By Scott Patterson
WASHINGTON -- At a conference of state utility regulators in Seattle, a group of Trump administration officials got an earful of complaints about a plan the White House is pushing for the federal government to take control of part of the country's power grid in the service of artificial intelligence.
Their concerns stem from instructions Energy Secretary Chris Wright recently gave to the Federal Energy Regulatory Commission, which is known as FERC and oversees wholesale power in the U.S., to draft new rules that would give it oversight of how giant data centers connect to the power grid. The process is typically overseen by states.
During the conference last month, regulators told administration energy officials such as James Danly, deputy secretary of the Energy Department, that Wright's plan violates the 1935 Federal Power Act, which carves out the separation of oversight of the grid between state and federal governments, according to people familiar with the conversations.
The clash between states and the federal government is a result of the Trump administration's dueling political desires. The administration is looking for ways to support electricity-guzzling data centers that are critical to the country's AI race with China; at the same time, President Trump's advisers are looking for ways to lower costs for Americans concerned about living expenses, including electricity bills.
By overseeing how data centers hook up to the grid, federal regulators could make it easier and faster for data centers to construct their own power supply, administration officials have argued. They have said the rule could turbocharge data center growth as AI giants such as Google, Amazon, Meta and OpenAI open up their trillion-dollar pocketbooks to build power plants and potentially help solve supply-chain bottlenecks that have slowed growth of new generation capacity.
Companies such as Trump Media & Technology Group and Alphabet-backed fusion-energy company TAE Technologies, which agreed to a $6 billion merger, are betting the data-center boom will continue for years.
Neil Chatterjee, chairman of FERC in Trump's first administration, said Wright's initiative "is the most consequential thing in energy going right now." He said the traditionally conservative utility industry has been slow to respond to the burst in demand from data centers and other big industrial customers and that has led to rising utility bills in parts of the country.
On Dec. 16, Democratic Sens. Elizabeth Warren (Mass.), Chris Van Hollen (Md.) and Richard Blumenthal (Conn.) said they had launched a probe into how data centers are pushing up electricity costs for consumers.
At a Washington gas conference in early December, Wright said that fast-tracking energy production for data centers will ultimately make electricity cheaper. "When people say, 'AI is going to drive up my price of electricity,' it's actually the opposite," he said.
Wright told FERC to complete the new rule by April 30, a pace experts said amounted to warp speed for a traditionally careful and plodding regulator.
The move comes amid heightened tensions between the federal government and states over AI oversight. Florida Gov. Ron DeSantis, a Republican, recently unveiled state legislation to curb AI's impact on consumers and to prohibit "utilities from charging Florida residents more to support hyperscale data center development."
Trump signed an executive order earlier this month that aims to override state laws on artificial intelligence. It would allow the Justice Department to punish states with rules deemed restrictive for AI, in a move to bring the U.S. under one federal standard. "We have to be unified," Trump said, noting that China didn't have to contend with state legislatures.
White House AI Czar David Sacks and other administration officials have pushed to take on state AI laws, hoping to remove obstacles for tech companies competing with Chinese companies.
Building large-scale power plants or expanding grid infrastructure takes years, and delays are getting longer amid equipment shortages, a labor crunch and rising costs. The Trump administration's new approach seeks to cut through the energy-supply gridlock by allowing data-center operators to quickly plug into the grid and build their own power generation.
The risk of the high-speed approach is that the administration cuts corners and finds itself entangled in a protracted legal morass, legal and energy experts said. "FERC knows they need to be thorough. If they do a slapdash on it, they're going to lose in court, and it's going to take longer" to boost data center growth, said Mike McKenna, who served as deputy assistant to the president in Trump's first administration.
The administration's plan "is one of the biggest federal power grabs at the expense of the states I have seen in 21 years as a state and federal utility regulator" that will result in unnecessary litigation, said former FERC Chairman Mark Christie, a Republican.
FERC could decline to follow Wright's proposal, but several of its members have already signaled that they are on board with the administration's agenda. Newly installed FERC Chairman Laura Swett said in a November open meeting that in addition to the commission's core goal of "keeping the lights on" for Americans, her priority "is to ensure that our country can connect and power data centers as quickly and as durably as possible."
Write to Scott Patterson at scott.patterson@wsj.com
(END) Dow Jones Newswires
December 26, 2025 22:00 ET (03:00 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
Comments