By Ahuva Battams, Miguel Suazo, DeAnza Valencia, and Raj Lahoti
On June 18, 2026, the Federal Energy Regulatory Commission (FERC) issued tailored show cause orders under Section 206 of the Federal Power Act to each of the six regional grid operators under its jurisdiction (Regional Transmission Organizations (RTO) or Independent System Operators (ISO)). FERC directed them to justify or reform the rules governing how data centers, manufacturing facilities, and other large energy users connect to the electric grid. The orders mark one of the most significant actions FERC has taken to modernize the nation’s electric markets and signal that “speed-to-power” has become a national regulatory priority.
The orders advance the Department of Energy (DOE) direction to FERC to establish rules to expedite large load integration onto the transmission system. Notably, DOE had contemplated a single national standard for large load interconnection. FERC declined that approach, instead directing each grid operator to develop rules tailored to its own region, markets, and stakeholder processes — a decision that drew both praise for its flexibility and criticism for leaving roughly a third of Americans outside RTOs without equivalent protections.
Under the June 18 orders, the six grid operators and their transmission owners face two deadlines: within 60 days, they must either justify why their current tariffs remain just and reasonable without large-load-specific provisions or file proposed tariff changes addressing five categories of reform FERC identified:
- Efficient transmission service application and study processes, including consideration of alternative transmission technologies;
- Prevention of cost shifts and transparency into transmission costs;
- Accommodation of co-location agreements and behind-the-meter generation;
- New transmission services for flexible large loads; and
- A process for studying generating facilities serving electrically proximate and co-located large loads.
Within 30 days, they must also submit a detailed informational report describing how they intend to ensure adequate generation will be available to serve both existing and new large loads.
A central theme of the orders is protecting existing ratepayers. FERC expressed concern that current RTO and ISO rules lack transparency about how network upgrade costs are assigned and paid for, creating risk that large load developers shift costs to ordinary households. The Commission emphasized that “if that data center doesn’t show up, other customers, especially regular consumers, will not be on the hook for those costs.” Importantly, the orders explicitly preserve state authority over retail electricity rates, retail sales, and siting decisions.
Implications for Texas and New Mexico
Texas. The Electric Reliability Council of Texas (ERCOT) is not subject to FERC’s orders—it operates as an islanded grid outside FERC’s wholesale jurisdiction—but Texas faces the same underlying pressures in even more acute form. On the same day FERC acted, the Texas Public Utility Commission (PUC) approved an initial large-load interconnection process for ERCOT, which is contending with more than 438 GW of interconnection requests, the vast majority tied to data center development. The PUC and ERCOT are acutely focused on ensuring that explosive data center growth does not compromise grid reliability or shift costs to Texas households and businesses. Companies seeking to develop data centers, generation resources, or supporting transmission infrastructure in Texas should closely monitor ERCOT’s evolving large-load study process and the PUC’s ongoing rulemaking activity.
New Mexico. New Mexico sits at the intersection of several dynamics that FERC’s orders are designed to address. Transmission systems serving New Mexico are interconnected with neighboring regional markets, including the footprints of the Southwest Power Pool (SPP) and California Independent System Operator (CAISO) —two of the six grid operators directly subject to FERC’s orders. As those operators revise their tariffs to accommodate large loads, developers may find new opportunities to pair data center projects in New Mexico with co-located or electrically proximate generation resources and emerging transmission investments across the Southwest. FERC also encouraged transmission owners outside of RTOs—including utilities serving parts of New Mexico—to voluntarily propose data center interconnection rules consistent with the reforms ordered for the RTOs.
What to Watch
The six grid operators (the Pennsylvania-New Jersey-Maryland Interconnection, Midcontinent Independent System Operator, SPP, CAISO, Independent System Operator – New England, and New York Independent System Operator) may request 90-day extensions after the initial 45 days, meaning the full reform picture may not emerge until late 2026 or early 2027. FERC has been explicit that if grid operators fail to adequately address the identified concerns, it will “not hesitate” to dictate solutions. Future disputes involving co-located generation, behind-the-meter arrangements, transmission cost allocation, flexible load services, and data center service agreements will be increasingly important areas of regulatory scrutiny.
How Beatty & Wozniak Can Help
Beatty & Wozniak’s regulatory and midstream teams are available to assist clients with any questions. Beatty & Wozniak represents energy developers, utilities, and industrial customers across Texas and New Mexico navigating the rapidly changing regulatory landscape governing large load interconnection, transmission access, and energy project development. Our attorneys have deep experience in ERCOT and Southwest transmission markets, state PUC proceedings, and federal energy regulatory practice.
If your company is developing a data center, generation facility, or large-load project in Texas or New Mexico—or evaluating transmission service options in the region—we welcome the opportunity to discuss how these developments may affect your project. Please contact us to arrange a consultation. For more information, please contact Miguel Suazo, Ahuva Battams, DeAnza Valencia, or Raj Lahoti.