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⚡ THIS WEEK'S SIGNAL
FERC gave six grid operators sixty days to explain how they connect data centers. The deadline was August 17. Most of the country's grid did not answer it — they invoked a procedural pause and moved the real filing to November and December. The nationwide rule everyone spent the winter preparing comments for became six separate proceedings on six separate calendars. If you have been waiting for one federal answer on who pays, that is not what is being built.
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📰 MAIN STORY
The clock ran out on August 17.
In June we wrote that FERC had not picked winners, it had started a 60-day clock. That clock has now expired. On June 18, 2026, FERC issued six show-cause orders under Section 206 of the Federal Power Act — one each to PJM, MISO, SPP, CAISO, NYISO and ISO New England, and to their transmission owners — preliminarily finding their tariffs unjust and unreasonable for lacking clear rules on large-load interconnection. What matters procedurally is what FERC did not do. It struck the nationwide rulemaking item from that morning's agenda and opened six regional dockets instead, on the reasoning that regional proceedings move faster and carry less litigation risk than notice-and-comment. Speed was the argument. Fragmentation is the result.
Everyone in this is optimizing rationally. FERC wants speed to power without losing on appeal. The RTOs want to hold the pen: FERC explicitly encouraged them to respond with Section 205 filings rather than defenses, because a Section 205 proponent gets a more favorable standard of review. Writing your own rule beats having one written for you, and it is worth taking the pause to do it. The hyperscalers — Microsoft, Alphabet, Amazon, Meta — want a study product and a date, and are close to indifferent about which region supplies it. For them, six regional answers is not a coordination failure. It is a menu.
Here is the gap. The August 17 deadline was real for the regions that met it. For the rest it converted into a November or December deadline under a 90-day abeyance. Meanwhile the load does not pause. In San Jose, PG&E's exceptional-case agreement to energize Google's 250 MW campus at 230 kV has been pending at the CPUC since December 18, 2025, and was postponed again at the September 3 voting meeting — roughly nine months on one customer's advice letter. Microsoft's 90 MW SJC02 project a few miles away, approved in January, carries a proposed January 2027 operation date. The campuses are being built against construction calendars. The cost-allocation rules that decide who pays for the wires are being built against docket calendars. Those two calendars are not the same length, and only one of them has a contractor on site.
The specifics worth keeping. FERC reviewed more than 3,500 pages of comments in the ANOPR record before acting. The orders identify five reform categories: study and service procedures, cost-shift safeguards, co-location and behind-the-meter rules, flexible transmission service, and joint study of electrically proximate generation. Notably, the orders define a large load as peak demand above 50 MW connecting at above 69 kV — materially higher than the 20 MW floor in the Secretary of Energy's original ANOPR, which drew the loudest objections. The deadline ladder ran July 9 to intervene, July 20 for generation-adequacy reports, August 3 to request abeyance, August 17 to respond. Replies are due 30 days after each response: September 16 for dockets that filed on time, on or about December 15 for those that did not. MISO, which has seen data center capacity compound at roughly 43% annually since 2020, is on the later track. CAISO has targeted a Section 205 filing for November 16.
Scenario A: The November and December filings arrive as substantive Section 205 packages, and by mid-2027 the five reform categories have produced six regionally-worded versions of the same basic bargain — bring your own generation or accept first curtailment, and pay for the upgrades you cause. Transmission equipment suppliers and engineering firms are positioned for a firmer multi-year capex pipeline. Utility program managers finally get a defined study product to build a workplan against.
Scenario B: The late filings come back defending existing tariffs, or thin enough that FERC has to litigate six separate Section 206 records to conclusion. Divergence hardens into a durable siting arbitrage, with SPP and ERCOT reading as the fastest paths to energization and the slower regions absorbing the projects nobody else wanted. Cost-shift protection then varies by ZIP code, and a ratepayer's exposure depends on which grid operator their utility happens to belong to.
Watch this: September 16 — the reply deadline in the dockets that answered on time, and the last formal opportunity for consumer advocates to put objections on the record before FERC starts writing.
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🧾 DEAL DECODER
The instrument: the pro forma cost recovery agreement.
Not a PPA, not a special facilities agreement. This is the contract FERC's June orders direct the regions to create — a standardized three-party agreement among the grid operator, the transmission owner, and the large-load customer, governing who pays for network upgrades a single customer triggers.
Who signs what. The ISO or RTO, the transmission owner that builds, and the load. The point of making it pro forma is that terms stop being individually negotiated. Today, in most regions, they are.
Who fronts the capital. The transmission owner builds and carries the cost. The customer posts security or advances funds, then earns credits back as it takes service. Think of a tenant funding a landlord's build-out and drawing it down against rent, except the building is a 230 kV substation and the lease runs decades.
Who eats the loss. This is the whole fight. If the load never energizes, the crediting mechanism determines whether the unrecovered balance stays with the customer or lands in rate base with everyone else. FERC has asked for transparency into exactly that calculation.
The precedent. The next developer will ask for a cost cap, having seen one granted. Whoever files first sets the ceiling every subsequent applicant cites.
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⚡ QUICK HITS
Microsoft's San Jose Project Has a Date, Not Just an Approval. CPUC Resolution E-5439 approved four agreements supporting a 90 MW data center on Alviso-Milpitas Road, including a new 115 kV line from Los Esteros to Microsoft's Kaku substation and a dedicated redundant backup line. The filing proposed a January 2027 operation date, which makes it one of the few Mag 7 campuses in the West with a public energization target you can actually hold against a calendar. [CPUC Draft Resolution E-5439 · PG&E Advice Letter 7635-E]
ISO New England Wants Large Loads to Bring Their Own Generation. In its July 20 informational report, ISO-NE outlined new obligations for large loads including a bring-your-own-generation requirement and explicit measures against cost-shifting to existing customers. New England has the least urgent load problem of the six regions and is proposing among the strictest conditions, which tells you something about how cheap it is to write rules before the applications arrive. [Climate Solutions Legal Digest, July 27, 2026 · underlying filing: ISO-NE informational report, Docket EL26-72, FERC eLibrary]
MISO Took the Long Road, and It Has the Fastest Growth. MISO acknowledged its tariff does not provide a consistent or transparent framework for evaluating large loads, and its data center capacity has compounded at roughly 43% annually since 2020. It moved to the later filing track, which means the region adding load fastest will be the last to have binding rules. [Day Pitney, June 2026 · Akin, MISO show cause order]
SPP Is the Region FERC Told Everyone Else to Copy. FERC approved SPP's High Impact Large Load initiative in January 2026 and cited SPP's progress in the June orders as the model for regions with no comparable process. The orders direct other regions to follow SPP's lead in ways that work for them, which makes SPP's framework the closest thing to a default the reply record will be argued against. [FERC, April 16, 2026 · Baker Botts, June 2026]
A Commissioner Asked State Regulators to Get Involved. In his concurrence on the CAISO order, Commissioner LaCerte directly addressed state public utility commissions on large-load retail tariffs and signaled willingness to press the jurisdictional question further. Retail rates are where a household actually feels any of this, and that sentence is an invitation to state commissions to move before FERC decides how far its own authority reaches. [FERC, Commissioner LaCerte concurrence, Docket EL26-71 · full order, 195 FERC ¶ 61,214]
🧭 THE EXPOSURE MAP
If you hold equities. The segment structurally strengthened by a slower, more fragmented federal process is long-lead equipment and engineering services, because divergence does not reduce the volume of upgrades — it staggers when they are ordered. Regulated utilities with large-load pipelines carry the opposite exposure: capital plans built on assumed cost-recovery terms that six separate dockets have not yet fixed. The reporting events that would confirm or contradict this are Q3 earnings calls, where the question is whether large-load capex guidance is being reaffirmed or hedged pending docket outcomes.
If you run projects at a utility. Your interconnection studies are being written against tariff language that FERC has preliminarily found unjust and unreasonable. The question your organization probably cannot answer yet: for every large-load commitment with an energization date inside 36 months, which contract terms would have to be reopened if your region's Section 205 filing changes the crediting mechanism?
If you set or influence policy. The precedent established is procedural: FERC can pursue national reform through parallel regional proceedings rather than a rulemaking. The next venue is the reply record — September 16 for the on-time dockets, roughly December 15 for the rest.
If you pay a utility bill or buy AI compute. Nothing on your bill changes this month. The mechanism runs from these dockets into network upgrade cost allocation, then into retail rate cases or transmission riders at your state commission, then onto a bill — a path measured in quarters and years, not weeks. The honest read is that the decision determining your exposure is being made now and will reach you later.
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🔧 TOOL / RESOURCE OF THE WEEK
FERC eLibrary — the public docket system where every filing in these six proceedings lives, searchable by docket number. Utility project and program managers should pull their own region's docket now (CAISO EL26-71, MISO EL26-70, NYISO EL26-69, ISO-NE EL26-72) and read the proposed study timelines, because those are the numbers your 2027 workplan will inherit whether or not anyone forwards them to you. → https://elibrary.ferc.gov
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💬 CLOSING THOUGHT
I keep coming back to how ordinary the abeyance motion is. It is a routine procedural tool, used properly, by operators with legitimate reasons to want more time. Nobody did anything wrong. And the cumulative effect of six reasonable decisions is that the country's answer to who pays for the AI buildout now arrives in installments, from different rooms, on different dates. For optimism to hold here, the November and December filings have to converge on their own, without anyone requiring it.
Will six regional answers settle into one national floor by themselves?
