# Federal Energy Regulatory Commission (FERC) The independent federal agency that regulates the interstate transmission of electricity, natural gas and oil, and the wholesale sale of electric power. Successor to the Federal Power Commission, created in 1977 when the [[Department of Energy]] was established. Five commissioners, no more than three from one party, confirmed by the Senate to staggered five-year terms. It is funded by fees recovered from the industries it regulates rather than by net appropriations. > [!important] The jurisdictional line that decides everything > FERC regulates **wholesale** power sales and **interstate transmission**. It does **not** set the retail rates that appear on a household electricity bill — those belong to state [[Public Utility Commission]] bodies. Almost every fight about who pays for the grid is a fight about which side of that line a given cost falls on. FERC can decide what a transmission owner may charge a data center for network upgrades; only a state can decide whether the leftover ends up in a residential rate class. ## What FERC actually controls - **Wholesale rates and transmission tariffs.** Under the [[Federal Power Act]], rates must be "just and reasonable" and not unduly discriminatory. Section 205 governs utility-initiated filings; Section 206 lets FERC find an existing tariff unjust and order it changed, with FERC carrying the burden of proof. - **Open-access transmission.** FERC requires transmission owners to offer service to all comers on non-discriminatory terms, the doctrine that made competitive wholesale markets possible. - **RTO and ISO market design.** The rules of the [[Capacity Market]], the energy market, and the [[Interconnection Queue]] in every [[Regional Transmission Organization]] are FERC-jurisdictional tariff provisions. - **Hydropower licensing, interstate gas pipeline certificates, LNG terminal siting, and reliability standards** enforced through NERC. It does **not** control generation siting, retail rates, retail service territories, or which resources a state chooses to build. That reservation to the states is statutory and is the reason FERC's 2026 large-load intervention stopped where it did. ## The 2026 large-load intervention The single most consequential thing FERC has done to the economics of the AI buildout. **Origin.** On 2025-10-23 the Secretary of Energy invoked Section 403 of the DOE Organization Act to direct FERC to open a rulemaking on the interconnection of large loads, arguing that FERC held jurisdiction over loads connecting directly to the interstate transmission system. DOE's proposed framework covered facilities of 20 MW or greater and recommended assigning 100% of network upgrade costs to the interconnecting load. FERC opened Docket RM26-4-000 and accumulated over 3,500 pages of comment from roughly 175 parties. **The action.** On 2026-06-18, rather than issue a generic national rule, FERC issued **six show-cause orders under Section 206** — one for each jurisdictional RTO and its transmission owners — requiring each to demonstrate that its existing open-access tariff is just and reasonable for large-load interconnection, or propose changes. The generic RM26-4 docket was left open for possible later action on non-RTO regions. **The threshold.** FERC defined a large load as a single-site commercial or industrial customer, not part of a co-location arrangement, with **peak load of 50 MW or greater interconnecting above 69 kV**. Note this is more permissive than DOE's proposed 20 MW. **The five reform areas.** | Area | What FERC directed | |---|---| | Study process | Clear application and readiness rules, escalating deposits to deter speculative requests, studies completed in 60–90 days, and evaluation of alternative transmission technologies with an explanation if they are not used | | Cost transparency and recovery | A pro forma cost recovery agreement requiring the customer to make a minimum financial contribution to the transmission owner's revenue requirement, secured by credit support sized to the requested megawatts | | Co-location | Dedicated expedited study processes for generation serving "electrically proximate" load, defined as within two buses or no more than two substations | | New transmission services | Interim non-firm service while upgrades are built, plus firm and non-firm contract demand services tailored to large loads | | Flexible loads | Terms for large loads able to curtail during system stress, with control and protection equipment at the customer's expense | **The behind-the-meter finding.** FERC determined that allowing large loads to net on-site generation against their demand in order to reduce wholesale transmission charges is **unjust and unreasonable**, and directed grid operators to set a strict megawatt materiality threshold on netting. It further directed that co-located load pay for regulation and black start service on a **gross demand basis** even when it withdraws nothing from the grid — the reasoning being that co-located load still relies on grid stability. See [[Behind-the-Meter]]. **Deadlines.** Informational reports on generation adequacy within 30 days; abeyance requests within 45; substantive responses within 60, with 30 days for parties to comment afterward. **What it did not do.** FERC expressly declined to assert new jurisdiction over large-load interconnection, and it did not address the generation shortfall itself. Chairman Laura V. Swett said "free riding" by data centers is not an option, but the orders leave the primary tools for preventing retail cost-shifting — creating new rate classes, assigning upgrade costs in retail tariffs — in state hands. Commissioner David A. LaCerte warned that the Commission "will not hesitate" to exercise the full extent of its transmission jurisdiction "if our hand is forced." ## Why it matters for this vault FERC is the clearest live case of an obscure technical regulator becoming a distributive institution. The choice between a Section 205 rulemaking and six Section 206 show-cause proceedings is a procedural detail that determines who bears the burden of proof, how fast reform arrives, and whether the outcome is uniform or regional. The choice of a 50 MW threshold instead of DOE's 20 MW decides how many facilities escape the regime entirely. None of this is legible as politics, and all of it allocates billions. Compare [[Metric Capture]] and [[Regulatory Capture]] for the general pattern of contested choices hidden inside technical form. ## See Also - [[Federal Power Act]] — the statute, and the Section 205 / 206 / 202(c) distinction - [[Regional Transmission Organization]] — the entities FERC regulates - [[Capacity Market]] — the FERC-approved auction where large-load cost shows up first - [[Public Utility Commission]] — the state counterpart on the other side of the jurisdictional line - [[The Quest for 90 Gigawatts]] — the rolling news log this agency now sits at the center of