Stampede to gas: Fossil fuel transition case studies

The push to build new U.S. gas-fired generation capacity is unmistakable, with utilities, developers, and even many regulators rushing to approve projects without fully considering the risks. As this report demonstrates, those risks are significant, particularly for consumers.

Gas price volatility can cost consumers billions of dollars, even for relatively short-term price increases. The independent monitor for PJM, the largest organized power market in the U.S., reported that the system’s wholesale energy costs soared to $15.4 billion in January, more than double the cost from a year earlier. The driving force for that increase was a sharp rise in gas prices due to the cold temperatures and snowfall that blanketed much of the U.S. in the second half of the month. That pushed Henry Hub gas prices skyward; they averaged $7.72 per million British thermal units (MMBtu) in January, up 81% from December and more than double the 2025 annual average. Similar spikes hit the six-state New England region, with the system operator reporting that energy costs in January totaled $2.7 billion – the highest total since the market was organized in 2003. Essentially, all those costs will be passed on to consumers.

This year’s spike was not an anomaly. Previous increases in 2021 and 2022, driven by weather and geopolitical events, led to similarly sharp increases in power costs for consumers. In Virginia, in fact, consumers are still paying for those events even as the costs of this year’s spike have not yet been passed through to their bills.

Utilities are largely insulated from these spikes, since fuel purchases are generally treated as pass-through costs to be paid by consumers. Given that, regulators need to require utilities and project developers to more carefully consider these risks when proposing new gas-fired power plants. There are competitive options that do not pose the same threat for consumers; that benefit needs to be factored into the project approval process.

The following case studies examine the decisions made by three utilities as they seek to meet anticipated growth in electricity demand while transitioning away from fossil fuels. The high-level takeaway is that state policies matter, particularly now that federal leadership on transition issues is absent. Another takeaway is that utilities will stick with what they know, even in the face of outside pressure, regardless of the cost implications for their customers.

The three case studies examine one large investor-owned utility, Entergy Corporation, which serves a four-state area along the Gulf coast; one mid-sized IOU, Portland General Electric, the largest utility in Oregon; and a small cooperative, Colorado-based Holy Cross Energy. IEEFA’s findings are straightforward:

• Entergy earns an F on the transition test. It plans to build substantial new gas-fired generation capacity, which will pose significant cost risks for its consumers. This build-out will also pose substantial stranded-cost risks if projected electricity demand growth does not materialize. At the same time, it is slowing the development of fuel-free renewables that can be built quickly and scaled as needed to support actual growth.
• Portland General Electric has made significant progress toward moving away from fossil fuels, having closed its only coal plant in Oregon and planning to exit its 20% stake in the Colstrip coal station in Montana. It is also building or contracting for substantial amounts of new wind, solar, and battery storage capacity, which will help it meet new demand without the threat of fuel price spikes. Still, it owns five gas-fired power plants that currently provide 40% of its generation needs and has not yet indicated when it will be able to close them. PGE’s progress is promising, but its grade is an Incomplete.
• Holy Cross Energy, the smallest of the three utilities by far, has made the biggest progress. Its electricity mix in 2025 was 85% renewable, and its electricity costs were 33% lower than the national average. HCE has aced the test; its A grade is well deserved.