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Faster-than-Expected Data Center Load Growth May Cause Increased Regional Short-term Fossil Fuel Generation and Wholesale Electricity Prices

LCG, March 18, 2026--The EIA released a new "In-depth Analysis" of the potential impact of faster-than-expected near-term growth in data center power demand on power generation and wholesale prices on March 12. The analysis models the lower 48 states through 2027 and compares results to its base case scenario. Key takeaway from this sensitivity analysis is the potential increase in fossil fuels in some regions and potentially a significant increase in wholesale prices in ERCOT.

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Faster-than-Expected Data Center Load Growth May Cause Increased Regional Short-term Fossil Fuel Generation and Wholesale Electricity Prices

LCG, March 18, 2026--The EIA released a new "In-depth Analysis" of the potential impact of faster-than-expected near-term growth in data center power demand on power generation and wholesale prices on March 12. The analysis models the lower 48 states through 2027 and compares results to its base case scenario. Key takeaway from this sensitivity analysis is the potential increase in fossil fuels in some regions and potentially a significant increase in wholesale prices in ERCOT.

Read more

Industry News

California Assembly Passes 'Brokerage' Legislation

LCG, Jan. 17, 2001The lower house of the California legislature yesterday evening passed legislation that would allow a state agency to purchase electric power and resell it to the state's beleaguered electric utilities at cost.

Under the measure passed 60 to 5 in the Assembly, the state Department of Water Resources would be allowed to enter into long-term contracts to buy wholesale power for not more than 5.5 cents per kilowatt-hour.

The bill is fatally flawed in that power producers will not sell power to anyone, including the state, for 5.5 cents per kilowatt-hour. Because of extremely high natural gas prices, it is doubtful that power can be generated in California for that cost. The power producers have said they need between 7 cents and 8 cents per kilowatt-hour no matter who signs a long-term contract.

Stacey Jernigan, a bankruptcy lawyer who has been advising Assembly leaders, said she was hopeful that the length of the contracts and the high volumes of power would make it possible to get the lower rate the bill would require. "It just depends on who you contact," she said.

Depending on whom you contact may not have anything to do with it if natural gas prices do not drop abruptly and significantly. Yesterday in Southern California, some power plants were forced to switch to burning fuel oil because of high gas prices. The switch worsened another California power problem, that of insufficient generating resources, as the plants produce less power when using the alternate fuel.

The Assembly bill moves to the state Senate today where realism may be applied to the price limit. If passed and reconciled with the Assembly, it will then go to Gov. Gray Davis for his signature. His pen is ready.

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