Exelon Urges US States to Ease Rules on Utility-Owned Generation

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(Bloomberg) — The head of one of the US’s largest utilities is pressing states across the country to allow it to own generation facilities as it seeks to capitalize on surging demand from data centers, arguing that such a move would help curb rising energy prices for consumers.

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Exelon Corp. Chief Executive Officer Calvin Butler said he’s working with officials in Pennsylvania, Illinois, Maryland and New Jersey to change rules that prevent the company from owning generation assets. The company is exploring land acquisitions in those states to develop battery storage, gas-fired plants and solar farms, as soon as nine months of receiving regulatory approvals, he said.

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“When legislation passes, we’ll be ready to go,” Butler said in an interview Tuesday. “That will help drive costs down.”

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Artificial intelligence is spurring a sharp increase in electricity demand after two decades of stagnant growth, forcing a rethink of how to expand supply without saddling ratepayers with extra costs. After decades of market deregulation across much of the US, Exelon is leading a push for more utilities to get back into the power generation business and avoid missing out on a booming market.

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Unlike utilities, so-called independent power producers in the states where Exelon operates have been able to generate electricity and sell it at higher prices. That market, known as a capacity market, seeks to ensure reliability during periods of system stress by paying power plants to guarantee they can deliver electricity when needed. Exelon has argued that those costs are being passed onto consumers and would be better contained under a regulated framework.

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Chicago-based Exelon once owned generation assets through Constellation Energy Corp., including the largest US fleet of nuclear reactors, before spinning off the business into a separate company in 2022.

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Butler’s comments add to signs that AI-fueled electricity demand is triggering changes across the utilities sector, following NextEra Energy Inc.’s agreement last month to buy Dominion Energy Inc. The blockbuster deal would create an industry giant, extending from Florida to the AI data centers clustered in Virginia.

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Butler said Exelon’s plan would involve partnering with engineering firms to build new generating facilities. The company already can own battery-storage assets in New Jersey and Maryland, and expects Delaware to follow suit as soon as this week, he said. Additional changes should come over the the next 18 months, he added.

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“Our governors and legislators are realizing you can’t drive prices down if you don’t have adequate supply,” Butler said.

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