The anger and anxiety over electricity in America is palpable. You can see it in packed utility commission hearings, in protests against companies, and in furious reactions on social media.
And you can see it in the polling. Across poll after poll, more people are saying that they can’t afford their bills and they think utilities need to change how they make money. And they are also very cynical about data centers.
So will this be the push utilities need to finally change the way utilities pay for infrastructure?
This week, we dig into three indicators. First: 75% of Americans say their home energy costs have gone up, and a quarter of Americans now consider utility bills unaffordable. Second: 86% of California voters said executive pay should be tied to affordability. And third: 71% of Americans would now oppose a data center being built near their home, a 49-point swing in less than a year.
Julia Hamm, a partner at Ad Hoc Group, joins us to explore how these economic anxieties may shift the electricity economy.
Credits: Co-hosted by Stephen Lacey, Jigar Shah, and Caroline Golin. Produced and edited by Stephen Lacey, Sean Marquand, and Anne Bailey.
Open Circuit is brought to you by FlexGen, a leader in integrated battery energy storage solutions and energy management software. FlexGen helps owners and operators gain greater visibility and control across complex energy systems to maximize performance. Learn more at www.flexgen.com.
Transcript
Stephen Lacey: From Latitude Media, this is Open Circuit. The anger and anxiety over energy in America is palpable. And I’m not talking about gas prices, although people are certainly stressed about those too. I’m talking about electricity, the commodity that most people didn’t think about until recently. You can see it in packed utility commission hearings in protests against companies in the furious reactions on social media and you can see it in the polling.
Across poll after poll, more people are saying that they can’t afford their bills. They think utilities need to change how they make money and how they pay executive salaries and they are of course very cynical about data centers as well. So will this be the push utilities need to finally change some of the things that industry watchers have been calling out for decades? This week, a look at how America’s economic anxieties could shift its electricity economy. That is coming right up.
Stephen Lacey: Welcome to the show. I am Stephen Lacey. I am the executive editor of Latitude Media. Jigar Shah is my co-host. He’s the co-managing partner of Multiplier. He is the co-founder of Deploy Action. He is the co-host of the Energy Empire Podcast. Oh God, that’s a lot of cos, Jigar.
Jigar Shah: I’m doing too many things. I’m doing too many things. But as you remember, there’s a co involved. The work split is always 90% on them and 10%.
Stephen Lacey: Julia Hamm is back with us. She’s a partner with the Ad Hoc Group. She is our guest co-host this week. How are you?
Julia Hamm: I’m doing great. Excited to be back.
Stephen Lacey: Absolutely. And you adjusted a flight to be with us so we are very grateful for that.
Julia Hamm: I did. I’m in DC this week. I actually was at a meeting with Jigar just yesterday in person.
Stephen Lacey: Did you get your arguing out?
Julia Hamm: Well, we were not on stage together. We were on stage at different times.
Jigar Shah: Exactly. And we largely don’t argue. We are what you call colleagues.
Stephen Lacey: All right. I think we’re all familiar with this concept of the vibes-based economy. Over the years, many of the fundamentals of the economy have actually been okay, but people certainly don’t feel like it’s working for them. The vibes have been bad for a long time now and they have spilled over into the energy economy. We have seen a steady drumbeat of polling from all across the spectrum that show people are mad about electricity prices. They are specifically mad about utilities and data centers. And the question that we want to answer is, what is all this frustration and anger going to lead to?
So let’s explore that through a couple polling indicators. And the first indicator is 75%. That’s the number of Americans who set their energy costs have gone up in the last few years. A New York Times/Siena poll showed that a quarter of Americans now consider utility bills flat out unaffordable and they’re on the list with housing, healthcare, and education as some of the top unaffordable things in people’s lives.
And so much polling backs this up more or less. And also the organization that Jigar co-founded, Deploy Action, released a poll recently from California that found two thirds of Californians are very or extremely concerned about household utility costs. So this goes on and on through so many different polls. Affordability is obviously the word of the moment right now. Julia, you were at the Edison Electric Institute’s yearly conference recently. This is a huge theme. Do you think that utilities you’re talking to have internalized the urgency of what Americans are feeling?
Julia Hamm: Absolutely. One thing I’ll point to, if you have any doubt about whether utility executives understand the significance of this issue, all you have to do is look at the increase and the amount of security that utility CEOs have. Most of them travel with bodyguards. Most of them have bodyguards that literally every day escort them from their home to the office and back. They’re not allowed to open their own mail until security has gone through it. You don’t do those things unless you understand how significant the sentiment is of your customers and that things have gotten pretty bad.
Stephen Lacey: Jigar, how is this anger hitting the C-suite of utilities?
Jigar Shah: I mean, I don’t know. They all voted for a 20% increase in their salary last year, so maybe not that much. I think when you think about where they are on rate increases, right? I mean, they’re asking for the highest rates they’ve ever asked for. EEI is bragging about the fact that CapEx is going up 40% compared to what they projected last year. And so I think they’ve missed the entire memo. For them, the memo is we’re going to be able to invest more money and make more money for ourselves personally. And yeah, we can afford bodyguards and people to check our mail, but we’re not actually going to take ownership for the fact that large power, right? If you look at large public power, their rates have been at inflation or below since 2020. And they cover more meters than most investor-owned utilities, right?
Most investor-owned utilities are basically like 800 to 900,000 meters. The large public power entities think like Los Angeles Department of Water and Power or Austin Energy or CPS, they’re basically the same size, right? But their rates are 30 to 40% cheaper and they’re doing a lot of data center load growth. And so it’s like, what’s different between the two models? Like what could possibly explain why one group is charging way more than the other group? And it’s just not something that I think people are self-aware about, but the Pew poll that you talked about was pretty explicit. People knew exactly why their rates were going up and they called it out in the poll.
Julia Hamm: Well, but the poll also does acknowledge that it is also significant investment in the T&D system and those types of investments are also being made by the munis and co-ops. So I think we need to be careful not to sort of paint this with a broad paintbrush, broad strokes, and really look at what is the driving the cost. And yes, certainly there are differences between investor and utilities and the munis and co-ops that have a different business model, but the munis and co-ops are also doing pretty significant investment in the T&D system for all the same reasons that the investor and utilities are.
Jigar Shah: Without the rate increases, right? This is what I’m saying is like I just … The thing that I find frustrating about this moment is investor-owned utilities, the vast majority of their rate increases are coming from distribution investments. They’re not transmission investments. They’ve fully admitted that in all of their documents. But when you ask them and say, “What did you do wrong the last five years?” Why the divergence? They’re not saying, “Oh, here are the three things that we probably should have done differently.” And if we had done them differently, then we probably would have had the same outcomes as the munis and the large public power folks. They’re defensive. They’re like, “We didn’t do anything wrong. It’s just what it costs. Everything’s old and we just have to do stuff.” It’s not like everything isn’t old in San Antonio and Austin or in LA. Everything’s old everywhere, right?
But magically, people who only get paid $700,000 a year have figured out how to protect consumers and people making an average of $20 million a year can.
Stephen Lacey: Well, just to distill this down to its basic element Jigar, are you saying that it’s the pressure to deliver returns to shareholders that’s different about IOUs?
Jigar Shah: Yeah. I mean, Katherine Blunt said this exact thing in her book about PG&E, right? I mean, her analysis was ultimately that all of those CEOs were focused on shareholder returns over affordability for customers, right? That was the driving force. And look, I know a lot of these CEOs because I worked with them for the 1706 loan program. They’re wonderful people. I’m not accusing anybody of anything personally, but I’m saying that the system solves for people who are really, really good at managing their small number of clients, which is their regulator. They are so good at manipulating the regulator and getting stuff through, right? The system does not solve for people who have this dying need to figure out how to reduce rates for everybody that they’re serving.
Julia Hamm: Yeah. Jigar, I appreciate that acknowledgement that the issue is the system, right? And it is the regulators and really thinking about it, the governors and the legislatures, if we really want to change things, that’s where the change is going to have to come from.
Stephen Lacey: How much of this is vibes and how much is this specifically about utilities? We talk about the vibes-based economy, right? People are just really angry in general. How much of this is about people needing someone to be angry about and what utilities are actually doing?
Julia Hamm: It’s probably a little bit of both.
Jigar Shah: Do you want to do that Julia?
Julia Hamm: It’s probably some of both, honestly. But I’ve said this before, I think you’ve even said this before last time I was on the show, but I would love to see us try to change the national narrative to move away from this sort of general concept of affordability and really start talking about low income customers that have high energy burden. And what energy burden is typically defined as is households that spend more than 6% of their gross income every month on home energy bills.
I was looking at, there’s some data from the National Energy Assistance Directors Association from 2025 that low income families typically have an energy burden of about 8.6%, which is triple what the burden is for non-low income households. So for low income households, it’s about 3% of the gross spend is on home energy bills. So I would love to see us because is electricity affordability in national crisis, people that it’s a crisis for are those low income customers with high energy burden.
That’s who this is a crisis for. So we should be focusing on those customers. Yes, we need to focus on data centers and cost allocation, make sure that’s done right, but when we really get down to state level, local level programs, who should we be focusing on making sure this isn’t a disaster for it’s those customers. We need programs and processes and things in place to protect those people.
Jigar Shah: I just don’t think people are that dumb. I mean, I just think that this is not about semantics, right? At some point you’re making $150,000 a year, right? Your total energy burden is 3% of your total bill. Your bill still went up 47% over the last five years. It still sucks.
Julia Hamm: It’s still a lot less than your cell phone bill is.
Jigar Shah: Yeah, but you actually find more value out of your cell phone.
Julia Hamm: But Jigar, come on, give me … If you don’t have electricity, your cell phone doesn’t charge. If you don’t have electricity, you can’t watch TV.
Jigar Shah: Look, people’s telephone bill is four times higher than it was in the 1990s. I get it, right?
Julia Hamm: Is that a crisis?
Jigar Shah: But they believe that they have value from that, whether it’s for watching TikTok videos or whatever it is, right? On the electricity side, people don’t feel like they have value. Every time they want to put a solar or battery storage system in, it’s like another eight week delay. It’s not like the utility companies have figured out how to use AI or any of these solutions to make things easier or faster, right? When it looks like you want to put in an EV charger, they’re like, “Oh, we have to upgrade the pole transformer in front of your house instead of using Span.” Every time you turn around, the electric utility is making your life more difficult and explaining to you what it can’t do for you instead of what it can do for you. That’s not true for the cell phone companies.
Julia Hamm: I don’t disagree with the things that you’ve said, but let’s be honest, most customers are not trying to do those things with their utility and actually aren’t having those experiences. They’re the customers we know and those of us in the industry know that there are customers that are having these issues, but the average customer is unfortunately, right? I wish they were. I wish the average customer was trying to buy an EV and put an EV charger. I wish they were trying to put solar on the roof, a battery in their garage. The average customer isn’t doing that. So the average customer isn’t having those negative experiences in the same way. I’m not trying to defend the utility, but I just want to make sure we’re being real about what the average customer, why they’re feeling the way they’re feeling, right?
Jigar Shah: There’s polling that we are reading from Pew, which is probably one of the most respected pollsters in the country, right? Nonpartisan does not skew their questions and people are very specific about why they think that their rates are going up. Now they may be wrong to be clear. I’m not saying that consumers are all knowing, but they are actually people who believe something and they’re telling a pollster something, right? And then that group is going to turn around and vote for 36 governor’s elections this fall. And so governors are reading the same polling and saying, “What should my official position be in this campaign to make sure that I don’t lose those voters?” And what this polling is saying is every single person, Republican or Democrat better damn well be anti-utility because if you’re not anti-utility, you’re probably going to lose your governor’s race. And so I’m just saying that that has to be a self-awareness moment.
Instead of being defensive, the utility industry needs to look themselves in the mirror and say, even though I provide an extraordinary product and I do such great work, and every time there’s a storm, I am working 24 hours a day, seven days a week to get people back up and running, people don’t perceive the value that I provide, right? They should look themselves in the mirror and say-
Julia Hamm: But it’s a perception issue. It’s not, is there value?
Jigar Shah: I mean, you can say whatever you want to say, but I generally don’t talk down to voters.
Stephen Lacey: Well, yeah, but I mean, I agree. I think you’re both right. I agree with Julia that it is very much a perception issue and I also think it will have consequences and that’s why we haven’t seen anything like this before. I do agree that even if consumers are sort of feeling it based on vibes rather than understanding exactly what is driving up rates or how much rates have gone up, it will have a consequence in this next political cycle. And so that’s why we’re having this conversation. I think it’s unlike anything we’ve ever seen before.
Julia Hamm: Yeah. And it’s super complex, right? It’s not one thing, it’s multiple things. Part of it, Jigar, as you said, there certainly is an element that is the construct that investor-owned utilities work under that is part of the problem, but it’s not the only problem.
Stephen Lacey: Yeah. And I mean, utilities are in a tough spot, right? Let’s go to NV Energy, the utility that people were protesting at the EEI conference. They’ve got this demand charge they want to put in place. I think it’s a case study for how complicated this is. The utility says it will lower bills for most customers. The protestors say it’s air conditioning rationing for low income people in a city that is regularly well over a hundred degrees and they’re both kind of right. So I guess people want creative solutions from utilities. A demand charge is a way for them to shift consumption without necessarily having to build a lot more infrastructure, but people are pissed about it anyway. So what position is the utility in here?
Jigar Shah: Well, remember, NV Energy sits right next to Rocky Mountain Power. Rocky Mountain Power has decided to do this in a completely different way. They have their Wattsmart program where they have systematically deployed batteries in residential homes and they dispatch those batteries up to four times a day instead of natural gas peaker plants. So what NV Energy has said is we are going to give you a demand charge, which you neither understand nor want to change your lifestyle around. And what Rocky Mountain Power has said is we’re going to actually give you new technology, give you access to new technology. And by the way, their program is one of the least lucrative programs in the entire country, right? Mary Powell hates it from Sunrun famously because it’s not very lucrative, but it is what it is. Rocky Mountain Power said, “Here’s what we think a battery’s worth. If you want a battery and you want us to control that battery, we’ll give you a discount on your bill.”
Julia Hamm: So Jigar, why do you think it is? So Rocky Mountain Power is also an investor-owned utility. So I’m curious to get your take on why do you think it is that Rocky Mountain Power has taken that path as an IOU when next door and NV Energy hasn’t? Do you think there’s something structurally that’s different for them?
Jigar Shah: No, there’s an extraordinary guy in Salt Lake City who’s made it his mission in life, even though he has a windowless office in the basement of his building to actually do this VPP program and he just hasn’t let it go. You know this, this is the same story in Commonwealth Edison or in BG&E’s territory where Divesh Gupta has done the same thing. There’s generally a champion in that particular utility who’s like, “I think this is a great idea.” The CEO’s like, “I don’t really care, whatever. If you want to do this, go do it as long as you can prove it to regulators, we’re happy to do it.” And then when you ask people like, “Well, when does this roll out nationwide?” EEI is like, “We haven’t had competent leadership since Tom Coon left. We don’t know how to do this stuff. How do we actually share best practices? Does it get done through EPRI?” I don’t know.
Look, I’m a big fan of each and every person that’s there, but in my experience, every utility is a snowflake. The notion that they actually share best practices on this stuff is really ridiculous and it takes a long time to change. Look at Arizona Public Service who famously has been anti-solar in one of the best solar states in the country for like 20 years. They only just changed maybe in the last four or five years to being somewhat solar friendly.
Stephen Lacey: Well, let’s dig deeper into how people feel about utilities. So our second indicator is 64% that is from the Pew poll I mentioned earlier. Of the people who said their costs have gone up, they blamed utilities for wanting to make more money. The other poll from your organization, Jigar, Deploy Action found that 83% of California voters think investor-owned utility profits are too high. They said greed and profit seeking were the top reasons for higher costs. 86% of those California voters support tying utility executive pay to bill affordability. 86% want utilities to prove they’re efficiently using existing grid infrastructure before being allowed to build more and pass costs onto customers and that number is identical to a separate Embold Compass poll. Jigar, what do these results tell you?
Jigar Shah: Well, the other thing that’s in that poll, which I think is important is that the investor owned utilities in California are net 41 negative and the public power institutions in California are 22 points positive. So people don’t universally hate electric utility companies. They just really hate their investor owned utility companies. So I just think that one of the things that I just think that we all need to grapple with is that the way in which these entities are private but provide a public good because they’re a monopoly, right? It’s not like you can choose to go elsewhere, right? You can choose to invest in energy efficiency or solar and battery storage, but you can’t choose to go elsewhere I think is what’s causing the level of specificity in the polling results. I think people realize that this is sort of a group of private sector companies that have captive customers.
Julia Hamm: Yeah. Stephen, listen, I agree with Jigar that we have this core problem of this build more, earn more incentive, right? Which is what’s happening with the investor and utilities. And we need to start thinking about grid utilization. We should be thinking about how to get more out of the existing system before we jump immediately to building new things. We also need to be thinking about local resources that should be allowed to compete with the previous historic ways of doing things. And as Jigar said, with Rocky Mountain Power as an example, there are investor and utilities that are beginning to do things, but this is the age old dialogue Jigar and I have. There are those who are leading by example and beginning to do the right things, but we do need to accelerate the pace of that change and we’re also starting to see now on the policy side of things, this idea of utilization come into the picture.
So we’ve got this legislation in Virginia that’s focused on grid utilization. The investor and utilities there are going to be required to provide very specific and detailed data to their regulators about grid utilization and proposed programs that are going to help increase that utilization.
Stephen Lacey: Yeah. Let’s talk about the utilization piece from a couple different angles. One I think is just like, will this create the momentum needed for wholesale change and how utilities think about utilization? The other is just a reaction to the polling and I want to get your thoughts on that Jigar. So I don’t know if that one surprised me, like the support for it. I feel like it’s one of those common sense questions that people would support anyway. At any other time, I think you could set up the question, would you rather the utility use more of what it has or build more and pass on those costs? So does that polling feel unique to you? It feels like anyone would support that.
Jigar Shah: Oh no. No, I think it’s motherhood and apple pie, but I think that the part that it’s paired with is all of these revelations that we’re getting in the press, right? The fact that GridCARE just magically found 650 megawatts of unused capacity in National Grid’s territory in New York that they’re embarrassed that was there and now they’re like aggressively scheduling it with Google and other people, right? Or Portland General Electric magically found 450 megawatts with GridCARE and Grid Astra is doing the same thing now with 12 utilities and Think Lab is doing the same thing with six utilities. They’re like, why is it that you run a utility in a moment where we’re in a race against China and you have trapped data within three silos that requires a third party firm to unlock where your large loads are going to go. What are we doing around here?
Like you have one job, right? We gave you a monopoly license so that you can promote the economic development within that territory, right? Part of doing that is to know where you can site data centers. Why is it that you need some company over here to do that and why is it not already done for the whole damn country?
Julia Hamm: I mean, is it realistic to expect … I mean, we’ve talked for years about the importance of utilities partnering with technology companies. So is it realistic to expect that utilities have the capability and the internal resources to do all of those things? I agree. It’s unfortunate that they weren’t aware that they have this capacity sitting there available, but thank goodness GridCARE now exists as a partner to them to be able to do that.
Jigar Shah: So then let’s make a prediction, right? How long do you think it’ll take for the 168 utility companies that are investor owned across the country to sign up with one of these services? Do you think all of them will sign up by the end of this year?
Julia Hamm: No, things don’t happen that fast.
Jigar Shah: I mean, but that’s a huge problem. In a moment where we are in a crisis, how is it that we’re not hiring one of these companies? I’m not telling you which one there’s six of them or more, right? Just to say, here’s where you should actually put data centers, as opposed to where Mr. Wonderful wants to put it in the middle of Utah, right? All these people are like, “Well, my grandfather gave me this land it’s worthless, now I can sell it for a million dollars an acre.” Instead, why wouldn’t you have the utility company say, “Here is where you can place the data centers that would be most advantageous to all the rate payers and the utilization of the grid as a whole.” I would rather that.
Stephen Lacey: What’s the case to investors for utilization, right? Investors want to see utilities build more, earn a rate of return, right? There’s that pressure. What’s the case for the investors of IOUs that grid utilization is actually better for the long-term health of the utility?
Jigar Shah: Well, I mean, this is one of the big challenges I have with the model altogether, which is that if I can prove that no matter how much utilization we do, that the 2003 prediction of how much CapEx we were going to spend as a utility for the next five years would never be broken, that we would never go below that number. Would you be satisfied as an investor? You’re like, no, but they made a promise to spend double that number in 2026. And so I would like to double the number, please, with two scoops of ice cream. And I was like, but in 2023, it was like a perfectly good number. You were still buying their stock. The earnings per share growth was still there. And so part of my problem here is that we treat investors, which I actually don’t think that they are truly this way.
I think they actually don’t care. But we treat investors as though they have an insatiable appetite for earnings when I don’t think that’s actually true. I think as long as they see earnings growth of X percent a year, I think they’re probably fine.
Julia Hamm: Well, and I also think it is challenging for publicly traded IOUs when they’re looking at quarterly earnings. It’s harder to think about the longer term. But it is also interesting, I think, to take a look at as an example, I’m on the board of Puget Sound Energy. It is an investor owned utility, but it’s not publicly traded. There are six shareholders. Those shareholders, because we’re not focused on quarterly earnings, can think about things from a much sort of longer term time horizon. And I will tell you, we talk about it every board meeting. Eventually affordability will break the system and that is what will not be good for the shareholders and the shareholders know that. So we talk in every board meeting, every decision we make about what is the impact of this decision on rates and what does that mean and how do we manage that?
So we have to be thinking about it. We have to find ways as an industry, all investor and utilities, whether they’re privately owned or publicly traded, to think about things. The affordability issue in the long run is not good for shareholders. We have to find ways to make sure that electricity remains affordable for customers. It’s going to break the system if it’s not.
Stephen Lacey: Where do you think medium or long-term this wave of populism will have the greatest impact on the way utilities are run?
Jigar Shah: Well, I mean, I think first of all, I think you’re seeing a crash course for all 36 governors, right? Republicans and Democrats, whoever wins the primary, they are suddenly getting briefings from their staff every day going, “Hey, the stuff that you ignored for 40 years, let’s give you a briefing on how it works and who you should actually pick as regulators and how this thing might affect you in the future and how it affects your economic development goals and how it affects all these other things.” And so I think the fact that governors who have largely been checked out for 40 years are now checking themselves back in and saying, “We want to actually understand how this works,” I think is a big deal. I think the second thing is that I think Google I think has been leading in a big way. I think most of the other hyperscalers are doing some good things here and some good things there, but I think you’re starting to see a huge amount of focus from the other hyperscalers to say, “Hey, maybe this isn’t something we can just paper over with another $20 million to the church or $10 million to the hospital or $5 million to whatever. We’re going to have to actually be more present for how the utilities are solving this problem.”
And ground zero for that is North Carolina. When you look at what’s happening in North Carolina, I am shocked what’s happening there. Duke is deliberately saying they don’t want to do anything that saves consumers money. They want to just buy combined cycle gas turbines and it’s going to be a 15% rate increase for everybody and everybody is coming out of the woodwork saying, “But if we put batteries at the 7,200 megawatts of existing solar systems that already have interconnections, if we do this, if we do that.” And Duke is saying, “Nope, we don’t want to do any of it. We don’t want this, we don’t want that.” And then we’ll see where the regulators come out, the legislators come out, the governor. It is ground zero in North Carolina and it is shocking to me because North Carolina should be a place where a lot of data centers want to go, but all this uncertainty is leaving data center companies looking elsewhere.
Stephen Lacey: Yeah. Julia, what do you think? Where are the pressure points that could bring the most change? Is it going to be among regulators? Is it going to be people in the C-suite saying, “Hey, maybe we should give those cute VPPs a try.”
Julia Hamm: Oh gosh, I think it has to be all of it. I don’t know that it’s going to be a single pressure point. It’s going to have to be a combination, again, all the way from the governors to the legislators to the regulators to the utility C-suite and all of the parties around them, the hyperscalers and all of the technology companies that are sort of intersecting between the utilities and the hyperscalers. I don’t know. I don’t know that I can point to one thing that everybody should be watching.
Stephen Lacey: Well, we do know they have bodyguards though. At least they’re safe. We can’t talk about this anger and rage without talking about data centers, of course. And that brings us to indicator number three, 71%. That is the percentage of Americans who now say they would oppose a data center near their home according to a poll commissioned by Heatmap. That is a 49 point change in nine months. We’ve seen the backlash gather steam over the last year. We’ve of course covered it here, but the bipartisan support for full on moratoriums is shocking. And we’re now seeing people like Steve Bannon and Bernie Sanders pushing hard to stop new data centers and New York became the first state to pass a moratorium recently. So where is all this headed? How does it intersect with utilities? Julia, just your initial reaction, does that rise in the support for a moratorium surprise you?
Julia Hamm: It doesn’t surprise me, but I think it’s an emotional reaction that people are having. And I guess what I don’t understand enough is what’s the primary driver between people saying that they want a moratorium, right? Is it just the general NIMBYism of you don’t want anything in your backyard, right? You’re going to oppose a wind farm, a solar plant, a data center. Is it related to your concerns or is it related directly to your concerns over the impact that a data center is going to have on your utility bills? Because if it is that latter part, the moratorium, it’s just an emotional response. It’s actually not a policy fix or a policy answer. It’s not going to lower bills. And if anything, it’s just going to export the build out to states or other communities where the community isn’t able to stop it from happening. So it’s just pushing the problem to somewhere else.
Stephen Lacey: Yeah. I think it’s a very bad policy idea. I mean, rather than spinning our wheels on stopping data centers, we should be trying to leverage utility commissions to force utilities to do this in a way that doesn’t pass on costs. We should be focusing on permitting reform. We should be focusing on all these really important policy levers that, yeah, sure a lot of people are focused on, but this is a huge distraction in my mind.
Julia Hamm: Yeah. It’s interesting. So Stephen, I’ll just mention, I mentioned earlier that Jigar and I were here in DC at an event together yesterday and one of the other speakers was Jim Robb, who’s the CEO of NERC and he was talking about how the grid initially was built out on the backs during the industrial revolution on the backs of manufacturers and his perspective was that this next massive build out of the grid should be on the backs of the hyperscalers whose balance sheet in many cases are bigger than a lot of countries.
Stephen Lacey: For sure.
Julia Hamm: Right. So I think that’s a really important point and there are ways in which the economic driver that data centers can provide for communities, not only helping to pay for the grid, but the grid build out, which brings better resilience and reliability for all customers ultimately have done right. I just totally lost my train of thought.
Stephen Lacey: Yeah, no, I mean, it’s a great point. I think there’s a whole conversation about like how the hyperscaler should support this and we’ve really tried to dig in there. Jigar, we made an earlier parallel to fracking, right? We saw this wave of uproar and bans, threats of bans and then fracking of course became mainstream and I think we got really distracted along the way and now look where we are with energy and climate policy. Do you think we’re on a similar pathway?
Jigar Shah: Yeah. I think if you look at the data from Heatmap more carefully, the moratorium tests while in isolation, but it doesn’t actually reveal that voters are anti-data center. I think they’re anti getting stuck with the bill. And so when you pair up the moratorium against a menu of options like forcing grid utilization, making data centers pay their fair share, promoting distributed energy, then the moratorium option actually falls to the bottom of the list. So I think that like what voters are saying here is that they don’t feel like folks are listening to them and actually like doing permitting reform or doing these other things that would allow them to get lower bills. And so until that gets fixed, they’d rather just ban it all. They’d rather just have a moratorium point.
Julia Hamm: Do you think customers understand, but getting back to your point about like what the average customer is feeling and what they’re reacting to, they don’t know about permitting reform, right? I don’t know that they’re connecting the dots on those types of policy issues.
Jigar Shah: Well, but the Heatmap polling shows that they do.
Stephen Lacey: I think it’s the Third Way polling, right?
Jigar Shah: Sorry, the Third Way polling shows that they do, right? So like what they’re saying is, is that would you want a moratorium in isolation everyone’s saying yes. But then they’re saying, “Well, would you want a moratorium or would you want to force the utility to use the grid more efficiently or this or that?” They picked the moratorium last, right? That’s all I’m saying. And so I don’t think they’re anti-data centers because they think it causes cancer. I think they’re anti-data centers because they’re saying right now because you’re not doing these other things, this is going to lead to a higher bill for me. And so until you figure that out, I’d rather not have a data center.
Stephen Lacey: I think that’s exactly right and that’s one of the things that stuck out to me. If you ask them about the data center in isolation, they’re by far more likely to be against it. But the Third Way did a poll in March that set it up against this menu of options, like you said, building more renewables, modernizing the grid, limiting utility profits and it fell from number one down to 15 of 17 options. So this is like an opportunity for me that we can actually use this energy to lean into something positive, right? I mean, that was what I took from that, that it’s not just that people are anti-data centers, that they want some kind of solution and there’s plenty of other solutions besides just banning data centers.
Julia Hamm: Yeah. Well, Stephen, I also think it’s interesting to pull in sort of the technology innovation side of things to this and thinking about, I mean, it’s very early days, but we’re starting to see companies beginning to pop up and experiment with compute at homes, essentially really micro distributed compute power rather than … I shouldn’t say rather than, because they’re not going to replace the need for big data centers, but it can help reduce it to some degree, right? If you look at a company like Span, they have a partnership now with NVIDIA and Pulte where they’re putting basically mini data centers on residents.
Again, super early, they’re just beginning sort of their first community build out on that, but that it benefits the data center companies or those who need the compute power because it gives them immediate flexible capacity without the multi-year lead times of building out a big data center. It benefits the homeowners because they get a smart electrical panel, they get battery backup, they have an option for solar and they can get fixed discounted rates for their electricity and internet by participating in this type of program and it helps the utilities because they can better manage their peak demand and defer CapEx expenses by again, optimizing existing underutilized grid infrastructure. So it really is a win, win, win if this sort of model could play out. Again, it’s not going to displace the need for big data centers, but I think it could be a really interesting tool in the toolkit if we could see more of this type of thing playing out across the country.
Stephen Lacey: Absolutely. Yeah. We had a brief conversation about that at the end of last week’s episode. I think we were all pretty supportive of it. I mean, I don’t know if that particular idea is going to work, but like in theory, this is the kind of solution that we need to be exploring and you need to get closer to the customer and give them a stake and a reason to support it. I’m just really struck by how that conversation is lacking in tech circles. I mean, like my algorithm now on X is so finely tuned to the data center conversation and like you’ve got-
Jigar Shah: It’s all Shanu, all the time.
Stephen Lacey: Yeah, all Shanu. He’s great, by the way. But like if you look at what people are sort of saying in the traditional Silicon Valley tech industry and what people over here in the distributed clean energy world are saying, they’re still pretty distant and a lot of people in the clean energy industry have coming up with some really great ideas to get these solutions closer to customers, give them a stake in the energy portion of it. I don’t see a lot of people talking in sort of Silicon Valley circles about these kinds of solutions and I think that gap needs to close. Jigar, what do you think?
Jigar Shah: Well, I mean, I think that this goes back to what I was saying before about the electric utility industry, right? Which is that while I’d love for this stuff to be discussed in Silicon Valley and I think it is, right? I mean Andreessen Horowitz and others are investing in some of these companies. I’m going to that reindustrialized conference June 16th and 17th in Detroit that talks about this with builders, but the one group that’s not investing in this conversation are utilities, right? So when you say like you have 168 investor owned utilities, how many of them have mandatory training for all of their relevant staff members on a DERMS platform and have a plan to put a DERMS platform in place over the next two years? How many of them have mandatory training on grid enhancing technologies and advanced conductors and have a plan to put them in place at scale over the next two years, right?
So when you think about who actually is not investing in education, who is not investing in like really getting up to speed so that this can happen in a very fast way when it’s all aligned. I love Jim, but part of what I was talking to him about yesterday at the Gridiron piece is like, do you actually think that if the hyperscalers offered to pay for this entire upgrade that the utilities would say yes. And he’s like, no, of course they wouldn’t say yes. And in fact, they’ve been blocking the hyperscaler’s ability to pay for this stuff every day because they want to rate base it. They don’t want Google to pay for it or someone else to pay for it, right? They want to be able to rate base it and get FERC regulated returns. And so then there’s this fight where the hyperscalers are offering to pay for it for free in exchange for speed to power and the utility companies are like, “Wait, that’s not part of our business model.”
Stephen Lacey: Do you guys think we’re at the start of a longer radical period of backlash and change or is the anger peaking?
Jigar Shah: This is most certainly going to be the start of a 10 year fight with the electric utility companies. I don’t think the utility companies are even close to being prepared for what’s coming. My sense is the environmental groups broadly have nothing to work on and I think you will see that this is what they decide to work on. Instead of shutting down coal plants, every one of them is going to have an entire business around regulatory reform is probably what they’re going to call it. And my sense is this is the 10 year effort because now they’ve got Steve Bannon on their side.
Stephen Lacey: Yeah. And one point I’ve heard you make Jigar is that like the utilities are getting all this backlash because they’re seen as enablers and not protectors of rate payers. They’re enablers of the data center boom and instead of protecting rate payers from the costs say more.
Jigar Shah: Exactly. I mean, they’re stuck in the middle, right? Because they’re supposed to be pro-economic development. So they’re seen as enabling data center load growth that benefits shareholders and the tech companies, right? Both of whom are sort of like the asset owners, right, part of the 1%. And so the story sort of connects them to the villains, whereas like if you look at average rate payers, they don’t believe that their electric utility companies are protecting them against the data centers and the tech companies taking advantage of them.
Julia Hamm: Yeah. And on that note, I think we really need to begin to see more binding contracts between utilities and the hyperscalers and data centers that do protect the customers because right now, I want to give credit where credit’s due, but there’s a lot of headline sort of commitments from the data center community that at this point really are voluntary and they’re only as strong as their enforcement and their actual follow through on those voluntary commitments. So we really do need to get to a point where these are binding contracts, customers, regulators, policymakers can all have confidence that this data center build out is ultimately going to help drive down rates as opposed to drive them up further.
Stephen Lacey: Indeed. Well, vibes are strong here. Julia Hamm is our regular contributor. She’s a partner with the Ad Hoc Group. Really good to see you, Julia.
Julia Hamm: Yeah. Thanks again. It’s always fun.
Stephen Lacey: Jigar, this was fun. Where can people find the Deploy Action polling that we were talking about?
Jigar Shah: All of the Embold Research polling is on deployaction.org and welcome anybody’s feedback. I think this is a fast moving story and I think a lot of what folks are trying to do in this moment is figure out how to stay ahead of where this is going, right? Because I do think we’re going to gear up this summer with 36 governors races and I don’t think that all the governors are getting good advice around how to help land this in the best place for ratepayers.
Julia Hamm: And actually on that point, Stephen, on governors, I’ll just note that our CEO, Jim Kapsis and one of our team members, Max Davidson, just wrote a great article about the Virginia governor and sort of the complexities of the Virginia situation that’s really, I think, worth a read for those who want to learn more. And it’s part of our just newsletter, which is a monthly newsletter actually that Latitude Media helps us with. But if anybody wants to take a look at that article, it’s on the Ad Hoc Group website.
Stephen Lacey: Cool. Yeah. And you can subscribe to The Gist, subscribe to Latitude Media’s newsletters. You’ll be covering a lot of what’s happening in the industry and of course all the storylines that we’ve been talking about here today we’re going to continue to cover over the summer as things really heat up. Please subscribe to this show on YouTube. We’ve got our channel Latitude Media there. You can subscribe to see episodes of Open Circuit and Catalyst. Open Circuit is produced by me, Sean Marquand and Anne Bailey. The audio version is anywhere you get podcasts and if you want to see this show grow and you like it, subscribe to us on YouTube. Thank you so much for being here as always. We’ll catch you next week.
