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A conversation with the most interesting man on the Federal Energy Regulatory Commission.
It’s not every day that a top regulator calls into question the last few decades of policy in the area they help oversee. But that’s exactly what Mark Christie, a commissioner on the Federal Energy Regulatory Commission, the interstate power regulator, did earlier this year.
In a paper enticingly titled “It’s Time To Reconsider Single-Clearing Price Mechanisms in U.S. Energy Markets,” Christie gave a history of deregulation in the electricity markets and suggested it may have been a mistake.
While criticisms of deregulation are by no means new, that they were coming from a FERC commissioner was noteworthy — a Republican no less. While there is not yet a full-scale effort to reverse deregulation in the electricity markets, which has been going on since the 1990s, there is a rising tide of skepticism of how electricity markets do — and don’t — reward reliability, let alone the effect they have on consumer prices.
Christie’s criticisms have a conservative bent, as you’d expect from someone who was nominated by former President Donald Trump to the bipartisan commission. He is very concerned about existing generation going offline and has called activist drives against natural gas pipelines and other transportation infrastructure for the fossil-fuel-emitting power sources a “national campaign of legal warfare…[that] has prevented the construction of vitally needed natural gas transportation infrastructure.”
Since renewables have become, at times, among the world’s cheapest sources of energy and thus quite competitive in deregulated markets with fossil fuels (especially when subsidized), this kind of skepticism is a growing issue in the Republican Party, which has deep ties to oil and gas companies. The Texas state legislature, for instance, responded to Winter Storm Uri, which almost destroyed Texas’ electricity grid in 2021, with its own version of central planning: billions in low cost loans for the construction of new gas-fired power plants. Former Texas Governor Rick Perry, as secretary of energy in the Trump administration, even proposed to FERC a plan to explicitly subsidize coal and nuclear plants, citing reliability concerns. (FERC rejected it.) Some regions that didn’t embrace deregulation, like the Southeast and Southwest, also have some of the most carbon-intensive grids.
But Christie is not so much a critic of renewable resources like wind and solar, per se, as he is very focused on the benefits to the grid of ample “dispatchable” resources, i.e. power sources that can power up and down on demand.
This doesn’t have to mean uncritical acceptance of existing fossil fuel infrastructure. The idea that markets don’t reward reliability enough can help explain the poor winterization for fossil fuel generation that was so disastrous during Winter Storm Uri. And in California, the recognition that renewables alone can’t power the grid 24 hours a day has led to a massive investment in energy storage, which can help approximate the on-demand nature of natural gas or coal without the carbon pollution.
But Christie is primarily interested in the question of just how the planning is done for a system that links together electric generation and consumers. He criticized the deregulated system in much of the country where power is generated by companies separate from the utilities that ultimately sell and distribute that power to customers and where states have less of a role in overall planning, despite ultimately approving electricity rates.
Instead, these markets for power are mediated through a system where utilities pay independent generators a single price for their power at a given time that is arrived at through bidding, often in the context of sprawling multi-state regional transmission organizations like PJM Interconnection, which covers a large swath of the Midwest and Mid-Atlantic region, or the New England Independent System Operator. He says this set-up doesn’t do enough to incentivize dispatchable power, which only comes online when demand spikes, thus making the system overall less reliable, while still showing little evidence that costs have gone down for consumers.
Every year, grid operators and their regulators — including Christie — warn of reliability issues. What Christie argues is that these reliability issues may be endemic to the deregulated system.
Here is where there could be common ground between advocates for an energy transition and conservative deregulation skeptics like Christie. While the combination of deregulation and subsidies has been great for getting solar and wind from zero to around 13 percent of the nation’s utility-scale electricity generation, any truly decarbonized grid will likely require intensive government supervision and planning. Ultimately, political authorities who are guiding the grid to be less carbon-intensive will be responsible for keeping the lights on no matter how cold, warm, sunny, or windy it happens to be. And that may not be something today’s electricity “markets” are up for.
I spoke with Christie in late June about how FERC gave us the electricity market we have today, why states might be better managers than markets, and what he’s worried about this summer. Our conversation has been edited for length and clarity.
What happened to our energy markets in the 1990s and 2000s where you think things started to go wrong?
In the late ‘90s, we had this big push called deregulation. And as I pointed out in the article, it really wasn’t “deregulation” in the sense that in the ‘70s, you know, the trucking and airlines and railroads were deregulated where you remove government price regulation and you let the market set the prices. That’s not what happened. It really was just a change of the price-setting construct and the regulatory construct.
It took what had been the most common form of regulation of utilities, where utilities are considered to be natural monopolies, and said we’re going to restructure these utilities and we’re going to let the generation part compete in these regional markets.
And, you know, from an economic standpoint, okay, so far so good. But there’s been a lot of questioning as to whether there’s really true competition. Many parts of the country also just didn’t do it.
I think there’s a serious question whether that’s benefiting consumers more than the cost of service model where state regulators set the prices.
So if I’m an electricity consumer in one of the markets that’s more or less deregulated, how might reliability become an issue in my own home?
First of all, when you’re in one of these areas that are deregulated, essentially you’re paying the gas price. If it goes up, that’s what you’re going to pay. If it goes down, it looks really good.
But from the reliability standpoint, the question is whether these markets are procuring enough resources to make sure you have the power to keep your lights on 24/7. That is the big question to a consumer in a so-called deregulated state: Are these markets, which are now the main vehicle for buying generation resources, are they getting enough generation resources to make sure that your lights stay on, your heat stays on, and your air conditioning stays on?
Do you think there’s evidence that these deregulated markets are doing a worse job at that kind of procurement?
Well, let’s take, for example, PJM, which came out with an announcement in February that said they were going to lose in the next five years over 40 gigawatts. A gig is 1,000 megawatts, so that’s a lot of power, that’s a lot of generating resources. And the independent market monitor actually has told me it is closer to 50 gigawatts. So all these units are going to retire and they’re going to retire largely for economic reasons. They’re not getting sufficient compensation to stay open.
The essence of restructuring was that generating units are going to have to make their money in the market. They’re not going to get funding through what's called the “rate base,” which is the regulated, traditional cost-of-service model. They have to get it in the markets and theoretically, that sounds good.
But in reality, if they can’t get enough money to pay their cost, they’re going to retire and then you don’t have those resources. Particularly in the RTOs [regional transmission organizations, i.e. the multi-state electricity markets], you’re seeing these markets result in premature retirements of generating resources. And so, now, why is that? It’s more of a problem in the RTOS than non-RTOS because in the non-RTOS, they procure resources under the supervision of a state regulator through what’s called an integrated resource plan or IRP.
The reason I think the advantage and reliability is with the non-RTOS is that those utilities have to prove to a state regulator that their resource plan makes sense, that they’re planning to buy generating resources. Whether they’re buying wind or solar or gas, whatever, they have to go to a state regulator and say, “Here’s our plan” and then seek approval from that regulator. And if they’re shutting down units, the state regulator can say, “Wait a minute, you’re shutting down units that a few years ago you told us were needed for reliability, and now you’re telling us you want to shut them down.” So the state regulator can actually say , “No, you’re not going to shut that unit down. You’re going to keep running it.”
That’s why I think you have more accountability in the non-RTOS because the state regulators can tell the utility, “you need more resources, go build it or buy it,” or “you already have resources, you’re not going to shut them down, we’re not going to let you.”
You don’t have that in an RTO. In an RTO, it’s all done through the market. The market decides, to the extent it has a mind. You know, it’s all the result of market operations. It’s not anybody saying whether it’s a good idea or not for a certain unit to shut down.
I find it interesting that a lot of the criticism of the deregulated system — and a lot of places that are not deregulated — come from more conservative states that would generally not think of themselves as having this kind of strong state role in economic policy. What’s different about electricity? Why do you think the politics of this line up differently than it would on other issues?
I don’t know. That’s an interesting question. I haven’t even thought about it in those terms.
I think it goes back to when deregulation took place in the mid-to-late ‘90s. Other than Texas, which went all the way, the states that probably went farthest on it were in the Northeast. Part of the reason why is because they already had very high consumer prices. I think deregulation was definitely sold as a way to reduce prices to consumers. It hasn’t worked out that way.
Whereas you look at the Southeast, which never went in for deregulation. The Southeastern states, which are still non-RTO states, had relatively very low rates, so they didn’t see a problem to be fixed.
The other big trend since the 1990s and 2000s is the explosive growth of renewables, especially wind and solar. Is there something about deregulated electricity markets, the RTO system, that makes those types of resources economically more favorable than they would be under a different system?
Well, if you’re getting a very high subsidy, like wind and solar are getting, it means you can bid into the energy markets effectively at zero. So if you can bid in at zero offering, you’re virtually guaranteed to be a winner. In a non-RTO state, a state that's doing it through an integrated resource plan, the state regulator reviews the plan. That's why I think an IRP approach is better actually for implementing wind and solar because you can implement and deploy wind and solar as part of an integrated plan that includes enough balancing resources to make sure you keep the lights on.
To me an Integrated Resource Plan is a holistic process, where you can look at all the resources at your disposal: wind, solar, gas, as well as the demand side. And you can balance them all in a way that you think, “Okay, this balance is appropriate for us for the next three years, or four years, or five years.” Because you’re typically doing an IRP every three to five years anyway. And so I think it’s a good way to make sure you balance these resources.
In a market there’s no balancing. In a market it’s just winners and losers. And so wind and solar are almost always going to win because they have such massive subsidies that they’re going to get to offer in at a bid price of zero. The problem with that is they’re not going to get paid zero. They’re going to get paid the highest price [that all electricity suppliers get]. So they offer in at zero, but they get paid the highest price, which is going to be a gas price. It’s probably going to be the last gas unit to clear, that’s usually the one that’s the highest price unit. And yet because of the single clearing price mechanism, everybody gets that price. So you can offer it at zero to guarantee you clear, but then you’re going to get the highest price, usually a gas combustion turbine peaker.
Do you think we would see as much wind and solar on the grid if it weren’t for the fact that a lot of the resources are benefiting from the pricing mechanism you describe?
I don’t think you can draw that conclusion because there are non-RTO states that have what’s called a mandatory RPS, mandatory renewable portfolio standard. And so you can get there through a mandatory RPS and a cost to service model just as you can end up in a market. And actually, again, I think you can get there in a more balanced way to make sure that the reliability is not being threatened in the meantime.
To get back to what we’re talking about in the beginning, my understanding is that FERC, where you are now, played a large role in encouraging deregulation in the formation of RTOs. Is this something that your staff or other commissioners disagree with you about? How do you see the role you’re playing, where you’re doing public advocacy and reshaping this conversation around deregulation?
First of all, we always have to give the standard disclaimer, you never talk about a pending case. But FERC was really the driving force behind a lot of this deregulation. So obviously, they decided that that’s what they wanted to push, and they did. And so I think it’s appropriate as a FERC regulator to raise questions. I think raising questions about the status quo is an important thing that we do and should do. Ultimately, you advocate for what you think it ought to be and if the votes come eventually, it might take several years, but it’s important.
One of the things I try to do is, I put the consumer at the center of everything I do. It is absolutely my priority. And I think that it should be every regulator’s priority, particularly in the electric area because most consumers in America — in fact, almost all consumers in America — are captive customers. By captive. I mean, they don’t get to choose their electric supplier.
Like, where do you live, Matthew?
I live in New York City.
You don’t get to choose, right? You’re getting electricity from ConEd. And you don’t have any choice. So you’re a captive customer. And most consumers in America are captive customers. We tried this retail choice in a few states that didn’t work. You know, they’re still doing it. I’m not going to say whether it’s working or not, but I know we tried it in Virginia, and it didn’t work at all because of a lot of reasons.
I always put customers first and say, “Look, these customers are captive. We have to protect them. We have to protect the captive customers by making sure they’re not getting overcharged.” So that’s why I care about these issues. And that’s why I wrote this article. I think that customers in a lot of ways in America are not getting treated fairly. They’re getting overcharged and I think they’re not getting what they should be getting. And so I think a big part of it is some of this stuff that FERC's been pushing for the last 25 years.
Our time is running out. So I will leave with a question that is topical: It’s already been quite hot in Texas, but outside of Texas and in FERC-land, where are you concerned about reliability issues this summer?
Well, I’m concerned about everywhere. It’s not a flippant remark. I read very closely the reliability reports that we get from NERC and we have reliability challenges in many, many places. It’s not just in the RTOs. I think we have reliability challenges in the South. Fortunately, the West this year, which has been a problem the last couple of years, is actually looking pretty good because all the rain last winter — even flooding — really was great for hydropower.
I’m from California, and I think it’s the first time in my adult life that I remember stories about dams being 100 percent, if not more than 100 percent, full.
The rains and snowfall were so needed. It’s filled up reservoirs that have been really dry for years. And from an electrical standpoint, it’s been really good for hydro. So they’re looking at really good hydro availability this summer in ways they haven't been for the last several years. So the West actually, because of all the rain and the greater available of hydro, I think is in fairly good shape.
There’s a problem in California with the duck curve, the problem is still there. If you have such a high solar content, when the sun goes down, obviously the solar stops generating and so what do you do you know for the next four to five hours? Because the air conditioners are still running, it’s still hot, but that solar production has just dropped off the table. So they’ve been patching with some battery storage and some gas backup.
But I’m worried about everywhere. I watch very closely the reports that come out of the RTOs and you can’t be shutting down dispatchable resources at the rate we’re doing when you’re not replacing them one to one with wind or solar. The arithmetic doesn’t work and it’s going to catch up to us at some point.
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On FERC’s ‘disastrous misstep,’ the World Court’s climate ruling, and 127 SMRs
Current conditions: West African countries including Guinea-Bissau, Guinea-Conakry, Senegal and The Gambia are facing flash flooding from heavy rainfall • The southwestern corner of New Mexico is suffering “exceptional” drought, the highest possible level in the U.S. Drought Monitor. • Already roasting in excessive heat, Des Moines, Iowa, is bracing for thunderstorms.
The Department of Energy canceled a nearly $5 billion loan guarantee for the Grain Belt Express, a transmission project designed to move wind power from Kansas to the industrial upper Midwest. After more than a decade of development, the power line won bipartisan support and secured $4.9 billion in federal financing late last year to fund the first phase of the project, running from Ford County in Kansas to Callaway County in Missouri.
As Heatmap’s Matthew Zeitlin explained, the project eventually drew the ire of Missouri Senator Josh Hawley, who recently stepped up his attacks in the hopes that a more friendly administration could help scrap the project. The transmission line’s developer, Invenergy, told Heatmap in a statement that “a privately financed Grain Belt Express transmission superhighway will advance President Trump’s agenda of American energy and technology dominance.”
The microreactor startup Oklo inked a deal with Liberty Energy, the fracking giant where Secretary of Energy Chris Wright served as chief executive before entering government. Liberty was already an early investor in Oklo, and Wright served on the nuclear company’s board. But the new deal is a strategic partnership with a plan to deploy Liberty’s gas equipment alongside Oklo’s reactors, mirroring similar pairings that other small modular reactor developers have promoted.
Oklo is among 127 small modular reactor designs currently under development worldwide, according to a new tally from the Nuclear Energy Agency at the Organisation for Economic Co-operation and Development, the 38-member club of rich countries. Of those designs, 51 are in pre-licensing or licensing processes, and 85 are in active discussion between SMR developers and site owners. Just seven are either operating or under construction.
The Federal Energy Regulatory Commission approved fast-track interconnection processes proposed by the Midcontinent Independent System Operator and the Southwest Power Pool. The new processes will allow power plants to sidestep the standard reviews for a grid hookup. Gas-fired power plants are “likely to be the main beneficiary of the fast-track processes, with standalone batteries also potentially being included,” Utility Dive reported. The American Clean Power Association, the biggest renewable energy lobby, called the decision “a dangerous misstep.”
Southern California’s landmark rule to spur the electrification of certain boilers and water heaters survived a major court challenge. A federal court last week upheld the first-in-the-nation regulation that applies to light-industrial and commercial boilers, steam generators, process heaters, residential pool heaters and tankless water heaters. The ruling, which only applies to the 17 million people in large parts of Los Angeles and its surrounding suburbs, could “help reenergize efforts around the country to replace fossil-fuel-burning equipment with electric heat pumps and other clean technologies,” Canary Media’s Maria Gallucci wrote.
Heatmap’s Emily Pontecorvo reported earlier this week on an effort in Newton, Massachusetts to beat back new gas pipelines block by block. But overall, the fight for electrification has recently faced repeated setbacks. In 2023, a federal court struck down the northern California city of Berkeley’s pioneering ban on new gas hookups, which was replicated in cities across the country. Last year, gas utilities staged something of a coup at the quasi-governmental organization that writes the building codes used in nearly every state.
Children stand outside a church destroyed in a cyclone in Vanuatu.Mario Tama/Getty Images
In a historic decision on Wednesday morning, the International Court of Justice ruled that countries must act on climate change. While non-binding, the verdict from the United Nations’ high court was dubbed “the biggest climate case in history,” as it established the first international legal precedent of a nation state’s responsibility to curb planet-heating emissions.
The tiny South Pacific island republic of Vanuatu called the ruling a “milestone in the fight for climate justice” and vowed to “take the ICJ ruling back to the United Nations General Assembly, and pursue a resolution that will support implementation of this decision,” said Vanuatuan climate minister Ralph Regenvanu. He anticipated opposition from Washington. “Even as fossil fuel expansion continues under the U.S.’s influence, along with the loss of climate finance and technology transfer, and the lack of climate ambition following the U.S.’s withdrawal from the Paris Agreement,” he said, “major polluters — past and present — cannot continue to act with impunity and treat developing countries as sacrifice zones to further feed corporate greed.”
Researchers at Japan’s Shinshu University have demonstrated for the first time that a new eco-friendly plastic made from microbes safely decomposes in deep ocean conditions
“This research addresses one of the most critical limitations of current bioplastics—their lack of biodegradability in marine environments,” said Professor Seiichi Taguchi at the Shinshu’s Institute for Aqua Regeneration. “The study provides a pathway for safer alternatives to conventional plastics and supports the transition to a circular bioeconomy.”
NextEra CEO John Ketchum projected serenity during the company’s earnings call Wednesday.
The business of renewable energy development in the United States is the business of NextEra. The company’s renewable division is one of the country’s largest and most sophisticated, with almost 30 gigawatts in its project backlog — including 3.2 gigawatts added in the past three months.
NextEra’s financial results and outlook for the future can be a guide to how the sector is thinking — or wants people to think it’s thinking — about the state of the development landscape. Now especially, that landscape looks confusing and contradictory, with power demand increasing sharply alongside hostility to wind and solar development.
The way NextEra sees it, NextEra will come through fine. But many other — especially many other smaller — players may struggle.
“Bottom line, America needs more electricity, not less,” NextEra Chief Executive John Ketchum told analysts during the company’s earnings presentation Wednesday.
“America needs it now, not just in the future. We are firmly aligned with the administration’s goal to unleash American energy dominance. And to do so, we need all of the electrons we can get on the grid. There’s truly no time to wait.”
That alignment may be one way, however. From sunsetting tax credits to ordering enhanced reviews of wind and solar projects by federal regulators, the Trump administration has made it clear that it does not see wind and solar as part of its energy strategy.
The rhetoric coming from Washington hasn’t been particularly constructive, either, no matter how often renewable energy companies try to label their work as part and parcel of an “energy dominance” agenda. Just in the past few weeks, Trump has claimed that China has “very, very few” wind farms (in fact it has very, very many), and Secretary of Energy Chris Wright called wind and solar a “parasite on the grid.”
NextEra is not unaware of the tone and policy emanating from the administration. The company issued a new risk disclosure, first noticed by analysts at Jefferies, saying that its guidance on future performance assumes “no changes to governmental policies or incentives, including continued applicability of existing Internal Revenue Service tax credit safe harbor guidance,” i.e. that it can “commence construction” the way it always has, by following existing IRS guidance.
Although that would be awfully nice, it may not be the case for much longer. Soon after signing the One Big Beautiful Bill Act, President Trump issued an executive order calling for “new and revised” tax guidance “to ensure that policies concerning the ‘beginning of construction’ are not circumvented, including by preventing the artificial acceleration or manipulation of eligibility and by restricting the use of broad safe harbors unless a substantial portion of a subject facility has been built.”
It doesn’t take a terribly close reading to intuit that Trump wants to narrow the window for renewables developers to claim tax credits even beyond what Congress has already done. According to conservative members of Congress who wanted the tax credits to phase out even sooner, the president was merely fulfilling a promise he’d made to win their vote.
Ketchum at least projected serenity about the safe harbor situation, telling analysts that the definition of construction has been understood “for well over a decade,” that it “is informed by longstanding Treasury Department guidance,” and that the OBBBA’s language “definition is consistent with the settled meeting.”
He also noted that NextEra had “made significant financial commitments over the last few years, including in the first half of 2025, to begin construction under these rules that were in effect at the time those commitments were made,” i.e. before the bill was signed.
“We believe that we’ve begun construction on a sufficient number of projects to cover our development expectations through 2029,” Ketchum continued, adding that the company has determined it will be eligible for tax credits based on “our belief as to what the statute provides based on our experience in this industry over the last couple of decades.”
If anything, Ketchum suggested, NextEra might be advantaged by the harsh deadlines for commencing construction (July 4, 2026) or being placed in service (the end of 2027) in the new law. “It comes down to who’s safe harbor, right?” Ketchum said. “We know we compete against a lot of really small developers who don’t have the balance sheet, the construction financing to do things around safe harbor.”
In this kind of environment, Ketchum said, size matters.
“If you’re in a market where you have folks drop out, right, because they didn’t plan ahead, they don’t have the ability to get construction financing, they don’t have the ability to safe harbor. It obviously creates bigger opportunities for us.”
NextEra could be left to pick up the pieces from smaller developers that don’t make it, Ketchum said. “If we do see some small developers kind of fall away, there’ll be more projects that could potentially hit the market and come up for sale.”
It sure looks that way, at least. Democrats should start coming up with a plan.
For the first six months of President Trump’s term, the big question was about what would happen to the Inflation Reduction Act. We now have something like an answer.
President Trump’s memorably named One Big Beautiful Bill Act repealed many of the IRA’s most important clean energy tax credits, including incentives for wind, solar, and electric vehicles. And while it’s still unclear whether the Trump administration will let developers actually use the tax credits that remain on the books — especially the now-denuded credits for wind and solar — fewer “unknown unknowns” remain about what might come next.
So I’ve been trying to figure out where climate and energy policy might go from here. And one story that I keep coming back to is the flashing red lights around what could become a serious electricity affordability crisis.
It’s now widely understood that electricity demand is rising in the United States for the first time in a generation. The Energy Information Administration projects that electricity use will grow 1.7% in the next few years, after increasing by just 0.1% per year from 2005 to 2020. That growth is projected to come from new data centers, new factories, the (now) slow(er) but (still) steady adoption of electric vehicles, and population growth.
What is less well understood is how poorly the United States is prepared to match this rise in electricity demand with an equivalent increase in supply. To some degree, American electricity prices are already rising: So far this year, utilities have received or requested permission to increase customers’ bills by $29 billion, according to a July report from PowerLines, a think tank and advocacy group. That’s a large number in its own right, and it’s more than twice as much as had been approved at this time last year.
But when you look across the power system, virtually every trend is setting us up for electricity price spikes:
On top of all this, of course, the Trump administration has made it much more uncertain which new solar, wind, and battery projects will be able to secure tax credits — and with them, secure bank financing.
None of these trends alone would guarantee price increases or electricity supply constraints. But taken together, they reveal an electricity system that is coming under a variety of strains.
In the 2010s, cheap natural gas and technological advances in energy efficiency pacified much of the power system. We won’t have the same luxury this decade.
This is all going to be bad for the economy, bad for the climate, and bad for climate policy.
It’s a setback for the U.S. economy because, as President Trump somewhat alluded to in his second inaugural address, energy is a key input to virtually every other economic process, including manufacturing. But it’s especially bad for climate policy. The dominant plan to decarbonize much of the U.S. economy is to “electrify everything” — cars, appliances, home heating, and even many industrial processes. Americans will be far less eager to electrify everything if electricity is expensive.
If energy price hikes do arrive, Democrats are going to have a relatively straightforward time communicating about them in a narrow political sense. The story is just too simple: Democrats passed a law to encourage clean energy called the Inflation Reduction Act. Republicans repealed it. Energy prices inflated. QED.
That story alone might be too contrived, but the evidence we have suggests that OBBBA will raise energy bills. The REPEAT Project at Princeton University — led by Jesse Jenkins, my Shift Key podcast cohost — has a new report out projecting that the One Big Beautiful Bill Act will increase Americans’ electricity bills by $165 a year by the end of the decade. (If the law is allowed to stick around, and in the absence of intervening policies, it could raise bills by hundreds of dollars a year by the middle of next decade.)
OBBBA’s explosion of the federal deficit will make the situation worse: By expanding the deficit for such little public gain — that is, merely to memorialize earlier tax cuts, not even to make new ones — the Federal Reserve will have a more difficult time cutting interest rates in the future. That will in turn make it even more difficult for utilities and developers to finance new energy projects.
The political story will be so compelling here, I think, that Democrats will come under a lot of pressure to reinstate the wind and solar tax credits. And maybe they should do that — it could make sense as part of a larger energy or permitting deal. But stacking more solar and wind on the grid will not on its own lower people’s electricity bills.
Going into 2028, Democrats will need an actual plan to stabilize or cut electricity costs. They will need ideas about how (and whether) to speed up permitting, restructure wholesale power markets, and build new power plants in order to stabilize the power grid.
One thing that’s already clear is that in this inflationary environment, states like New York with publicly owned power authorities are able to intervene more forcefully in their own power markets than states that lack such capability. That’s because the state itself can act to build its own large-scale power plants. New York Governor Kathy Hochul recently directed the state’s power authority to build a new nuclear power plant upstate in order to grow the supply of zero-emissions electricity. Using their state own power authorities, governors in other states — or even the federal government, with an entity like the TVA— could take a similar step.
With all that said, I’ve been trying to come up with a scenario under which these price hikes will not materialize. In the late 2010s, for instance, America’s liquified natural gas exports surged essentially from zero, but domestic consumers didn’t see significant price hikes because drillers increased gas production to match the exports. Maybe that could happen again. And maybe utilities will — and this would, to be clear, be horrible for the climate — run their aging coal plants much more than they once anticipated doing.
Or maybe load growth won’t be as bad as we think. When Jesse and I spoke to Peter Freed, Meta’s former director of energy strategy, for Shift Key, he told us that the current data center boom is different from any previous buildout because of the presence of speculators. For the first time, he said, speculative data center developers are buying up prospective sites and requesting utility-scale hookups with the expectation that they will find a tenant for the data center in the future. In other words, the demand side of the electricity system is filled with an unusual amount of froth at the moment.
We also know that, more generally, the demand side of the power system is a mess. In the past few years, climate analysts have gotten used to talking about the power grid’s interconnection queue — that is, its supply side. But the demand-side queue — the process that lets new data centers, factories, and other new electricity users connect — is even more broken. In some jurisdictions, it’s little more than an Excel file that projects move up and down within as local politics requires.
We also know that one source of new demand — one planned factory or, more often, one data center — will sometimes apply to hook up to multiple states or utilities at the same time. It will get utilities to bid against each other, suss out the best construction sites and power rates, and only relatively late in the process make a final decision about where to build.
So if I were putting together a bear case for electricity demand, I would start here. Maybe aggressive data center speculators are bidding in multiple utilities, driving up projections across many states. That’s causing utilities to freak out about their supply, leading them to project the need for a lot of new investment — and, with it, a lot of electricity rate increases. But as data center speculators actually begin to build (or abandon) projects — and as some of the air inevitably comes out of the AI boom — some of this projected demand will start to evaporate. Perhaps the data centers that do get built will find ways to reduce their power usage, too.
Even this story won’t fully eliminate load growth on its own, though. Data centers make up the largest share of new electricity demand, but even then, they’re not the majority of it. The rest comes from, roughly, new factories, the slow electrification of the vehicle fleet, and new residential construction. But let’s say the One Big Beautiful Bill Act succeeds in hobbling the electric vehicle sector in the United States, many EV and battery factories get canceled, and fewer Americans buy EVs overall. Calculate in a mild recession, too, since all the AI and EV investment will be drying up.
In that world, most new sources of power demand really will be in abeyance. That’s how some of these power projections might not come true. But in most other scenarios, it’s time to hold on — and for blue-state leaders to think about how they can find cheap, zero-emissions electrons, as soon as possible.