DOE Proposes New Federal Standards For Interconnecting Large Loads To The Grid

The U.S. Department of Energy (DOE) has taken a major step toward addressing a pressing challenge in the energy and technology landscape: connecting large electricity consumers like data centers and large manufacturing plants to the power grid quickly and reliably. Specifically, in a letter dated October 23, 2025 (DOE Letter), Energy Secretary Chris Wright directed the Federal Energy Regulatory Commission (FERC or the Commission) to develop and issue a Final Rule to standardize and "rapidly accelerate" the interconnection process for "large loads" of 20 MW or more, including facilities co-located with new or existing generation. While the Advance Notice of Proposed Rulemaking (ANOPR) attached to the DOE Letter "for the Commission's consideration" raises significant questions regarding FERC's jurisdiction to accomplish its objectives and whether the agency can meet the aggressive deadline Secretary Wright provided and is likely to be contested from many angles, this action represents the most significant federal energy regulatory action to date to address large load interconnection issues related to data centers, AI, and advanced manufacturing.

"To usher in a new era of American prosperity," Secretary Wright wrote, "we must ensure all Americans and domestic industries have access to affordable, reliable, and secure electricity. To do this, large loads, including AI data centers, served by public utilities must be able to connect to the transmission system in a timely, orderly, and non-discriminatory manner." Secretary Wright set an aggressive deadline for FERC to issue a Final Rule by April 30, 2026, which likely will require an expedited comment period for FERC to address stakeholder input. Press reports note that a FERC spokesperson acknowledged receipt of Secretary Wright's letter and the ANOPR and that FERC is "reading [them] with interest." FERC "plan[s] to [issue a] notice . . . promptly and look[s] forward to interacting with stakeholders" on next steps.

Why This Matters

Electricity demand in the U.S. is "expected to [continue to] grow at an extraordinary pace, due, in large part, to the rapid growth of large loads," with some observers projecting a 25% increase by 2030. Recently, much of the surge has been driven by new, large-scale energy users such as AI-focused data centers and advanced manufacturing facilities. These projects require huge amounts of electricity—sometimes 1,000 MW or more per site—but interconnection queues and disparate rules across the country have slowed deployment in some areas. DOE's proposed reforms seek to reduce study times for grid interconnection requests; lower barriers for co-location of load and generation (e.g., pairing large consumers with a nearby power plant); ensure large loads pay the cost of network upgrades required for them to interconnect reliably; and introduce readiness requirements and penalties to deter speculative projects.

Legal Authority and Policy

Secretary Wright noted that while "[h]istorically, the Commission has not exerted jurisdiction over load interconnections," it is his "view that the interconnection of large loads directly to the interstate transmission system to access the transmission system and the electricity transmitted over it falls squarely within the Commission's jurisdiction" because "Congress authorized [FERC] jurisdiction over the transmission of electric energy in interstate commerce and the sale of electricity at wholesale in interstate commerce."

He continued: "Asserting Commission jurisdiction is in the public's interest. This Administration is committed to revitalizing domestic manufacturing and driving American AI innovation, both of which will require unprecedented and extraordinary quantities of electricity and substantial investment in the Nation's interstate transmission system." Accordingly, Secretary Wright invoked authority under Section 403 of the Department of Energy Organization Act, 42 U.S.C. § 7173(a), to propose for FERC's consideration an advance notice of proposed rulemaking to address these issues, noting his hope that FERC "will build upon the principles [for reform] and work expeditiously to initiate a rulemaking proceeding and ultimately issue a final rule."

Anticipating objections regarding infringement on state jurisdiction over sales of power at retail to end users, the ANOPR argues that "the proposal does not impinge on States' authority over retail electricity sales by asserting jurisdiction over the interconnection of large loads to the transmission system. Even if the large load seeking to interconnect to the transmission system is an end-use customer, the proposal does not exert jurisdiction over any retail sales to the large load." Similarly, the ANOPR continues, "nothing in the proposed reforms governs the siting, expansion, or modification of generation facilities," which "remains reserved to the States," consistent with Section 201 of the Federal Power Act.

Key Principles for Reform

According to DOE, Secretary Wright's proposed rule "allows customers to file joint, co-located load and generation interconnection requests. It will also significantly reduce study times and grid upgrade costs, while reducing the time needed for additional generation and power to come online." The proposed rule advances the Administration's "agenda to ensure all Americans and domestic industries have access to affordable, reliable, and secure electricity," and outlines fourteen guiding principles for reform, including:

1. Standardized Processes: Large loads and "hybrid" facilities (combined load + generation) would be subject to uniform study deposits, readiness requirements, and withdrawal penalties, similar to generator interconnection rules like those FERC issued in its Order No. 2023 in July 2023, which built on past interconnection reforms by establishing a cluster study process, increased study deposits, increased financial commitments and readiness requirements, and adopted study delay penalties.
2. Co-Location Incentives: Load and generation projects could file joint interconnection requests, helping site facilities in ways that minimize costly upgrades.
3. Curtailment Flexibility: Projects agreeing to be dispatchable or curtailable during peak demand would be eligible for expedited interconnection studies.
4. Full Cost Responsibility: 100% of assigned network upgrade costs would be borne by the large load or hybrid facility.
5. Protection Systems: Hybrid interconnections would have to install safeguards to prevent unauthorized injections or withdrawals of power from the grid.
   

Implications and Next Steps

If adopted as proposed, DOE's proposed rule could significantly impact both timelines and costs for large load interconnections, including:

• Faster Project Schedules: Standardized processes and expedited studies for flexible loads could reduce connection timelines by months or even years, giving developers faster access to power.
• More Strategic Co-Location: Data center and industrial developers may find competitive advantages in pairing facilities with new generation projects to reduce upgrade needs and improve reliability.
• Increased Cost Certainty: While the proposal assigns 100% of network upgrade costs to the interconnection customer, clearer rules and standardized practices could help developers budget more accurately. In addition, making interconnection customers responsible for such costs reduces the likelihood of objections from other customers who do not want to pay for facilities they will not use or believe will not benefit them.
• Grid Planning Alignment: Uniform requirements could help utilities forecast demand growth more accurately, potentially leading to better-planned infrastructure expansions and fewer interconnection disputes.

Secretary Wright set an aggressive deadline—April 30, 2026—for FERC to issue a Final Rule addressing the issues outlined in the ANOPR. The ANOPR itself does not include an opportunity for public comment but FERC intends to issue a notice regarding the ANOPR, which presumably will include a comment deadline. In the meantime, generation and data center project developers and utilities should consider the ANOPR's principles for reform and prepare to take part in the rulemaking process to protect their interests and to help ensure that FERC's Final Rule reflects practical realities for large-scale energy consumers and developers of projects to serve those consumers.

The ANOPR also states that it "is not intended in any way to discourage public utilities from making filings to address these and similar issues under . . . section 205" of the Federal Power Act. Interested parties should continue to track developments in their markets and participate in relevant proceedings at FERC that involve utility-specific changes to load interconnection policies and procedures.

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