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PJM Disputes // Fix the Forests // NARUC Meeting

Welcome to this week’s GridBrief, where we break down the latest energy developments and provide insight into the evolving power landscape. From wildfire mitigation in the West to grid capacity disputes in PJM, this week’s energy stories highlight one inescapable truth: the energy landscape isn’t just evolving—it’s erupting. As policymakers, utilities, and tech giants jostle for position, the stakes couldn’t be higher. Reliable electricity is the lifeblood of both the economy and innovation, but the road to securing it is anything but smooth.

Fixing Forests to Protect the Grid

California’s escalating wildfire crisis has turned forest management into a critical battleground for energy reliability. Last week, the Fix Our Forests Act passed the House, proposing to simplify vegetation management on federal lands near utility infrastructure. Electric companies, led by PG&E, argue the bill is essential to prevent disasters like the wildfires that devastated Northern California in 2019. The legislation includes provisions to bypass lengthy environmental reviews, enabling quicker vegetation removal in high-risk areas.

Critics, however, warn the bill sacrifices crucial environmental protections. Groups like Environment America have expressed alarm, suggesting it could exacerbate habitat destruction and threaten endangered species. Despite these concerns, utilities see the bill as a lifeline for wildfire mitigation and grid hardening. As the legislation moves to the Senate, it could become a pivotal moment in balancing wildfire prevention, environmental stewardship, and energy reliability.

PJM’s Price Cap Battle

Four governors and a coalition of utility regulators have called on FERC to lower the price cap for PJM’s capacity auctions, arguing that record-high prices from the July auction are unjustifiable. With capacity costs jumping from $2.2 billion to $14.7 billion for the upcoming delivery year, the stakes are immense for both consumers and grid operators. Pennsylvania Governor Josh Shapiro’s proposal suggests capping prices at 1.5 times the Net Cost of New Entry, or Net CONE, as a temporary measure to stabilize costs while reforms are developed.

Opposition from power producers, including Constellation Energy, highlights the tension between consumer relief and long-term reliability. Generators argue that higher prices signal the need for new power supplies, and capping them could deter critical investment. PJM itself is caught in the middle, acknowledging the challenges of managing resource adequacy while protecting consumers. The debate underscores a broader challenge in balancing affordability, reliability, and the push for cleaner energy sources.

Big Tech Takes on Utilities

Google, Amazon, and Microsoft are flexing their influence in the energy sector, upending the traditional utility landscape. At the recent National Association of Regulatory Utility Commissioners (NARUC) meeting, tech giants made their presence known, lobbying for regulatory reforms to power their rapidly growing data centers with clean energy. Google, for example, has pitched innovative solutions like its Clean Transition Tariff in Nevada, pairing a data center with advanced geothermal energy.

But the rise of hyperscalers presents a new set of challenges for utilities and regulators. Data centers are projected to triple their share of U.S. electricity demand by 2030, sparking debates over who should bear the costs of the infrastructure upgrades required to meet this surge. Critics warn that short-term agreements from tech companies may leave traditional utility customers footing the bill for long-term investments. Meanwhile, tech leaders argue their financial power and clean energy ambitions can drive the next phase of grid modernization. As the economy digitizes, the growing tension between utilities and Big Tech will shape the future of energy markets.

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Good Bet, Bad Bet

Good Bet: Nevada’s Clean Transition Tariff
Google and NV Energy’s collaboration on a Clean Transition Tariff is setting a new standard for clean energy innovation. By connecting a data center to advanced geothermal energy, the model not only helps Google achieve its carbon-free goals but also accelerates the deployment of emerging technologies like small modular reactors and long-duration batteries. If scaled, this approach could redefine utility-corporate partnerships and the path to a cleaner grid.

Bad Bet: “Peak Oil Is Here” (2005)
In 2005, experts confidently declared the world had reached "peak oil," forecasting an inevitable decline in production. Yet today, global oil output is near all-time highs, driven by advancements in hydraulic fracturing and horizontal drilling. The prediction failed to account for technological innovation, underscoring the dangers of assuming energy trends are set in stone.

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