FERC's Large-Load Rulemaking and the Regulatory Wall Now Facing AI Data Center Power Procurement#
ERCOT is now tracking more than 438 GW of large-load interconnection requests, nearly 90% of them data centers, up from approximately 410 GW at ~87% data centers as of March 26, 2026. That queue is applications, not approved projects or committed capital — and the gap between queue MW and energized MW is the number your capital stack has to price, not the headline forecasts.
The regulatory response arrived in a single week. On June 18, 2026, FERC issued show-cause orders E-7 through E-12 addressing large-load interconnection, and the Public Utility Commission of Texas approved the rules for ERCOT's first gated review batch. FERC's formal rulemaking on large-load interconnection, Docket RM26-4, remains open. If you are procuring generators, transformers, switchgear, or gas turbines against a grid interconnection assumption, the procedural pathway now carries as much schedule risk as any long-lead item on your order book.
Key Takeaways
- RM26-4 is an active proceeding, not a rule. No binding obligations are in effect. Every co-location term sheet signed before it resolves carries revision risk.
- 438 GW queued, ~90% data centers in ERCOT alone — against an adjusted long-term forecast that counts new data center load at 49.8% of requested MW. Queue MW is not deliverable MW.
- Texas is running its own track. PUCT's Batch Zero process means ERCOT projects face state gating independent of anything FERC does.
- 13 of 23 NERC assessment areas face resource adequacy challenges over the next 10 years, with data centers named as the primary demand driver.
- Until a signed interconnection agreement exists, treat grid COD as a scenario. Size and permit behind-the-meter generation for at least critical IT load, and order long-lead equipment against the IA milestone, not the queue-application date.
What FERC's RM26-4 Rulemaking Actually Does — and Doesn't Do Yet#
FERC opened RM26-4 as a formal rulemaking proceeding governing how large loads interconnect to the interstate transmission system. The Commission characterized its June 2026 package as aggressive targeted action to speed large load integration — an acceleration initiative, not a restriction. That framing matters for how you read the risk: the direction of travel is toward faster integration under clearer rules, not toward blocking projects.
What is not yet true. No Notice of Proposed Rulemaking has been published under RM26-4 and no binding obligations are in effect. A NOPR will define the scope of any cost-allocation, study-process, or interconnection obligations, and comment periods and technical conferences precede any final rule.
The proceeding did not appear from nowhere. FERC held a commissioner-led technical conference on large loads co-located at generating facilities, examining whether such arrangements raise transmission planning and cost allocation obligations, and NERC convened an Emerging Large Loads Technical Conference on February 24–25, 2026 covering interconnection, reliability, and cost allocation. The record was building for eighteen months before the docket opened.
The Co-Location Show-Cause Orders: What E-7 Through E-12 Signal#
In June 2026 FERC issued a series of show-cause orders designated E-7 through E-12 related to large loads, and Commissioner Rosner addressed the Commission's concerns about co-location arrangements at the June 18 open meeting. The underlying PJM proceeding runs under Docket EL25-49, which specifically addresses co-location at PJM generators serving data centers running AI.
What this changes for procurement. Co-location structures that treat a portion of a generator's output as private supply — outside the capacity and transmission cost stack — are under active review. No ruling prohibiting co-location has been issued, and the show-cause orders do not themselves establish enforcement outcomes. They ask respondents to demonstrate why existing arrangements comply with the applicable tariff and Federal Power Act cost-allocation principles.
The practical consequence is narrow and specific: a co-location term sheet signed today is signed into an open docket. Price the revision risk, build reopener language, and do not assume the cost-allocation treatment you negotiate this quarter survives the final order.
NERC's Accelerated Large Loads Action Plan#
NERC filed an accelerated Large Loads Action Plan into the RM26-4 docket, putting reliability considerations for large-load interconnection under active review at the standards level. The plan is documented. Conversion of any resulting recommendations into binding reliability standards has not occurred.
This is a parallel track, and it matters outside PJM. FERC governs tariffs and cost allocation; NERC governs reliability standards that apply across the bulk power system. Ride-through behavior, protection coordination, and load modeling obligations for large computational loads would flow from the NERC track regardless of how the FERC dockets resolve. NERC's 2025 Long-Term Reliability Assessment identifies data centers as a primary driver of substantial peak demand growth across multiple regions and finds 13 of 23 assessment areas facing resource adequacy challenges over the next 10 years.
The Power Demand Numbers Regulators Are Actually Using#
The federal response is anchored in ISO/RTO filings that show a widening gap between announced demand and what planners will underwrite.
Grid Operator Load Forecasts Driving Regulatory Action#
| ISO/RTO | Key load forecast finding | Source document | Publication date |
|---|---|---|---|
| PJM | 2035 summer peak of 209,923 MW, up 55,779 MW over 10 years; 2030 summer peak raised 16,010 MW vs. prior report | 2025 Load Forecast Report | January 2025 |
| PJM | Near-term load lowered vs. the 2025 forecast through 2032 after adopting a load adjustment requiring firm commitments for near-term years | 2026 Load Report | January 2026 |
| PJM | Potential capacity shortfall flagged for the 2027/2028 auction period | 2027/2028 BRA Reserve Target Shortfall Report | February 2026 |
| ERCOT | Adjusted forecast reduces new data center load to 49.8% of requested MW; officer-letter load to 55.4% of request | Long-Term Load Forecast RPG | April 2025 |
| ERCOT | ~410 GW of large-load requests, ~87% data centers as of March 26, 2026; more than 438 GW, nearly 90%, by June | Large Load Update to House State Affairs | April 2026 |
| NERC | 13 of 23 assessment areas face adequacy challenges; data centers named primary demand driver | 2025 Long-Term Reliability Assessment | 2025 |
| EIA | Analysis indicating fossil generation could rise with faster-than-expected data center demand growth | Today in Energy | 2026 |
The operational read is that PJM and ERCOT have both moved from accepting large-load applications at face value to filtering them through firm-commitment or observed-behavior tests. That filter protects the resource adequacy math — and it is the point at which your individual queue position decouples from the headline aggregate. An individual position is not blocked by the whole 438 GW.
For context outside the regulatory filings, Goldman Sachs Research forecasts data center power demand reaching approximately 92 GW by 2027, roughly a 50% increase from 2025 levels at about 17% compound annual growth. That is a research forecast, not a planning commitment, and it should be treated differently from the ISO/RTO numbers above.
Texas Runs Its Own Track: PUCT Batch Zero#
On June 18, 2026 — the same day FERC issued E-7 through E-12 — the Public Utility Commission of Texas approved rules for ERCOT to begin reviewing an initial set of large-load interconnection requests, known as Batch Zero.
This is the answer to a question most developers get wrong. ERCOT is intrastate and largely outside FERC jurisdiction, so the co-location show-cause exposure that applies in PJM does not transfer directly. But that does not make Texas the low-regulation path — it makes it a different regulated path, with state-level gating on a queue that has grown faster than any other in the country. Both regions now filter. Only the filtering authority differs.
EPA's Air Permitting Constraint on Behind-the-Meter Generation#
If grid interconnection is a scenario rather than a schedule, behind-the-meter generation is the hedge. Every BTM configuration carries its own classification risk.
EPA maintains dedicated Clean Air Act compliance resources for data centers, confirming that data center emissions sit inside active regulatory scope rather than in a gap. More consequentially, EPA has clarified that emergency backup generators are subject to operating-hour limitations, and that exceeding those limits during non-emergency conditions can trigger New Source Review permitting obligations.
Read that as a hard constraint on the most common bridge-power plan. The specific hours applicable to any facility depend on that facility's permit conditions and equipment category — audit them before assuming an emergency-classified fleet can bridge a multi-month grid delay. The operationally correct answer, where a real bridge is needed, is to permit the bridge fleet as prime power, which is a different air permit pathway on a different timeline.
Equipment Categories and Timeline Reality#
Empirical grounding for the load side comes from LBNL's 2024 United States Data Center Energy Usage Report, the reference dataset regulators cite for U.S. data center energy consumption trends. On the supply side, EIA analysis indicates fossil generation could rise with faster-than-expected data center demand growth — the gap between clean-energy procurement intent and actual dispatch.
Behind-the-Meter Generation Options and Procurement Reality#
| Equipment type | Typical campus role | Regulatory classification risk | Lead time note | Key procurement trigger |
|---|---|---|---|---|
| Large-frame simple-cycle gas turbines | Prime or bridge power for full campus load | Air permit classification (major-source PSD vs. minor source); co-location scrutiny if sited at or near an existing generator | Longest of any category on this list; confirm against OEM slot availability | Order against signed EPC contract and confirmed air permit path, not queue position |
| Aeroderivative gas turbines | Fast-start bridge power, peaking | Air permit for prime operation; site NOx and CO limits | Shorter than large-frame; still a critical-path item | Confirm fuel supply agreement and emissions permit before deposit |
| Diesel reciprocating gensets | Emergency backup for critical IT load | EPA emergency-use limitations vary by permit classification and equipment category | Shortest of the generation categories; secondary market available immediately | Emergency-only classification requires operating-hour discipline; prime operation triggers a different permit |
| Gas reciprocating engines, prime rated | Continuous behind-the-meter power | Full air permit as a prime source; NSR and PSD applicability | Between aeroderivative and diesel | Air permit and fuel infrastructure precede the equipment order |
| Medium-voltage switchgear | Interconnecting BTM generation to campus distribution | Utility interconnection standards for parallel operation | Peer of the transformer on the critical path, not a downstream trade package | Order concurrent with the generator deposit |
| Power transformers | Campus and building service | None material at federal level | Among the longest in the electrical scope; see transformer lead times | Release with the switchgear order, against the IA milestone |
What Procurement Teams Should Do Before Year-End#
Classify your interconnection status honestly. A signed interconnection agreement with milestones is a commitment. A queue application is a scenario. If you do not have a signed IA, budget as if grid COD will slip and model the debt stack against a range rather than a point estimate.
Know which filter you are behind. PJM exposure runs through the co-location show-cause proceedings and RM26-4. ERCOT exposure runs through PUCT Batch Zero and SB 6 gating. Different authority, same effect on your date.
Audit the air permit envelope before the equipment order. If your site already holds a permit envelope, expand within it. If not, budget the NSR or PSD timeline as a critical-path item alongside the equipment. Sub-100 MW campuses have materially more BTM permitting flexibility than 500 MW-plus campuses, which trigger PSD major-source thresholds in most airsheds.
Check operating-hour history against permit caps. Emergency-classified engines used to bridge a grid delay can breach permit conditions faster than most operators track.
Default position: until RM26-4 resolves and the IA is executed, size and permit BTM generation to serve at least critical IT load, and order long-lead equipment against the IA milestone rather than the queue-application date.
Three procedural markers tell you whether the wall gets higher or lower: publication of the RM26-4 NOPR, resolution of the E-7 through E-12 show-cause orders, and whether NERC's Large Loads Action Plan converts to binding standards. Until those move, the discipline is straightforward — do not confuse a queue position with a commitment, an emergency permit with a bridge power authorization, or an order confirmation with an energized MW.
Run the sizing against your density profile and redundancy configuration in the power system configurator, and track docket movement in the large load interconnection guide.
FAQ: FERC Large-Load Rules and Data Center Power Procurement#
What is FERC's RM26-4 and how does it affect my data center's power procurement?#
RM26-4 is an active FERC rulemaking proceeding governing how large loads interconnect to the interstate transmission system. No NOPR has been published and no binding obligations are in effect. FERC has described the initiative as action to speed large load integration rather than to restrict it. The practical effect today is revision risk: any co-location or large-load interconnection structure signed while the docket is open may need to be restructured once a final rule issues.
How large is the AI data center power demand problem for grid operators right now?#
ERCOT is tracking more than 438 GW of large-load requests, nearly 90% data centers, up from ~410 GW in March 2026. Those are applications, not approved projects. ERCOT's own long-term forecast counts new data center load at 49.8% of requested MW based on observed behavior, and PJM's 2026 forecast now requires firm commitments for near-term years. NERC's 2025 LTRA finds 13 of 23 assessment areas facing adequacy challenges, with data centers the primary driver.
Can I legally run my on-site diesel generators to fill the gap while waiting for grid interconnection?#
Only within the operating-hour and use-condition limits of your specific air permit. EPA has clarified that emergency backup generators carry operating-hour limitations and that exceeding them in non-emergency conditions can trigger New Source Review obligations. Limits vary by permit classification and equipment category, so the applicable hours are a function of your permit rather than a general rule. Bridging a multi-month grid delay with an emergency-classified fleet can breach permit conditions; permitting the bridge fleet as prime power is the compliant path.
What equipment has the longest lead times for AI data center power infrastructure?#
Large-frame simple-cycle gas turbines sit at the long end, followed by power transformers and medium-voltage switchgear, with diesel gensets the shortest of the generation categories and the most available on the secondary market. Current verified figures by class are tracked in the transformer lead times guide rather than quoted here, because published OEM lead times move quarterly and a stale number is worse than none. The more important point is that equipment lead time is no longer the binding constraint on most projects — permitting and queue position are co-equal or greater.
Is the FERC co-location risk limited to PJM, or does it apply in Texas and other regions?#
The co-location show-cause exposure centers on PJM under Docket EL25-49, and ERCOT is intrastate and largely outside FERC jurisdiction — so that specific risk does not transfer. Texas is not the unregulated path, though. On June 18, 2026, PUCT approved rules for ERCOT's Batch Zero large-load review process, creating state-level gating on the largest queue in the country. Both regions filter; only the filtering authority differs.