Both the government and private sector have emphasized the importance of artificial intelligence (AI) to the economic and security interests of the United States. However, the AI computing revolution is increasing energy demand at a breakneck pace and requires speed to market for solutions that are rarely available to data centers under the current regulatory framework. While developing data center projects and placing them into service is difficult under the best of circumstances, aging electric infrastructure, uncertainty around the retirement of generation resources, and inadequate interconnection resources have increased the hurdles to bringing new data centers online. Recognizing these challenges, industry participants, system operators, and regulators are proposing, evaluating, and implementing potential solutions. From queue reform to co-location of load and generation, regulators at both the federal and state level are attempting to provide actionable guidance that accelerates the development and deployment of data centers, while also protecting reliability and other ratepayers.
Following the April 16, 2026 Federal Energy Regulatory Commission (“FERC” or “Commission”) open meeting, data centers remain a, if not the, key issue before the Commission. Chair Swett stated that FERC is prioritizing reforms to accelerate the interconnection of large loads, such as data centers, and explained that FERC has committed to act by the end of June 2026[1] on the Advance Notice of Proposed Rulemaking that the Secretary of Energy submitted to FERC in October 2025. [2]
The Secretary’s proposal contains series of principles meant “to ensure the timely and orderly interconnection of large loads to the transmission system”[3] in light of the “unprecedented current and expected growth of large loads.”[4] When submitting his proposal, the Secretary explained that “given the urgency of this issue, I look forward to your consideration and final action (no later than April 30, 2026).”[5]
Although FERC will not meet the Secretary’s April deadline, Chair Swett explained the Secretary and FERC agree “that there is urgent need for thoughtful reforms that ensure large loads are able to connect to the transmission system in a timely, orderly, nondiscriminatory manner.”[6] At least some of the delay can be attributed to widespread engagement on the part of industry; FERC has participated in numerous stakeholder meetings and reviewed over 3,500 pages of comments filed on the Secretary’s proposal. However, despite the delays, Chair Swett stated that the market can expect “bold action in June.”[7]
These statements from Chair Swett align with her earlier comments and the positions of previous FERC Chairs that have recognized the importance of data centers and need for FERC to lead on this issue. For example, Chair Swett’s immediate predecessor, Chair Christie, stated that failure on data centers could have catastrophic consequences.[8] Chair Christie’s predecessor, Chair Philips, emphasized that the Commission can and should play a leadership role on this important economic and national security issue.[9] In her first FERC open meeting in November 2025, Chair Swett echoed those same sentiments, stating it “is crucial to economic and national security that we win the artificial intelligence data race for our country so that American data does not go abroad.”[10] Her “priority as Chair[] is to ensure that our country can connect and power data centers as quickly and as durably as possible.”[11]
While FERC has been delayed ruling on the Secretary’s proposal, the Commission has taken significant actions related to data centers in the past few months, including:
- Issuing a landmark order in December 2025 directing PJM, the nation’s largest grid operator, to establish transparent rules that recognize the ability of large loads that are co-located with generation facilities to limit their withdrawals from the transmission system;[12]
- Issuing an order in January 2026 that:
- approved SPP’s innovative High Impact Large Load proposal, which established new study processes for large loads that will both expedite load interconnection and protect consumers, and
- approved SPP’s equally innovative High Impact Large Load Generation Assessment proposal, which enables expedited interconnection opportunities for generating facilities that are electrically proximate to large loads;[13]
- Ruling on a number of proposed tariffs and agreements related to large loads connecting to the transmission system, accepting many while rejecting those that FERC determined exceeded its jurisdiction or failed to reasonably allocate costs;[14] and
- Tracked the actions of the National Energy Dominance Council, 15 Governors who signed the Statement of Principles Regarding PJM, and the President’s Ratepayer Protection Pledge in March 2026.[15]
There will continue to be significant change in the data center space, but the ruling on the Secretary of Energy’s proposal will represent a significant culmination of work that FERC began in a November 2024 technical conference. However, this is just one step, and FERC has recognized that the ruling will represent progress rather than a final conclusion, explaining that FERC and the Secretary “fully agree . . . that Commission-led efforts towards reform, including those we will announce in June, should not be interpreted as ‘discourag[ing] public utilities from making filings to address these and similar issues . . . .”[16]
FERC has repeatedly identified data centers as a national security issue. Addressing the unprecedented load growth from the data center boom will require a multi-pronged approach, and implementing those changes will require coordinated efforts by both state and federal level regulators. FERC along with state regulators must implement structural changes to provide viable pathways to bring more generation online, maximize the use of the existing grid, and expedite interconnection processes for both load and generation. Industry participants eagerly await the ruling in June and future regulatory leadership to implement creative solutions needed to accelerate data center development.
Stand by for more data center updates from the Sheppard team.
FOOTNOTES
[1] Interconnection of Large Loads to the Interstate Transmission System, 195 FERC ¶ 61,045 (2026) (“Order Regarding Intent to Act”).
[2] Interconnection of Large Loads to the Interstate Transmission System, Docket No. RM26-4, Advance Notice of Proposed Rulemaking (Oct. 23, 2025) (“ANOPR”); see also Interconnection of Large Loads to the Interstate Transmission System, Docket No. RM26-4, Letter from Chris Wright, Sec’y, U.S. Dep’t of Energy (Oct. 23, 2025) (“Secretary’s Letter”).
[3] ANOPR at P 1
[4] Id at P 12.
[5] Secretary’s Letter at 2.
[6] Video of April 16, 2026 FERC Open Meeting at 3:17-32 (available at https://www.youtube.com/watch?v=6w6EGI2bWDQ)
[7] Id. at 3:33-36.
[8] Large Loads Co-Located at Generating Facilities, Docket No. AD24-11-000, Transcript of Technical Conference at 11:7-23 (Nov. 1, 2024).
[9] Id. at 9:25.
[10] Video of November 20, 2025 FERC Open Meeting at 5:57-6:08 (available at https://www.youtube.com/watch?v=_Cxq0gORq8c).
[11] Id. at 6:14-22.
[12] Order Regarding Intent to Act at P 2 (citing PJM Interconnection, L.L.C., et al., 193 FERC ¶ 61,217 (2025)); see also FERC Directs Revisions To Enable Co-Located Load (Data Centers) And Generation (available here)
[13] Order Regarding Intent to Act at P 2 (citing Sw. Power Pool, Inc., 194 FERC ¶ 61,031, at PP 61-63 (2026))
[14] Id. (citing Commonwealth Edison Co., 194 FERC ¶ 61,181 (2026); Tri-State Generation & Transmission Ass’n, 193 FERC ¶ 61,070, at P 45 (2025); Duke Energy Carolinas, LLC, 193 FERC ¶ 61,237, at P 16 (2025)).
[15] Id. (citing Exec. Order No. 14213, 90 Fed. Reg. 9945 (Feb. 14, 2025); Statement of Principles Regarding PJM, U.S. Dep’t of Energy (available at https://perma.cc/94EL-6DC2); Proclamation No. 11014, 91 Fed. Reg. 11439 (Mar. 4, 2026).
[16] Id. at P 5.
