrawals that exceed the respective rights.
7. The interconnection study of large loads that agree to be curtailable and hybrid facilities that agree to be curtailable and dispatchable should be expedited.
8. Load and hybrid facilities should be responsible for 100% of the network upgrades that they are assigned through the interconnection studies.
9. To the extent the interconnection customer is not the transmission owner, the interconnection customer shall be afforded the same (or equivalent) option to build as currently provided to generator interconnection customers.
10. An existing generating facility that seeks to enter a partial suspension to serve a new load at the same location must go through a system support resource/reliability must run type study.
11. Utilities serving large loads, including those at hybrid facilities, should be responsible for transmission service based on their withdrawal rights.
12. Utilities serving large loads, including those at hybrid facilities, should be responsible for ancillary services based on peak demand, without consideration of any co-located generation.
13. There must be a plan to implement these proposed reforms, including the treatment of large load interconnections already being studied for interconnection.
14. Utilities serving large loads must meet all applicable North American Electric Reliability Corporation reliability standards and open access transmission tariff provisions.

The ANOPR also states that it is not meant “in any way to discourage public utilities” from making voluntary filings to address these and similar issues. 

3. Implications and Next Steps

Concurrent with the issuance of this ANOPR, the Secretary also relied on section 403 to issue a separate directive to initiate rulemaking procedures regarding hydroelectric power preliminary permits. The Secretary also recently invoked his section 403 authority to direct Commission action on the then-draft 2022 Certificate Policy Statement. See DOE Directs FERC to Rescind the Updated Certificate Policy Statement. The increased use of section 403 to direct Commission action is consistent with the overall trend of increased executive branch influence on policy decisions by federal agencies, including FERC, that have historically been viewed as independent.

It seems certain that FERC will act on the ANOPR in a way that is generally aligned with DOE’s proposals.  But it remains to be seen whether FERC will modify particular recommendations and how it will resolve various details. Democratic Commissioner David Rosner posted on social media that there is “broad bipartisan support for FERC taking action soon on these issues, and I appreciate the @ENERGY Secretary turning to @FERC to do so.” However, former Republican Chairman Mark Christie expressed concerns about whether “reliable power service [could] be threatened by FERC-mandated interconnection of large load customers without sufficient generation capacity available to the grid operator.”  He also worried that the ANOPR “appears to be a massive expansion of federal control and intrusion into states' historic area of authority . . . .” Another key question will be whether FERC will truly require standardized national load interconnection standards or, as FERC has always done with its generator interconnection rules, allow for material regional variations.

Given that the ANOPR requests “final action” by April 30, 2026, it is possible that the Commission may proceed directly with a Notice of Proposed Rulemaking rather than a more preliminary ANOPR. Enacting the reforms contemplated in this proposal would be a substantial regulatory effort, and meeting the April 30 deadline would require the Commission to move more quickly than it traditionally has for significant rulemakings. FERC may have to establish an expedited comment date to meet DOE’s timetable. It is unclear whether the ongoing federal government shutdown will impact FERC’s ability to stay on schedule. 

[1] The ANOPR defines “large loads” as those greater than 20 MW, which is consistent with how the Commission defined large generation resources in Order No. 2003. See Standardization of Generator Interconnection Agreements & Procs., Order No. 2003, 104 FERC ¶ 61,103, at P 1 (2003), order on reh’g, Order No. 2003-A, 106 FERC ¶ 61,220 (2004), order on reh’g, Order No. 2003-B, 109 FERC ¶ 61,287 (2004), order on reh’g, Order No. 2003-C, 111 FERC ¶ 61,401 (2005), aff’d sub nom. Nat’l Ass’n of Regul. Util. Comm’rs v. FERC, 475 F.3d 1277 (D.C. Cir. 2007).

[2] The ANOPR argues that the Commission should adhere to its seven-part test for identifying the primary function of a facility in determining whether to assert jurisdiction. See Cal. Pac. Elec. Co., 133 FERC ¶ 61,018, at P 46 (2010) (“(1) local distribution facilities are normally in close proximity to retail customers; (2) local distribution facilities are primarily radial in character; (3) power flows into local distribution systems; it rarely, if ever, flows out; (4) when power enters a local distribution system, it is not reconsigned or transported on to some other market; (5) power entering a local distribution system is consumed in a comparatively restricted geographical area; (6) meters are based at the transmission/local interface to measure flows into the local distribution system; and (7) local distribution systems will be of reduced voltage.”).