Surge in Electricity Demand Drives Power Sector Agenda

President-elect Donald Trump will be sworn in on Monday, returning to the White House at a time when the United States faces a surge in electricity demand, driven in part by planned data centers, new manufacturing facilities, and the electrification of buildings and transportation.

Experts point out that this reality—sharply different from the steady growth in electricity demand during Trump's first term from 2017 to 2021—will dominate the new administration's electricity-related policies.

At the same time, obstacles to adding new electricity supply may be greater than at any time in the past, such as state policies that make infrastructure construction difficult. Devin Hartman, director of energy and environmental policy at the market-oriented think tank R Street Institute, said: "You cannot reconcile the enormous obstacles to new supply with growing demand, and what you inherit in the electricity sector is the same set of conditions that constrain decarbonization."

Hartman believes there is significant overlap between Republican priorities of lowering energy costs and improving reliability and Democratic desires to develop clean energy. For example, both goals could be advanced by building new transmission lines.

Trump moves quickly on personnel nominations

At least three agencies—the Federal Energy Regulatory Commission (FERC), the Department of Energy, and the Department of the Interior—will play important roles in the Trump administration's efforts to add new electricity supply and cut energy costs. The Environmental Protection Agency (EPA) will also be involved.

The new administration has moved quickly on nominations, with picks for the heads of the Energy Department, Interior Department, and EPA announced in mid-November. The Senate is holding hearings this week involving North Dakota Governor Doug Burgum, a Republican (Trump's nominee for Interior Secretary and potential energy czar), former Representative Lee Zeldin (nominee for EPA Administrator), and Liberty Energy CEO Chris Wright (nominee for Energy Secretary). At Wednesday's hearing, Wright said that if confirmed, he would work to increase U.S. electricity supply to lower power prices.

John Lushetsky, senior vice president at ML Strategies, said at a January 9 webinar hosted by the law firm Mintz that these nominees are likely to be confirmed smoothly. He said: "At this accelerated pace, the Trump administration is better positioned to advance many of the energy-related items they campaigned on from day one."

For example, Trump said during the campaign that he would cut electricity bills in half within 12 months of taking office. Trump has also selected former FERC Chairman James Danly as Deputy Secretary of Energy.

Who will lead FERC?

Trump inherits a FERC currently operating with a 3-to-2 Democratic majority, in contrast to the start of his first term when the agency lacked a quorum for months.

Travis Fisher, director of energy and environmental policy research at the Cato Institute, said: "We'll keep a quorum and keep operating, but I think some Republicans view this as a loss because they want to make changes on day one, and that's not possible." Fisher noted that most FERC orders are unanimous, but commissioners often diverge on major policy issues. Therefore, he doubts action will be taken on major policy issues until Republicans gain a majority.

How long this process takes may depend on whether FERC Chairman Willie Phillips, a Democrat, decides to leave the agency before his term ends on June 30, 2026. Phillips has not revealed his plans.

"The Trump administration has been very public about wanting to take major action in the energy sector, but if FERC is deadlocked, it could slow the new administration's agenda."

— Steven Shparber, attorney at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo

Meanwhile, Trump could immediately appoint one of FERC's two Republican commissioners, Mark Christie or Lindsay See, to lead the agency until a permanent chairman is chosen. Christie's term expires June 30, while See's term runs until June 30, 2028.

Former Commissioner Allison Clements said the new chairman will set FERC's priorities and noted that the agency's current commissioners appear to work well together. Clements, who joined consulting firm ASG this week as a partner focused on the data center sector, said: "Whenever new commissioners or a chairman come in, the dynamics of the whole agency change. At this important moment, I hope that spirit of cooperation and productivity continues regardless of who becomes chairman."

Changes in the agency's composition could affect the Trump administration's success on energy policy. Steven Shparber, an attorney at Mintz, said: "The Trump administration has been very public about wanting to take major action in the energy sector, but if FERC is deadlocked, it could slow the new administration's agenda."

Demand growth drives FERC agenda

Shparber said FERC's agenda will be driven by the overarching issue of once-in-a-generation demand growth. At the January 9 Mintz webinar, he said: "This (demand growth) chart really unsettles a lot of people, not just at FERC, but on Capitol Hill and in the energy industry." The chart shows U.S. electricity demand was largely flat since 2000, with a sharp uptick in forecasts from the North American Electric Reliability Corporation starting in December 2023.

Clements noted that given new power supply can take years to come online, FERC may consider how to facilitate cost-effective and reliable near-term resource additions. This could include further steps on interconnection queue reform, finding ways to utilize remaining interconnection capacity, and addressing co-located load (such as data centers) at power plant sites. She also said this could include improving the efficiency of the existing grid through the use of grid-enhancing technologies, reducing inefficiencies at seams between grid operators, and increasing transparency so market participants can compete effectively.

John Moore, director of the Sustainable FERC Project at the Natural Resources Defense Council, said FERC will likely continue to support transmission development and competitive wholesale markets. He said: "The facts on the ground tell us we may need more transmission lines, and these regional markets play an important role in ensuring reliability and resource adequacy."

Hartman expects FERC to advance rules on dynamic line ratings—"an excellent candidate for putting downward pressure on power prices quickly at low cost"—and to promote interregional transmission, as well as implement its Order No. 1920 on transmission planning and cost allocation.

Managing new load

Josh Price, director at consulting firm Capstone, said another issue FERC may address is analyzing best practices for interconnecting new load from data centers and manufacturing facilities to the grid. He noted that utilities lack uniformity and oversight in load interconnection processes, making it difficult to clarify the amount, timing, and location of new load. Price believes FERC could hold a technical conference on the issue or meet with the National Association of Regulatory Utility Commissioners to discuss jurisdictional questions.

Clements said the load interconnection process has become as "Wild West" as generation interconnection, with speculative projects flooding the queue. She said: "People are submitting load applications that are commercially unrealistic and economically unreasonable, or they sign up for five speculative applications when they only actually want to build one. We've seen this in interconnection." Clements believes some policy requirements for load applications, such as financial readiness or commercial readiness, may be needed to clarify which projects are likely to move forward.

Shparber noted that large load siting is primarily a state jurisdiction issue. He said: "Therefore, FERC will likely continue to coordinate with states to better understand where and how large load growth is concentrated, in order to optimize transmission planning processes within FERC's jurisdiction. That sounds simple and straightforward, but it's a very important and complex task."

Will FERC lose staff?

The Trump administration may face a conflict between shrinking the federal government and addressing urgent issues such as increasing electricity supply to lower energy prices.

The Heritage Foundation's presidential transition project, "Project 2025," includes the "Mandate for Leadership," a roadmap for "deconstructing the administrative state." In addition to calling for changes to electricity markets, the roadmap urges the new administration to reinstate the "Schedule F" job classification from the first Trump administration for career federal employees involved in policymaking. This personnel classification would allow the president to fire these employees and replace them with selected appointees. According to a 2022 Government Accountability Office report, in response to Trump's October 2020 executive order creating "Schedule F," FERC estimated that more than half of its positions would qualify as "Schedule F."

Fisher, who co-authored the FERC chapter in "Project 2025," said the Trump administration is unlikely to carry out a political purge or fire a specific number of FERC employees. He said: "I think that would be a bad move, especially at a highly specialized agency like FERC." Hartman believes that given FERC's importance to the U.S. economy, the agency is unlikely to experience staffing cuts. However, he said some employees are exploring new job opportunities.

Energy Department restructuring and loan pause

Through the Bipartisan Infrastructure Law and the Inflation Reduction Act (IRA), the Energy Department invested billions of dollars in clean energy and transmission projects during the Biden administration. Lushetsky said it remains unclear how this funding, distributed through the department's Loan Programs Office and other offices, will be affected. However, given Energy Secretary nominee Wright's technical, engineering, and business background, he may be "very pragmatic." Lushetsky noted that Liberty Energy has invested in geothermal company Fervo, and Wright serves on the board of Oklo, a company developing small modular nuclear reactors.

Lushetsky said withdrawing IRA funds from already-awarded projects, especially those under contract, would be challenging, noting that these funds flow to Republican districts at a ratio of roughly six to one. He mentioned that in August, 18 House Republicans urged Speaker Mike Johnson to protect the IRA, while other members have talked about "surgical" changes to the law rather than a "sledgehammer" repeal.

Kennedy Nickerson, vice president at Capstone, said under Trump, the Energy Department may shift unobligated funds within legal limits to support priorities such as nuclear and geothermal energy. Nickerson expects the new administration to temporarily pause Loan Programs Office (LPO) programs to review pending loan applications. As of December 31, the LPO was reviewing 182 applications involving approximately $279 billion in loans for advanced nuclear, renewable energy, transmission, and other technologies. The office said the LPO has roughly $397 billion in remaining loan authority, primarily for its Energy Infrastructure Reinvestment program. Fisher of the Cato Institute said the Energy Department may also undergo restructuring, and the Grid Deployment Office could be eliminated.

EPA power plant rules face rollback

Hartman of R Street said Trump's first term did not leave a strong legacy on energy and environmental policy, with many decisions overturned in court or actions launched too late to be easily reversed by Biden. He said: "I'm very curious to see whether there will be a more pragmatic EPA agenda."

Overall, experts expect the Trump administration to roll back EPA greenhouse gas regulations for power plants and other rules affecting generators. However, Lushetsky of ML Strategies said this process could take three years to complete.