Mexico currently depends on natural gas imported from the United States. Of the nine billion cubic feet of gas that the country consumes daily, 75% comes is imported from Texas (80%) and California (20%). To address this situation, the Federal Government has identified the exploitation of shale gas as a solution. According to data from Pemex, Mexico has 141.5 trillion cubic feet of gas in unconventional reservoirs that require fracking, in addition to an estimated 83 trillion cubic feet in conventional reservoirs.

The three geographic areas with the greatest identified potential are: (i) the Sabinas-Burro-Picachos Basin, located in Coahuila, Nuevo Le贸n, and Tamaulipas; (ii) the Burgos Basin, in the same northeastern region of the country; and (iii) the Tampico-Misantla Basin, which spans Veracruz, San Luis Potos铆, Hidalgo, and Puebla. The Burgos Basin shares the same geological formation as the “Eagle Ford Shale” field in Texas, considered one of the most productive in the world, which suggests significant production potential.

The government鈥檚 strategy contemplates a phased increase in natural gas production: from the current 2.3 billion cubic feet per day to 5.8 billion by the end of the presidential term and reaching 8.31 billion cubic feet per day by 2035, which would represent an increase of 261%. Pemex will be the entity responsible for the project, although it is acknowledged that the state-owned oil company has not previously engaged in this type of exploration.

Considering the foregoing, the opening of private sector participation in the exploitation of these resources is highly probable, given that such activity requires investment. In this regard, it is anticipated that partnership arrangements between Pemex and private companies will need to be established, primarily with recognized U.S. extraction companies in the sector located in the area of Texas comprising the Burgos Basin, due to their technological expertise in conducting fracking operations.

The legal and contractual framework under which these partnerships will be structured has not been defined; however, it is certain that, if private sector involvement is permitted, the hydrocarbon extraction intervention policies that existed in Mexico prior to the previous administration will be reinstated. The viability of these projects will depend greatly on the political will to remove the legal barriers that currently limit private sector participation in hydrocarbon extraction.

Foley is at your disposal to advise you on the analysis of these opportunities and on the structuring of investment strategies adapted to this new regulatory context.

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Purpose

HB 2992, titled the “Data Center Customer Protection Act of 2026,” is designed to protect residential, commercial, and industrial electricity ratepayers from bearing 鈥渦njust鈥� costs associated with providing electric service to new, large-scale data center, cryptocurrency mining, and artificial intelligence computing facilities. The lead sponsor of the bill is Representative Brad Boles, R-Marlow. Representative Boles has described the bill by stating 鈥溾�hat this is going to do is basically make sure that the data centers pay for their portion of infrastructure costs.   So, for instance, if there鈥檚 a new power facility going in, and let鈥檚 say 80% of that facility is dedicated to a data center, 20% is dedicated to residential, industrial, the data center will pay for 80% of their infrastructure costs, which would be all 100% of their costs that they brought to the grid.鈥�

Key Definitions

• “Large load customer” is defined as new data centers, new cryptocurrency mining operations, and new AI computing facilities that contract with an electric supplier to add 75 megawatts or more of electric load per facility (or in aggregate behind a single point of interconnection) after July 1, 2026. Residential, commercial, agricultural, and industrial ratepayers are expressly excluded, as are entities that build generation for behind-the-meter projects. 
   
• “Electric supplier” covers all entities providing electric service in Oklahoma, including investor-owned utilities, electric cooperatives, municipal utilities, and public power utilities. 

Key Provisions

1. Ratepayer Protection Mandate. Applicable governing bodies must ensure that existing residential, commercial, and industrial customers are protected from paying unjust rates resulting directly from electric service to large load customers. All rates must be fair, just, and reasonable, and costs and revenues must be assigned and allocated among customers in accordance with cost causation principles. 
    
2. Separate Tariffs and Terms of Service. Every electric supplier must establish and maintain separate terms, conditions, and tariffs for large load customers. These must include credit requirements and other measures to ensure that large load customers reimburse the utility for all costs fairly allocated to them鈥攊ncluding costs that may remain unrecovered if the customer departs the system or materially reduces load. 
    
3. Minimum 10-Year Service Commitment. The term of service for a large load customer must be at least ten (10) years. An exception exists for public power utilities using tax-exempt municipal financing, where the term is the lesser of ten years or the applicable IRS guideline. 
    
4. Universal Applicability. The Act applies to all retail electric suppliers serving load in Oklahoma, including those regulated by the Oklahoma Corporation Commission (OCC), electric cooperatives, municipal utilities, and public power utilities. 
    
5. OCC Rulemaking and Enforcement. The OCC is authorized to promulgate rules to effectuate the Act and has exclusive jurisdiction to enforce its provisions for electric suppliers under its rate jurisdiction. Compliance with the Act is a condition of providing service to large load customers. 

Effective Date

The bill provides for an effective date of July 1, 2026.  However, the current version of the bill also contains an emergency clause, declaring that the Act takes effect immediately upon passage by the House of Representatives and Senate and approval by the Governor, given the necessity for preservation of public peace, health, or safety.

Implications for Energy Sector Stakeholders

• Data Center and AI Facility Developers. Any new data center, crypto mining, or AI computing facility planning to draw 75 MW or more in Oklahoma should anticipate being subject to a separate, dedicated rate class with potentially significant credit requirements and a mandatory 10-year service commitment. This could affect project financing models and site-selection decisions.
   
• Electric Utilities. All utilities鈥攊nvestor-owned, cooperative, and municipal鈥攚ill need to develop and file new tariffs and service terms specifically for large load customers, which will require coordination with the OCC or their respective governing body. Utilities must build in protections against stranded costs in the event a large load customer exits or curtails its load. 
   
• Existing Ratepayers and Industrial Loads. The bill is structured to insulate existing customer classes from rate increases driven by infrastructure buildout for these new, high-demand facilities. However, traditional industrial ratepayers and behind-the-meter generation projects are expressly excluded from the “large load customer” definition and would not be subject to the new requirements. 
   
• Infrastructure and Real Estate. Developers planning large-scale energy-intensive facilities in Oklahoma should factor in the regulatory costs and long-term contractual commitments this legislation would impose when evaluating potential sites. The 10-year minimum service term, in particular, may affect lease structuring and project timelines for facilities intended to serve data center tenants. 

As noted above, the bill is still only pending legislation and would not become effective until and unless it is passed by the State Senate and signed by the Governor.  The full text of the proposed bill can be found .

Other Oklahoma Bills Affecting Data Centers Introduced During 2026 Legislative Session

As noted above, during the current Legislative session several other bills which would have affected data centers in Oklahoma were proposed but failed to advance.  Most notable among these proposed bills was Senate Bill 1488.  Introduced by Senator Kendal Sacchieri, R-Blanchard, proposed SB 1488 would have imposed a complete moratorium on construction of data centers in Oklahoma with a load of 100MW or more until November 1, 2029. In the interim, the bill would have required the OCC to conduct a study of the potential impacts of data centers in Oklahoma.  Industry stakeholders will be carefully monitoring the 2027 Legislative session to see if a similar bill is introduced next year, given the potentially drastic effect of such a measure.

Date Centers Also in Focus on Other State Legislatures

A number of other states are currently considering legislation that would affect the data center industry.  Click here for our recent blog post discussing potential 2027 Texas legislation.
 

About Foley鈥檚 Energy & Infrastructure Sector

Foley鈥檚 cross-disciplinary Energy & Infrastructure team of more than 200 attorneys regularly represents clients in the traditional and renewable power, oil & gas, nuclear, and infrastructure and energy transition industries. Foley offers comprehensive legal services for energy and infrastructure companies and projects to guide clients through every phase鈥攆rom development and site control to investment, commercial contracting and financing. Foley can also assist companies involved in mining, processing, and disposal to navigate the various state and federal regulations, international agreements, and national security considerations.

The post Proposed Legislation Pending in Oklahoma State Legislature Would Impact Responsibility for Payment of Costs Associated with Data Centers and Other Large Load Facilities appeared first on 番茄社区; Lardner LLP.

The Growing Pains of Data Centers

• Balancing Growth and Rights: Lawmakers are seeking ways to balance the economic benefits of data center growth against the impact on local landowners, private property rights, and community integrity.  Systemic potential economic benefit has brushed up against concerns local communities will have difficulty absorbing the impacts (Senate Business and Commerce Committee).
• National Security & Competitiveness: The state will study the development of data centers specifically in the context of their importance to global competitiveness and national security (House State Affairs Committee).
• Framework Adequacy: Committees are evaluating whether current statutory, regulatory, and infrastructure frameworks are sufficient to meet the rapidly increasing demand from large electric loads (Senate Business and Commerce Committee; House State Affairs Committee).

A Multi-Billion Dollar Tax Question

• Sales Tax Exemption Review: Leadership is reviewing the cost and consequences of the sales tax exemption for qualifying data centers first enacted in 2013 (Senate Finance Committee), and which has grown from $14 million to a projected $3 billion.
• New Safeguards: Lawmakers are tasked with recommending new “safeguards” for the program, to ensure that Texans are receiving a clear benefit from these massive data center investments in exchange for the tax benefits provided to data centers (Senate Finance Committee).

Keeping the Lights On: Grid Reliability

• Large Load Interconnection: Committees are closely monitoring the implementation of SB 6, which addresses the planning and interconnection for facilities requiring 75 MW or more (Senate Business and Commerce Committee; House State Affairs Committee).
• ERCOT Scrutiny: Policymakers will evaluate ERCOT鈥檚 proposed “Large Load Batch Study Process” and its impact on timing of large load projects (House State Affairs Committee; Senate Business and Commerce Committee).
• Battery Storage: Rules for battery storage and safety are under review to allow for continued deployment while protecting local communities (House State Affairs Committee).

The Water Equation

• Cooling Transparency: There is a new push to improve transparency regarding the “high-consumption cooling technologies” used by data centers (Senate Water, Agriculture, and Rural Affairs Committee).
• Protecting Affordability: A primary goal is ensuring that industrial growth does not compromise the affordability of water for Texas residents and agricultural producers (Senate Water, Agriculture, and Rural Affairs Committee).
• Water Usage & Stewardship: The House is examining total water usage by data centers and considering policy options to enhance water stewardship (House Natural Resources Committee).
• Aquifer Viability: Lawmakers will study whether current groundwater regulation is adequately protecting the long-term viability of the state’s aquifers (House Natural Resources Committee).

AI Impact on the State鈥檚 Economy, Budget, and Workforce:

• Balancing innovation with protecting consumer/privacy: Legislators are looking at regulation and use of artificial intelligence systems and the management of data by governmental entities as set forth in SB 1964 and regulation more broadly of the use of artificial intelligence systems in Texas under the state鈥檚 pioneering (along with several other states) AI regulation and use through HB 149 (Senate Business & Commerce).  In connection with public health, House members will evaluate potential risks to patient safety, privacy, and access to care for Texans attributable to AI use in the health care system (House Public Health).
• Looking at how AI impacts the Texas economy, public health and education, and workforce participation: Senators will study the impact of AI on the Texas workforce and its implications for economic competitiveness (Senate Economic Development Committee) while House members look at the role of technology and artificial intelligence in education (House Public Education). House members will also study the impact of social media platforms and artificial intelligence technologies on the mental health, cognitive development, and behavioral well-being of minors in Texas and the use of artificial intelligence in the health care system to improve access, quality, and efficiency of care (House Public Health).
• Texas DOGE via use of AI: Legislators will study how the state can leverage AI to detect fraud, waste, and abuse of taxpayer resources (House Delivery of Government Efficiency Committee).
• AI in Legal Practice:  House members will study the risks and benefits associated with using artificial intelligence in the legal profession and judiciary and how to mitigate actual or potential harms (House Judiciary and Civil Jurisprudence).

How We Can Help These interim charges signal that the era of unregulated data center growth in Texas may be shifting toward a period of greater oversight. Foley maintains strong ties with the leadership and committee members who will be conducting these studies. If you are concerned about how these policy shifts might affect your operations, or if you would like to have a seat at the table during these hearings, we are ready to help you navigate the process.

About Foley鈥檚 Energy & Infrastructure Sector

Foley鈥檚 cross-disciplinary Energy & Infrastructure team of more than 200 attorneys regularly represents clients in the traditional and renewable power, oil & gas, nuclear, and infrastructure and energy transition industries. Foley offers comprehensive legal services for energy and infrastructure companies and projects to guide clients through every phase鈥攆rom development and site control to investment, commercial contracting and financing. Foley can also assist companies involved in mining, processing, and disposal to navigate the various state and federal regulations, international agreements, and national security considerations.

About Foley鈥檚 Texas Government Solutions Group

番茄社区; Lardner鈥檚 Texas Government Solutions team provides clients with unparalleled legal and legislative representation and counseling. The attorneys and lobbyists manage legislative and regulatory proposals at the Texas Capitol and before state agencies. The group counsels clients regarding key governmental processes and areas of law based upon decades of collective legal or governmental experience. Our Austin office is also home to a unique federal, state, and local government enforcement defense and investigations (GEDI) and litigation defense team, as well as several members of Foley鈥檚 national State Attorneys General practice.

The post Texas Legislature Sets Its Sights on Data Centers and AI: What You Need to Know appeared first on 番茄社区; Lardner LLP.

Senate Bill 6, which was enacted in June 2025 (89th Legislature), requires the PUCT to establish formal standards for interconnecting large load customers within the ERCOT power region. These standards must be designed to support state business development while maintaining grid reliability and minimizing the potential for “stranded infrastructure costs” which would be borne by the rate payers.

Under the new Section 37.0561 of the Utilities Code, the PUCT is required to establish standards for any new or expanded interconnection where total demand at a single site exceeds 75 MW. The law mandates that these standards include:

• Demonstrated Site Control: Proof of ownership, lease, or legal interest.
• Fixed Study Fees: A flat screening study fee of at least $100,000.
• Uniform Financial Commitments: Security provided on a dollar-per-MW basis and contributions in aid of construction (CIAC).
• Mandatory Disclosures: Transparency regarding backup generation and “substantially similar” interconnection requests elsewhere.

2. The Intermediate Agreement: The Mandatory First Step

The proposed rule introduces an “Intermediate Agreement” – a preliminary contract that must be executed with the utility before a project can be submitted to ERCOT for a formal study.

To execute this agreement, customers must provide:

• Proof of Site Control: A deed, a signed lease (minimum 5-year duration from the target energization date), or a signed purchase/lease option.
• Upfront Financial Security: $50,000 per MW of requested peak demand.
• Study Fees: Study fees of $100,000 to $300,000 depending on the size of the project.
• Detailed Project Maturity Data: Plans for site studies (geotechnical, water, gas), regulatory approvals (air/water permits), and phased energization schedules.

3. The Cost of Entry: Financial Obligations & CIAC

Financial requirements intensify following the completion of the interconnection study. Within 30 days of the study’s conclusion, the customer must execute a final Interconnection Agreement and fulfill the following:

• Non-Refundable Interconnection Fee: A payment of $50,000 per MW of contracted peak demand. Any balance from the initial security posted during the Intermediate Agreement will be applied toward this fee.
• No Interconnection Allowances: Large loads must pay 100% of direct interconnection costs (radial lines, substation upgrades) through a CIAC. Utilities are prohibited from offering allowances to offset these costs, and CIAC payments are non-refundable.
• Eligible Security Forms: Security must be cash, a corporate/parental guaranty (requires a BBB-/Baa3 rating), or a letter of credit from a major U.S. bank (rated A-/A3 or higher).

4. Transparency and Operational Risk

The rule seeks to eliminate speculative “line-jumping” through rigorous disclosure mandates:

• “Substantially Similar” Disclosures: At the Intermediate Agreement state, customers must disclose if they are pursuing similar requests elsewhere that could result in materially changing, delaying (by 1 year+), or withdrawing the current request.
• Grid Reliability & Curtailment: Customers must disclose on-site backup generation capable of serving at least 50% of demand. In energy emergencies, ERCOT may direct these customers to deploy backup generation or curtail their load.

5. Forfeiture and Refund Framework

The financial stakes for failing to reach or maintain operations are significant. The proposed rule adopts a graduated forfeiture and refund structure tied to project performance and follow-through:

• 80% Withdrawal Penalty: If a project is withdrawn or fails to meet milestones (within a 6-month grace period), the utility will draw down the security to cover costs. After costs are covered, only 20% of the remaining balance is refunded; the other 80% is forfeited to the utility’s rate base.
• The 5-Year Sustained Operation Rule: A full refund of the remaining financial security is only available after the customer sustains operations at the contracted peak demand for five years.

Overall Significance

Taken together, the proposed rules represent a material shift in ERCOT large鈥憀oad interconnection policy; from a relatively light鈥憈ouch queue access to a model emphasizing early commitment, financial discipline, and transparency. The PUCT has emphasized that the rule is still in draft form and expressly invited stakeholder comment, underscoring that details around the intermediate agreement and forfeiture mechanics remain active points of debate.

Action Items

• Evaluate Portfolios: Audit existing site control and queue positions for potential non-compliance under the new disclosure rules.
• Adjust Pro Formas: Finance teams must account for the $50,000/MW non-refundable fee and the 5-year operational requirement for capital recovery.
• Engage in Rulemaking: Consider submitting comments by the April 17 deadline regarding the impact of these financial commitments on project viability.

About Foley鈥檚 Texas Government Solutions Group

番茄社区; Lardner鈥檚 Texas Government Solutions team provides clients with unparalleled legal and legislative representation and counseling. The attorneys and lobbyists manage legislative and regulatory proposals at the Texas Capitol and before state agencies. The group counsels clients regarding key governmental processes and areas of law based upon decades of collective legal or governmental experience. Our Austin office is also home to a unique federal, state, and local government enforcement defense and investigations (GEDI) and litigation defense team, as well as several members of Foley鈥檚 national State Attorneys General practice.

About Foley鈥檚 Energy & Infrastructure Sector

Foley鈥檚 cross-disciplinary Energy & Infrastructure team of more than 200 attorneys regularly represents clients in the traditional and renewable power, oil & gas, nuclear, and infrastructure and energy transition industries. Foley offers comprehensive legal services for energy and infrastructure companies and projects to guide clients through every phase鈥攆rom development and site control to investment, commercial contracting and financing. Foley can also assist companies involved in mining, processing, and disposal to navigate the various state and federal regulations, international agreements, and national security considerations.

The post Public Utility Commission of Texas Issues Proposed Rules for Large Load Interconnections; What Data Center and AI facility Developers Need to Know appeared first on 番茄社区; Lardner LLP.

The post AI, Energy, and the Future of Data Centers: Key Takeaways from the Questions Shaping the Market appeared first on 番茄社区; Lardner LLP.

No party requested rehearing of the decision, so the court issued its mandate on March 10, 2026. Unless one of the parties seeks and receives Supreme Court review,[1] the case now returns to FERC, which must consider on the merits whether the re-run auction results are unjust and unreasonable under Section 206 and, if so, what relief is appropriate. 

Background

PJM is the Regional Transmission Organization that manages electricity transmission and markets across all or parts of thirteen Mid-Atlantic and Midwestern states and the District of Columbia, covering more than 67 million customers. It is the nation鈥檚 largest organized wholesale electricity market. PJM procures power generation capacity鈥攖he ability to produce electricity when necessary鈥攂y conducting auctions years in advance of when the capacity is expected to be needed. The results of these capacity auctions directly affect the prices consumers pay for electricity. 

The underlying dispute arose from PJM鈥檚 2024/25 capacity auction, which occurred in 2022. After bidding closed, PJM discovered an error in its calculation of the Locational Delivery Area Reliability Requirement (LDA Reliability Requirement) for the Delmarva Power & Light Company South Zone (DPL South Zone), a subsection of the DPL Pricing Zone covering parts of Delaware, Maryland, and Virginia. PJM had predicted that certain large power plants and solar facilities would participate in the auction, and because PJM considered both to be relatively unreliable sources of power, it had factored in a need for a correspondingly large amount of backup capacity. When those suppliers declined to participate in the auction at all, the additional backup capacity became unnecessary, but the inflated LDA Reliability Requirement remained. 

Seeking to avoid more than $100 million in excess capacity charges, PJM filed requests for relief with FERC under both Section 205 and Section 206 of the FPA,[2] asking FERC to approve a tariff amendment that would authorize PJM to modify the LDA Reliability Requirement before finalizing the results of the auction. In February 2023, FERC approved PJM鈥檚 request under Section 205 and denied its Section 206 filing as moot. PJM then amended its tariff, revised the LDA Reliability Requirement, and completed the auction using the adjusted LDA Reliability Requirement.

The Third Circuit鈥檚 Filed-Rate Doctrine Ruling

Capacity suppliers that would have benefited from the higher clearing price in the original auction results challenged FERC鈥檚 approval of PJM鈥檚 tariff amendment. In PJM Power Providers Group v. FERC, 96 F.4th 390 (3d Cir. 2024), the Third Circuit vacated FERC鈥檚 orders under the 鈥渇iled-rate doctrine,鈥� which binds regulated entities to charge only the rates that have been filed with FERC and to change their rates only prospectively. As the Third Circuit explained, the doctrine is 鈥渦nbending regardless of where the equities lie鈥� and 鈥渄oes not yield, no matter how compelling the equities.鈥� Importantly, it extends not only to rates per se but also to 鈥渕atters directly affecting rates,鈥� including any 鈥渞ule, regulation, or contract relating thereto.鈥� This stems directly from the text of Section 205, which prohibits changes not just to rates but also to any classification, service, or rule, regulation, or contract relating to such rates without proper prior notice and FERC approval.

The Third Circuit reasoned that PJM鈥檚 tariff amendment violated the filed-rate doctrine because it operated retroactively. Specifically, the court held that it was retroactive to change the LDA Reliability Requirement mid-auction because PJM鈥檚 tariff required that parameter to be calculated and posted before conducting the auction and then used in the auction.

Following the Third Circuit鈥檚 mandate, FERC instructed PJM to completely re-run the auction using the original, inflated LDA Reliability Requirement. When PJM re-ran the auction, it was unable to secure enough capacity for the auction to clear naturally, causing it to clear at a predetermined price cap. Compared to the earlier iteration of the auction, without the inflated LDA Reliability Requirement, PJM spent an additional $182.8 million to procure just under two percent more capacity. 

The Section 206 Complaint

A group consisting of state agencies in the Maryland and Delaware governments, PJM customers, and private entities representing customers鈥� interests (together, the 鈥�DPL Customers鈥�) filed a complaint with FERC under Section 206, asking FERC to declare the re-run auction results unjust and unreasonable and replace them with the efficient market outcome from the original auction. FERC denied the complaint, reasoning that it could not reach an outcome inconsistent with the Third Circuit鈥檚 ruling. In a subsequent order denying rehearing, FERC contended it was powerless to grant relief that would fail the Third Circuit鈥檚 test for retroactivity and lead to an outcome inconsistent with the Third Circuit鈥檚 ruling. 

The D.C. Circuit鈥檚 Analysis

The D.C. Circuit granted the petition for review of the relevant FERC orders, applying de novo review because FERC鈥檚 denial rested entirely on its interpretation of the Third Circuit鈥檚 decision, and courts give no deference to an agency鈥檚 interpretation of judicial precedent.

The court emphasized the 鈥渋mportant differences鈥� between Sections 205 and 206, noting that while both require that rates charged by utilities subject to FERC鈥檚 jurisdiction be just and reasonable, they enforce that mandate differently. Section 205 requires regulated entities to file their rates with FERC and primarily involves newly filed rates, whereas Section 206 focuses on existing rates, empowering FERC to modify those it deems unjust or unreasonable. The court characterized FERC鈥檚 role under Section 206 as 鈥渕ore active鈥� than the 鈥渆ssentially passive and reactive鈥� role contemplated by Section 205. 

The court determined that the Third Circuit was presented only with and answered in the negative one 鈥渄iscrete legal question: whether FERC acted lawfully when it used its Section 205 authority to modify the process PJM uses to procure capacity.鈥� (Emphasis added.) Critically, the Third Circuit was 鈥渟imply not presented with, nor did it answer, the question of whether a subsequent use of FERC鈥檚 Section 206 authority to modify the resulting auction price would be retroactive, much less impermissible[.]鈥� Indeed, when capacity suppliers had argued that the tariff amendment was impermissibly retroactive because it allowed PJM to disregard the auction results, the Third Circuit declined to take up that argument.

The Upshot: The Filed-Rate Doctrine Does Not Categorically Bar All Retroactive Rate Modifications; Section 206 May Provide an Exception

The D.C. Circuit rejected FERC鈥檚 contention that, under the Third Circuit鈥檚 reasoning, any modification to PJM鈥檚 auction-set capacity price would be retroactive. The court explained that the filed-rate doctrine does not operate independently of the statutory provisions that undergird it. While the filed-rate doctrine generally forbids retroactive modification of rates, this is 鈥渙nly a default rule鈥� and Section 206 provided an exception.

Under Section 206(b), if FERC finds that a rate is not just and reasonable, it may provide refunds for 鈥渁mounts paid鈥� during a Section 206 proceeding, the refund effective date of which is set based on the commencement date of the proceeding. Courts have viewed this refund as a 鈥渞etroactive . . . rate decrease[.]鈥� As such, if the filed-rate doctrine were a complete bar to 鈥渁ll 鈥榬etroactive鈥� rate modifications,鈥� then Section 206(b) would be ineffective. Instead, the court held, reading Section 206(b) as 鈥渁 narrow exception鈥� to the filed-rate doctrine鈥檚 general prohibition of retroactive rate modifications fulfills Congress鈥檚 intent.

The court also rejected FERC鈥檚 argument that granting relief would 鈥渞ender the Third Circuit鈥檚 judgment economically meaningless[.]鈥� The court observed that the Third Circuit is 鈥渁 court, not an economic regulator,鈥� and when a court finds that an agency based its decision upon an improper legal ground, the agency might later reach the same or a similar result for a different reason. Further, FERC did not need to adopt a 鈥渦se-it-or-lose-it approach鈥� when considering different ways it might address the problems caused by PJM鈥檚 forecasting error and the court refused to impose a new requirement without a statutory basis.

Implications

The D.C. Circuit decision provides important guidance in several respects: 

First, the case reaffirms the structural distinction between Sections 205 and 206 of the FPA. A determination that relief is unavailable under Section 205 does not automatically foreclose relief under Section 206. Parties should evaluate which statutory pathway may be available for addressing concerns. 

Second, the case clarifies that the filed-rate doctrine, while foundational to FERC鈥檚 regulatory framework, is not an absolute bar to all backward-looking rate modifications. The refund mechanism under Section 206(b) represents an exception that may provide relief in appropriate circumstances.

The Foley energy regulatory team will continue to track the remand proceedings and welcomes questions on these issues.

The post D.C. Circuit Finds FERC Erred in Declining to Consider Section 206 Relief in 2024/25 PJM Capacity Auction Re-Run Case appeared first on 番茄社区; Lardner LLP.

The proposed Batch Zero Process in Planning Guide Revision Request (PGRR) 145, posted on March 4, 2026, introduces a transitional study process that would replace most elements of the existing Large Load Interconnection Study (LLIS) process with a coordinated, system-wide study and transmission capacity allocation approach. Developers seeking to connect loads over 75 MW, or to substantially modify existing facilities, would face new eligibility criteria, stricter project maturity requirements, and potentially more competitive access to available transmission capacity.

ERCOT鈥檚 aim is to bring large load interconnections into a cluster study process to reduce delays and uncertainty and increase efficiency, transparency, and fairness. For developers of large electric loads, it is both an opportunity to secure capacity in a coordinated, transparent manner and a challenge given the heightened entry requirements and increase in competition. But developers who can meet ERCOT鈥檚 maturity and commitment criteria stand to benefit from early transmission capacity allocations on an increasingly congested grid.

What is 鈥淏atch Zero鈥�?

ERCOT is addressing challenges created by an influx of large load interconnection requests in recent years. Under the existing LLIS process, each Transmission Service Provider (TSP) conducts an individual study, often requiring restudy when nearby projects change, and then ERCOT would review each request in isolation. This approach has contributed to backlogs, repeated restudies, coordination gaps across TSPs, and delays and uncertainty for interconnecting entities. The Batch Zero proposal is intended to be a one-time, transitional step toward a permanent, recurring batch study process, similar to 鈥渃luster鈥� studies for generation in other markets, which would allow ERCOT to allocate transmission capacity and plan system upgrades in a more coordinated way.

PGRR 145 divides pending projects into three buckets:

• Base Load: Projects that are already energized or sufficiently mature, with completed studies and equipment procurement, and not subject to further study.
   
• Studied Load: Projects meeting certain maturity criteria but requiring reliability assessment and capacity allocation.
   
• Excluded/Future Batch: Projects not meeting 鈥淏atch Zero鈥� eligibility criteria that must await a future batch study process.

Eligibility for the Batch Zero study depends on a mix of maturity and commitment criteria that ERCOT would apply before including a project in the initial study. And project developers would need to act by these dates:

• By July 15, 2026: Developers must submit full project information, including technical models, a commissioning plan, attestations, and in some cases application fees, through their TSP or Distribution Service Provider (DSP).
   
• By January 29, 2027: ERCOT would delivers the 鈥淏atch Zero Interconnection Study鈥� results, showing capacity allocations per year for 2028-2032, and proposed transmission improvements and costs.
   
• By March 1, 2027: Interconnecting Large Load Entities (ILLEs) must execute interconnection agreements and meet detailed financial security and site-control standards to confirm their capacity allocation.
   
• By June 1, 2027: ERCOT would complete the 鈥淏atch Zero Refinement Study鈥� and submit a final transmission plan including cost estimates for ERCOT Regional Planning Group review.

Key Requirements and Implications for Developers

The Batch Zero proposal adds many significant front-end obligations for prospective ILLEs, including:

• Site Control: The ILLE must have a lease or deed for property sufficient for its planned facilities.
   
• Disclosure: The ILLE must identify any substantially similar interconnection request(s) that it is pursuing in ERCOT or elsewhere.
   
• Design & Permitting Progress Reports: The ILLE must provide attestations regarding engineering services and non-ministerial regulatory approvals.
   
• Financial Commitment: The ILLE must post financial security with the Interconnecting DSP or the Interconnecting TSP of $100,000/MW of the requested peak demand for new interconnection requests or of the incremental increase in the peak demand for expanded interconnection requests. The ILLE must also pay an interconnection fee of $100,000/MW of contracted peak demand, which is non-refundable. The ILLE must also pay all direct interconnection costs through Contribution In Aid of Construction (CIAC) payments.

These requirements are on top of technical requirements for load modeling, short-circuit analysis, stability screening, and compliance with ERCOT Quarterly Stability Assessment prerequisites, making the overall process more stringent than the existing LLIS process.

PGRR 145 thus has strategic implications for high-demand projects like hyperscale data centers, including:

• Increased Competition: In Batch Zero, transmission capacity allocations are tied to a coordinated capacity study, so where capacity is constrained, allocations may be less than requested, potentially affecting how developers choose to scale or phase their projects.
   
• Acceleration vs. Deferral: Batch Zero鈥檚 project maturity criteria are designed to screen out speculative projects, so developers with more advanced timelines may benefit, while those still configuring site plans may be delayed until later batches.
   
• Greater Upfront Capital Commitments: The required interconnection fees and CIAC obligations under the Batch Zero proposal, combined with its substantial financial security requirements (including for system upgrades), mean higher pre-construction capital exposure that will require developers to secure financing earlier in the project lifecycle.
   
• Increased Transparency: ERCOT would require disclosure of similar interconnection requests that could alter project demand, meaning that multi-site developers would need to coordinate carefully to avoid misaligned disclosures.
   
• Risk of Withdrawal and Reallocation: Failure to meet milestones or energize according to the required schedule could trigger reallocation of capacity to other projects, accompanied by partial loss of posted security.

The Foley energy regulatory team will continue to track developments in this area and welcomes questions on these issues.

The post ERCOT鈥檚 Proposed 鈥淏atch Zero鈥� Process: What Developers of Large Loads Need to Know appeared first on 番茄社区; Lardner LLP.

A substantial Foley team was on the ground throughout the conference. Foley attorneys and professionals in attendance included Jeff Atkin, Jason Barglow, Justus Britt, Rachel Conrad, John Dunlap, Kyle Hayes, Matt Kiel, Nick Kitzman, Jocelyn Lavallo, Darin Lowder, David Markey, Chris McNamara, Joel Meister, Lynn Parins, Adam Schurle, and Annie Tsai.

Foley also played a visible role in the conference program. Partner Annie Tsai moderated the panel discussion, 鈥淔inancing Community Solar, C&I and Other Smaller Scale Projects.鈥� The session explored emerging financing structures, the evolving tax credit transfer market for smaller-scale assets, and how sponsors and lenders are approaching risk allocation in community solar and C&I portfolios.  

In addition, Foley鈥檚 reception at the conference was well attended by clients and friends who were eager to network, talk deals, and compare notes on the rapidly evolving tax and financing landscape.

As in prior years, federal policy developments were top of mind. Much of the discussion focused on the direction of the current administration鈥檚 energy and tax policies and, in particular, speculation around the durability and implementation of Inflation Reduction Act (IRA) incentives. Despite some trepidation about potential changes in law, there was broad consensus at the Summit that the investment tax credit (ITC) in its current form for solar and other clean energy deals is likely to remain largely intact in the near term.

Interest in tax credit transfers remained high, with many market participants continuing to explore and refine transfer structures, documentation, pricing and risk allocation. (We cover several of these themes in more detail in our recent blog post on tax credit transfers linked here .)

Foley attorneys will continue to participate actively in Infocast and other key industry events over the coming year. If you would like to connect with any of the Foley team members who attended the Solar + Wind Finance & Investment Summit in Scottsdale, or to discuss trends we鈥檙e seeing in project finance, tax credit transfers, or M&A, please feel free to reach out to any of the Foley attorneys listed above.

The post Foley Team Highlights Tax Credit, Policy & Financing Trends at 2026 Infocast Solar + Wind Finance & Investment Summit appeared first on 番茄社区; Lardner LLP.

One of the Act鈥檚 most consequential developments is the addition of certain 鈥減rohibited foreign entity鈥� (鈥淧FE鈥�) limitations  (commonly referred to as the 鈥渇oreign entity of concern鈥� (鈥淔EOC鈥�) limitations, although the rules impose limitations beyond only FEOC entities).  These fall into three buckets, 鈥渕aterial assistance鈥� limitations that limit the amount of equipment from PFEs that can be included in a project, 鈥渆ffective control鈥� limitations that prohibit taxpayers from claiming credits if any 鈥渟pecified foreign entity,鈥� which is a subset of PFEs, has effective control over a project, and taxpayer-level limitations providing that a PFE is not entitled to claim the credits.

Treasury has since issued interim rules addressing how to measure 鈥渕aterial assistance鈥� for FEOC limitation purposes (which applies to projects on which construction begins on or after January 1, 2026), though it left some of the most relevant questions to be addressed in future guidance. That gap is quickly surfacing in renewable energy project finance transactions: while IRS Notice 2026-15 is widely viewed as incrementally helpful; investors, lenders and their counsel have flagged unresolved questions around ownership/control, debt attribution, and potential liability.  For a high-level overview of the material assistance guidance, see Foley鈥檚 summary in IRS Releases Guidance Regarding Material Assistance Rules. 

Lenders should pay special attention in debt financings where the underlying project has tax credits that are being sold or that are being monetized by tax equity investors, in particular if there is a bridge loan component. Because bridge loan repayment is tied to tax equity investor funding or tax credit purchases, lenders need certainty that the project will ultimately qualify for the tax credit.  Additionally, following a tax credit investment or sale, borrowers and their affiliates often continue to be on the hook to tax investors and tax credit purchasers in the event that the available tax credits are reduced or recaptured, which could result in competing obligations of the borrower.  Treasury鈥檚 recent interim guidance (Notice 2026-15) is helpful on one front: it provides a user manual for calculating the 鈥渕aterial assistance鈥� prong of the FEOC/PFE requirements via the Material Assistance Cost Ratio (MACR). But the same guidance is comparatively quiet on the some of the other questions financing parties are asking: (i) who is treated as a covered foreign party for entity-level restrictions and (ii) what 鈥渆ffective control鈥� will mean in practice, particularly in common project contract and financing arrangements.

Lenders should consider ramping up their diligence on these topics as well as increasing their protections in the financing documents.  On the 鈥�飞丑辞鈥� prong, the market is still waiting for clearer rules around how far 鈥渃overed鈥� status reaches鈥攑articularly through ownership chains and affiliations鈥攁nd what that means for routine project counterparties (e.g., sponsors, EPC contractors, and key suppliers) and, potentially, lenders themselves. Lenders should consider conducting diligence up the ownership chain of each project company that owns a financed project and should include comprehensive representations and warranties from the borrower on that topic in the loan documents.  They should also increase their diligence on supply and service contracts, looking for (or requesting to add) representations and warranties that the counterparty is not a PFE. On the 鈥�飞丑补迟鈥� prong, 鈥渆ffective control鈥� is important because it can be created (or avoided) through contract drafting. Provisions that are customary in project finance鈥攊n supply agreements, EPC terms, O&M arrangements, IP licenses, step-in rights, negative covenants鈥攕hould be re-examined through a FEOC/PFE lens, depending on how Treasury ultimately draws the lines. For additional examples on increased diligence and protection in project documents, see Foley鈥檚 article on how Project-Level Documents Take Center Stage.

The enactment of OB3 and the release of material assistance guidance (and the uncertainty they created) is causing more targeted sponsor representations, compliance certificates tied to beginning of construction, covenants requiring ongoing supply chain documentation, and procurement-side requirements to obtain and preserve supplier attestations (including under-penalty-of-perjury certifications) for the required retention period. To that end, financing parties should analyze whether the sponsor has a credible process to document compliance in a way that will withstand future scrutiny鈥攑articularly given the 鈥渒now or reason to know鈥� overlay that can make reliance on certifications an important deal point.

The bottom line is that the Act is forcing debt financing parties in the renewables world to consider tax-credit eligibility in a more contract-and-supply-chain-specific way. For now, the interim 鈥渕aterial assistance鈥� guidance provides some structure to shape diligence and documentation practices, but not enough clarity to totally eliminate uncertainty鈥攅specially on ownership questions and effective control of projects. Expect loan agreements, EPC and supply contracts, and sponsor deliverables to continue evolving as projects seek to begin construction ahead of key deadlines and project participants await the release of expected guidance. For more background and continuing updates, please see Foley鈥檚 related posts on the ITC/PTC changes, the FEOC/PFE-related developments, the material assistance guidance, and current diligence considerations.  Foley is helping clients translate these and other recent developments into financeable transactions and practical diligence workplans. If you鈥檇 like to discuss how these issues could affect your financing plans, please contact your Foley relationship partner or the authors.

The post One Big Beautiful Bill (鈥淥B3鈥�) and FEOC: Current Considerations for Debt Financings appeared first on 番茄社区; Lardner LLP.

The proposed rules will be posted to the Federal Register on March 9, 2026 as a Notice of Proposed Rulemaking. Consistent with administrative procedures governing these matters, comments will be accepted for 60 days thereafter, after which the agency will hold hearings or render a final rule.

The NOPR itself can be accessed at: ; and at: (Prior to publication, these links will take you to the as yet unpublished version of the NOPR.)

The post Dept of Interior Proposes Revisions to Rules Licensing Producers of Governing Offshore O&G appeared first on 番茄社区; Lardner LLP.