Utilities routinely underestimate the true cost of new gas power plants by roughly 30%, according to a new analysis by Current Energy Group and GridLab published this week. The hidden expenses — mandatory long-term pipeline contracts, gas storage facilities, and processing equipment — are typically omitted from initial project proposals, leaving regulators and ratepayers facing sticker shock after approval. As energy demand accelerates from the data center boom, major utilities including Georgia Power, Duke Energy, and Dominion Energy are rushing to build new gas generation, making these concealed costs a growing concern for electricity customers nationwide.
The scale of the gas buildout is striking. Gas now represents nearly half of PJM Interconnection's entire 220-GW interconnection queue, which reopened for the first time in four years, nearly doubling what was already planned in utility plans as of last year. In the Midcontinent Independent System Operator's fast-track process, gas represents nearly three-quarters of projects in its Expedited Resource Addition Study. Wisconsin's largest utility, WE Energies, plans to roughly double its existing gas demand to serve a massive Microsoft data center, with $1.5 billion in new gas generation and an additional $668 million in associated pipeline and storage costs — adding 30% to the tab that wasn't included in the original generation project proceedings. Since the initial analysis, those costs have ballooned to $6 billion in generation and $1.3 billion for LNG storage.
The report finds that utilities typically separate gas plant approval from fuel infrastructure approval, creating fragmented regulatory oversight that obscures total costs. According to Cassady Craighill, technical education director at GridLab, "Just as a car is useless without fuel, a gas power plant requires a guaranteed supply of natural gas to operate reliably." The report concludes that because utilities omit these massive, long-term infrastructure and contractual costs from initial proposals, regulators end up approving projects with incomplete information — often representing only a portion of the total ratepayer cost. The analysis notes that discussions of large-load tariffs covered by data centers typically focus on power generation costs and almost never include gas system costs.
The problem stems from how utilities structure their approval requests. A gas generation plant goes through a Certificate of Public Convenience and Necessity proceeding, while the gas storage facility needed to operate that same plant is considered in a separate proceeding after the plant has already been approved using an understated figure. By that point, the report explains, regulators have tied their own hands since they already approved the plant, which needs the pipeline to operate at a time when demand for new pipeline capacity is sky high. This fragmented structure means total cost exposure for ratepayers is dispersed across different proceedings and rate recovery mechanisms, preventing regulators from comparing the full costs of gas against cleaner energy alternatives. The report also notes that utilities and regulators are likely working with outdated construction cost estimates for gas plants, figures that continue rising and adding upward pressure on customer bills.
The report calls for power grid planners to access and use transparent data on gas transmission costs to answer two critical questions amid the nationwide affordability debate: What will the final tab be for the rush to gas, and who will pay for it? The analysis identifies a critical data gap — the lack of standardized gas infrastructure planning documents and hidden costs buried in confidential utility filings. Without this information, regulators could be dismissing generation alternatives that would relieve the financial burden on everyday customers, even as gas price volatility exposes all customer classes to unexpected charges on their monthly bills.