Exelon CEO Warns of 2027 Blackouts, Seeks Power Plant Buildout

Exelon CEO Warns of 2027 Blackouts, Seeks Power Plant Buildout

Exelon CEO Calvin Butler is warning that parts of the U.S. could face blackouts as soon as 2027, and he’s pushing states to let regulated utilities build power plants again, according to an analysis published on OilPrice.com by energy analysts Leonard Hyman and William Tilles.

Market Impact

Butler’s concern centers on the PJM transmission region that Exelon serves, where many states currently bar regulated utilities from owning or operating power plants. That policy was meant to foster competition and shield ratepayers from construction cost overruns. But Hyman and Tilles argue the approach has backfired: independent builders without a utility ratepayer backstop need to earn roughly one-third higher returns to justify the added risk, and when prices are held down artificially, those builders simply take their capital elsewhere instead of adding new supply.

The analysts’ own review of industry data from 2004 to 2024 found utilities expanded their rate base by about 5.5% a year while electricity sales grew just 0.5% annually. After adjusting for inflation, real rate base growth was only 1.2% a year, which the authors say is not enough to replace aging plants, let alone prepare for rising demand tied to AI data centers and other growth. A pre-COVID paper by the same analysts had already concluded the industry was underinvesting by close to 50%.

The piece lays out four possible fixes: accept higher electricity prices, reform the competitive generation market, let regulated utilities build generation again under tighter oversight, or, as the authors put it, “buy some batteries or an on-site generator” as a hedge against unreliable service.

What It Means for Subcontractors

• If states move to let regulated utilities like Exelon build generation directly, expect new EPC and subcontract packages for power plant construction in PJM states over the next several years, a shift from the current independent-developer model.
• Electrical and mechanical contractors serving commercial and industrial clients in PJM territory should watch for near-term demand in backup power installation, as the article specifically flags on-site batteries and generators as a stopgap reliability fix ahead of the 2027 warning window.
• Firms bidding grid and transmission work should track state regulatory dockets in PJM member states, since any policy reversal on utility-owned generation would need state-by-state approval before new plant construction packages hit the market.
• Contractors with utility-scale generation experience should position now for potential rate-case filings tied to reliability investment, since the analysts note fixing the grid, especially for AI-driven demand, will require utilities to seek cost recovery through regulators.