Data Centers Are Already Stressing the Grid. Regulators Are Playing Catch-up.

Despite ongoing warnings about the risks data centers pose to the stability of the electric system, the reliability of the grid remains precarious, hanging between outdated regulations that fail to adequately oversee hyperscale data centers.

Two weeks ago, data centers totaling more than three gigawatts (GW) disconnected from the grid following a minor transmission fault in Virginia, resorting to their own polluting backup power systems. This abrupt load reduction, equivalent to the electricity usage of millions of homes, caused significant fluctuations in the grid’s voltage and frequency, affecting areas as far as Illinois, and took nearly 10 minutes to stabilize. Although grid fluctuations are common and typically resolved within seconds, such extensive disturbances pose a risk of cascading failures that could lead to blackouts, with impacts felt across state lines due to the data centers’ connection to the transmission system.

This situation might feel familiar, reminiscent of a similar event in July 2024 when 1.5 GW of data centers disconnected from the grid due to a transmission fault. Additionally, there have been 26 documented loss of load events in Texas over the past two years. Despite efforts by regulators to draft standards and make recommendations, the recurrence of these incidents underscores that more needs to be done. To mitigate the increasing risk, state regulators and utilities must urgently implement transparent and robust requirements and prepare to enforce upcoming standards.

The rapid growth of data centers causes reliability risks

The events in Virginia are technically termed “customer initiated load reduction” or CILR. In both instances, significant grid damage was averted, though utilities received complaints about flickering lights and unusual noises from appliances, caused by deviations in the grid’s voltage and frequency.

Following the 2024 incident, the president of the North American Electric Reliability Corporation (NERC) described it as a “five-alarm fire when it comes to reliability.” NERC, which develops and enforces grid reliability standards, operates under the authority of FERC, the Federal Energy Regulatory Commission, which regulates the bulk power system and oversees the large transmission wires that many hyperscale data centers connect to.

Despite NERC’s efforts, data centers continue to pose challenges to grid stability. While I’ll outline the actions taken by FERC and NERC, it’s clear that these measures alone are insufficient—state regulators must also take decisive action.

What have NERC and FERC been up to?

Here is a timeline of significant actions taken by NERC and FERC, framed by these two events:

• January 2025: NERC published an incident review of the 1.5 GW CILR event in 2024, advising transmission planners and operators to take proactive measures to prevent future significant issues.
• September 2025: NERC issued a level two alert with specific recommendations to mitigate reliability risks from data centers. A summary of responses to the alert showed that few utilities are adhering to the recommendations or making plans to implement them.
• October 2025: The Secretary of Energy issued an “advanced notice of proposed rulemaking”, instructing FERC to develop rules ensuring the timely and orderly interconnection of large loads to the transmission system.
• May 2026: NERC issued reliability guidelines, a precursor to enforceable standards, and released a level three alert (NERC’s highest), detailing seven critical actions utilities must take to address risks from computational loads on the bulk power system.
• June 2026: In response to the October directive, FERC issued “show cause” orders to regional grid operators, concluding that none had sufficiently addressed data center reliability concerns.

Finally, in July, FERC mandated NERC to establish reliability requirements by year’s end, a timeline NERC had previously suggested. This resolution addressed a key question about NERC’s authority to require data centers to register, thus subjecting them to reliability standards. NERC’s CEO previously raised concerns about this in a letter to members, highlighting that “registering load-side assets is unprecedented.”

Data centers are coming online even as standards evolve

Despite these developments, significant gaps remain. NERC highlighted these issues in a March 2026 whitepaper, noting that inadequate coordination among regulators, utilities, and data centers can lead to inefficiencies, misalignments, and increased system reliability risks.

A major challenge is that data centers are already operational, with more under construction now, yet enforceable standards are still months away. A recent report from Berkeley Lab estimates that from 2024, when NERC first documented data center CILR, to 2027—the earliest possible enforcement of reliability standards—the total data center load is expected to nearly double.

This growth would pose less of a challenge to grid reliability if utilities were taking the issue more seriously by establishing sufficient interim requirements, or if regulators planned to apply future standards retroactively. Unfortunately, neither is happening.

It’s particularly problematic given the regular excuse from utilities for not accelerating the connection of clean energy: a lack of confidence in existing standards for technologies like rooftop solar. Yet, they are hastily interconnecting data centers without any applicable standards.

The Midwest grid operator takes a step backward on enforcing reliability standards

MISO, the Midcontinent Independent System Operator, is one of the grid operators under FERC jurisdiction responsible for incorporating NERC standards into its interconnection policies. In a June presentation, MISO proposed phasing in NERC requirements by late 2027, with standards applied retroactively to data centers built after October 2026, or existing centers expanding by over 25 MW.

However, a month later, MISO revised its approach, deciding to “manage” existing data centers, with full standards applying only to new ones. MISO cited feedback from unnamed stakeholders when announcing this change. During a related call, MISO estimated that up to 30 GW of data centers in its territory would be exempt from these standards. While the utilities serving them may have their own standards, there is no transparency regarding their adequacy or enforcement.

Given that 1.5 GW of data center load in Virginia triggered an event NERC described as a “five-alarm fire,” the potential risk in MISO’s territory is significantly higher, potentially 20 times greater.

State regulators must fill this gap

While FERC and NERC are active on a federal level, progress is slow. Regionally, FERC’s show cause orders criticized all six grid operators, finding insufficient action, resulting in a regulatory gap. Thus, it is crucial for state regulators—public service commissions and public utility commissions—to intervene.

In our state-level advocacy, UCS has been advocating for such measures.

When Michigan utility I&M proposed a large load tariff for approval, I recommended the state establish a working group to address data center reliability risks, even as NERC and regional requirements are pending. This recommendation was endorsed by the administrative law judge, with a commission decision expected soon.

I expanded on this testimony when Michigan utility DTE sought approval to connect a 1 GW Google data center, arguing in our brief that scrutiny of DTE’s confidential requirements is necessary as standards are still in development.

This week, I submitted additional testimony in Michigan urging the Commission to apply any NERC and MISO standards retroactively.

In a Louisiana docket aimed at developing large load guidelines, UCS submitted extensive comments documenting reliability risks from data centers and recommended forming a workgroup similar to what we proposed in Michigan.

UCS also submitted parts of these comments in a Maine docket to examine the impact of data centers.

Next steps

The landscape is complex, and I haven’t even touched on the work of industry-expert groups, developments from other regional grid operators, or activities in Europe. Nonetheless, the rapid developments in this area highlight the necessity for regulators to demand greater transparency from data centers and utilities and to plan for retroactive application of standards as they are developed.

The 3 GW load loss incident I mentioned earlier illustrates the critical nature of this issue: data centers are affecting the grid’s reliability even as experts rush to establish standards and requirements. We cannot simply wait for those standards to be ready. Allowing this delay risks escalating grid stress, potentially leading to widespread grid damage and blackouts.