FERC is Moving on the ANOPR—Here’s What We’re Watching
As we look ahead to FERC’s highly anticipated action on the load interconnection rules in June, it’s worth pausing to take stock of all that has happened since U.S. Energy Secretary Wright first issued the administration’s large load principles last year.
The Energy Secretary’s October 2025 letter directed the agency to consider establishing consistent rules across the country’s utilities for interconnecting new large loads, like data centers, to the transmission system. While the letter itself was a bare bones statement of principles for FERC to follow, it didn’t take long for stakeholders, energy pundits and market participants to fill in the blanks with pro- and con- takes on what it might mean.
804 Advisory has been very supportive of the push to standardize these load interconnection rules, especially the principles that would (1) provide for hybrid load and generation projects to be studied together; and, (2) expedite interconnection for new loads willing to be “curtailable” or flexible when the grid is stressed to reduce their impact on the system.
Of course, time waits for no one. It turns out a lot has happened in the six months since FERC issued its Advanced Notice of Proposed Rulemaking, or “ANOPR,” reiterating Secretary Wright’s principles. Here are three of the most notable changes to the landscape, and what they might mean for FERC action in the coming weeks.
-States and utilities are not waiting on FERC. Since October, half a dozen additional states have initiated large load tariff proceedings, bringing the total state commission efforts to more than twenty. This doesn’t even account for the continuing development of utility-specific tariffs and one-off direct contracts between large load customers and utilities. So today, fewer utilities are without some level of guidance for potential new large loads than they were last year.
This state of play may evoke memories of FERC’s process a few years back that led to issuance of its supply-side interconnection rule, Order 2023. In that case, FERC pulled from best practices that utilities around the country were already adopting to get a handle on exploding generation interconnection queues and to cut down on speculative development.
The twist in the large load context, of course, is the jurisdictional split of responsibilities between states and FERC. Despite having the weaker legal argument, states have spent the last several months expressing vocal opposition over fears that the federal government may step into their territory.
-Markets are increasingly strained under reliability and affordability concerns. After decades of zero to low growth in electricity demand, data center development has succeeded in squeezing out much of the excess grid and generation capacity accounted for in system planning. Like all customers, data centers were hooked up to the grid and assigned a portion of system costs. At first, data centers were able to actually lower other customers’ bills by taking on a material share of system costs that, until then, had been spread across a smaller group.
But new grid infrastructure and new generation are hard to build and expensive, and the costs of this new investment are traditionally shared by all customers. This transformation increases the pressure on system resource adequacy (i.e., that there will be enough supply to meet demand at all times) while at the same time putting upward pressure on electricity rates, which eventually flow through to customers.
The Mid-Atlantic grid operator, PJM, has had the unfortunate experience of becoming the country’s flashpoint for cost and reliability concerns related to data center development. FERC Chair Laura Swett recently echoed the concerns of a bipartisan coalition of all 13 PJM governors that PJM may be, “too big to function.” These challenges represented a central issue in the New Jersey and Virginia governors’ races last November, and related concerns continue to gain steam in regions and utilities around the country.
-Community opposition to data center development has skyrocketed. With anxiety around the advancement of artificial intelligence on the rise, it is not surprising that the level of unease around data center development has also increased rather dramatically. Heatmap reported that at least twenty proposed data center projects were canceled after local pushback during the first three months of 2026. This negativity has forced the data center industry to demonstrate its ability to be good citizens of the grid (see Google here) and strong community partners (see Microsoft here). We’re far from the finish line, and FERC intervention could easily impact disputes already playing out at the state and local level.
These intensifying dynamics heighten the already high-stakes context in which FERC will act on its ANOPR next month. The Commission is under pressure to provide some clarity to help improve this very fluid situation. But what does this landscape mean for how FERC will come out on the ANOPR? Four questions have come into sharper focus:
1. Will FERC lay off in light of state concerns? Although the relationship ebbs and flows, FERC tends to lean towards facilitating state and utility preferences and differences. In this case, however, the administration has been clear about its desire for standardization. As recently as April 15, Chairman Swett made clear that she plans to, “push right up to the edge of precedent” in terms of FERC’s ability to act.
At 804, we predict that despite state concerns, FERC’s issuance will include more details around an established set of principles that transmission-owning utilities must meet as part of tariff rules for new load connecting to the transmission (as opposed to the distribution) system. FERC may view its issuance as a baseline that regions may surpass, and there will likely be some equivalent of the “independent entity variation” (or “consistent with or superior to” deviation) that FERC has allowed regional grid operators to use in the past for exceptions from what FERC has ordered. This is especially true if FERC views potential state litigation as a genuine concern.
From a practical standpoint, standardized load interconnection rules would go a long way towards market certainty and the transparency required for communities to determine whether data centers are paying their fair share. It remains to be seen whether and how far FERC may water down consistent requirements.
2. Will FERC ensure other customers don’t pay for data center development? Almost everyone agrees that data centers should pay for their costs. The problem is determining their “fair share” is not straightforward.
FERC’s traditional approach to cost allocation, as affirmed by the courts but admittedly some mix of art and science, is based on the principle that beneficiaries of investments should pay for them. Stakeholders have long argued over which benefits should count and who actually benefits in any given case, but the general framework has proven durable. New large loads interconnecting to an already constrained electricity system are testing the limits of this approach. Identifying the costs and benefits of any new load is difficult; capturing the indirect costs related to the interconnection, planning, and supply aspects of new large loads is even harder.
Most states and utilities have addressed concerns about costs by requiring data centers to pay a minimum monthly demand charge and put up collateral tied to the network upgrade costs needed to reliably interconnect new data centers. But utilities have an incentive to pay for new infrastructure so that they can earn a return on investment–an incentive which has mixed the pot in the data center context as well. Designing fair and politically palatable cost allocation approaches (which aren’t always one in the same) is challenging and ripe for litigation. We think FERC has no choice except to carve out specific minimum costs for new large loads and perhaps differentiate across the types of and costs for different levels of service. But we predict the legal challenges to whatever approach or set of principles FERC issues will be strong and swift.
3. Will FERC accept the flexibility challenge? Two of the biggest opportunities that the advent of data centers has provided are: (1) the acceleration and deployment of technologies that can help the existing grid achieve higher utilization and fit more stuff on quickly; and, (2) the realization of load flexibility—from both data centers and all customers—as a cheaper and meaningful grid resource.
Loads that interconnect and face curtailment for periods of grid stress should be able to interconnect quickly as they avoid the need for expensive and time-consuming system upgrades. This helps to get better utilization of what is generally subpar operational grid efficiency and behave as grid assets instead of liabilities. It also saves customers money while maintaining reliability and serving the industry’s desire for speed to power.
One of the most promising policy ideas we’ve heard on the large load integration front is to incentivize operational flexibility. So, if a data center can flex in a way that decreases its consumption of grid power during periods of high electricity demand, then customers can avoid network upgrades and therefore get online before other non-flexing data centers. State policies to incentivize flexibility are gaining steam, and this is FERC’s chance to be a hero.
4. What type of issuance will FERC put out? The most common next step for FERC would be issuing a “NOPR” without the “advanced” qualifier. This step would invite further public comment for several months, followed by a final rule after those comments are considered and, eventually, rehearing, implementation and litigation. This whole process would take at least 12 to 18 months, likely more.
In light of the increasing pressure from states and utilities, FERC may instead opt for a policy statement, which would provide immediate guidance but would not require any implementation or subject the guidance to court challenge. We imagine a policy statement would be less satisfying from both a market and federal administration perspective because it is not legally binding. A policy statement paired with a NOPR is also an option.
Some observers are suggesting a flyer by which FERC would issue an “interim final rule” that the Administrative Procedure Act allows agencies to do under some circumstances. Here, the rule would become effective immediately but would be superseded by a final, final rule once comments were received on the interim version. Of all the options, this one seems a little too cute and doesn’t do much for market certainty.
FERC will decide many other issues in its order, including approaches to colocation, timelines for study and implementation and the role of emerging technologies. We’re as excited as you are to find out where they land but on the issues of state concerns, cost allocation and flexibility, we hope FERC stays the course and provides practical, streamlined guidance that will achieve market certainty and consumer protection. Whatever the outcome, it will be some time before the data center industry has certainty around interconnection rules.
Allison Clements is a former FERC commissioner and the founder and principal of 804 Advisory—a strategic energy consulting firm. Mary Yang is the COO and senior energy advisor at 804 Advisory and was previously a legal advisor to Commissioner Clements at FERC. 804 Advisory operates at the intersection of energy policy, markets, and investment. The firm supports clients across the power sector, including investors, developers, and other stakeholders navigating regulatory and market complexity. For more information, visit: www.804Advisory.com.
