By Kennedy Maize
Reactions to the Federal Energy Regulatory Commission’s landmark action to streamline and coordinate the way artificial intelligence data centers connect to the interstate electric transmission grid are largely positive.
Politico headlined its account of the FERC actions: “’Not the old sleepy agency’: Energy regulator dives into fight over data center connections,”
The reactions begin with perhaps the most significant. Former FERC chairman and veteran Virginia electric regulator Mark Christie was skeptical of October’s proposal from Trump Energy Secretary Chris Wright to broadly sweep obstacles away from data center grid connections. That prompted the FERC action, although the commission’s move this month bore little resemblance the hard-line DOE proposal.
Republican Christie, a Trump FERC appointee and now director of the Center for Energy Law and Policy at William & Mary Law School, posted on Linkedin soon after the commission’s action, “FERC made three very smart strategic moves today on the large-load connection issue.” First, Christie said, the commission issued a series of “show work orders” to the operators of the interstate grid, where FERC has clear authority “Instead of proceeding on the proposed regulation from the Secretary of DOE…”
Next, Christie noted, FERC consciously avoided “non-RTO, state-regulated grid operators. Very smart move to stay within the RTOs and not wade into non-RTOs, because FERC jurisdiction over retail load customers in non-RTOs is virtually non-existent (or so one could argue and I and the states would).”
Last, said Christie, by working through the six regional independent system operators, “FERC has smartly decided not to force a ‘one size fits all’ regime on all transmission providers in the RTOs, much less the entire country.”
State regulators were also happy with FERC’s direction — away from the states — in its orders. Ann Rendahl, president of the National Association of Regulatory Utility Commissioners, the Washington lobbying group for state utility regulators, said, “We appreciate the Commissioners’ comments at today’s meeting recognizing the critical role of states and state regulators given the jurisdictional division of duties under the Federal Power Act.” Rendahl is a member of the Washington Utilities and Transportation Commission.
Rendahl also praised FERC’s “focus on reliability and affordability, noting the need for transparency in setting wholesale transmission rates, which has been a key issue raised by our members, as these costs are passed directly through to end-use customers.”
“Addressing the rapid influx of new large loads requires speed, clarity, and transparency, and FERC’s orders today make meaningful progress on all those fronts”
Advanced Energy United, based in D.C. and representing a group of companies that support energy efficiency, demand response, energy storage, solar, wind, hydro, nuclear, electric vehicles, biofuels and smart grid applications, also liked what they saw from FERC. Liberal Democratic California billionaire Tom Styer founded the group in 2011.
Managing Director Caitlin Marquis said, “Addressing the rapid influx of new large loads requires speed, clarity, and transparency, and FERC’s orders today make meaningful progress on all those fronts; FERC recognized that grid flexibility, advanced transmission technologies, and new co-located generating resources are critical to solving the challenge of accommodating large load.”
The Sierra Club, which filed its views during the notice and comment period, was also pleased with the result. The national environmental group said FERC’s action is “responsive to Sierra Club’s requests on several fronts, including protecting consumers from any costs incurred by large loads, codifying reliability safeguards, increased transparency, and prioritizing grid efficiency.”
Jessi Eidbo, a Sierra Club senior advisor, said, “As large loads like data centers reshape electricity demand, we’re encouraged that FERC took public concerns seriously. More than 4,000 Sierra Club members urged FERC to protect households from higher electricity bills and safeguard the health of communities and the environment, and FERC took notice.”
As this article was published, the Edison Electric Institute, the Washington lobby representing the nation’s investor-owned electric companies. Neither did the American Public Power Association nor the National Rural Electric Cooperative Association.
Returning to Mark Christie’s take on the FERC actions, he noted that the detailed responses to the show cause orders will be most revealing. “In particular, we need to see how prescriptive the requirements are that the RTOs are expected to meet. In particular, we need to see that data centers which co-locate with generators do not get to skip out on their full transmission costs.”
“Ultimately,” Christie wrote, “the policy issues of cost allocation and reliability must be paramount. As much as we lawyers like to debate (argue) jurisdiction, the end goal is reliable power at the least cost to consumers. Or should be.”
Coincidentally, the same day FERC unveiled its show cause orders (June 18), the Public Utility Commission of Texas approved new rules for large loads, specifically data centers, to connect to the Texas transmission grid proposed earlier by the Electric Reliability Council of Texas, the state’s grid operator. ERCOT, by design, is not subject to FERC jurisdiction, but faces many of the same issues as the jurisdictional transmission systems.
The Texas commission said, “A record number of large electric users are lining up to connect to the ERCOT grid including data centers, crypto mines, industrial facilities, and other major projects. Using the new ‘Batch Study’ process, ERCOT will group projects together to speed up the evaluation process, separate out speculative projects, and identify what new transmission infrastructure may be required.”
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