In this episode of the Data Center Counsel podcast, Jared Berg and Bryan Clark are joined by Josh Robichaud for a discussion of the Federal Energy Regulatory Commission (FERC) in data center development.
Josh explains FERC’s role in regulating wholesale power markets and interstate transmission through regional transmission organizations and independent system operators, while states maintain authority over generation siting and retail electricity sales. The discussion also highlights emerging policy reforms, including a US Department of Energy directive asking FERC to consider standardized processes for large-load interconnections and approaches to allocating grid upgrade costs associated with new data center demand.
Episode Highlights
[2:14] FERC’s Role in Power Markets and Transmission Oversight: Josh explains where FERC’s authority begins and ends with respect to the electricity system. He notes how FERC regulates wholesale electricity sales and interstate transmission, while states retain authority over generation siting, distribution systems and retail electricity service.
[5:03] Large Loads and the Growing Pressure on Interconnection Systems: The discussion turns to the rapid growth of data centers and other energy-intensive facilities. Jared and Josh explain that existing interconnection procedures, originally designed primarily for generation projects, are now struggling to accommodate the scale and pace of large-load requests entering regional transmission systems.
[13:24] DOE’s Proposed Reforms to Address Data Center Interconnection: Josh describes how the Department of Energy has directed FERC to consider reforms through an Advanced Notice of Proposed Rulemaking (ANOPR). These reforms would standardize the interconnection process for large loads, establish financial commitments and potentially allow expedited interconnection when developers bring co-located generation alongside their data centers.
[22:21] Cost Allocation and the Risk of Socializing Infrastructure Costs: Bryan highlights concerns about how the cost of transmission upgrades required for new data centers will be allocated. The group discusses whether these costs should be borne primarily by large-load developers or socialized across the broader rate base, highlighting the tension between attracting investment and protecting existing ratepayers.
[30:03] PJM Proceedings and New Transmission Service Structures: Josh explains recent proceedings involving Constellation Energy and PJM Interconnection. FERC directed PJM to develop new transmission service options — including firm and non-firm contract demand service — to allow data centers and other large loads to interconnect more quickly while maintaining reliability across the transmission network
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The opinions expressed in this podcast are those of the speakers and do not necessarily reflect the viewpoint of their institutions or clients.
