HWG LLP Energy Advisory (PDF)

By: Sean A. Lev, John Hodges, and Daeyeong Kim

On Monday, November 10, the Department of Energy (DOE) issued a letter directing the Federal Energy Regulatory Commission (FERC) to consider a rulemaking proceeding to expedite interconnections of large loads (greater than 20 MW), including data centers, to the transmission system.[1]  In light of rapidly increasing energy demands, the draft Advance Notice of Proposed Rulemaking (ANOPR) attached with the letter proposes procedures to ensure connections “to the transmission system [are established] in a timely, orderly, and non-discriminatory manner.”[2]  To date, interconnections have remained under the purview of states.  If FERC exercises jurisdiction over large load interconnections, that could well have a significant impact on the development of data centers in the United States, which the Trump Administration has cited as a national priority.

DOE has requested FERC’s consideration and publication of a final action by no later than April 30, 2026.[3]  In response, FERC released a Notice Inviting Comments regarding the ANOPR and announced that comments are due on November 14, 2025, and reply comments are due on November 28, 2025.  On November 7, 2025, in response to a motion requesting an extension of time, FERC extended the deadlines to November 21, 2025, for comments and December 5, 2025, for reply comments.[4]

DOE has indicated that this effort to modify interconnection procedures for large loads is an effort to support the development of AI data centers.[5]  FERC historically has not exercised jurisdiction over load interconnections, but the letter argues that, under the Federal Power Act (FPA), such matters are “squarely” within FERC’s jurisdiction.[6]  The ANOPR thus raises important questions regarding the boundary between federal and state jurisdiction, particularly given ongoing policy changes on this issue at the state level.

The draft ANOPR provides several legal justifications for FERC’s expanded jurisdiction:

  • Large loads are critical to “open access transmission service[s],” which require “minimum terms and conditions to ensure non-discriminatory transmission service”;
  • Large load interconnections directly impact “Commission-jurisdictional wholesale electricity rates,” which FERC must ensure are “just and reasonable” under the FPA;
  • The proposal in the ANOPR does not intrude on state jurisdiction over “retail electricity sales,” as it does not (a) propose jurisdiction over retail sales of large loads or (b) govern “siting, expansion, or modification of generation facilities”; and
  • Contrary views would be inconsistent with the FPA, which has vested FERC with “exclusive jurisdiction over the transmission of electric energy in interstate commerce” (including “rates, terms, and conditions of transmission service” as well as “facilities for such transmission or sale of electric energy at wholesale”).[7]

The ANOPR also sets forth several guiding principles and proposed modifications, including:

  • Limiting FERC’s jurisdiction to direct interconnections to transmission facilities based on FERC’s seven-factor test[8] to determine jurisdiction and a 20MW threshold (for new loads and hybrid facilities);
  • Reforming study processes for load and hybrid facilities for efficient siting and other cost-reducing benefits;
  • Imposing “standardized study deposits [e., money paid to a transmission provider for an interconnection study], readiness requirements, and withdrawal penalties” to discourage speculative projects;
  • Requiring installation of “system protection facilities” for hybrid interconnections in order to prevent unauthorized injections; and
  • Allocating 100% of network upgrade costs to load and hybrid facilities.[9]

The ANOPR seeks comment on these proposed changes.[10] The key threshold issue will be whether FERC has jurisdiction overload interconnections that historically has been overseen at the state level.  Interested parties should consider whether to participate in this proceeding, which could significantly reshape the interconnection procedures applicable to AI data centers in the United States.

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For more information, please contact Sean A. Lev, John A. Hodges, or Daeyeong Kim.  Sean Lev has served as Acting General Counsel and Deputy General Counsel for Environment and Nuclear Programs at DOE and as General Counsel at the Federal Communications Commission.  John Hodges regularly counsels clients on energy and data center issues.  Daeyeong Kim counsels clients on regulatory issues related to energy efficiency standards and data centers.

 This advisory is not intended to convey legal advice.  It is circulated publicly as a convenience and does not reflect or create an attorney-client relationship.

[1]      Letter from Chris Wright, Secretary of Energy, Department of Energy, to David Rosner, Chairman, Federal Energy Regulatory Commission (Oct. 23, 2025) (“DOE Letter”) https://www.energy.gov/sites/default/files/2025-10/403%20Large%20Loads%20‌Letter.pdf.  The Department of Energy Organization Act authorizes the Secretary of Energy “to propose rules, regulations, and statements of policy of general applicability with respect to any function within the jurisdiction of the [Federal Energy Regulatory] Commission under section 402 of this Act” and requires FERC to “consider and take final action on any proposal made by the Secretary.”  42 U.S.C. § 7173(a)–(b).

[2]      DOE Letter at 1.

[3]      Id. at 2.

[4]      FERC, Notice Granting Extension of Time re Interconnection of Large Loads to the Interstate Transmission System, Docket No. RM 26-4-000 (rel. Nov. 7, 2025) https://elibrary.ferc.gov/eLibrary/docinfo?accession_number‌‌‌‌=‌20251107-3060&sid=3aee2f7b-fbe8-4b4a-9ebf-d67349702746.

[5]      DOE Letter at 1.

[6]      Id.

[7]      FERC, Ensuring the Timely and Orderly Interconnection of Large Loads, Draft Advance Notice of Proposed Rulemaking, 9–10 (rel. Oct. 23, 2025) (“Draft ANOPR”).

[8]      Cal. Pac. Elec. Co., LLC, Order Granting in Part and Denying in Part Petition for Declaratory Order, 133 FERC ¶ 61,018 at 46 (2010) (explaining a seven-part test to determine whether the primary function of a facility is transmission (FERC jurisdiction) or distribution (state jurisdiction): “(1) local distribution facilities are normally in close proximity to retail customers; (2) local distribution facilities are primarily radial in character; (3) power flows into local distribution systems; it rarely, if ever, flows out; (4) when power enters a local distribution system, it is not reconsigned or transported on to some other market; (5) power entering a local distribution system is consumed in a comparatively restricted geographical area; (6) meters are based at the transmission/local interface to measure flows into the local distribution system; and (7) local distribution systems will be of reduced voltage”).

[9]      Draft ANOPR at 10–14.

[10]     Id.