FirstEnergy Asks FERC to Make Data Centers Pay Directly
- FERC & Federal Policy & Markets Regulatory
Marin Holt
- 0
- 7 minutes read
- Transmission network: 24,000 miles
- Proposed contract term: 15-year service contracts
- Pipeline pricing precedent: more than 25 years
- FERC docket: RM26-4
FirstEnergy asked the Federal Energy Regulatory Commission on June 5, 2026 to require data centers and other large electricity users to pay directly for the transmission upgrades needed to connect them, instead of spreading those costs across existing households and businesses. The Akron, Ohio utility, which operates about 24,000 miles of transmission lines across the Midwest and Mid-Atlantic, told FERC that large new loads such as data centers, which each draw hundreds of MW, should sign 15-year service contracts and post collateral before grid expansions proceed. The filing is part of FERC’s large-load rulemaking, Docket RM26-4.
Under the proposal, a data center would pay two charges: its share of the existing zonal transmission rate that all customers pay, plus a separate “expansion rate” covering the specific network upgrades built to serve it. FirstEnergy modeled the structure on the way FERC has priced new natural gas pipeline capacity for more than 25 years, where the customer whose demand causes a new line pays for it through incremental rates rather than socializing the cost. The 15-year contract term and collateral requirements are meant to give developers a predictable, financeable cost while protecting other customers from stranded investment if a project is cancelled.
Critical Perspective
FirstEnergy wants large loads to sign 15-year service contracts and post collateral before it builds the transmission to connect them, modeling the structure on how gas pipelines have priced incremental capacity for more than 25 years. The analogy is convenient for the utility but skips a basic mismatch: a pipeline’s shippers commit to a commodity with decades of stable demand, while a data center’s economic life can turn over in well under a decade as compute moves. Maryland’s parallel FERC complaint over $1.6 billion attacks the same data-center cost problem from the opposite end, reassigning existing cost rather than guaranteeing a utility’s recovery on new build. If a 15-year term outlasts the hardware cycle it is meant to finance, who absorbs the stranded transmission when a data center walks away at year eight?
Why It Matters
Utilities, states, and ratepayer advocates across the PJM region are fighting over who pays for the transmission buildout driven by data center demand. Maryland’s ratepayer advocate has a parallel complaint at FERC over $1.6 billion in PJM costs, Oregon now makes loads above 20 MW fund their own expansion, and the New York Public Service Commission opened a data center cost-allocation proceeding. FirstEnergy’s filing would set a template that other transmission owners could copy. Critics counter that the framework guarantees the transmission owner’s cost recovery and collateralizes its investment while locking large customers into 15-year terms whether or not they keep operating.
What Happens Next
FERC took up the broader large-load docket at its June 18, 2026 open meeting, where it directed PJM and the other five U.S. grid operators to develop new rules for interconnecting data centers and other large loads. FirstEnergy’s cost-allocation proposal now enters that record, and the commission has not set a date to rule on the specific two-part rate. Whatever method FERC ultimately approves will shape billions of dollars in grid-upgrade costs and determine how much of the data center boom lands on ordinary utility bills.
Sources
- Utility Dive — FirstEnergy asks FERC to require data centers to pay for transmission interconnection costs
- RTO Insider — FirstEnergy Calls for Directly Assigning Tx Costs to Data Centers
- FERC — Interconnection of Large Loads to the Interstate Transmission System (Docket RM26-4)
