Our topic on this episode is energy affordability. The U.S. saw largely flat electricity demand from the late ’90s until just a couple of years ago but now increasing demand has strained the nation's ability to keep up. To offer some perspective, we sat down with Representative Craig Williams of Pennsylvania, and Janine Benner, the director of the Oregon Department of Energy.
Our topic on this episode is energy affordability. In the worlds of both politics and policy, energy affordability is a hot topic. The U.S. saw largely flat electricity demand from the late ’90s until just a couple of years ago. Increasing demand from both homes and businesses, electrification of cars and trucks, the growth of data centers and other factors has strained the nation's ability to meet demand. Rates also have increased and legislators are increasingly concerned that consumers will face more and larger rate increases.
To offer some perspective, we sat down with Representative Craig Williams of Pennsylvania, and Janine Benner, the director of the Oregon Department of Energy.
Benner discussed how her agency focuses on an energy strategy for the state, how it works with the Oregon Public Utility Commission, and the challenge posed by scores of data centers around Oregon. She also explained how all of these elements work in the context of Oregon's ambitious clean energy goals.
Williams, who has extensive experience in the energy industry as a lawyer, talked about the demand challenge that's hitting the electrical system now and is expected to continue to increase, the effect of data center growth in Pennsylvania and what he sees as the right legislative approach to the problem.
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ES: (00:12):
Hello and welcome to “Our American States,” a podcast from the National Conference of State Legislatures. I'm your host, Ed Smith.
CW: (00:21):
And as a consequence of these data centers now coming online and their projected use going through the roof, our version of futures market and power is the capacity market and those prices absolutely exploded and there's not a constituent in my district or a resident across the Commonwealth of Pennsylvania that isn't suffering the impact of those high prices.
ES: (00:42):
That was Representative Craig Williams of Pennsylvania, one of my guests on this podcast along with Janine Benner, the director of the Oregon Department of Energy. Our topic is energy affordability. In the worlds of both politics and policy, energy affordability is a hot topic. The U.S. saw largely flat electricity demand from the late '90s until just a couple of years ago. Increasing demand from both homes and businesses, electrification of cars and trucks, the growth of data centers and other factors has strained the nation's ability to meet demand. Rates also have increased and legislators are increasingly concerned that consumers will face more and larger rate increases.
Benner discussed how her agency focuses on an energy strategy for the state, how it works with the Oregon Public Utility Commission, and the challenge posed by scores of data centers around Oregon. She also explained how all of these elements work in the context of Oregon's ambitious clean energy goals.
ES: (01:43):
Williams, who has extensive experience in the energy industry as a lawyer, talked about the demand challenge that's hitting the electrical system now and is expected to continue to increase, the effect of data center growth in Pennsylvania and what he sees as the right legislative approach to the problem.
Here's our discussion starting with Janine Benner.
ES: (02:05):
Janine, welcome to the podcast. Nice to have you.
JB: (02:08):
Nice to be here.
ES: (02:11):
So ,to get started here, why don't you tell us a little bit about your role at the Oregon Department of Energy?
JB: (02:17):
Absolutely. Well, as director of the Oregon Department of Energy, I provide strategic direction on policy and programs and budget and personnel to a department of about 120 staff. In Oregon, the energy office is a cabinet level department, and I was confirmed into my position by the Oregon State Senate.
ES: (02:39):
The issue of energy affordability is obviously one everybody's talking about. And I wonder if you could talk about how your department approaches that notion, what your role is as an agency. My understanding is in Oregon, like many states, rights are set by the Public Utility Commission.
JB: (02:55):
It's a really good question and one that the Oregon Department of Energy has been thinking about since I started here nine years ago. And it's something that we really grappled with back in 2020 when we came up with our mission statement that's still with us today. So, ODOE's mission is to help Oregonians make informed decisions and maintain a resilient and affordable energy system. We advance solutions to shape an equitable, clean energy transition, protect the environment and public health, and responsibly balance energy needs and impacts for current and future generations. So, you heard the word affordability in there in that first sentence and it's a really big part of what we do, and we think about it bigger picture and longer term. So maybe a way to think about it is as a longer-term commitment to affordability. So, the Oregon Public Utility Commission looks at individual utilities through specific rate cases.
JB: (03:50):
We think about the system overall and what steps the state can take now to help ensure affordability into the future. An example I would share is through the energy strategy, which is something that the Oregon Department of Energy published last fall and we were asked by the legislature to identify pathways to achieving Oregon's energy policy objectives. So, your listeners may be familiar with Oregon's ambitious climate and clean energy targets, which were a really important consideration as we developed the energy strategy, but so were reliability and affordability. And we looked at how we could meet our energy objectives while maintaining an affordable, reliable system. So just digging in a little deeper, we started with a modeling exercise where we looked at many different ways that we could meet the policy objectives all within the bounds of Oregon's existing statutes and goals. And we had the model identify the least cost way to meet those objectives, starting with what was the least cost overall for the economy and then also looking more closely at how it would affect people's household budgets.
JB: (04:57):
We called that part of the modeling the energy wallet and we looked at affordability across all parts of the energy system, electricity, direct use fuels like natural gas and also transportation fuels. So, the energy strategy includes five pathways which represent the pathways that would be the least cost overall to the economy and individual Oregonians. And maybe one other example which could be pertinent for legislators is the education part of our mission, helping Oregonians make informed decisions while the legislature in Oregon is a key audience for us. We've been called the Oregon Legislature's Think Tank. We find that by presenting fact-based information for legislators through testimony and reports, we can help them understand the impacts of their decisions on affordability among other things.
ES: (05:51):
I want to get into some of the details of this, but before we do that, how do you work with the PUC? You were sort of explaining the difference that you have more of a long-term mission. How do you folks work together?
JB: (06:03):
We really consider the Oregon Public Utility Commission as an important partner in all of our work, especially on the affordability side. They really help us ground truth Oregon's policies and what they'll mean for ratepayers. They're sort of ground zero when it comes to the effects of Oregon's energy policy decisions on affordability. At the Oregon Department of Energy, we can think big picture, economy-wide, we can be visionary. They have to think about every specific thing and what it means for ratepayers. And so, over the years, we've really come to recognize that that sort of difference in jurisdiction and statutory direction is a strength, and we build on each other's strengths and areas of expertise. And we do this at all levels, staff to staff meetings to leadership. I'm going to be joining the chair of the Oregon Public Utility Commission at a natural resources agency cabinet meeting with the governor's office.
JB: (06:57):
A couple weeks ago we were in San Diego visiting with our peers in Western states on shared electricity interests and there's lots of opportunities for collaboration. Going back to the energy strategy for a moment, there are a number of specific actions within the energy strategy that the PUC is going to take, including looking at wildfire utility liability solutions, which will have significant impacts on customer cost containment and reliability. And as we were developing the energy strategy, we wanted to make sure that it was a strategy for the state of Oregon, not just for the Oregon Department of Energy. So, the PUC was a really important partner to us in the development of the energy strategy as were a number of other agencies in Oregon.
ES: (07:43):
When it comes to energy affordability, of course, it's not the same in every state or even in every region. Certainly, the generation mix, the transmission investments, challenges, resilience effort, load growth, all that sort of thing factors in. But what are the most significant drivers in Oregon right now? What are the big challenges you folks are facing?
JB: (08:05):
Well, definitely some of the things that you mentioned, Ed, are showing up in Oregon as rate drivers. And we looked at this issue in 2024 as part of our biennial energy report, which is a key product we put out every two years that's used by Oregon legislators and really looks at what's the state of energy in Oregon. As part of that report, we reviewed Oregon's 10 largest utilities, and we found that only one of them had not increased rates between 2020 and 2024 and that utility just announced a rate increase earlier this year. So, rates are going up. The average retail price of electricity for residential consumers in Oregon increased about 30% between 2020 and 2024. Although keep in mind that Oregon's electricity prices are still some of the lowest in the country. It's important for us to understand, but of course the average Oregonian is not thinking about how they compare to other states every time they pay their energy bills, so it's not much of a consolation.
JB: (09:03):
To your point, electricity rates in particular are going up. And when we looked at this in 2024, we found three top factors that were driving costs. So first is rising power costs and this of course is what a utility pays to procure or generate electricity. Second is ongoing infrastructure needs, that's building and maintaining power plants and transmission lines and that can be compounded by inflationary pressures. Everything is getting more expensive. And then a third top factor that we found back in 2024 is the costs to mitigate the increasing prevalence and risks of wildfire and extreme weather. So, the resilience piece that you mentioned earlier is coming into play. And of course, these cost drivers are not mutually exclusive. They often intersect with one another. For example, wildfires can damage existing infrastructure such as utility poles and then utility may face high costs to replace the damaged equipment due to market forces such as inflation and supply chain disruptions.
JB: (10:09):
As to whether load growth, especially large loads and data centers are contributing to higher rates, it's hard to say. Oregon has taken some steps to shield residential customers from the costs associated with expanding data centers and data centers are certainly contributing to increased demand in Oregon.
ES: (10:28):
Well, on that point, I can hardly read a new site these days without seeing at least one story on data centers. This is of course a real topic of conversation. There was a Gallup poll recently showing more than 70% of respondents opposed to data centers. I know that legislators are very concerned not only about the load growth, the amount of power and water they use, but probably most important, the potential shifting of cost to consumers, of consumers paying more because of these data centers. So, I'm just wondering what the strategy is in Oregon. How are you looking at this?
JB: (10:59):
Well, it's definitely a topic of conversation in energy fields or in the energy sector in Oregon. I have a conversation about data centers at least every day and Oregon, we're not ground zero, maybe that's Virginia, but we're definitely a place where a lot of data centers have come and we've attracted a lot of data center growth due to several conditions that make us attractive. So, we have affordable, reliable, clean power that helps companies meet climate commitments. Hydropower is our main source of electricity, for example. We have a mild climate that supports energy efficient cooling. We have a tax structure without a sales tax combined with some enterprise zone property tax incentives and others that really make it attractive or have made it attractive from a tax perspective. We have strong fiber networks and subsea cable access, and we have an established ecosystem. So once a cluster forms, companies tend to expand where the infrastructure and experience already exist and we're consistently ranked among the top data center hubs in the world.
JB: (12:10):
This has been happening for some time now. We had about by our staff’s count about eight data centers in the Portland metro region in the early 2000s and then in 2010, development expanded to the Umatilla Basin, which is sort of in North Central Oregon. Then to Central Oregon, which became a hub with the arrival of Apple and Meta. And then by 2025, we had over 120 data centers including more than 60 of those big hyperscale facilities and they're concentrated again in those three regions, the Umatilla Basin, Prineville and Central Oregon and the Portland Metro region. One of the things that I think is driving concern and interest in the energy sector is that the data center growth has become the single largest new driver of electricity demand in the Pacific Northwest. We have an entity in the Northwest called the Northwest Power and Conservation Council, and they help the region with electricity planning.
JB: (13:04):
They came out with a forecast recently that shows new data centers and semiconductor facilities adding roughly 1,500 to 5,000 average megawatts of incremental load by 2030. We use those scenarios for modeling for the energy strategy, and we found that by 2030 most modeling runs, Oregon's electricity demand would increase approximately 40% and that is really much more growth than our state is used to seeing.
JB: (13:35):
So how are we thinking about it? I think it's evolving every day and it depends on who you ask, but in 2025, Oregon legislators passed something called the Power Act and this created a new classification for large energy users using more than 20 megawatts within the PUC rate structure and it requires those large energy users to pay for their share of electricity use and costs. So, their impact on the system, they're covering it and it's not going to be spread to the utilities other customers. And that only applies to investor-owned utilities. So, we also have a lot of consumer-owned utilities in the state, especially in the rural areas actually where a lot of these data centers are locating and they're taking a variety of different approaches. So, for example, in the Umatilla Basin, there's a co-op there that has seen a huge increase in data centers over the past decade and has had some luck in leveraging the financial investments at those data centers to make necessary infrastructure upgrades.
JB: (14:41):
And the utility actually argues that that investment has protected its traditional members from rate increases. So there are definitely some folks in Oregon who see data centers as an opportunity, but I would say there's a lot of people who are very nervous about the impacts and one thing that our governor did earlier this year is create a data center advisory committee, group of smart folks that she's tasked with looking at energy, water, land use, economic development impacts of data centers and they'll be putting together recommendations going to her this end of this summer or early fall. So, we're anxiously awaiting what the data center advisory committee will say, and Oregon Department of Energy has been providing some technical assistance and helping them think through the energy impacts.
ES: (15:37):
Well, I can't imagine the tension over these data centers is going to dissipate soon, so it'll be interesting to see how that develops. And I didn't realize Oregon was quite that popular location for data centers and that projected 40% increase in power demand over that period is also kind of breathtaking. As we wrap up here, you mentioned earlier Oregon having an aim of 100% clean energy. I think that's within the next 15 years if I'm not mistaken. I wonder to what extent those efforts to meet this goal are going to affect utility rates and how's the state balancing this decarbonization with the ratepayer or the affordability issue that we're talking about?
JB: (16:16):
Well, to your first question about the Oregon Public Utility Commission, that may be a question you want to ask to our friends there since they track rates more closely and they have oversight over the utilities that are subject to that target. So, in Oregon, that target applies to investor-owned utilities and electricity service suppliers not to consumer utilities, which means it applies to most of the electricity producers in the state. But I can tell you that when we looked at this issue for the biennial energy report back in 2024, we found that clean energy targets were not a driver of utility rates. It really was those three factors that I mentioned earlier. We have an aging system that we need to make investments in in order to keep electricity rates reliable. Making those investments is going to happen anyway regardless of whether we're going to do it with 100% clean electricity or not.
JB: (17:14):
So, I think the costs are going to be there and it's really hard to separate what are going to be the costs associated with meeting the needs in a particular way. We've also continued to see that clean energy, particularly wind and solar, are the least expensive resources in Oregon. These are the types of resources that are coming before the Energy Facility Siding Council, which is part of the Oregon Department of Energy and issues site certificates for large-scale energy facilities in the state. So, I would say it's less about the clean piece and more about the need to meet new load growth and maintain reliability and that's what would affect ratepayer affordability, but hard to say what's going to happen in the future.
ES: (18:03):
Well, I certainly read a great deal about the amount of money that needs to go into the grid, not just for resilience, but also increasing the ability of the infrastructure to handle energy from different sources coming onto it. And it does sound like the cost of maintaining and improving infrastructure is going to be a big factor going forward and probably an area that most consumers don't even think about. Thank you so much, Janine. Anything else you want to share with people before we wrap this up?
JB: (18:29):
Just to your point about consumers not being aware of those costs, I think that's going back to the Oregon Department of Energy's mission is really helping them understand that there's been study after study showing the need to make investments in transmission and distribution infrastructure as well as generation resources. In the energy strategy, we found that we can have affordable, reliable, clean energy through five pathways, which is energy efficiency. Let's reduce the amount of energy we need to generate and transmit to consumers through clean electricity, found that we definitely need to deploy more clean electricity. Electrification is a third pathway that's a decarbonization strategy, but also an efficiency strategy because electric technologies are usually way more efficient than others. Low carbon fuels for the places that are hard to electrify and then resilience being the fifth pathway is something we need to incorporate in this changing climate of ours with increased extreme weather and wildfires we need to incorporate resilience into everything we do and that of course has a cost.
ES: (19:43):
Janine, thanks so much for taking the time to share what's going on up there in Oregon, and I'm sure it'll be interesting and useful to people in other parts of the country. Take care.
JB: (19:53):
My pleasure. Thank you.
Speaker 4 (20:01):
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ES: (21:20):
Representative Williams, thanks for coming on the podcast. Great to have you.
CW: (21:24):
Ed, I really appreciate this. This is one of my passion projects and I delighted at getting an invitation to your podcast.
ES: (21:33):
Why don't we start, tell us a little bit about your time in the Pennsylvania House and your policy priorities, particularly as they relate to energy, the topic we're discussing today.
CW: (21:43):
I actually ran for Congress in 2008. I left the Department of Justice where I was a federal prosecutor and in the context of that 2008 campaign made American energy to the centerpiece of that campaign. You may recall that that was the first time gasoline prices were more than $4 a gallon. I was running against a retired admiral. I'm a retired Marine Corps colonel and our fights about the war in Iraq were just getting nowhere. Nobody wanted to hear an argument between an admiral and a Marine Colonel. So, I pivoted to energy and led a delegation to the North Slope of Alaska. I'm originally from Alaska to teach them about exploration of our natural resources. And before you know it, that launched a new career in energy law. And so, I spent the next, I don't know, 10 or 12 years both on the generation side making electricity and on the distribution side, bringing it to people's homes.
CW: (22:36):
Did a lot of the largest litigation for my utility as it relates to rate making, default service, the deployment of smart meters, the whole nine yards. In 2000, I was elected, I'm sorry, 2020, I was elected to the Pennsylvania House appointed almost immediately to the National Conference of State Legislature's Energy Supply Task Force. In fact, I just got back from a meeting this last Thursday and Friday in New Orleans and we've been working for quite a while on a number of issues, one of which is how are we going to address resource adequacy and the impending large demand that was about to hit our system. The funny thing about it, Ed, is I don't think anybody believed this for about three years that it was coming. And then sure enough, as if it were literally overnight, the AI technology starts to take off, the demand for data takes off.
CW: (23:28):
And as you know from doing these podcasts, the demand for the electricity to support it takes off. Well, what we haven't done over the last 10, 20 years is build out generation to be ready for this moment. And I'm not sure that we could have forecasted it, but our demand on electricity has been relatively flat over the last 25 years. I just saw this graph at our ESTF conference in New Orleans, and it bears true. For a quarter of a century, our demand has been relatively flat, which means nobody had any economic incentive to build new electricity. And as a consequence of these data centers now coming online and their projected use going through the roof, our version of futures market and power is the capacity market and those prices absolutely exploded and there's not a constituent in my district or a resident across the Commonwealth of Pennsylvania that isn't suffering the impact of those high prices.
CW: (24:26):
So, to answer your question now directly, you said, "What are my legislative priorities?" It's to get power prices down and I have done it with the most unique bill in the Pennsylvania General Assembly, which is called the Pennsylvania Electricity Ratepayer Protection Act. And I'm happy to get into that in a moment.
ES: (24:45):
Oh, well, we certainly want to get into that, and I could not agree with you more that this was something I think for most of us who are not particularly aware of this, this huge spike, this huge change really surprised people. From a lot of podcasts, I've done, the data centers, the amount of demand, a lot of it has to do with what we as citizens are doing. You watch a football game, it's in the cloud. You do a bank transaction, it's in the cloud.
CW: (25:10):
Oh, Ed, if I can jump in on that, because one of the moments that gives me the biggest chuckle in my daily legislative life is when a member of my community will go on Facebook on a post about energy and post the comment, "No data centers." And I'm like, "Well, there's a little irony in that, isn't there? You're on a meta platform, perhaps one of the biggest data consumers in the world right now on my Facebook page on your phone commenting, no data centers." We'll get into the particulars. And I know why people are opposed to data centers and in my district, I would absolutely rise up and fight against the data center being here. I'm in one of the historic areas of the Commonwealth where the Battle of the Brandywine was not far from where we signed the Declaration of Independence. We don't have the space for that here, nor the desire for it, but I get the pushback and yet we're all-consuming vast amounts of data every day, if not from the constant queries of AI, even if it's just making AI create new images for our Christmas post, right?
ES: (26:20):
Let's go to the role of the legislature around energy affordability and you're just talking about legislation. What are the levers that the Pennsylvania General Assembly can pull here to try to address this issue?
CW: (26:34):
That's a great question. So let me talk very briefly about arguably three levers. Okay. One is legislation and I'm going to come back to that one at the end. The first is a starting point, which is the PJM governors in our area, all 13 of them and the U.S. Department of Energy and the U.S. Department of Interior signed what's called the PJM Statement of Principles because they knew that they needed to get their arms around the fact that the capacity auction in the last three years has absolutely exploded. And as I explained a little bit ago, the reason it exploded is because the utilities are required to forecast their anticipated load for the next auction period and they forecasted AI and data centers in there and therefore the anticipated demand went through the roof. All of the governors signed those statement of principles which had things like data centers need to pay for their own power, they need to pay for their own infrastructure, but none of it has the force of law.
CW: (27:33):
The last element was each one of the governors is required to go back to their home states and execute on these agreements. So far in Pennsylvania, we've done nothing to effectuate that. The second is the president of the United States and I believe it was seven or 13, I mixed them in the two subject matters, but I think it's seven of the largest data companies in the country executed what's called the Ratepayer Protection Pledge whereby they, the data companies, agreed they would bring or buy or build their own generation, their own electricity and pay for their infrastructure costs. But again, the president and those companies signed it by way of a proclamation or pledge that doesn't have the force of law. So here we are with two agreements, one signed by my governor, the other one signed by my president who have signed basic ideas that don't have the force of law in Pennsylvania.
CW: (28:29):
So, I offered a bill that captured both of those principles, bring your own generation, pay for your own infrastructure into the only bill of its kind in Pennsylvania to make that the requirement of our state. At the end of the day, the 13, and I'm talking about PJM because it's what I know in my area, but your system is operating the same way where each state has to decide for itself what its energy policy is going to be in the context of a larger RTO. At the end of the day, the No. 1 electricity exporting state in the country, Pennsylvania, is within three years of being upside down or short on power like every one of our neighbors because sooner or later, data centers will be built out in PJM somewhere in PJM and as long as we're all connected to the same grid, they're going to be using Pennsylvania power no matter where the data center is built.
CW: (29:22):
It could be built in Ohio, it could be built in Virginia, take it to the Chesapeake Bay for all I care with Maryland, but you're going to be using Pennsylvania power. So, the only answer is build it and make the data centers pay for it.
ES: (29:37):
Let me ask you a little bit about collaboration with the Public Utility Commission. And I think this is an issue for legislators around the country. You've got a lot of experience in this. How would you advise your colleagues around the country to interact with their PUC?
CW: (29:55):
That's a great question and one that we've actually been addressing. So, in addition to being on the Energy Supply Task Force of NCSL, I also sit on the executive committee of the National Council of Electricity Policy and that's a DOE and NARUC function. There are many more regulators in the room for those meetings than there are elected officials. In fact, I think at the last meeting I was the only legislator in the room. We spend a lot of time talking about whether or not the commissions can just simply pass tariffs that would require these things that I believe have to come as a function of law. There's some regulators in other states that believe that with the right tariff, the right large load tariff, that they can force costs back into the class data centers or create a new class. I'm an administrative law lawyer by training and trade.
CW: (30:48):
I will tell you that the number one attack on a regulation is that it doesn't have enabling legislation. At the end of the day, I do firmly believe that notwithstanding us having a very, very engaged and talented public utility commission, they need a law from us before they're going to have the authority to act. I think it's also the clearest, least litigious path is providing them a law. The problem that we don't want, Ed, is for our PUC to pass a large load tariff, which I don't think they have the authority to do right now and then have that litigated in the Commonwealth Court and the Pennsylvania Supreme Court for the next three years while ratepayers are paying exorbitant prices. Pass a law. And here's the beauty. If you pass a law that says data centers must build their own generation, data centers must pay for their own distribution and transmission upgrades to site and power their data centers.
CW: (31:48):
You remove that from the calculation of anticipated load needs. You're removing it from the market calculation. And if that's true, we return to old prices overnight. Overnight. And because as soon as Pennsylvania passes it, the other 12 states in the PJM territory are going to pass a similar law. And before you know it, we have this entirely separate marketplace for data centers that's not impacting ratepayers, which is entirely the design of my bill. The last piece of my bill, and I will end with this, is to require Pennsylvania utilities to engage in long-term power purchase agreements with Pennsylvania generation. My purpose in that is twofold. One is if it's true, and it is, the data centers are engaging in long-term agreements with Pennsylvania generation for the limited supply today. I want ratepayers entering that marketplace immediately. In other words, I want us competing for those same prices.
CW: (32:49):
Now, I saw some market analysts criticize my ideas saying, "You're going to lock in high prices at the worst moment." And it's like, no, this is a small hedge of a much larger portfolio. I'm not saying all of our power will be consumed by purchased by way of long-term agreements. I'm just saying we are going to participate in that long-term market. That's No. 1. And No. 2, what that means is Pennsylvanians will be the first at the door to buy Pennsylvania power. And as far as I'm concerned, we build a lot of it, we tax it as it goes across the border and we start paying down some of the problems we have just like Alaska did when it started pulling oil out of the ground in its state.
ES: (33:31):
Representative, let me ask you to look into your virtual crystal ball for a second. It sure sounds like power demand is not going to be flat or down in the long term here. So, say in the next decade or so, what do you see as the challenges to try to get a handle on this exactly in the way you've been discussing?
CW: (33:48):
I think that's a very forward-looking astute question and one that I've been struggling with. Here's the problem that you're putting out in an energy and business sense. Let's just set up an example that you and I are able to effectuate the statute that I've offered and it happens. And let's just isolate this to the Commonwealth of Pennsylvania and say that we need to build 10 gigawatts worth of new power and Meta and Microsoft and Google and XAI and Amazon all come in and build that power in our state using our natural gas or nuclear power plants or what have you. And then in 10 years or 15 years, the AI data center industry has found a new way to do it. Like for example, Elon Musk wants nothing to do with on land data centers. He wants them in space. And let's just say that all of that technology finds a new place to dwell and we've built 10 gigawatts of new power.
CW: (34:51):
Now the power market is absolutely flooded. The bottom falls out of energy prices. It becomes the absolute dream world of ratepayers, right? Because now they're paying pennies where they're paying hundreds of dollars and you have a glut of energy. Well, that's when energy companies tend to start economically closing power plants and now, you're dealing with stranded assets. And so that's why I was getting over to this business model. It's like today we have to figure out when that eventuality occurs, and I believe that it will in about whatever the technology cycle is. I tease all the time. I never imagined in my childhood that I would have a computer far more powerful than my Atari in my pocket. Playing missile command is the least impressive thing I can do on my phone right now. So, I can't imagine what the data center world, the data world is going to look like when my children are adults, but I do know that if we get started today, they'll have enough power for it.
CW: (35:50):
And if they have so much residual excess power that they can start thinking about the next idea, that's when the new company is rolling in to take over meta power or Google power and start using it for what I think is going to be a second industrialization boom, that we're going to become the world's leading manufacturers again over China, like we were several times in our country's history. So, I do think that the natural cycle is the demand for data is going to dramatically decrease just like the size of computer chips have and the size of memory modules, but that our ability to build out power so quickly is going to turn into another economic boom of a different quality, different nature.
ES: (36:35):
Oh, that's fascinating. And I think that being even a little older than you are, when I think about my childhood, the notion of having what was sort of a Star Trek type device in my pocket every day is just amazing. And it doesn't seem beyond the realm that we could certainly be exactly where you're saying.
CW: (36:53):
Ed, we could do like six different examples of that, right? Like you and I were tuning into, was it UHF and VHF TV channels with rabbit ears and now we get TV from satellites, right? We get our internet from satellites, right? All of those things were incomprehensible to us 50 years ago and the curve for technology learning is so much steeper. Now it's not flattening off, it's getting steeper and AI is contributing to that. So, I don't know what tomorrow's computing technology is going to be, but I do know that as the population continues to grow as our technology continues to grow, one thing will remain constant over the next 25 years and that is our demand for energy.
ES: (37:37):
As we wind up here, let me ask you, I think it'd be a benefit to your colleagues around the country. Can you talk to them about what other things are in the assembly right now around energy affordability or just other things you might want to share with your colleagues as they are grappling with this, as everyone is around the country
CW: (37:56):
My home utility where I used to work filed a rate case one year after they filed their last rate case and asked for an outrageous return on equity. And so, there's going to be now because of that moment of inattentiveness to ratepayer needs, it's about as politely as I can put it. We're now looking at restrictions on return on equity on ROE. And I think that there are states in the country already who have looked at performance-based rates. We're going to have to start addressing things like that. We need to start addressing the marketplace, the supplier marketplace and consumer protection around that. These are all issues that the core of price increases is the lack of electricity. There can be no doubt of that, but this is also an opportunity to fix a number of things that have been negatively impacting our bills, whether it's nefarious suppliers, getting those code of conducts written in a way that they can't gouge people during winter and summer storms, return on equity, trying to advance technology.
CW: (39:00):
The Pennsylvania House is right now running what I think is an unwise bill in its consequences, but wise in its formation, which is requiring utilities to start buying battery systems. And I'm not a big proponent of forcing the utility to buy technology that's unproven because the ratepayers pay for that, but I am a big proponent of trying to advance fledgling technologies by way of tax incentives. I used to work for a company that had one of the biggest wind companies in the country and the business model was around federal tax subsidies, not around producing electricity. There's a lot of these things that we can tackle. I don't think we should avoid them because it's not the crucial central issue of building more electricity because at the end of the day, every nickel you can save a ratepayer through one of these other programs is magnified when you look at the entire electric system.
ES: (39:59):
Representative, thanks so much for sharing really a fascinating perspective from Pennsylvania. Very, very interesting. I really thank you for walking us through that and I'm sure the listeners will appreciate it. Take care.
CW: (40:12):
Yeah, no, I really enjoyed it and I appreciate you inviting me.
ES: (40:21):
I've been talking to Janine Benner from the Oregon Department of Energy and Representative Craig Williams from Pennsylvania about the challenges of energy affordability. Thanks for listening.
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