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December 10, 2025

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Clean Energy Sector in Texas Grapples with New Legislation, Large Loads

AUSTIN, Texas — The dust has settled in Texas after another biennial legislative session that installed guardrails for data centers and other large loads and avoided stiff penalties on the clean energy sector. At the same time, ERCOT stakeholders still are digesting the massive federal budget reconciliation bill signed into law in July.

Both pieces of legislation weighed heavily on the minds of panelists during Infocast’s annual Texas Clean Energy Summit Aug. 26-28.

The summit’s opening panel took on Texas’ Senate Bill 6, which governs the planning, interconnection and operation of large loads and generation resources in ERCOT. The bill directs the state’s Public Utility Commission to set rules that address cost-sharing and interconnection standards for new large load customers (defined as any load 75 MW or greater). These loads will be required to contribute to utilities’ costs to connect them to the grid.

The legislation also requires electric cooperatives and municipally owned utilities that have not adopted retail choice to pass through reasonable interconnection costs for large loads.

Ned Bonskowski, vice president of Texas regulatory affairs for Vistra, pointed out that SB 6 didn’t occur in a vacuum.

“It wasn’t like on the first day, the Legislature said, ‘Let there be Senate Bill 6,’ and then that was the first energy policy that we had in the state,” he said. “There’s a long continuum of statutory and regulatory policies that it has to fit in, and that goes way back beyond Senate Bill 6. I honestly think that about 75 to 85% of what you see in Senate Bill 6 was already happening or was going to happen anyway, so it’s really codifying in statute, putting some guardrails that the Legislature said they learned how they wanted to be implemented.”

“Load growth, triggered largely by data centers, is creating a lot of anxiety in different markets and we’re seeing different approaches to how to manage that pending issue,” Samantha Robertson, director of global strategy at cryptocurrency miner Bitdeer, said. “In Texas, it’s codified in statute, but we’ve seen it in other jurisdictions where [transmission and distribution providers] are dealing with it differently in their specific service territory or it’s happening at the RTO level. Not only do we have a lot of tools, but we’re in a market where finding innovative approaches and looking at problems in a completely new way is possible based on how the market is designed.”

Caitlin Smith, policy lead for storage developer Jupiter Power, called for load forecasts that are accurate and believable. Load forecasts help transmission planning, she said, but the market also needs to know what is coming in order to serve resource adequacy.

“We’ve had what we all recognize as these kind of very bloated load forecasts. I think we will see that what comes out of this law is hopefully a more accurate load forecast,” Smith said. “Load being the signal that you need more generation, but my understanding what may be different about the data center loads and the AI loads is they’re not price responsive. That creates a tricky situation when you’re thinking about these things, too, right?”

PUC Reviewing 4CP Program

High on the PUC’s priority list is a review of ERCOT’s 4CP program, which assesses transmission charges for the following year based on the grid’s overall — or coincident — peak demand during four 15-minute intervals, one from each summer month. The Texas grid’s increased reliance on solar power has shifted tight conditions from the load peak to the net load peak at the same time as more flexible crypto miners and data centers are connected to the system.

That has caught the attention of lawmakers, who directed the PUC to review 4CP within the context of SB6. The review must be completed by the end of 2026.

“[4CP] has long been a subject of discussion and debate. It certainly will have an impact on incentives for loads and for the market,” Bonskowski said.

Michael Macias, vice president of operations for Electric Transmission Texas, a joint venture between American Electric Power and Berkshire Hathaway Energy subsidiaries, urged his panel’s listeners to engage themselves in the stakeholder process.

Michael Macias, ETT | © RTO Insider 

“I think it’s clear that 4CP is on the table for a revision. What’s not clear is how that’s going to be implemented,” Macias said. “What’s also clear is that we know that in order to support the substantial growth that we’re seeing in our time, we’re going to have to spend tens of billions of dollars. If we’re going to build the system up to bring the new load in, then we need to make sure that we’re putting protections in place for everybody, for the folks that are investing in that infrastructure, folks that are using that infrastructure, and then for everybody else that wasn’t planning on having to pay for 760 pipelines around the state.”

Robertson said the conversation needs to include how costs are allocated to large loads.

“I think it’s largely the expectation that AI or high-performance computing data centers wouldn’t necessarily participate in 4CP, so their demand would be whatever their load contribution is during the coincident peaks,” she said. “I think another question that SB6 is asking is how transmission costs are allocated. … That’s something that is going to go back to addressing utility business models. And again, I think it also goes back to the fact that if you want to be interconnected to the grid very quickly and you’re willing to pay for it, maybe you can shoulder 100% of the cost. So, I think that’s a bigger question that isn’t necessarily addressed by 4CP or 8CP or 12CP or whatever it ends up being.”

Managing Large Load Forecasts

Kristi Hobbs, ERCOT’s vice president of system planning and weatherization, keynoted the summit’s second day with a discussion of — what else? — large loads and their effect on the market.

She said ERCOT’s regional transmission planning studies look six years into the future because “we know it takes time to build transmission on the system.”

As part of ERCOT’s latest regional plan, staff asked transmission service providers how much load they were expecting to hook up to their systems. They told staff they expected more than 218 GW of demand.

“Anyone in this room believe that we’re going to hit 218 GW of demand in six years?” Hobbs asked.

A few hands shot up.

“Anybody believe we won’t?” she asked.

More hands were raised.

“Yeah, we were a little bit uncertain about that as well,” she said. “If we would have taken the entire forecast that we received from the transmission service providers, it would have been 85,000 MW of demand from data center loads. That’s more than the entire United States.”

ERCOT is currently tracking about 188 GW of large loads seeking interconnection, compared with 63 GW in December 2024. The grid operator has reviewed and approved planning studies for more than 19 GW of large loads over the past two years. Almost 7 GW have been approved to energize.

A report released in August by Enverus Intelligence Research said load projections from ERCOT and PJM widely differ from the company’s models.

“ERCOT’s and PJM’s estimates imply that each of the next five years, their regions alone would absorb more than 100% of U.S. annual data center capital spending, an assumption we believe is unrealistic,” according to Enverus senior analyst Kevin Kang.

“We know a lot is coming in Texas, but we need to be careful that we’re balancing the cost to consumers with the transmission build for those that will actually be here,” Hobbs said. “They’re very motivated, they’ve got contracts … and they’re wanting to move forward. They come motivated.

“We also have some that come, and I feel like they’re just fishing,” she added. “They put in a request over here, they put a request over there, and they see which utility bites. Whichever one bites first, they’re going to go with that, and then they let the other one just fade off.”

Clean Energy Still Faces Uncertainty

With the federal budget reconciliation bill hamstringing the development of clean energy, the only resource that can quickly and cheaply be brought to market, the sector is grappling with an uncertain future. The bill took away tax credits from wind and solar projects unless they were able to begin construction by July 4, 2026 — or be in service by Dec. 31, 2027, if they did not meet the July 4 deadline.

Clean energy advocacy group E2 said companies have canceled or scaled back more than $22 billion in projects since the start of 2025, including $6.7 billion in investments in June alone.

Doug Pietrucha, AEU | © RTO Insider 

“It is going to be impactful long-term and in the immediate, too,” said Doug Pietrucha, senior principal with Advanced Energy United. “Realistically, those resources needed to have steel in the ground in the next 10 months to have any ability to take advantage of the remaining tax opportunities that exist for them. So really, the quickest turnaround for those resources is creating a huge decision-point bottleneck for those developers at the moment. There are a lot of projects that are on the bubble.”

Pietrucha noted that batteries are eligible for credits into the 2030s, as long as they maintain Foreign Entity of Concern compliance.

“Certainly, storage has the capacity to do procurement in a way that will permit them to qualify into the future, but the reality of navigating how to do it and actually getting your hands on components that are going to keep you compliant is a whole ballgame in itself,” he said.

“We’re on pause right now, there’s so many moving pieces,” energy storage consultant Katherine Meik said. “It’s not just about the tariffs. Sometimes, it’s about equipment availability. I think a lot needs to be defined. We’ll start seeing some of those answers, but we need to get through the tariff wars first and then we have to figure out who can manufacture and where it’s coming from.”

Asked how ERCOT is dealing with the uncertainty, Hobbs said SB6’s directive to standardize the information required to be included in load forecasts will help. Large load customers must disclose whether they are pursuing similar interconnection requests elsewhere in Texas that could affect the planning and timing of their requests.

“We’re working with the utilities who have the relationships with the customers making the load request to better understand the level of certainty,” she told RTO Insider. “I think we have more certainty on those developments in the shorter term and then it’s getting the best information on the longer-term [loads].”

Developers: Chaos is Good

That uncertainty is not necessarily a problem, agreed a panel discussing the future of the Texas grid, which leads all other states in clean energy installations.

Former ERCOT staffer Nemica Kadel, now with Lightsource BP, advocated for a hybrid solution where everyone contributes to the cost of building out the grid because “we’re all working towards a stable grid.”

Nemica Kadel, Lightsource BP | © RTO Insider 

“[Cost allocation] has always been a heated topic, especially in Texas, where it’s a socialized cost. There’s questions of who gets to hold the bag right now,” Kadel said. “The way it is, all the ratepayers are paying for it. There’s also a lot of demand, and I know that the policymakers are working on trying to come up with the optimal solution.”

“I’ve always been told that power development is no place for the faint of heart,” moderator Dino Barajas, with the Baker Botts law firm, said. “If you have a weak stomach, you’re probably in the wrong industry, because everything changes on the dime.”

“Every chaos is an opportunity, right?” Kadel responded.

“I love the chaos, just simply because we do have chaos and people have to be talking about it. People talking about it is a good way to get improvements,” said Alex Shattuck, director of grid transformation for Energy Systems Integration Group.

As an example, he used the technical aspects of recent regulatory changes for clean energy being critical facts for eight years.

“We’re just now getting there and putting them into place because people are finally talking,” Shattuck said.  “The conversations they’re having give [the regulatory space] momentum to actually get improvements and enhancements to regulatory procedures done.”

“The chaos is 100% a good thing,” OTC Global Holdings’ Campbell Faulkner said. “We finally went from the power industry being rather boring to being interesting again.”

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Parties Argue for Appeal of Order 1920’s Tx Reforms in First Set of Briefs

After more than a year of preliminary proceedings, parties filed their first briefs Aug. 30 in Appalachian Voices v. FERC, in which the 4th U.S. Circuit Court of Appeals is reviewing the commission’s Order 1920 (24-1650). 

Parties from all sides of the argument weighed in. Environmentalists and developers argued the transmission order did not go far enough. States and utilities argued FERC exceeded its authority. And one brief seeks to avoid the reimposition of a federal right of first refusal (ROFR). A response from FERC is not due until early 2026. The court will take other briefs later in February. 

A group of more than 30 utilities that includes American Electric Power, Dominion Energy, Duke Energy, Exelon and Xcel Energy Services argued FERC exceeded its authority by forcing them to file cost-allocation proposals they might disagree with.  

“FERC compels public utilities to include and promote state-designed utility tariff provisions, including those with which utilities disagree, which FERC would then be free to adopt even though the utility’s proposal was just and reasonable (the ‘inclusion requirement’),” the utilities said. “FERC also requires public utilities to consult with states before exercising their statutory right to amend their long-term transmission cost-allocation, and to explain why they reject contrary state proposals (the ‘consultation requirement’). This violates both the FPA [Federal Power Act] and the First Amendment.” 

In the initial version of Order 1920, FERC declined to make utilities file state agreement approaches against utilities’ wishes, but in Order 1920-A, it reversed course and allowed “state entities to infringe on transmission providers’ filing rights.” 

The filings come under Section 205 of the FPA, which is supposed to be reserved for utilities that cannot be forced to include proposals from states or other third parties. FERC said it would consider state agreement approaches on par with utilities’ own cost-allocation proposals, even though it is supposed to accept utilities’ Section 205 filings if they are in a broad zone of just and reasonable rates. 

“FERC cannot circumvent statutory limitations by creating a rule that trumps the FPA’s plain meaning and confers on state entities filing rights that Congress withheld,” the utilities said. 

Even when FERC sets a rate under Section 206 of the FPA, the utility keeps its right to respond and propose its own preferred rate under Section 205, the utilities said. 

“Section 206 does not authorize FERC to override utilities’ Section 205 rights,” they added. “When remedying a rate that it finds no longer just and reasonable under Section 206, FERC must stay within the statutory limits of its power, just as in any other remedial context.” 

Another brief arguing for rehearing was filed by the American Forest and Paper Association, Industrial Energy Consumers of America, National Rural Electric Cooperative Association, New England States Committee on Electricity, Ohio Consumer’s Counsel and others that faulted FERC for failing to adopt cost-management and customer-protection proposals. 

“Order 1920 arbitrarily and capriciously facilitates an escalation in transmission rates without implementing any cost controls and cost-containment mechanisms to ensure rates remain just and reasonable,” the groups said. “FERC’s rejection of its initial proposal to eliminate certain transmission rate incentives for long-term regional projects violated FPA Section 206’s requirement that FERC must remedy unjust and unreasonable rates and practices.” 

That includes a financial incentive that allows utilities to charge consumers 100% of prudently incurred costs before projects go into service, or even if they never go into service. FERC also failed to address ideas of an independent transmission monitor to ensure fair plans, leaving that for another docket where it has no requirement to act. 

Order 1920 also shifts the costs of interconnecting generators from developers themselves to consumers, who will pay for those lines under the regional transmission planning process, the organizations said. 

Their brief also urged the court to find that electric cooperatives can participate in the cost-allocation process with states. In much of the country, cooperative boards establish their consumers’ rates independently of any state regulator. 

States including the attorneys general of Texas and Utah, the Arizona Corporation Commission, the Louisiana PSC, the Mississippi PSC, the Ohio PUC’s Federal Energy Advocate and others argued FERC goes too far and is trying to encourage a shift to renewable energy with Order 1920. 

“It effectively transforms the transmission planning process into a tool to subsidize transmission facilities that support a specific set of favored generation resources,” they said. 

Order 1920 requires transmission providers to use seven categories of factors to develop planning scenarios that lead to the construction of favored technologies. The factors include state or local policy, including decarbonization and renewable energy targets. 

“The effect of this process is to socialize costs of transmission,” the state opponents said. “If a city passes an ordinance requiring that all its energy must be solar (without regard to the cost), the transmission provider for the entire region must now account for that policy in its planning and thus build the infrastructure necessary to support the city’s power generation goals. The transmission providers cannot disregard the policy as unreasonable.” 

States that favor traditional methods of power generation are required to subsidize the development of the infrastructure required to support states and localities that favor other methods of generation, they added. 

Appalachian Voices, Invenergy, Environmental Defense Fund, Natural Resources Defense Council, Sierra Club and others filed a brief that FERC did not go far enough and that Order 1920 will not fix the “broken” transmission grid that has been neglected by is owners and operators for decades. 

“The existing regional grid has experienced catastrophic and deadly failures during extreme weather events,” the environmentalists and Invenergy said. “It lacks the infrastructure necessary to adapt to acute changes to electricity supply and demand. And cheaper, cleaner resources wait years to connect to the grid while aging, uneconomic plants are unable to retire, costing consumers billions of dollars every year.” 

FERC has passed other transmission reforms over the decades where it was clear what the industry had to do, they argued. But when it paired “a choose-your-own-compliance adventure” with a general set of planning principles then nothing changed. 

“This is unsurprising; incumbent transmission owners tasked with transmission planning and development have financial incentives to avoid the most cost-effective projects, since truly efficient regional transmission introduces competition and reduces profits for them and their affiliated generating resources,” the environmentalists and Invenergy said. 

They argued that FERC was wrong to let transmission owners ignore benefits like access to cheaper generation, deferred generation investments and increased competition from the planning process. It also failed to consider alternatives such as new transmission technologies and storage, or merchant transmission lines, in the planning process. 

The final brief came from industry competition proponents such as Advanced Energy United, Electricity Transmission Competition Coalition, LS Power and others. They argued FERC should not have reimposed a federal ROFR for “right-sized” projects.  

Order 1000 had eliminated federal ROFRs, but Order 1920 would reimpose them for projects that come out of local planning processes but would produce more benefits if the need addressed a larger, regionally planned project. 

The rule is the first time FERC has imposed a ROFR on its own. The old federal ROFRs were put in place by incumbent transmission owners themselves and filed with FERC under Section 205 of the FPA. It proposed the new one because in earlier rounds of reforms, many incumbent transmission owners were replacing aging infrastructure on their own, avoiding regional planning processes. 

FERC reasoned that allowing a ROFR for right-sized projects would subject more transmission to regional planning. Competition proponents argued the lack of planning for such lines was a calculated effort from utilities to counteract Order 1000’s attempt to use competitive market forces. 

“Order 1920 takes a drastic step in the opposite direction — creating a ROFR from whole cloth and mandating its use in FERC-jurisdictional tariffs — on the flawed theory that the power to find a practice unlawful under the FPA necessarily entails the power to mandate that practice,” AEU, ETCC and LS Power said. 

“Although FERC’s motivation to incentivize regional transmission investment may be well-intentioned, its chosen method is both misguided and unlawful. Giving incumbent transmission owners a monopoly right to build tomorrow’s regional grid free from competition is a Faustian bargain. For the incumbent utilities, that deal is too good to be true. For consumers, it is a financial nightmare.” 

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Western Utilities Set Sights on RTO After DAM Choice

Four Western utility executives participating in a webinar hosted by the Energy Bar Association presented their reasoning for why they ultimately chose either SPP’s Markets+ or CAISO’s Extended-Day-Ahead Market (EDAM), with some eyeing the creation of a full regional transmission organization in the future.

Representatives from Portland General Electric, Bonneville Power Administration, Public Service Company of New Mexico and Salt River Project participated in the Aug. 28 webinar about the development of wholesale markets in the West.

PGE and PNM have committed to joining EDAM, which is scheduled to go live in spring 2026, and are integrating processes with the day-ahead market alternative.

The utilities’ choices boiled down to, among other things, customer affordability and reliability.

Pam Sporborg, director of transmission and market strategy at PGE, pointed to production cost models showing EDAM would provide greater economic benefits than Markets+. The CAISO markets’ contiguous footprint also “offers us good resource diversity, helping to balance many different geographic regions.”

PNM joined for similar reasons, noting the utility delivers significant wind and solar power to California. (See PNM Signs Agreement to Join CAISO’s EDAM.)

“Being in a separate market from that would create huge operational challenges,” said Kelsey Martinez, director of regional markets and transmission strategy at PNM.

Although PNM’s decision to join EDAM means there will be market seams with SRP, Arizona Public Service and El Paso Electric, seams with California would be too costly, Martinez said. However, “we do want to ultimately have the option to be on a path to an RTO.”

“I think it needs to definitely remain optional,” she added. “Given our resource diversity with California and our wind shape and the future of our system, we see the benefits of having California footprints in an RTO eventually, and realizing more and more incremental benefits that way. So, we do think that’s an important option for us in the future.”

Sporborg, meanwhile, said the West likely will see an “incremental advancement” that captures the benefits of an RTO in a way unique to the region.

Sporborg is co-chair of the West-Wide Governance Pathways Initiative Launch Committee. The Launch Committee, consisting of members from several Western states, was formed with the task of establishing an independent RO to oversee CAISO’s WEIM and EDAM.

The Pathways model can help capture the “benefits that we see in the RTO environment, but in a uniquely Western way that is developed ground up from the stakeholders and really targets the specific benefit that we’re looking for within the overall market construct in a way that we can hopefully avoid some of the pitfalls and stagnation that we see in some of the Eastern markets,” Sporborg said.

‘Primary Platform’

Meanwhile, BPA and SRP chose to join Markets+ based on a few other benefits, the utilities’ representatives said during the webinar.

Specifically, resource adequacy requirements, an independent governance model and the greenhouse gas accounting mechanism were some of the factors that led BPA to join Markets+ in May following a lengthy public process, said Nita Zimmerman, acting vice president of bulk marketing at the agency. (See BPA Chooses Markets+ over EDAM.)

“We expect day-ahead markets to be the primary platform for wholesale electricity transitions in the West, especially with some states requiring utilities to transition to RTOs,” Zimmerman said. “And based on our experience as a later entrant to the Western [Energy Imbalance Market], BPA believes that early [day-ahead market] adoption … will better meet customer and stakeholder objectives, because the first years of a market greatly influence development and maturation of the market design.”

For SRP, an important aspect was “having a pathway to an RTO,” said Josh Robertson, director of energy market strategy at SRP.

“That’s really the next logical step here,” Robertson said. “I think we are adding some complexity by doing a day-ahead market and not an RTO, and we’re potentially leaving some things on a table. There are issues with moving to an RTO, surely, but we want to make sure that there’s a pathway to doing that.”

Markets+ has a viable path to a full-fledged RTO, given its independent board and governance structure, Robertson said.

“We did not see that path very viable with the CAISO market,” he added.

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NYISO Puts Storage as Transmission on Pause

ALBANY — At a recent Budget and Priorities Working Group meeting, NYISO presented its final recommendations for 2026, which will define where the ISO puts its market design resources. The storage-as-transmission project, while on the budget, faces an uncertain future.  

While the project will be on the budget for 2026, NYISO does not consider the project to be “continuing.” This designation means a project was approved in a prior year and has progressed to a late stage of project development and is picked up automatically in the following prioritization cycle.  

“We’re going to add storage as transmission to be included into the budget,” said Kevin Pytel, director of product and project management for NYISO, at the Aug. 25 BPWG. “This does create resource constraints for us, adding this in. We do not have all the resources necessary to complete this project.” 

That means the ISO does not think it has the money and staffing hours to complete the project as budgeted but also does not want to abandon it. That leaves storage as transmission in the unusual position of waiting for other projects to meet milestones early and under budget so resources can be shifted to it.  

The storage as transmission project would allow energy storage systems to act as regulated transmission, making them eligible for cost-of-service rate recovery and to be considered as transmission solutions in ISO planning processes. Assets developed under the “storage as transmission” designation would not be dispatched by the wholesale market beyond what would be necessary for them to remain ready to inject or withdraw from the grid.  

The ISO’s initial proposal limited storage as transmission to 200 MW systemwide with 20 MW per substation. (See NYISO Outlines Storage as Transmission Proposal.) 

Pytel said that due to resource constraints, storage as transmission would not receive a continuing status even though it has hit a development milestone of “functional requirement specifications” that ordinarily would grant it that status. In the NYISO project development cycle, some project development milestones like “development complete” automatically continue into the next year. Pytel said if other projects come in under budget, then storage as transmission would receive extra money and work hours.  

“But when we come back and talk about project prioritization in April or May of next year, we will not have a strong handle on whether or not we’re really marching toward the deliverable,” Pytel said. “I can confidently say that when we come back … we would not consider this as continuing.” 

Pytel added it’s unlikely NYISO staff would be able to work on storage as transmission by Q1 of 2026. 

“I am extremely concerned about what I am hearing,” said Kevin Lang, a lawyer representing the City of New York. “You have a project, but it’s not clear what work you’re actually going to do on it or when you might be doing the work.” 

Lang said this is troubling because the ISO hadn’t really committed to work on the project and it wasn’t clear whether or when resources would open up to make it possible. 

“The NYISO is acting as a barrier to technology and that is wholly inconsistent with your mission and its wholly inconsistent with open markets,” Lang said. He asked that the ISO provide a list of the other projects ahead of storage as transmission so market participants could weigh in on whether the projects at the front of the line were prioritized appropriately.  

Pytel said those other projects were discussed in the last BPWG when the ISO had presented stakeholder scoring. Storage as transmission received modest scores in the stakeholder survey. Twenty-five stakeholders supported the project, with most of them in the public power/environmental sector and end-use consumer. Some generators and transmission owners also supported the project. It came in 12th out of 28 projects by weighted score.  

Tony Abate, representing the New York Power Authority, said he saw things differently. He credited the ISO for its flexibility and for being generally progressive on including new resources. He didn’t think the ISO was putting up a barrier to an imminent storage application that would benefit ratepayers. 

Chris Hall, representing the New York State Energy Research and Development Authority, thanked Pytel for not dropping the project completely and leaving some way for it to be finished. He said that while the current proposal was limiting, it could serve as a platform to leverage future use cases.  

Other Business

The ISO presented an update on how its budget forecasts from 2024 compared to actual spending for 2025. So far, the ISO generally is on target with a $3.8 million over-collection. NYISO forecasts that the over-collection will continue through the end of 2025, totaling $7.2 million. Additionally, NYSIO collected $1.4 million more than expected due to interconnection study deposit cash balances.  

At the same time, NYISO predicts an under-spend of about $4.6 million due to lower-than-expected professional fees and higher-than-expected “miscellaneous revenues.”  

Patrick Kelly, NYISO’s controller and assistant treasurer, said that was in large part due to savings seen in consulting. Some of the savings is due to the cancellation of the Public Power Transmission Need project, which would have served offshore wind. (See NYISO Cancels Offshore Transmission Studies.) Kelly anticipates $1.4 million in labor savings due to the PPTN cancellation.  

Kelly said that as of June, NYISO anticipates an excess of $11 million between over-collections and under-spends. 

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TVA, ENTRA1 to Collaborate on up to 6 GW of Nuclear Build

The Tennessee Valley Authority is taking another step to boost next-generation nuclear technology, collaborating to site up to 6 GW of generation within its seven-state footprint.

TVA announced the “landmark” deal with ENTRA1 Energy on Sept. 2, calling it the largest ever of its kind. The two plan to develop new nuclear plants using the small modular reactor NuScale Power expects to deploy by 2030.

ENTRA1 holds the commercialization rights to NuScale’s products and services. It presents itself as a one-stop shop for development, financing and management of NuScale’s SMRs, with multiple options for development, management and operation.

The new agreement calls for ENTRA1 to develop and own the power plants and sell the output to TVA under future power purchase agreements. They called it an important step to promote advanced nuclear technology in the U.S.

Accelerating nuclear deployment has been a stated priority for President Donald Trump; TVA’s rate of progress on nuclear development has been a target of Republican criticism.

TVA said in a news release that it “stands at the forefront of America’s advancements in nuclear energy — and its bold partnerships and national leadership continue to power the nation’s nuclear renaissance.”

CEO Don Moul said: “TVA is leading the nation in pursuing new nuclear technologies, and no utility in the U.S. is working harder or faster than TVA.”

Trump began removing members of TVA’s board after it appointed Moul the new CEO. The president reportedly demanded that the remaining members remove Moul, but they refused. (See TVA Board Promotes Nuclear Veteran from COO to CEO and Trump Nominates Four to TVA Board of Directors.)

TVA in its news release said the ENTRA1 deal “aligns with the administration’s energy dominance agenda and focus on America’s energy security. The partners are identifying opportunities to work with other federal agencies and explore potential sites with new nuclear generation and joint gas-fired capabilities.”

Other recent nuclear updates by the nation’s largest public power supplier include:

On Aug. 18, TVA and Kairos Power announced the first-ever PPA by a U.S. utility for electricity from an advanced GEN IV reactor. (See Kairos Power, TVA Announce Nuclear PPA.)

On May 20, TVA announced it was the first U.S. utility to submit a construction permit application for GE Vernova Hitachi Nuclear Energy’s BWRX-300 SMR. (See TVA First U.S. Utility to Request SMR Construction Permit.)

And on April 23, TVA said it and a coalition of industry and state leaders had reapplied for funding under the U.S. Department of Energy’s $800 million Generation III+ Small Modular Reactor Program.

NuScale, meanwhile, is part of the crowded U.S. SMR field. It was the first and so far only company to receive Nuclear Regulatory Commission approval for its reactor module design, then obtained a second NRC approval in May on an uprated design that boosts output from 50 MW to 77 MW.

That has not translated into many announced deals, however.

A groundbreaking project planned in Idaho was canceled in November 2023 when subscriptions for the power it would produce proved too difficult to secure. (See Pioneering NuScale Small Modular Reactor Project Canceled.)

NuScale’s stock closed 7.5% higher in trading Sept. 2.

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Stakeholder Forum: Clearing Power Sector Roadblocks with Permitting Reform and Policy Certainty

By Todd Snitchler

“Help me help you.” The famous line from the movie Jerry Maguire captures the dynamic facing competitive power markets today.  

RTOs have made meaningful progress in clearing interconnection backlogs. PJM alone has processed more than 140 GW of projects since 2023, with 46 GW already holding signed interconnection service agreements. Across MISO, ERCOT, CAISO and other regions, reforms are moving projects through the queue faster and giving developers greater clarity. 

So, what’s standing in the way?  

Though progress on legislative action has stalled, permitting reform remains a vital step forward — one where policymakers can make a meaningful difference. As Congress reconvenes this September, this critical issue is back on the table. 

That said, while significant, permitting is just one element of a broader landscape of uncertainty that all participants in the power sector must work to resolve. 

Progress in Interconnection, But Projects Still Stalled

Todd Snitchler | EPSA

Competitive markets have long delivered reliability, efficiency and innovation at lower cost than monopoly procurement. By requiring independent power producers to bear investment risk — rather than captive ratepayers — they drive efficiency and discipline, while shielding consumers from the costs of stranded or uneconomic assets. 

That structure is working. RTOs/ISOs have improved their interconnection processes, and developers continue to pursue projects across technologies even as auction schedules change and regulatory proceedings inject uncertainty. 

Yet interconnection progress alone does not guarantee timely deployment. The challenge now is converting cleared projects into operating megawatts amid heightened uncertainty — a task that demands policy clarity, durable rules and practical coordination beyond the control of market operators alone. 

“Developers stand ready with billions in private capital — but uncertainty stalls projects.” 

A Key Hurdle: Permitting and Siting

Projects that clear the interconnection queue remain delayed by regulatory hurdles across markets (PJM and MISO, in particular): 

    • Federal, state and local permitting delays that stretch timelines for years.
    • Local opposition and litigation that block projects even after contracts are signed. 
    • Policy interventions that prematurely retire resources before replacements are online.   

These barriers block development of resources that already have been cleared by RTOs. PJM’s Reliability Resource Initiative identified 9,300 MW of near-term projects that could be online by 2030, but many hinge on permitting timelines beyond the grid operator’s control. Similar stories are playing out in MISO, CAISO and ERCOT. Markets cannot build around these hurdles. 

Importantly, streamlining these processes does not mean lowering environmental standards. A more efficient, predictable and transparent review can strengthen outcomes — creating clear timelines, improving interagency coordination and delivering legally durable decisions. Predictable processes are essential to keep investment flowing into renewables, storage and dispatchable resources alike. 

“Permitting reform is not about shortcuts — it’s about certainty.” 

Financing, Supply Chains and Policy Uncertainty Add Layers of Risk

With that said, permitting is one major barrier, but not the only one. Developers also must navigate: 

    • Financing uncertainty: Competitive suppliers invest without guaranteed cost recovery; shifting rules and political interventions raise risk premiums and complicate financing. 
    • Supply chain delays: Global shortages and trade policies affect delivery of transformers, turbines, panels and other critical equipment, driving up costs and timelines. 
    • Load forecasting questions: Rapid growth from data centers, electrification and manufacturing challenges traditional forecasting, making it harder to underwrite long-lived investments. 
    • Tariff and trade policy volatility: Changing tariffs or exemptions can materially alter project economics late in the process. 

These hurdles affect resource developers and business models of all kinds, whether they be utilities or independent power producers, or located in vertically integrated and restructured regions alike. 

Policymakers cannot control every factor. But they can reduce risk where it matters most — by providing certainty in permitting and market rules, improving coordination among agencies and reinforcing confidence in competitive markets so private capital can move. 

The Wrong Focus: Political Attacks on Markets

Even as interconnection reforms advance, some governors and utility boards are focusing on the wrong target. Investigations aimed at second‑guessing auction outcomes, calls for price caps or efforts to tilt the field back toward monopoly procurement may be politically tempting in the short term, but they don’t solve the deployment challenge — and they risk making it worse. 

Price caps, in particular, distort the very signals that attract investment. When policymakers override market outcomes, the message to investors is that politics trumps market discipline. The predictable result is reduced investment, weaker reliability and higher long‑term costs. The better approach is to fix the obstacles to building — not to mute the signals that bring private capital to the table. 

“Markets deliver innovation and efficiency. Politics delivers uncertainty.” 

The Risk of Backsliding

Frustration with delays has prompted some to argue for a return to the vertically integrated utility model. That would be a mistake. While monopoly procurement can appear to offer certainty, history shows it often produces inefficiency, cost overruns and stranded risks borne by consumers. Competitive markets discipline investment, reward performance and foster innovation across technologies. The alternative is not better outcomes — it is higher costs and slower progress. 

EPSA’s Balanced Approach to Reform

EPSA supports permitting reform that modernizes NEPA and related statutes to make reviews efficient, predictable and fair — striking “an appropriate balance between environmental protection and building essential infrastructure.” That balance includes: 

    • Definitive timelines for reviews and litigation: Endless procedural delays increase costs and weaken reliability. 
    • Better coordination across agencies: Projects should not be subject to duplicative or conflicting requirements.
    • Certainty for investors: In competitive markets, developers take on significant risk without guaranteed cost recovery. Clear, durable rules are essential to attract investment. 
    • Inclusive benefits: All resource types — renewables, storage and dispatchable generation — face permitting barriers. 

Reform should apply fairly across technologies to ensure a balanced and reliable grid.   

EPSA’s position makes clear: Permitting reform is not about shortcuts. It is about building a transparent, efficient and accountable system that both protects the environment and enables timely development of critical energy infrastructure. 

“The alternative to competitive markets isn’t better outcomes — it’s higher costs and stranded assets.” 

The Path Forward: Certainty, Not Shortcuts

The interconnection backlog is easing, but deployment still lags because multiple external hurdles converge at once. Policymakers can’t solve every problem — nor should they try — but they can reduce uncertainty where only they can: by ensuring clear, consistent, enforceable permitting processes; resisting political interventions that distort market signals; and supporting coordination that aligns siting, environmental review and reliability needs. 

Do that, and private capital will do the rest. Competitive markets have proven they deliver innovation, efficiency and reliability when the rules are clear. Now they need partners to help clear the path. As Jerry Maguire put it: “Help me help you.” 

Todd Snitchler is president and CEO of the Electric Power Supply Association, which represents competitive power suppliers who own and operate around 200 GW of capacity from electricity resources of all types in markets throughout the U.S. 

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Neb., Miss. Utilities to Pay $186K in Penalties

Utilities in the territories of the Midwest Reliability Organization and SERC Reliability will pay a total of $186,000 in penalties to the regional entities for violations of NERC’s reliability standards under two settlements approved by FERC.

NERC filed the settlements on July 31, along with an additional settlement for infringement of the ERO’s critical infrastructure protection (CIP) standards whose details were not made public in accordance with NERC and FERC’s policy on CIP violations. The commission said in an Aug. 29 filing that it would not further review the settlements, leaving the penalties intact.

MRO’s settlement involves the Grande Prairie Wind Farm (GPW), a 400-MW facility in Holt County, Neb., owned by Berkshire Hathaway Energy subsidiary BHE Renewables (NP25-14). Power generated at the wind farm is sold to Omaha Public Power District under a long-term power purchase agreement.

According to the settlement agreement, GPW notified MRO in a quarterly report on July 17, 2023, that it was in violation of FAC-003-4 (Transmission vegetation management) in its capacity as a generator owner. The utility had experienced a C-phase to ground fault on a 345-kV generation tie-line between the wind farm and a facility owned by another entity. The fault caused the main generator supply breaker at GPW, as well as two breakers at the other entity’s facility, to trip open, which cleared the fault on the tie-line.

GPW investigated the cause and discovered “a tree that demonstrated damage from contacting the overhead C-phase line.” The utility cut back the tree and other plants nearby, visually inspected the rest of the line, and returned it to service.

MRO attributed the violation to a lack of adequate controls to prevent encroachments into the minimum vegetation clearance distance of the tie-line that could cause a sustained outage, as required by requirement R2.4 of FAC-003-4. The RE assessed the risk as moderate because, while the vegetation encroachment caused a sustained outage and exposed the 345-kV transmission system to a fault, the facility is not a networked transmission facility or black start resource, so a trip “would not have a significant impact on the” electric grid.

After removing the tree and other encroaching plants, GPW’s additional mitigation actions include increasing the frequency of vegetation inspection at the wind farm to at least twice a year, with the 15-foot MVCD to be documented with photographs. The GO also updated its FAC-003 program to reflect the new inspection schedule and conducted training on the standard.

Mississippi Power Discovers Rating Mishap

In the other settlement approved by FERC, Southern Co. subsidiary Mississippi Power agreed to pay $86,000 to SERC (NP25-15). The penalty stemmed from violations of FAC-008-5 (Facility ratings) and its predecessor FAC-009-1 (Establish and communicate facility ratings) reported to the RE on June 3, 2022.

According to NERC’s monthly spreadsheet notice of penalty, where the settlement was filed, Mississippi Power discovered a discrepancy on Jan. 4, 2022, between its records of equipment installed at a 230-kV substation and those found in the field. The utility was examining the facility in response to a data request from SERC in advance of an on-site audit.

Mississippi Power’s drawings and database for the substation indicated the 230-kV line should be equipped with bundled aluminum conductor steel-reinforced (ACSR) cable jumpers rated at 2,808 amps, with the most limiting element (MLE) being the ACSR conductor, rated at 1,512 amps. However, the field verification found that one set of jumpers actually was single all-aluminum conductor (AAC) jumpers rated at 1,496 amps. This meant that the AAC jumpers should have been identified as the MLE, and therefore the facility rating was incorrect.

After discovering this issue and derating the facility, Mississippi Power conducted walkdowns of all 108 transmission substations, 106 of which were completed by March 31. During this time, Southern began a system-wide initiative to implement a common transmission facility ratings database across all operating companies. This involved a quality assurance review by each company of the data for the new database.

Because of the walkdowns and QA assessment, Mississippi Power found 15 total instances where incorrect element ratings resulted in an incorrect MLE, leading to incorrect facility ratings at eight different 115-kV and 230-kV stations. The misratings required derates of up to 44%. None of the stations were found to have operated above the correct ratings.

The utility also discovered 239 instances of incorrect element ratings on 115-kV, 230-kV and 500-kV facilities that did not impact the MLE or facility rating. Mississippi Power has committed to finishing the remaining walkdowns by Dec. 31.

SERC said the cause of the infringement was “inadequate change management controls and legacy equipment identification controls.” The violation began on June 18, 2007, when FAC-009-1 became enforceable, and should end Dec. 31, when the utility has completed the walkdowns and updated all incorrect equipment and facility ratings.

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Results Elusive in N.Y. Build-Ready Renewables Program

A state with plenty of brownfields and lots of ambition for clean energy is having trouble bringing the two together.

New York’s Build-Ready program was launched in October 2020 to develop a roster of turn-key plans that would place renewable generation on sites such as landfills, abandoned industrial sites and dormant electric-generating facilities.

More than four years of effort by state personnel at a cost of $15.5 million identified 480 potential sites for such projects through June 30. But for assorted reasons, all 480 were found to be unworkable.

The one success so far was the auction of a 12-MW solar project on a tailings pile at a defunct iron mine, and even that had to be scaled back from 20 MW to avoid the need for expensive grid upgrades. (See NY Sells First Build-Ready Site for Renewables.)

Requests for proposals are out for three more solar projects totaling 15 MW — two on a former municipal landfill and one adjacent to the infamous Love Canal toxic waste cleanup site.

The New York State Energy Research and Development Authority offered the details about Build-Ready in an annual progress report submitted to the Public Service Commission on Aug. 28.

NYSERDA told NetZero Insider that Build-Ready is an inherently challenging prospect — preparing what may be a blighted location for a clean energy system that private developers would not build on their own due to cost and risk.

“The fact that the Build-Ready program screened 480 sites shows the due diligence needed to find the right site for a successful project,” a spokesperson said.

NYSERDA said, however, that its upcoming five-year report will provide a more complete overview of the program and offer recommendations for moving it forward. That report is due Oct. 1.

Build-Ready began as part of the Accelerated Renewable Energy Growth and Community Benefit Act of April 2020.

In October 2020, it became one of the many initiatives launched from the wide-ranging proceeding the PSC initiated in 2015 to implement a large-scale renewable program and a clean energy standard (Case 15-E-0302).

Build-Ready calls for NYSERDA to look for potentially suitable sites; assess their suitability; secure rights to the site; evaluate environmental needs and interconnection options for a renewable generation project; design a project; seek necessary permits; and then offer the package to the private sector in a competitive sale, bundled with a long-term contract for renewable energy certificates.

Each of these steps can take months or years on their own — the final package is about as close to “build-ready” as one could hope for.

But the process has reached completion exactly once so far, at the defunct iron mine in a remote wilderness area; $56.3 million of the $71.8 million allocated to Build-Ready remains unspent.

The 480 rejections break down to:

    • 166 for insufficient buildable land area;
    • 91 for lack of landowner cooperation;
    • 64 because interconnection options were not viable;
    • 51 due to agriculture activity, which since 2024 has been ranked as a higher priority than Build-Ready;
    • 46 because of commercial development potential, also a higher priority;
    • 40 to avoid competition with a potential private-sector renewable developer; and
    • 22 due to wetlands or other significant environmental constraints on site.

NYSERDA’s report goes into detail on several of the sites that reached advanced stages of review — four landfills, an airport and a huge post-industrial scar sprawling from the city of Utica into a neighboring town.

One by one, they all got crossed off the list.

The Utica site stands out as a lost chance to repurpose a site with a tortured history.

Thousands once worked there, cranking out guns and later computer parts in one of the massive brick-and-concrete industrial complexes that once dotted upstate New York. The factory died, was reborn as a retail outlet complex, lost its luster, was converted to a mixed-use office and commercial facility, died again, was partly demolished and partly left to rot, was gutted in a massive fire, stood as a skeleton for two years, then finally was demolished in 2022 by the EPA, which removed nearly 30,000 tons of debris, asbestos and drums of hazardous substances.

Build-Ready would have placed batteries on the concrete foundations left on site, and there would be few residents in the surrounding industrial zone to be worried about them.

But during its assessment, NYSERDA determined that the amount of site preparation and electrical upgrades that would be needed for a 20-MW standalone BESS — including a three-breaker ring bus — would be so expensive as to make the project unviable.

There is no mention in the report of another factor that may make future projects unviable: President Donald Trump and his Republican allies in Congress.

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Power Play: Political Intermittency is Now the Biggest Threat to the Grid

When a government’s word is no longer its bond, investors get nervous, and investors in clean energy generation plants in the United States are very nervous indeed. For good reason: The administration is threatening wind and solar generation projects with tactics ranging from revoking permits to trimming tax credits to reneging on grants.  

Capriciousness is the Market’s Kryptonite

Project developers are, by nature and necessity, risk averse. There’s no reward if a project gets derailed by a desert tortoise after years of planning, permitting and perfecting the capital stack to fund its construction. But how can the industry do due diligence when a political wild card can be dealt at the last minute? 

A recent example, where the Bureau of Ocean Energy Management halted the Revolution Wind offshore project for belated and questionable “national security concerns,” is the wildest wild card yet. After all, if this can happen to an 80% complete project that underwent more than a decade of studies and hearings to obtain permission, no project seems safe.  

political grid

Dej Knuckey

As Nancy Sopko, vice president of external affairs for a U.S. Wind project off the coast of Delaware, another project under threat, said, the permits the administration is threatening to revoke for that project were “secured after a multi-year and rigorous public review process” and were legally sound. But a drawn-out legal battle, even if the project team prevails, is just another cost that will make a project difficult to pencil out. 

The market is becoming increasingly cautious about investing in clean energy generation and is re-evaluating projects already in the planning stage. Already, the pipeline of generation projects is pre-emptively narrowing as investors and developers seek safer shores. 

Putting aside the why of the political agenda, it’s essential to ask how this will impact electricity supply in a time of rising demand. The grid may face capacity and reliability challenges if clean energy generation projects are shelved, whether voluntarily or otherwise.  

AI, Data and the Demand Crystal Ball

In a steady state, cancellation or delay of major projects would be problematic, but unlikely to lead to shortages. However, in the past two years, the rise of AI and the related proliferation of data centers have sent energy analysts scrambling to rework demand projections. 

In early 2023, consulting firm ICF International projected a 1.3% annual growth rate through 2030. Two years later, it more than doubled the projected growth rate to 3.2%. And thanks to the joy of compounding, those small annual increases result in 25% growth in U.S. electricity demand by 2030 and 78% by 2050, compared to 2023 levels.  

Peak load growth projections also have been revised upward; however, with data centers’ “always-on” load profile, the result is a more feasible 14% by 2030 and 54% by 2050. While data centers providing cloud computing and AI account for most of the growth in demand, it also is coming from a rise in manufacturing, cryptocurrency mining and building electrification. 

One trend that may offset some of the increase in demand is the administration’s shift away from electrifying transportation, which still may grow, but at a lower rate than previously predicted. Other actions seem performative: For example, the move to eliminate or privatize the Energy Star program is not going to lead white goods manufacturers to flood the market with less efficient appliances. 

Reliability on the Rails

To ensure a reliable supply during peak demand, utilities and grid operators strive for a reserve margin of at least 15%. While today there’s a larger reserve margin, ICF warns, “mapping demand growth estimates against generating capacity online today, including the impact of firm builds and retirements, shows that much of the U.S. will experience below-target reserve margins as soon as 2030.” 

political grid

U.S. regional electricity demand growth and peak demand growth (2025-2035) | ICF

These analysts, however, use the phrase “firm builds and retirements,” but planning is being done now in an environment where many “firm builds” have been demoted to “likely build unless the technologies being targeted by the administration.”

If there’s continued proactive withdrawal by developers, the reliability risk may grow. It will vary by region, but in New England, the offshore wind farm that now is in suspended animation was critical to manage winter power costs, Jon Lamson reported this week. In other regions, the peak summer load is a bigger worry, as longer and hotter heat waves drive up the cooling load. 

The question of whether this changed environment will be able to supply enough electricity with acceptable reliability isn’t really about the newsworthy disruptions to offshore wind and the ability for other renewables to survive without tax credits; it’s about the ripple effect. Will the pipeline of planned clean energy projects dry up further, and what will fill the void? 

Project Finance is Self-deporting

There are echoes of the administration’s immigration policies in the project development world: Make the development environment untenable and the developers will halt their projects without the Interior Department ever issuing a stop-work order. Until those behind a project are sure that their hard-won approvals will be honored, preemptive withdrawal is an increasingly prudent option.   

Given the choice between investing time and money in a project that the political rug could be pulled out from under it before it’s ever commissioned or putting the project on ice today, some renewables developers and investors are choosing the latter. 

BloombergNEF reports “the U.S. saw the greatest drop in new renewable energy investment in 1H 2025, with committed spending down $20.5 billion (36%) from the second half of 2024.” Some of the drop is attributable to the artificial bump caused by the rush to start projects before the end of 2024 to lock in tax credits. Still, worsening policy conditions also contributed to it. 

The capital is, in essence, self-deporting, and the E.U. is the beneficiary, with an uptick in the number of low-carbon generation projects in its development pipeline. The EU-27 saw a 63% rise in investment in the first half of 2025 compared to the last half of 2024. 

“These numbers support the idea that companies are reallocating capital out of the U.S. and into Europe — particularly in offshore wind, where several developers refocused to North Sea sites over U.S. projects,” BloombergNEF said. 

One Foot on the Gas, the Other on the Brakes

It’s not all bad news for capacity: Fossil fuel generation, primarily gas, is benefiting from the administration’s focus. Global Energy Monitor’s tracker shows almost 100 GW of capacity in preconstruction, up from 15 GW a year earlier. The focus on fossil fuel-powered generation puts the United States at odds with its OECD counterparts. Close to 40% of pre-construction projects in the U.S. now are fossil, compared with less than 6% in the balance of the OECD countries. 

A rush to build new fossil capacity won’t add to capacity or reliability if the projects can’t come online rapidly, and these newly planned plants are just beginning to navigate the yearslong interconnection queues. It’s no wonder that data center giants want to skip the grid altogether by building dedicated capacity and energy storage. 

Even those projects, however, face a literal pipeline problem unless there is an existing gas supply they can tap into. And if their pipeline crosses state borders, FERC gets involved. “Currently, depending on size and jurisdiction, a pipeline project could take anywhere from eight months to five years,” Norton Rose Fulbright said. “The federal government has been working on natural gas pipeline permitting reform that would allow pipeline projects to be built more expeditiously.”  

Similarly, some fossil plants that were scheduled to close are receiving a stay of execution, such as the emergency order from the U.S. Department of Energy to keep two units of the Eddystone Generating Station in Pennsylvania in operation. (See related story: Eddystone Ordered to Remain Operational for PJM 90 More Days.) The surge in fossil projects may offset some of the decline in renewables. However, even if you assume hydro and geothermal are left alone, there’s still a significant portion of planned new generation capacity at risk.  

Of the 57 GW of power capacity under construction in North America in August, 23 GW is solar, and 17 GW is wind, according to Global Energy Monitor, meaning more than two-thirds of all power capacity under construction may be at risk. And of the 253 GW in pre-construction? Even after the sharp uptick in fossil plants in pre-construction, utility-scale solar and wind account for 114 GW, or 45%, of capacity in pre-construction. 

The critical question is how much of that pre-construction and construction is one revoked permit away from being halted. Some developers — or the project financiers that enable them to exist — aren’t waiting around to find out.  

What Do We Want? Clarity! When Do We Want It? Now!

The sooner clear and consistent policies are communicated, the faster the markets can start to rebuild trust. If the administration’s goal is to prevent all offshore wind projects and allow onshore wind and solar projects to flourish and grow as long as they can pencil out without tax credits, say so.  

Investors already fear the worst, and moving to more stable markets but knowing how profound these market shocks will be and how long they will last will enable everyone — developers, investors, utilities, grid operators and regulators—to get back to working out how to build the capacity and reliability electric consumers will need in the coming decades. 

Power Play Columnist Dej Knuckey is a climate and energy writer with decades of industry experience. 

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CPUC OKs Large Increase to PG&E Energization Cost Cap

The California Public Utilities Commission approved a plan to increase Pacific Gas and Electric’s cost cap for customer energization projects in 2025 and 2026 by more than $1.5 billion, despite acknowledging the utility did not provide data to support its forecast growth in energization applications during those years. 

The increased cap amounts are mountainous: PG&E can seek to recover costs for up to about $1.1 billion in 2025 and $1.7 billion in 2026 for certain customer energization projects, according to the decision. In a 2024 decision, the CPUC approved cost caps of about $619 million in 2025 and $669 million in 2026 for these types of projects. 

Increasing the cost caps will allow PG&E to “complete additional energization work in 2025 if it is able to accelerate its energization activity or in 2026 if activities are delayed,” the CPUC said in the approved decision. 

“We all know that load growth today is looking very different than just a few years ago,” CPUC President Alice Reynolds said during the Aug. 28 voting meeting. “Utilities are receiving more energization requests that require substantial electricity capacity. These requests are coming from industries central to California’s electrification goals — EV charging infrastructure, high-tech campuses.” 

The scale and speed of these projects is “leading to the need for significant upgrades and on timelines the utilities have not historically had to meet, leading to delays and backlogs,” Reynolds said. 

Commissioner Darcie Houck voted “no” on the proposal, questioning whether the decision gives “sufficient consideration to affordability concerns,” specifically because it omits estimated bill impacts. 

“This is a difficult case and requires balancing of critically important issues,” Houck said. “When considering just and reasonable rates, we as economic regulators must balance many factors, including affordability.” 

“The proposed decision states that it cannot estimate the proposed bill impact due to not being able to calculate potential [electricity] sales,” Houck said. “However, this … has not been a barrier for the commission in past decisions authorizing funds for projects and programs that result in increased sales including in our general rate case process.” 

“There are real dollars that real customers will be paying once the work is performed,” Houck added. “In other words, there will be real bill impacts to customers. … I do not make my determination here lightly.” 

Energization project costs include connecting new customers to the distribution grid, upgrading capacity for existing customer sites and building additional capacity for forecast load, the CPUC said in the 2024 decision. The CPUC is required to accelerate energization processes for investor-owned utility customers per Assembly Bill 50 and Senate Bill 410. 

External Labor Versus Internal Labor

PG&E needs to increase energization cost caps in part because it plans to hire external contractors for 45% of projects in 2025 and 2026, according to the decision. In 2024, PG&E projected 22% of work would be performed by external contract laborers.  

The utility estimates the cost for external contractors to perform energization project work will be about $137,000 per unit in 2025, compared with $67,000 per unit for internal labor, the decision says. 

“There is not adequate time for PG&E to hire and train an internal workforce … to complete all of the energization projects in its backlog in 2025 and 2026,” the CPUC said in its decision. 

Another factor behind the cost cap increase: PG&E says it needs to spend about $74 million to increase customer outreach and improve customer notifications for its energization process over 2025/26. 

According to the decision, PG&E projected an 8% increase in energization applications in the coming years. However, the utility did not provide data that supported its forecast growth in energization applications over 2025/26, the decision says. Comparatively, from 2021 to 2024, PG&E’s data showed a 1% increase in energization project applications, the decision says. 

The average time for large electric utilities to complete energization projects should be 182 days, according to the decision.

While PG&E said the increased cost cap would translate into a 1.8% rate increase for an average residential customer, the CPUC countered that the “evidence does not support” this projected amount. The Utility Reform Network (TURN) estimates proposed cost cap increases would cost $72.50/year for a residential customer that uses 500 kWh/month. 

Energization project costs will be tracked in PG&E’s Electric Capacity New Business Interim Memorandum Account (ECNBIMA). PG&E can seek recovery of costs in this interim memorandum account only if the costs exceed what the utility was authorized to recover in its 2023 General Rate Case, the decision says. The CPUC will review PG&E’s costs tracked and recovered in its ECNBIMA in the utility’s 2027 GRC. 

Energy Efficiency Goals Set

At the voting meeting, the commission also approved energy efficiency and energy savings goals for 2026-2037 for California’s large IOUs. Energy savings goals are tracked in a metric called Total System Benefit (TSB), which includes the lifecycle energy, capacity and greenhouse gas benefits of an efficiency or fuel substitution measure.  

The 2028-2031 TSB goal is about $1 billion for PG&E, $646 million for Southern California Edison and $300 million for San Diego Gas & Electric. 

“Today’s decision reflects changes in efficiency opportunities and market conditions, including growth in fuel substitution, such as switching from natural gas to electric appliances, a decline in traditional efficiency measures in industrial and agricultural sectors, and a more rigorous cost-effectiveness threshold,” the CPUC said in a press release.