On June 18, 2026, FERC issued tailored show cause orders under Section 206 of the Federal Power Act to all six regional transmission organizations (RTOs) and independent system operators (ISOs) under its jurisdiction: PJM, MISO, SPP, CAISO, ISO New England, and NYISO. Each operator now has 60 days to either demonstrate that its existing tariffs remain just and reasonable — or file tariff reforms that address the Commission's concerns about large-load integration.
Additionally, within 30 days, each RTO and its transmission owners must submit a detailed informational report describing how the grid operator intends to ensure adequate generation will be available to serve both existing customers and new large loads without shifting costs to ratepayers.
Five Categories of Reform
The orders identify five categories that each grid operator must address. First, developing efficient transmission service application and study processes tailored to the unique characteristics of data centers and other large loads. Second, preventing cost shifting and requiring transparency into transmission costs so that residential ratepayers are not subsidizing hyperscale facilities. Third, accommodating colocation agreements and behind-the-meter generation — a direct response to deals like AWS's controversial arrangement at Talen Energy's Susquehanna nuclear plant. Fourth, providing new transmission services for flexible large loads that can modulate consumption. And fifth, developing processes to study generating facilities that serve electrically proximate large loads.
Why This Matters for Infrastructure Risk
The FERC action arrives at a critical inflection point. Year-to-date U.S. data center construction spending has reached $58.1 billion — more than four times the record set over the same period in 2025. Interconnection queues at PJM, MISO, and ERCOT have ballooned to over five times historical averages, with wait times stretching to seven or more years in some regions.
For data center developers, the order is a double-edged sword. On one hand, streamlined interconnection processes could accelerate speed-to-power, the single most critical competitive variable in the AI infrastructure race. On the other, new cost-transparency requirements and anti-cost-shifting provisions could increase the financial burden on data center operators who have benefited from favorable utility arrangements.
Colocation Under the Microscope
The order's explicit treatment of colocation agreements signals that FERC is moving to establish clear rules for an arrangement that has sparked intense controversy. Multiple utility commissions have pushed back against behind-the-meter deals that allow data centers to tap directly into power plant output, bypassing the transmission grid and its associated costs. FERC's intervention could either legitimize or constrain these arrangements depending on how the RTOs respond.
"The Commission's action recognizes that the current interconnection framework was designed for a different era. We need rules that can handle load growth at this unprecedented scale while protecting all ratepayers." — FERC Commissioner statement
The 60-day response window means initial filings are due by mid-August 2026. The outcome will shape the regulatory landscape for data center siting and power procurement for years to come — and represents a material variable that every infrastructure investor and operator must now factor into their planning models.