Category: Electricity Markets

FERC Issues Order Clarifying Data Center and Large Load Interconnection Procedures in PJM

Mark R. Haskell, Brett A. Snyder, Lamiya N. Rahman, and Emily S. Childress ●

The Federal Energy Regulatory Commission (“FERC” or the “Commission”) issued an order on December 18, 2025, creating a framework for how large co-located loads, such as data centers, can connect to the grid in a timely, efficient, and fair manner.[1] In February 2025, the Commission initiated Docket No. EL25-49-000, a show cause proceeding under section 206 of the Federal Power Act (“FPA”), directing PJM Interconnection, L.L.C. (“PJM”) and PJM transmission owners to show cause as to why PJM’s governing documents addressing service arrangements between and among generators and co-located load remain just and reasonable and not unduly discriminatory or preferential.

The Commission’s Order—finding that PJM’s current tariff is unjust and unreasonable—directs PJM to implement revisions to clarify what steps entities must take to effectuate co-located load arrangements, to establish three new transmission services, and to create new behind-the-meter generation rules. The Order also seeks additional briefing on the appropriate rates, terms, and conditions of the new transmission service offerings. 

First, several key terms are important to understand in the context of the Commission’s Order. The Order defines “Co-Located Load” to mean a “configuration that refers to end-use customer load that is physically connected to the facilities of an existing or planned Customer Facility on the Interconnection Customer’s side of the Point of Interconnection to the PJM Transmission System.”[2] A “Co-Location Arrangement” refers to both the Co-Located Load and the associated generator. Other capitalized terms used throughout the Order are defined in PJM’s tariff.[3]

FERC v. States: Who Has Jurisdiction? 

Regulating large loads, such as data centers, requires involvement from local, state, and federal entities. FERC’s jurisdiction is limited; it can only regulate matters that Congress authorizes. Under the FPA, states have authority over any matters not expressly conveyed to the Commission.[4] The Order addresses the jurisdictional divide in the specific context of Co-Located Load, noting that FERC has authority to oversee the terms and conditions of generator interconnection to any Commission-jurisdictional distribution facility or transmission facility, and to ensure that rates for transmission service in interstate commerce are just and reasonable.[5] Concurrently, states retain exclusive jurisdiction over the specific terms of retail sales, generator siting, the generation mix, and transmission in intrastate commerce.[6]

Why PJM’s Tariff Is Not Just and Reasonable

The Commission ultimately found that PJM’s current tariff is not just and reasonable, and the Order focused on three key reasons for this: (1) a lack of consistency and clarity regarding serving Co-Located Load, (2) failure to properly allocate costs to the entities that cause the costs to be incurred and reap the resulting benefits, and (3) outdated behind-the-meter generation (“BTMG”) rules that do not account for large loads on the scale of data centers. 

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[1] PJM Interconnection, L.L.C., 193 FERC ¶ 61,217 (2025) [hereinafter PJM Order].

[2] Id. at P 1 n.3. The Commission directed PJM to incorporate this definition into its tariff. Id. at P 164. 

[3] See PJM Governing Documents, Open Access Transmission Tariff, available at agreements.pjm.com/oatt/3898.

[4] Nat’l Ass’n of Regul. Util. Comm’rs v. FERC, 964 F.3d 1177, 1187 (D.C. Cir. 2020) (citing N. Nat. Gas Co. v. State Corp. Comm’n of the State of Kan., 372 U.S. 84, 91-93 (1963)).

[5] PJM Order at PP 171-174.

[6] Id. at PP 167-170.

Unleashing American Energy: Trump Administration’s Latest Executive Orders

Margaret Anne Hill, Frank L. Tamulonis III, Melissa A. Scacchitti, and Stephen C. Zumbrun ●

New Executive Orders and Proclamation

On April 8, 2025, President Donald J. Trump issued three significant executive orders (“EOs”) and a fourth proclamation consistent with his pledge to “Unleash American Energy.” These Presidential actions, titled (1) Strengthening the Reliability and Security of the U.S. Electric Grid, (2) Protecting American Energy from State Overreach, (3) Reinvigorating America’s Beautiful Clean Coal Industry, and (4) Regulatory Relief for Certain Stationary Sources to Promote American Energy, seek to promote domestic oil, gas, and coal energy production. Each of these actions is discussed below.

Strengthening the Reliability and Security of the U.S. Electric Grid, EO 14262

This EO directs the Secretary of Energy to streamline emergency processes and to develop a uniform methodology for analyzing reserve margins across all regions of the bulk power system. The stated needs for the EO include aging infrastructure, increased need for electricity, and demand for energy use by datacenters.

Continue reading “Unleashing American Energy: Trump Administration’s Latest Executive Orders”

DOE Releases Draft Roadmap to Address Interconnection Challenges for Clean Energy Projects

Brett A. Snyder and Lamiya N. Rahman  ●

On October 25, 2023, the Department of Energy (“DOE”) released a draft roadmap addressing challenges to the interconnection of clean energy projects to the transmission grid. The roadmap, developed by the Interconnection Innovation e-Xchange (“i2X”),[1] identifies short-term (1–2 year), medium-term (2–5 year), and long-term (5+ year) solutions aimed at addressing barriers to connecting solar, wind, and battery projects to the grid and maintaining grid reliability.[2]

As the roadmap notes, interconnection requests have dramatically increased in the past decade, with 2,500 to 3,000 new requests a year, reflecting 400 to 600 GW/year of proposed capacity.[3] At the same time, constraints on transmission capacity and issues in the interconnection process have caused large backlogs, delays, and interconnection costs, resulting in a “more difficult and costly energy transition for ratepayers, utilities, and their regulators.”[4]

DOE has also issued a request for information (“RFI”) to seek feedback from interconnection stakeholders regarding the draft roadmap. Responses to the RFI are due on November 22, 2023.

Continue reading “DOE Releases Draft Roadmap to Address Interconnection Challenges for Clean Energy Projects”

In Order No. 2023, FERC Takes Step in Reforming Transmission Grid Policies by Enacting Generator Interconnection Reforms

Mark R. Haskell, Brett A. Snyder, Lamiya N. Rahman, and Jane Thomas

On July 28, 2023, the Federal Energy Regulatory Commission (“FERC”) unanimously approved Order No. 2023, a Final Rule designed to streamline the process by which generation resources can connect to the interstate transmission grid.

At a high level, the Final Rule substantially revises the current pro forma large generator interconnection procedures (“LGIP”) and agreement (“LGIA”) with the following updates: 

      • Replacing the current first-come, first-served process with a first-ready, first-served interconnection cluster study process.
      • Increasing the speed of interconnection queue processing by, among other things, imposing strict study deadlines and penalties on transmission providers.
      • Incorporating technological advancements into the interconnection process.

Order No. 2023 also makes changes to the small generator interconnection procedures (“SGIP”) and agreement (“SGIA”).

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Accounting for Change: FERC Proposes Accounting and Financial Reporting Reforms to Address Renewable Energy Assets

Mark R. Haskell, Brett A. Snyder, and Lamiya N. Rahman


The Federal Energy Regulatory Commission (“FERC” or “Commission”) recently issued a Notice of Proposed Rulemaking (“NOPR”) to address industry concerns that FERC’s current Uniform System of Accounts (“USofA”) does not adequately account for renewable energy assets. The NOPR, which was released during the last Commission open meeting, proposes the following four categories of amendments to the USofA, as well as conforming revisions to FERC’s accounting reports:

      • Creating new production accounts specifically dedicated for wind, solar, and other non-hydro renewable assets;
      • Creating a single dedicated functional class for energy storage accounts;
      • Specifying the accounting treatment of renewable energy credits (“RECs”) and similar instruments by codifying prior Commission guidance; and
      • Adding new dedicated accounts for hardware, software, and communication equipment within existing functions in the USofA.

Additionally, the NOPR requests feedback on whether the FERC Chief Accountant should issue accounting guidance related to hydrogen.

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Supreme Court Limits EPA’s Authority under the Clean Air Act

Margaret Anne Hill, Frank L. Tamulonis III, and Stephen C. Zumbrun ●


After seven years, three presidential administrations, and two appearances before the Supreme Court, the Obama Administration’s “Clean Power Plan” (“CPP”)—a Clean Air Act regulation designed to limit carbon emissions from existing coal-fired power plants (and later revised by the Trump-era “Affordable Clean Energy” (“ACE”) rule)—was struck down by the Supreme Court on June 30, 2022. See West Virginia et al. v. Environmental Protection Agency et al., No. 20-1530.

Relying on Section 111(d) of the Clean Air Act (“CAA”), the Environmental Protection Agency’s (“EPA’s”) CPP set a carbon emission limit that was essentially unattainable for existing coal-fired power plants. Consequently, EPA determined that the “best system of emission reduction” for carbon from these plants was to cause a “generation shift” from higher carbon emitting coal-fired sources to lower-emitting sources, such as natural gas plants or wind or solar energy facilities. Compliance with the CPP would have required a plant operator to: (1) reduce the amount of electricity the plant generated to reduce the plant’s carbon emissions; (2) build a new natural gas plant, wind farm, or solar installation, or invest in someone else’s existing facility and increase generation there; or (3) purchase emission allowances as part of a cap-and-trade regime. See West Virginia at 8.

Continue reading “Supreme Court Limits EPA’s Authority under the Clean Air Act”

FERC’s Final PURPA Rule May Significantly Alter the Landscape for Qualifying Facilities

Brett A. Snyder, Frederick M. Lowther, and Jane Thomas

On July 16, 2020, the Federal Energy Regulatory Commission (“FERC” or “Commission”) issued Order No. 872 (“Order”), a final rule that significantly revised its rules implementing the Public Utility Regulatory Policies Act of 1978 (“PURPA”). Congress enacted PURPA to reduce the country’s reliance on oil and natural gas by promoting “Qualifying Facilities” (“QFs”) that rely on alternative energy sources or more efficient generation. Since their promulgation, FERC’s regulations implementing PURPA have been largely unaltered. FERC opined that the energy industry has substantially evolved since PURPA was promulgated and that the final rule is necessary to address the changing landscape and more closely align with underlying congressional intent.

Among other things, PURPA requires electric utilities to offer to purchase electric energy from QFs, which are categorized as either small power producers or cogenerators. The rate that a QF may receive for energy must be a rate “not to exceed the incremental cost to the electric utility of alternative electric energy,” which is “the cost to the electric utility of the electric energy which, but for the purchase from such cogenerator or small power producer, such utility would generate or purchase from another source.” In other words, “the purchasing utility cannot be required to pay more for power purchased from a QF than it would otherwise pay to generate the power itself or to purchase power from a third party.” This is referred to as the utility’s “avoided cost.”

Rates for energy are generally categorized as either fixed or “as-available.” Fixed rates are generally fixed at the time of the contract or other legally enforceable obligation (“LEO”) between the QF and the utility and do not vary over the term of the contract or LEO. For example, many renewable energy projects, which generally produce only to sell into the market and rely on a fixed revenue stream for financing, often rely on fixed energy rates. Conversely, other types of generators, such as cogeneration facilities, might only sell into the market when they have excess energy and will take the prevailing price at the time of sale. This rate is referred to as an “as-available” energy rate and is variable. Rates for capacity are generally fixed at the time of contract or LEO. QF rates for energy and capacity are set by state commissions.

Order No. 872 follows a technical conference, notice of proposed rulemaking (“NOPR”), and multiple rounds of industry comments. The Order adopts most of the NOPR proposals and substantially alters the rules for QFs.

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D.C. Circuit Upholds FERC’s Rules Encouraging Electric Storage Participation in Wholesale Markets

Brett A. Snyder, Lamiya N. Rahman, and Jane Thomas


On July 10, 2020, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) denied challenges1 to the Federal Energy Regulatory Commission’s (“FERC” or “Commission”) final rule on electric storage participation in Regional Transmission Organization (“RTO”) and Independent System Operator (“ISO”) markets (“Order No. 841”).2

Order No. 841 aimed to facilitate the participation of electric storage resources (“ESRs”) in RTO/ISO markets, with the goals of removing barriers to participation by ESRs, increasing competition within RTO/ISO markets, and ensuring just and reasonable rates. Specifically, FERC ordered RTOs/ISOs to establish participation models that recognize the physical and operational characteristics of and facilitate participation by ESRs.3

An ESR for these purposes is defined as “a resource capable of receiving electric energy from the grid and storing it for later injection of electric energy back to the grid,”4 and encompasses storage resources located on the interstate transmission system, on a distribution system, or behind the meter.5 Order No. 841 declined to allow states to decide whether ESRs located behind a retail meter or on a distribution system in their state could participate in RTO/ISO markets.6 On rehearing, the FERC reiterated that it would not provide state opt-out rights, arguing among other things that “establishing the criteria for participation in the RTO/ISO markets of [ESRs], including those resources located on the distribution system or behind the meter, is essential to the Commission’s ability to fulfill its statutory responsibility to ensure that wholesale rates are just and reasonable.”7 FERC further concluded that it was not required under the Federal Power Act (“FPA”) or relevant precedent to provide an opt-out from ESR participation.8

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Breaking with Precedent, D.C. Circuit Holds FERC Lacks Authority to Issue Tolling Orders under the Natural Gas Act

Mark R. Haskell, Brett A. Snyder, and Lamiya N. Rahman

On June 30, 2020, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) struck down the Federal Energy Regulatory Commission’s (“FERC” or “Commission”) practice of issuing tolling orders that extend the time FERC may take to consider applications for rehearing of its orders under the Natural Gas Act (“NGA”). In a recent decision on en banc rehearing in Allegheny Defense Project v. FERC,1 the D.C. Circuit ultimately denied landowners’ and environmental groups’ challenges to FERC’s approval of the Atlantic Sunrise interstate natural gas pipeline on the merits. However, the court’s rejection of FERC’s tolling order practice—which breaks with longstanding precedent and creates a circuit split—significantly affects proceedings under the NGA and likely implicates FERC’s rehearing procedures under the Federal Power Act (“FPA”).

The NGA requires natural gas companies to obtain a certificate of public convenience and necessity from FERC in order to construct and operate an interstate natural gas pipeline.2 Once such a certificate is issued, the NGA confers upon certificate holders eminent domain authority to obtain necessary rights-of-way.3

The NGA further provides that before a party can seek judicial review of a FERC order, it must apply for rehearing of the order.4 Upon receiving such an application, the NGA provides FERC the “power to grant or deny rehearing or to abrogate or modify its order without further hearing.”5 If FERC does not act on the application for rehearing within 30 days, the application “may be deemed to have been denied.”6 Given the complexities inherent in its proceedings, FERC’s practice has often been to issue tolling orders intended to “act upon” the rehearing requests within the 30-day timeframe (i.e., to avoid the requests from being deemed denied), without making a substantive merits decision on such requests. Petitioners in Allegheny Defense Project argued that FERC’s tolling order process unfairly stalls judicial review of FERC’s pipeline approvals, while pipelines are permitted by FERC and district courts to proceed with construction and exercise eminent domain authority, respectively, in the interim.

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FERC Establishes Revised ROE Methodologies for Public Utilities and Pipelines

Mark R. Haskell, Brett A. Snyder, and Lamiya N. Rahman

On May 21, 2020, the Federal Energy Regulatory Commission (“FERC”) issued two orders addressing methodologies for analyzing the base return on equity (“ROE”) components of rates of FERC-regulated entities. In Opinion No. 569-A, FERC revised the methodology used under section 206 of the Federal Power Act (“FPA”) to evaluate the base ROEs of public utilities.1 In a separate Policy Statement, FERC clarified that the methodology established in Opinion No. 569-A applies, with certain exceptions, to natural gas and oil pipelines.2

Opinion 569-A

To change a public utility’s rates, including ROE, in a complaint proceeding under section 206 of the FPA, FERC must (i) make a finding that an existing rate is unjust and unreasonable; and (ii) determine a just and reasonable rate.3

FERC’s recent order arose from two complaint proceedings challenging the base ROE of Midcontinent Independent System Operator, Inc. (“MISO”) transmission owners.4 In November 2019, FERC issued Opinion No. 569, establishing a revised methodology to determine whether the existing base ROE was unjust and unreasonable under the first prong of FPA section 206, and if so, to establish a new just and reasonable replacement ROE under the second prong.5

Among other things, Opinion No. 569 relied on the discounted cash flow model (“DCF”)6 and capital-asset pricing model (“CAPM”)7 in the first prong of its FPA section 206 analysis, and declined to use two other models—i.e., the Expected Earnings8 and Risk Premium9 models. FERC adopted the use of ranges of presumptively just and reasonable ROEs that would be based on the risk profile of a utility or group of utilities. FERC gave equal weight to the DCF and CAPM models to establish composite zones of reasonableness. Absent evidence to the contrary, an ROE within the zone of reasonableness would be presumptively just and reasonable while an ROE outside this range would be presumptively unjust and unreasonable. FERC also relied on the DCF and CAPM models (and declined to use the Expected Earnings and Risk Premium models) in the second prong of its section 206 analysis in order to establish a new just and reasonable ROE.10

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