Bringing Data Centers to the Grid: FERC’s Emerging Large Load Framework

On October 23, 2025, Secretary of Energy Chris Wright directed the Federal Energy Regulatory Commission (FERC) to consider an Advance Notice of Proposed Rulemaking (ANOPR) to initiate rulemaking procedures to “ensure the timely and orderly interconnection of large loads to the transmission systems.” Under the ANOPR, “large loads” are defined as those with a capacity of 20 MW or more, aligning with the definition of “large generation sources” in FERC’s Order No. 2003.

The primary purpose of the ANOPR is to address the growing challenges associated with connecting large energy consumers to the grid. Data centers, which consume vast amounts of electricity, present unique issues for grid operators; these issues include difficulties in forecasting demand, ensuring system reliability, and integrating large-scale loads without compromising existing service. The ANOPR seeks to establish a regulatory framework that anticipates these issues and promotes efficient, non-discriminatory access to transmission infrastructure. FERC published notice of the ANOPR on October 27, 2025, with comments due by November 14, 2025. Numerous public and private entities have already filed Notices of Intervention, one has already filed Comments, and others have asked for an extension of the comment period, indicating their intent to file comments. The ANOPR requests FERC to have a final rule no later than April 30, 2026, and any rule which is promulgated will likely be challenged and subject to further judicial review.

Traditionally, FERC has not regulated the interconnection of end-use customers or loads. However, the ANOPR asserts FERC’s jurisdiction through Order No. 888, which required public utilities to provide open access transmission services on a comparable and non-discriminatory basis, mandating that transmission providers file “open access non-discriminatory transmission tariffs that contain minimum terms and conditions of non-discriminatory service.”

The ANOPR outlines four legal theories supporting FERC’s jurisdiction over interconnections for large loads under Order No. 888:

1. The ANOPR argues that, similar to generator interconnections, which are governed by Order No. 2003, large load interconnections are a “critical component of open access transmission service.” FERC issued Order No. 2003 in July 2003, requiring a standard set of interconnection procedures for transmission providers, determining that “generator interconnection is a critical component of open access transmission service…subject to the requirement that utilities offer comparable service under [(open-access transmission tariffs)].”
2. The Federal Power Act (FPA) grants FERC exclusive authority to ensure that wholesale electricity rates are just and reasonable. Because interconnection of large loads to the transmission system directly affects wholesale electricity rates, FERC’s regulatory oversight is justified.
3. The ANOPR asserts that ensuring interconnection of large loads does not intrude on the states’ authority over retail electricity sales, even when the large load that is seeking interconnection is an end-use customer. The ANOPR clarifies that it does not seek to regulate retail sales, siting, expansion, or modification of generation facilities.
4. Finally, the ANOPR argues that any contrary view conflicts with the FPA’s purpose. FERC’s exclusive jurisdiction extends to “the transmission of electric energy in interstate commerce,” including the rates, terms, and conditions of transmission service, and that “any large load that seeks to interconnect to the transmission system does so to obtain transmission service.”

While the ANOPR leaves the details of the rulemaking to FERC, it enumerates 14 guiding principles intended to inform the FERC’s decision-making process, aiming to balance federal authority, reliability, cost allocation, and fairness across market participants. These principles include:

• FERC’s authority should be limited to interconnections directly to transmission facilities consistent with FERC’s seven-factor test for determining the primary function of a facility, to avoid affecting states’ jurisdiction.
• The reforms should apply only to new loads greater than 20 MW.
• Load and hybrid facilities should be studied together alongside generation projects to enable co-location and reduce costly network upgrades.
• Load and hybrid facilities should be subject to standardized study deposits, readiness requirements, and withdrawal penalties, like generating facilities, to deter speculative projects and increase certainty in transmission forecasting.
• Hybrid facilities should be evaluated based on their requested injection or withdrawal rights, with requirements for protective systems to prevent unauthorized energy flows.
• FERC should expedite the interconnection study of large loads that agree to be curtailable.
• Cost responsibility should rest primarily with the load and hybrid facilities, which would fund 100% of assigned network upgrades, though FERC may consider crediting mechanisms.

Lessons from ERCOT

The principles articulated in Secretary Wright’s letter are not the first policy effort to address the impact of data centers and other large loads on the electric grid. In June 2025, Texas enacted Senate Bill 6 (SB 6), which introduced new interconnection and emergency curtailment requirements for large electricity consumers within the Electric Reliability Council of Texas (ERCOT) region.

SB 6 mandates that the Public Utility Commission of Texas (PUCT) examine new interconnection and cost-sharing mechanisms for large load customers—defined as those with a demand of 75 MW or greater. Similar to the ANOPR, SB 6 does not prescribe detailed rules. Instead, it directs the PUCT to develop regulations that balance economic development with the need to protect ratepayers from stranded costs and to preserve system reliability. The approach parallels the ANOPR’s emphasis on principles over mandates, suggesting an adaptive regulatory regime that allows state and federal authorities to respond to evolving grid conditions and demands.

Jurisdictional Issues

Despite Secretary Wright’s assertions of federal authority, any rules promulgated by FERC to govern interconnection activities relying on the legal principles of Order No. 888 will likely face legal challenges.

The FPA granted FERC jurisdiction over wholesale electricity sales and the transmission of electric energy in interstate commerce. Through Order No. 888, FERC required public utilities to offer open-access transmission tariffs (OATTs) containing minimum terms and conditions of non-discriminatory service. This order effectively unbundled retail transmission services from retail sales, allowing greater transparency in transmission pricing and access.

Order No. 888 was challenged in New York v. Federal Energy Regulatory Commission, a case brought by both the State of New York and Enron. New York contended that FERC had exceeded its jurisdiction by extending its open-access rules to unbundled retail transmission services, while Enron argued that FERC was obligated to regulate bundled retail transmissions as well.

The Supreme Court upheld FERC’s position. The Court held that FERC did not exceed its jurisdiction by regulating unbundled retail transmission service under its open-access rules. Even though such transactions involve retail customers, the Court reasoned that the transmission itself occurs in interstate commerce, especially given the interconnected nature of the national grid. The Court also affirmed that the statute does not limit FERC’s jurisdiction exclusively to wholesale transactions. Additionally, the Court ruled that FERC’s decision not to extend jurisdiction to bundled retail transmission services was a permissible policy choice. The FPA contemplates that local distribution and retail sales remain within the purview of state regulators, and FERC’s restraint in this area was consistent with the statute’s framework.

Critically, Order No. 888 addresses transmission facilities, not interconnection facilities. For FERC to assert jurisdiction over large load interconnections under Order No. 888, the Court will likely need to determine that such interconnection facilities fall within FERC’s existing statutory authority under the FPA, and that they fall within interstate commerce.

Major Question Doctrine

Any rule promulgated by FERC will likely face scrutiny under the major questions doctrine. Established in West Virginia v. Environmental Protection Agency, the doctrine requires Congress to provide clear and specific authorization for agency actions that carry vast economic and social significance. Combined with the Supreme Court’s recent decision in Loper Bright Enterprises v. Raimondo, which eliminated the judicial deference once given to agencies’ interpretations of their own enabling statutes, it remains uncertain whether FERC has authority under the FPA to regulate large load interconnections.

FERC’s own precedent, particularly its rejection of the large load tariff proposed by the Tri-State Generation and Transmission Association Inc., underscores this ambiguity. In denying the proposal, FERC stated that “Tri-State has not provided a sufficient basis for the Commission to find that its proposal does not regulate the terms and conditions of a Customer’s retail service in ways that are beyond the Commission’s authority.” This reasoning highlights FERC’s own concern about exceeding its jurisdiction, making it unclear how a new rule governing interconnection will avoid FERC’s own fear of federal overreach.

Looking Forward

Organizations are already pushing back against the ANOPR. The Board of Directors of the National Association of Regulatory Utility Commissioners (NARUC) has urged the DOE to “substantially modify” the proposed ANOPR, asserting that it infringes on the states’ jurisdiction to regulate the retail of electricity and compromises grid reliability. NARUC’s resolution indicates the potential for a hotly contested rulemaking process and protracted legal fight,—similar to the steep legal challenges faced by Order No. 888..The Order was issued in 1996, and the Supreme Court’s ruling in New York v. Federal Energy Regulatory Commission wasn’t handed down until 2001. Should history prove any guide, it is likely that there will not be a final decision on any large load interconnection rules for many years. But the message from Secretary Wright’s letter is clear: Data center interconnection is now a central focus of federal energy policy.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.