'not The Old Sleepy Agency’: Energy Regulator Dives Into Fight Over Data Center Connections

Big Tech, governors and the White House have leaned on U.S. energy regulators to do just one thing in 2026: Clean up the giant mess that’s keeping data centers off the power grid and frustrating American voters with rising utility bills.

The Federal Energy Regulatory Commission on Thursday stepped into the fray, asserting leadership over a fragmented U.S. energy system struggling to keep up with the costs and demands for electricity to power artificial intelligence.

The five-member commission with extraordinary power to shape interstate electricity markets voted unanimously to move swiftly toward policies that bring AI data centers more quickly onto the electric grid. And it directed the power industry to keep tighter controls on the ballooning cost of building energy infrastructure for AI companies.

“This FERC is not the old sleepy agency that it has been in the past. We can’t afford to be, and our country cannot afford for us to be,” FERC Chairman Laura Swett told POLITICO afterwards. “We are unified in protecting the American ratepayer.”

Energy Secretary Chris Wright in October sent a letter to FERC that kicked off an eight-month sprint by the agency to address mounting regulatory and political problems for data centers — including faster timelines for linking onto a grid.

In an interview at FERC headquarters in Washington, Swett talked about the immense pressure on FERC to act as AI has driven up projections of electricity demand.

“Giving a clear directive, I’m hoping, will calm the fears and have us all get down and get to work instead of wondering and worrying about hypotheticals,” Swett said. “And I do believe that the White House and DOE should be pleased about what we did."

Swett said technology companies with huge financial stakes in the outcome had come to her with concerns about how long they had to wait to hook onto the grid, and notes of caution about how far FERC might go to standardize electricity contracts.

“They told me, several of them, that their existing deal negotiations would be disrupted. And so we have heard all of those concerns,” Swett said.

“So I think the hyperscalers should have the confidence and comfort that this commission is very aware of their concerns," she said, "and they should be able to invest with comfort knowing that we are going to be good regulators."

FERC waded into questions that have loomed over the build-out of data centers across the United States, including who pays for multibillion-dollar grid upgrades, how quickly tech companies can tie onto the grid and the role of the federal government in a process traditionally left to state regulators.

The commission under Swett developed a strategy that gives FERC the option to assert more federal power, but it didn’t go quite as far as Wright had wanted. Swett sought to avoid the pitfalls of overreaching, setting off a tidal wave of litigation from states or undermining the goals of the Trump administration and the tech industry.

The commission on Thursday directed six regional electricity grids serving nearly two-thirds of the country to show FERC that they have plans in place to keep the massive costs for upgrading the grid to serve tech giants like Google, OpenAI and Amazon from making their way into household utility bills.

If the regional grid operators from Ohio to California can’t show they can both clear the way for more data centers and safeguard utility customers, FERC said it’s prepared to intervene directly in the power markets.

But the stakes also couldn’t be higher for tech giants and their investors whose biggest bets on the future revolve around AI. To make it all work long term, data centers need access to the power grid.

“FERC’s actions today are a win for ratepayers, grid reliability, and American competitiveness," said a statement from the AI semiconductor giant NVIDIA.

"By speeding the integration of large energy customers,” the company added, “FERC ensures these new loads help shoulder infrastructure costs, lowering rates for everyone while bringing new generation online alongside new demand."

The Data Center Coalition, which lobbies on behalf of major tech companies and other owners and operators of data centers, reiterated its support for policies that place the costs on large tech companies, not regular ratepayers. But the coalition encouraged “legally durable pathways” to speedy grid hook-ups.

Data centers that require enough electricity to power a city have triggered a public backlash, partly the result of double-digit increases to people’s utility bills starting last summer. Projections of record electricity demand tied directly to the data center boom contributed to the higher price of electricity, particularly in the East.

That sparked a response in March from the White House, which brokered a voluntary deal with the major tech companies to guarantee they would pay for their electricity and power themselves.

Meanwhile, Pennsylvania Gov. Josh Shapiro and state and federal lawmakers pushed for more protections for utility ratepayers in the power market PJM Interconnection, which serves 67 million people from Chicago to Virginia.

In Washington, Wright had urged FERC to assert more power to manage grid connections and divvy up costs in the major markets. FERC grappled with how far to push the limits of its jurisdiction — setting off a potential fight with state regulators.

Under the orders unveiled Thursday, FERC chose not to deliver a nationwide approach. Instead, grid operators have a few months to show they have a good plan for speeding up a years-long, drawn-out process for getting onto the power grid.

“They correctly treated each region as its own jurisdiction rather than a national once size fits all system,” said Sen. Kevin Cramer (R-N.D.), a former state regulator.

Where FERC lands on allocating costs — which are usually rolled into rates that everyone pays through their utility bills — matters to a utility industry that plans to spend more than $200 billion this year on capital upgrades, according to Fitch Ratings.

"By building on regional and state processes that are already driving progress, the commission is advancing our shared goals while supporting flexibility and innovation," said a statement from the Edison Electric Institute, which represents investor-owned utility companies.

"We see FERC's reforms as accelerating data center study timelines and offering new flexible (less expansive) transmission interconnection pathways — both actions benefit the speed-to-power push," John Miller, an analyst for TD Cowen, said in a note to clients after the FERC orders.

The commission has broad reach under the Federal Power Act to respond to problems in interstate power markets. But broad, assertive action out of Washington also invites litigation if it encroaches on state regulators whose role is to keep local utility rates under control.

“The design seems to target the core challenges on a region by region basis on a tight timeline," said former FERC Chair Neil Chatterjee, a Republican. "Faster and likely more legally defensible than a rule but seems to pursue the same desired outcome.”

Mark Christie, another former FERC chair, said in a social media post that each regional transmission organization “will no doubt come up with its own individual path forward” under the orders and “hopefully not be forced into a FERC straightjacket.” Christie, now the director of the Center for Energy Law and Policy at William & Mary Law School, had been particularly critical of Wright’s request to potentially assert more federal control over the grid.

Robert Gramlich, president of the consulting firm Grid Strategies, noted that FERC deviated from the approach that Wright wanted to take — a rule that would push deeper into the states' retail rate-setting terrain. Instead, Gramlich said, the commission went right up to the line of its jurisdiction.

Still, Allison Clements, a former FERC commissioner and current principal at 804 Advisory, said FERC, “probably with good reason,” punted Thursday on the “toughest set of jurisdictional questions” that would apply a new set of facts to the Federal Power Act in a way that hasn't been done before.

And she called the next weeks critical.

“The orders that came out today only represent the starting gun, and how these issues play out through the stakeholder processes will make-or-break the success of these proposed reforms,” she said.

Reporter Josh Siegel contributed to this report.