- FERC gave regional power grid operators 60 days to fix or defend tariffs for large loads customers like data centers
- The action seeks to stop data center infrastructure costs from landing on residential ratepayers while accelerating data center deployment
- FERC stopped short of a single national rule and the orders skip Texas, which sits outside its jurisdiction
The Federal Energy Regulatory Commission (FERC), the federal body that regulates interstate electricity transmission, is requiring the country's grid operators to answer a question the industry has dodged for years: who pays when a data center shows up wanting hundreds of megawatts overnight.
Earlier this month, FERC issued show cause orders under Section 206 of the Federal Power Act to all six regional transmission organizations and independent system operators (RTOs/ISOs) it regulates. The commission found their existing tariffs likely inadequate for handling large and co-located loads, and gave each grid operator 60 days to justify its rules or propose fixes, with a 30-day deadline for separate resource adequacy reporting.
FERC's goal is preventing data center infrastructure costs from shifting onto residential ratepayers while still speeding up connections. Other goals include speeding interconnection — which FERC calls "speed-to-power" — improving national security, reshoring manufacturing and providing certainty to investors.
The move came after the FERC said in April it planned to act on rule changes that would speed interconnection and help ensure large load customers foot the bill for grid upgrades required to service them.
Nvidia: a step in the right direction
Nvidia, whose high-power chips are contributing to rising data center power demand, welcomed the decision.
"For policymakers, utilities and technology partners, the message is clear: This is a pro-growth, pro-affordability and pro-reliability policy," the company wrote on its blog. The framework shifts large customers from passive queue-sitters to active participants who fund their own network upgrades and bring new generation online, which Nvidia said reduces cost pressure on existing ratepayers.
FERC stopped short of a single national rule, however, leaving each grid operator to write its own fix. Additionally, the orders don't touch Texas, which runs its own grid outside FERC's jurisdiction.
Morningstar DBRS framed the move as a net positive for utility credit in a note to investors, provided the reforms produce "transparent and enforceable tariff provisions." A credit-supportive outcome would pair faster interconnection with binding commitments, rather than leaving utilities to build with no guaranteed recovery, Morningstar said.
The episode follows mounting strain on the nation's power grids — and community backlash. Data centers already account for around a quarter of electricity demand in Virginia and could hit double that share by 2030 in several other states.
The clock is now running on grid operators to show they can deliver on FERC's terms by August 17.