Top US energy regulator pushes grids to overhaul data center power rules

By Laila Kearney

NEW YORK, June 18 (Reuters) – The top U.S. energy regulator ordered the country’s electric grid operators on Thursday to consider new protocols to quickly connect very large energy users, such as data centers, without driving up costs and the risk of blackouts.

Data centers are pushing U.S. electricity use to record highs and requiring more electricity in large swaths of the country than grids can supply, sending regulators scrambling to develop ways to manage that explosive demand. 

The Federal Energy Regulatory Commission draft “show cause” orders direct the six regional grids under its jurisdiction, which excludes Texas, to justify or overhaul their process for powering large energy users.  The aim, FERC said, is largely to speed up the connection of data centers while minimizing the impact on grid stability and power bills for Americans. 

“This is the biggest priority our country is facing at the moment,” FERC Chairman Laura Swett said.

FERC’s order follows a directive by U.S. Energy Secretary Chris Wright last year to expedite the connection of data centers as part of the country’s objective of winning a global race to develop and roll out AI technologies.

“This is a race against time, and we are going to win,” Swett said at a press conference.

‘STANDING STILL NO LONGER AN OPTION’

Grid operators and transmission owners have 60 days to respond to FERC and explain why their current rules are justified or whether they will make changes in five main categories. Those categories include having clear processes for connecting very large energy users, such as data centers, and allocating costs to the large energy customers for the infrastructure needed to serve them. 

FERC, in its orders, also encouraged new frameworks for very large energy users to bring their own power supplies, such as by building their own plants. The regulator implored grid operators to integrate advanced technologies to make existing infrastructure more efficient.  

Advocates for data center and power plant developers generally supported FERC’s directive to grid operators.

“The grid and prior policy were not built for the pace and scale of demand we’re seeing from AI infrastructure, and FERC is signaling that standing still is no longer an option,” Robert Montejo, a partner at Duane Morris, who represents clients including data center developers and power companies.

Some clean energy advocates also said FERC’s directives were a step in the right direction. 

“We are energized that there is a clear path forward to adopt responsible large load interconnection policies that safeguard reliability, improve transparency, and embed affordability and ratepayer protections for American households,” the Sierra Club said in a statement.

In its series of orders, FERC also said it would no longer automatically consider cumulative environmental impacts in its rulemaking under the National Environmental Policy Act.

“We are no longer going to waste valuable staff and applicant time and money doing an analysis that is not necessary under the law,” Swett said.

(Reporting by Laila Kearney in New York; Editing by Mark Porter, Rod Nickel)

By Laila Kearney | Reuters | © Copyright Thomson Reuters 2026.