NERC Signals Rare Level 3 Alert on Large Loads and Data Centers

The Board of Trustees of the North American Electric Reliability Corporation (NERC) agreed on April 16, 2026, to advance NERC's years-long effort to examine the reliability impacts of computational load (e.g., data center) interconnections by voting to issue a rare Level 3 alert, which is expected to be issued on May 4, 2026. Among the hierarchy of alerts that can be issued by NERC, a Level 3 alert represents an urgent call to the industry to undertake specific steps, in this case, to address serious reliability ramifications associated with the rapid growth of computational loads.

The issuance of the Level 3 alert comes during a period of active NERC engagement with the industry to assess the reliability impacts of large computational loads. Two of the more prominent developments that set the stage for the Level 3 alert are summarized below.

White Paper

In a white paper published in March 2026 (the White Paper), NERC's Large Loads Working Group (LLWG) proposed a number of recommendations to address gaps existing in the NERC Reliability Standards with regard to emerging large loads, including data centers. NERC is concerned that, with the evolution of the nation's bulk power system (BPS), large loads are challenging the reliability, resilience, and security of the BPS.

To address these challenges, NERC instituted the LLWG to identify gaps in the NERC Reliability Standards and related procedures (e.g., generator interconnection procedures). In the White Paper, the LLWG evaluates gaps in numerous areas, including planning, resource adequacy, security, and load modelling.

The White Paper concludes that "the existing Reliability Standards and the existing processes and requirements related to BPS planning, operations, security, and other areas are inadequate to address the risks posed by emerging large loads that are forecasted to make up a significant portion of the future grid." Calling the White Paper a "foundational step in updating industry practices," the LLWG presents several recommendations, including:

• There are multiple high-impact risks to the BPS from large loads that NERC-registered entities cannot adequately address. The LLWG recommends that NERC pursue registration of a type of entity (or types of entities) capable of performing specific functions to address the risks.
• The LLWG and other groups should propose Standard Authorizations Requests (SARs) to address the unmitigated risks to the BPS related to emerging large loads.
• The LLWG should identify potential mitigations to risks posed by emerging large loads through improvements to existing planning and operations processes and interconnection procedures for large loads.
• Registered entities should coordinate and collaborate with large-load entities and update their practices to address the identified gaps.
• Transmission Owners (TO) should coordinate, as applicable, with other registered entities to update their interconnection requirements; Planning Coordinators (PC) and Transmission Planners (TP) should update their interconnection study processes.

Computational Load Entities

To implement the first and central recommendation of the White Paper, NERC released a set of registration criteria to identify a new functional entity type, "Computational Load Entity" (CLE), that would include certain large loads with a material impact on the BPS. Once adopted, these criteria will be used to identify entities that are to be included in this new functional entity type. NERC is also expected to issue reliability guidelines for CLEs and to develop new reliability standards applicable to these entities.

The proposed criteria establish two new defined terms. A "Computational Load" is defined as load comprised of electric power demand from information technology equipment, such as servers, storage, and networking hardware. A "Computational Load Entity" or "CLE" is an end user, or an entity that hosts end users, that receives electric power for computational load.

As proposed, an entity will need to register as a CLE if it meets the following criteria:

• The entity is the end user or hosts end users that receives electric power for computational load;
• The entity contributes to an aggregate connected load capability greater than or equal to 20 MW;
• The entity is connected at a single point of interconnection to the BPS at a voltage greater than or equal to 60 kV; and
• The entity hosts 1 MW or greater of computational load.

Comments on the proposed registration criteria are due May 15, 2026.

The Level 3 Alert

The Level 3 alert will include several actions for transmission owners, transmission planners and operators, planning coordinators, reliability coordinators, and balancing authorities:

• Develop lists of modeling data, settings, and parameters needed for distribution to transmission owners;
• Study the stability margin for areas with computational loads at least annually;
• Revise the definition of "qualified change" and set up studies of local area protection, stability limits, and other factors in relation to computational loads;
• Establish a commissioning process for computational loads;
• Implement system-side corrective actions to ensure no loss of firm load for computational loads due to normally cleared faults;
• Install dynamic fault recording devices to help study electrical performance of computational load facilities during system disturbances; and
• Improve communication capabilities with large loads for better situational awareness.

Additionally, entities will be required to respond to a list of questions regarding their implementation of the above recommendations. NERC will use those responses to prepare a report to the Federal Energy Regulatory Commission (FERC).

Implications

NERC's large-load connection initiative has reached a critical juncture. The regulation of large CLEs is going to play a pivotal role in NERC's monitoring of the BPS. It is critical that large-load developers, owners, and operators stay informed of regulatory developments in order to be a in a position to influence regulatory outcomes. Additionally, the new standards will introduce compliance and enforcement burdens, including possible monetary penalty exposure, that ultimately will need to be factored into project development.

Our team will monitor the issuance of the Level 3 alert and issue an additional advisory shortly after its publication.

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Bradley Miliauskas is of counsel, Samin Peirovi is an associate, and Nicholas Giannasca is a partner in the energy group in the Washington, D.C. office of DWT. If you have any questions or need assistance, please contact the authors or another member of our energy team. To stay informed, sign up for our alerts.