FERC’s Large Load Actions Create a New Opening for Energy Efficiency in Data Center Growth

On June 18, 2026, the Federal Energy Regulatory Commission took one of its most significant recent steps to address the rapid growth of large electric loads, including data centers, advanced manufacturing facilities, and other energy-intensive users. Energy demand growth is accelerating after two decades of relatively flat growth, driven largely by data centers, electrification, and domestic manufacturing expansion.[1] The Commission issued tailored show-cause orders to all six regional grid operators under its jurisdiction: PJM, MISO, SPP, CAISO, ISO New England, and NYISO.[2] The action marks a shift from broad discussion to region-specific reform. Rather than issuing a single national rule at this stage, FERC is requiring each regional transmission organization and independent system operator to either justify its existing tariff or propose reforms that address how large loads connect to and use the transmission system.

For energy efficiency stakeholders, this is a critical moment. The large load debate is often framed as a supply problem: how quickly can new generation and transmission be built to serve data centers and other fast-growing electricity users? Supply will be essential. But the June 18 orders also make clear that the issue is broader. It is about reliability, affordability, cost allocation, transparency, flexibility, and whether large load growth can be integrated without shifting unjust costs to families and small businesses.

That is where energy efficiency belongs in the conversation.

FERC's orders focus on five major areas of reform. First, the Commission is asking regions to examine transmission service application and study processes, including whether alternative transmission technologies can help meet needs faster or at lower cost. Second, the Commission is focused on preventing cost shifting and increasing transparency into transmission costs. Third, the orders address co-location agreements and behind-the-meter generation. Fourth, they raise the need for new transmission services for flexible large loads. Fifth, they call for improved study processes for generation facilities that serve electrically proximate or co-located loads. Each of these areas has implications for energy efficiency and demand-side policy.

The most immediate connection is flexibility. Data centers and other large loads are often discussed as fixed, unavoidable demand. But some large loads may be able to operate more flexibly than traditional customer classes. The Department of Energy has identified flexible demand resources as a critical tool for managing load growth while reducing the need for costly new infrastructure investments.[3] They may be able to manage ramping, shift certain functions, participate in demand response, pair with on-site or nearby generation, or support operational models that reduce stress on the grid during peak periods. FERC's focus on flexible large load service creates an opportunity to ask a more strategic question: how should large loads be designed, served, and compensated when they can reduce, shift, or manage demand in ways that benefit the grid?

Energy efficiency should be part of that answer. Efficiency reduces the amount of energy required to deliver the same economic output. For data centers, that includes facility-level efficiency, cooling optimization, efficient power management, advanced controls, heat reuse opportunities, and better integration between building systems and grid signals. These solutions do not replace the need for generation and transmission, but they can reduce the scale, timing, and cost of infrastructure required to serve new demand.

The second major connection is affordability. FERC's June 18 actions place strong emphasis on protecting consumers from inappropriate cost shifts. This matters because large load growth can require significant network upgrades, and without clear rules, the costs of those upgrades may be spread across broader customer classes. Energy efficiency and demand flexibility are consumer protection strategies because they can reduce peak demand, defer infrastructure needs, improve use of existing assets, and lower the risk that new load growth results in unnecessary bill increases for households and small businesses.

The third connection is grid optimization. FERC specifically raised alternative transmission technologies, often referred to as Grid Enhancing Technologies, as part of the toolkit for reducing large-load-driven network upgrade costs. That principle should be applied more broadly. Before defaulting to traditional buildout alone, regions should evaluate the full portfolio of solutions that can increase usable system capacity, lower demand, or shift usage away from constrained periods. That includes grid-enhancing technologies, demand-side management, virtual power plants, grid-interactive efficient buildings, and customer-side efficiency investments.

This is consistent with ASE's long-standing framing: demand is the new supply[4]. In an era of rapid electricity demand growth, the cheapest and fastest megawatt is often the one that does not need to be generated, transmitted, or delivered at peak.

The PJM proceeding is especially important. PJM sits at the center of the national data center conversation, particularly given load growth in Virginia and other parts of the Mid-Atlantic. FERC's June 18 action builds on its December 2025 order addressing large loads co-located with generating facilities. These proceedings raise fundamental questions about how co-located load should take transmission service, how costs should be assigned, and how markets should handle customers that may be physically close to generation but still rely on the broader grid for reliability and backup service.

For ASE, PJM should be a priority docket to monitor. It is likely to shape how other regions approach co-location, cost recovery, transmission service design, and flexible large load treatment.

The June 18 actions also create an opening for ASE's broader data center work, including the Bring Your Own Distributed Capacity, or BYODC, concept. At its core, BYODC can be framed as a strategy to ensure large-load customers bring more to the system than demand alone. That may include on-site or nearby generation, storage, demand flexibility, efficiency commitments, grid services, and cost responsibility structures that protect existing customers. Properly designed, a BYODC-type framework could help align speed-to-power with reliability, affordability, and accountability.[5]

The policy opportunity is to move beyond the binary debate of whether data centers are "good" or "bad" for the grid. Data centers are part of today's economy and will continue to grow. The Department of Energy projects that data center electricity demand could double or triple over the coming decade, making large-load integration one of the defining grid challenges of the next generation.[6] The real question is whether they are integrated in a way that strengthens the system or strains it. Energy efficiency provides a practical, bipartisan, fuel-neutral pathway to make that integration more affordable and reliable.

FERC's June 18 actions are not the final word. They start a new phase of regional filings, stakeholder engagement, and potential tariff reform. The next key milestones will be the 30-day informational reports on generation adequacy and the 60-day responses from each RTO/ISO and its transmission owners.

For ASE and its members, the priority should be clear: engage early, track the regional filings, and ensure energy efficiency is visible in the large load reform conversation. The Commission is asking how the grid can serve rapid demand growth while protecting reliability and consumers. Energy efficiency, demand flexibility, and active efficiency provide part of the answer.