In a striking illustration of how fragile grid balance can be, two years ago lightning struck a high-voltage transmission line in Dominion Energy's Virginia territory. Sixty data centers simultaneously dropped off the system, relying on backup power and causing a sudden loss of 1,500 megawatts in demand. Grid operators scrambled to reduce voltage levels before a dangerous spike could occur.
That close call — and a pattern of similar incidents across the country — has finally prompted action. The Federal Energy Regulatory Commission on Thursday issued sweeping orders requiring the nation's six major grid operators to propose reforms within 60 days for how data centers and other large customers connect to the electric grid.
The move comes after Secretary of Energy Chris Wright ordered FERC last October to address the unprecedented energy demands straining power supplies. The wholesale energy market overseen by these regional operators — including PJM Interconnection, the Midcontinent Independent System Operator, and ERCOT in Texas — serves roughly 200 million customers across two-thirds of the United States.
"This product is not as ambitious as what Secretary Wright asked them to do," said Nick Guidi, a senior attorney for the Southern Environmental Law Center. "I think they responded in a way that makes sense for traditional FERC activity, in a way that seems like it has some pluses and minuses."
The order aims to expedite connections between large customers and utilities while adding transparency to the ratemaking process and preventing energy costs for data centers from being shifted to residential ratepayers. Grid operators will also examine how to handle co-location arrangements, where data centers are built directly at or near power plants, and "behind-the-meter" supplies, where facilities generate their own power.
Within 30 days, each grid operator must submit a detailed report on how it will ensure adequate generation exists to serve both existing and new large loads. The order allows operators to define what constitutes a "large load" — many states currently use a 100-megawatt threshold, though that could shift as more facilities connect.
In Texas, ERCOT reported five loss incidents exceeding 100 megawatts from October 2023 to October 2024. Consumer advocates have raised concerns that utilities may overbuild natural gas infrastructure to meet forecasted data center demand, potentially leaving ratepayers responsible for costs if that energy use never materializes.
Yet the ruling also preserves state authority. "Nothing in today's orders intrudes either on the authority of states to select sites and permit generating resources or on the authority of states to set the rates, terms and conditions of retail sales of electricity," said FERC Chairman Laura Swett. The Sierra Club, which filed 4,000 comments from its members during the public comment period, called the announcement "responsive to Sierra Club's requests on several fronts, including protecting consumers from costs incurred by large loads."
With 60 days now ticking on grid operators to respond, the coming months will test whether federal guidance can bring order to an energy landscape being reshaped by the relentless rise of artificial intelligence and digital infrastructure.