The AI Power Bill — Digest
TL;DR
FERC's October 9 order is the pivot of the cycle: it rejected PJM's IRAS/BYONC ratepayer-protection mechanism outright, pushing cost allocation back to state commissions — and the industry responded by building around the grid entirely. AEP's $4B Google fuel-cell plant, Black Hills' Cheyenne microgrid, and Venture Global's 10 GW behind-the-meter "AI utility" all answer "who pays" by contract before ratemaking begins, while EIA's October STEO confirms PJM wholesale prices up 41% in 2026, the largest jump of any hub.
FERC punted cost allocation to the states — and the market read it as bullish for incumbents
The federal track for ratepayer protection just stalled at the jurisdictional line. On October 9, FERC split PJM's large-load package: it accepted the 50-MW "Large Load" definition and the Large Load Registry (effective October 12), but rejected the IRAS curtailment framework, BYONC, and the exclusion of new large loads from the 2029/30 capacity auction — a 5-0 vote ferc-rejects-pjm-iras-byonc
.
"We find that several provisions of the proposed tariff appear to place obligations directly on eligible new large loads, which are, for the most part, retail customers... and that the proposed compensation framework appears to establish a retail rate."
— FERC order, via Utility Dive
The consequence is that un-backed data-center load stays in the capacity auction, so the cost-socialization dynamic persists — which is precisely why Jefferies called it "positive for existing generation/IPPs," i.e., higher capacity prices for longer, favorable to Constellation, NRG, Talen and Vistra ferc-rejects-pjm-iras-byonc. Commissioner Rosner's concurrence flagged the mirror-image risk: a capacity market signaling abundance while demand sheds involuntarily. The fight now moves to state dockets, with Ohio and Pennsylvania — where large-load tariff cases are already live — the states to watch.
What to watch: PJM's backstop refile (~October 29) and the registry compliance filing (~November 9).
The grid-bypass track went from concept to template in one week
Where market-rule politics are slow, hyperscalers are now contracting dedicated generation that never touches the ratepayer base. AEP announced a $4 billion, 702-MW Bloom Energy fuel-cell plant in Cheyenne with Google buying the output under a 20-year PPA — built outside AEP's own footprint — plus up to 1.6 GW of Mainspring linear generators through 2034 hyperscaler-dedicated-generation
. Black Hills signed agreements to serve Google's $17 billion Project Tembo campus through 2048 via a 2.7-GW portfolio, stating the deal is "structured so that Google bears all costs of serving the data center."
"With Island Mode power generated using this incremental dedicated on-site infrastructure, the expansion would place no additional demand on the public electric grid or public water utilities and, therefore, have no added costs to local consumers."
— Venture Global press release
Venture Global's frame agreements with GE Vernova and Baker Hughes — up to 10 GW of behind-the-meter compute capacity by end-2034 — complete the picture. This is the cleanest answer yet to the "who pays" question: in Wyoming it's explicitly Google, in Louisiana explicitly "no added costs to local consumers." The investable exposure migrates to regulated utilities keeping the grid-connected slice (AEP's 69 GW contracted queue, $78B capital plan), equipment suppliers, and the builders themselves.
What to watch: AEP's October 28 Q3 call and its new 2027–2031 capital plan.
The BYONC question died with the mechanism — hyperscaler-funded nuclear is now pure bilateral
The Google–Constellation deal's full structure is public: 3.59 GW total, a 20-year PPA for 890 MW of uprate capacity plus a 15-year agreement for 2,700 MW of existing fleet output, driving more than $4.3 billion of upgrades across 11 nuclear units in Illinois, Pennsylvania and New Jersey hyperscaler-funded-nuclear-uprates
. Last cycle's open question — whether the 890 MW would register as PJM BYONC and shield other ratepayers — was resolved by rejection: FERC killed BYONC on October 9, so the deal proceeds as bilateral contracting without those mechanics hyperscaler-funded-nuclear-uprates.
The template's genealogy now runs Microsoft–Three Mile Island (2024), NextEra–Duane Arnold (2025), Meta–Vistra's 2,600 MW and Amazon–Calvert Cliffs' 690 MW (2026), to Google–Constellation. Hyperscalers funding capex against 15–20 years of contracted revenue reprices merchant nuclear fleets without waiting for auctions.
What to watch: Whether states build their own BYONC-equivalent protections, per FERC's invitation.
PJM's wholesale repricing is official — and the 2027 "relief" is weather, not structure
EIA's October STEO puts the national residential price at a record 18.2 ¢/kWh for 2026, and the regional divergence is now in the federal data eia-electricity-price-demand-outlook
.
"We forecast wholesale prices in the PJM region this year will increase by 41% compared with 2025, the largest increase across all regions. The Northwest Mid-Columbia region saw the largest decline with prices falling 23% from 2025 levels."
— EIA STEO
This is the wholesale-side mirror of the state retail dispersion documented last cycle — PJM epicenter, Pacific Northwest deflating. The forecast PJM decline of 7% in 2027 assumes normal weather, not any relief from data-center load, which EIA has commercial demand growing +2.8% through 2027. Don't mistake the weather normalization for the cost curve bending.
What to watch: The November 10 STEO for confirmation the PJM divergence persists.
The momentum trade rotated from merchants to regulated names
Last cycle's rule — contracts re-rate, forecasts don't — got complicated. The FERC tailwind was absorbed unevenly: Talen leads at +21.4% over a month, Constellation gave back its Google pop (−9.0% over five days, −32.0% from its high), and NRG remains the laggard at −43.3% from its 52-week high on two straight EPS misses ai-power-trade-derating. Meanwhile the regulated complex — Southern (RSI 93), FirstEnergy (RSI 88), AEP (RSI 81), Dominion (RSI 79) — is stampeding into earnings at 52-week-high proximity on contracted load plus rate-base capex ai-power-trade-derating.
What to watch: The October 28–November 5 earnings run — AEP's capital plan, FE's Ohio tariff economics, SO's Georgia pipeline, TLN's contract book on November 3.
What surprised us
- FERC solved the ratepayer-protection question by deleting it. BYONC was the mechanism that would have let hyperscalers fund capacity and shield other ratepayers; rejecting it on retail-jurisdiction grounds means the Google–Constellation uprates flow through normal PJM constructs with no protection mechanics at all ferc-rejects-pjm-iras-byonc.
- The fastest-growing supply model doesn't touch the grid. Venture Global's pitch — "no added costs to local consumers" — is the grid-bypass track answering the cost-allocation fight by contract, making state ratemaking irrelevant for that load hyperscaler-dedicated-generation.
- Regulated utilities are the momentum trade. RSI readings of 79–93 across SO/FE/AEP/D heading into earnings — the "boring" rate-base story is now the crowded one ai-power-trade-derating.
Open threads worth a vote
The AI Power Bill — Digest
Since last time
- Promoted — Grid-bypass generation. Last cycle's "bring your own capacity" was a PJM market-rule question; it's now a physical build-out track with its own section (AEP, Black Hills, Venture Global).
- Escalated — The FERC story went from suspending the backstop to rejecting PJM's IRAS/BYONC ratepayer-protection mechanism outright. Also escalated: the market trade (the "contracts re-rate, forecasts don't" rule got complicated by a regulated-name stampede) and the hyperscaler-funded nuclear template (last cycle's BYONC open question is resolved — by rejection).
- Demoted — The state retail price map (now just "documented last cycle"; the wholesale STEO is the new front), the PJM backstop saga (reduced to a watch item and open thread), and Talen's price/earnings disconnect (now one line in the momentum section).
- Disappeared — The Virginia NextEra–Dominion merger fight (Hashmi, SCC hearings, the January 11 deadline — Dominion survives only as a ticker in the momentum trade), the Montana/NorthWestern 1.5 GW load story, the negative-correlation finding, and the New Jersey prepaid-pain outlier.
- Unchanged — Nothing survives intact; every section either moved or shrank.
FERC punted cost allocation to the states — and the market read it as bullish for incumbents (Escalated)
Last cycle FERC paused the backstop; on October 9 it went further, splitting PJM's large-load package 5-0: accepting the 50-MW "Large Load" definition and registry (effective October 12), but rejecting the IRAS curtailment framework, BYONC, and the exclusion of new large loads from the 2029/30 capacity auction ferc-rejects-pjm-iras-byonc.
"We find that several provisions of the proposed tariff appear to place obligations directly on eligible new large loads, which are, for the most part, retail customers... and that the proposed compensation framework appears to establish a retail rate."
— FERC order, via Utility Dive
Consequence: un-backed data-center load stays in the capacity auction, so cost socialization persists — which is why Jefferies called it "positive for existing generation/IPPs" (Constellation, NRG, Talen, Vistra). Commissioner Rosner's concurrence flagged the mirror-image risk: a capacity market signaling abundance while demand sheds involuntarily. The fight moves to state dockets — Ohio and Pennsylvania, where large-load tariff cases are already live, are the states to watch.
What to watch: PJM's backstop refile (~October 29) and the registry compliance filing (~November 9).
The grid-bypass track went from concept to template in one week (Promoted)
Where market-rule politics are slow, hyperscalers are contracting dedicated generation that never touches the ratepayer base hyperscaler-dedicated-generation:
- AEP: $4B, 702-MW Bloom Energy fuel-cell plant in Cheyenne with Google buying output under a 20-year PPA — built outside AEP's own footprint — plus up to 1.6 GW of Mainspring linear generators through 2034.
- Black Hills: serving Google's $17B Project Tembo campus through 2048 via a 2.7-GW portfolio, "structured so that Google bears all costs of serving the data center."
- Venture Global: frame agreements with GE Vernova and Baker Hughes for up to 10 GW of behind-the-meter compute capacity by end-2034.
"With Island Mode power generated using this incremental dedicated on-site infrastructure, the expansion would place no additional demand on the public electric grid or public water utilities and, therefore, have no added costs to local consumers."
— Venture Global press release
This is the cleanest answer yet to "who pays": in Wyoming it's explicitly Google, in Louisiana explicitly "no added costs to local consumers." Investable exposure migrates to regulated utilities keeping the grid-connected slice (AEP's 69 GW contracted queue, $78B capital plan), equipment suppliers, and the builders.
What to watch: AEP's October 28 Q3 call and its new 2027–2031 capital plan.
The BYONC question died with the mechanism — hyperscaler-funded nuclear is now pure bilateral (Escalated)
Last cycle's cleanest test — whether the 890 MW would register as PJM BYONC and shield other ratepayers — was resolved by rejection: FERC killed BYONC October 9, so the Google–Constellation deal proceeds as bilateral contracting without protection mechanics. The full structure is now public: 3.59 GW total, a 20-year PPA for 890 MW of uprate capacity plus a 15-year agreement for 2,700 MW of existing output, driving more than $4.3B of upgrades across 11 nuclear units in Illinois, Pennsylvania and New Jersey hyperscaler-funded-nuclear-uprates.
The template's genealogy now runs Microsoft–Three Mile Island (2024), NextEra–Duane Arnold (2025), Meta–Vistra's 2,600 MW and Amazon–Calvert Cliffs' 690 MW (2026), to Google–Constellation. Hyperscalers funding capex against 15–20 years of contracted revenue reprices merchant nuclear fleets without waiting for auctions.
What to watch: Whether states build their own BYONC-equivalent protections, per FERC's invitation.
PJM's wholesale repricing is official — and the 2027 "relief" is weather, not structure (Escalated; retail map demoted)
The regional-divergence story you already have at the retail level (MD/PA/OH/VA leading, documented last cycle) now has its wholesale mirror in federal data. EIA's October STEO puts the national residential price at a record 18.2 ¢/kWh for 2026 eia-electricity-price-demand-outlook:
"We forecast wholesale prices in the PJM region this year will increase by 41% compared with 2025, the largest increase across all regions. The Northwest Mid-Columbia region saw the largest decline with prices falling 23% from 2025 levels."
— EIA STEO
PJM epicenter, Pacific Northwest deflating — same shape as the retail map. The forecast PJM decline of 7% in 2027 assumes normal weather, not relief from data-center load, which EIA has commercial demand growing +2.8% through 2027. Don't mistake weather normalization for the cost curve bending.
What to watch: The November 10 STEO for confirmation the PJM divergence persists.
The momentum trade rotated from merchants to regulated names (Escalated)
Last cycle's rule — contracts re-rate, forecasts don't — got complicated. The FERC tailwind was absorbed unevenly: Talen leads at +21.4% over a month (the price/earnings disconnect persists), Constellation gave back its Google pop (−9.0% over five days, −32.0% from its high), and NRG remains the laggard at −43.3% from its 52-week high on two straight EPS misses ai-power-trade-derating. Meanwhile the regulated complex — Southern (RSI 93), FirstEnergy (RSI 88), AEP (RSI 81), Dominion (RSI 79) — is stampeding into earnings at 52-week-high proximity on contracted load plus rate-base capex.
What to watch: The October 28–November 5 earnings run — AEP's capital plan, FE's Ohio tariff economics, SO's Georgia pipeline, TLN's contract book on November 3.
What surprised us
- [NEW] FERC solved the ratepayer-protection question by deleting it. BYONC was the mechanism that would have let hyperscalers fund capacity and shield other ratepayers; rejecting it on retail-jurisdiction grounds means the Google–Constellation uprates flow through normal PJM constructs with no protection mechanics at all ferc-rejects-pjm-iras-byonc.
- [NEW] The fastest-growing supply model doesn't touch the grid. Venture Global's pitch — "no added costs to local consumers" — is the grid-bypass track answering the cost-allocation fight by contract, making state ratemaking irrelevant for that load hyperscaler-dedicated-generation.
- [NEW] Regulated utilities are the momentum trade. RSI readings of 79–93 across SO/FE/AEP/D heading into earnings — the "boring" rate-base story is now the crowded one ai-power-trade-derating.
Open threads
- Closed: The BYONC registration question — resolved by FERC's October 9 rejection, absorbed into the nuclear section above.
- Absorbed: The Q3 2026 earnings watch item — folded into the momentum section's October 28–November 5 earnings run.
- Superseded: Last cycle's backstop thread (February 28, 2027 suspension expiry, EL26-108 paper hearing) is no longer tracked as such; the live thread is narrower:
- [watch] PJM refiles Reliability Backstop Procurement plan (~Oct 29) after FERC suspension — does the refile cure the retail-jurisdiction objections, and when does the auction actually run?