In light of the unprecedented projected spike in demand for electricity driven by data centers, manufacturing and industrial development, federal and state regulators are poised to act in 2026 to develop rules to address reliability, resource adequacy, process and cost allocation issues related to the integration of new large end users. Building on actions taken in 2025, the Federal Energy Regulatory Commission (FERC), regional transmission organizations (RTOs), independent system operators (ISOs) and some states are expected to take significant steps to address the impact of these large end users on the electricity grid.
Read on to learn about recent developments and key actions/developments anticipated in 2026 affecting generators and large loads.
Nationwide Actions Impacting Resource Adequacy
DOE/FERC Rulemaking Proceeding: Interconnection Advanced Notice of Proposed Rulemaking (ANOPR)
Where it started:
- Following a set of executive orders issued by President Donald J. Trump focused on energy and AI development, in October 2025, the Department of Energy directed FERC to issue an ANOPR related to the interconnection process, reliability issues and cost allocation associated with interconnection of large loads to the electric transmission system, including under co-location arrangements (i.e., where load and generation are located together or nearby). Interested parties filed over 230 initial and reply comments. Read here for an overview of the ANOPR’s 14 proposed principles. [i]
Where it’s going:
- DOE directed FERC to take “final action” on the matter by April 30, 2026, which likely will mean issuance of a final rule. At the December 2025 FERC meeting, when acting on the PJM Interconnection LLC matter (described below), all FERC commissioners made clear that this issue is a priority for FERC. Given that a Notice of Proposed Rulemaking has not yet been issued, it will be difficult for FERC to issue a final order that incorporates comments from interested parties and the public by the DOE’s requested deadline of April 30, 2026. In response to a question at a hearing of the House Energy and Commerce Committee on Feb. 3, 2026, Chairman Laura Swett implied that with so many comments in the ANOPR docket, it might take some time for FERC to issue an order. Any final rule will likely include compliance directives to transmission providers requiring changes to their open access transmission tariffs to effectuate the final rule.
Proposed Federal Legislation: Decentralized Access to Technology Alternatives (DATA) Act of 2026
Where it started:
- Sen. Tom Cotton introduced the DATA Act in the U.S. Senate in January 2026 to exempt Consumer-Regulated Electric Utilities (CREUs) — privately owned electric generation and supply systems that sell power at retail to eligible on-site customers and are physically islanded from the grid — from all federal regulation. [ii] This legislation, if enacted, would facilitate state laws that permit CREUs. There is a growing effort to enact CREU legislation at the state level, which likely would conflict with state-granted utility franchises. Importantly, the DATA Act does not provide any independent federal authority to establish CREUs in the states.
Where it’s going:
- The DATA Act will likely be considered by the Senate Energy and Natural Resources Committee; but a markup by the committee has not been scheduled at the time of publication. Though the nature of completely islanded generation and load suggests that such arrangements would not represent the sale and transmission of electricity in interstate commerce subject to the Federal Power Act, the DATA Act affirms such interpretation and prohibits FERC from regulating a CREU’s rates, transmission and interconnection. Furthermore, the DATA Act would exempt CREU facilities from FERC, NERC and DOE reliability requirements, as well as compliance with certain corporate ownership requirements under FERC jurisdiction. As noted above, the DATA Act does not provide any independent federal authority to establish CREUs in the states; but it does provide developers of such systems under state law with federal regulatory certainty, which could incentivize additional development.
Regional Developments: RTO/ISO Proposals to Address Large Loads
Most regions took some form of action related to large loads in 2025, and each region has bigger plans in 2026 — either to continue implementing proposals adopted in 2025 or to propose new ones.
PJM Interconnection, LLC
Co-Located Load Litigation
- Where it started:
- PJM was at the forefront of the debate on how co-located load and generation arrangements should be treated, dating back to stalled stakeholder processes and FERC proceedings filed in 2024 related to a co-location arrangement at the Susquehanna Nuclear Station (Docket No. ER24-2172-000). On Dec. 18, 2025, FERC issued an order as part of a consolidated order to show cause and complaint proceeding directing PJM through two separate compliance filings. PJM was to revise its tariff to provide three new transmission service types designed to give flexibility to co-located generation and load arrangements and revise interconnection procedures to accommodate co-located loads (PJM Co-Location Order). FERC also instituted a paper hearing related to the new transmission service types.
- On Jan. 20, 2026, PJM submitted an informational report and the first of two compliance filings implementing revisions to its tariff. In addition, several parties requested rehearing of FERC’s order, which signals potential for appeals.
- Where it’s going:
- FERC will consider the pending rehearing requests as well as PJM’s initial compliance filing and informational report in early 2026, with potential for appeals of the order also likely filed in 2026.
- PJM’s second compliance filing (which is anticipated to contain the bulk of the required tariff revisions) is due Feb. 24, 2026. PJM’s initial brief in the paper hearing proceeding is due Feb. 23, 2026, responses are due March 25, 2026, and replies are due April 24, 2026.
- Although the PJM Co-Location Order is specific to PJM and its tariff, it is possible that some of the compliance directives will become a blueprint for both the Interconnection ANOPR currently before FERC, as well as a possible future transmission rulemaking proceeding, in which similar reforms are likely to be proposed and ultimately required on a more uniform basis.
Critical Issue Fast Path (CIFP) Stakeholder Process
- Where it started:
- Concurrently with the co-location litigation, PJM initiated its CIFP stakeholder process to address several issues, including (1) a new load forecasting process that includes additional state commission review before load forecasts are finalized; (2) a new price response demand product; (3) revisions to PJM’s “backstop” reliability mechanism; and (4) a new expedited interconnection track that would expedite interconnection of certain projects.
- PJM stakeholders were unable to reach consensus on the proposal (and several competing proposals) at a meeting in late November.
- Where it’s going:
- In PJM’s Jan. 20, 2026, Informational Report required under the PJM Co-Location Order, PJM updated FERC on its CIFP process, including estimated timelines for each of the anticipated CIFP improvements, ranging from January 2026 to the end of the year.
- Each anticipated future improvement is likely to significantly impact how large loads interconnect and participate in PJM.
White House and 13 Governors Issue ‘Statement of Principles Regarding PJM Reform’
- Where it started:
- On Jan. 16, 2026, the U.S. Secretaries of Interior and Energy and 13 governors representing PJM states signed a Statement of Principles Regarding PJM Reform to address reliability concerns, capacity shortfalls and rising prices borne by customers. The principles call for PJM to hold a special capacity auction (Reliability Backstop Auction) to secure new electric generation with 15-year contracts in hopes of supporting $15 billion in new investment. The Principles also call for improved load forecasting; accelerated interconnection studies; a “return to PJM Market Fundamentals” (meaning reform to the capacity market to ensure long-term viability and control costs); and for state PUCs to develop rate structures to make sure load serving entities allocate their share of capacity costs through the Reliability Backstop Auction to new data centers.
- The same day, the PJM board issued its own decisional letter setting forth similar concepts, including improved load forecasting, “bring your own” new generation, an expedited interconnection track and immediate initiation of backstop procurement.
- Where it’s going:
- PJM and its stakeholders will need to consider the Statement of Principles and address many of the concerns raised therein, including how they align, or differ, with the PJM board’s own proposal. The political pressure on PJM to address reliability and costs concerns could overcome any arguments regarding “market fundamentals.”
Market Monitor Complaint to Limit PJM’s Ability to Add Large Load Without Corresponding Generation
- Where it started:
- On Nov. 25, 2025, the PJM’s Independent Market Monitor filed a complaint at FERC seeking an order finding that PJM’s authority to add large new data center loads was limited to where such load could be served reliably, meaning that there is sufficient capacity and transmission.
- Where it’s going:
- Protests and comments to the complaint were filed mid-to-late December, but FERC has not yet acted on the filing.
Southwest Power Pool (SPP)
- Where it started:
- SPP filed, and FERC accepted, subject to a ministerial compliance filing, aproposal that would clarify the study, interconnection, registration and other requirements applicable to High Impact Large Loads (HILLs) in SPP. [iii] The revisions are intended to provide a more defined process for large loads interconnecting with SPP to follow, while maintaining system reliability.
- Where it’s going:
- SPP’s revisions went into effect Jan. 15, 2026, and will apply to load service requests by Transmission Customers or Network Customers on or after the tariff revisions effective date.
- Although the filing was generally supported by most commenters, some supported narrow revisions that could form the basis of a request for rehearing. Parties seeking rehearing of FERC’s order accepting the proposal must do so by Feb. 13, 2026.
Electric Reliability Council of Texas (ERCOT)
- Where it started:
- In 2025, the Texas Legislature passed and the Public Utility Commission of Texas (PUCT) began to implement SB6, a comprehensive bill related to interconnection of large loads in Texas (described in more detail here). The PUCT established five parallel proceedings to implement the bill: (1) addressing net-metering arrangements with existing behind-the-meter generation (Project No. 58479); (2) addressing large-load forecasting (Project No. 58480); (3) addressing large load interconnection standards (Project No. 58481); (4) addressing reliability and demand reductions (Project No. 58482); and (5) transmission cost allocation (Project No. 58484).
- Where it’s going:
- The current implementation schedule set forth by the PUCT anticipates that currently proposed rules related to net-metering arrangements and large-load forecasting will be adopted in early 2026.
- Other rulemaking proceedings addressing large load interconnection standards, reliability and demand reductions, and cost allocation are also scheduled to be issued later in 2026.
- Finalization of the rules in 2026 will provide additional certainty for large loads interconnecting in ERCOT, which largely operates outside of FERC’s jurisdiction.
State-Level Initiatives That Could Overlap With Federal Requirements
States, including those that do not currently have significant data center activity, are increasingly taking steps to address large load growth. The trend is growing nationwide, with two states expected to act early this year.
Delaware
- Where it started:
- The Delaware legislature introduced Senate Bill 205, which would implement a “certificate to operate” requirement for entities seeking to use 30 MW or more of electricity and interconnect to the PJM transmission grid. Read here for more of the details of Senate Bill 205. Concurrently, the DE Public Service Commission paused all interconnection of large load in Delaware while it requires the utility to adopt a new large load-specific tariff.
- Where it’s going:
- SB 205 was assigned to Delaware’s Environment, Energy & Transportation Committee, which will hold a hearing in late January to consider the bill. If adopted, new large load developers will have an additional state approval hurdle before commercial operations. It remains to be seen whether PJM’s actions resulting from the PJM Co-Location Order or FERC’s ANOPR will impact Delaware’s proposal.
- A decision in the large load tariff docket (DE PSC Docket No. 25-0826) is expected by July 2026. If the large load tariff is adopted, Delaware will join several other states seeking to regulate large loads and their impact on retail ratepayers through similar large load tariffs.
Pennsylvania
- Where it started:
- Under recently enacted legislation, the Pennsylvania Public Utility Commission (PA PUC) is required to “investigate the methodologies, dates and assumptions used by [Pennsylvania] utilities when developing forecasts submitted to PJM” and “coordinate with PJM so that PJM forecasts are incorporated into regional planning on a fair, accurate and non-duplicative basis.” [iv]
- Where it’s going:
- As of the date of publication, the PA PUC has not initiated a proceeding to implement the new law and therefore is not clear at what point in the existing forecasting process the PA PUC might seek to review the utilities’ forecasts, or to coordinate with PJM on the same. It is possible the review could be conducted in addition to the contemplated state review process PJM seeks to introduce as part of its CIFP proposal, which would allow state commissions to review and provide input on forecasts before they are finalized.
McGuireWoods continues to monitor these and other proceedings related to large loads. For questions, contact the authors or a member of the Federal Energy Regulatory Commission team.
[i] All initial and reply responses can be found in FERC’s Docket No. RM26-4-000.
[ii] Specifically, the DATA Act would exempt CREUs from Federal Power Act (FPA) requirements, North American Electric Reliability Corporation (NERC) Reliability Standards, Public Utility Regulatory Policies Act of 1978 (PURPA) regulations and Public Utility Holding Company Act of 2005 (PUHCA) requirements, among others.
[iii] Under the revisions, a HILL is defined as a new or increased commercial/industrial load 50 MW and above, if connecting above 69 kV, or 10 MW and above, if connecting at or below 69 kV. The revisions clarify the tariff processes a HILL must follow to be studied by SPP, and also create an optional, expedited process to interconnect generation dedicated to serving a HILL, including a new, separate kind of interconnection service and a special generator interconnection agreement.
[iv] Under the new requirements, enacted as part of a larger state budget bill, the PA PUC is required to “review and audit specific large-load interconnection requests to ensure that only projects with a high likelihood of development are included in a forecast[.]” The PA PUC may promulgate any necessary guidance or rules to implement the requirements, and must report back to the legislature annually on June 30 regarding implementation.