FERC Section 206 Show-Cause Filings: RTOs Propose Landmark "BYONG" and Capacity Market Exclusions

FERC Section 206 Show-Cause Filings: RTOs Propose Landmark "BYONG" and Capacity Market Exclusions

On June 18, 2026, the Federal Energy Regulatory Commission (FERC) issued a landmark suite of six contemporaneous show-cause orders under Section 206 of the Federal Power Act (Dockets EL26-67 through EL26-72). Directed at all six Regional Transmission Organizations and Independent System Operators (RTOs/ISOs) under its jurisdiction, the orders preliminarily found that current tariffs are "unjust and unreasonable" regarding the integration of large commercial and industrial loads (specifically AI data centers). FERC gave operators 60 days to either defend their existing tariffs or propose reforms to ensure timely, orderly, and non-discriminatory grid access.

On July 20, 2026, all six regional grid operators filed their large-load resource adequacy reports with FERC, revealing a stark divergence in how different regions intend to manage the AI power surge.

ISO New England's Landmark "BYONG" and Capacity Market Exclusion

In its filing under Docket EL26-72-000, ISO New England (ISO-NE) proposed the most aggressive and structurally transformative framework in the nation. Because the region has historically flat load and has not yet connected massive data center hubs, ISO-NE is designing rules "ahead of the wave."

ISO-NE's proposal consists of two complementary halves:

1. "Bring Your Own New Generation" (BYONG): ISO-NE intends to require new large loads to "bring their own" incremental new generation to serve their demand. This will be modeled on the Southwest Power Pool's (SPP) Conditional High Impact Large Load Service (CHILLS) rules, allowing data centers to receive energy on a long-term non-firm basis (subject to strict flexibility and curtailment rules) for up to seven years while designated resources and network upgrades are completed.
2. Excluding Large Loads from the Installed Capacity Requirement (ICR): In a massive structural shift, ISO-NE proposes to exclude new large loads from the system load forecasts used to set the capacity market's demand curves and the ICR. This ensures the capacity market will not procure incremental capacity on behalf of new large loads. Existing ratepayers are shielded from capacity price spikes, and the entire cost of procuring new generation is shifted directly onto data center developers.

MISO's Fast-Track "Zero Injection" Interconnection

In contrast, the Midcontinent Independent System Operator (MISO), under Docket EL26-70, focused on creating fast-track interconnection pathways to accelerate connection times for co-located generation:

• Zero Injection Generator Interconnection Agreement (ZI-GIA): MISO's proposal (filed July 31, 2026) covers generation that serves only a co-located load at the same substation and never exports power onto the broader transmission system. Because there is zero net injection, MISO expects network upgrades to be capped at the substation level, allowing developers to bypass slow, multi-year network studies.
• Large Load Parallel Study Process: MISO's companion initiative (targeting a late September 2026 filing) will concurrently study large loads of 250 MW or more alongside their associated generation, with generation nameplate capacity capped at 150% of the identified load. This process targets a fast-tracked 120-day timeline.

Other Regional Approaches and Timelines

The remaining operators have proposed varying compliance vehicles under their respective dockets:

• Southwest Power Pool (SPP, EL26-68) is pursuing Price Adaptive Load (PAL) and Price Adaptive Load Service (PALS), with a filing target of November 16, 2026.
• California ISO (CAISO, EL26-71) is using a Large Load stakeholder initiative as its compliance vehicle, targeting November 16, 2026.
• New York ISO (NYISO, EL26-69) is proposing planning and market reforms, targeting a March 2027 filing.

While the August 17, 2026 deadline represents the official 60-day show-cause response deadline, operators have utilized abeyances and Section 205 filings to push detailed rule text into late 2026 and 2027. However, the operational filings that govern what developers must buy—such as SPP's CHILLS and MISO's ZI-GIA—are already moving forward, shifting generation-side equipment costs out of utility rate bases and directly onto data center developers.

Verbatim Quotes

From ISO-NE's July 20, 2026 informational report to FERC:

"While those loads have yet to materialize in New England, ISO-NE believes that two related actions will be necessary: requiring new large loads to 'bring their own' incremental new generation; and excluding new large loads from the load-side requirements of the capacity market (i.e., the Installed Capacity Requirement). Both changes are intended to avoid cost-shifts and adverse reliability risks.¹"

"Conceptually, the exclusion of large loads from the capacity market’s Installed Capacity Requirement complements the 'bring your own new generation' obligation. Namely, the capacity market will not procure incremental capacity on behalf of new large loads, which will be responsible for their own energy supply."