FERC Issues Pivotal Show Cause Orders To Grid Operators To Integrate Large Energy Users

Commission directs the six U.S. regional grid operators and their transmission owners to provide justification within 60 days on why their current tariffs remain just and reasonable in the absence of clear and consistent provisions for large load customers—or alternatively, to propose changes.

On June 18, 2026, the Federal Energy Regulatory Commission (“Commission” or “FERC”) issued six tailored show cause orders to each of the FERC-jurisdictional Regional Transmission Operator (“RTO”)/Independent System Operator (“ISO”) entities and the jurisdictional transmission owners within each RTO/ISO to justify why their current tariffs remain just and reasonable in the absence of clear and consistent provisions for large load customers or, alternatively, to propose changes (“Show Cause Orders”). To support the interconnection of large load customers, the Commission also directed the six grid operators to submit an informational report within a month on how they intend to ensure that adequate generation will be available to serve existing and new large loads.

Rather than imposing a single nation-wide tariff or interconnection rule, the Commission emphasized the need for regional flexibility and acknowledged that the six RTOs/ISOs differ in market design, existing transmission service models, and current progress on large-load reforms. For example, SPP already has developed High Impact Large Load (“HILL”) and related generation assessment processes to study large-load additions and electrically proximate generation.¹ Meanwhile, PJM’s co-location issues are being addressed in a separate proceeding.² CAISO’s market is distinct because it does not offer traditional Order No. 888 transmission services. Notwithstanding these differences, the Show Cause Orders preliminarily find that each tariff may no longer be just and reasonable because they lack clarity regarding the rates, terms, and conditions that apply to flexible large loads, co-location arrangements, load with behind the meter generation, and generating facilities with electrically proximate large load or co-located load.

The Commission’s deadlines underscore the urgency in integrating large loads. The grid operators and transmission owners have:

• 60 days (August 17, 2026) to justify current tariffs or file tariff changes addressing the issues identified
• 30 days (July 20, 2026) to submit an informational report on generation adequacy for existing and new large loads

The Commission will consider requests from the grid operators and/or the transmission owners to hold in abeyance, for up to 90 days, all or certain aspects of the orders, including the deadline to respond. Abeyance requests will be considered to allow stakeholder processes to develop responsive tariff revision filings. Requests for a full or partial abeyance should be submitted by August 3, 2026 (45 days of the Show Cause Orders). FERC stated that it will heavily scrutinize abeyance requests, that any abeyance will be limited to 90 days, and that it will disfavor requests to extend the abeyance period.

Interested entities may respond within 30 days of the grid operators’ and transmission owners’ filings.

Background

On October 23, 2025, Secretary of Energy Chris Wright directed FERC to initiate a rulemaking proceeding concerning the interconnection of large loads pursuant to Section 403 of the Department of Energy Organization Act.³ In his letter to FERC, Secretary Wright emphasized that ensuring affordable, reliable, and secure electricity service to American households and industries requires that large loads be able to connect to the transmission system in a timely, orderly, and nondiscriminatory manner.⁴ On April 16, 2026, the Commission issued an order regarding its intent to act with respect to that ANOPR docket, agreeing that “‘[i]n light of the unprecedented current and expected growth of large loads’ such as data centers, there is an urgent need for thoughtful reforms to ensure that large loads are ‘able to connect to the transmission system in a timely, orderly, and non-discriminatory manner.’”⁵

The Commission had begun to address the growing use of co-location arrangements over the last year. The Commission explained that those proceedings have underscored the need for clear and consistent tariff provisions regarding the rates, terms, and conditions of service that apply to co-location arrangements and for transmission services that reflect customers taking transmission service on behalf of co-located loads and load with behind the meter generation that are willing and able to limit their energy withdrawals from the transmission system under certain conditions.

Show Cause Orders

Each Show Cause Order begins by acknowledging progress made in the Southwest Power Pool, Inc. (“SPP”) and PJM Interconnection, L.L.C. (“PJM”) regions since October 2025 and acknowledging ongoing stakeholder efforts by the other grid operators. The Commission also specifically encouraged the RTOs/ISOs to work with transmission owners and other stakeholders in the region to submit Federal Power Act section 205 filings that can address the Commission’s concerns. Addressing current tariffs in each region, the Commission tailored each Show Cause Order to direct each grid operator and their constituent transmission owners to show cause as to why each tariff remains just and reasonable.

Midcontinent Independent System Operator, Inc. (“MISO”), California Independent System Operator Corporation (“CAISO”), ISO New England Inc. (“ISO-NE”), and New York Independent System Operator, Inc. (“NYISO”) must each address why their respective tariff is just and reasonable without provisions addressing the Commission’s five buckets of reform: (a) the application process, study procedures, and ongoing operational requirements that apply to large loads seeking transmission service; (b) additional transparency concerning the Network Upgrade costs to provide transmission service to Eligible Customers on behalf of large loads, a pro forma cost recovery agreement between the grid operator, the relevant transmission owner and Eligible Customer taking transmission service on behalf of the large load to mitigate the risk of cost shifting; (c) transmission services that reflect Eligible Customers taking transmission service on behalf of flexible large loads that are willing and able to limit their use of the transmission system under certain conditions; (d) the rates, terms, and conditions of service applicable to interconnection customers serving electrically proximate large load or co-located load; and (e) the rates, terms, and conditions of service applicable to interconnection customers serving electrically proximate large load or co-located load.⁶ PJM must address all but the co-located load reform.⁷

Because SPP has already made significant progress, its directives from the Commission differ from the other regions, but still overlap. In addition to the above reforms, SPP must address why its tariff is just and reasonable without provisions addressing the evaluation of alternative transmission technologies, and provisions cementing operational requirements in large load transmission service agreements.⁸

Alternatively, the grid operators can instead explain what changes to the tariff would remedy the Commission’s identified concerns. The Commission also directs briefing on several topics, including: how to protect existing commercial arrangements during the transition; potential impacts of new transmission services on regional and local transmission planning; structures for cost recovery agreements and appropriate minimum levels of financial security; whether alternative transmission technologies warrant additional requirements; and how interconnection customers’ generating facilities serving large load may participate in the grid operators’ markets.⁹

Jurisdiction

The orders address the Commission’s jurisdictional authority in three distinct contexts. First, with respect to the transmission service study process for large loads, the Commission recognizes that rates, terms, and conditions associated with large load additions implicate both federal and state interests, but finds that certain aspects of integrating large loads onto the transmission system fall squarely within the Commission’s exclusive jurisdiction.¹⁰ Second, regarding co-location arrangements, the Commission reaffirms its exclusive jurisdiction to oversee the interconnection of generating facilities to the interstate transmission system, including where generators serve co-located load, as well as over the provision of transmission service to an Eligible Customer on behalf of Eligible Load, while reiterating that states retain exclusive authority over the specific terms of retail sales and rate design, retail cost allocation to co-located load, which entities may provide electricity in co-location arrangements, and which generating facilities are sited and allowed to serve co-located load.¹¹ Third, with respect to interconnection customers serving electrically proximate large load, the Commission confirms its exclusive jurisdiction over generating facilities seeking to interconnect to Commission-jurisdictional transmission or distribution facilities, noting that a generator’s interconnection does not fall outside the Commission’s jurisdiction merely because there is co-located load or electrically proximate large load behind the generator’s point of interconnection.¹² At the same time, the Commission acknowledges that states have exclusive authority over resource planning and the generation mix within their boundaries, and the order is not intended to intrude on that authority.¹³

Implications

As Commissioner LaCerte’s concurrence notes, the Commission is “further down the road in some regions as compared with others.”¹⁴ Accordingly, the tailored approach of issuing individualized Show Cause Orders allows each grid operator and their constituent transmission owners to propose reforms—based on the specific attributes of a region—to ensure that large loads can connect to the transmission system in a timely, orderly, and non-discriminatory manner.

The Commission suggests that SPP is the model market for several of the reforms. SPP has already amended its tariff to add the HILL study process, established the HILLGA process for expedited review of generators designated to serve a HILL, and created Conditional High Impact Large Load Service (“CHILLS”). As a result, the SPP Order is tailored to a market that has already innovated, and the Commission repeatedly points other regions to SPP’s recently approved proposals as a blueprint. Meanwhile, CAISO has already filed proposals and undertaken stakeholder proceedings, so CAISO’s cost-shifting concerns “may not present the same” as in other regions.¹⁵

In contrast, NYISO, MISO, and ISO-NE have not yet proposed responsive tariff revisions. FERC observes that NYISO “has not yet proposed tariff revisions” despite recognizing limitations in its existing load interconnection process.¹⁶ The Commission opines that MISO’s tariff does not “provide a consistent or transparent framework to evaluate” large loads, though MISO is developing both a large-load definition through its Large Load Working Group and a zero-injection generator interconnection process in its stakeholder forum.¹⁷ ISO-NE is also at a comparatively early stage, with the order noting that it has not yet proposed tariff revisions to address the challenges associated with the integration of large and co-located loads.¹⁸ Addressing these differences, rather than trying to implement a one-size-fits-all approach, will allow for faster progress, consistent with the ANOPR’s directives, and may lessen the risk for protracted litigation. The Commission’s tight deadlines also emphasize the urgency with which FERC expects grid operators and transmission owners to provide clear rules to accommodate the speedy interconnection of large load customers.

Lastly, FERC left the ANOPR docket open “for further potential action.” Utilities outside of the ISO/RTO markets are not required to take any action at this time, but the Commission encouraged them to do so.

The following links provide copies of each Show Cause Order: PJM Interconnection, L.L.C.; Midcontinent Independent System Operator, Inc.; Southwest Power Pool; California Independent System Operator Corporation; ISO New England; and New York Independent System Operator, Inc.

*Summer Associate Jarret Fisher assisted in the preparation of this article.

Footnotes

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