The Impact of Permitting Reform on State-level Residential Electricity Prices and Bills
We find that key BAAJA provisions reduce average national electricity prices for residential customers by 3-4% in 2035 compared to current policy, and nearly all states experience these benefits.
The Bipartisan American Affordability and Jobs Act (BAAJA) is actively under consideration after the US Senate voted on Monday, November 9 to begin debate on the bill. If passed in its current form, BAAJA would apply sweeping changes to many federal environmental permitting laws, mandate new transmission planning and cost allocation processes, and require data centers to pay for the costs they impose on the grid.
In this analysis, we model key provisions of BAAJA (excluding manager’s amendment updates) focused on easing barriers to building linear infrastructure (transmission lines and natural gas pipelines), protecting ratepayers from data center costs, and securing federal permit certainty for wind power plants. We quantify the impacts of BAAJA provisions against a current policy baseline without BAAJA. We find that key BAAJA provisions reduce average national electricity prices for residential customers by 3-4% in 2035 compared to current policy, depending on future clean technology costs and fossil fuel prices. Residential electricity prices decline because easier permitting allows lower-cost resources to connect to the grid and enables greater sharing of resources between neighboring regions.
The ratepayer protection provisions also protects residential customers from the costs associated with growing data center demand, which drives the majority of economy-wide demand growth through 2035 in our modeling. As a result of these effects, average residential household bills decline by $41-66 in 2035 compared to current policy, and savings total $36-56 billion through 2035 across all residential customers. Nearly all states experience these benefits from key BAAJA provisions: residential electricity prices and bills fall compared to current policy in 46 to 48 states out of the 48 contiguous states we modeled.
This nonpartisan, independent research was conducted with support from Third Way. The results presented reflect the views of the authors and not necessarily those of the supporting organization.