The Trump administration is attempting to shift control of portions of the U.S. power grid from state to federal hands, aiming to clear energy obstacles for the massive expansion of artificial intelligence data centers through centralized regulatory authority. During a recent meeting of utility regulators in Seattle, Trump administration energy officials reportedly faced strong opposition from state-level regulators. The controversy stems from a recent directive by Energy Secretary Chris Wright to the Federal Energy Regulatory Commission (FERC), ordering the agency to draft new rules governing how large data centers connect to the grid. Under the existing 1935 Federal Power Act, this regulatory power has traditionally resided with state governments, not at the federal level. The White House argues that having a federal regulator uniformly manage the grid interconnection process for data centers would significantly shorten construction timelines, enabling tech giants like Google, Amazon, Meta, and OpenAI to more easily build their own power supply facilities, thereby accelerating capital investments worth trillions of dollars. However, this logic is being challenged by state regulators, who warn that the move not only infringes on states' jurisdiction but could also spark prolonged legal disputes.

Markets are paying close attention to the surge in power demand from data centers. As Trump Media & Technology Group enters into a $60 billion merger agreement with Alphabet-backed nuclear fusion energy company TAE Technologies, capital markets are betting that this boom cycle will last for years. Meanwhile, Democratic Senator Elizabeth Warren and others have launched an investigation into how data centers are driving up residential electricity costs, making energy allocation a new focal point of political contention.

State regulators at the Seattle meeting explicitly conveyed their dissatisfaction to officials including Deputy Energy Secretary James Danly. Citing sources familiar with the discussions, media reports indicate that state representatives argued that Chris Wright's plan violates the principle of regulatory power-sharing between states and the federal government established by the 1935 Federal Power Act. Former FERC Republican Chairman Mark Christie offered harsh criticism, calling the plan one of the "largest federal power grabs at the states' expense" he has seen in his 21 years as a state and federal utility regulator, and warning that it would inevitably lead to unnecessary litigation. Mike McKenna, who served as Deputy Assistant to the President during Trump's first term, also noted the risks of this rapid-push strategy, stating, "If FERC rushes, they will lose in court and ultimately slow down the goal of boosting data center growth."

The Trump administration, however, has a different calculus. Earlier this month, Trump signed an executive order aimed at overturning state AI laws, allowing the Justice Department to penalize states that enact restrictive AI rules to establish a uniform federal standard. Trump emphasized that unification is "necessary," pointing out that competitors do not have to contend with obstacles from state legislatures. White House AI chief David Sacks and other officials have been pushing to counter state AI laws, hoping to eliminate barriers in the tech competition.

Trump administration officials contend that the new rules would stimulate data center growth and ultimately lower electricity costs. Energy Secretary Chris Wright stated at a natural gas conference in Washington that accelerating energy production for data centers would make power cheaper, countering concerns that AI will drive up electricity prices. Wright has directed FERC to complete the new rules by April 30, a pace that experts note is "warp speed" for a traditionally cautious and slow-moving regulator. Neil Chatterjee, who served as FERC chairman during Trump's first term, believes Wright's move is the "most impactful event" currently in the energy sector. He pointed out that the traditionally conservative utility industry has been slow to respond to the explosive demand from data centers and other large industrial customers, leading to rising utility bills in some areas.

This approach, however, faces direct challenges from the local level. Florida's Republican Governor Ron DeSantis recently unveiled state legislative proposals aimed at curbing AI's impact on consumers and prohibiting "utilities from charging Floridians higher rates to support the development of hyperscale data centers." Despite legal and political headwinds, FERC, as an independent regulatory body, appears ready to align with the administration's agenda. Although FERC could theoretically refuse to follow Wright's proposal, several commissioners have signaled support. New FERC Chair Laura Swett clearly stated at a public meeting in November that, aside from the commission's core goal of ensuring Americans "have access to electricity," her top priority is "ensuring our nation can connect and power data centers as quickly and enduringly as possible." This statement suggests that federal regulators are adjusting their priorities to place support for AI infrastructure construction in a more central position, signaling that the battle over grid control between the federal government and the states is set to intensify.