“Large Loads”—Meaning Data Centers—Won’t Wait

In the September 2026 issue of Climate and Energy, Senior Managing Director Jeff D. Makholm and Director Laura T.W. Olive examine the Federal Energy Regulatory Commission’s (FERC’s) response to “large loads” (i.e., data centers). At its 18 June 2026 Open Meeting, the FERC directed its six regional transmission organizations (RTOs) to develop their own remedies through “show cause” proceedings, requiring them to justify why their existing means for dealing with large loads are “just and reasonable” or propose and implement specific remedies.

The authors explain that the show cause orders reflect the FERC’s desire to speed up the process by bypassing the normal “notice and comment” period that would accompany new rules sensitive to the needs of data centers. They conclude that this approach will likely not work for two interrelated reasons. First, they state that the novelty, colossal scale, and highly evident risk of the new industrial activity in data centers do not reasonably fit into the public interest sphere that the institutions comprising US “regulatory common law” were intended to cover. Second, they argue that the six RTOs are neither independent nor disinterested actors with respect to large loads.

Dr. Makholm and Dr. Olive also examine evidence that data centers are not waiting for traditional grid interconnection processes. Data centers need electricity, land, and water. Of those three, electricity is currently the prime constraint. Given rising computational demand, developers are finding creative ways to bypass the constraints of traditional grid interconnection processes through functional bypasses and administrative workarounds. The authors discuss off-grid power projects and identify the restart of Constellation Energy’s Three Mile Island Unit 1, renamed the Crane Clean Energy Center, as a key example of an administrative workaround.

The article also considers the history and structure of RTOs. The authors note that US RTOs developed during a period of essentially no growth in electricity demand and that, when new technology lowered the entry cost of renewable generation, RTOs proved incapable of adapting to the desire for independent entry, resulting in a queue of waiting renewable generation larger than the existing stock of generation.

In concluding, Dr. Makholm and Dr. Olive note that data centers have many options to choose from. They discuss the highly competitive interstate natural gas pipeline system as a source of natural gas for data centers and traditional state regulatory arrangements without RTOs, in which integrated resource planning can work to separate data center facilities and costs from the public service infrastructure serving utility consumers. With diverse choices regarding location and styles of regulation, together with functional bypasses and administrative workarounds already on display, the authors expect continued diversity in approaches to data location and electricity supply.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.