Part 3 of 3 — What it means for stakeholders, and what comes next

This is Part 3 of a three-part series. Start with Part 1 and Part 2.

Data center demand is straining the electric grid faster than the system was built to absorb, and the resulting pressures have revived a 90-year-old question about regulatory authority: when a very large customer connects directly to the high-voltage transmission system, does the federal government or the state control the terms? In October 2025 the Department of Energy directed FERC to claim that authority for itself, at least for loads above 20 MW.

FERC has not yet answered in full, but in December 2025 it took a concrete first step, the PJM Co-Location Order, creating new transmission service options for data centers sited next to their own power plants while declining to decide the underlying jurisdictional question. Part 1 and Part 2 tell that story in full.

A final rule is due by the end of June 2026, and whatever FERC decides is almost certain to be challenged in the D.C. Circuit. The framework taking shape, and the jurisdictional question still open at its center, reach four groups with very different exposure to the outcome.

What the outcome means for each stakeholder

State public utility commissions

Federal assertion of jurisdiction over large-load interconnection would transfer to FERC the authority to set network upgrade cost allocation terms, manage large load additions through integrated resource planning, and override retail franchise arrangements. The FPA’s “no man’s land” canon, established in EPSA, requires that some entity regulate each electricity transaction; the solution need not be federal. Courts could conclude that the “local distribution” carve-out in FPA § 201(b)(1) encompasses direct-to-transmission retail interconnections, confirming state jurisdiction.

State PUCs should participate in Docket No. RM26-4-000 and prepare for D.C. Circuit challenges. The November 2025 NARUC comments provide a template, emphasizing the “local distribution” carve-out and cooperative federalism.

Retail customer advocates

States are not waiting for FERC to resolve the jurisdictional question. Ohio, Virginia, Indiana, Florida, Illinois, and other states are already implementing data center tariffs and large-load regulations through their own proceedings. Retail customer advocates may find unlikely allies among large industrial loads (manufacturers, distributors, and other non-data-center customers above the proposed thresholds) that face the same cost-allocation consequences but did not cause the capacity crisis.

Competitive generators and power developers

The PJM Co-Location Order provides the first federal framework for co-located arrangements. Developers can structure projects around four transmission service options, but uncertainty remains: final rates are being set through a paper hearing, anti-toggling and excess-withdrawal rules impose new contractual discipline, and D.C. Circuit challenges could alter the framework. Developers outside PJM should monitor the rulemaking and engage their RTO’s stakeholder processes, as the PJM Order is expected to serve as the nationwide template. Generators will continue to build to follow load, but where interconnection at the point of demand is unavailable, development will gravitate toward locations with existing transmission capacity. Transmission expansion is therefore a prerequisite both for clearing the queue and for profitable generator siting.

Hyperscale data centers and large industrial loads

Large load customers gain a standardized, faster interconnection pathway, but at material cost. The ANOPR proposes 100 percent network upgrade cost responsibility, though commenters have proposed partial credits where upgrades deliver systemwide benefits. The 20-MW threshold has drawn debate, with many stakeholders converging around 50 to 100 MW, arguing that 20 MW would sweep in midsized manufacturers traditionally under state tariffs. Curtailability is the price of expedited service under the proposed study timelines; non-firm service is incompatible with production AI reliability requirements. Long-term power purchase agreements and financing agreements should include regulatory-change provisions. Large loads should engage actively in Docket No. RM26-4-000, including by filing comments at the next opportunity, with a focus on cost allocation, the threshold, and the treatment of hybrid generation-load facilities.

The road ahead

FERC procedurally satisfied the April 30, 2026 deadline by issuing an Order Regarding Intent to Act on April 16, 2026, announcing that it will take action by the end of June 2026. The rulemaking remains at the ANOPR stage. The Order adopts no new rules; it commits FERC to addressing the ANOPR’s issues in a manner that is “quick, efficient and legally durable.” The fundamental jurisdictional question remains unresolved. PJM’s Dec. 2025 capacity shortfall has raised the stakes, with commissioners publicly expressing alarm and PJM’s market monitor urging a pause on new data center interconnections that cannot be reliably served. Two substantive paths remain on the table: a narrow rule grounding federal authority in existing transmission-service and generator-interconnection jurisdiction, or a broad rule asserting jurisdiction over all loads above 20 MW at transmission-level facilities. The broad rule is the more vulnerable approach under Loper Bright and the major questions doctrine. Procedurally, FERC could bypass a formal Notice of Proposed Rulemaking if the existing record provides sufficient basis for direct final action. D.C. Circuit review is near-certain.

The upcoming mid-2026 PJM capacity auction for the 2028–2029 delivery year will sharpen the question: a third consecutive shortfall could trigger PJM’s Reliability Backstop Auction mechanism, with significant cost-allocation consequences.

Whichever path FERC takes, the question underneath all of it will not stay open much longer: which government decides how the country’s largest new electricity consumers connect to the grid.

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