Exelon warns of U.S. power shortfall as AI demand raises blackout risk

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Exelon warns of AI blackout risk

Highlights

Exelon CEO Calvin Butler warns of potential U.S. power outages in 2025 due to a supply-demand gap driven by AI-related electricity demand.
PJM forecasts a 60-gigawatt supply shortfall over the next decade and reported a 6.5-gigawatt deficit in its December auction, signaling critical grid risks.
Electricity prices rose 7 percent nationally and up to 17 percent in Exelon territories, prompting legislative intervention in New Jersey, New York, and Maryland to review utility rate hikes.

Grid strain and investment warning

As reported by the Financial Times, Exelon chief executive Calvin Butler says the U.S. could face power outages next year because electricity supply is not keeping pace with demand growth tied to artificial intelligence. He says the risk is especially acute in the north-east and Midwest, where the company nearly had to curtail service for about 400,000 customers during some of the coldest days of the past winter.

Butler links the warning to a wider supply problem across the power system. Grid operator PJM, which covers the north-east and Midwest, has forecast a 60-gigawatt supply shortfall over the next decade, and reported a 6.5-gigawatt deficit at its last auction in December.

U.S. electricity demand is expected to rise 39 percent by 2035, according to ICF data cited in the report. Butler says utilities need to raise rates to support investment in ageing and weather-damaged networks, while also preparing infrastructure for economic growth driven by AI.

Political backlash and regional cost pressures

Electricity prices have risen 7 percent nationally since last year, according to Energy Information Administration data, with sharper increases in several Exelon markets, including 17 percent in New Jersey, 16 percent in Maryland and 13 percent in Pennsylvania. Exelon serves nearly 11 million customers through utilities including ComEd, BGE and PECO.

Those price increases have drawn political scrutiny as inflation remains elevated. New Jersey, New York and Maryland have passed legislation to more closely review utility rate increases and provide financial relief to consumers, while Butler says utilities and large technology companies have absorbed much of the backlash over data centre-related demand.

In Pennsylvania, Exelon subsidiary PECO withdrew in April a request that would have raised a typical electric and gas bill by $35 a month in 2027, shortly after Governor Josh Shapiro criticised the company. Butler says delaying such increases only pushes costs further out, and argues that utilities cannot maintain reliable systems without recovering infrastructure spending through rate cases.

He also says current market rules limit utilities' ability to build generation in several PJM states, leaving independent power producers with too little incentive to develop plants that may take 10 to 20 years to become profitable. Efforts to expand utility ownership rights in Maryland have stalled, although Butler says he remains optimistic about similar proposals in New Jersey and Delaware.

Kentucky Municipal Power Agency’s 'BBB' revenue bond rating and stable outlook highlight how steady finances can support ongoing utility capital improvements. Our earlier report noted that the bond proceeds are aimed at funding system upgrades and reliability-focused infrastructure work, with the outlook underpinned by the agency’s financial discipline and resilience through prior market swings.

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