FERC Large Load Interconnection Order: 6 RTOs on the Clock

On June 18 and 19, FERC did the thing it had spent six months circling. In a unanimous vote, the commission issued tailored Section 206 show-cause orders to all six RTOs and ISOs, directing each one to justify or rewrite the tariffs that govern how data centers and other large loads connect to the grid. The FERC large load interconnection order gives the operators 60 days to revise those tariffs and 30 days to explain how they will keep enough generation online to serve the loads they are already approving.

That is the answer to a question this newsletter has been tracking all spring. Our coverage of the June 18 cost-allocation vote laid out what to watch. The show-cause orders are what FERC actually decided to do, and they are more aggressive than a single national rule would have been. Instead of one tariff for everyone, FERC is forcing each operator to defend its own rules against a common set of benchmarks, with a clock attached.

For anyone who sells, specifies, or buys transformers, switchgear, protection relays, and substation equipment, the order matters because it sets who pays and how fast the large-load buildout proceeds. FERC commissioner David LaCerte put the stakes plainly: if the RTOs fail to address the concerns, the agency will dictate the solutions itself.

What the Section 206 Show-Cause Order Actually Does

A Section 206 show-cause order is not a suggestion. It is FERC telling each operator that their existing tariff may be unjust and unreasonable, and putting the burden on the operator to prove otherwise or fix it. The orders are tailored, meaning PJM, MISO, SPP, ERCOT’s regulatory analog, ISO-NE, NYISO, and CAISO each got language matched to their own filings rather than a copy-paste mandate.

Three benchmarks run through all of them. First, prevent cost-shifting, so the bills for data-center upgrades do not land on residential and small-commercial ratepayers. Second, enable co-location and behind-the-meter power, so a load that brings its own generation is not blocked from doing so. Third, offer new transmission services for flexible loads that can curtail when the system is tight.

Buried in the documents is the provision that should get a procurement reader’s attention. FERC called for upfront cost-recovery agreements that require data-center developers to fund certain transmission upgrades before construction, so other wholesale customers are not left holding the bill for a project that never energizes. The commission told operators to consider alternative transmission technologies such as dynamic line rating and advanced conductor, but stopped short of mandating them.

Three Benchmarks That Reshape Large Load Cost Allocation

The large load cost allocation question is the one with the longest tail for equipment buyers. When a hyperscaler funds its own network upgrade, that order does not flow through a utility rate case and a multi-year recovery cycle. It flows through a developer with capital and a commissioning deadline. The buying behavior is different: faster decisions, larger single orders, and a willingness to pay for lead-time certainty.

SPP shows how this plays out in practice. FERC approved the Conditional High Impact Large Load Service, or CHILLS, on June 5, letting large loads take curtailable, non-firm transmission service for up to seven years while firm capacity gets built behind them. Two weeks later, the same docket drew a show-cause order on cost shifting and alternative transmission technologies. The lesson for the buy side is that a large load on conditional service still needs the firm infrastructure to follow, which means two purchasing events per site, not one. The curtailable window front-loads the load; the equipment orders chase the firm-service deadline.

ERCOT’s Batch Zero Is the Model RTO Interconnection Reform

The RTO interconnection reform that FERC is holding up as the template came out of Texas. The Public Utility Commission of Texas approved ERCOT’s large-load interconnection process, with a first grouped cohort nicknamed Batch Zero, expected to cover roughly 100 GW of mature projects. ERCOT’s large-load queue now totals about 438 GW, and close to 90% of it is data centers.

The mechanism worth copying is the grouped study. Rather than processing each request in isolation, ERCOT studies a cohort together, which lets it allocate available capacity and pinpoint the transmission upgrades each group actually requires. Governor Abbott layered a $200 million grid-reliability grant on top. For a distributor, the grouped study is the signal that turns a vague queue number into a defined set of substation and transmission upgrades with a timeline. That is the moment equipment demand becomes specific.

What the Order Means for Equipment Procurement

The order does not move headline transformer numbers in the next quarter. Tariff revisions take 60 days to file and longer to clear, and equipment orders follow the firm-service deadline, not the vote date. What changes now is the planning posture.

The upfront cost-recovery provision de-risks the buildout it touches. A project funded by a developer who has already signed a cost-recovery agreement is a more bankable equipment order than one waiting on a contested rate case. The grouped-study approach, if other operators copy ERCOT, converts open-ended queues into defined upgrade lists inside a 60-day to 90-day window. And the co-location benchmark keeps behind-the-meter generation in play, which sustains demand for medium-voltage switchgear, protection relays, and metering at the point of common coupling. This is the same federal load-class authority that showed up in the DOE order directing PJM to curtail data centers, now expressed through the interconnection tariff instead of an emergency directive.

Which operator moves first, which equipment categories tighten in which quarter, and how to position a quote against a developer-funded order: that is the work we do in the report library. Strip away the detail and the takeaway is simpler. The FERC large load interconnection order put six grid operators on a 60-day clock, and the buildout they are being told to plan for is the same one already straining transformer and switchgear lead times.

Our grid modernization procurement guide tracks the full federal, RTO, state, and utility action set across the data center load class. This show-cause order is one of several cost-allocation events shaping the 2026 procurement window.

The Feeder is our free monthly read on the regulatory and procurement signals that move equipment demand. We break down what each FERC, RTO, and state action means for buyers before the orders show up in your lead times. Subscribe to The Feeder and start the next month ahead of the buying cycle.

Related Reading

• Who Pays for Data Center Grid Upgrades? FERC’s June 18 Decision
• Data Center Substation Design and Procurement
• Three Signals and a July 4 Equipment Procurement Deadline