The impact of Trump 2.0 on the Federal Energy Regulatory Commission: potential developments for generation, transmission, and data centers

FERC is an independent agency with a well-defined statutory mandate that does not include setting energy policy

First, FERC is an independent agency. That means that the Commissioners, three of whom are from one party and two from the other, cannot be dismissed by a displeased President. As a result, for at least the next few months, FERC will continue to be comprised of three Democrats and two Republicans (with a Republican chairman) until there is a Democrat vacancy that the Administration can fill with another Republican. And Commissioner Phillips, a Democrat, has a seat that runs through 2026.  

The agency’s independence is real. There are a number of examples of a Commission comprised of a majority of the President’s party declining to pursue policy choices favored by the Administration. Perhaps most famously, the Trump campaign in 2016 ran under the slogan to “bring back coal.” The best way to do that would be to stop the premature retirement of uneconomic coal-fired generation facilities. Once elected, President Trump’s Department of Energy proposed that FERC establish an out-of-market revenue stream (i.e., a subsidy) to support economically strapped coal-fired generation. A Republican-majority FERC rejected that proposal.

Second, and perhaps more significantly, FERC has a very defined statutory mandate with respect its role for the U.S. power sector. Its primary purpose under its governing statute – the Federal Power Act of 1935 – is to ensure that the rates and terms/conditions of electric transmission service and the wholesale sale of power (i.e., sales for resale) are “just and reasonable.” And it is responsible for the reliability of the nation’s power grid. Of course, while its jurisdiction is limited, it still has an impressive mandate. It encompasses such things as ensuring that generation has non-discriminatory access and use of the nation’s power grid and that there is sufficient transmission infrastructure in place to get the power where it is needed. As part of that mandate, FERC also oversees the functioning of the nation’s complex bilateral and regional wholesale power markets.

But FERC does not have a mandate to develop, implement, or enforce any clean energy or energy efficiency goals or standards. It is largely the States that have the authority to determine the generation resource mix within their boundaries – i.e., whether generation resources are renewable, nuclear, coal, and/or natural gas. Renewable Portfolio Standards and other clean energy standards and mandates are the product of State policy. 

At its core, FERC is an economic regulator. Its role is primarily to ensure that the wholesale power markets are competitive and result in just and reasonable rates – providing reliable power to consumers at the least cost. FERC cannot, for example, take the position that wind power should be incentivized because it provides societal benefits such as producing no carbon emissions. It can, however, direct that the wholesale power market rules ensure that there is an even playing field for wind resources to participate in the markets and receive compensation commensurate with the values that they provide to those markets.

Trump 2.0 is coming out of the gate with its energy policy– but what about FERC?

Last week, there was a flurry of activity from the new Administration on issues that fundamentally impact the U.S. renewables sector. In particular, the industry’s collective attention has been focused on the Administration’s Executive Orders’ impacts on the Inflation Reduction Act’s grant and loan funds as well as available tax credits, and the halting of offshore wind lease sales in federal waters and the pausing of the issuance of approvals, permits and loans for both offshore and onshore wind projects. However, largely speaking, none of those Executive Orders will directly impact FERC’s jurisdiction over the power sector.

So what are the expected impacts of the new Administration on FERC's priorities? As in prior Administration changes, the impact will likely be limited given FERC’s statutory mandate, even if the President nominates Commissioners that are true acolytes to his energy vision. And Congress is unlikely to materially amend the Federal Power Act anytime in the foreseeable future.

In addition, the agency is like a big ocean liner – while the captain can tell the crew to change course, by the time the boat starts to veer in another direction, there is often a new captain at the helm pointing at another shore. The U.S. power grid impacts every aspect of daily life, and FERC Staff has the technical expertise necessary to ensure that the markets and regulatory framework literally keep the lights on. Discounting the possibility that the Administration could nominate a new Commissioner with the intent to dismantle the agency from within and reduce the significant role of career staff in meeting its critical mission (which is a possibility but probably not likely), fundamental changes in FERC’s priorities and how the agency operates are not expected.

That being said, there are definitely a few things the industry should be paying attention to over the next few years.

FERC will continue to focus on the development of generation resources and transmission infrastructure, likely building off recent orders

The anticipated increased demand for power over the next decade (or more) is simply staggering.  That increase is largely, but not exclusively, driven by projected data center / artificial intelligence (AI) development across the country (more on that topic later). While not all of this projected load will materialize, the expected strains on the grid from the surging demand are raising justified alarms with the federal and state regulators, the independent transmission grid administrators, and the industry more generally. Meeting these demands will not only require significant additions to generation capacity, but a build-out of transmission infrastructure – activities that are squarely within FERC’s jurisdiction and that would need to be addressed regardless of who the President is.

On the generation side, FERC is expected to take an “all of the above” approach to bringing resources on line as quickly as possible, regardless of whether they are conventional or renewables. First, FERC does not have a statutory mandate to distinguish between the two. The agency is largely technology neutral when it comes to generation. Second, even if a Republican-majority FERC were to deviate from its traditional role of not favoring certain generation technologies over others, FERC may not have the luxury of discriminating against renewables in favor of conventional generation for policy reasons given the massive need for all generation to meet the surging demand of data centers and other increasing load. Electrons are interchangeable regardless of the technology that produces them – a “green” electron is the same as a “dirty” electron for purposes of meeting customers’ needs. 

However, there is a massive backlog of generation resources seeking to interconnect to the FERC-jurisdictional transmission grid, which creates significant delays in bringing them on line. A number of observers believe this queue “clogging” is largely attributable to wind and solar developers seeking to secure valuable interconnection spots for speculative projects. It is possible that a FERC under the new Administration could try to cull renewables from the interconnection queue in an effort to expedite the process for conventional generation. However, FERC has recently reformed the generator interconnection process to address these clogging issues, with particular emphasis on removing speculative projects. Any effort by a new FERC to further interconnection queue reform through a normal rulemaking process would not be likely to become effective until late 2026, at the earliest.

And then there is the difficult question of transmission infrastructure build-out. Getting proposed transmission projects over the commercial finish line is the industry’s equivalent to a Rubik’s cube, times a thousand (ten thousand?). Transmission development in the U.S. has a number of inherent hurdles, not the least of which is that it is the States, rather than FERC, that have jurisdiction over the siting of transmission lines within their borders. And that fundamental aspect of “cooperative federalism” in the U.S. power space is unlikely to change soon. Every configuration of FERC in recent (and not-so-recent) memory has tackled the thorny question of inadequate transmission infrastructure, and FERC under a Trump Administration is likely to do the same. Just last year, FERC issued a major order to reform the transmission planning process (more on that later) and the related cost recovery issues; any new effort at reform will likely have to build on that effort. That means that, similar with respect to generation queue reform, any meaningful order would not likely be issued until late 2026, at the earliest.

But there is a new wrinkle in that the question of transmission infrastructure has become somewhat politicized. Historically, the need for investment in the transmission sector was not viewed as a partisan issue – everyone agreed that our aging infrastructure needed serious investment in upgrades and new lines. That seems to have changed over the past few years, with a number of observers suggesting that the need for transmission structure investment is caused, at least to some extent, by State clean renewable energy policies and mandates, which are not within the purview of FERC.  

In particular, Republican Commissioner Christie – who last week was elevated by President Trump to chair – issued a lengthy and vociferous dissent from FERC’s landmark order on transmission planning issued last year (Order 1920).  He argued that Order 1920 was a jurisdictional overreach by the other Commissioners that would result in trillions of dollars of costs imposed on consumers. He argued that the order was impermissibly designed to further the development of “politically preferred generation [i.e., preferred by State policies] . . .  and corporate ‘green energy’ preferential purchasing policies” and concluded that FERC does not have the ability under the Federal Power Act to undertake such an enormous clean energy policy agenda. In its on rehearing of Order 1920 (Order No. 1920-A, issued in November 2024), FERC largely addressed (now) Chair Christie’s concerns, for example by explicitly removing this requirement to factor in large corporate power purchasing preferences when transmission planning.

To be clear, Chair Christie certainly does not have an anti-transmission bias. However, it is expected that he will do what he can in his new role as Chair to push back on FERC transmission policies that could be seen fostering the development of transmission necessitated by State clean energy policies, and that the policies preferences of any State (or private actors) are not imposed on everyone else. 

However, it is worth noting that a massive transmission build-out is also critical to ensure the deliverability of power to a robust domestic data center / AI industry for national security purposes, a hallmark of the new Administration. Separating the need for new transmission to implement State renewable energy policies and corporate power preferences from the need for new transmission to meet surging data center demand, which is clearly supported by the Administration, could quickly start to feel like an exercise in deconstructing a big bowl of spaghetti. While FERC staff and others in the industry have the expertise to address that issue, it will nonetheless be a time consuming process that requires input from multiple stakeholders, not the least of which is FERC Staff.

FERC’s hyper-focus on data centers and AI

It is fully expected that, in the next year and likely for multiple years after that, FERC will be laser focused on playing its part in ensuring that the U.S. has a robust and secure domestic data center / AI industry. That is a clear goal of the new Administration. Given the national security concerns involved, it would be hard for anyone to seriously push back on that policy objective. But getting power to those end-users will require both significant amounts of new generation as well as massive transmission infrastructure build-out which, again, are subject to FERC oversight.

At the end of last year, FERC issued an order related to the Susquehanna nuclear facility in Pennsylvania that created a fair amount of uncertainty with respect to connecting data centers to existing baseload (coal and nuclear) generation assets.  Curiously, it was the two Republican Commissioners (the current Chair Christie and Commissioner See) who supported the order that introduced this regulatory uncertainty. It was a Democrat (then-Chair Phillips) who criticized his Republican colleagues for taking a position that could undermine the national security interests in fostering a domestic data center industry. It should be emphasized however, that the Susquehanna order focused on a very specific type of configuration, where new data center load would be attached to existing baseload generation. That particular configuration raises a host of thorny reliability and cost allocation issues. In any event, it is fully expected that all the Commissioners, regardless of party, will be aligned in doing whatever they can to keep FERC from being perceived as the stumbling block to achieving this national security goal, provided however that grid reliability is assured and cost allocation issues are equitably resolved.

Last week at the World Economic Forum, President Trump announced that his Administration will give “rapid approvals” to AI companies seeking to build new generation attached to data centers (unlike the issue addressed in FERC’s Susquehanna proceeding, which was focused on existing generation).  That announcement was likely triggered by FERC’s Susquehanna decision, and probably is a signal to the current and to-be-nominated Commissioners, and the industry more generally, that the President is fully behind the AI industry and does not want the lack of sufficient electric infrastructure to delay implementation of his policy. And it also demonstrates the Administration’s recognition that FERC has a significant role to play in this space.

But what is a “rapid approval” for new generation intended to meet the surging power demands of data centers? Bringing large load on line, together with new generation capacity, while not raising all of the thorny issue connected to the use of existing generation to meet data center demands, nonetheless potentially has significant impacts on overall grid reliability. FERC will not want to cut corners on the necessary reliability studies for these configurations and risk causing grid events that disrupt power supply to customers. And when data center generation unexpectedly goes offline, who loses the power first – the data centers, which may be necessary for national security, or multiple thousands (or tens of thousands) of homes?  These are legitimate issues that cannot be addressed in a “rapid approval” edict.

And the Administration’s policy of encouraging data center generation development through an expedited process could quickly come into conflict with its other priorities, such as its focus on ensuring that consumers incur the lowest costs necessary to ensure the reliable delivery of power. When a data center is directly connected to generation and not to the grid (which was the subject of Trump’s recent announcement at the World Economic Forum), the data center is arguably not using the grid to transmit electricity. But it is nonetheless also arguably benefitting from the grid. How do we determine how to allocate to a data center its fair share of the costs of the grid? Otherwise, those costs, which can be massive, would be paid by retail and small commercial customers through higher utility rates (and Chair Christie is clearly on record as focused on lowering consumers’ costs).  This is also an issue that can be solved, and FERC Staff has significant experience allocating costs to entities that caused those costs. But that will also take some time to get to an equitable resolution.

Again, none of these are insurmountable problems. FERC and the industry it regulates are well accustomed to sitting in rooms together to hash out their positions and drafting comments to one another to clarify the pros and cons of various approaches. But, notwithstanding the edicts of any Administration, it will by necessity be a deliberative process.

Conclusion

Which gets to the original question as to what the impact of Trump 2.0 will be on FERC.

While nothing in DC will be business as usual in the next few years, major industry disruptions like those that are likely to occur elsewhere in the federal government on energy issues are not expected at FERC. Of course, FERC’s continued independence relies on the individual Commissioners maintaining their independence from the Administration. But there is nothing to suggest that the current Republican Commissioners would not keep their demonstrated focus on meeting the technology-neutral objectives of the Federal Power Act. For decades, FERC has largely been a non-partisan agency that provides a relatively predictable level of regulatory certainty to a critical industry. That is not likely to change.  

Then-Candidate Trump said in April 2023 that his goal was to “bring the independent agencies, such as the [Federal Communications (FCC)] and the [Federal Trade Commission (FTC)], back under Presidential authority, as the Constitution demands.”[3] While Trump did not expressly mention FERC, the same would presumably apply. (Perhaps the omission was largely related to the fact that, unlike the FCC and FTC, “FERC” is not a household acronym, notwithstanding its impact on our daily lives. Perhaps, “FERC” will become more recognizable in an era of massive data center and AI growth). He argued that his Administration would require any proposed regulations from independent agencies be submitted for “White House review.” However that would likely require an act of Congress to implement.  

But stay tuned. If nothing else, the first week of the Trump Administration has demonstrated that we should expect the unexpected.