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Section 206 show-cause
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Section 206 show-cause

FERC tool compelling RTOs to justify existing tariffs or propose reforms before any binding rule takes effect.

Last refreshed: 28 June 2026 · Appears in 1 active topic

Key Question

Why did FERC choose show-cause orders rather than a direct rule, and what does it mean for data-centre timelines?

Timeline for Section 206 show-cause

#1019 Jul

Mentioned in: FERC sets a 20 July adequacy deadline

Data Centres: Boom and Backlash
#818 Jun

FERC delays its grid rule to 2027

Data Centres: Boom and Backlash
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Common Questions
What is a Section 206 show-cause order from FERC?
A Section 206 show-cause order is a Federal Power Act mechanism that requires a utility or grid operator to prove its existing tariff is just and reasonable, or to propose reforms. Unlike a FERC rulemaking, it places the burden of proof on the tariff holder and typically takes 6-18 months to produce a final order.
Why did FERC use show-cause orders instead of issuing a rule for data-centre grid connections in 2026?
FERC issued Section 206 show-cause orders to all six US grid operators on 18 June 2026 rather than a direct rule, allowing it to build an evidentiary record across six separate proceedings before writing a national standard. This reduces the risk that a single nationwide rule would be immediately challenged in court, but delays any binding standard to 2027.Source: FERC
When will FERC's show-cause process produce a binding rule for large-load grid connections?
Show-cause responses from the six RTOs are due 17 August 2026, with public comments by 16 September. Industry lawyers estimate 6-18 months from a show-cause order to a final FERC order, placing any binding standard in 2027 at the earliest.Source: FERC

Background

FERC used Section 206 on 18 June 2026 to send show-cause orders to all six US grid operators (RTOs) rather than issue the large-load connection rule it had promised for end-June. Each RTO must prove its existing tariff is just and reasonable, or propose reforms, across five areas: co-location terms, large-load definitions, queue priority, cost allocation, and reliability obligations. Resource-adequacy reports are due 20 July, show-cause responses 17 August, and public comments 16 September. Industry lawyers estimate six to eighteen months from a show-cause order to a final FERC order, pushing any binding standard on large-load connections to 2027 at the earliest.

Section 206 of the Federal Power Act gives FERC authority to investigate whether a utility's rates, terms, or conditions are unjust, unreasonable, or unduly discriminatory, and to order changes. Unlike direct rulemaking, which FERC initiates itself, Section 206 places the burden of proof on the existing tariff holder to justify current arrangements. This procedural posture explains why show-cause extends the timeline rather than compressing it: FERC can let six separate proceedings run simultaneously, collecting evidence before writing a national rule, rather than defending a single standard through immediate appellate litigation. The mechanism was used in earlier interconnection reform cycles, including the run-up to FERC Order 2003 in 2003, which took three years from proceeding to adopted rule.