Energy Cost Fairness and Reliability Act of 2026
- Sponsor
- Sen. Schiff, Adam B. [D-CA]
- Committees
- Energy and Natural Resources Committee (primary)
- Last action
- May 18, 2026
Bottom line
This bill aims to manage the rapid growth of large electricity loads, particularly from data centers, by imposing new interconnection requirements and cost responsibilities on large load customers to protect grid reliability and affordability for other ratepayers.
What it actually does
This bill amends the Federal Power Act to mandate that the Federal Energy Regulatory Commission (FERC) establish a formal interconnection queue system for large load facilities, such as data centers, seeking to connect to the interstate transmission system. It requires large load customers to bear 100% of interconnection study and network upgrade costs, demonstrate demand flexibility and curtailability, and arrange for new generating resources. The bill also directs the Department of Energy (DOE) to collect data on data center energy use and establish an artificial intelligence (AI) testbed.
Proponents argue
Proponents argue the bill is crucial for maintaining grid reliability and ensuring fair electricity costs for residential consumers amidst the unprecedented proliferation of large load facilities like data centers. They contend that these facilities pose serious challenges to grid resource adequacy and that current interconnection processes are insufficient. The bill promotes responsible energy infrastructure investment, energy security, and technological growth compatible with sustainability by requiring large loads to contribute to grid stability and new generation.
Opponents contend
Opponents might argue that the stringent requirements, particularly the 100% cost assignment for network upgrades and the mandates for demand flexibility and new generation, could stifle technological innovation and economic growth driven by data centers and electrification. They might contend that these measures could increase the cost of doing business in the U.S., potentially driving large load facilities to other regions or countries, thereby undermining global technological leadership.
The bill is moderately detailed but clearly structured, allowing an informed reader to understand its core provisions within a reasonable timeframe.
Sec. 3, FPA Sec. 224(a)
Definitions for Large Load Facilities
This provision establishes the specific meanings for terms used throughout the new section, such as what constitutes a 'large load facility' (over 50 megawatts peak demand), 'curtailable' load, and 'demand flexibility,' which are central to the bill's regulatory framework. It clarifies the scope of facilities and operational capabilities subject to the new regulations.
Supporters argue
Proponents argue that clear and precise definitions are essential for the consistent and effective application of the new regulatory framework, ensuring all stakeholders understand their obligations and the scope of the bill.
Critics contend
No specific opposition is typically raised against definitions themselves, though the thresholds or specific inclusions/exclusions within definitions can become points of contention for affected industries.
Tradeoffs
The definitions balance the need for broad applicability to address grid challenges with the specificity required to target particular types of energy-intensive facilities.
Sec. 3, FPA Sec. 224(b)
Standard Interconnection Procedures for Large Loads
This provision mandates that FERC issue one or more final rules within one year to establish formal interconnection procedures for large loads requesting to connect to the interstate transmission system. This creates a structured queue system for large loads, similar to existing processes for generators, to manage their integration into the grid.
Sec. 3, FPA Sec. 224(b)(1)
100% Cost Responsibility for Interconnection Studies
This provision requires any large load customer seeking to interconnect to the interstate transmission system to pay 100 percent of the costs associated with interconnection studies. It also states that failure to satisfy these payment obligations will prohibit the large load customer from interconnection or receiving transmission service.
Sec. 3, FPA Sec. 224(b)(4)
Mandatory Demand Flexibility, Curtailability, and New Generation
This provision mandates that large load customers must demonstrate technical capability for demand flexibility and curtailability, and enter into binding agreements to exercise these capabilities. Furthermore, they must guarantee the construction or arrangement of new generating facilities (including distributed energy resources) to supply the power needed by their new large load facility, ensuring it temporally matches capacity needs.
Sec. 3, FPA Sec. 224(b)(5)
Prioritization for Social and Environmental Criteria
This provision establishes criteria for prioritizing large load interconnection requests within the queue. Prioritization is granted if the customer implements a battery energy storage system for backup, adheres to prevailing wage and registered apprenticeship requirements for construction, and ensures labor peace agreements for the operation and maintenance of new energy supply resources associated with the facility.
Sec. 3, FPA Sec. 224(d)
Full Cost Recovery for Network Upgrades from Large Loads
This provision requires large load customers to be responsible for 100% of network upgrade costs assigned through interconnection studies. These payments are explicitly nonrefundable, and FERC is prohibited from approving any tariff that includes crediting mechanisms, refunds, or offsets that would shift these costs to other transmission customers or credit them against future service charges. Payments must be made through a Commission-jurisdictional mechanism like upfront payments or surcharges.
Sec. 3, FPA Sec. 224(i)
DOE Data Collection on Data Centers
This provision authorizes the Secretary of Energy to require data center owners or operators to submit data necessary to identify trends in energy and water performance, assess actual energy use for AI activities, establish benchmarks, and support refined models for projecting future energy needs. It includes provisions for protecting confidential business information submitted by data centers.
Sec. 3, FPA Sec. 224(j)
DOE Artificial Intelligence Testbed and Report
This provision directs the Secretary of Energy to establish a data-center-scale AI testbed at a National Laboratory within 180 days. This testbed will facilitate research on energy-efficient AI algorithms, hardware, grid integration, and load flexibility. It also requires the Secretary to submit a report to Congress and FERC within one year, assessing load growth, grid impacts, and providing recommendations for improving forecasting, energy consumption, and policy.
These subsections allow colocated large load facilities to receive non-firm transmission access for withdrawing electric energy and non-firm injection rights without the need for deliverability studies. This access is explicitly subject to curtailment or interruption before firm service and is priced to reflect its non-firm nature.
Sec. 3, FPA Sec. 224(b)(6)-(7)
Why it matters:It is standard legislative practice to include specific operational flexibilities and their limitations within detailed regulatory frameworks, ensuring comprehensive coverage of different scenarios.
Case for: Supporters argue that these provisions offer some operational flexibility for colocated facilities, potentially reducing their need for more costly firm transmission service, while crucially protecting grid reliability by making the service interruptible.
Case against: Critics might contend that 'non-firm' access is insufficient for the reliable operations of many large load facilities, potentially pushing them to seek firm service anyway, or that it creates a less desirable two-tiered system for certain users.
Estimated impact: Provides a limited, conditional pathway for grid interaction for colocated facilities, potentially reducing their firm transmission demand but offering less operational certainty.
This subsection prevents an existing generating facility from withdrawing any of its capacity to begin serving a large load facility if that withdrawal would result in a loss of capacity for other customers, unless a new generation resource is interconnected to compensate for the loss or all necessary network upgrades are completed and operational.
Sec. 3, FPA Sec. 224(c)
Why it matters:It is standard legislative practice to include such safeguarding provisions within new regulatory frameworks to prevent unintended negative consequences on existing services and customers.
Case for: Proponents argue this provision is crucial for safeguarding existing grid reliability and ensuring that the integration of new large loads does not inadvertently destabilize service or reduce capacity for current customers.
Case against: Critics might argue that this adds an additional hurdle for large load facilities seeking to utilize existing generation resources, even if colocated, potentially complicating their energy supply arrangements.
Estimated impact: Prevents potential reliability issues and ensures stable service for existing customers by imposing strict conditions on capacity reallocation to new large loads.
This subparagraph explicitly prohibits FERC from approving any tariff that includes a crediting mechanism, refund, or offset that would allow the costs of network upgrades assigned to large load customers to be recovered from any other transmission customer or credited against future transmission or retail service charges.
Sec. 3, FPA Sec. 224(d)(1)(C)
Why it matters:This provision is a key enforcement mechanism designed to ensure that the '100% cost responsibility' for network upgrades is truly implemented without loopholes, preventing creative accounting from shifting costs.
Case for: Supporters argue that this strict prohibition is essential to ensure full adherence to the principle that large load facilities bear the entire cost of their grid impacts, thereby preventing any hidden subsidies from other ratepayers.
Case against: Critics might argue that such a rigid prohibition removes flexibility for innovative financing or cost-sharing models that could potentially benefit the grid more broadly or ease the burden on large load developers.
Estimated impact: Reinforces the direct assignment of network upgrade costs, potentially increasing the upfront financial burden for large load developers and ensuring no cost shifts to other ratepayers.