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FERC delays its grid rule to 2027

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13:06UTC

FERC met its end-June deadline on 18 June, then chose its slowest tool: show-cause orders to all six US grid operators instead of the connection rule it promised in April. Any binding standard now slips to 2027 at the earliest.

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Key takeaway

FERC's slowest tool pushes any binding large-load connection rule to 2027, after most near-term capacity is committed.

The Federal Energy Regulatory Commission (FERC), the US regulator for interstate power transmission, met its end-June deadline on 18 June and then reached for its slowest instrument. Rather than issue the large-load connection rule it pledged in April , FERC sent Section 206 show-cause orders, which compel each operator to justify or change its existing rules, to all six US regional transmission organisations (RTOs): PJM, MISO, SPP, CAISO, ISO-NE and NYISO ¹.

Each RTO must now defend or reform its tariffs across five areas, from study processes to co-location terms, the same co-located load question PJM was ordered to file on in May . Resource-adequacy reports are due 20 July, show-cause responses 17 August, and public comments 16 September, with the RM26-4-000 docket left open and no rule attached. Industry lawyers expect six to eighteen months from a show-cause order to a final order, which puts any binding standard in 2027 at the earliest.

Show-cause puts the burden on each operator to prove its existing rules are just and reasonable, which reads as aggressive but actually buys time: FERC can let six separate proceedings run rather than defend one nationwide rule through the appeal courts. Six dockets also multiply the points where reform can stall or be litigated, and connection-side certainty slips past the window in which most near-term capacity is being committed. FERC counted 75 GW of new summer capacity since 2025, yet PJM still declared a grid emergency in May .

Deep Analysis

In plain English

FERC is the US Federal Energy Regulatory Commission, the federal agency that sets the rules for how electricity flows across state lines. In April 2026, FERC promised it would publish new rules by the end of June on how data centres get connected to the national grid, since the existing queue was taking years to clear. On 18 June, FERC met that deadline, but only barely: instead of publishing new rules, it sent formal questions to the six companies that run different regions of the US electricity grid, asking them to explain or reform their own existing rules. Those six companies, called RTOs (Regional Transmission Organisations), manage the grid in different regions: PJM covers the eastern US, MISO the Midwest, SPP the central plains, CAISO California, ISO-NE New England, and NYISO New York. Each has its own rules for how data centres connect. The responses are due through September 2026, meaning no binding new rule can arrive before 2027 at the earliest.

Deep Analysis

Root Causes

FERC's procedural choice reflects two structural problems it cannot solve by rulemaking alone.

First, the six US RTOs operate under different state utility commissions with different regulatory priorities. PJM's co-location problem, driven by Northern Virginia's hyperscale density, is structurally different from CAISO's, where BTM generation is already restricted under California air-quality rules. A single FERC rule must accommodate that variance, which requires the show-cause process to surface each RTO's specific constraints before FERC can write a standard.

Second, FERC has no authority over behind-the-meter generation that never crosses the interstate transmission system. The fastest-growing segment of data-centre power, captive co-located gas plants like Project Kilby, sits outside FERC's primary jurisdiction entirely. Show-cause orders to RTOs cannot reach that category of demand; they address only the grid-connection queue for facilities that do use the transmission system.

Escalation

FERC's choice of show-cause over direct rulemaking signals institutional caution rather than escalation. The direction is toward slower resolution, not faster. Three of the six RTOs face Fifth Amendment challenges to their curtailment authority, which may have influenced FERC's choice to build a stronger evidentiary record through show-cause before issuing a rule that could face the same legal exposure.

What could happen next?

Consequence
Binding large-load connection standards across all six US RTOs will not arrive before 2027 at the earliest, leaving the period of maximum data-centre investment without a federal framework for the most contested terms.
Medium term · Assessed
Risk
Six separate show-cause responses may produce six divergent tariff reforms, creating regulatory arbitrage between grid territories that operators can exploit by choosing connection location.
Medium term · Suggested
Opportunity
The 20 July resource-adequacy reports due from RTOs will produce the first official disclosure of each region's data-centre load forecast, creating a public data baseline the industry has previously had only through unofficial ERCOT disclosures.
Immediate · Assessed

Source Landscape

This story draws on neutral-leaning sources

Primary parallel: FERC Order 2003 (2003) took four years from open proceeding to binding rule to standardise large-generator interconnection after the energy crisis of 2000-01 revealed that each RTO's interconnection tariff was different.

The parallel is structural: FERC used the same notice-and-comment sequence, the same multi-RTO filing requirement, and the same open docket mechanism that RM26-4-000 now uses. Order 2003 ultimately produced a standardised Large Generator Interconnection Agreement adopted across all RTOs by 2006, three years after the initial rule.

Counter-parallel: FERC Order 1000 (2011), which tried to standardise transmission planning across RTOs, was litigated for a decade and produced different planning outcomes across territories.

The counter-parallel is instructive: where Order 2003 addressed a technically bounded question (generator connections), Order 1000 addressed a politically contested one (who pays for new transmission). The large-load question in RM26-4-000 is closer to Order 1000 in political complexity, which suggests the three-year Order 2003 timeline is optimistic.

Consensus view: Mayer Brown's energy regulatory team has noted publicly that Section 206 show-cause is FERC's most conservative procedural tool: it places the burden of proof on the existing tariff holder to justify current rules, not on FERC to prove a new rule is necessary. This distinction matters because it extends the runway to 2027 without FERC having to defend a specific new standard.

Counter-view: The China Electricity Council and analysts at the State Grid Corporation have observed that China's grid planning model, which mandates load forecasts and connection timelines jointly by the State Grid, avoids the US RTO fragmentation problem entirely. Six separate RTOs with six separate tariff structures are themselves the root pathology; show-cause orders to six separate bodies produce six separate reform paths.

Key tension: Whether the five-area show-cause scope, covering co-location terms, large-load definitions, queue priority, cost allocation, and reliability obligations, will converge on harmonised standards across all six RTOs or produce six divergent tariff patches that create regulatory arbitrage opportunities between grid territories.

Sources:FERC

Mentions:California →Mayer Brown →Midwest →England →China →MISO →SPP →ISO-NE →NYISO →Section 206 show-cause →FERC →PJM Interconnection →CAISO →

First Reported In

Update #8 · Data centres build their own power plants

FERC· 28 Jun 2026

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Causes and effects

Caused by

FERC commits to June 2026 grid-load order

FERC met its April pledge to act on RM26-4-000 by end-June but chose show-cause over direct rulemaking, extending the timeline it had promised to close

Occurred 16 Apr 2026

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PJM faces Monday FERC tariff deadline

Co-location terms, the same issue PJM was ordered to file on in May, are one of five areas covered by the June show-cause orders

Occurred 18 May 2026

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MISO's second grid emergency in July

The emergency underscores the gap FERC's Section 206 show-cause orders were meant to address.

Occurred 15 Jul 2026

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This Event

FERC delays its grid rule to 2027

The one federal lever that could force grids to connect large loads faster will not bind until most of the 2026 and 2027 build pipeline is already committed.

Led to

FERC sets a 20 July adequacy deadline

The 20 July generation-adequacy filing deadline follows FERCs 18 June show-cause orders to the six RTOs.

Occurred 19 Jul 2026

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