USA – CALIFORNIA Trends and Developments Contributed by: Nora Sheriff and Samir Hafez, Buchalter
This financial pressure is colliding with consumer affordability concerns. As regulators weigh utility rate filings, many are concerned with approval of large capital investments that would raise bills for residential and commercial customers. This is creating tension between long-term reliability planning and short-term economic sensitivity. Federal programmes under the Infrastructure Investment and Jobs Act (IIJA) and Inflation Reduction Act offered some relief. However, the freezing and partial reinstatement of Infla- tion Reduction Act-related grants in 2025 has left developers wary. Uncertainty over federal permitting reforms, cost allocation rules and tax credit monetisation is further clouding the investment outlook. Despite this turbulence, the underlying drivers of grid modernisation efforts – including safety, reliability and decarbonisation goals – persist. Whether the pace of investment can match the urgency of these goals is now a central question. Trade Policy Is Power Policy With tariffs and supply chain instability now shaping project timelines and costs, state and federal regulators are reassessing energy plan- ning processes. Integrated resource plans, capacity expansion models and interconnection queue reforms are being updated to reflect new cost assumptions and geopolitical risks. Organisations such as the Business Council for Sustainable Energy (BCSE) are calling for mod- ernised federal infrastructure policies that reflect the urgency of the energy transition. BCSE emphasises the need for competitive markets, long-term planning frameworks, and collabora- tion between public and private sectors to over- come the estimated USD565 billion shortfall in US energy infrastructure investment.
The Federal Energy Regulatory Commission’s (FERC) ongoing efforts to reform transmission planning and cost allocation remain critical to unlocking inter-regional project development. FERC’s Order No 1920, implemented in May 2024, represents the most significant federal transmission planning reform in over a decade. By requiring transmission providers to engage in long-term regional planning over a 20-year horizon and to clearly identify how new trans- mission facilities will be funded, Order 1920 lays an ambitious roadmap towards a co-ordinated reinvention of energy infrastructure across the West. However, optimism around this regulatory pro- gress is tempered by hostile federal policies and a bleak financing environment. The House’s pas- sage of HR 1 has already had a chilling effect on investment in the energy sector, particularly for developers reliant on third-party capital and smaller project sponsors. As these conditions continue to drive up the cost of clean energy investments, ratepayer scepticism surround- ing these measures will grow, especially since the purported and long-championed benefits of energy infrastructure modernisation have yet to materialise. In this context, Order 1920 is necessary but insufficient; it provides a thoughtful and prac- tical plan for infrastructure development under the assumption that public and legislative sup- port would propel it forwards. However, such support appears to be swinging in the opposite direction, leaving developers with the unenvi- able task of reassessing their approach under this new framework. The coming months will be pivotal, though lingering uncertainties threaten to blunt the momentum behind transmission reform and clean power deployment across the West. Without timely regulatory and financial
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