FERC cleared one policy barrier to data center grid connections. Transformer lead times are now the binding constraint.

A GC closing out a data center knows the frustration: the building is done, the equipment is racked, and the project can't reach substantial completion because the grid interconnection is stuck in a queue. Federal regulators just moved on that queue.

On June 18, the Federal Energy Regulatory Commission issued "show cause" orders to six regional grid operators: PJM, MISO, SPP, CAISO, ISO New England, and NYISO. Together they serve about 200 million Americans across more than 30 states. Each operator has 60 days to either justify why their current tariffs for connecting large energy users are adequate — or file specific proposed reforms. A separate 30-day deadline requires each to submit a reliability report detailing how they'll ensure enough generation capacity for large loads already online and coming online.

FERC identified five reform areas: transmission study processes for large-load applications; cost-shifting prevention and transparency; co-location and behind-the-meter generation arrangements; new transmission service offerings for flexible large loads; and processes for studying generators near data centers. Every friction point in the current data center interconnection process is under explicit review.

What's still blocking data center construction

The interconnection queue has been a real project-schedule constraint. Some projects with issued permits and active construction have waited a year or more for a confirmed grid connection date. That wait compresses commissioning, delays certificate of occupancy, and holds retainage.

But the FERC order, if it results in real reform, only removes one layer of the problem. The next layer is equipment.

Transformer lead times for the large power units data centers require have extended severely. Some specialty units now carry lead times of up to four years. Of roughly 12–16 GW of planned data center capacity scheduled to come online this year, only about one-third is actually under construction — the rest is stuck waiting on electrical equipment, according to Energy News Beat. More than half of planned US data center builds have been reported as delayed or cancelled due to power infrastructure shortages.

That's the constraint FERC's order doesn't touch. Clearing the interconnection queue paperwork doesn't manufacture large power transformers faster.

What GC project teams should track

The 60-day filing deadline runs to mid-August. When each grid operator files its response or proposed reforms, those documents become public at FERC. For GCs active in PJM territory — the Mid-Atlantic and Midwest — PJM's filing will matter most. PJM manages one of the largest interconnection backlogs in the country. A substantive reform proposal there would be a signal to revisit project scheduling assumptions for anyone with campus work in that footprint.

Co-location is explicitly on FERC's reform list. FERC flagged arrangements where data centers bring on-site generation — gas, solar, battery storage — to backstop or supplement the grid connection. If rule changes make this easier, the construction scope on some campuses grows: generator buildings, fuel systems, pad and concrete work, and additional electrical tie-lines enter the package. If your project has any co-location component, watch how PJM and MISO respond to this piece specifically.

Transformer procurement still drives your schedule, not the interconnection queue. The FERC action doesn't change this. If your project doesn't have step-down transformers and switchgear on order with confirmed delivery dates, those items are the critical path — full stop. Lead times on large custom units are the variable your schedule needs to be built around, not the tariff filing.

The bigger picture

Illinois and New York's moves to pause data center incentives show state-level policy pushing back on data center growth at the same moment federal policy is pushing to enable it. The national market is still running at roughly $50 billion in annual construction spending. The work isn't going away. What changes when federal policy clears the interconnection queue — assuming the grid operators comply — is that more projects can get to construction start faster. Whether those projects can actually get powered up still depends on transformer and switchgear procurement chains that are running years behind demand.

The practical question for a GC PM this week: do your active data center projects have confirmed equipment delivery dates for long-lead electrical gear? If not, that's the schedule risk to address — not the interconnection docket.

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