The Ruling That Will Determine Who Gets Power — and Who Waits
By Keith Reynolds | Publisher & Editor, ChargedUp!
On April 30th, 15 days from today, the Federal Energy Regulatory Commission is expected to finalize a rule that will reshape how data centers, industrial campuses, and large commercial loads connect to the U.S. transmission grid. The rulemaking has drawn nearly 200 comments from utilities, hyperscalers, steel manufacturers, ratepayer advocates, and state commissions. The core question: Who should pay for the grid infrastructure that large electricity users require?
This question's answer will determine project feasibility for large-load developments across the eastern interconnection for the next decade.
What the Rulemaking Covers
In October 2025, U.S. Department of Energy Secretary Chris Wright directed FERC to initiate a rulemaking to standardize the interconnection of large loads (defined as facilities over 20 megawatts) directly to the transmission grid. The rulemaking addresses how these facilities study, queue, and pay for grid connections. It represents FERC asserting jurisdiction over a domain that has historically been governed by a patchwork of state utility rules.
The 20-megawatt threshold is the first point of contention. Twenty megawatts is enough to power approximately 16,500 homes or a large university campus. It was once a meaningful threshold for a large industrial load. In the current market, data centers routinely exceed 200 to 300 megawatts, and the largest AI training clusters approach 1,000 megawatts. Many stakeholders have argued for a 50 to 100 megawatt threshold that would focus federal jurisdiction on system-shaping projects while preserving state authority over midsized manufacturers and facilities.
The second dispute is cost allocation. FERC's proposed framework adopts a 100 percent participant funding model: large loads pay the full cost of the network upgrades their projects trigger, rather than spreading those costs across all ratepayers through the regional transmission tariff. This is a sharp departure from the traditional socialized model of transmission infrastructure, in which upgrades are treated as shared public benefit and recovered across all customers.
Why the Cost Allocation Fight Matters to Real Estate
The participant funding model has a clean logic: if a data center developer builds in a constrained area of the grid and requires a new substation, transformer, or transmission line to serve it, the developer pays for that infrastructure rather than passing the cost to the residential customers in neighboring ZIP codes.
The policy has already been applied in specific transactions. Recent data center interconnection approvals have required project developers to pay for system upgrades, and, in some cases, substantially more. FERC Chair Laura Swett described this approach approvingly at a recent open meeting, referencing her family's experience with energy bills and pledging that the Commission's decisions would not come at the expense of ordinary consumers.
For commercial real estate developers, the participant funding model creates both a risk and an opportunity. The risk is straightforward: interconnection costs for large-load projects could be significantly higher than under the traditional socialized model, and those costs must be incorporated into project underwriting from the earliest feasibility stage. A project that pencils at a $200 million budget assuming traditional interconnection costs may not pencil if it is required to fund a $50 million substation upgrade.
The opportunity is equally clear. Buildings and campuses that can generate their own power through onsite solar, battery storage, or dedicated generation, can reduce or eliminate the transmission infrastructure they require and bypass interconnection queues entirely. The participant funding model creates a strong financial incentive for behind-the-meter generation that the traditional socialized model never provided.
The Colocation Question
One of the most consequential elements of the rulemaking addresses hybrid projects, including data centers or large industrial campuses paired with co-located generation or storage. The technical term is BYOP: bring your own power.
When a data center brings its own generation and connects to the grid primarily as a backup source, the interconnection analysis changes fundamentally. The facility's net draw on the transmission system is reduced, its upgrade requirements are smaller, and its queue position may be more favorable. FERC's proposed framework would study hybrid projects through a single, coordinated interconnection process rather than treating the generation and load as separate facilities. Stakeholders broadly support this approach.
Microsoft, which operates more than 400 data centers in North America, told FERC that studying load and generation together has the potential to speed up the interconnection process and reduce the scale and cost of grid system upgrades. The company also warned that if states do not allow large loads to take flexible end-use service or delay building power plants to meet data center demand, the entire federal effort could be counterproductive.
That warning points to the governance asymmetry that the rulemaking cannot fully resolve. FERC's authority runs to the transmission system. States retain authority over retail sales, utility service territories, and the siting of generation facilities. A standardized federal framework for transmission interconnection does not clear the local permitting and zoning hurdles that determine whether a data center — or the generation it needs — can actually be built.
What It Means for Planners and Developers
For planners, the FERC rulemaking is the upstream regulatory document that shapes the interconnection landscape their communities operate in. Communities with documented distributed energy frameworks in their comprehensive plans are better positioned in interconnection proceedings and have stronger negotiating leverage on infrastructure cost allocation with utilities. That is more than a theoretical advantage: it is the practical difference between a utility that treats a community as a planning partner and one that treats it as a load to be served.
For developers, there are three practical implications. First, underwriting any large-load project, such a data center, a logistics campus with significant EV charging, a mixed-use development with substantial electrical demand, should now include a specific line item for transmission interconnection costs under the participant funding model. Second, projects that include co-located generation or storage will have an increasingly favorable position relative to grid-only projects, and that advantage should be modeled in feasibility analysis. Third, projects in states where utility interconnection rules remain unclear or where large-load rules have not yet been updated to reflect FERC's framework will face additional uncertainty that should be priced into development timelines.
The April 30 deadline is real but not absolute in the sense that the Commission's final rule will require implementation by utilities across their individual tariffs. The rulemaking's practical effect on project timelines will develop over months, not days. What changes on April 30 is the regulatory foundation. Everything built on top of it follows from there.
