What FERC’s June 18 Orders Mean for Utility Rate Design and Interconnection

On June 18, 2026, the Federal Energy Regulatory Commission (FERC) took what may be the most significant regulatory action on utility interconnection in a generation. The Commission voted unanimously to issue tailored show-cause orders to all six regional transmission organizations (RTOs) and independent system operators (ISOs) under its jurisdiction, directing each to either defend or rewrite the tariff rules governing how data centers and other large energy users connect to the grid. For utility accountants, rate designers, and finance professionals, the implications reach well beyond interconnection queues. They touch cost allocation, rate base treatment, stranded asset risk, and the fundamental question of who pays for infrastructure built to serve hyperscale loads.

Background: How We Got Here

The June 18 orders are the culmination of a regulatory process that began in October 2025, when DOE Secretary Chris Wright invoked a rarely used authority under the DOE Organization Act to direct FERC to initiate a proceeding on large load interconnection. The resulting Advance Notice of Proposed Rulemaking (ANOPR), filed under Docket No. RM26-4-000, generated more than 3,500 pages of comments from utilities, grid operators, data center developers, ratepayer advocates, and state regulators.

FERC had already been moving on specific pieces of the problem. In December 2025, the Commission ordered PJM Interconnection to develop transparent rules for co-locating large loads with generation resources. In January 2026, FERC approved the Southwest Power Pool’s High Impact Large Load (HILL) initiative, establishing new protocols to accelerate the interconnection of large loads and associated new generating resources. By April 2026, the Commission publicly committed to acting on the full ANOPR docket by the end of June—and today’s orders deliver on that commitment.

The approach FERC chose surprised many observers. Rather than issuing a Notice of Proposed Rulemaking—a process that typically takes years to finalize—the Commission used Section 206 of the Federal Power Act to issue customized show-cause orders directly to each grid operator. This approach is faster and, by targeting FERC’s existing jurisdiction over interstate transmission rather than asserting broad new authority, is designed to be more legally durable against potential state-level challenges.

The Six Grid Operators Affected

Today’s orders apply to every RTO and ISO under FERC jurisdiction, together with their transmission owners:

Together, these markets serve more than 200 million Americans in more than 30 states and the District of Columbia, covering nearly two-thirds of U.S. electricity load under FERC jurisdiction. Utilities operating outside these markets—including many rural electric cooperatives and municipal utilities—are not directly subject to the orders, though the policy signals will shape state proceedings and contract negotiations across the country.

What the Orders Actually Require

Each grid operator received a tailored order reflecting its existing rules and current practices. The common thread: FERC has determined that existing tariffs “appear to be unjust and unreasonable” in how they handle large load interconnection requests. Each RTO and ISO must now either demonstrate that its current tariff provisions are just and reasonable or propose specific reforms. Three issues are at the center of every order.

The Federal–State Jurisdiction Question

The most consequential long-term issue may not be interconnection timelines or cost allocation—it may be jurisdiction. FERC’s authority under the Federal Power Act extends to wholesale power markets and interstate transmission. Retail rates, distribution facilities, and the terms under which utilities serve end-use customers remain the province of state public utility commissions.

Data center interconnection sits squarely on this boundary. A hyperscale facility connecting directly to the transmission system resembles a wholesale transaction. A data center served through a utility’s distribution system under a special retail contract is unambiguously a state matter. The vast middle ground—large loads connecting at transmission voltages but served under retail tariffs—is now contested terrain.

FERC’s decision to use Section 206 orders rather than asserting broad new jurisdiction over retail load interconnection was a deliberate choice to stay within established legal limits. The National Association of Regulatory Utility Commissioners (NARUC) had urged FERC not to encroach on state authority, and the Commission appears to have taken that concern seriously. But the practical effect of today’s orders will be felt in state rate cases, where utilities will be asked to design new large-load rate categories that are consistent with—but not necessarily required by—the federal framework.

What This Means for Utility Rate Designers

The near-term workload for utility rate professionals is substantial. Several tasks flow directly from today’s orders, even for utilities not subject to FERC jurisdiction:

• Tariff review: Existing large-power tariffs should be evaluated for alignment with the cost allocation and interconnection principles in today’s orders, particularly if the utility serves—or expects to serve—loads above 20 MW.
• Cost-of-service studies: New or updated cost-of-service studies will be needed to properly allocate transmission upgrade costs to large load customers and support tariff filings or rate case testimony.
• Contract structures: Developer agreements, special contracts, and dedicated infrastructure riders will need to reflect the new cost allocation framework. Minimum bill provisions, CIAC requirements, and termination fee structures should all be reviewed in light of today’s orders.
• Rate design for co-located loads: If generation co-location becomes standard practice, rate designers will need new frameworks for billing, metering, and revenue recognition that do not fit neatly into existing retail tariff structures.

What This Means for Utility Accountants

Several accounting issues are directly activated by today’s orders. Utilities subject to ASC 980 or FERC’s Uniform System of Accounts will need to evaluate the regulatory accounting treatment of interconnection costs, transmission upgrades, and co-location arrangements as the new rules take shape across all six markets.

The stranded asset question deserves particular attention. When a data center exits—because the facility closes, the operator relocates, or load forecasts prove overstated—transmission infrastructure built to serve that load may have no alternative use. Whether stranded costs can be recovered through rates, deferred as regulatory assets, or must be written off depends on the terms of the underlying interconnection agreement and the applicable regulatory framework. Today’s orders increase the stakes of getting those agreements right from the outset.

For cooperatives and public power utilities outside FERC jurisdiction, the accounting implications are similar even when the regulatory trigger differs. GASB 62 provides the regulatory accounting framework for these entities, but the underlying questions—how to recognize and defer costs associated with large load infrastructure, how to treat cost contributions from large load customers, and how to account for potential stranded investment—are the same questions investor-owned utilities are now navigating under FERC’s new framework.

Looking Ahead

Today’s orders are a beginning, not an end. Each of the six grid operators must now respond—either defending its existing tariff as just and reasonable or proposing specific reforms. Those filings will trigger additional comment periods, potential hearings, and follow-on orders. The full regulatory picture will take shape over the remainder of 2026 and into 2027.

For utility professionals, the immediate priority is understanding how today’s framework applies to your organization’s specific situation—whether you operate in an RTO/ISO market, serve large industrial loads under state-regulated tariffs, or are being approached by data center developers exploring interconnection options. The principles FERC has articulated today will shape those conversations regardless of which regulatory jurisdiction applies.

The data center load wave is not a future possibility. It is happening now. FERC’s June 18 orders are the federal regulatory system’s most direct response to date. Understanding them is not optional for utility finance and accounting professionals.