FERC Orders All U.S. RTOs/ISOs to Review or Reform Data Center Interconnection Rules

The Federal Energy Regulatory Commission has ordered US grid operators—the regional transmission organizations and independent system operators that manage electricity distribution—to either justify their existing data center interconnection policies or reform them. This directive signals regulatory scrutiny of how data centers, particularly those supporting AI infrastructure, are currently integrated into the nation's power grid.

Data center connections to the electrical grid have become increasingly contentious as demand for compute capacity driven by AI development has surged. RTOs and ISOs have faced questions about whether their current interconnection standards and approval processes adequately account for the scale and speed of data center deployment, particularly for large power-consuming facilities.

The order requires grid operators to substantiate their current approach or make changes, creating potential shifts in how quickly data centers can achieve grid connection and begin operations. For the AI infrastructure sector, this regulatory action could either streamline pathways to connection if reforms reduce barriers, or impose new requirements that delay deployment depending on what reforms FERC and individual grid operators implement.