Will FERC stand up for competitive power markets? Our grid depends on it.

The U.S. electric grid is on the cusp of generational growth. The industrial shifts that will reshape the global economy and create the next generation of American jobs all need electricity, and lots of it. After decades of stagnation, demand for electricity in the U.S. is projected to increase by more than 15% by 2029.

A national effort to promote investment in reliable energy infrastructure is underway, as seen in President Donald Trump’s Council on Energy Dominance and various state and federal initiatives. The efficacy of all this work, however, depends on one fundamental question: Will the electric grid of the future be determined by free market competition or by monopoly utilities?

The dismal performance of monopoly utilities shows how important that choice will be. Monopoly utilities and their state regulators have presided over a 20-year run of electric rates that have risen faster than inflation, with electricity prices rising by a whopping 6.3% annual growth rate since 2022, more than 280 points above the Consumer Price Index. The expected increase in natural gas prices in coming years will only drive electric bills higher at a time when government leaders continue to fight inflation.

The Federal Energy Regulatory Commission created competitive power markets in the 1990s to provide a check on monopoly utilities’ out-of-control costs. In the ensuing decades, FERC has cultivated a growing, competitive segment of independent power producers by safeguarding “open access” to the electric grid for private developers. These companies have brought innovation, efficiency, lower costs and significant capital to the electricity market.

The value of IPPs is on display in the Electric Reliability Council of Texas power market, where streamlined regulatory processes have created the conditions for robust competition, and where load growth began in earnest five years ago. IPPs in ERCOT have led the way in bringing new generating resources online to help serve record-breaking load while also improving reliability and lowering costs for consumers. Since 2021, Texas has added 44 GW of generation to the grid — over 90% of which came from solar, wind and battery energy storage system (BESS) assets. This diverse resource mix, driven by competitive power producers, has already proven its economic worth: According to FERC’s latest projections, wholesale electricity prices in ERCOT will be lower this summer than they were in 2024. In every other market, prices are expected to increase.

The load growth in ERCOT will soon spread to the rest of the U.S. As in Texas, IPPs are ready. Thousands of projects representing hundreds of gigawatts of electricity — including BESS, renewables and conventional thermal generation — are under development across the country and could provide enough resources to power U.S. economic growth for decades to come.

But IPPs can only move as fast as regulatory processes allow. These processes are managed by the regional transmission organizations that coordinate grid planning across state lines. RTOs are regulated by FERC and chartered to protect power market competition, but they are also beholden to the resource planning of monopoly utilities and governed by boards and committees in which utility interests have IPPs outnumbered, and outvoted. While IPPs are ready to bring new power onto the grid, in recent months it has become painfully clear that utilities, and the RTOs under their influence, are not.

To connect a new resource to the grid in most markets, IPPs must obtain a generator interconnection agreement (GIA) from an RTO. Developers may wait as long as four years for a GIA for a single project, a dismal experience for which they pay millions of dollars. These delays are the product of underfunding and neglect on the part of utilities, which have spent decades operating as though electricity demand would remain flat forever.

Citing these backlogged interconnection “queues,” utilities and RTOs have noted they are not prepared to meet the rising demand they will soon be expected to serve. Instead of working to enhance competitive interconnection processes, utilities and RTOs have closed ranks and devised “emergency” plans that empower utilities to handpick projects to cut to the front of the queue. The PJM Interconnection, the RTO that serves the mid-Atlantic, initiated its FERC-approved “Reliability Resource Initiative” earlier this year, which changed established rules to let select projects jump to the front of the line.

FERC will ultimately decide how large of a share of the growing electricity market it will permit utilities to skim off the top. But the commission should note that these queue-jumping proposals send ominous and lasting signals to the competitive power market. IPPs have shown a necessary willingness to invest in interconnection processes rife with uncertainty and delays, but they do so on the view that FERC’s commitment to free market principles is firm. With hundreds of billions of dollars to be spent and tremendous need for innovative solutions, now is not the time for regulators to let utilities sell the competitive power market down the river. It may be the most valuable asset we have.