Over the past year, the U.S. Department of Energy has exercised emergency authority to force the continued operation of retiring fossil fuel plants across multiple states, including two in my home state of Indiana, citing reliability concerns. But these federal orders override state-level decisions that were reached through rigorous, multi-year, data-driven planning processes involving utilities, regional grid operators, regulators, consumer advocates, and the public. This maneuver raises the fundamental question of who is best positioned to make complex, long-term decisions about resource adequacy and affordability.
Energy regulation exists in the collaborative space of cooperative federalism. States oversee resource planning, infrastructure investment, and cost allocation. Regional grid operators and other multi-state actors assess and plan for system reliability across multi-state footprints. And the federal government can preempt state jurisdiction during true emergencies such as natural disasters, grid failure, or sudden fuel disruption.
This cooperative structure has delivered affordable, reliable energy to millions of people for decades. State regulators don’t make ad hoc decisions; they engage in methodical, iterative, and transparent planning processes in which assumptions are challenged, data is scrutinized, questions are asked, and any resulting trade-offs are weighed in full public view. Such were the resource planning decisions made in Indiana when I was a commissioner that are now being overturned unilaterally by the federal government.
Before retiring aging and uneconomic generation, utilities forecast load across multiple scenarios, test reliability under varying conditions, examine fuel price risks, and solicit stakeholder input. These nuanced retirement decisions are made only after years of analysis and review. Beyond evidentiary proceedings and rigorous planning processes, utilities, state regulators, and grid operators engage in regular information sharing. They work from the same load forecasts and reliability assessments and find additional ways to coordinate so they can identify potential risks years in advance and plan proactively to resolve them.
Regulators allowed the plant retirements that are the subject of these DOE orders only after determining that generating capacity would remain adequate without those units in operation. Even the recent trend of large load additions does not justify indefinitely extending the life of aging, high-cost facilities that have already been thoroughly evaluated and scheduled to retire, because utilities and grid operators are incorporating this projected growth into their forecasts and planning processes as they identify least-cost, reliable resources to meet incremental growth.
The owners of these plants don’t want to keep them online — no utility voluntarily retires an asset that is cost-effective to operate. The cost to maintain the units is immense, each requiring tens of millions of dollars annually in repairs, fuel, and operating costs, already totaling hundreds of millions of dollars since the first federal order was issued last year. Extending the life of uneconomic fossil fuel plants nationwide could cost customers billions of dollars by the end of the decade. Those expenses are not absorbed by utilities or their shareholders but are recovered from customers who are already burdened with increasingly expensive power bills.
These federal orders set a troubling precedent because they upend the regulatory certainty utilities rely on to make long-term investment decisions. When approved plans can be changed at a whim, it discourages efficient capital allocation and raises financing risks. Customers ultimately will pay for that uncertainty. Reliability is not just about keeping the lights on; it’s also about maintaining the integrity of regulatory decision-making that market participants and utilities can trust.
Day in and day out, state utility regulators are focused on ensuring our energy systems are operating effectively and that we have adequate resources to keep the lights on for millions. They operate in public forums subject to oversight and accountability. They possess detailed knowledge and the authority to adjust decisions as conditions change. Federal emergency authority is an important backstop but cannot and should not reverse decisions that were made with the most comprehensive information. We must continue to defend the independent authority of the decision-makers closest to the work. Federalism is not broken, so let’s double down on the cooperative structure that continues to provide safe, reliable, and affordable energy across the United States of America.
