On June 18, 2026, FERC issued show-cause orders to all six of the nation's major grid operators, directing them to justify or reform the rules governing how data centers and other large energy users connect to the electric grid. Grid operators have 60 days. That deadline falls in August. [1]

This paper tracked how FERC launched the data-center load question through two successive instruments: first a technical conference on forecasting methodology, then a 30-day generation readiness clock for large loads. The cost-allocation ruling is the third instrument, and the most consequential for the people paying the bills. FERC told six regional transmission organizations: you may not spread hyperscaler infrastructure costs across ordinary ratepayers. Show your rules, and if they permit that cost shift, fix them. [2]

The August window in which this promise arrives is also the window in which ratepayers are already paying emergency prices. During the June 30 - July 3 heat wave, day-ahead settlement prices on the PJM Western Hub reached $1,222 per megawatt-hour. [3] Residential customers on variable-rate plans — the customers FERC's order is designed to protect — pay those prices in real time. The regulatory promise and the operating emergency are running simultaneously, in opposite directions.

What the FERC order requires

FERC's show-cause orders define five areas of possible tariff reform: transmission service processes, cost-allocation mechanisms, co-location arrangements, flexible load services, and generation readiness for large loads. [2] The cost-allocation section is the one with direct ratepayer consequences. FERC found that existing rules in several grid regions allow infrastructure upgrades required by a large new data-center load to be socialized across all customers rather than charged to the entity that created the need. [2]

The order does not ban that cost shift immediately. It requires each grid operator to either justify the existing rule or file a proposed reform. If a grid operator's justification is insufficient, FERC can order a specific tariff revision. That process takes time. The August deadline is for the justification or proposal, not for the final tariff reform.

During that interval — between now and when any new tariff takes effect — the existing cost-allocation rules remain in operation. Data-center interconnection costs that current rules allow to be socialized will continue to be socialized. Ratepayers will continue to pay them alongside the day-ahead emergency prices that the June heat wave and PJM's record demand produced. [3]

The gap between FERC and PJM

PJM has separately asked state public utility commissions to develop their own rules for allocating reserve-margin costs to hyperscalers. Those state rules do not exist. PJM cannot, under current federal-state jurisdictional arrangements, compel states to act on the timetable that the grid emergency requires. [1]

The result is a regulatory gap: FERC addresses interconnection costs at the federal level, state commissions address rate design at the state level, and the June 30 - July 3 emergency demonstrated that the gap between those processes is where ordinary ratepayers currently live. PJM dispatched data-center campuses to diesel backup; the day-ahead settlement price hit $1,222/MWh; residential customers on variable rates received those prices on their July bills. [3] FERC's 60-day deadline will produce tariff reform proposals. The July bills will have arrived before those proposals are final.

Coverage of the FERC order has been accurate on the facts. [1] [2] What it does not yet capture is the simultaneity: a federal regulator ordering ratepayer protection at the same time ratepayers are paying emergency prices under rules that the order has not yet changed. That gap is the paper's story.

-- DARA OSEI, London