Previous modelling studies suggest that thermoelectric power generation is vulnerable to climate change, whereas studies based on historical data suggest the impact will be less severe. Here we explore the vulnerability of thermoelectric power generation in the United States to climate change by coupling an Earth system model with a thermoelectric power generation model, including state-level representation of environmental regulations on thermal effluents. We find that the impact of climate change is lower than in previous modelling estimates due to an inclusion of a spatially disaggregated representation of environmental regulations and provisional variances that temporarily relieve power plants from permit requirements. More specifically, our results indicate that climate change alone may reduce average generating capacity by 2–3% by the 2060s, while reductions of up to 12% are expected if environmental requirements are enforced without waivers for thermal variation. Our work highlights the significance of accounting for legal constructs and underscores the effects of provisional variances in addition to environmental requirements.