Contributed by John Fernandes, Policy Director, Ulteig
The results of the 2024 presidential and congressional elections are expected to be pivotal for the US utility sector. Priorities and preferences are expected to change measurably from the current administration in Washington, impacting key federal agencies, funding mechanisms, and the pace of industry transformation.
EPA regulations and coal fleet impacts
Under the current administration, utilities faced some of the most stringent environmental regulations in decades. The EPA’s 2024 power plant emissions rules presented challenges for coal-dependent utilities, possibly forcing rapid retirement decisions that diverge significantly from planned generation transition schedules.
These accelerated retirements may create operational challenges for grid operators. Organizations must simultaneously manage unprecedented interconnection requests while maintaining system reliability as traditional baseload resources are pushed offline ahead of schedule. This pressure compounds existing challenges in resource adequacy and grid stability.
While the EPA’s power plant rules have been upheld by the Supreme Court, it can be expected that an “energy transition” is going to look very different under the incoming administration. Utilities may be revising plans and rethinking expectations.
FERC’s transmission push meets supply chain reality
The Federal Energy Regulatory Commission’s ambitious transmission planning initiatives have represented an additional recent pressure point for utilities. FERC’s emphasis on long-term and inter-regional planning, combined with reforms to speed up interconnection processes, would require substantial infrastructure investments at a time when global supply chains remain strained.
Major transmission components such as high-voltage transformers and breakers currently face multi-year lead times, complicating utilities’ ability to meet accelerated upgrade schedules. These challenges are particularly acute for rural utilities and smaller operators with limited procurement leverage in the global market.
Under the incoming administration, importing project components could become more challenging if a more aggressive trade policy is put in place. Where new leadership in Washington chooses to take transmission expansion will be interesting to see. While infrastructure expansion will remain in favor, cost allocation could become an even bigger challenge for transmission.
Political leadership and agency direction
The election’s outcome could influence the regulatory environment through new agency leadership appointments. While a change in administration wouldn’t necessarily nullify existing regulations, new agency heads could modify timelines and enforcement approaches.
The Manchin Bill and legislative timing
The Manchin-Barrasso permitting bill made important concessions to both the fossil and renewable energy sectors. Senator Manchin continues to work to get the legislation signed during the lame-duck session, but progress seems slow. The incoming Congress may see their majorities in both the House and Senate as an opportunity to further refine the bill to better reflect the priorities of the party.
Renewable integration and grid stability
Grid operators currently bear the responsibility of integrating rapidly growing renewable energy resources while maintaining grid stability. The Inflation Reduction Act (IRA) provides incentives for the development of carbon-free generation, which brings with it operational challenges for utilities managing increasing amounts of intermittent generation. Even a modest change to the structure, tax adders, or timelines of the IRA could change the trajectory of penetration of intermittent generation and alter the pace of turnover of the US generation fleet.
Financial implications and federal support
For the past several years, utilities have had unprecedented access to federal support for grid modernization and clean energy initiatives. Rural utilities, in particular, have benefited from federal programs supporting such efforts. These funding streams could face scrutiny under new political leadership.
The IRA’s tax credit provisions have also created new revenue opportunities for utilities, specifically through transferability mechanisms that allow utilities to monetize credits they are otherwise not eligible to claim. Any scaling back of these provisions could impact utilities’ financial planning and investment strategies.
Supply chain and manufacturing considerations
The global supply chain for critical utility components remains strained, affecting everything from transmission infrastructure to renewable energy project components. Current federal policies emphasizing domestic manufacturing and supply chain resilience could further evolve under the incoming administration, affecting both equipment availability and costs.
Strategic planning in an uncertain environment
Utilities must balance their decades-long planning horizons against a dynamic regulatory environment. Success requires maintaining optionality in long-term plans while meeting immediate operational needs and reliability requirements. Organizations must also consider how political shifts might affect their ability to access federal support for modernization efforts. No matter the course of action of the new administration in Washington, utilities must maintain focus on their core mission of providing reliable, affordable power while adapting to evolving policy landscapes and operational challenges.
