U.S. Secretary of Energy Chris Wright has directed FERC to initiate a rulemaking to accelerate the interconnection of large loads by asserting jurisdiction over end-use customers’ connections to the grid for the first time.
“It is my view that the interconnection of large loads directly to the interstate transmission system to access the transmission system and the electricity transmitted over it falls squarely within the commission’s jurisdiction,” Wright said in a letter sent to FERC on Oct. 23 with an attached advanced notice of proposed rulemaking (ANOPR).
Asserting FERC’s jurisdiction is in the public interest and in line with the Trump administration’s goals of revitalizing American manufacturing and driving innovation in artificial intelligence (AI), both of which require extraordinary quantities of electricity and substantial investment in the transmission grid.
Wright used his authority under Section 403 of the Department of Energy Organization Act to direct FERC to initiate rulemaking procedures and consider the ANOPR on reforms to ensure the timely and orderly interconnection of large loads to the transmission system.
“In light of the unprecedented current and expected growth of large loads seeking to interconnect to the transmission system, and to provide open access and non-discriminatory access to the transmission system, it has become necessary to standardize interconnection procedures and agreements for such loads, including those seeking to share a point of interconnection with new or existing generation facilities (hybrid facilities),” the ANOPR said.
The document lays out four legal justifications for the regulatory change, the first being that large load interconnections are a critical component of open access transmission service that require minimum terms and conditions to ensure non-discriminatory transmission service.
Second, the interconnection of large loads is a practice that directly affects FERC-jurisdictional rates, and the Federal Power Act has vested the regulator with exclusive authority to ensure wholesale rights are just and reasonable.
The ANOPR’s third justification argues it will not impinge on state authority over retail sales because FERC will not exert jurisdiction over any retail sales to the large load.
“Similarly, nothing in the proposed reforms governs the siting, expansion or modification of generation facilities,” the ANOPR says. “Authority over expansion or siting of generation facilities remains reserved to the states.”
Fourth, any contrary view of the proposed reforms conflicts with the Federal Power Act’s core purpose that grants FERC exclusive jurisdiction over transmission in interstate commerce and large loads connecting to the grid to obtain service benefit from that.
Any new rules should apply only to transmission facilities, consistent with FERC’s seven-factor test. The new rules also should apply only to customers with 20 MW of load, or for hybrid facilities where the load is greater than 20 MW.
DOE’s ANOPR suggests studying large loads and new generation together where possible as that would allow for efficient siting and minimize the need for network upgrades. Load and hybrid facilities should be subject to study deposits, readiness requirements and withdrawal penalties.
The studies should be done based on injection and withdrawal capacity available and be required to install system protection facilities to stay at or below those levels.
Curtailable load and hybrid facilities should have their studies expedited and the ANOPR asks whether requirements around curtailability can be included in the interconnection study process, or by other means.
Any generator that enters a partial suspension to serve large load will have to go through a reliability-must-run type study that will consider system conditions, including load growth, at least three years after the suspension.
FERC will have to justify its departure from long-standing rules that gave states jurisdiction over customer interconnection, which despite decades of orders on restructuring markets it has never claimed.
“Thus, while we believe in most cases there will be identifiable local distribution facilities subject to state jurisdiction, we also believe that even where there are no identifiable local distribution facilities, states nevertheless have jurisdiction in all circumstances over the service of delivering energy to end users,” FERC said in its Order 888 in 1996.
FERC Commissioner David Rosner posted on X that he was happy to take up Wright’s proposal and that dealing with the issues has bipartisan support on the commission.
“I am excited to work with my colleagues on Secretary Wright’s proposal,” he posted. “Getting large load interconnection right is a generational opportunity that is key to winning the AI race, reshoring American manufacturing, and keeping electricity reliable and affordable for everyone.”
Former FERC Chair Mark Christie said in an interview Oct. 24 that the ANOPR overlapped with the ongoing debate at FERC over co-location of load, which he wanted to get a final rule out on, but was unable to secure enough votes before stepping down in August.
The devil is in the details, and many questions will be answered as FERC works through a rulemaking process, but Christie warned that the change in jurisdiction could lead to problems.
“It’s going to have a monumental impact certainly on state authority to govern interconnection and set the terms of interconnection, and also it’s going to have a monumental impact on the states’ ability to maintain the integrity of their integrated resource planning process (IRP),” Christie said.
The order directs FERC to process large load interconnection requests with 60 days, which could mess up load forecasts on which IRPs rely. In RTO states, it will have the effect of removing existing generators from the market and putting upward pressure on prices to the extent it encourages co-location, and the issue of load forecasting also is pertinent due to the use of demand curves in capacity markets.
“That demand curve is set by load forecast,” Christie said. “So, if load is basically unpredictable, because FERC is now saying every single large load customer has to be interconnected within a short time frame, that’s going to potentially drive up the demand curve in the PJM capacity market.”
The main questions FERC will have to answer are what the rule change would mean for reliability, what it will mean for costs and cost allocation and whether it can claim an authority previously reserved for states.
“I think they’re all questions at this point, not conclusions,” Christie said. “I want to emphasize that they’re all questions at this point, not conclusions.”
Speaking at S&P Global’s Nodal Trader Conference, NRG Vice President of Regulatory Affairs Travis Kavulla said that hopefully the order moves the ball forward on dealing with large loads.
“Obviously all of these loads are connected at relatively high voltages, basically to the transmission system,” Kavulla said. “So, I have sometimes puzzled why state-regulated utilities acting in what seems to be solely in keeping capacity would be the arbiters of how that load gets on the system.”
One of Texas’ big examples is that it does not have separate authorities for transmission and distribution, which has helped make it a major market for hyperscale data centers, he added.
A key difference with Texas is that it is operating an intrastate market and it is not having its authority potentially usurped by the federal government, Christie said.
NARUC spokesperson Regina Davis said in an email that the proposal was being reviewed by the group and its state regulator members so it could not comment on specifics.
“Naturally, the matter of adequate load growth is a priority for NARUC and its members,” Davis said. “We engaged with FERC on the Joint Federal-State Task Force on Electric Transmission, which has evolved into the new Federal and State Current Issues Collaborative exploring cross-jurisdictional issues.”
Davis added that “the ANOPR points to data centers as one of the drivers of load growth, which is the focus of our Demand Roundtable that convenes hyperscalers and mega users in dialogues to discuss the critical issues surrounding increased demand.
“Achieving the grid reliability and flexibility needed to accommodate growing demand will require input and collaboration with state regulators and NARUC looks forward to working with FERC and other stakeholders to ensure the grid can meet future demand,” Davis said.
