To prioritize power supply for AI data centers, Trump aims to seize control of the U.S. power grid regulation

The Trump administration is attempting to shift some control of the U.S. power grid from the states to the federal government, aiming to clear energy obstacles for the large-scale expansion of artificial intelligence data centers through centralized regulatory power.

According to reports on the 27th, energy officials from the Trump administration faced strong opposition from state regulators at a utility regulatory meeting held in Seattle. The controversy centers around a directive issued by Energy Secretary Chris Wright to the Federal Energy Regulatory Commission (FERC), requiring the agency to draft new regulations governing how large data centers connect to the power grid. Under the current Federal Power Act of 1935, this regulatory power traditionally belongs to state governments rather than the federal level.

The White House believes that having federal regulators manage the interconnection process for data centers will significantly shorten construction timelines, allowing tech giants like Google, Amazon, Meta, and OpenAI to more easily build their own power supply facilities, thereby accelerating capital investments in the trillion-dollar range. However, this logic has been questioned by state regulators, who warn that this move not only infringes on state jurisdiction but could also lead to prolonged legal disputes.

The market is highly attentive to the surge in power demand from data centers. With the Trump Media & Tech Group reaching a $6 billion merger agreement with TAE Technologies, a fusion energy company supported by Alphabet, capital markets are betting that this boom cycle will last for years. Meanwhile, Democratic Senator Elizabeth Warren and others have initiated investigations into the issue of data centers driving up residential electricity costs, making energy allocation a new focal point in political maneuvering.

Federal Government's "Power Expansion" and State Pushback

At the Seattle meeting, state regulatory agencies clearly expressed their dissatisfaction to Deputy Energy Secretary James Danly and other officials. According to media reports citing sources familiar with the discussions, state representatives pointed out that Chris Wright's plan violates the principle of regulatory decentralization established by the Federal Power Act of 1935 between the states and the federal government.

Former FERC Republican Chairman Mark Christie harshly criticized the plan, calling it one of the "largest federal power grabs at the expense of state interests" he has seen in his 21 years as a state and federal utility regulator, warning that it would inevitably lead to unnecessary litigation. Mike McKenna, who served as a deputy assistant to the president during Trump's first term, also stated that this fast-tracked strategy carries risks:

"If FERC acts hastily, they will lose in court, ultimately delaying the goal of enhancing data center growth."

In response, the Trump administration has different considerations. Earlier this month, Trump signed an executive order aimed at overturning state laws regarding artificial intelligence, allowing the Department of Justice to penalize states that establish restrictive AI rules in order to create unified federal standards. Trump emphasized the need for "unity" and pointed out that competitors should not have to deal with obstacles from state legislatures. White House AI director David Sacks and other officials have been pushing against state AI laws, hoping to eliminate barriers in technological competition

The Paradox of Accelerating Grid Connection and Stabilizing Electricity Prices

Officials from the Trump administration argue that the new rules could stimulate the growth of data centers 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 electricity cheaper, countering concerns that AI would drive up electricity prices. Wright has instructed FERC to complete the formulation of new rules by April 30, and experts point out that this speed is akin to "light speed" for a traditionally cautious and slow-moving regulatory agency.

Neil Chatterjee, who served as FERC chairman during Trump's first term, believes that Wright's initiative is the "most influential event" in the energy sector at present. He noted that the traditional 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 regions.

However, this approach faces direct challenges at the local level. Florida Republican Governor Ron DeSantis recently unveiled a state legislative proposal aimed at curbing the impact of AI on consumers and prohibiting "utility companies from charging Florida residents higher fees to support the development of massive data centers."

Despite facing legal and political resistance, FERC, as an independent regulatory agency, seems ready to align with the agenda of the administration. Although FERC could theoretically refuse to follow Wright's proposal, several commissioners have signaled their support.

New FERC Chair Laura Swett made it clear at a public meeting in November that, in addition to the commission's core goal of ensuring that Americans "have electricity available," her top priority is "to ensure that our nation can connect and power data centers as quickly and sustainably as possible." This statement suggests that the federal regulatory agency is adjusting its priorities, placing support for AI infrastructure development at a more central position, which also indicates that the future struggle between federal and state authorities over grid control will intensify