FERC Show Cause Orders On Large Load Interconnection: What Data Center Developers And Other Stakeholders Should Know

The rapid growth of data centers, advanced manufacturing and other energy-intensive industries is reshaping electricity demand across the United States. In response, the Federal Energy Regulatory Commission (FERC) has taken a significant step toward improving how large loads connect to the transmission system.

On June 18, 2026, FERC issued a series of Federal Power Act Section 206 show cause orders directing organized market operators to justify or reform their existing rules relating to large load interconnection. The orders reflect FERC’s preliminary view that current frameworks may be inadequate to address reliability, cost allocation and timing challenges associated with large load growth.

This Q&A explains what the orders require, how FERC defines large loads for this purpose and what developers and other stakeholders should expect next.

What Is FERC’s 2026 Show Cause Order on Large Load Interconnection?

FERC’s June 18, 2026, show cause orders require each RTO/ISO to demonstrate whether its existing tariff provisions adequately enable the efficient and reliable interconnection of large loads.

If an RTO/ISO cannot make that showing to FERC’s satisfaction, FERC expects it to propose tariff revisions under Section 205 of the Federal Power Act, such tariff revisions are developed through stakeholder processes and subject to FERC review.

Each RTO/ISO must:

• Respond to FERC’s show cause directives within 60 days, or by August 17, and
• Submit a separate resource adequacy report within 30 days, or by July 20, addressing how it will ensure sufficient generation to serve new and existing large loads (subject to potential extensions or procedural requests).

It is possible that RTOs/ISOs may request and receive an extension of these timelines from FERC (although FERC may decide to strictly enforce these deadlines).

Why Did FERC Act on Large Load Interconnection?

FERC’s actions are driven by a sharp increase in electricity demand from data centers, AI infrastructure and advanced manufacturing and the perception that interconnected transmission owners within RTO/ISO footprints were not keeping up with processing such requests.

The Commission identified several limitations in existing frameworks, including:

• Interconnection processes not designed for large, concentrated load growth
• Misalignment between developer timelines and study processes
• Increasing prevalence of co-located load and generation configurations
• The potential for speculative or duplicative transmission service requests

As a result, FERC concluded that existing rules may not adequately address reliability risks, cost allocation concerns or interconnection delays.

How Does FERC Define a “Large Load”?

For purposes of the show cause orders, FERC defines a large load as:

• A new commercial or industrial customer
• Located at a single site
• With peak demand of 50 MW or greater
• Interconnecting at transmission-level voltage (above 69 kV)
• Not part of a co-location arrangement

While this definition provides a baseline, each RTO/ISO may propose alternative definitions to FERC, subject to demonstrating that they are just and reasonable.

What Reforms Must RTOs/ISOs Evaluate Under FERC’s Show Cause Order?

FERC directed RTOs/ISOs to assess and, if necessary, revise their tariffs across several key areas affecting large load interconnection:

Transmission Service Application and Study Processes

• Establishing procedures tailored to large loads
• Improving study timelines and efficiency
• Incorporating alternative transmission technologies
• Requiring additional operational data to evaluate grid impacts

Cost Allocation and Transparency

• Preventing cost shifting to existing customers
• Ensuring large load customers bear network upgrade costs
• Enhancing transparency for regulators and stakeholders

Co-Located Load and Behind-the-Meter Generation

• Clarifying how co-located configurations interact with the transmission system
• Defining cost responsibility for ancillary services
• Preventing cross-subsidization among customers

Transmission Services for Flexible Large Loads

• Developing non-firm or conditional service options
• Allowing “ramp-up” service as network upgrades are completed
• Enabling earlier interconnection for loads able to limit withdrawals

Generation Serving Electrically Proximate Loads

• Coordinating interconnection studies for generation and nearby large loads
• Capturing potential efficiencies where facilities are electrically proximate

Collectively, these reforms are intended to accelerate interconnection timelines while preserving reliability and cost causation principles.

How Does FERC Define Co-Located Loads?

FERC defines a co-located load as an end-use customer physically connected to a generating facility on the customer’s side of the point of interconnection. These structures, sometimes proposed in data center interconnection strategies as a temporary measure or on a permanent basis, raise several regulatory issues, including:

• Allocation of transmission and ancillary service costs
• Whether and how such loads rely on grid services
• The potential for cross-subsidization

FERC has directed RTOs/ISOs to establish clear tariff provisions governing these arrangements.

Do FERC’s Show Cause Orders Apply Outside RTO/ISO Regions?

No. The show cause orders apply only to FERC-jurisdictional RTOs/ISOs:

• PJM
• MISO
• SPP
• CAISO
• ISO-NE
• NYISO

They do not apply to ERCOT or regions where transmission utilities have not ceded operational control of their facilities to an ISO/RTO (e.g., much of the Southeast, Northwest and portions of the Southwest), although FERC has encouraged voluntary adoption of similar reforms.

Why Did FERC Use Show Cause Orders Instead of Rulemaking?

Rather than pursuing a nationwide rulemaking, FERC used its authority under Section 206 of the Federal Power Act to require region-specific responses.

This approach allows the Commission to:

• Move more quickly than a formal NOPR process
• Better account for regional market differences
• Build on existing tariff structures, some of which already incorporate some of the provisions FERC is looking to incent

However, it also introduces the possibility of more inconsistencies across RTOs/ISOs, depending on how each entity responds and how FERC evaluates those responses.

What Happens Next?

The show cause process will unfold over the coming months:

• RTOs/ISOs will submit responses addressing FERC’s concerns
• Where necessary, they will develop tariff revisions through stakeholder processes
• FERC will review those filings and may accept, reject or modify proposed reforms
• Additional rounds of comments, protests and compliance filings are likely

Because these processes are region-specific and stakeholder-driven, timelines and outcomes may vary significantly across markets. Related stakeholder processes at the RTO/ISO level may be crucial and many decisions will be made during those processes that FERC may choose not to change or reverse even if there is opposition once those proposals are submitted for FERC’s review.

What Do FERC’s Show Cause Orders Mean for Data Center Developers?

For data center developers, FERC’s recent show cause orders signal:

• Potential increased RTO/ISO scrutiny of interconnection requests and study assumptions
• Greater emphasis on cost responsibility and transparency
• Potential for new regulatory frameworks for co-located and behind-the-meter configurations
• Opportunities to utilize flexible transmission service options
• Potential divergence across regions in interconnection requirements

While the proceedings introduce near-term uncertainty, they are expected to produce a more transparent, though not necessarily uniform, framework for large load interconnection.

Conclusion

FERC’s June 2026 show cause orders represent a significant development in the regulation of large load interconnection. By requiring RTOs and ISOs to reassess their tariff frameworks, the Commission is seeking to balance faster interconnection timelines, on the one hand, with reliability and equitable cost allocation, on the other hand.

For companies pursuing data center interconnection or other energy-intensive projects and other stakeholders, early engagement in stakeholder processes and proactive planning will be critical to navigating evolving requirements and securing timely access to transmission service.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.