Facing competition from Big Tech, states dangle incentives and loosen
laws to attract power plants
[March 10, 2025] By
MARC LEVY
HARRISBURG, Pa. (AP) — Facing projections of spiking energy demand, U.S.
states are pressing for ways to build new power plants faster as
policymakers increasingly worry about protecting their residents and
economies from rising electric bills, power outages and other
consequences of falling behind Big Tech in a race for electricity.
Some states are dangling financial incentives. Others are undoing
decades of regulatory structures in what they frame as a race to serve
the basic needs of residents, avoid a catastrophe and keep their
economies on track in a fast-electrifying society.
“I don’t think we’ve seen anything quite like this,” said Todd Snitchler,
president and CEO of the Electric Power Supply Association, which
represents independent power plant owners.
The spike in demand for electricity is being driven, in large part, by
the artificial intelligence race as tech companies are snapping up real
estate and seeking power to feed their energy-hungry data centers.
Federal incentives to rebuild the manufacturing sector also are helping
drive demand.
In some cases, Big Tech is arranging its own power projects.
But energy companies also are searching for ways to capitalize on
opportunities afforded by the first big increase in electricity
consumption in a couple of decades, and that is pitting state political
leaders against each other for the new jobs and investment that come
with new power plants.
Governors want to fast-track power plants
Moves by states come as a fossil fuel - friendly President Donald Trump
and Republican-controlled Congress take power in Washington, D.C.,
slashing regulations around oil and gas, boostingdrilling opportunities
and encouraging the construction of pipelines and refineries that can
export liquefied natural gas.
States are seeking action, with the National Governors Association
asking Congress to make it easier and faster to build power plants and
criticizing the U.S. as among the slowest developed nations in approving
energy projects.
But there may be less that the federal government can do right away
about a looming power shortage, since greenlighting power plants to feed
the electric grid is largely the province of state regulators and
regional grid operators.
Pennsylvania Gov. Josh Shapiro wants to establish an agency to
fast-track the construction of big power plants and dangle hundreds of
millions of dollars in tax breaks for projects providing electricity to
the grid.
The state, and the country, needs more power plants to win the
artificial intelligence race and provide reliable and affordable power
to residents, said Shapiro, who suggested Pennsylvania may leave the
regional grid operated by PJM Interconnection in favor of “going it
alone.”
“It has proven over the last number of years too darn hard to get enough
new generation projects off the ground because of how slow PJM‘s queue
is,” Shapiro told a news conference on Feb. 27.
Indiana, Michigan and Louisiana are exploring ideas to attract nuclear
power while Maryland lawmakers are floating ideas about commissioning
the construction of a new power plant there.
In Ohio, a lawmaker wants to restrict the influence of electric
utilities in hopes of giving independent power producers more incentive
to build power plants to feed the state's fast-growing tech sector.
The bill, which awaits a vote, won the support of the Ohio Consumers’
Counsel, the state's residential ratepayer watchdog, and business groups
whose members care about electric prices. However, it split the energy
sector between companies operating in competitive markets and those
operating under state utility monopolies.
[to top of second column] |
A data center owned by Amazon Web Services, front right, is under
construction next to the Susquehanna nuclear power plant in Berwick,
Pa., on Tuesday, Jan. 14, 2024. (AP Photo/Ted Shaffrey, File)
 States competing against each
other
In Missouri, utilities including Ameren and Evergy, as well as the
Missouri Chamber of Commerce and Industry, labor unions and the
state's top utility regulator are backing legislation to repeal a
nearly half-century old law preventing utilities from charging
customers to build a power plant until it is operational.
The law was approved in a 1976 voter referendum when states were
looking to hedge against utilities saddling ratepayers with
financing upfront, potentially bloated, inefficient or, worse,
aborted power projects.
Consumer and environmental groups protested the bill, saying it
would result in new natural gas plants that are likelier to be more
costly to ratepayers.
Last year, similar legislation passed almost unanimously in Kansas,
along with companion legislation extending tax breaks to new power
plants.
Within months, Evergy announced alongside the state's leaders that
it would build two 705-megawatt natural gas plants and said the
legislation will “help Kansas compete with other states for
investment and ultimately save customers money.”
John Coffman, the utility consumer counsel for the Consumers Council
of Missouri, said utilities are playing the two states, Missouri and
Kansas, against each other and were planning to build the power
plants anyway.
But, he said, “They're just looking for opportunities to squeeze
more money out of the process."
Energy companies see an opportunity
Snitchler said action is being spurred by states realizing that
longstanding power reserves are dwindling, especially as coal-fired
and nuclear power plants retire, and now all sorts of power
companies are leaping at the chance to make money.
A pitfall he sees in the race to build plants is an undoing of
protections that some states once adopted to shield ratepayers and
put the risk of building expensive power projects onto corporate
shareholders.
“The problem, of course, is it shifts the risk back on the people
who perhaps should not be bearing it,” Snitchler said.
A Pennsylvania state lawmaker, Sen. Gene Yaw, wants to set up a
massive power plant-financing fund like Texas, which established a
$10 billion low-interest loan program after the state was wracked by
a deadly winter blackout in 2021.
Yaw, a Republican, has no misgivings about Pennsylvania helping
finance power plants. Even by conservative estimates, the state will
need dozens more power plants to meet projections of rising demand,
he said.
“And what do we have underway or planned right now? Nothing," Yaw
said. "And we haven’t built anything since 2019. So we’ve got to do
something to encourage people to come here and build in Pennsylvania
just to maintain the status quo."
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