Analysis and commentary on energy policy and its real-world impacts.
The Prairie State debacle illustrates a fundamental problem with how municipalities enter long-term energy contracts. Local governments, often lacking specialized energy expertise, relied on projections from project developers and underwriters who had financial incentives to paint optimistic pictures. Take-or-pay contracts stretching decades into the future locked communities into commitments based on assumptions about fuel costs, energy markets, and demand growth that proved wildly wrong. Reform should require independent financial analysis, public disclosure of risk scenarios, shorter contract terms with renegotiation triggers, and meaningful exit provisions that protect ratepayers when market conditions change dramatically. Communities shouldn't bear all the downside risk while investors enjoy guaranteed returns.
Every major energy project begins with a promise: this will save ratepayers money. Prairie State promised affordable, reliable baseload power that would insulate communities from volatile natural gas markets. The reality has been the opposite. Construction costs exceeded estimates, natural gas prices plummeted thanks to the shale revolution, and renewables became cheaper than anyone anticipated. The lesson isn't just about one bad project — it's about the systemic failure of energy planning models that treat 30-year demand forecasts as certainties and ignore the accelerating pace of technological change. Communities considering major energy investments should demand stress-testing against multiple scenarios, not just the developer's best case.