According to Utility Dive, the Federal Energy Regulatory Commission unanimously rejected Tri-State Generation & Transmission Association’s proposed High Impact Load tariff in a 3-0 vote, citing jurisdictional concerns over retail electricity sales. The Colorado-based wholesale cooperative, which serves 40 utility members across four states, had proposed the tariff to address growing data center interest in the Mountain West region, with 10 existing requests for loads ranging from 45 MW to 650 MW that could potentially expand to 300 MW-1,000 MW each. FERC determined the proposal improperly encroached on state jurisdiction over retail sales, distinguishing it from the agency’s approved demand response programs. The Data Center Coalition had opposed the tariff, arguing it would stifle development through a patchwork of utility-specific requirements.
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Table of Contents
The Regulatory Fault Line Exposed
This decision reveals a fundamental tension in America’s evolving energy landscape. The Federal Energy Regulatory Commission maintains authority over wholesale electricity markets and interstate transmission, while states regulate retail sales and local distribution. As data centers emerge as massive electricity consumers—sometimes demanding as much power as medium-sized cities—they’re testing these traditional regulatory boundaries. The commission’s refusal to bless Tri-State’s approach suggests FERC is being careful not to overstep its authority, even as the Department of Energy pushes for clearer interconnection rules for large loads. This creates a regulatory no-man’s-land where neither federal nor state authorities have clear oversight.
The Data Center Industry’s Growing Pains
For the data center industry, this ruling compounds existing challenges. Companies planning major facilities now face uncertainty about interconnection requirements, cost allocation, and regulatory approval timelines across different regions. The patchwork approach that the Data Center Coalition warned about is becoming reality, with utilities like AEP Ohio and Dominion Energy Virginia developing their own large load tariff structures. This fragmentation could force data center operators to navigate dramatically different regulatory environments state by state, potentially influencing where companies choose to build their billion-dollar facilities. The industry’s explosive growth, driven by artificial intelligence and cloud computing, is colliding with a regulatory system designed for a different era of electricity consumption patterns.
The Unaddressed Transmission Crisis
What’s notably absent from this decision is any meaningful address of the underlying transmission capacity issues. Tri-State’s concerns about needing additional generation and transmission infrastructure to serve these massive loads are legitimate—the cooperative currently manages a 2,500 MW peak load, meaning a single large data center could represent 40% of their current maximum capacity. The commission’s narrow jurisdiction focus means broader questions about who pays for grid upgrades and how to plan for concentrated load growth remain unanswered. This creates a dangerous situation where data centers might secure interconnection agreements without adequate planning for the systemic grid impacts, potentially leading to reliability issues or massive cost-shifting to existing ratepayers.
The Coming Security Deposit Wars
FERC’s guidance that Tri-State should better justify security deposit sizing in any refiled proposal signals growing tension around financial guarantees for large projects. As noted in the commission’s decision, utilities are increasingly demanding substantial security deposits to hedge against the risk that massive data center projects get canceled after significant grid upgrade investments. These requirements can reach hundreds of millions of dollars for the largest facilities, creating cash flow challenges for developers and potentially pricing smaller operators out of certain markets. The balancing act between protecting existing ratepayers and enabling new economic development will become increasingly contentious as load growth accelerates.
The Emerging Regional Divide
This decision will likely accelerate regional divergence in data center development strategies. States with clear regulatory frameworks and available power capacity—particularly in regions with robust renewable energy resources—will become magnets for development, while areas with regulatory uncertainty or transmission constraints may see projects redirected. The Mountain West region that Tri-State serves represents a particularly interesting case, offering attractive attributes for data centers including lower disaster risk and available land, but potentially limited transmission capacity to major population centers. How different regions navigate these jurisdictional questions will shape the geographic distribution of America’s digital infrastructure for years to come.
The Path Forward for Large Load Interconnection
Looking ahead, we’re likely to see continued regulatory evolution around large load interconnection. FERC’s cautious approach suggests the commission may develop more targeted rules that respect state jurisdiction while providing clearer federal guidance for transmission-level interconnections. The growing number of large load tariff proposals indicates utilities recognize the need for specialized frameworks, but the lack of coordination creates inefficiency. Ultimately, Congress may need to clarify jurisdictional boundaries or establish new frameworks specifically for hyperscale electricity consumers. Until then, the tension between rapid technological growth and deliberate regulatory processes will continue to shape where and how America’s digital infrastructure gets built.
