Transition Finance Weekly - 12/18/2025

Gas Plant Doubles in Cost; Virginia SCC; Michigan VPPs

Exploring the policy, politics, and economics of the clean energy transition

Each week here in Transition Finance Weekly, researchers and analysts from Pleiades Strategy summarize the top stories and trends related to the policy, politics, and economics of the clean energy transition in the states.

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1. South Carolina Gas Plant Doubles in Cost

Doubling down on gas is getting more expensive and ratepayers are left bearing the risk.

• South Carolina lawmakers passed H.3309 this year, an energy bill that explicitly encourages Santee Cooper and Dominion Energy to collaborate on new “joint resources.” And with that push, Santee Cooper and Dominion Energy are pressing ahead with a proposed natural gas plant in Colleton County, South Carolina whose estimated cost has ballooned to roughly $5 billion — double the original $2.5–$3 billion projection.

• The cost escalation reflects a broader shift in the economics of gas. The price of large combustion turbines has jumped from about $1,200 to $2,300 per kilowatt, driven by supply chain constraints, inflation, and surging demand. But these South Carolina utilities are doubling down on their commitment to fossil generation at a moment when both construction and operating costs are rising fast — and with Santee Cooper publicly owned, ratepayers will end up paying that escalating price.

2. Virginia SCC Sets New Rules for Large Load Customers

Regulators are starting to put some guardrails around data center–driven growth, but key cost risks remain.

• The Virginia State Corporation Commission approved a new framework for large-load customers alongside a scaled-back Dominion Energy rate hike, raising base rates by $11.24 per month in 2026 and an additional $2.36 in 2027 for the average residential customer, less than Dominion requested. The SCC also limited Dominion’s return on equity increase to 9.8%, below the 10.4% the utility sought.

• More significantly, the SCC created a new rate class for large customers that use more than 25 MW with a monthly load factor above 75%, a category that captures most data centers, along with some industrial and commercial users. Customers in this class will be required to sign 14-year contracts guaranteeing payment for their projected energy costs, even if their usage drops or planned data centers are never built.

• This is a good first step. Long-term contracts help reduce the risk of overbuilding and stranded assets, and special rate classes acknowledge that hyperscale loads pose unique challenges. But these measures don’t automatically ensure data centers pay for all of the infrastructure and system costs they impose.

“Data centers and other large energy users create a special set of risks…. Residential customers should not be subsidizing these wealthy companies, and Virginians are relying on the Commission to address these fundamental questions of fairness,” said Peter Anderson, Director of State Energy Policy with Appalachian Voices.

3. Michigan Moves to Bring Virtual Power Plants Online

VPPs are gaining recognition as a reliability tool that can reduce the need for costly new generation.

• Michigan lawmakers are advancing legislation that would lay the groundwork for virtual power plants across the state. Senate Bills 731 and 732 would establish a legal framework for VPPs to operate and direct the Michigan Public Service Commission to require utilities to account for these resources in their transmission and distribution planning. If enacted, the bills would ensure that VPP aggregators and the owners of distributed energy resources are compensated for the value they provide to the grid.

• VPPs play an important marginal role in modern grids. By coordinating thousands of small, flexible resources, they help stabilize the system during peak events, improve reliability, and flatten the demand curve, reducing pressure to overbuild new power plants that may only run a handful of hours each year.

• Michigan’s proposal signals growing awareness that grid resilience and affordability can be strengthened by using existing distributed assets more intelligently rather than defaulting to expensive new generation.

“We can’t meet our state’s future energy needs with 20th-century infrastructure,” said Sen. Sue Shink. “This legislation will help us create the flexibility and reliability to rise to modern energy challenges.”

4. Surprise! Offshore Wind Isn’t Dead

Maryland just launched the first new offshore wind procurement effort since President Trump took office.

• Maryland has launched a new offshore wind procurement, issuing an advisory seeking a 20-year power purchase agreement from developers holding leases off its coast. The move marks the first new offshore wind procurement effort since President Trump took office, despite his administration’s sustained hostility toward wind energy, particularly offshore projects.

• Maryland announced the procurement days after a federal court victory blocking the administration’s sweeping attempt to halt offshore wind development. A federal judge ruled that the executive order freezing wind permitting in federal waters was “arbitrary and capricious” and violated federal law, undercutting the legal foundation of the administration’s blanket ban.

• Federal agencies still retain ample discretion to slow-walk or obstruct projects through other means, from delayed Army Corps permits to revoked environmental approvals and stalled sign-offs at the Department of the Interior. But Maryland’s action sends a clear signal: coastal states are not waiting for Washington to get out of the way.

“As we look to build the electric grid that will power America’s future, wind energy is a key component,” said Marguerite Wells, executive director of the Alliance for Clean Energy New York. “With this ruling behind us, projects can now be judged on their merits.”

5. Florida Senate Moves to Rein in Rate Hikes – With Limits

Lawmakers are responding to public outrage over soaring bills, but political taboos are constraining how far reform can go.

• Florida Senate Republicans are advancing SB 126, a bill aimed at tightening oversight of how the Public Service Commission sets energy rates, after the PSC approved Florida Power & Light’s $7 billion rate increase, the largest in state history.

• The rate hike was approved by a PSC stacked with Gov. Ron DeSantis appointees, including a recently added commissioner who has publicly denied climate science. At the same time, DeSantis has taken actions that compound long-term cost pressures: rejecting climate mitigation strategies, steering utilities toward expanded natural gas use, and outright banning offshore wind, while also receiving substantial campaign support from FPL.

• SB 126 would expand the commission from five to seven members, require financial expertise on the panel by mandating one CPA and one chartered financial analyst, and compel the PSC to clearly justify its decisions. It also requires explanations for accepting or rejecting settlements and an annual report benchmarking utility rates, returns on equity, costs, and executive compensation.

“It sends a pretty strong message to investors that it’s going to be risky for the investors if they continue to rely on plants that have big reliability issues like Comanche 3,” said Michelle Solomon, an analyst who tracks the electricity industry at the clean energy think tank Energy Innovation.