You've got to come to Thanksgiving dinner prepared to debate AI, and I'm doing my part to have you covered.

@ENERGY has said "speed to power" in the AI industry is not happening as quickly as it should. I offer 3 reasons for why that might be.

1) uncertainty of demand: 2) A supply chain where each link costs a fortune in fixed costs is more likely to have everyone hold their wallets close...

So in Louisiana we seem to have:
-Hyperscaler seeking to keep data center off its balance sheet by claiming it doesn’t control the project
-On the power side, the strength of the hyperscaler name invoked as a golden backstop to message that other ratepayers protected
I really have no strong opinion on what the hyperscaler is doing here, but I do wonder why a utility commission would allow itself to be razzle-dazzled into allowing a utility fight out of legacy customers' pocketbooks to supply this load.

We at @nrgenergy are big fans of the @ENERGY proposal that could create a more standardized, efficient process to connect large loads to the grid. Today we propose some concrete ideas to make sure it works as intended. 🧵 Big picture: This could be the most substantial shift in a generation from what states regulate to what exists at a national standard in the power sector. This is the shiny debate that will draw people’s attention. This is why society invented lawyers.

Oh man this Amazon complaint against OR's PacifiCorp has it all.
1. a reminder of the how poorly American cost-of-service regulation squares to the moment
2. a showcase of monopoly power vs. customers
3. A blaring 🚨 about stranded capital in AI sector
🧵 Reading between the lines -- the most detailed parts of this complaint are redacted -- it looks like the utility is blockading the data centers until the latter pay a gross-up for taxes: a *32.6%* adder to all payments made to the utility to offset infrastructure costs

The @LBNL & @TheBrattleGroup teams have an excellent study out this week on what's feeding electricity price changes over the past 5 years.

Legislators should be required to read or get a briefing on it before taking any vote on electricity policy! Highlights & my commentary🧵 High level, there's two parts to your electric bill: the utility poles & wires... and the supply of power. The former is driven largely by incremental capital spending and boy is that booming...

Speaking of government programs that don't work: The "carbon market" in the eastern United States is *increasing* emissions in PJM, while costing ratepayers >$1B annually -->
The Regional Greenhouse Gas Initiative is the northeast's cap-and-trade market for carbon. It's limited to the power sector and it is, important for this analysis, limited to only some of the states within power markets that have opted in.

Data center growth & electricity demand have been a big “known unknown" since before yesterday. It's hardly prophetic, but here's what I thought obvious earlier this month – & wow, did DeepSeek put a fine point on it. A short 🧵 I have no idea why any utility regulator would let monopoly utilities gamble on AI-based load growth. Letting them fight out of ratepayers’ pocketbooks for power-generation investments is utterly dumb. A competitive market exists for that. Full stop.

Texas' much-talked-about ADER (a VPP "pilot program") has reached only 15 MWs of its already-paltry 80 MW cap because it's a kludgier, bureaucratic attempt to duplicate what already happens at a vaster scale in Texas' competitive retail choice landscape. A brief🧵 The Aggregated Distributed Energy Resources (ADER) pilot is trying to get lots of small, demand-side resources (EVs, home batteries + solar, gas gen-sets, thermostats) rolled up into an aggregation, and then jerry-rigged to participate as a proxy *supply* resource in Texas’ wholesale market.
utilitydive.com/news/ercot-con…

.@FERC has an odd "after dark" order tonight where it rejects an amendment to a pre-existing agreement between a data center & power plant that @awscloud/@TalenEnergy have for the @pjminterconnect grid. Traditionally, this would've been a noncontroversial item @FERC.

Yet, utilities (ironically, not even the one concerned with this particular service territory) objected, because they see it as a threat to their endless gatekeeping of every single thing that happens on the grid.

There's a lot going on in yesterday's PJM capacity auction -- intended to ensure enough power resources exist to supply projected demand from mid-2025 to mid-2026. Let me break down a few items & ask some questions🧵 Public policy & economics are driving fossil retirements . A gradual trend, until this year – where every megawatt counts. Literally every single MW of fossil that offered into the capacity auction was awarded a capacity supply obligation.

A wonderful example of how jacked the incentives of the regulated-utility industry:
1. Generators tell the utes: "Listen, we will pay up front all the money you say you need to interconnect us to your grid"
2. Ute, returning check: "No. We insist on financing these projects." This is, of course, that utilities want to take their own capital and sink it into "rate base" to earn the regulator's authorized return (and the only way to do that is by rejecting "customer-contributed capital")

Hearing @ChristieFERC tell it, it seems what @FERC has done on transmission planning is a classic outcome-based reconfiguring of policy in roughly 4 steps 🧵 1. You make up new "benefits" -- apparently including corporate renewable goals? -- to fit into cost-benefit analysis, weighting it toward an inevitable conclusion that b>c

A truly shameful episode in utility regulation has been brought to a close, involving @FERC & @pjminterconnect, but not without a good measure of dyspepsia and misundertanding about the nature of the electricity markets the regulators are tasked with regulating. Ergo, a 🧵 The issue concerned @pjminterconnect deciding, at the last moment, to violate its tariff and attempt to re-run the 2024-25 capacity auction whose constituent elements already had been completed.

An obvious, clear violation of the Filed Rate Doctrine:

https://twitter.com/TKavulla/status/1616649276758671360

1/ @MissouriPSC under leadership of @Scott_Rupp took the bold step of deciding that retail electricity rates should more closely relate to the underlying costs of the system.

The Time of Use rates on the left are poised to be the default, but customers could choose alternatives 2. This step accomplishes a few things, all of them good:
* It eliminates cross subsidies inherent in the current rate structure
* Relatedly, it makes the demand side more reflective of, and reactive to, supply costs. That = lower costs & lower rates in both the short & long term

A word about Demand during the Yuletide Winter Storm (Elliott, if you must) -- since I'm seeing lots of focus on Supply, and it takes two to tango!

We now know that MISO, PJM, and ERCOT all had huge misses -- underestimating demand for electricity during the storm. Weird! 🧵 This is important because power plants dependent on gas or with longer lead times will rely on RTO forecasts in order to buy gas (in this case, over a long weekend) or to start-up. When same-day Demand comes in unexpectedly high: no gas, no runway.

Summer is behind us, so let's review the Texas electricity market's blockbuster performance for 2022. (graphs courtesy of upcoming @ERCOT_ISO board meeting). 🧵 1. ERCOT didn’t just set a new record peak load (>80 GWs), it cleared the deck on its “All Time Top 10 Peaks” – literally all of the “Top 10” list occurred in 2022!

BREAKING: This afternoon, Massachusetts' utility regulator approved an increase for the "regulated" rate for residential electricity customers of the state's largest electric utility.

34 cents/kwh, not including distribution charges and other fees. 2x the previous winter. 49% of all residential customers in National Grid's service territory are on that rate. But they don't have to be! As @nrgenergy noted:

The Manchin-Schumer legislation is a Transmission Trifecta for @FERC.

It would make electric-transmission a matter of clear national policy, similar to how phone/internet regulation went "federal" a generation ago. Short 🧵 on the Trifecta's 3 elements 1. FERC / DOE get power to apply / designate new or upgraded transmission facilities as "national interest" lines. It's based on some pretty squishy factors that allow nearly *any* line to be so designated if the political motivation exists for it.

Power generation is open to competition in Texas. In order to ensure the integrity of that competition, investor-owned utilities have long been “quarantined” from having a role in it through their “My Customers Will Pay Whatever It Costs Me To Do This” business model. But… 🧵 Utilities are now attempting to re-enter this market. The biggest instance is Houston-based Centerpoint’s plan to use its remaining distribution monopoly as a sop to charge customers for as much as 1800 MWs of mobile generation (all gas turbines).

A major shout-out to @californiapuc's Energy Division for the publication of a thought-provoking proposal for a new retail market / rate design structure.

Done right, it could create the world's first, genuinely two-sided electricity market where demand actively participates. The proposal contemplates the creation of highly dynamic retail prices that encompass both the short-run marginal costs of power production (fuel, emissions) and the long-run marginal costs of capacity (new substations, capacity, etc.)

ERCOT is out with an analysis of the causes of plant outages during Winter Storm Uri. You’ll definitely want to look at the “important notes” section because this methodology invalidates the major takeaway that some may draw from this analysis --> There’s ~30 MWs of wind and solar on the ERCOT system. Much of it was on “outage” due to weather, but even if those power plants had been operationally available, they would not have been producing energy due to lack of wind and sun.