FERC Challenges RTOs and Large Loads to Improve Speed and Flexibility of Grid Interconnection

FERC’s issuance of tailored show cause orders to all six regional grid operators means changes are likely coming to transmission interconnection rules for large load users. In order to comment, interested parties should file for intervention in the next 21 days to secure the right to comment on RTO proposals when they are filed later. Upcoming public comment periods will give an opportunity to shape the rules in each region for large load developers and utilities alike.

Background

Driven by the rapid proliferation of artificial intelligence data centers and advanced manufacturing operations, electricity demand across the United States is growing at rates not seen in decades. Existing transmission interconnection and tariff frameworks have struggled to keep pace, creating interconnection bottlenecks and cost-shifting concerns.

Earlier this year, the Department of Energy (DOE) issued an Advance Notice of Proposed Rulemaking (ANOPR) directing attention to expediting large load integration onto the transmission system. FERC’s June 18 orders advance that initiative, imposing a review of grid operator rules across the country. Anyone interested in commenting should follow FERC’s direction in today’s orders and file for intervention within 21 days to secure the right to comment once the RTO submits its filing. While FERC routinely grants belated interventions, this timeline and Section 206 jurisdictional posture sets up a trap where those waiting to see the RTO filings may miss their opportunity to obtain standing to participate in the comment period.

What FERC Did

FERC issued six individually-tailored show cause orders, one to each of the RTOs/ISOs under its jurisdiction under Section 206 of the Federal Power Act. Section 206 permits FERC to investigate whether existing rates, terms, or conditions of service are just and reasonable, and importantly these orders place the burden on each grid operator (and its transmission owners) to demonstrate compliance or propose remedies.

While the orders are tailored to each region’s existing structure, market design, and level of advancement on large load issues, each order tees up five categories of reform for the grid operators to address:

1. Efficient Transmission Service Processes
2. Cost Shifting Prevention & Transparency
3. Co-Location and Behind-the-Meter Generation
4. New Transmission Services for Flexible Loads
5. Electrically Proximate and Co-Located Load Studies

Key Deadlines

• Within 21 days: Interested parties are to intervene in each of the relevant grid operators’ show cause FERC dockets by July 9^th to secure their right to participate and comment in the review of the grid operator’s tariff. While belated intervention is commonly granted by FERC, it is possible FERC denies belated intervention
• Within 30 days: Each grid operator must submit a detailed informational report on how it intends to ensure adequate generation will be available to serve existing and new large loads, including ongoing stakeholder processes and estimated milestones for any filings with FERC.
  • Strategic Opportunity: Reviewing the informational report will allow interested parties to get a glimpse into each operator’s perspective on large load issues and get a jumpstart on preparing comments before the full Section 206 filing comes in to start the clock on comment submission.
• Within 60 days: Each RTO/ISO and its transmission owners must file with FERC to either justify why current tariffs remain just and reasonable without large-load-specific provisions, or file proposed tariff revisions addressing the five categories above.
  • Public Comment Opportunity: Once an RTO/ISO makes its Section 206 filing with FERC, those who intervened will have 30 days to submit comments. This gives a meaningful, but narrow opportunity for large load users and utilities alike to shape new RTO/ISO procedures to match their unique needs.

Federal-State Jurisdictional Lines

FERC was explicit that today’s orders do not intrude on state authority. The Commission stated that the orders do not affect:

• The authority of states to site and permit large load projects; to regulate which entities may make retail electric sales within the state; and to monitor for cost shifting among retail customers (as opposed to transmission customers, over whom FERC does act).

Despite these express carve-outs, FERC’s directives on accommodation of behind-the-meter generation and co-location arrangements are likely to reverberate at the state level.

Implications for Affected Stakeholders

FERC did not impose a definition of “large load”, leaving it to each grid operator to propose a definition. But FERC did offer it would be reasonable to define a large load as a commercial or industrial interconnection over 50MW peak load, interconnecting to the transmission system directly, not part of a co-location arrangement. Entities interested in including or excluding themselves from the large load definition should offer comments on the appropriateness of this definition, as well as the definitions proposed by grid operators.

The issuance of six separate, tailored orders means interested parties will want to monitor each of the individual dockets for regional differences, and it will be worthwhile for commenters to weigh in on the rules for each region where they have interests.

It is not yet clear how exactly how these proceedings affect utilities and transmission customers in areas outside of an RTO/ISO footprint. Tariff concepts implemented during these Section 206 proceedings are likely to find their way into the transmission tariffs of Transmission Operators in bilateral wholesale market regions, meaning it is still worthwhile to monitor and potentially comment on relevant provisions introduced by any RTO/ISO.