Just got through reading Gov. Hochul's energy affordability items in her State of the State. Thin gruel! Summary 🧵

1. The state's plan is to make utilities propose a plan! Their plan no good? We will install a hall monitor! 2. These rate cases? They are complex amirite? More process & time for rate cases. The public will go line by line through these rate cases until they find the affordability.

Toward the end of a document bemoaning the slow pace of investment in its market, @pjminterconnect has helpfully provided a link to comment on whether it should extend the market's price freeze.

If you want to save on word count, you can just submit the meme!
The price cap (& the lingering will they/won't they debate on its extension) made it inevitable the @pjminterconnect market either would
1. bifurcate -- so someone (i.e., data centers) would pay the necessary (higher-than-the-cap) price for new gen --> new load, or
2. stagnate

1. I have a confession to make, which is that I have (lawfully!) received many incentives available to me as a Maryland ratepayer & this has been a wealth transfer from other ratepayers to me. Join me as I make an Act of Ratemaking Contrition 🧵 1b. Don’t hate the player, hate the game!

Nevertheless, I’m engaging in a little private, soul-searching ratemaking to calculate the subsidy I’ve derived from my fellow ratepayers. I will contribute that amount to the local Catholic charities.

The results are in -- and opinions are divided! Which is the point I had hoped the X hive mind would show:

Because regulators don't (cannot) know what the future holds, especially given an uncertain new industry, they should promote innovations & flexibility in regulation! 🧵

https://twitter.com/TKavulla/status/2002025512353362394

I personally think that there are huge beneficial network effects of front-of-meter arrangements, but those are certainly offset when you bring a 300-MW project to your local utility in 2025 and they tell you it'll be served no sooner than 2030.

A few observations on the @pjminterconnect that are not the hair-on-fire takes I am seeing... 🧵 1. Because this is a forward auction for 2027-28, the game isn't over, people. There is an "incremental auction" (Feb. '27) for additional resources, including ones that can scale up quickly like Demand Response, to fill the gap between supply/demand

I gave a talk titled "High Power Prices Got You Down? Policy Strategies for Affordability" to state legislators last Friday.

My proposals are a combo of bringing down regulated rates that are half of customers' bills + policies to ensure AI gets done while paying its own way 🧵 It's crazy that utilities
1. are so heavily weighted (~/> 50%) equity vs normal infrastructure biz. &
2. have their return on equity set at supranormal levels by regulators engaged in a circular guessing game

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.