A shift is underway in the power centers of Washington, D.C.
The utility industry’s political influence is waning, fueled in part by Americans’ outrage over rising energy bills. That, combined with soaring electricity demand from data centers, electrification, and reshoring, has prompted new enthusiasm among policymakers for making the most of the existing grid and expanding it as affordably as possible. Those goals can be at odds with investor-owned utilities’ profit model, which relies on building new infrastructure and recovering the costs from customers under state-approved rates of return.
Just last week, four senators proposed a bipartisan overhaul of permitting laws that would give the federal government greater authority and oversight of utilities’ plans to build long-haul transmission lines, and make some compete for projects with independent developers. While the legislation will evolve as it moves through the Senate and then the House, it’s telling that the lawmakers — in consultation with the White House — agreed on aggressive changes to transmission policy that utilities have historically opposed, according to interviews with lobbyists, energy analysts, and congressional staff.
“I think part of what made agreement on this text possible to begin with is that utilities are less politically powerful than they have been in a long time, and that is not going to last forever,” Jane Flegal, a senior fellow at the Searchlight Institute, a center-left Democratic think tank, said during a briefing with reporters on the Senate permitting deal. That’s why lawmakers need to act fast to pass it, she added.
Jefferies analyst Julien Dumoulin-Smith, in an October 1 note to investors, said he was surprised by the “adverse” provisions for monopoly utilities’ that would lead to lower capital expenditures. Those provisions include eliminating utilities’ right of first refusal to build regional transmission projects identified in their service territories, which would open them up to greater competition from independent developers; mandating the use of advanced transmission technologies that boost the capacity of existing lines, and tend to be less expensive than new ones; and allowing state regulators to refer a utility to the Federal Energy Regulatory Commission for investigation if their local transmission planning is inefficient or otherwise harms customers.
“This is a manifestation of Washington D.C. stakeholders’ dislike of monopoly utilities,” Dumoulin-Smith wrote.
The Senate deal would strengthen FERC’s authority beyond what a 2024 bipartisan permitting bill attempted; that legislation ultimately went nowhere after President Donald Trump won the election and Republicans gained control of Congress.
The Edison Electric Institute, which represents investor-owned utilities, didn’t take a stance on that 2024 bill and has yet to announce a position on the deal unveiled last week. Two years ago, two of EEI’s members, Duke Energy and Southern Company — monopolies that serve large swaths of Southeastern states — were explicit about their opposition to increased federal authority over long transmission lines.
An EEI spokesperson didn’t comment on the industry’s political power, but shared a statement from the group’s president and CEO Drew Maloney, who said the group is reviewing the transmission provisions in the latest deal and how they might affect the delivery of reliable and affordable electricity to the 250 million customers who EEI members serve.
Riley Cook, a spokesperson for Duke Energy, said in a statement that the company is reviewing the details with a focus on whether it will allow utilities to deliver reliability while keeping costs as low as possible. “We look forward to working with policymakers on durable reforms that help meet growing energy demand and support the infrastructure our communities and economy need while protecting customers from unnecessary costs,” he said.
Southern Company didn’t return a request for comment.
A change of status quo
In interviews with Latitude Media, several lobbyists and energy policy analysts explained that it wasn’t just the bipartisan push for affordability ahead of the November midterm elections that helped undercut utilities’ leverage in Washington.
For one, Congress has been discussing permitting reform since at least 2022, when Sen. John Barrasso (R-Wyo.) and former Sen. Joe Manchin (I-W.Va.) began working on their own legislation. That two-year effort — combined with the latest negotiations among Sens. Shelley Moore Capito (R-W.Va.), Martin Heinrich (D-N.M.), Mike Lee (R-Utah), and Sheldon Whitehouse (D-R.I.) — has forced dozens of policy staffers on Capitol Hill to learn the wonky world of transmission policy, and understand why it’s so challenging to build large new lines. In other words, they can vet the industry’s take for themselves.
Lengthy federal environmental permitting processes that often get tied up in litigation are certainly an obstacle. But so are utilities that opt to build smaller transmission lines within their own service territories to fend off outside competition, instead of the longer, high-voltage lines that connect wider regions of the country. Countless studies have shown that regional and interregional projects would save customers money over the long run, because these lines can carry cheaper power across farther distances and can reduce congestion that drives up electricity prices.
The Southeast, for example, has relatively low energy costs compared to other regions of the country, but is similarly facing massive load growth from data centers and manufacturing. In July, a Department of Energy study found that the region could reduce electricity prices by an average of $10 per megawatt-hour by building more long-distance transmission lines that bring in power from neighboring markets like PJM and MISO.
Those kinds of savings could be a boon for local politicians, if they pan out.
Another shift: Transmission planning has become a bipartisan issue. The policy has long been a top priority of Democrats — in part because they want more solar, wind and battery storage projects sited in remote parts of the U.S. to be added to the grid — while Republicans for years were more focused on speeding up environmental permits. While that split remains to some extent, the new era of load growth means backers of both data centers and fossil fuels alike also have more to gain under a compromise deal.
That includes the Trump administration itself, which is trying to strike a balance between supporting the artificial intelligence boom while shielding ratepayers from the costs of serving data centers. During negotiations, senators worked closely with officials at both the White House and DOE, who recognized that building more long-haul transmission lines and deploying advanced technologies are critical to achieving their goals, according to several lobbyists who work closely with the administration who requested anonymity to speak about private negotiations.
DOE has doled out several billion dollars in federal loans and grants to transmission projects, including $1.9 billion announced in September for more than two dozen projects. Many involve ATTs, including reconstructing existing lines and deploying grid-enhancing technologies. Combined, the projects are estimated to make up 23 gigawatts of additional electrical capacity available across 26 states.
The White House also considered an executive order directing FERC to encourage utilities to do more with the technologies, Latitude reported, but hasn’t yet issued it.
That said, even wide agreement from legislators and a defanged utility lobby don’t equal guaranteed passage. While there is broad support among energy developers and moderate House members, opposition is mounting from some environmental groups; meanwhile, at least one House Democrat argues that the party has a good chance of winning big in the midterms, and therefore should wait until after the lame duck to move permitting reform.
And utilities still have allies, such as a cohort of House lawmakers representing districts in Alabama, Florida, Georgia, North Carolina, and South Carolina who’ve expressed concern — most recently during an Energy and Commerce hearing in May — about increasing federal authority over grid planning when state regulators already conduct oversight with a greater understanding of local needs. David Pomerantz, executive director of the utility watchdog group Energy and Policy Institute, expects the fight is just getting started.
“I expect the investor-owned utility lobby — EEI, Southern Company, Duke Energy — to heavily lobby on this bill to at minimum weaken, or even remove, all the components of the transmission portion they find threatening,” he said.
