The Connect the Grid Act of 2026 amends the Federal Power Act to remove several statutory exemptions that have insulated the Electric Reliability Council of Texas (ERCOT) from federal oversight. It requires the Federal Energy Regulatory Commission (FERC) to direct the Electric Reliability Organization (ERO) to propose binding reliability standards establishing minimum total transfer capability (TTC) between ERCOT and neighboring regions, and it forces joint plans and timelines to reach those minimums.
The bill also layers practical requirements onto build-out: projects to meet the TTC targets must prioritize grid-enhancing technology, use of existing rights-of-way and degraded lands where feasible, include community and Tribal engagement, follow prevailing-wage and registered-apprenticeship requirements, and comply with NEPA and the Endangered Species Act. It raises available Transmission Facilitation Program borrowing authority to $13.5 billion and directs the Department of Energy to study the benefits of interconnecting with Mexico.
That combination moves the federal government from advisor to active enabler — and imposes new planning, permitting, labor, and financing consequences on utilities, developers, and regulators.
At a Glance
What It Does
The bill strips statutory exemptions that have limited FERC’s reach over ERCOT and orders the Commission to have the ERO deliver a proposed reliability standard within 30 days that sets minimum transfer ranges between ERCOT and SPP, MISO, and the Western Interconnection. It requires joint plans identifying entities to site and build or modify transmission, with a required completion date of January 1, 2035, and makes such projects subject to NEPA and ESA review.
Who It Affects
ERCOT and its member utilities, transmission owners and developers planning interregional ties, the Midcontinent ISO (MISO) and Southwest Power Pool (SPP), FERC and DOE, labor organizations and apprenticeship programs, and communities—especially environmental justice and Tribal communities—in proposed project corridors.
Why It Matters
This is a structural change to U.S. grid governance: it transforms ERCOT from a largely state-contained system to one subject to federal planning requirements and interregional reliability mandates, imposes specific siting, labor, and environmental requirements on transmission projects, and increases federal financing capacity for large transmission builds.
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What This Bill Actually Does
The Act starts by redefining who is covered by the Federal Power Act: it removes statutory language that previously excluded entities in ERCOT from a handful of federal authorities. Practically, that means FERC’s toolbox — including requirements related to transmission siting and interregional transfer standards — becomes available to influence planning and projects that connect Texas to neighboring grids.
On timelines and targets, the bill makes the ERO the drafting authority for a new reliability standard but binds FERC to a tight schedule: the Commission must order the ERO to submit a proposed standard within 30 days of enactment. That proposed standard must include minimum total transfer capability ranges for three interface groupings (ERCOT–SPP, ERCOT–MISO, and ERCOT–Western Interconnection).
The Commission can only approve the standard if the implicated regions jointly file a one-year plan assigning entities to site and build or modify transmission and commit to finishing construction by January 1, 2035.The bill does not leave project design to market preference alone. It lists siting and construction priorities — favor grid-enhancing technologies, reuse existing rights-of-way where possible, and place new lines on degraded or previously contaminated lands before greenfield sites.
It also requires meaningful outreach to environmental justice and Tribal communities, involvement of labor groups, the use of registered apprenticeship programs, and prevailing wages as defined under federal standards. Importantly, projects undertaken to meet the mandated transfer goals remain subject to NEPA and Endangered Species Act reviews, so environmental compliance is mandatory, not optional.To support the required build, the Act increases the Transmission Facilitation Program borrowing cap from $2.5 billion to $13.5 billion, expanding one federal financing tool for large transmission projects.
Finally, the Department of Energy must complete a separate one-year study assessing the operational, climate, and cost benefits of physically connecting U.S. facilities to Mexico, and identify which cross-border projects would deliver the greatest cumulative benefits. The combination of jurisdictional change, hard transfer targets, prioritized siting and labor requirements, and increased financing makes this a comprehensive federal push to tie Texas into the broader continental grid.
The Five Things You Need to Know
The bill removes multiple ERCOT-specific exemptions in the Federal Power Act, making ERCOT entities subject to provisions they were previously exempt from.
Within 30 days of enactment FERC must order the ERO to propose a reliability standard requiring minimum total transfer capability: 4.3–12.6 GW (ERCOT–SPP), 2.5–16.2 GW (ERCOT–MISO), and 2.6–7.9 GW (ERCOT–Western Interconnection).
ERCOT and each neighboring region must jointly submit, within 1 year, a plan that designates entities to site and build or modify transmission to reach the minimum TTC and complete work by January 1, 2035.
Projects carried out to meet the TTC standard must prioritize grid-enhancing tech, existing rights-of-way and degraded lands, include outreach to environmental justice and Tribal communities, and use registered apprenticeships and prevailing wages; they are subject to NEPA and the Endangered Species Act.
The bill raises the Transmission Facilitation Program borrowing cap to $13.5 billion and requires DOE to report in 1 year on the reliability, climate, and cost benefits of interconnecting U.S. grid facilities with Mexico.
Section-by-Section Breakdown
Every bill we cover gets an analysis of its key sections.
Definitions that shape scope and priorities
This section supplies the statutory definitions used throughout the Act: it clarifies what counts as abandoned mine land, brownfields, grid-enhancing technology, the Western Interconnection, and what the bill means by environmental justice and Tribal communities. These definitions matter because they constrain the siting preferences (for example, when the bill directs siting on degraded lands) and set the frame for required outreach and labor standards. A compliance officer will need to map those statutory terms to project-level geographies and technical solutions when preparing plans.
Recasts FPA jurisdiction to include ERCOT
Section 3 amends multiple provisions of the Federal Power Act — altering section 201 and striking statutory subsections that previously provided ERCOT-specific exemptions — effectively subjecting entities in the ERCOT footprint to federal authorities that formerly did not apply. It also requires FERC to convene a technical conference within 180 days to publish steps affected entities must take to comply. The immediate practical effect is a compliance timeline and a formal federal forum for transmission owners and ERCOT stakeholders to understand newly applicable obligations.
Reliability standard, transfer targets, siting priorities, and labor rules
This is the operational core. The Commission must order the ERO to propose a reliability standard within 30 days that establishes specified minimum TTC ranges for three interregional interfaces. The Commission can only approve the standard if ERCOT and its neighbors jointly submit a plan within one year that designates who will site and build the lines and commits to completion by January 1, 2035. The statute sets explicit siting and construction priorities — grid-enhancing technology first, reuse of rights-of-way, siting on degraded or contaminated lands where feasible, outreach to environmental justice and Tribal communities with translation/virtual options, and use of registered apprenticeships and prevailing wages. It also makes any project done to meet the standard subject to NEPA and the Endangered Species Act, and it directs DOE to consider those corridors for national interest transmission corridor designation under existing law. For project managers, this section creates parallel requirements: hard technical targets and mandatory social, labor, and environmental processes.
Expands Transmission Facilitation Program borrowing capacity
Section 5 amends the Infrastructure Investment and Jobs Act to increase the borrowing authority under the Transmission Facilitation Program from $2.5 billion to $13.5 billion. That change signals larger federal financing capacity for interstate transmission that may be required to meet the TTC targets, but it does not change program eligibility rules or delivery mechanisms. Project sponsors should treat it as an expanded—but still discretionary—tool that could help bridge financing gaps for particularly costly interregional projects.
DOE study on interconnection benefits with Mexico
This section requires the Department of Energy to complete a one-year study and report to Congress on the reliability, climate, and cost benefits of interconnecting U.S. electricity facilities with Mexico. It defines covered facilities broadly (generation, transmission, sale) and asks DOE to recommend which siting or modification options offer the most cumulative benefit. That study does not itself authorize cross-border projects but creates a factual basis for potential future legislative or regulatory steps and highlights cross-border market and reliability considerations that project planners will need to account for.
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Explore Energy in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Texas electricity customers facing extreme-event risk — greater interregional transfer capability can reduce the frequency and severity of localized blackouts by enabling imports and shared reserves.
- Renewable project developers and off-takers — new interties expand markets for wind, solar, and geothermal resources in Texas and neighboring regions, easing curtailment and enabling higher renewables penetration.
- Construction and skilled-trade workers — the law mandates registered apprenticeship use and prevailing wages for prioritized projects, creating demand for unionized and certified labor and training pipelines.
- Transmission developers and engineering firms — a federal mandate, clearer transfer targets, and expanded TFP financing increase the pipeline of large interregional projects and lower some capital-risk barriers.
- Neighboring grid operators (MISO, SPP, Western balancing authorities) — improved transfer capability enhances regional reliability and provides more balanced capacity sharing options.
Who Bears the Cost
- Transmission owners and utilities in ERCOT and neighboring regions — they will carry planning, siting, construction, and operational costs (largely recovered through rates), plus compliance burdens tied to joint planning and federal oversight.
- ERCOT and Texas regulators — loss of de facto isolation means new federal reporting, coordination, and potential conflict with state policy preferences, along with the administrative work of responding to FERC and ERO requirements.
- Ratepayers in the affected regions — customers may face higher bills to fund long-distance transmission construction and upgrade costs, even if long-run benefits from reliability and renewables accrue.
- Federal agencies and project sponsors — NEPA/ESA compliance, community engagement, and labor enforcement will increase permitting complexity and administrative workload, potentially raising costs and schedules.
- Tribal governments and local communities near new corridors — despite prioritization of degraded lands and required outreach, some projects will still require new land use and may impose local environmental and cultural impacts.
Key Issues
The Core Tension
The bill poses a clear trade-off: accelerate national reliability and decarbonization by federally mandating interconnections and labor standards, or preserve state-level control, local siting authority, and a slower, market-driven approach — you cannot fully achieve the federal timelines and social protections without accepting higher near‑term costs, complex multi‑jurisdictional coordination, and the risk of legal pushback from state actors.
The Act creates several implementation choke points. First, converting statutory exemptions into enforceable federal obligations depends on coordination between FERC, the ERO, multiple independent system operators, and dozens of transmission owners — entities with different governance models and incentives.
The statute forces technical targets but leaves the practical allocation of siting, permitting, and financing to joint plans; disagreements over who bears construction risk or how costs are allocated can stall those plans. Second, mandating NEPA and ESA compliance while imposing a hard endpoint (completion by January 1, 2035) creates tension: environmental reviews and litigation can meaningfully delay large transmission projects, making the timeline aspirational absent streamlined permitting or substantial upfront funding.
A third tension is political and legal: bringing ERCOT under more federal FPA provisions will raise questions about state authority and could invite litigation from state actors and utilities. Fourth, the bill’s prioritization of degraded lands and rights-of-way is sensible for minimizing new environmental footprints but may conflict with technical routing needs or existing landowner rights, constraining feasible alignments.
Lastly, the increase in the Transmission Facilitation Program’s borrowing cap expands federal financing capacity but does not, by itself, guarantee sufficient capital or specify repayment mechanisms or allocation priorities — leaving a potential funding shortfall for megaprojects unless further programmatic or appropriations follow-up occurs.
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