Why the true cost of new gas plants is much higher than the sticker price
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- Current Energy Group and GridLab found that mandatory long-term contracts for firm pipeline transportation, gas storage, and gas processing equipment inflate gas plant costs by roughly 30% beyond the upfront construction figures utilities submit to regulators
- PJM Interconnection's recently reopened queue shows gas now represents nearly half of the entire 220-GW pipeline, nearly double what was already in utility plans as of last year, while gas also accounts for nearly three-quarters of projects in MISO's Expedited Resource Addition Study
- Georgia Power, Duke Energy, and Dominion Energy have all announced major capital investments in new gas generation to meet data center load growth, with separate gas storage and pipeline projects typically approved after the plant itself
- WE Energies plans to roughly double its gas demand to serve a massive Microsoft data center, requiring $1.5 billion in new gas generation plus $668 million in associated pipeline and storage costs that were not included in the CPCN proceedings for the generation projects
- Since the initial analysis was done, WE Energies' costs have grown to $6 billion in generation and $1.3 billion for LNG storage, illustrating how construction cost estimates are already outdated and continuing to rise
- Wisconsin ratepayers may still face new charges on their gas utility heating bills for the pipeline and storage costs even if the power plant itself is largely covered by the data center customer, because electric and gas planning are reviewed in fragmented, separate proceedings
Why it matters: Because regulators approve the power plant in one proceeding and the gas storage and pipeline in a later, separate one, state commissions are comparing incomplete costs when deciding between gas and cleaner alternatives — meaning a project advertised at $1.5 billion can quietly balloon to $2.2 billion in ratepayer exposure, as in Wisconsin, before anyone is asked to weigh the trade-off.
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