Search
January 14, 2026

Posted on

EIA Predicts Sustained Power Growth in 2026 and 2027

The U.S. Energy Information Administration (EIA) is forecasting the highest power demand growth in a quarter century in 2026 and 2027, largely due to the proliferation of data centers.

The predicted 1 and 3% growth in 2026 and 2027 would be the first time since 2007 that power demand has increased four years in a row and would be the largest four-year increase since 2000, EIA said Jan. 13.

EIA’s January 2026 Short-Term Energy Outlook also projects that solar power output will continue its sharp growth, natural gas will provide a slightly smaller percentage of U.S. electricity and coal will resume its decline.

EIA predicts:

    • Solar generation will increase by more than 20% in both 2026 and 2027, giving it 10% of U.S. power generation by the end of 2027, up from just 5% in 2024.
    • Natural gas generation will be unchanged in 2026 and increase 1% in 2027; this gives it a 39% share of the power supply in both years, down from 40% in 2025 and 42% in 2024.
    • Coal will provide 15% of U.S. power in 2026 and 2027, down from 17% in 2025 and 16% in 2024.
    • Wind power will tick up from 11% to 12% of the power supply.
    • Nuclear and conventional hydropower will hold steady from 2024 to 2027, with nuclear providing 18 or 19% of the nation’s power and hydro 6%.
    • The benchmark Henry Hub price for natural gas will start to increase in 2027 on higher natural gas consumption in the electric power sector and growing demand for LNG exports, with three new export facilities coming online.

“U.S. energy production remains strong, and natural gas output is expected to grow to nearly 109 billion cubic feet per day this year,” EIA Administrator Tristan Abbey said in the news release. “Natural gas supply is critical as we forecast that U.S. liquefied natural gas exports expand and electricity demand rises through 2027, driven largely by increasing demand from large computing facilities, including data centers.”

The increases are a marked change from the early part of this century — EIA reports that U.S. electricity consumption increased by an average of only 0.1% per year from 2005 to 2020.

Other projections from EIA’s January outlook include:

    • Power demand growth is being driven in part by data centers and other commercial users; as a group, they bought 2.4% more electricity in 2025 and are projected to buy 2.4 and 4.3% more in 2026 and 2027.
    • The industrial sector, by contrast, is expected to see 1.6 and 3.4% growth in 2026 and 2027 after 1.7% growth in 2025.
    • Total generation by the electric power sector increased 2.5% in 2025 to nearly 4,300 BkWh; it is expected to increase 1% in 2026 and 3% in 2027.
    • The 4% decrease in natural gas generation and the 13% increase in coal generation seen in 2025 were both due largely to higher natural gas prices.
    • Coal generation will decline 9% in 2026 and be nearly unchanged in 2027; even with deferred coal plant retirements, coal generating capacity is expected to decline by 13 GW — nearly 8% — over the two years.
    • Nuclear power generation will increase 2% in 2026, largely due to the anticipated Palisades nuclear plant restart, but no change is expected in 2027.
    • Wind power generation will increase 6% in both 2026 and 2027, even factoring in the uncertainty facing the offshore wind sector.
    • Solar will hit 171.3 GW of installed capacity in the fourth quarter of 2026, finally surpassing wind (170.7 GW) as the leading U.S. renewable by nameplate capacity and becoming second only to natural gas (495.1 GW) among all forms of power generation.
    • However, solar’s low capacity factor will leave it fifth among the six major types of power generation sources in 2026, providing 8% of U.S. power; only hydropower — 6% — will be lower.
Posted on

DOE Official Faces Questions on PJM Resource Adequacy at House Hearing

Democrats used a House Energy and Commerce Subcommittee on Energy hearing on bills to shore up the electricity sector’s physical and cyber security as an opportunity to criticize Trump administration policies affecting resource adequacy in PJM.

“This is an area where the committee has a history of bipartisan success, and we should build on that,” Rep. Kathy Castor (D-Fla.), ranking member of the House Energy and Commerce Committee, said during the Jan. 13 hearing.

“However, we cannot ignore that right now, the greatest threat to grid reliability and security is the president and Republican policies. The arbitrary project cancellations, higher cost and uncertainty have driven the country into an electricity crisis,” she said.

Castor criticized the Trump administration’s December decision to revoke permits for the country’s remaining offshore wind projects, some of which were close to completion. Developers have challenged that decision in court and already won an early victory. (See Judge Again Lifts Revolution Wind Stop-work Order.)

Castor asked Acting Secretary of Energy Alex Fitzsimmons whether he had a role in any of the administration’s orders under Section 202(c) of the Federal Power Act to keep fossil fuel-fired power plants open, to which he said he did as director of Office of Cybersecurity, Energy Security, and Emergency Response.

In response to a follow-up question, Fitzsimmons affirmed that orders to keep open the Eddystone plant in Pennsylvania came in response to a looming shortage of supply in PJM. (See Energy Secretary Wright Issues 3rd Order Keeping Eddystone Open.)

“If you believe there is an energy shortage in PJM, why did you take what the federal court described as an ‘arbitrary and capricious action’ to cancel offshore wind projects that were permitted and ready to go?” Castor asked.

To submit a commentary on this topic, email forum@rtoinsider.com.

Fitzsimmons said PJM had asked DOE to issue the 202(c) order and that Eddystone has supported grid reliability since the first such order was issued last May.

“Offshore wind is some of the most expensive energy that exists,” Fitzsimmons said.

Castor responded that canceling projects at the last minute is very expensive as well.

“A business has invested billions of dollars,” Castor said. “They’ve gone through and they’ve gotten permits. They’ve hired a bunch of people, and then at the 11th hour, a president who’s focused on retribution, who the court said ‘acts in an arbitrary and capricious manner,’ comes and takes a hatchet to it, and it’s costing people a lot of money, and they’re angry about it.”

The Department of the Interior ultimately made the decision to withdraw the permits for offshore wind plants, Fitzsimmons said.

Castor asked to enter into the record a brief from PJM that was filed with a federal court recently to support Dominion Energy’s request to overrule the stop-work order on its Coastal Virginia Offshore Wind (CVOW) project.

“The CVOW project, with a nameplate rating of 2,489 MW, is an integral component of needed new generation that PJM has been relying upon to timely achieve commercial operation,” PJM said in the brief. “The CVOW project’s continued development and ability to produce 2,489 MW for the interstate grid will help mitigate the capacity shortfall PJM is now experiencing, which is projected to continue into the future.”

Extended delay of the project will cause “irreparable harm” to the 67 million Americans served by PJM given its critical need for new generation to achieve commercial operation in the next few years, the RTO added.

Later during the hearing, Fitzsimmons defended the 202(c) orders in more depth, saying they are needed in response to shrinking reserve margins in all the major ISO/RTOs at the same time they need to grow supplies to meet new demand.

“In order to meet the reserve margin requirements that are necessary for future load growth and to win the AI race, we need capacity that gets accredited by the grid operators, and that is dispatchable capacity,” Fitzsimmons said. “So, you can build as much non-dispatchable capacity as you want. It does not obviate the need for more always-on electricity.”

Cyber and Physical Security Legislation

While the minority took the opportunity to conduct an unofficial oversight hearing, the committee also took testimony on several bills, including the SECURE Grid Act from Subcommittee Chair Bob Latta (R-Ohio) and Rep. Doris Matsui (D-Calif.). It would give states funding to study the resilience and security of their electric grids.

Another piece of legislation would extend the operation of the Energy Threat Analysis Center (ETAC), which was set up as a pilot to improve information sharing on security threats to the industry.

“The ETAC Reauthorization Act of 2025 promotes improving operational collaboration between the government and industry securing critical energy infrastructure from cyber threats and protecting information sharing, thereby strengthening the nation’s energy security,” Fitzsimmons said.

In his written testimony, Edison Electric Institute Vice President Scott Aaronson said that one way Congress could help the industry is by limiting its liability when it follows government directions during a security event.

“The government may order utilities to ensure certain areas have power during an emergency for national security purposes,” his testimony said. “Or, conversely, an agency may ask that a utility allow a threat to persist to support an investigation. While utilities stand ready to collaborate with the federal government to address threats and emergency situations, existing law does not provide sufficient legal liability protection for utilities that accommodate such an order.”

Both the American Public Power Association and the National Rural Electric Cooperative Association asked the committee to extend DOE’s Rural and Municipal Utility Cybersecurity Program.

“We operate in resource-constrained rural areas, defending lines and substations that are often remote and difficult to access,” Dairyland Power Cooperative Vice President Nathaniel Melby told the subcommittee. “We operate on thin margins without profit incentives or shareholders. We must balance costly security needs against the financial reality of our members. Every dollar we invest in cyber defense comes directly from our members’ pockets.”

DOE’s program for municipal utilities and co-ops helps the close the “rural resource gap” while building partnerships, collaboration mechanisms and information sharing capacities, he added in testimony made for NRECA.

Posted on

D.C. Circuit Vacates FERC Order Requiring PJM to Rerun 2024/25 Capacity Auction

The D.C. Circuit Court of Appeals has vacated FERC’s decision to order PJM to rerun its 2024/25 capacity auction without a tweak to the parameters for the DPL South zone. The court ruled that the commission was not justified in dismissing a complaint from consumer advocates arguing that the PJM auction results were not just and reasonable due to the unresolved flaw in the parameters. (See 3rd Circuit Rejects PJM’s Post-auction Change as Retroactive Ratemaking.)

The court ruled that the commission incorrectly determined that revising the 2024/25 Base Residual Auction (BRA) results would violate the filed-rate doctrine. FERC took that stance in the wake of the 3rd U.S. Circuit Court of Appeals in March 2024 finding it had run afoul of the doctrine by permitting a PJM request to revise the locational deliverability area (LDA) for DPL South in December 2022 after the bidding window had closed but before the results were posted. The RTO said it had identified a “mismatch” in the capacity expected to be available in the region versus what was offered. The DPL South zone encompasses the Delmarva Peninsula. (See PJM Decides Against Posting Indicative Capacity Auction Results.)

PJM intervened to defend FERC’s order, along with the Electric Power Supply Association, PJM Public Power Providers Group, Midwest Generation, Constellation Energy and NRG Business Marketing.

To submit a commentary on this topic, email forum@rtoinsider.com.

The court’s Jan. 13 ruling states that the 3rd Circuit had applied only to the request to revise the reliability requirement and did not necessarily bind the commission from revising the BRA results if they are determined to be unjust and unreasonable.

“There may have been a sound basis for FERC to deny relief. But the only reason it articulated — that the 3rd Circuit resolved the matter — was anything but sound. The 3rd Circuit held that the filed-rate doctrine foreclosed FERC’s efforts to modify PJM’s rate-setting process under Section 205 of the (Federal Powers Act). But it never addressed whether the auction result is subject to revision under Section 206. FERC’s conclusion to the contrary was erroneous,” the court wrote.

The court was not swayed by the commission’s arguments that the 3rd Circuit anticipated the economic effects of its ruling and therefore it could not act in a way that would render the court’s expectations meaningless. The Jan. 13 ruling states that courts are not economic regulators and the 3rd Circuit’s ruling could be interpreted as acknowledging that FERC had multiple paths it could proceed with, not solely requiring it to direct PJM to rerun the auction.

The vacatur did not direct the commission to take any particular action, and it cautions that a reversal of the auction results is not guaranteed.

“We do not mean to suggest that the DPL customers are necessarily entitled to a refund under Section 206(b). We hold only that labeling the relief they seek as “retroactive” should not foreclose the possibility that it is available under Section 206,” the court wrote.

Maryland People’s Counsel David Lapp said the ruling is a step toward reversing a PJM mistake that cost ratepayers $180 million.

“Delmarva Peninsula customers paid the consequences of a mistake PJM made — a mistake that gave generators a windfall, and one that federal regulators failed to fix. The court’s decision significantly advances the possibility that customers will be made whole through refunds,” Lapp said in a statement.

Posted on

NERC Report Discusses Crypto Ride-through in Texas

Continued growth of blockchain and crypto mining operations in the Texas Interconnection could “threaten the reliability of the interconnection” through indirect load loss effects, according to a report recently published by NERC.

The Considering Voltage-Sensitive Crypto Load Reductions report, published Jan. 7, is NERC’s first incident review of 2026. The ERO produced the document to highlight the unique characteristics of crypto mining facilities and how they differ from other emerging large electronic loads such as cloud computing and artificial intelligence data centers.

“As these facilities rely heavily on constant-power electronic supplies, cooling equipment and single-phase devices that respond to normally cleared transmission faults, they experience load drops within milliseconds of a voltage sag,” the report’s authors wrote. “Restoration times vary widely depending on equipment configuration and the level of manual intervention required. Understanding these behaviors is essential for assessing grid impacts, interpreting event data, and developing appropriate ride-through expectations and mitigation strategies.”

Between January 2023 and September 2025, ERCOT has experienced 26 large electronic load ride-through events involving one or more crypto facilities with indirect load loss of at least 100 MW, according to the report. The incidents “primarily occurred in central Texas, far west Texas, the Panhandle and the North Zone,” with impacts ranging from 17 to 95% of pre-disturbance consumption.

NERC staff emphasized that the load loss attributed to crypto facilities is indirect, meaning that it arises “from system or grid effects” rather than line outages. The events “verified that crypto facilities exhibit sensitive ride-through behavior, reducing consumption rapidly in response to voltage dips, particularly when single-phase voltage falls below approximately 0.7 p.u. [per unit].”

This behavior deviates from that suggested by the Information Technology Industry Council, which created the ITIC curve to illustrate the “AC voltage limits that most information technology equipment (ITE) can endure without experiencing unexpected shutdowns or malfunctions,” the authors wrote.

According to the ITIC curve, “voltage sags down to 70% of the root mean square nominal voltage are acceptable if the duration does not exceed 0.5 seconds.” Voltage sags below 70% of the RMS nominal voltage can lead to dropout events, which cause equipment to stop functioning. A dropout that lasts longer than one AC cycle enters a “no damage region” where the ITE shuts down.

But “multiple instances of partial loss of load have been observed” in voltage depressions “close to the boundaries of the … ITIC curve at the [point of interconnection]/utility connection,” NERC staff wrote.

The report cited a lightning strike on 138-kV lines that caused a fault affecting two crypto facilities. The first experienced a multiphase voltage depression that “reduced both A-phase and B-phase voltages below 0.7 p.u. for more than 20 milliseconds [with] the reduction in active power for A-phase and B-phase [accounting] for 80% of the total reduction.” Current levels rose to about 160% of pre-fault levels during the disturbance, with the facility requiring almost two hours to return to normal consumption.

At the second facility, only the A-phase was affected, dipping below 0.7 p.u. for more than 20 milliseconds. The reduction in active power for the A-phase accounted for 70% of total reduction, with current increasing to about 150% of pre-fault magnitude, and “load was fully restored in approximately five minutes.”

The report acknowledged that crypto mining facilities can vary widely in their design and equipment, which can affect their behavior during grid events. These differences include the type of overcurrent protection used, transformer configuration between the facility and the utility connection, and cooling systems whose failure can lead to a complete facility shutdown during normally cleared transmission system faults.

NERC’s report suggested “additional analysis, equipment adjustments and operational improvements [in these areas] may be needed” to improve crypto facilities’ ride-through performance and reliability, while observing that some efforts along these lines are already underway. For example, the authors wrote that ERCOT is considering introducing ride-through requirements for cooling systems.

Additional suggested areas of study include variability in restoration times and interconnection requirements for crypto facilities, especially those that are also transitioning toward AI or cloud workloads. The report suggested that such changes could introduce additional variables to load behavior and ride-through characteristics.

Posted on

N.Y. Governor Envisions 8-GW Nuclear Fleet

New York’s governor is calling for a “Nuclear Reliability Backbone” of more than 8 GW of the emissions-free baseload power as part of an all-of-the-above energy solution.

The plan was among the more than 200 initiatives Kathy Hochul (D) floated Jan. 13 as part of her State of the State Address, the annual forum in which governors present their agenda and priorities for the coming year and its legislative session.

Hochul in 2025 directed the New York Power Authority (NYPA) to develop at least 1 GW of advanced nuclear capacity. Now she is directing the state Department of Public Service (DPS) to facilitate a cost-effective pathway to an additional 4 GW of new nuclear capacity.

“Go big or go home,” Hochul said.

New York’s existing commercial reactor fleet totals only 3.3 GW.

A confluence of factors faces New York and its policymakers: The state’s power portfolio is aging and shrinking as the demands placed on it are expected to grow. NYISO has identified reliability violations developing as soon as mid-2026. But the long-running effort to develop renewable generation is lagging behind schedule and is only going to get more difficult under President Donald Trump.

By turning to nuclear energy, Hochul is betting that the many public- and private-sector efforts underway to reduce the staggering cost and tortoise pace of recent U.S. nuclear development will be successful. Limiting rate increases for residents of a state with some of the highest utility costs in the nation has been a theme for the governor, and she reiterated it in her address.

New York ratepayers already contribute around a half-billion dollars a year to subsidize Constellation Energy’s four reactors.

To submit a commentary on this topic, email forum@rtoinsider.com.

Along with technical, regulatory, supply chain and fuel supply hurdles, any U.S. nuclear renaissance will need widespread host-community support.

NYPA has begun laying the groundwork for this.

It said Jan. 7 that eight upstate communities expressed interest in becoming host communities.

But many people and organizations remain opposed to new nuclear development because of the costs and hazards associated with it.

“The proposal for 5 GW of new nuclear capacity is a dangerous misdirection for state energy policy,” Food and Water Watch said. “Nuclear power is a foolishly expensive and antiquated approach to meeting the state’s energy demand needs.”

Public Power NY called it a disastrous plan and doubled down on its call for NYPA to set a higher goal for renewable energy development.

The Alliance for Clean Energy New York suggested the effort to expedite nuclear development be applied as well to renewables: “New Yorkers need affordable electrons now, not in the decade-plus it will take until new nuclear could be operational. Renewables paired with storage are the cheapest way to deliver more electricity for New Yorkers today.”

Advanced Energy United said: “We are optimistic about the governor’s plan to move on a suite of advanced energy solutions that are ready to go now that will keep the lights on while protecting consumers.”

Constellation’s Nine Mile Point nuclear plant in central New York is shown. Gov. Kathy Hochul is proposing a 5-GW expansion of the state’s nuclear fleet. | Constellation Energy Group

The newly formed Future Energy Alliance is squarely in favor. Constellation, which is part of the broad industry-labor-business coalition, said: “Constellation is proud to support this work and to advance the next generation of nuclear technology that can deliver long-term energy stability and broad economic benefits for communities across the state.”

Hochul offered several other ideas relevant to the energy sector in the larger book of proposals that accompanied her Jan. 13 address. Most are directly keyed to affordability and transparency for ratepayers or other consumer-focused measures.

But she also is advancing Excelsior Power, a new initiative that will direct utilities to treat grid flexibility as a key resource and expand incentives to encourage their customers to participate in demand flexibility programs. This is expected to reduce the need for costly system upgrades.

Hochul wants to reduce the infamous red tape that frustrates energy and housing developers and, by the state’s own analysis, causes projects to take up to 56% longer to get from concept to groundbreaking than in peer states. New York has made some progress on this, but delays remain. NYPA and the New York State Energy Research and Development Authority will be directed to update their regulations to speed clean energy development.

Hochul is addressing the human aspect of new nuclear technology with NextGen Nuclear New York, a workforce development effort for the people who will build and operate nuclear plants.

She also is directing the DPS to launch Energize NY Development, an initiative to streamline how large load customers connect to the grid. It will speed up interconnection, she said, and it explicitly will require that projects either cover the costs they create or supply their own energy if they create very large demand without also creating very large job creation or other public benefits.

Other proposals would boost protection of the state grid from cyber threats; adjust rules for aid to school districts to encourage on-site renewable energy development; establish a sales tax exemption for EV charging stations; and expand efforts to encourage agrivoltaics.

But energy was almost a side note in Hochul’s speech, which focused on quality of life, human rights and affordability issues and drew varying levels of applause from the heavily Democratic audience.

2026 may witness an even more intricate balancing act than is normal in Albany: Hochul, who won the deep-blue state by a surprisingly narrow margin in 2022, is facing a primary challenge from the left and a general election challenge from the right, plus skirmishes with the Trump administration along the way.

Posted on

Utility Ratemaking Has Become More Complicated

By Kenneth W. Costello

Utility ratemaking comprises three distinct parts: revenue requirements, cost allocation and rate design. Ratemaking is a regulator’s prime function, as it determines how much revenue that utilities should collect from customers, from which customers and how.

The ratemaking process is complex and interactive, striving to satisfy or appease groups with diverse goals, interests and agendas. It also entails addressing the several objectives underlying ratemaking, each of which has a distinct effect on the public interest.

Most utility regulators subscribe to what regulatory observers call the “balancing act” of regulation. In an ideal world, regulators attempt to balance the interests of the different stakeholders with the overall goal of promoting the general good. This objective complies with the premise behind the public-interest theory of regulation. While ratemaking plays an integral role in achieving the “balancing act,” this action has become increasingly difficult for regulators as they have to cope with new interests.

Examples abound in which a particular rate mechanism advances some regulatory objectives while hindering others. The reality is that all rate mechanisms have mixed effects on the public interest. The premise is that when a rate mechanism impedes some regulatory objective it diminishes the public interest, while improving the public interest when it advances an objective. This speaks to the trade-offs regulators must make when deciding on different rate mechanisms.

Ken Costello

One example is real-time pricing in which the trade-off is between economic efficiency and price stability. A second example is price caps in which the regulator must weigh the benefits of pricing flexibility and increased incentives for productive efficiency against profit variability, which could lead to “excessive” utility profits. These conflicts inevitably require regulators to make value judgments on the overall desirability of a rate mechanism for the general public.

A third example is cost trackers or riders, in which a trade-off exists between timely utility recovery of costs and robust incentives. Trackers and riders allow utilities to recover their costs more quickly and with more certainty, lowering their financial risk; but they also can create incentive problems when: (1) regulators fail to adequately scrutinize those costs, and (2) cost recovery methods differ across different utility functional areas.

A Risk of Drifting Away from Core Objectives

Today, clean energy, low-income and climate advocates add to the interests that regulators must appease. If regulators try to satisfy more interests, driven by politics or for other reasons, one must ask: Do they therefore risk drifting away from their resolve to achieve core objectives, especially advancing the well-being of utility customers? After all, the raison d’etre for public utility regulation is to protect customers from “monopoly” utilities.

What are these other responsibilities that regulators have to take on? The landscape confronting utility regulators requires them to address a wider array of social issues that historically were under the purview of the other branches of government or left to the marketplace.

Their ratemaking duties include consideration of affordability for low-income households, the accommodation and even the subsidization of new technologies that compete with utilities’ core business, decarbonization of utilities’ generation portfolio, and the subsidization of utilities’ customers to use less electricity and switch to other electricity sources (e.g., rooftop solar).

No other private business comes to mind in which society compels private firms to tackle such a wide array of social issues. It is legitimate to ask whether utility regulation has expanded its domain far beyond its original mandate and what is socially optimal.

What Happens When Ratemaking Goes Astray

Faulty ratemaking can lead to adverse outcomes, like undue price discrimination, inequity, poor incentives for innovation, economic inefficiencies like uneconomic bypass, misallocation of business risk between customers and shareholders, and financially stressed utilities.

Concerning uneconomic bypass, faulty ratemaking can lead to customers choosing providers that have lower prices but higher costs. A regulated utility with an unregulated affiliate might have an incentive to subsidize the affiliate by shifting some of the affiliate’s costs to its core customers (e.g., residential customers).

Good ratemaking always has been a big challenge for regulators. It demands both sound analytics and judgment by regulators. Regulators must weigh or prioritize those objectives underlying ratemaking and measure (if possible) the effect of a rate mechanism on each one, as well as on the overall public interest. Assigning weights requires judgment by regulators, while examining the effect demands data and other unbiased information. Although ratemaking is both an art and a science (some compare it to sausage making), it should start with a strong foundation that includes specified objectives and underlying economic principles, like cost causation.

Utility Regulators Know How to Adapt

Developments in the electric industry have required regulators to re-examine their current, longstanding ratemaking practices. Previous experiences show that utility regulators do adapt, although gradually, to a changed economic, technological and political environment by throwing their support to new rate designs and ratemaking mechanisms.

One example is the restructuring of the U.S. electric industry, starting in the 1970s, triggered by the discontent of consumer groups (especially industrial customers) from continuous rising electricity rates along with the problems encountered by utilities in getting the regulators to approve pass-throughs of costs, even those prudently incurred but second-guessed because of unexpected circumstances.

Utilities could not incorporate these costs (to a large extent beyond their control) into their rates fast enough to keep their earnings from falling to a critical level. Regulators eventually allowed fuel adjustment clauses (and, to a lesser extent, future test years) to reduce regulatory lag and avert more serious financial difficulties. Regulators also revisited existing rate structures (e.g., declining block rates) to determine whether they satisfied new objectives, like the advancement of energy efficiency and the reduction of carbon emissions.

As its central duty, utility regulation should make well-informed decisions driven toward the public interest. It should strive for balance and fairness. Good regulation weighs legitimate interests and makes decisions based on facts.  Regulation decisions should not unduly favor any one interest group over the public interest; they should coincide with the law and the evidentiary record. This idea is especially critical today where good ratemaking has become more important, but harder to achieve.

Kenneth W. Costello is a regulatory economist and independent consultant who resides in Santa Fe, N.M. 

To submit a commentary on this topic, email forum@rtoinsider.com.

Posted on

Judge Rules Blue-state Energy Grant Terminations Unlawful

A federal judge has ruled the U.S. Department of Energy acted illegally when it terminated several energy grants because they were based in Democratic-leaning states.

The ruling stems from the controversial cancelation of $7.56 billion worth of Biden-era grants in October 2025. A month later, the city of St. Paul, Minn., and five organizations challenged the cancellation of nine grants earmarked for them.

Judge Amit Mehta in the U.S. District Court for the District of Columbia ruled Jan. 12 that the grant cancellations violated the guarantee of equal protection of laws under the Fifth Amendment of the U.S. Constitution (25-cv-03899).

All 223 projects that were to receive the 321 grants (except one in Canada) are in states Kamala Harris carried in the 2024 presidential election. Moreover, Mehta noted, the defendants admitted that a primary reason for selecting which DOE grants to cancel was whether the grantee was in a “blue state.”

Similar grants in “red states” that Donald Trump carried in the 2024 election were spared from termination, Mehta wrote, and the defendants conceded those grants were comparable to the terminated grants.

The judge specifically cites Grid Resilience and Innovation Partnership and methane emissions monitoring grants that were awarded to both red and blue states but terminated only in blue states.

To submit a commentary on this topic, email forum@rtoinsider.com.

The defendants asserted partisan politics does not offend the Equal Protection Clause and compared it to the common practice of federal pork barrel spending.

But that analogy falls flat, Mehta wrote, because members of Congress securing money for their districts is wholly different from an agency taking away congressionally appropriated funds that already have been awarded. Further, pork-barrel spending can rationally be related to a legitimate government interest.

The plaintiffs, Mehta wrote, do not dispute that the defendants proffered a legitimate purpose for this: administering grant programs consistent with the agency’s priorities. The question, he said, is whether the classification the defendants drew is rationally related to the purpose.

Mehta then answered the question: “It is not. Without more [evidence], there is no reason to believe that terminating an award to a recipient located in a state whose citizens tend to vote for Democratic candidates — and, particularly, voted against President Trump — furthers the agency’s energy priorities any more than terminating a similar grant of a recipient in a state whose citizens tend to vote for Republican candidates or voted for President Trump.”

Mehta ruled the termination unlawful and vacated the October termination notices to the seven awards at issue in the litigation. He directed the plaintiffs to indicate by Jan. 16 whether they will seek injunctive relief and/or compensation for attorney’s fees.

In response, a DOE spokesperson said Jan. 13: “We disagree with the judge’s decision and stand by our review process, which evaluated these awards individually and determined they did not meet the standards necessary to justify the continued spending of taxpayer dollars. The American people deserve a government that is accountable and responsible in managing taxpayer funds.”

DOE’s Oct. 2 announcement of the grant terminations indicated many of the grants were awarded during the lame-duck phase of Joe Biden’s presidency but did not indicate where the recipient projects were based: California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, New Hampshire, New Jersey, New Mexico, New York, Oregon, Vermont and Washington. (See DOE Terminates $7.56B in Energy Grants for Projects in Blue States.)

All are blue states, but in some cases, the impact of the cancellations would stretch into red states.

St. Paul was joined in the Nov. 10 complaint by Elevate Energy, the Environmental Defense Fund (EDF), the Interstate Renewable Energy Council, Plug In America and Southeast Community Organization as plaintiffs.

EDF was party to four awards totaling $535.5 million. The other five were designated to receive small grants ranging from $1.2 million to $6.9 million. Mehta’s ruling pertains to seven grants totaling $27.6 million.

Named as defendants were DOE, Secretary of Energy Chris Wright, the Office of Management and Budget and its director, Russell Vought.

Posted on

State Briefs

CALIFORNIA

Trump Admin Sues Morgan Hill, Petaluma Over Local Natural Gas Bans

The Trump administration has sued the Bay Area cities of Morgan Hill and Petaluma to block their bans on natural gas infrastructure in new buildings.

The lawsuit claimed the local decarbonization measures deny consumers reliable and affordable energy while undermining “American energy dominance.” By banning the fuel gas piping “in pursuit of electrification,” the government argued, the cities “undermine and conflict with” federal energy policy.

Morgan Hill adopted its natural gas prohibition in late 2019. Petaluma followed suit in May 2021.

More: KQED

ILLINOIS

Peoples Gas Files for $202M Rate Increase

Peoples Gas filed for a $202.3 million rate hike request with the Commerce Commission.

The increase, which the company estimates will add $10 to $11 to monthly gas bills for typical residential customers, comes three years after Peoples Gas received a $303 million rate hike in 2023, the largest in state history. The company said the revenue is required to meet the ICC’s order to retire more than 1,000 miles of old iron pipes by 2035.

The ICC will review the request over the next 11 months.

More: Capitol News Illinois

IOWA

Gov. Reynolds Creates Nuclear Energy Task Force

Gov. Kim Reynolds announced the creation of the Iowa Nuclear Energy Task Force, which will generate a report and advise state leadership on opportunities to embrace nuclear energy in the state.

Reynolds said the task force marks a “strategic step forward” to ensuring Iowa has a “safe, efficient and responsible integration” of nuclear energy. The task force is asked to assess emerging nuclear technologies, engage with industry leaders to help develop the necessary workforce, and engage with manufacturers and other stakeholders to identify potential barriers to entry in the nuclear field.

Presently, Iowa has no operational nuclear energy plants, but NextEra Energy is working to restart the Duane Arnold Energy Center in Linn County.

More: Iowa Capital Dispatch

KENTUCKY

PSC Extends Kentucky Power Use of Coal Plant

The Public Service Commission has approved Kentucky Power’s plan to continue using the Mitchell Generating Station after 2028, concluding the coal-fired plant remains the least costly option available to meet the region’s power needs.

A Certificate of Public Convenience and Necessity allowed the company to maintain its 50% share of the plant.

The approval includes recovery of costs associated with federally required wastewater treatment upgrades at Mitchell, which will raise the average household bill by about $2.33/month.

More: The Mountain Eagle

MARYLAND

Conowingo Dam Appeal Dropped, Allowing $340M Settlement to Go Forward

Maryland’s $340 million settlement with the owner of the Conowingo Dam can now move forward after a group of Eastern Shore counties dropped their challenge of the deal.

The Department of the Environment, which brokered the settlement, had lobbied for the counties to back down because the appeal had the potential to derail or delay funds from dam owner Constellation. The state negotiated to receive the funds in exchange for issuing the hydroelectric dam a water quality certification, which it needs to obtain a 50-year license from FERC.

After state officials promised counties they could have input on the rollout of the environmental projects in the settlement, several counties pulled out in late December. Cecil County, which hosts the dam and has complained about the impacts of sediment build-up, was the final holdout, but dropped out Jan. 2.

More: Maryland Matters

MICHIGAN

PSC Adopts New Rule for Bill Increase Notifications

The Public Service Commission is set to adopt a new rule that will require utilities to notify each customer how much their rate-hike requests would cost if approved, both in a dollar amount and percentage amount.

It’s one of the changes being made by the PSC to increase customer participation in utility issues, including cases that set new rates. DTE Energy and Consumers Energy filed objections to the new rule before it was adopted.

More: Michigan Public Radio

NEW YORK

NYC GHG Emissions Drop to Pandemic Levels

New York City’s latest annual greenhouse gas inventory showed a decrease of about 5% in emissions citywide compared to the previous year and a 25% cut since 2005, when the city began tracking its emissions.

The COVID-19 pandemic spurred the largest drop in emissions since tracking began, with a 9% decline between 2019 and 2020 as people stayed home or left the city entirely. In 2024, transportation emissions were more than 16% higher than in 2020, but emissions from buildings and waste were 5% and 3% lower, respectively. Emissions from natural gas increased 15% compared to 2005 but still were at decade low.

More: The City

OHIO

PUC Approves Settlement to End FirstEnergy HB6 Cases

The Public Utilities Commission will end its House Bill 6-related investigations into FirstEnergy Corp. by approving a settlement agreement filed with the agency in December.

The settlement between FirstEnergy and multiple other groups — including the Office of the Ohio Consumers’ Counsel, the Ohio Manufacturers’ Association Energy Group and the Retail Energy Supply Association — will provide FirstEnergy customers with $249 million in restitution over three billing periods, the commission said. The settlement also designates $20 million to fund low-income programs.

The settlement will not include the previously announced $64.1 million in civil forfeitures.

More: Akron Beacon Journal

PENNSYLVANIA

Supreme Court Dismisses Appeals to Revive RGGI

The Pennsylvania Supreme Court has ended appeals of a lower court’s ruling that the commonwealth’s participation in the Regional Greenhouse Gas Initiative was illegal. 

The court’s order dismissing the cases as moot follows Gov. Josh Shapiro’s agreement to withdraw from the multistate climate compact as part of his deal with Republican state lawmakers to bring the five-month budget stalemate to a close in November.

More: Pennsylvania Capital-Star

TEXAS

Solar Supplies More Power than Coal to Grid in 2025

In 2025 — for the first year ever — solar provided more electricity to Texas’ main grid than coal-fired power plants.

Solar farms contributed 67,800 GW from January to December, according to ERCOT data. In comparison, coal-fired plants supplied 63,000 GW.

More: Houston Chronicle

VIRGINIA

Dominion Gas Plant on Hold While SCC Considers Petition

Dominion Energy’s proposed Chesterfield County natural gas plant is on hold, as the State Corporation Commission reconsiders its final order approving the project.

In a Dec. 15 decision, the SCC issued a brief ruling that it will consider a petition from opponents of the Chesterfield Energy Reliability Center — Appalachian Voices, the NAACP and Mothers Out Front. It will put the project on hold for at least the time being, according to the ruling. The petition raised multiple issues, including health impacts of air pollution, higher costs for customers and the disregarding of “substantial proof that new gas is not required to meet Virginians’ energy needs.”

Meanwhile, on Dec. 19, the Department of Environmental Quality approved an air permit for the project. However, it does not override the SCC’s reconsideration.

More: Virginia Business

Posted on

Federal Briefs

U.S. Sees 23 Billion-dollar Disasters in 2025

The U.S. saw 23 billion-dollar weather and climate disasters in 2025, which claimed 276 lives and caused $115 billion in damages, according to analysis from the research group Climate Central.

Only 2023 and 2024 recorded more of these events, and 2025 was the 15th consecutive year with an above-average number. Since 1980, the annual average has been nine events costing $67.6 billion. In that time, the country has tallied 426 billion-dollar disasters, costing more than $3.1 trillion. And 2025 was the ninth most expensive on record.

At $61.2 billion in damages, the Los Angeles fires accounted for more than half of the losses from the 23 events in 2025, according to the analysis.

More: Grist

EPA to Skirt Coal Ash Rules Until 2031

EPA plans to let 11 coal plants dump coal ash into unlined pits until 2031 — a full decade later than allowed under current federal rules.

The latest proposal would let three such plants in Illinois, two in Louisiana, two in Texas and one each in Indiana, Ohio, Utah and Wyoming operate until 2031. These 11 plants already have circumvented the 2021 deadline to close such pits through a 2020 extension offer from the first Trump administration. By filing applications for that extension through 2028, the plants were allowed to keep running even though EPA has yet to rule on the applications. On Jan. 6, EPA held a virtual public hearing on its proposal to give the plants three more years to stop dumping coal ash in unlined pits.

EPA has made a final decision in only one case, denying an extension to the James M. Gavin plant in Ohio in 2022. But any company that filed an application has been able to keep its plant running while the agency considers the case. 

More: Canary Media

Trump Withdraws U.S. from 1992 Climate Treaty

President Donald Trump announced he is withdrawing the United States from the U.N. Framework Convention on Climate Change.

The 1992 UNFCCC serves as the international structure for efforts by 198 countries to slow the rate of climate pollution. It has universal participation. The U.S. was the first industrialized nation to join the treaty following its ratification under former President George H.W. Bush — and it will be the only nation ever to leave it.

Trump also pulled the U.S. out of the Paris Agreement, the landmark 2015 pact that’s underpinned by the UNFCCC. That withdrawal will take effect later in January.

More: POLITICO

Posted on

Company Briefs

Hallador Energy Appoints Sugg to Board of Directors

Hallador Energy last week announced it has appointed Barbara Sugg to its Board of Directors, effective Jan. 1.

Sugg is the former president and CEO of SPP.

Sugg’s appointment follows the resignation of David Hardie.

More: Hallador Energy

Sunrun, HASI Close $500M Distributed Energy Joint Venture

HA Sustainable Infrastructure Capital and Sunrun last week announced the closing of a joint venture to finance distributed energy assets.

HASI will invest $500 million over an 18-month period into the newly formed entity. The partnership intends to finance 300 MW of solar and energy storage capacity.

More: pv magazine

LG Energy Solution to Sell Ohio Battery Building to Honda

LG Energy Solution last week announced it will sell the building of its Ohio EV battery joint venture plant to its partner, Honda, for $2.9 billion.

According to regulatory filings, LG will dispose of the building and all building-related facilities of the joint venture L-H Battery Company — excluding the land and equipment — to Honda’s U.S. unit. The joint venture will continue to use the facility under a lease agreement, with no changes to production or operational plans.

The transaction is scheduled to be completed Feb. 28.

More: Batteries News