By Kennedy Maize
The Trump administration’s latest Department of Energy move to centralize and federalize the U.S. electricity system is drawing fire, including from important FERC veterans, Republicans and Democrats alike.
At the end of October, DOE told the independent Federal Energy Regulatory Commission to issue a draft order giving FERC the ability to order grid interconnections for “large load” data centers. Citing the section of the U.S. Code that gives the federal government authority to regulate interstate transmission of wholesale power, DOE told FERC to bypass regional grid operators and state utility regulators to hasten the connection of these energy-intensive facilities.
The DOE-led move attempts to redefine the somewhat ambiguous but practical line that has long distinguished interstate electrical transmission from state and regional distribution. It would put the federal government in control over many traditional non-federal decisions.
DOE told FERC to take action within six months and delivered a16-page “Advanced Notice of Proposed Rulemaking” (ANOPR) that FERC should issue, with a ludicrous deadline of “no later than April 30, 2026.” FERC established a new docket to consider the ANOPR with an initial comment period closing Nov. 14, quickly extending it to Nov.28 after numerous requests.
An analysis by the Mayer Brown law firm summarized the DOE plan: “In substance, the ANOPR’s proposed framework would establish generator-like standardization for large load interconnections while facilitating the integration of new large load co-located with new or existing generation facilities, and potentially expediting the interconnection process for projects that agree to curtail and/or dispatch, as applicable.”
Republican Mark Christie, former FERC chairman appointed by Trump and a veteran Virginia utility regulator, commented on LinkedIn this month that the DOE proposal “amounts to a huge power grab by FERC over states and state-regulated utilities. And I thought conservatives wanted to reduce and shrink the power and reach of the federal Administrative State?”
Christie, who heads the William & Mary Law School’s new Center for Energy Law & Policy wrote, “FERC has never tried to expand its control to retail customers (load), which have always been under state regulatory authority. The ANOPR ordered by the Secretary of DOE admits in the cover letter that FERC has never tried expanding its power this way….”
Former Democratic FERC Commissioner Allison Clements commented on a podcast, “Ever since standard market design failed in 2000, the agency has been really skittish about requiring standardized anything across the board….So my instinct, without getting into the politics, is they’re not going to get that specific on first take.”
At its annual meeting in Seattle last week, the National Association of Regulatory Commissioners passed a resolution critical of the administration’s jurisdictional power grab. The seven-page resolution calls on FERC “to preserve and affirm states’ retail regulatory authority under the Federal Power Act, ensure that large load interconnections do not compromise grid reliability or impose undue costs on retail customers, and respect state tools for promoting system flexibility and equitable cost allocation.”
PJM’s independent market monitor, Monitoring Analytics of Berwick, Pa., in a Nov. 10 memo described some of the issues facing the nation’s largest regional transmission organization as it tries deal with the data center load blitz: “The current tight/short conditions in the PJM Capacity Market are almost entirely the result of large data center load additions, both actual historical and forecast. The current supply of capacity in PJM is not adequate to meet the demand from large data center loads and will not be adequate in the foreseeable future.” The economic monitoring organization advised, “PJM should not permit the interconnection of large new data center loads if they cannot be served reliably.”
The DOE proposal is further evidence of the federal agency’s apparent intent to take control of electricity wholesale and retail decisions traditionally in the hands of state and regional institutions that have knowledge and and experience that conflict with the political agenda of the White House. The DOE draft to FERC cites Trump’s aggressive executive orders in its justification for the data center centric proposal.
In May, DOE overrode decisions by the Midwest Independent System Operator, the PJM Interconnection, and private utilities to close uneconomic power plants in the face of threats of extreme weather events that the local experts did not consider probable and did not occur. In May, DOE ordered the 1,500-MW J.H. Campbell coal-fired plant in Michigan, long scheduled to close, to continue to operate until the end of August, despite objections from MISO and the local utility company. In August, DOE extended the order to November.
It’s likely that DOE will extend the J.H. Campbell order again at the end of this month, requiring local electricity customers to continue paying the costs of the 63-year-old, outdated plant. A recent Wall Street Journal article noted that keeping the plant open is costing customers of Consumers Energy $615,000/day. When the utility decided to close the money-losing coal plant, it made firm arrangements to supplant its capacity at lower cost to customers, provisions that won approval from the state regulators.
In October, Energy Secretary Chris Wright told Fox Business, “We are going to stop closing existing, reliable power plants that are essential to our grid, and we are going to bring some common sense back.”
DOE’s muscle flexing is unlikely to go unchallenged. Should FERC enact DOE’s data center fast track plan, it may get a trip to the U.S. Court of Appeals for the D.C. Circuit and perhaps a visit to the U.S. Supreme Court. In his Linkedin post, Christie noted, “The ANOPR ordered by the Secretary of DOE admits in the cover letter that FERC has never tried expanding its power this way, so that is a signal to courts that the Major Questions Doctrine is definitely in play here.”
Christie added that,in addition to the doctrine, “the repeal of Chevron deference in Loper Bright v. Raimondo will act as obstacles to what amounts to a huge power grab by FERC over states and state-regulated utilities.”
The Supreme Court explicitly defined the major questions doctrine in the 2022 West Virginia v. EPA air pollution case. The court held that agencies must point to “clear congressional authorization” for the power asserted in “extraordinary cases”.
In an interesting turn of fate, West Virginia’s solicitor general at the time, Lindsay See, successfully argued the Supreme Court case for The Mountain State. She is now a Republican FERC commissioner.
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