Energy is at the center of one of the biggest political swings in a generation.
Two years ago, Trump rode into Washington with a powerful MAGA coalition. He promised, among many things, to dismantle woke energy and cut utility bills in half. But the midterm elections cracked that coalition wide open.
Democrats flipped the House and Senate by historic margins, won governor’s races in Texas, Ohio, and Georgia, and made inroads at public utility commissions.
Trump’s “energy dominance” strategy did not move voters who feel angry and restless about spiraling energy costs, an unpopular war, massive data centers, and erratic trade policy. And now Democrats have more control over energy infrastructure decisions in the years ahead.
This week, Jane Flegal of the Searchlight Institute joins us to tackle some of the biggest storylines in the aftermath: data centers, utility political power, state policy, and the next set of fights in Washington.
We’ll start in Texas and Ohio, where data centers played an outsized role in the election. What happens to the market when the two most important states for AI infrastructure pull back?
Then we dig into the impacts on utilities. Democrats won a majority on Georgia’s Public Service Commission, Michigan voters banned utility political spending, and key states for load growth are now under full Democratic control. How can utilities earn back trust?
Finally, we’ll look ahead to the permitting bill headed for a Senate vote. Will Democrats support the bill, or find a way to delay it until they regain power in Congress?
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Transcript
Stephen Lacey: Energy is at the center of one of the biggest political swings in a generation. Two years ago, Trump rode into Washington with a powerful MAGA coalition, promising, among many things, to dismantle woke energy and cut utility bills in half. But the midterm elections cracked that coalition wide open. Democrats flipped the House and Senate by historic margins and won governor’s races in Texas, Ohio, and Georgia. And the core of Trump’s energy dominance strategy — a proud reliance on fossil fuels, a return to coal-fired power, and gigawatt-scale computers powered by muscular gas turbines — did nothing for voters. People are angry, they’re worried, they’re restless. They feel out of control. Spiraling energy costs, an unpopular war, giant data centers, and erratic policy that jolts markets all fueled the unease. The feeble attempts to blame wind and solar for electricity prices didn’t work. Instead, voters blamed the tech industry, utilities, and Trump himself.
So how will this election shape how we build power in the years ahead? This week we’re tackling some of the biggest storylines in the aftermath: data centers, utility political power, state policy, and the next set of fights in Washington. That’s coming right up on Open Circuit.
Hey, welcome to the show. I’m Stephen Lacey, the executive editor at Latitude Media. Thanks for being here. We have our post-election panel assembled, all familiar voices back by popular demand. Jane Flegal is a senior fellow at the Searchlight Institute and the States Forum. How are you, Jane?
Jane Flegal: I’m great. I’m energized. I’ve got the liberal zoomies. It’s a fun time to be a Democrat.
Stephen Lacey: Caroline Golin is the chief growth and policy officer at NRG. How are you doing, Caroline?
Caroline Golin: I’m exhausted, but I’m great. I’m great. I’m just exhausted right now.
Stephen Lacey: Jigar Shah is the co-managing partner at Multiplier and co-host of Energy Empire. Hi, Jigar.
Jigar Shah: Hello.
Stephen Lacey: All right, so we’re taping this a few days after the election, and I think a lot of people are still processing the shock of the size of the win for Democrats. The question is, how are they going to govern? What happens to the tech industry’s infrastructure bonanza, and what does it all mean for the way we build energy? The midterms are, of course, a chance for us to gauge the mood of the country. We all knew that people were restless and angry, but this is a chance to see just how vast that anger is. So let’s start deep here. What story are the American people telling us right now? Jane?
Jane Flegal: The story was quite clear, as far as I can tell. I’m most interested in two things I think the American people are telling us. The first is that it was a repudiation of the Trump administration’s policies and a referendum on the cost of living — interestingly, with energy at the center in a way most of us might not have predicted a few years ago. So that’s thing one. Thing two is maybe slightly less about the politics of energy and climate and more about politics generally, which is that voters are really up for grabs. Nate Cohn’s data has shown that most of the swing in this election was about persuasion, not turnout. So the same people who voted for Trump on prices a few years ago basically fired him two years later. Latino voters swung 30 points; young men swung 45 points. When you put those two things together, I think it’s a real opportunity and, frankly, a warning for Democrats. No party clearly owns the energy cost and energy affordability issue, and Democrats now have an opportunity to take the mantle and run with it. That’s how I’ve been thinking about this. But if bills keep going up, it’s just as likely that we get fired. There’s a very molten middle of the American electorate that is really up for grabs here. But it rocked, by the way. It was a great night for America.
Stephen Lacey: I am really surprised at how persuadable so much of the electorate is. My perception has been that people are so entrenched in tribalism that very few people can be persuaded, and that’s just wrong. It’s a restless American electorate. Absolutely. Caroline, what about you?
Caroline Golin: I was actually having this conversation with a number of people on my team. Everyone has a different perspective, but one of the women on my team said, “At the end of the day, we know what good leadership looks like, and this just wasn’t good leadership.” That simple statement captured all of it for me. There were obviously dynamics in the Latino community and a refusal to accept the administration’s approach to immigration. There were aspects of this within the young male community, which was concerned about the technocrat-overlord future of AI. And there were subthemes across all of it. I think energy was a unifying subtheme, but it was more a derivative of a general erosion of belief in institutions.
Trump pulled on that narrative a couple of years ago, and pulled on the populist narrative, and then he didn’t deliver on any of the variables he pulled on.
At the end of the day, I think people can excuse certain party platforms. They can hold their nose on certain policies. But the leadership just hasn’t been there, and it just hasn’t been there, and hasn’t been there, and hasn’t been there. So what it’s telling us as a country is, one, democracy still exists, so that’s a good thing. Two, and I agree with Jane, people are going to fire your ass if you don’t do your job. That’s another good thing. But the last thing that’s particularly unique about this one is that there was such a huge swing in some states. If you look at Texas, Texas does not know what to do with itself. And there’s a lot of dog-that-caught-the-car mentality going on across the country.
Stephen Lacey: We’ll get to Texas.
Caroline Golin: Yeah.
Stephen Lacey: Yeah.
Caroline Golin: We’ll get to Texas. The dog-that-caught-the-car mentality means that we have to show up in our industry with really, really strong leadership and actually execute. We cannot have hype statements, we cannot have platitudes, and we cannot kick the can down to the next presidential election. You’ve got one legislative cycle before everyone’s focused on who the next president is going to be, and you’ve got a lot of work to do. If you don’t deliver something quickly, they’ll vote you out. And I love that. I love the pressure cooker of that. I think it’s going to make us interesting and innovative and get us to work.
Stephen Lacey: I love it too. Absolutely. Jigar, what’s your read on the story?
Jigar Shah: I think the two people who got this the most right are Tucker Carlson and Steve Bannon.
Stephen Lacey: I was actually just talking about this — I thought Steve Bannon had been reading the situation right for a long time. Explain more.
Jigar Shah: These are all the people I grew up with in rural Illinois. This is why I think this podcast has gotten it right all year, which is that this is all about a repudiation of the oligarchs. They’re just tired of it. They’re like, “We asked you to release the Epstein files. You didn’t do it. We asked you to keep energy costs affordable. You decided to bomb Iran.” The two things you said you weren’t going to do: you weren’t going to do a forever war, and you were going to release the Epstein files. And that just cracked open their brains, and they’re like, “Who else is screwing us on a daily basis?” Every governor who wants a gigawatt data center is screwing us. Every electric utility that’s raising rates 9% a year is screwing us. All these people are screwing us.
In an era of a cost-of-living crisis, there’s not a single person who gives a shit about cost of living. Literally not a single person around us is focused on it. They’re just blaming this person for higher food prices and blaming that person, and saying, “We need it, and we should just take our medicine, and here’s the broccoli.” And people are like, “No.” I thought Hinojosa was great in her New York Times interview yesterday, where they were trying to paint her as a progressive or a liberal. And she’s like, “No, the people who voted for me just want me to take care of them, and I am going to do that.” And when you look at the three states that flipped from Republican to Democrat — Ohio, Georgia, and Texas — all three ran on data center moratoriums. All three of them. And I think everyone’s like, “Oh no, they didn’t really mean it.”
Watch them. Watch them. They had 40 ballot initiatives at the county level in Ohio to ban data centers. And the notion that people are going to say, “These voters didn’t know what they were talking about. We’re going to go back to business as usual” — go back and reevaluate your ideas from the perspective of Tucker Carlson and Steve Bannon. Because I’m pretty sure that this new coalition the Democrats have somehow cobbled together, they do not want to break it apart on day one.
Caroline Golin: Well, and it’s not a super liberal, progressive coalition.
Jigar Shah: It is not at all.
Caroline Golin: And I think that’s what’s amazing. Blue Dog Democrats are back, maybe.
Jane Flegal: Sorry. Mississippi?
Stephen Lacey: Yeah.
Jigar Shah: That’s what I’m saying. This is not crazy. I mean, South Carolina, right?
Caroline Golin: Yeah.
Jigar Shah: This is not crazy liberal. This is not DSA. But it’s also not labeled. People are just saying, “Come back to me: Is this policy going to be good for cost of living or not? Is this policy actually going to bring down bills and costs for people? Yes or no? Let’s figure it out.” New lens, new conversation.
Stephen Lacey: Yeah. We saw a diversity of candidates, and one thing was very clear: they all had a single, unified economic message and stayed away from social issues. That is the winning recipe.
Jane Flegal: There are few things I hate more than the insistence on engaging in weird factional fights to no end within the Democratic Party and, frankly, within the climate and environmental movement. One of the things I’ve found very frustrating in the last few years is this false debate between whether we do some version of abundance or populism and antitrust or whatever. One of the opportunities emerging out of this election, and one of the things voters are telling us, is that they mostly just want us to solve problems. A clear diagnosis of the problems around affordability and cost of living would almost always indicate a two-pronged solution: one that meaningfully addresses energy scarcity, and one that also ensures voters aren’t getting screwed by incumbents and monopolies that don’t have their best interests at heart.
So I think there’s a real opportunity here to get out of our corners and find a way to synthesize those two perspectives. And that’s what you see governors across the country already starting to do on electricity and data centers.
Stephen Lacey: One of the things that’s interesting to me is Senator-elect James Talarico. He is unabashedly pro-oil and gas, pro all-of-the-above energy strategy, but he was loved by the left because he was fighting against corporate power. If you don’t apply the purity test we often see on the left, and give candidates the rein to talk about issues in a way that matters locally, you can have some really effective candidates. That seemed like a shift on the left to me: they gave candidates latitude to not pass, for example, a climate purity test.
Caroline Golin: What this means for Democrats is that you’re going to have to drop a lot of the positions that galvanize the Republican and Democratic parties on social issues if you want to get stuff done. I don’t know if they’ll be able to handle that or juggle it, because that’s not why they were elected. I do not think Democrats were elected because of — and we don’t need to go through the laundry list — the social issues that became the platform of the Democratic Party in the last election. That’s not why they were put there. And if they lean into those and create factions again, they’re out. I think they’re out again.
Jigar Shah: Totally disagree with you, Caroline. This was clearly a referendum on Palestine. I don’t know what you think is happening here.
Caroline Golin: It was a referendum on transgender sports. That’s what —
Stephen Lacey: No, but I also think it holds for climate too, and that is a separate discussion.
Jigar Shah: I think it does. Climate was never a thing, honestly.
Stephen Lacey: What do you mean?
Jigar Shah: It was always about technology, industrial policy, or whatever.
Stephen Lacey: Not for a while. No, it wasn’t.
Jigar Shah: But nobody —
Jane Flegal: Jigar, climate was a thing. I mean, we both worked in the Biden administration.
Jigar Shah: Sure, but I’ve never used climate as a debate, because it never made any sense. No one can even fathom what CO2 is.
Jane Flegal: I think there was. Look, it’s definitely the case that the Biden administration had a hypothesis about the electorate that was less about swing voters and more about mobilization. It suggested that if they ran strong on the climate crisis, which is language the president often used, we would mobilize the base. And that did not happen. We lost young voters, and now they’re coming back as we spend more time centering an economy-first agenda. The thing that’s going to be tricky for those of us who care about climate is that there’s an assumption right now that there’s always a neat alignment between affordability and climate. In many cases that’s true, but not in all cases. Look at Talarico in Texas. There are going to be trade-offs in some instances.
You can see some of this in the way the fight over the permitting bill is going down right now. It’s definitely a winner on affordability, no question. But everyone online is spending all their time litigating the emissions impact of a bill that isn’t even really a climate bill. That’s a sign we haven’t quite metabolized the need to rethink how we get motivated as a party about energy infrastructure.
Stephen Lacey: So well said. I think that really nicely summarizes tension one. Tension two is data center infrastructure. This is the central tension of the election. I think we’re going to have a lot more conversations about climate messaging over the next couple of years, but you summarized that really well. So, data center infrastructure. Let’s go to Texas. Not even a year ago, Governor Abbott was calling Texas the epicenter of AI. Then, over the last year, rural voters turned on data centers. In September, as we covered, he paused state data center permits pending a grid audit. It was way too late. Governor-elect Gina Hinojosa made data centers the face of Abbott’s corruption. She was outspent $281 million to $36.8 million, and she won anyway. She’s promised a moratorium on all data center approvals until the legislature passes new protections. Everybody’s talking about Texas right now.
Caroline, I’m sure you’re focused a lot on Texas right now. What’s the tone of the conversation?
Jane Flegal: Why do you think she’s so tired?
Caroline Golin: I’m a little tired. Yes. So I just want to separate — I don’t want to call it political posturing — but what I think moratorium means. We’ve talked about this before. Ohio is a very different conversation. We’re going to get to Ohio, and that’s a level of county empowerment that I think is going to grow. If you actually look at her platform, I think she is going to maintain a really responsible approach to development, and I don’t think it’s night and day from what Abbott would have been forced into doing anyway. What she’s saying, and will continue to say, is that if development is happening and the communities want it, go forth. If development is happening and the communities don’t want it, you’re going to pause, and we’re going to figure out whether this is something we need to broker and get the communities behind.
But if they’re going to say no, they’re going to have the right to say no. I think that responsiveness-to-the-electorate mentality is going to be translated into a development approach, and I don’t think that’s wildly different from what Abbott would have said. Before the election, everything I was hearing from Republican leaders in Texas was, “You shouldn’t be allowed to build a data center here if you haven’t had a town hall. If you haven’t had a town hall and the community hasn’t said it wants this, you shouldn’t be allowed to do it.” I don’t think that’s wildly different from what will move forward. What I do think will happen is a significant showdown on transmission and the expansion of the bulk power system in Texas. And it could create some interesting bedfellows, because the only way to integrate more renewables into Texas is to build more lines from West Texas to East Texas.
That’s going to require a lot of communities that are against transmission to stand up and say they want it in their communities. It’s also going to require suppliers to get behind that message, because they need transmission to interconnect data centers and to interconnect new supply. So I think the data center development piece is going to look very similar. I actually don’t think that’s the point that becomes partisan and bloody and difficult. All the Republicans and all the Democrats want Texas to still be an economic leader. She’s going to want to take home that cup. She’s going to want to show that a Democrat as governor, a woman as governor, can still run an economic powerhouse. She is not going to shut down the state. But I do think the transmission debate is where it’s going to get really, really, really partisan, and that’s what I’m watching.
Stephen Lacey: Jigar, what are you watching in Texas?
Jigar Shah: I want to understand how fast Elon Musk moves to Miami. That’s what I want to understand. As the oligarch Texans most voted against, it’s going to be fascinating to see what happens to Elon and his plans in Texas, because I don’t know that most Texans want him there anymore. On the data center thing, I don’t know. I think you’re going to have to watch. I don’t think she’s going to stop construction of the data centers that are already under construction, but I think every one of them is going to have to sign a bring-your-own-new-capacity contract. I think every one of them is going to have to spend at least $100 million per gigawatt in the community on community benefits agreements. And my sense is you’re going to see some sort of waiving of all these requirements for data centers below 75 megawatts in size, and you’re going to see a crap ton of 75-megawatt data centers get built.
Jane Flegal: Well, I think — data centers for ants. Jigar loves nothing more.
Jigar Shah: People can say whatever they want to say, but as somebody who’s actually helping write all of the regulations in these states, that’s where this is going. And I think the notion that people — I was just with a bunch of Google folks yesterday and the day before, and they don’t get it. They literally don’t get it. They were like, “But Jigar, people like us.” And I’m like, “They hate you. They hate you just as much as they hate Meta, and they don’t know the difference between Meta and Google.” I don’t think people understand just how much voters tie data centers to oligarchs. It’s literally one for one. When you think about the ballroom and how Trump has enriched himself, they view that as part and parcel with the data centers. And when you think about Jon Ossoff on stage talking about corruption every day, they connect that directly with data centers.
Caroline Golin: So on the specifics: I think it’s state by state, and in Texas, water is a bigger issue than carbon. Local labor and workforce are huge issues. And there’s going to be a large population that says, “No, we want our sunsets. We don’t want new roads here. We don’t want this infrastructure here. Please go take it someplace else.” The great thing about Texas is that there are huge swaths of the state where no one really lives, where you can build things. The bad thing is that you need to build out the bulk power system to do that. That’s why I think it comes down to transmission. I don’t think Jigar is wrong in saying that people attach it to a world they cannot control. I think that’s a fair thing to say.
Many people feel like they cannot control the world that’s happening around them and that they don’t have buy-in. That’s why we have a democracy: so they can voice that opinion. But I don’t think you’re going to see full-out moratoriums in Texas like you will in other states. I just don’t.
Stephen Lacey: Jane, what do you think the Texas story is?
Jane Flegal: I have to be honest: I’m sort of bored of data centers. For me, the Texas story that isn’t getting as much attention is the fact that Democrats now run a state that produces 40% of U.S. crude and hosts most new LNG export capacity — and, by the way, funds most of its schools as a result. There’s been a lot of cognitive dissonance, denial, and confusion in the Democratic Party for a long time about domestic oil and gas supply, and about how to navigate the politics and economics of existing global demand for oil and gas in a world where we want to aggressively decarbonize. I’m really eager to see how the party sorts that out over the next few years. It’s easy enough to say, “Oh, just let…” And a lot of credit to Adam Jentleson at Searchlight; this has been his whole shtick: Democrats can build a supermajority if we allow candidates to take more heterodox positions and if the national brand can accommodate that.
On the other hand, a lot of politics is national now. So how is the national Democratic brand and posture on energy and climate going to shift as a consequence of realizing that we might actually be able to build a tent this big? I think that’s a really central question, especially because I think this election was much more about gas prices than data centers across the board.
Caroline Golin: So you’re saying Democrats have to be intellectually honest?
Jane Flegal: Yes. Well, we always have been, about everything, first of all. No, I really think it’s an interesting question, and it’s going to be hard to work through.
Caroline Golin: I agree. I don’t think —
Stephen Lacey: It’ll be a huge flashpoint.
Caroline Golin: I don’t think that if you were to interview many of the voters who voted for Trump and then voted blue this time — and I’m sure someone will — their number one issue was data centers. I don’t. I don’t. We talk about it a lot on this podcast because we’re an energy podcast, and you can’t talk about energy without talking about data centers. But I just don’t think that was the main driver.
Jane Flegal: One of the pollsters I trust on almost everything said something to me on election night. I asked, “If you disentangled all the pieces that played into this — say Trump still did the tariffs, the crazy ICE interventions, the bad immigration policy, yada yada, but didn’t do the war in Iran — how different would the outcome have been?” And this person said, “You can literally shoot your political opponent on live television as long as gas prices stay low.” It’s just a shockingly important political factor.
Caroline Golin: But Trump even said that. Didn’t he say that? I mean, he said that.
Jigar Shah: Well, he did, but I don’t think that… Remember, that’s what I said. This is really about Epstein and forever wars. Those are the two things that got a bunch of MAGA voters —
Caroline Golin: But you can be in a forever war as long as we don’t feel it.
Jigar Shah: No, I don’t think so. I don’t think so. Think about how many people revolted and voted for Trump because of the Ukraine conflict and the fact that they thought it was a forever war. In general, Trump promised two big things: one was the Epstein files, and one was not being in international conflict. And he violated both of them.
Jane Flegal: But his actual promise — part of the reason he beat Kamala — was about prices and inflation.
Jigar Shah: Sure. Which he was never going to do anything positive on.
Jane Flegal: Well, it’s not just that he didn’t do anything positive. He waged a tariff war on Canada, waged a literal war on Iran, and drove gas prices to historic highs. I really think —
Jigar Shah: But I’ve always said this wasn’t about data centers. I don’t think I’ve ever said it was about data centers.
Jane Flegal: Yeah, yeah. I’m just saying that’s one of the interesting stories about Texas.
Stephen Lacey: Can we talk about Ohio for a second, Caroline?
Caroline Golin: No, not for a second.
Stephen Lacey: For many minutes.
Caroline Golin: If you really want to understand the entire data center saga, you just have to study Ohio. It all begins and ends with this state. Yes, Georgia became a touchpoint, and Texas became a touchpoint. But if you really want to talk about what set off PJM — what set off all the crazy stuff around how we’re going to meet capacity and reliability, whether we have enough transmission, bring your own power, prices, everything — just go to Ohio. That’s where it all started. And what I think is really, really interesting about Ohio, and what you’re hearing a lot of elected governors say, is that they’re going to put power in the hands of local communities. That’s a slippery slope for a governor to go down, and I’ll be interested to see how it actually gets written into permitting law, into tax law, into any type of negotiation over development or build-out.
I don’t know the exact number — 14, 20? How many counties passed moratoriums? Somewhere in there, right? A couple dozen counties passed complete moratoriums. And the number of hyperscalers and data center developers who woke up and went — can we cuss on this podcast? — “Well, I’m fucked.”
Jigar Shah: Warmed my heart.
Caroline Golin: But the reality is that everyone went to Ohio for a reason. It wasn’t because the hyperscalers woke up and said, “Let’s just do Ohio. Let’s all pick one state and get in there together.” No. It had an amazing infrastructure backbone. It had a great workforce. It had a lot of existing sites abandoned during the manufacturing offshoring that began in the ’90s. So it was a perfect place to start building. It had network. It was a perfect place to start building out cloud. And once you start building out cloud there, you want to build your big hyperscaler compute there because you’re already there. So it just piled on itself and piled on itself. Then finally people said, “Hey, AEP, this isn’t working. We’re not doing this anymore.” And they said no. The fact that every single one that was on the ballot passed is the biggest shock. When you let development run away like a runaway train and don’t let communities have buy-in, they’re going to exercise their rights.
I think it’s a warning sign to other states. It will be very interesting to see how these new electeds balance it, because they don’t really want to hand economic development over to county-by-county decisions. At the end of the day, the one thing a governor is held to is economic development. To say they no longer hold the card on where that goes is very slippery. But responding to this populist view means that may happen. It’s a fascinating power dynamic, and we’ll see.
Stephen Lacey: Yeah, I know Jane’s bored by data centers, but —
Caroline Golin: I know, Jane.
Stephen Lacey: No, I think Ohio was an interesting test of how much data centers influenced the election, and we don’t have to hang on this for too long. But if you look at exit polling, I think 56% of voters said AI and data centers were a crucial factor in their vote. Three-quarters of those exit-polled said they oppose a new data center in their community. We saw all these bans throughout Ohio. Obviously, Sherrod Brown painted his opponent, Jon Husted, as the face of data centers. I think that he —
Jigar Shah: The ass of data centers. The perfect ass of data centers.
Jane Flegal: A lot of perfect butts. A lot of butt talk.
Stephen Lacey: Yes, definitely. I don’t know. What are some other stories in Ohio?
Jane Flegal: I have a question about this, Caroline and Jigar. I’m really curious what you think. One thing that’s really hard to disentangle, even in the polling, is how much of it is Jigar’s point — which I tend to agree with — that you can’t separate the physical infrastructure from people’s disdain for tech oligarchs and the politics of AI. So it’s hard to figure out how much is about actual local impacts on prices or water or CO2 versus the other, bigger stuff. But one of the things I’m interested in, Caroline, is the tension you’re describing between local control and state control of some of these decisions. I’ve been spending a lot of time on local siting fights for clean energy infrastructure, leaving aside data centers. There are a lot of counties across the country adopting bans on clean energy development.
So there’s a question about how you solve that problem. Does it mean rolling up control over siting decisions to the state level in some meaningful way and allowing some preemption? Or should we be devolving more to the local level? I’m just curious where you think —
Caroline Golin: Yeah, that’s the tension. I understand what you’re asking, and I think that’s exactly the tension. I also think any power developed in this country right now is synonymous with meeting AI load. So you’re already walking into a conversation where your motivation for negotiating across the table is suspect. And so I think that —
Jane Flegal: It’s like your transmission point in Texas.
Caroline Golin: Right. The other interesting thing with Ohio is that I don’t know if we’re going to have a special auction in PJM. If all that load drops out, I don’t know that you need a special auction. This state has had such a stronghold. And again, I want to explain the backstory of why so much compute went to Ohio. It’s not like they wanted to party with each other. It made sense from an infrastructure perspective. And we were being courted. Ohio was courting this community heavily, heavily, heavily, heavily. So everyone made these huge investment decisions, and now it’s evaporating. The ripple effect on the need for new capacity is going to completely affect load forecasts in PJM. It’s going to affect the need for new transmission into Ohio.
So it has massive implications for the region. But the point I was making with Jane is that it’s a slippery slope. If I’m a governor, I want to be able to attract new large load that’s not necessarily synonymous with AI. But all steel in the ground is now suspect.
Jigar Shah: Because of AEP’s central role in the nervous system of PJM, Ohio is Rome. All megawatts in PJM can easily be transported to Ohio. If you build capacity, a nuclear plant somewhere, you can bring all that capacity to Ohio. That’s not true for Virginia. That’s why Ohio was so attractive to everybody, and why it became so valuable as a data center haven. But to my earlier point, the reason these dynamics are occurring is that nobody in Ohio cared about the people of Ohio. Mike DeWine is about as good a governor as you can get, I think, and it was pretty obvious he was not interested in protecting the people of Ohio from the overreach of SoftBank or Meta or others. The reason the counties decided to rise up is that when they took legislation to the Ohio state legislature, the legislature said, “No, we do not want to regulate the oligarchs.” So that same group of people organized all of these ballot initiatives at the county level.
They didn’t start out saying, “We want to do all this heavy lifting at the county level.” They went to their state legislature and their governor and asked for help. And those people said, “Screw off. We’re making way too much money off the data center oligarchs. We’re not going to regulate them.” So the counties said, “Okay, then we’ll do it at the county level.” I just want to make sure we understand the dynamics here. The counties aren’t trying to seize power. They tried to get redress, and state officials said no.
Caroline Golin: Irrespective of the motivations, though, it sets a precedent that —
Jigar Shah: Yeah. Well, it sets the precedent that governors should listen to their voters and stop being bought off by oligarchs.
Stephen Lacey: This is a good segue into our conversation about governors and utility accountability. We saw Georgia’s Public Service Commission flip to Democratic control. Michigan voters banned utility political spending. In Arizona, Democrats are leading for Corporation Commission seats. And we saw a slew of new governors come in who ran on utility accountability. Jigar, what are the biggest consequences of this election for utilities, in your mind?
Jigar Shah: The utilities have no home. The number of text messages I got from utility CEOs saying, “Hey, Jigar, can we strategize?” I’m like, “Yeah, I guess so, but what do you want to strategize about?” In general, they’re like, “Here are my oligarch masters on the shareholder side. Jigar, how do I get past my public service commission so I can do this, this, and this?” And I said, “Wrong question.” The question is, what exactly is your plan to figure out the formula for your state? You have a certain amount of investment you have to make because of aging infrastructure, load growth, and all these other things. Then you have a certain number of new kilowatt-hours you have to sell to keep rates from going up 9% a year. What exactly is the formula you’re pitching me?
And everyone was like, “We don’t like your formula.” And so, therefore, public service commission replacement. I don’t think this is that hard to calculate, but they don’t have any good ideas.
Caroline Golin: Well, but also — okay. You’re a utility two or three years ago. You’re called into the White House and told it’s a national security threat if we don’t integrate these data centers.
Jigar Shah: Yes.
Caroline Golin: And you’re told, “It is my expectation, as commander in chief, that you do this. Figure it out.”
Jigar Shah: Yes.
Caroline Golin: Right?
Jigar Shah: And then they sent you to me to use the 1706 loan program to fund it. I talked to every one of those CEOs and CFOs and tried to help them through the process, and they told me to go pound sand.
Caroline Golin: Well, the color I want to add here is that, as the person who was on the other side trying to build quickly, for a long time the utilities said, “We can’t do that. We can’t do it that quickly. We can’t give you a special deal. We can’t do all those things.” They did that because they had a regulatory construct they needed to meet, and they have three people working on interconnection on any given day. But then they got a gun put to their head with the national defense narrative, and now, because they adhered to some of that, they’re getting another gun put to their head. Now, I’m not defending all the actions in between. There has been a lot of rent-seeking and a lot of opportunistic behavior. But we can’t forget that we all complained — we being the hyperscaler community, the AI and digital community — complained and complained and complained that the utilities weren’t moving fast enough for us, and that China was going to take over the world if we didn’t build these data centers. “So if you’re a patriot, you’ll do this.” And so they did it.
Jigar Shah: And their definition of patriotism was whatever would cost the most money with the least effect and the least change in culture. Not a single one of them took that signal in 2023 and said, “Let’s invest in transmission. Let’s drop our issues with the national corridors the Biden administration put forward. Let’s figure out a way to work with FERC so projects that have been wallowing for 10 years can go faster.” Not a single one of them changed their priors. And now you’re saying that because they decided to do things in the most expensive way possible, we should give them a pass because they had a gun to their head on national security.
Caroline Golin: I’m not saying they should get a pass. I’m not saying they should get a pass. I’m just saying I think we forget that they were slow, and the utilities being slow is actually what kept rates somewhat stable for a while.
Jigar Shah: Hell no. Come on now.
Caroline Golin: Yes, absolutely.
Jigar Shah: If you want to adjudicate why rates were low, it’s not because utilities were slow. It’s because natural gas prices went from $10 per million BTU in 2007 down to $2.50 per million BTU, and they took all of that money and stuffed it into transmission and distribution that we’re now using at 18% asset utilization.
Caroline Golin: Stop it. The number of times I would sit in a negotiation and say, “Can we do this in two years?” And they would say —
Jigar Shah: Yes, they can.
Caroline Golin: And they would say, “No, we can do it in seven.”
Jigar Shah: We had this conversation in Austin: the only time we make our grid more efficient is during world wars, when the federal government comes in and forces utilities to join the Southwest Power Pool, the Northwest Power Pool. All I’m saying is, let’s not make excuses for people who literally have the political instincts of Lindsey Graham. Come on. These are terrible, terrible companies that don’t know their head from their ass and were using campaign contributions to keep themselves in power. And the people of their states have said, “We’re done.”
Stephen Lacey: Jane, I don’t know how you’re going to wrap that one up.
Jane Flegal: I can do my usual shilling here, and turn it to my favorite topic, which is the permitting bill under discussion right now.
Stephen Lacey: Yeah, I was going to get there, so let’s roll into it.
Jane Flegal: Look, I probably — and I know that I do, in fact — have more space for some of the challenges utilities are grappling with that are not all a consequence of their greed. They’re operating within a structure that has shifted dramatically and very suddenly, and the system in which they operate is totally broken. And to Jigar’s point, some of that is their fault. Some of it is that they’ve lobbied to keep a broken system in place. I want to acknowledge that that’s true.
Caroline Golin: I’m not saying that’s not true. I’m not saying that’s not true.
Jane Flegal: Of course you’re not. I don’t know. Of course you’re not. But one of the reasons I think this permitting bill is so important is that it cuts across the board. Yes, data centers are at the center of this right now, but more generally, the world and the country are electrifying. That is happening, and we want it to happen — not just for climate, but for national security, global competitiveness, and geopolitical reasons. And I don’t think anyone in the system has fully grokked what a world of —
Jigar Shah: Too soon. Too soon, Jane. You can’t use the word “grokked.”
Jane Flegal: Grokked. What a world of very rapid demand growth, rather than 20 years of flat demand, looks like and requires of our system.
Caroline Golin: It looks like recip engines and jet engines. That’s what it looks like.
Jane Flegal: But I kind of feel like —
Caroline Golin: And that’s terrible. Yeah, go ahead. Sorry.
Jane Flegal: No, no. For me, there’s useful political posturing around who’s to blame. Do you blame monopoly utilities? Governors? Data centers? But fundamentally, all of these are actors operating in a system that we can all agree isn’t incentivizing the right behaviors, for lots of reasons. The reason we’re seeing diesel gensets and these crazy turbines rolling up everywhere is that our system wasn’t built or designed to accommodate rapid demand growth. That’s bad. And we have to meet that demand in a way that’s attentive to anxieties about affordability, which is a point Jigar often makes very eloquently. But surely we can do both of these things at the same time. I’m less interested in calling people bad actors than in saying, let’s change the laws, frameworks, and electricity market governance structures so we get out of this bind, which is a structural bind. It’s not just one bad actor. It’s a structural problem.
Jigar Shah: Right. But let’s put to bed —
Jane Flegal: I mean, I think part of the reason the permitting bill is as ambitious as it is, is that the utilities are on their back foot.
Jigar Shah: Right. So let’s put to bed the idea that Jane and I are on opposite sides of this issue.
Jane Flegal: We love each other.
Jigar Shah: We are on the exact same side of this issue. I have fought hard to make sure permitting gets passed. So we’re on the same page. But I just want to make clear that the trade we made is exactly what Jane suggested: the utilities are on their back foot, and the trade in the permitting bill is that we finally get to build out the bulk infrastructure in our country. If the manager’s amendment, which is supposed to drop any second now, takes out backstop authority or any of the other things we need, I’m against the permitting deal. The notion that we’d give natural gas pipelines everything they want, and in exchange not get the ability to build out the bulk power system in this country — F that.
Stephen Lacey: Oh, Caroline has to leave.
Caroline Golin: I’m sorry.
Stephen Lacey: It’s okay.
Caroline Golin: I’m very much for the permitting bill. I also think it’s an opportunity for direct access. So y’all discuss that while I leave and take a call.
Stephen Lacey: So what’s the status of the permitting bill right now, Jane?
Jane Flegal: We’ll see a manager’s amendment later today, late this afternoon, that I’m optimistic will incorporate some important changes that will hopefully make folks on both sides of the aisle happy. I think we can imagine some fixes to the permitting certainty provisions that environmental groups in particular were very concerned about, and, importantly, some changes to the NHPA provisions around tribal consultation. If those things happen, I think we’ll see a lot of momentum. There’s a vote in the Senate on Monday, and I think it’s going to have a lot, a lot of support. That’s where we are.
Stephen Lacey: Is there any pressure not to get this bill done now? I’m sure a lot of enviros and others who oppose the bill are saying, “No, no, wait for the Democratic majority to come in.” How has that picked up since the election?
Jane Flegal: Yeah, it’s weird. I think there are two effects of the election that run in opposite directions. There’s the one that says: Democratic sweep, why would you do a deal now? Wait. Jared Huffman has been making that case very loudly, and I don’t find it at all compelling, but okay, we’ll put that over here. Then there’s the tension in the other direction, which is: You just got elected to deliver on an affordability agenda. This is your first opportunity to demonstrate that you take it seriously. So why would the first thing you do be killing a bill that would directly tackle a lot of the energy affordability challenges the country is facing? I think that latter argument is going to win the day. There’s a lot of momentum building around this bill, even as environmental groups may or may not oppose it.
We saw IBEW, a very important labor union, come out in support. And to Jigar’s point, IBEW is sometimes a little complicated in its posture on these issues because of its relationship with monopoly utilities, so having it support the bill is a really big deal. We’ve seen support from some members in the last few days, Senator Gallego and others, which is really promising, along with endorsements from every manufacturing association in the country. So I’m really optimistic that in an era of politicians prioritizing affordability and pollution reduction, the bill will get done. But we’ll have to see.
Stephen Lacey: It’ll be a good sign that they’re ready to govern, rather than just fight, if they can pass this bill. And on that front, how do you expect Democrats to govern, or how should they? What fights do we expect over the next two years that intersect with energy and climate? Any other stories or issues top of mind as you think about the next couple of years?
Jane Flegal: I’ve been trying to think through what I’d say if someone asked me what the 120th Congress should prioritize on energy in the next year. And I really want to know what you guys think too. We’ve had some marker bills in the House and elsewhere that have, to me, a bit of the character of running back the old playbook. There’s a question of how much of that we should do, how much we shouldn’t, and what this new moment demands of us in terms of a new agenda. I think there are a few buckets. One is lowering bills now, which no one is more focused on than Jigar, so he’s got lots of good ideas in that bucket. But above and beyond the cost allocation fights over data center development, is there a way to think about new revenue streams that get data centers to help subsidize a modern grid?
One area that hasn’t gotten a lot of attention but should is how you get grid hardening and disaster mitigation costs off of bills, which is a really regressive way to pay for them. You could imagine some interesting stuff there. I also think there’s a real opportunity on electricity market reform, which is maybe not the sexiest thing, but really important. So that’s thing one: How do you lower bills today? Another thing in that category is delivering immediate relief to families through LIHEAP and other programs. As someone who lives in Massachusetts, I’m not particularly excited about my heating bill this winter. The second category is what we do about gas prices and fossil fuel states. Is there an agenda we can start to advance now to address some of those concerns?
Everything from Strategic Petroleum Reserve policy to — I don’t know — maybe there’s an opportunity in the surface transportation reauthorization to do something on electric vehicles that isn’t totally polarized and insane. That seems hard to me, but it’s a real strategy for mitigating oil price spikes. A bunch of stuff there. The third category is all the stuff around monopolies and putting families ahead of monopolies. That includes the data center stuff about making big tech pay. But I also think, Jigar, there’s interesting stuff we could probably do on funding the rate cops. Is there stuff we can do to help —
Jigar Shah: Dave Pomerantz gets 10x the budget.
Jane Flegal: Exactly, exactly. Can you help state utility commissions do a better job of governing? We also saw some interesting stuff on election night on banning ratepayer-funded politics. I think that’s kind of like a —
Jigar Shah: Oh, so good. So good.
Jane Flegal: Yeah, that’s great. Who doesn’t want that? That sounds like —
Jigar Shah: That was Michigan, where they passed a ballot initiative saying utilities can’t give to politicians anymore. Executives can do it with their own cash, but not with corporate cash.
Jane Flegal: And then there’s building faster, which — God help me, if this permitting bill doesn’t pass, I will never speak publicly again, which is probably a good thing for everyone around me. But I just can’t. I’m so excited.
Jigar Shah: It would not be good for me, Jane.
Jane Flegal: And then there’s a bunch of stuff on interconnection and grid equipment supply chains. This is all stuff, by the way, that I think Trump would sign. This is not crazy lefty stuff. And then there’s the innovation agenda and the “make technologies in America” agenda. So I don’t know.
Stephen Lacey: That’s a thick list.
Jane Flegal: There are a lot of opportunities. That’s a bunch of big, cool stuff that I really think could get done and that addresses the concerns the electorate actually has. It’s not a Green New Deal, but that’s fine.
Stephen Lacey: No, it’s a great list. I just hope Democrats don’t get completely caught up in restoring tax credits and fighting the old fights, as you said. I do expect plenty of oversight too, right?
Jane Flegal: Totally, yes.
Stephen Lacey: We’ll have hearings and subpoenas on frozen grants and canceled funding. I expect that to happen.
Jane Flegal: Again, I have my Biden administration PTSD. I came in to work on industrial emissions, and everyone was like, “What?” One lesson I have as we think about 2029 is, A, that’s one reason we have to get this permitting bill done now. The person the permitting bill will benefit most is whoever is in power in 2029. And B, administrations don’t pull agendas out of nowhere. They pull from things that have been socialized and tested in the states and federally. So as bills get introduced over the next two years, we should be thinking about what we want to socialize and tee up for the next administration. I say this because I was supposed to work on industrial decarbonization, and there hadn’t been many bills socialized on it other than 45Q. So there’s a lot of work we can do with an eye toward 2029 to build momentum for the things that matter.
Stephen Lacey: Jigar, what do you think? I’ve seen chatter — Jane alluded to this — from climate progressives who think this moment is like 2018, when we started to see more pressure on Congress to pass the Green New Deal, which eventually rolled into efforts to build and pass the IRA. There will be many people calling to bring back clean energy tax credits. First of all, do you agree with any of those priorities? And second, how do we ensure Democrats aren’t just fighting old fights and are really taking on things that meet the moment?
Jigar Shah: Well, first of all, Jane is amazing, so read all of her stuff. Again, I think this is a Steve Bannon–Tucker Carlson moment, and people need to check their priors at the door. In 2018, when we were doing the Green New Deal thing, we had one of the most robust economies of all time. That’s not true now. We’re headed toward 10% unemployment by the time Trump leaves office. The notion that we have the luxury of adding costs to the American people for the sake of climate, or whatever it is, is not the mandate anyone was given. So the question really becomes: What part of this Venn diagram reduces people’s bills? I think effectively eviscerating utility power is going to be part of the process. Federal Power Act changes, PURPA changes, figuring out how to actually give power back to the people, as opposed to having paternalistic organizations tell you they know what’s best for you — I think that’s going to be a big item.
The other piece, as you suggested, is the hearings and investigations, and some of that is critical. For those of us who care deeply about industrial policy, Trump is warping industrial policy in ways that might turn us off it for 20 years. Think about how many companies are getting money just because the Trumps invested in them. You have the Office of Strategic Capital — I’m pretty sure everyone there will probably resign in the next week because they don’t want to be in office when the next Congress is seated. It is critical that we investigate all of them and say this is not a feature of industrial policy; it is a feature of corruption from the president. Because America needs strong public-private partnerships to do big things, whether it’s nuclear power, large transmission, geothermal, or other things.
If we lose the mandate from the American people to do big things in this country, it’s going to be very hard to get it back. So some of these investigations will be critical, but we’ll have to be careful about which ones we pursue, because the American people don’t have the appetite for all of them.
Stephen Lacey: Absolutely.
Jigar Shah: So you only pursue investigations that are directly applicable to bringing down the cost of living.
Stephen Lacey: Yes. They’re going to have to be very targeted in which corruption stories they thread out for the American people. But going back to —
Jigar Shah: Sorry, I didn’t answer your question on tax credits. We should absolutely not extend the tax credits for solar and wind. I’ve been trying to phase them out since 2012, so I’m very clear in my thinking that our industry doesn’t need them anymore.
Stephen Lacey: Yeah. I guess my final thought is what we were talking about at the beginning: this is a really energizing moment, not because Democrats won, but because the electorate can be swayed by economic arguments. The electoral map is wide open. And if you’re working on clean energy issues, and to some extent climate issues, it’s up to you to meet the moment. There are cases that can be made to a wide swath of Americans who just want their lives to be better. Gina Hinojosa, in the New York Times interview you mentioned earlier, Jigar, was getting pushed on why she doesn’t call herself a progressive and calls herself a populist instead. She said, “I don’t call myself a progressive right now because it’s affiliated with the culture wars, and this is not the moment for culture wars.
“I am focused on making people’s lives better, and that is purely what I ran on and what I’ll focus on when I govern.” I think we should take that to heart in this industry and in the climate movement. There’s a unique opportunity to have a different message and actually resonate with people.
Jigar Shah: One other thing I’d say — and I’m all for what Jane is suggesting on hard-to-decarbonize sectors and other things — is that people forget 50% of carbon emissions in our country can be offset with technologies that save money today. And we’re just so bad at figuring out how to deploy them at scale. Think about what Jane said about her heating bill this winter. I pray for all of those people on fuel oil. But Lord Almighty, we have technologies with a two-year payback that can help people move to heat pumps and other things. Remote communities in Alaska are paying $27 a gallon for delivered fuel. And I fear that people are going to die this winter because the president doesn’t care about figuring out how to use the U.S. military or others to get them the supplies they need in time for winter.
I think people are going to start burning parts of their houses. We have got to start thinking about how to get all this modern American technology — which we’ve invested in for over 20 years and spent all that money bringing down the cost of — into the hands of the American people.
Jane Flegal: It’s also, by the way, why — I remember talking to a former Senate candidate from Maine about climate politics in the state. I don’t disagree with you at all about the promise of heat pumps, Jigar. But I think it goes back to this issue: you can’t just do a wartime push on consumer technology and demand-side stuff if you haven’t addressed the electricity supply side. In a lot of the Northeast and New England, we just don’t have enough electricity supply. So we have to be careful, because we make these promises about cost reductions from things like heat pump deployment, but we’re often in situations where electricity prices are crazy high. I almost think there needs to be a real debate right now about how to tackle electricity supply, and the decarbonization of electricity supply, as you scale to meet growing demand — and the pacing of those two things. That feels complicated to me, but it’s at the heart of some of the fights in the environmental movement right now about what we should be prioritizing.
Stephen Lacey: Jane Flegal is a senior fellow at the Searchlight Institute and the States Forum. I’ve enjoyed your takes and the wonderful screensaver on the TV behind you. It’s been incredible to watch.
Jane Flegal: It’s not made in America. Don’t tell anyone.
Stephen Lacey: It changes every couple of minutes, and I’m really digging it. Really good to talk to you again.
Jane Flegal: You too. Thanks, guys.
Stephen Lacey: Jigar Shah is the co-managing partner of Multiplier. Great to see you, Jigar.
Jigar Shah: Always a pleasure.
Stephen Lacey: Thanks for being here. Open Circuit is produced by Latitude Media. The show is edited by me, Sean Marquand, and Anne Bailey. You can find all of our audio episodes on Apple, Spotify, or wherever you listen to your pods, and of course, subscribe to us on YouTube, where you can watch Open Circuit and Catalyst. You can get transcripts of every episode at latitudemedia.com. Thanks for being here. I’m Stephen Lacey. We’ll catch you next week.
