The Nickel Report

On June 18, the Federal Energy Regulatory Commission (FERC) took long-anticipated action to speed the interconnection of data centers, other large loads, and the generation resources necessary to power them to the interstate transmission grid. FERC has responded to a late 2025 proposal from the Department of Energy (DOE ANOPR)¹ by issuing “Show Cause Orders” to each of the six Independent System Operators and Regional Transmission Organizations (ISOs/RTOs) subject to its jurisdiction.    

The Show Cause Orders find that ISO/RTO tariffs appear to be unjust, unreasonable, and/or unduly discriminatory because they do not clearly, consistently, or completely address key large load interconnection issues. Each ISO/RTO must file a response that explains why FERC’s concerns are invalid or describes reforms that FERC could impose under section 206 of the Federal Power Act (FPA). FERC will review each response and may impose different changes. 

FERC is pushing the ISOs/RTOs to make rapid and dramatic load interconnection improvements. Expediting load interconnections to the grid, especially for hyperscale data centers supporting artificial intelligence applications, is a major economic and national security priority for the Trump Administration. According to FERC’s Chairman, Lauren Swett, “the status quo across much of the country is not good enough. Nowhere close,” and FERC will demand “quick, efficient, and legally durable” changes. Among other things, FERC believes that ISOs/RTOs should be able to complete transmission studies for large loads in 60-90 days and favors expedited generator interconnection pathways for resources associated with large loads.

At the same time, FERC acknowledges the progress that various ISO/RTOs already have made. FERC is encouraging ISOs/RTOs to make voluntary FPA section 205 filings to enhance their interconnection arrangements beyond what the Show Cause Orders may require. FERC will allow ISOs/RTOs to develop solutions that best suit region-specific conditions instead of insisting on one-size-fits-all national mandates. All reforms must be prospective in nature and should not disrupt existing commercial arrangements. 

FERC separately is requiring each ISO/RTO to file a report on resource adequacy issues and steps they are taking to ensure that there will be sufficient supply to meet load increases.

Show Cause Order Directives

The Show Cause Orders pose numerous questions for each ISO/RTO to address. FERC has organized the issues into five broad topics. These are listed below, along with a few major points of interest.   

1. Developing efficient transmission service and application/study processes that also give serious consideration to the near-term use of advanced alternative transmission technologies.

• FERC believes that the large loads now seeking interconnections differ in size, concentration, and operating characteristics from traditional large loads. FERC worries that existing ISO/RTO rules do not adequately account for these characteristics, which can result in delays and increase costs.  

2. Preventing cost shifting and requiring greater transparency into the transmission costs to serve large loads.

• FERC emphasizes the need to strengthen state regulators’ ability to protect consumers and discourage speculative interconnection requests that could delay bona fide interconnections.

3. Better accommodating co-location arrangements and behind-the-meter generation.

4. Providing new kinds of transmission services for flexible large loads that are able and willing to limit their use of the transmission system under certain conditions.

• FERC specifically proposes that ISOs/RTOs adopt the three new types of transmission services that the PJM Interconnection was ordered to adopt in December.

5. Developing a process to study generating facilities serving “electrically proximate” large loads and co-located loads that reflects the operational dynamics of serving such loads.

• FERC views recently adopted large load, generator interconnection, transmission service and study reforms in the Southwest Power Pool as models for other regions. Other regions will not be required to adopt SPP’s structures but must explore similar improvements expedite interconnection for co-located and electrically proximate large load and generation arrangements.

Informational Reports on Resource Adequacy Issues

FERC is concerned about resource adequacy given the “rapid addition and proliferation of large loads without commensurate additions of supply or demand-side resources . . .” and that ISO/RTO regions will be unable to plan adequate generation to serve all load at the pace such load seeks to connect. ISOs/RTOs must therefore submit “a detailed informational report on any proposals under consideration in its stakeholder process to address the issue of resource adequacy to serve new large loads.” Such reports must include a detailed schedule of key milestones, expected future filing dates, and information regarding ongoing stakeholder processes aimed at increasing the pace of adding generating capacity. FERC also “strongly encourages” new section 205 proposals in this area. 

Filing Deadlines and Abeyance Requests

Each ISO/RTO, and to the extent applicable² their member transmission owners (TOs), have 60 days (i.e., until August 17) to respond to the Show Cause Orders by: (i) demonstrating that their tariffs continue to be just, reasonable, and not unduly discriminatory; or (ii) explaining what remedial tariff changes that would remedy FERC’s concerns. Interested parties will have 30 days to comment on Show Cause Order responses. ISOs/RTOs also have 30 days (i.e., until July 20) to submit their resource adequacy informational reports.

ISOs/RTOs and/or their TOs may ask, within 45 days (i.e., until August 3), for FERC to hold the Show Cause Order proceedings in abeyance for up to 90 days (i.e., until November 16). The purpose of the abeyance would be to give ISOs/RTOs time to develop and file FPA section 205 proposals to address FERC’s concerns and thereby obviate the need for FERC action under the Show Cause Orders. FERC is strongly encouraging section 205 filings while warning that it will not grant abeyances “reflexively” and will strongly disfavor requests for additional extensions.    

The Relationship Between the DOE ANOPR, the Show Cause Orders, and Jurisdictional Issues

The DOE ANOPR proposed that FERC assert jurisdiction over all large load interconnections to FERC-jurisdictional transmission facilities. It also set forth fourteen principles to guide FERC’s development of standardized interconnection procedures.

States raised various jurisdictional objections to DOE’s proposals. Many commenters urged FERC to avoid aggressive jurisdictional assertions that could trigger litigation and thereby impede progress on substantive reforms. There was also near consensus that FERC should recognize regional differences and avoid one-size-fits-all solutions. 

FERC ultimately opted not to act via rulemaking. It instead issued the Show Cause Orders because it expected that they would permit faster implementation with less risk of litigation delays and more room for regionally tailored ISO/RTO responses. In particular, FERC declined to “comprehensively address” the extent of its jurisdiction over aspects of large load interconnections beyond what was necessary to justify the Show Cause Orders. DOE has announced that it supports FERC’s revised approach.

The DOE ANOPR was originally the lead item for FERC’s June 18 open meeting. The Show Cause Orders were added to the agenda on the eve of the meeting, but the DOE ANOPR item was not dropped. As of this writing, FERC has not yet issued anything new in the DOE ANOPR docket. FERC has signaled that the DOE ANOPR proceeding will remain open for additional comments and for possible future actions aimed at non-ISO/RTO regions. But for now, it is clear that the Show Cause Order dockets will be the primary vehicles for expediting large load interconnections to the FERC-jurisdictional transmission grid.   

[1] See our previous post regarding the DOE ANOPR.

[2] Member transmission owners have an obligation to respond only with respect to Show Cause Order questions that “implicate aspects of the Tariff over which they have the filing rights,” i.e., generally matters involving their transmission revenues.