On April 8, 2025, the President of the United States signed a suite of executive orders designed to extend the aims of the January 31, 2025 Executive Order ("EO") Unleashing Prosperity Through Deregulation. The implementation of the procedures outlined in these orders portends the potential for significant changes to current regulations governing the operation of the U.S. electric grid.
Recognizing the "unprecedented surge in electricity demand driven by rapid technological advancements" and the policy of the U.S. to "ensure the reliability, resilience and security of the electric power grid," the EO Strengthening the Reliability and Security of the United States Electric Grid, directs the Secretary of Energy to establish streamlined procedures to assess reserve margins, identify generation critical to the stability of the grid, and ensure that such critical generation remains interconnected to the bulk power system. Specifically, the Secretary of Energy of the U.S. Department of Energy ("DOE") is directed to:
- Update and streamline the DOE's processes for issuing orders under Section 202(c) of the Federal Power Act to ensure that critical generation resources within "at-risk" regions are available for forecasted emergency conditions;
- Develop a "methodology for analyzing current and anticipated reserve margins for all regions of the bulk power system regulated by the Federal Energy Regulatory Commission" ("FERC") within 30 days of the EO, and use the methodology to identify current and anticipated regions with reserve margins below "acceptable thresholds";
- Publish that methodology within 90 days of the EO, including a process to accredit generation resources based on historic performance in varied operational and grid scenarios; and
- Prevent generation resources in excess of 50 MW nameplate capacity from exiting the market or converting their fuel source(s), if doing so would result in a net reduction on generating capacity under the aforementioned methodology.
The Protecting American Energy From State Overreach EO directs the U.S. Attorney General to identify and challenge all state policies that may operate as "illegitimate impediments" to the identification, development, siting, production and investment in "or use of certain energy resources, specifically identifying "oil, natural gas, coal, hydropower, geothermal, biofuel, critical mineral, and nuclear energy resources." Notably, this order does not limit applicability to the bulk power system regulated by FERC.
The EO also directs the U.S. Attorney General to expeditiously take all action to: (a) stop the enforcement of state laws purporting to address climate change, or involving environmental, social and governance ("ESG") initiatives, environmental justice policies, carbon or greenhouse gas emissions, and carbon penalties or taxes; and (b) prevent the continuation of climate-related lawsuits. Within 60 days of the order, the U.S. Attorney General must submit to the President, a status report of actions taken pursuant to the order, and recommendations for executive or legislative actions "necessary to stop the enforcement of state laws .... determine[d] to be illegal."
Lastly, the EO Reinvigorating America's Beautiful Clean Coal Industry and Amending Executive Order 14241, prioritizes the redevelopment of American coal as an energy resource, particularly in connection with powering AI data centers. Specifically, the order directs the Secretary of the Interior, Secretary of Commerce, and the Secretary of Energy to:
- Identify regions where coal-powered infrastructure is available and suitable for supporting AI data centers;
- Assess the market, legal, and technological potential for expanding coal-based infrastructure to power data centers to meet the electricity needs of AI and high-performance computing operations; and
- Submit a consolidated summary report with their findings and proposals for AI and cryptocurrency.
Through these executive orders, the Trump Administration signals an effort to enhance the reliability of the U.S. bulk power system in response to the significant growth in forecasted electricity demand driven by AI, cryptocurrencies, and other emerging technologies. The orders propose to remove existing energy regulatory and environmental hurdles to facilitate the use of all available sources of generation to ensure that the U.S. remains at the forefront of technological innovation.
While the orders seek to address existing inhibitors on the U.S. power system making space to expeditiously enable all types of generation capacity to support grid reliability amid rising demand from AI and other critical technologies, questions remain regarding their legal enforceability and the specific mechanisms that ultimately may be adopted to enhance reliability. Given this uncertainty, market participants are encouraged to monitor and participate in rulemakings and proceedings that may result from these initiatives. Baker Botts is prepared and available to provide guidance as these developments continue to unfold.
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