Large load grid connection and study agreements for AI data centers

In short

The Department of Energy has directed FERC to write the first federal rules for connecting large AI data centers and other big loads to the high voltage transmission grid. The proposal would set a national 20 megawatt threshold and standardize study deposits, cost responsibility, and timelines. FERC expects to act on its large-load interconnection docket by June 2026. FERC order While that rule is under development, regional grid operators PJM, ERCOT, SPP, and MISO each apply their own interconnection frameworks. Thresholds vary from 10 megawatts to 75 megawatts. Texas has layered on state law requirements, including mandatory curtailment during grid emergencies. ERCOT Q&A, Texas SB 6 A developer of an AI data center faces a patchwork of rules that is about to change again.

What is large-load grid interconnection, and why is it changing now?

An AI data center cannot just hook up to the electric grid. It must apply to the grid operator for permission. The operator studies whether the existing transmission lines and substations can carry the new demand safely. If they cannot, the developer pays for the necessary upgrades. This process can take years. GridLab report

AI data centers are not ordinary loads. A single campus can draw hundreds of megawatts, more than a steel mill or a small city. Because they are so large, many grid operators label them large loads and put them through a separate, more rigorous vetting. The Department of Energy has proposed that FERC set standardized rules for interconnecting AI data centers and other large loads, sparking major jurisdictional concerns from state regulators. Utility Dive

The first ever federal attempt to set national standards for large load interconnection came on October 23, 2025. The Department of Energy used a rarely invoked authority, section 403 of the DOE Organization Act, to order FERC to start a rulemaking. The goal is to standardize interconnection procedures to ensure timely, orderly, and non-discriminatory load interconnections and to deter speculative projects through standardized deposits, readiness requirements, and withdrawal penalties. DOE ANOPR

The federal directive and what it would do

How did DOE push FERC to act?

Section 403 lets the Secretary of Energy propose rules to FERC. FERC must consider them and take final action. This authority had been used only once before, in 2017, for a grid resilience proposal that FERC did not adopt. In August 2025, DOE used it again to direct FERC to end a natural gas certificate policy proceeding, and FERC complied within 14 days. Law firm analysis, FERC order The large load directive was issued under the energy secretary’s Section 403 authority, with an ambitious April 2026 deadline for FERC to issue a final action. Law firm analysis

FERC opened Docket RM26-4-000 and published an Advance Notice of Proposed Rulemaking, or ANOPR, that sets out 14 principles. The ANOPR is not a final rule, but it signals what a final rule will contain. Comments were due by November and December 2025. About 150 parties filed. FERC originally had until April 30, 2026 to act, but on April 16 it announced it would take action by June 2026. DOE directive, FERC order

Which loads would the federal rule cover?

Principle 1 says the rule would apply only to direct connections to FERC-jurisdictional transmission facilities. That means high-voltage interstate lines. Local distribution lines, which are state regulated, are outside. DOE ANOPR Principle 2 sets a minimum size. Any new standalone load greater than 20 megawatts would be covered. So would any load greater than 20 megawatts that shares a point of interconnection with new or existing generation, a hybrid facility. The ANOPR asks for comment on whether 20 megawatts is the right cutoff. DOE ANOPR, Tax alert

What happens during the study and how much will it cost?

The ANOPR envisions a process modeled on the generator interconnection rules that FERC first standardized in Order No. 2003 and later reformed in Order No. 2023. Here are the core ideas for loads. ANOPR, Docket No. RM26-4-000

• Joint studies. Large loads and hybrid facilities would be studied together with generating facilities whenever that makes sense. Studying them together can reduce the scope and cost of network upgrades because the grid sees the net effect. (Principle 3)
• Study deposits, readiness, and penalties. Big loads would have to put down standardized study deposits, prove they are real projects ready to build, and pay withdrawal penalties if they drop out late. This is designed to weed out speculative filings that clog the queue. (Principle 4)
• Study parameters. A hybrid facility that both consumes and generates power would be studied based on the developer’s requested amount of injection and withdrawal rights. (Principle 5)
• System protection. Hybrid interconnections must install equipment that prevents the facility from injecting or withdrawing more power than the study assumed. (Principle 6)

Can a large load get through faster?

Yes, if it agrees to be curtailable. Principle 7 says that interconnection studies for large loads that accept the risk of being curtailed, turned off or reduced, should be expedited. The target is about 60 days. The load agrees to be curtailable when the grid is stressed, and in return it receives expedited interconnection studies. DOE ANOPR, IFP comments This fast lane is one of the most watched pieces for AI data center developers, because speed to operation often matters more than a small risk of occasional curtailment.

Who pays for the upgrades?

The load pays. Principle 8 states that large load and hybrid facilities would be responsible for 100 percent of the network upgrade costs that the interconnection study assigns to them. The ANOPR asks whether some of that cost should eventually be credited back over time, and over how many years. DOE ANOPR

Can the developer build the upgrades itself?

Yes. Principle 9 gives large loads the same self-build option that generators already have. A developer can construct the interconnection facilities and some network upgrades on its own, subject to the same technical requirements. DOE ANOPR

How does the proposal handle co located generation?

Many data centers want to park a power plant next door, a co-located generator. Principle 10 says that if an existing generator partially suspends its service to serve that load, it must undergo a special study for reliability impacts, much like the study for a resource that the grid cannot afford to retire. (Principle 10) Principle 11 says transmission service for the load will reflect the actual quantity of power that moves across the system to reach it. The load cannot net its on site generation to reduce its reservation. Principle 12 adds that ancillary services, the essential stability services every grid needs, should be the load’s responsibility based on peak demand, without consideration of any co-located generation. DOE ANOPR

What about projects already in the queue?

Principle 13 promises a transition plan so that large loads already under study are not stranded. The final rule would spell out which existing applications move to the new process and which stay under the old rules. Principle 14 simply confirms that utilities serving large loads must meet all applicable NERC reliability standards and OATT provisions. DOE ANOPR

Why is the federal proposal controversial?

Historically, load interconnection has been regulated at the state level. The DOE proposal marks the first time the federal government would systematically govern how loads connect to the transmission grid. Many state regulators, ratepayer advocates, and even some grid operators argue that this intrudes on state turf. The Data Center Coalition expressed qualified support. NARUC, the National Association of Regulatory Utility Commissioners, and state lawmakers raised strong objections. Utility Dive A final rule is expected by June 2026, but litigation is possible.

Practical point. Even before a federal rule is final, FERC has already acted on several large-load issues. It ordered PJM to reform its co location rules in December 2025. It approved SPP’s High Impact Large Load initiative in January 2026. The shape of the final rule is being tested in real time. Law firm analysis

How the major grid operators handle AI data centers today

While the federal rule is being written, the regional transmission organizations (RTOs) and independent system operators (ISOs) already run their own interconnection processes. Each one is adapting quickly because the wave of AI data center requests is already here.

PJM

PJM runs the grid in 13 Mid-Atlantic and Midwestern states. Its long term forecast shows peak load growing by approximately 32 gigawatts from 2024 to 2030, and roughly 30 of those gigawatts are expected to come from AI data centers. PJM Board letter Its summer peak could climb to 220 gigawatts over 15 years, up from a record 165 gigawatts in 2006. PJM Inside Lines

The co-location order. On December 18, 2025, FERC told PJM to reform its rules for generators that are co-located with large loads. The order came after the high-profile Talen-AWS case. Talen sold a 960 megawatt AI data center campus to AWS next to the Susquehanna nuclear plant. FERC rejected an amended interconnection agreement that would have increased the allowable co-located load from 300 megawatts to 480 megawatts, saying PJM had not justified deviations from its standard template. FERC order 189 FERC ¶ 61,078, FERC eLibrary, FERC court case page

In response, PJM must now create three transmission service options for co-located loads. Interim non firm transmission service gives temporary, interruptible service while network upgrades are built. Firm contract demand service is a permanent alternative to the standard network service. Non-firm contract demand service at 0 megawatts is for loads that will never draw from the grid. Law firm analysis, Law firm analysis FERC also found PJM’s existing behind the meter generation (BTMG) rules unjust and ordered revisions within 60 days, with a three year transition for older contractual arrangements that predate the order. Law firm analysis PJM filed its compliance plan on February 23, 2026 and asked for a July 31, 2026 effective date. Law firm analysis

The Critical Issue Fast Path. In August 2025, PJM’s board launched an expedited stakeholder process to address the large-load queue. PJM defines a large load as an individual addition of 50 megawatts or more at a single point of interconnection. Twelve proposals were put forward, but none received a supermajority. The board issued a January 2026 decisional letter with six principles. The most concrete is a Bring Your Own Generation expedited track for loads that build dedicated supply. Load forecasting will also be improved, and a commitment made to further review a reliability backstop. PJM CIFP package, Law firm analysis

Queue progress. PJM has processed more than 170,000 megawatts of new generation requests since 2023. About 57 gigawatts of projects have signed or been offered generation interconnection agreements. The remaining transition queue, roughly 30,000 megawatts, is expected to be cleared in 2026. PJM’s new interconnection cycle opened in April 2026 with a one to two year review window. PJM Inside Lines Still, the scale of demand is straining the system. PJM utilities have committed to serve about twice as much new large-load demand as the region has planned new generation to support, according to one industry analysis. Law firm analysis

ERCOT

ERCOT operates the Texas grid, which is mostly isolated from the rest of the country and therefore outside FERC’s direct jurisdiction. However, Texas has moved aggressively on its own.

The size of the queue. As of December 2025, ERCOT was tracking approximately 239 gigawatts of large loads seeking interconnection. That is up from 63 gigawatts a year earlier, nearly a fourfold increase. AI data centers account for roughly 73 percent of those requests. ERCOT System Planning and Weatherization Update Meanwhile, only about 5,300 megawatts of large loads had actually been energized by November 2025, roughly 2 percent of what is in the pipeline. ERCOT Q&A

Senate Bill 6. The Texas Legislature passed SB 6 in 2025. It applies to any load with peak demand of 75 megawatts or more at a single site. The Public Utility Commission of Texas can adjust that threshold downward. Here are the key requirements. Texas SB 6 enrolled text, Texas SB 6 enrolled text

• A minimum $100,000 flat study fee for the initial transmission screening.
• Proof of site control.
• Disclosure of any backup generation that can cover 50 percent or more of on-site demand.
• A demonstration of financial commitment.
• Disclosure of any parallel interconnection requests elsewhere in Texas, an anti phantom load rule meant to stop developers from tying up capacity in multiple places.
• Mandatory equipment that lets ERCOT directly curtail the load during firm load shed events, the most severe emergencies.

SB 6 also requires ERCOT to develop a competitive reliability service that buys demand reductions from large loads during anticipated emergencies. New transmission-voltage customers in ERCOT must have curtailment capability, with equipment and protocols installed before interconnection to allow curtailment during firm load shed. Texas SB 6 enrolled text

The formal interconnection process (PGRR115). ERCOT’s Planning Guide Section 9, updated through PGRR115 and effective December 15, 2025, creates a three-phase interconnection procedure. Phase 1 is the interconnection request to the transmission service provider and the planning studies. Phase 2 covers agreements and modeling. The approval to energize now includes an interim ride through evaluation and validation of load modeling and telemetry. ERCOT Q&A Large loads that had already started under the earlier interim framework generally must follow the remaining steps but not the earlier stage requirements that are new. ERCOT Q&A

Net-metering and co-location review. SB 6 also imposes a new review for net metering arrangements between an existing stand alone generator and a new 75 megawatt or larger load. The developer must notify ERCOT, which then conducts a 120-day system impact study. The PUCT has 60 days after receiving that study to decide. It can impose conditions, including callable dispatchable capacity and behind-the-meter curtailment. Texas SB 6 enrolled text, Law firm analysis

What to watch. The PUCT is running five rulemaking projects to implement SB 6, with final rules targeted throughout 2026. ERCOT has also contracted with McKinsey & Company to help improve the large load interconnection process, aiming to develop a framework identifying short and mid term solutions in early 2026 and a streamlined process later in the year. ERCOT Constraints Report

SPP

The Southwest Power Pool operates in the central United States. It has seen over 26 gigawatts of large-load requests since 2020. Utility Dive

High Impact Large Load (HILL). SPP defines a High Impact Large Load as a new or increased commercial or industrial load at a single site. A load qualifies if it is 10 megawatts or more when connected at 69 kilovolts or less, or 50 megawatts or more when connected above 69 kilovolts. Energy storage projects are excluded. SPP, Law firm analysis

In September 2025, SPP’s board approved a fast track process, RR 696, that aims to complete a coordinated study and interconnection approval in about 90 days. It bundles transmission service, generation and load interconnection, and reliability studies into a single review. A companion HILL Generation Assessment handles on-site generation. SPP FERC approved the initiative in January 2026, in Docket No. ER26-247-000. 194 FERC ¶ 61,031

SPP is also developing a Conditional HILL (CHILL) service. A CHILL customer gets the fastest connection but accepts the possibility of temporary curtailment to protect system reliability. That product is still under development. SPP

Provisional Load Process. FERC accepted SPP’s Attachment AX effective August 4, 2025. It lets SPP study a new load using both existing resources and planned generation, even when the transmission customer does not yet have enough supply under contract. Any needed network upgrade costs are initially assigned to the customer. Once planned generation is formally designated as a resource, remaining costs roll into zonal or regional rates. Law firm analysis

MISO

MISO serves much of the Midwest and part of the South. Its interconnection queue shrank from 373 gigawatts to 252 gigawatts between March and September 2025, with solar projects making up the largest share of withdrawals as tax credit deadlines and viability pressures hit. LinkedIn

MISO’s Large Load Working Group is developing a formal large-load framework. The draft definition states that after September 1, 2026, any facility exceeding 50 megawatts of total capacity at a single site behind one or more transmission points of interconnection is a large load. For an existing load already above 50 megawatts, an expansion of 25 megawatts or more may trigger the framework. Multiple facilities at a single site under coordinated control can be aggregated. ZEG

The working group is considering a Firm Service Step Up, which would let a load energize at a reduced firm level before all upgrades are complete. It would be able to ramp up as the grid is reinforced. Operational requirements are also being developed, including ramp limits, modeling, telemetry, ride through, and stability assessments. ZEG MISO also imposed a queue cap for its 2025 cycle, limiting the studied capacity to 50 percent of non-coincident peak load in each study region. ZEG

State actions outside the RTOs

Not every AI data center sits inside an RTO. In vertically integrated states, the local utility, overseen by the state public utility commission, runs the interconnection process. Several states have adopted rules that mirror the emerging RTO frameworks.

Georgia. The Georgia PSC approved rules in January 2025 for loads over 100 megawatts. The customer must pay the full cost of any transmission and distribution upgrades, and every contract with Georgia Power must be filed with the commission. INL report

Indiana. An IURC-approved settlement from February 2025 requires new large-load customers to make long-term financial commitments. If they reduce their contract capacity by more than 20 percent, they pay an exit fee. They also must pay a minimum monthly demand charge equal to at least 80 percent of their contract capacity. INL report

Ohio. The PUCO approved a July 2025 settlement for AEP Ohio’s large-load tariff. It applies to loads above 25 megawatts. Customers must sign a 12 year contract with a minimum four year ramp, pay at least 85 percent of their contract demand each month, and provide collateral and proof of financial viability. The moratorium on new AI data center interconnections that had been in place since 2023 was lifted after the tariff was approved. INL report

These state rules share a common thread. Large-load customers must put real money on the table and accept long-term commitments so that existing ratepayers do not subsidize the grid upgrades for a private data center campus.

A side by side look at thresholds and key rules

What AI data center developers should watch

The federal rule will likely be final by June 2026. FERC’s April announcement that it will act by June signals that a final rule is imminent. The ANOPR proposes a 20 megawatt cutoff, standardized study deposits and withdrawal penalties, expedited studies for curtailable loads, and 100 percent cost responsibility for assigned network upgrades and seeks comment on the details of each. DOE ANOPR

Co-location is the flashpoint. The Talen-AWS rejection and the PJM co-location order show that regulators are determined to prevent AI data centers from free riding on the grid while claiming to be behind the meter. Generators that want to partially suspend service to serve a co-located load now face a special reliability study. DOE ANOPR In PJM, new service options are being created, but they come with stricter terms. Law firm analysis

Texas is forging its own path. ERCOT is outside FERC jurisdiction, so the federal rule will not directly apply. However, SB 6 and PGRR115 are among the most detailed large-load interconnection rules in the country. The requirement for remote curtailment during grid emergencies and the anti-phantom-load disclosure are established by the bill. Texas SB 6 enrolled text Developers with projects in Texas should engage with the five ongoing PUCT rulemakings and track ERCOT’s McKinsey redesign.

Queue volume and transmission buildout are the real limits. Even the cleanest interconnection rules cannot create transmission capacity. PJM has approved $6 billion in transmission projects to address reliability needs. PJM Inside Lines ERCOT expects $30.21 billion in transmission projects to be placed in service between 2026 and the end of 2031. ERCOT Constraints Report Yet in the PJM region, planned generation still lags behind the load that utilities have committed to serve. Law firm analysis A project that secures an interconnection agreement may still wait years for the grid to catch up.

The patchwork will persist even after a federal rule. The DOE’s directive applies only to FERC-jurisdictional transmission. State level and distribution level interconnections remain under local control. Over 60 large-load tariffs have been approved or are under consideration by states. Utility Dive A developer must still know the rules in each market where it plans to build.

Litigation is likely. The Talen-AWS case was transferred to the Third Circuit on November 3, 2025. Susquehanna Nuclear, LLC v. FERC, No. 25-60019 (5th Cir.), CourtListener docket State regulators have already signaled that they may challenge a DOE proposal for FERC to issue large-load interconnection rules that they see as overreaching. Utility Dive Any major rule will face court review, and that could delay implementation.

Key takeaways

• A federal rule on large-load interconnection is expected by June 2026. It will apply to loads above 20 megawatts that connect directly to FERC-jurisdictional transmission facilities. DOE ANOPR
• Until then, and even after, regional rules vary widely. Know the threshold, the study timeline, and the curtailment obligations in your target market. In PJM, the cutoff is 50 megawatts. In ERCOT, it is 75 megawatts. In SPP, it can be as low as 10 megawatts at lower voltages. PJM large load threshold, ERCOT large load interconnection, FERC order accepting SPP HILL tariff
• The ANOPR proposes that load and hybrid facilities should be responsible for 100% of the network upgrades they are assigned through interconnection studies. It seeks comment on whether those costs should be offset through a crediting mechanism, but the upfront exposure is real. DOE ANOPR
• The federal proposal and SPP offer expedited studies for curtailable loads or conditional interconnection services, making curtailment agreements one of the fastest paths to interconnection. DOE ANOPR, SPP
• Co-located generation is under heavy scrutiny. Do not assume that putting a generator behind the meter lets you bypass grid costs or interconnection requirements. FERC has ordered PJM to tighten its rules on co-located generation, and the Department of Energy has directed FERC to propose broader rules on large load interconnections. FERC order 193 FERC ¶ 61,217, DOE ANOPR
• In Texas, SB 6 adds state-specific requirements that go beyond anything in the federal proposal, including a $100,000 study fee, proof of site control, backup generation disclosure, and mandatory remote curtailment equipment. Texas SB 6 enrolled text
• Transmission capacity remains the gating item. Even a signed interconnection agreement may mean a long wait while new lines are built. Monitor the transmission plans in your region.

Frequently asked questions

Q:What is the federal large-load threshold?

A:The ANOPR proposes 20 megawatts. That means any new standalone load larger than 20 megawatts, or any load larger than 20 megawatts that shares an interconnection with generation, would be covered. DOE ANOPR

Q:How fast can a large AI data center get through the study process?

A:The fastest track under the federal proposal targets about 60 days for loads that accept curtailment. SPP’s HILL fast-track aims for about 90 days. Typical study timelines in PJM and ERCOT can stretch to one to two years or more. ERCOT, PJM Inside Lines

Q:What does curtailment mean for an AI data center?

A:Curtailment means the grid operator can tell the facility to reduce its load or disconnect entirely for a period. In Texas, new large loads must install equipment that lets ERCOT curtail them during the most severe emergencies. In exchange, the developer may get faster study and interconnection approval. DOE ANOPR

Q:Do I have to pay 100 percent of the network upgrade costs?

A:Under the federal proposal, yes. The ANOPR says loads would be responsible for 100 percent of the upgrade costs assigned to them by the system study. The rule may include a crediting mechanism that returns some costs over time, but that is not certain. DOE ANOPR

Q:Can I just build my own generation on site and avoid interconnection rules?

A:No. A co-located generator that partially suspends grid service to serve the load still triggers reliability studies. PJM now requires three new transmission service options for co-located loads, and the federal proposal treats hybrid facilities (load plus generation) separately, with no netting of ancillary service charges. FERC order 193 FERC ¶ 61,217, DOE ANOPR

Q:What is the status of the Talen-AWS case?

A:FERC rejected the amended interconnection agreement in November 2024. The original 300 megawatt arrangement remains. Talen petitioned the Fifth Circuit for review, which transferred the case to the Third Circuit in November 2025. Pacermonitor, Court docket, Third Circuit docket, No. 25-3167, Pacermonitor

Q:How does SB 6 change interconnection for a Texas AI data center?

A:SB 6 applies to loads of 75 megawatts or more. It adds a minimum $100,000 study fee, requires proof of site control and backup generation disclosure, requires disclosure of phantom queuing, mandates remote curtailment equipment, and imposes a 120-day ERCOT review for new net-metering arrangements. Texas SB 6 enrolled text

Q:When is the federal rule expected to be final?

A:FERC announced it will act by June 2026. FERC said it will take action by June 2026 on the ANOPR proceeding. FERC press release

Q:What if I submit an interconnection request now, before the federal rule is final?

A:Most RTOs have their own transition provisions. The federal ANOPR proposes that there must be a transition plan and seeks comment on one. In ERCOT, loads that started under the old interim process generally must comply with the remaining steps of the new process but not the earlier requirements. Check the specific rules in your region. DOE ANOPR, ERCOT Q&A

Q:Is there a penalty for dropping out of the queue?

A:Yes, under the federal proposal and in several RTO practices, withdrawal penalties and deposits are meant to discourage speculative filings. The exact amounts are still being set. DOE ANOPR, MISO ANOPR comments

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Junde Liu, JD, LL.M. (Taxation) candidate at UF Law. Originally published on Compute Law Blog. This article is general information and does not constitute legal advice. Reading it does not create an attorney client relationship. The reader should not act on the basis of any content here without first consulting a licensed attorney in the relevant state. Last reviewed for accuracy May 23, 2026.