To prioritize powering AI data centers, Trump seeks to seize control of U.S. grid regulation.
The Trump administration is attempting to shift partial control of the U.S. power grid from the states to the federal government, aiming to remove energy barriers for the large-scale expansion of artificial intelligence data centers by centralizing regulatory authority.
According to media reports on the 27th, at a utility regulatory meeting held in Seattle, Trump administration energy officials faced strong opposition from state regulators. The controversy centers on a directive recently issued by Energy Secretary Chris Wright to the Federal Energy Regulatory Commission (FERC), requiring the agency to draft new regulations on how large data centers connect to the power grid. Under the current 1935 Federal Power Act, this regulatory power traditionally belongs to state governments, not the federal level.
The White House believes that having federal regulatory bodies manage the data centers’ grid connection process would greatly shorten construction time, allowing tech giants such as Google, Amazon, Meta, and OpenAI to more easily build their own power facilities, accelerating investments worth trillions of dollars. However, state regulators have challenged this logic, warning that the move not only infringes on states’ jurisdiction, but could also trigger long-term legal disputes.
The market remains highly focused on the surge in power demand from data centers. With Trump Media & Technology Group reaching a $6 billion merger agreement with Alphabet-backed fusion energy firm TAE Technologies, capital markets are betting that this boom cycle will last for years. At the same time, Democratic Senator Elizabeth Warren and others have started investigations into data centers driving up residential electricity costs, making energy allocation a new political battleground.
Federal "Power Expansion" and State Pushback
At the Seattle meeting, state regulatory agencies made their dissatisfaction clear to Deputy Secretary of Energy James Danly and others. According to media citing individuals familiar with the conversations, state representatives pointed out that Chris Wright’s plan violates the principle of regulatory division between state and federal authorities established by the 1935 Federal Power Act.
Former FERC Republican chairman Mark Christie severely criticized the plan, calling it “one of the largest federal power grabs at the expense of states’ interests that I’ve seen in my 21 years as a state and federal utility regulator,” and warned that it would inevitably lead to unnecessary litigation. Mike McKenna, who served as a deputy assistant to the president in Trump’s first term, also said that the fast-track approach was risky:
“If FERC moves hastily, they’ll lose in court, and ultimately slow down the goal of boosting data center growth.”
The Trump administration, however, has a different calculation. Earlier this month, Trump signed an executive order to overturn state laws related to artificial intelligence, allowing the Justice Department to penalize states that set restrictive AI rules, in order to establish unified federal standards. Trump emphasized the need for “uniformity,” and noted that competitors don’t have to deal with obstacles from state legislatures. White House AI Chief David Sacks and other officials have been pushing to counter state AI laws, hoping to remove barriers in technological competition.
Accelerating Grid Connections and the Policy Paradox of Stabilizing Electricity Prices
Trump administration officials argue that the new regulations can spur data center growth and eventually lower power costs. Energy Secretary Chris Wright stated at a natural gas meeting in Washington that accelerating energy production for data centers would make electricity cheaper, countering concerns that AI will drive up prices. Wright has instructed FERC to complete the new regulations by April 30; experts say that for a traditionally cautious and slow-moving agency, this pace is “light speed.”
Neil Chatterjee, who served as FERC chairman in Trump’s first term, believes Wright’s move is currently “the most influential event in the energy sector.” He noted that the traditional conservative utility industry has been slow to react to explosive demand from data centers and other large industrial customers, leading to rising utility bills in some regions.
However, this approach faces direct local-level challenges. Florida Republican Governor Ron DeSantis recently released state legislative proposals to curb the impact of AI on consumers, and ban “utility companies from charging higher fees to Florida residents to support the development of megascale data centers.”
Despite the legal and political resistance, as an independent regulatory body FERC appears ready to cooperate with the administration’s agenda. Even though FERC could theoretically refuse to follow Wright’s proposals, several commissioners have signaled their support.
New FERC Chair Laura Swett stated plainly at a public meeting in November that, beyond the commission’s core goal of “keeping the lights on for Americans,” her primary duty is “to ensure our country can connect and power data centers as quickly and reliably as possible.” This stance signals that federal regulators are reordering their priorities, placing support for AI infrastructure at the center—a strong indication that the future struggle between federal and state control of the power grid will intensify.
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