Exclusive / Exelon’s controversial play for affordable electricity

Exelon’s new affordability play reflects how much pressure utilities around the US are under from their customers and from the Trump administration to get a grip on soaring prices. Managing the narrative about affordability has become utilities’ top PR priority, something they need to respond to at the risk of facing more draconian interventions by federal regulators. Fortunately for a company like Exelon, some of the solutions they’re proposing happen to lead to the same shareholder-friendly outcomes they’ve been chasing for years. Yet they’re likely to draw pushback from some regulators, analysts, and customers.

The first step is a $60 million fund, drawn from shareholders’ pockets, to which households and small businesses can apply for subsidized bills. It’s a drop in the bucket for a company whose annual net income reached $2.8 billion in 2025, up from $2.5 billion the previous year, but otherwise fairly standard fare for corporate social responsibility.

The second step involves agreements that make data centers or other large new customers responsible for their share of transmission system costs over time, so existing customers aren’t left paying if a data center project doesn’t materialize. “If you’re serious about your load, then you can commit to it. If not, that’s ok, but then we’re not going to build for it,” Butler said. “That’s how you avoid cost creepage to the smaller customers.”

Still, “those security agreements don’t provide [other] customers complete protection from higher rates or cross-subsidies,” said Kent Chandler, resident senior fellow for electricity policy at the R Street Institute and a former utility regulator in Kentucky. And it’s not clear how such agreements could be replicated if the company succeeds with the third step: Operating power plants.

At the moment, Exelon, as the parent company to a group of six regulated transmission utilities, is barred from doing so, and instead acts as a middleman for power that is generated by a host of competing power plant operators. But Butler said it’s essential for state regulators to allow the company back into power generation, so it can invest in closing the supply gap.

It’s easy to see why Exelon would want to jump back into power production, given the stratospheric heights that prices have reached. And as a regulated utility, if it did start to build power plants, it would be able to negotiate with regulators to adjust its prices accordingly and have those prices locked in for decades to come. In the short term, Chandler said, that could indeed benefit customers, since the supply deficit is real. The trouble with the strategy is that it hinges on a bullish forecast for data center demand. If that demand doesn’t actually materialize, then Average Joe customers could be left paying for infrastructure they don’t need.

There’s a kind of circular logic here: Independent power producers (IPPs), whose investor returns depend on making smart bets about future power demand and not building infrastructure they won’t be able to turn a profit on, are skeptical about the true size of the data center boom and therefore conservative about building new generation. PJM itself, the grid region in which Exelon operates, recently slashed its load forecast. Butler said IPPs are guilty of intentionally under-investing in new projects so as to “capitalize off the market of scarcity.”

But Chandler said the reality is companies like Exelon are simply willing to make riskier bets because ultimately they’ll have more ability to pass costs on to customers no matter what. Exelon could create a new Constellation-esque subsidiary to compete in the normal, non-regulated power generation market, Chandler said. Instead, “they only want regulated investments and corresponding high risk-adjusted regulated returns.”

There’s one other problem with Exelon’s strategy, said Rob Gramlich, president of the consulting firm Grid Strategies: Putting them into competition with the existing range of merchant power producers could drive the latter out of business — ultimately perpetuating, rather than solving, the supply crunch. “What sounds like it adds supply,” he said, “might do the opposite.”

Butler said he is confident the company’s plan will yield “long-term solutions to fix the lack of supply,” and that “the largest customers will be paying for their energy needs so costs will never shift to other customers.” He’s already shared this plan with the Federal Energy Regulatory Commission and with Trump administration officials, and is confident it will align with the president’s ongoing push to prevent data centers from passing on their power costs. In the meantime, he said, the company is working with its customers to help them audit their energy use and trim their bills with upgrades like better insulation and lightbulbs: “The cheapest kilowatt is the one never used.”