Why letting utilities build power plants is a $16 billion mistake | Opinion

Guest Editorial By James H. Cawley
Updated: Oct. 15, 2025, 10:01 a.m.
https://www.pennlive.com/opinion/2025/10/why-letting-utilities-build-power-plants-is-a-16-billion-mistake-opinion.html
 
Western Pennsylvania has long been at the heart of America’s energy economy. From coal and natural gas to renewables, the region has powered industries, communities, and economic progress for generations. Now, with energy demand rising from advanced manufacturing and data centers, Pennsylvania has the opportunity to again advance forward-looking, smart solutions.

Unfortunately, some lawmakers in Harrisburg want to take a step in the wrong direction. Bills now moving through the legislature — House Bill 1272 and Senate Bill 897 — would allow electric utilities to start building and owning power plants again. That might sound harmless, but it would undo nearly three decades of competitive energy policy and unquestionably saddle Pennsylvanians with unnecessary risks and higher electric bills.

In the late 1990s, Pennsylvania made a smart move: it restructured its power market. Utilities like Duquesne Light and West Penn Power continued to maintain the transmission and distribution lines that deliver power to homes and businesses, but they exited the business of generating electricity. Instead, private companies took on the job of building and operating power plants, taking on the significant risks instead of imposing them on captive customers.

Before restructuring, electric utilities recovered the enormous costs of construction delays and inefficient plant operations from ratepayers by convincing the PUC of the necessity and unavoidability of these costs. In fact, the PUC could not possibly have known the truth without constant onsite monitoring by legions of its own auditors, which, of course, was impractical.

The new competitive model has been effective by placing the responsibility for building and operating power plants on independent entities that are not compensated if they do not operate efficiently. They must bid to provide power into the grid for one or more hours the next day. If they do not operate efficiently enough, they cannot afford to bid low enough to win the right to serve and must operate during those hours without being paid.

Thus, market forces rather than a proxy for such forces – in this case, the PUC –have held costs down. Most importantly, the financial risks of power plant construction and operation are borne by private companies, not utility customers.

If utilities are allowed to build generation again, they will use ratepayer money to fund those projects and earn guaranteed profits, regardless of how expensive or inefficient the plant turns out to be. That’s a bad deal for families already struggling with rising costs and inflation.

We’ve seen what happens when utilities build power plants. In Georgia, the Vogtle nuclear plant ran over budget by more than $16 billion and took over a decade to complete. In South Carolina, a similar project was canceled after customers had already paid billions for it. Such mismanagement could easily occur here if Harrisburg were to put utilities back in charge of building power plants. Backers of these bills have pointed to the recent jump in PJM’s capacity market prices as evidence that the competitive market is failing. Not so. This jump is a market signal that electricity demand is rising and more power is needed.

As a result of this signal, PJM and private companies have responded. Since the transition to PJM’s “first-ready, first-served” interconnection process in 2023, 46 gigawatts of projects, including natural gas, solar, and storage, across the region have secured agreements to interconnect to the grid.

The real challenge is getting those projects built. It would be foolhardy to trust electric utilities with the job, given their deplorable track record of long delays and huge cost overruns. Instead, they should be addressing their reliability issues. According to the PUC, the Commonwealth experienced a 30-year high of reportable outages due to electric distribution companies (EDCs) struggling to meet reliability benchmarks, which left about 2.8 million Pennsylvanians in the dark in 2024. Instead of lobbying to build power plants, EDCs should focus on modernizing and strengthening their transmission infrastructure to deliver electrons more reliably.

Lawmakers should focus on much-needed permitting and siting reforms to enable independent generators and transmission line contractors to complete new projects faster. Combined with PJM’s efforts already underway to reform its interconnection process, that’s how we’ll get reliable power faster and at a lower cost.

Competitive markets have served Pennsylvania well. Let’s keep them strong by fixing what’s broken — not by undoing what works.