The state of America’s power grid with the Edison Electric Institute’s CEO

A nation isn't just built, it's powered by people like us. In 2024, Chevron increased its US production nearly 20% to help keep energy reliable. Since 2022, we spent $44 billion with local suppliers supporting good jobs across all 50 states. And this year, we're planning to invest about $10.5 billion in American energy projects to help build the future right here at home. We put in the work because America depends on it. Learn more at chevron.com/america. Hey, welcome back to the POTICO Energy Podcast, where we explore the people and stories shaping energy and climate policy. I'm Zach Coleman, one of your new regular Monday hosts. Tell me if you've heard this before. Electricity prices are rising. Yes, yes, I know, we've been covering it a lot, but even President Donald Trump has acknowledged this. He announced a pact last week with tech companies to limit power price increases from data centers. Electricity, the power grid that provides it and the data centers that rely on it have become by far the most salient political issues of the year in the energy space. So that's why I wanted to bring in someone who's at the center of all that. Drew Maloney, the President and CEO of the Edison Electric Institute. EEI is of course the trade of association for investor owned utilities, the companies that maintain the grid and generate and distribute most of America's electricity. Drew and I talk about President Trump's recent actions, data centers, electricity, affordability, the grid, and more. Here's our extended conversation. It's Monday, March 2nd. Drew Maloney, good to see you. Welcome to Politico Energy Podcast and thanks for joining the show. It's great to be with you today. Well, let's start off with the most recent news in the national scene. President Trump talked about how prices were going down during his state of the union address last week, but nationally, residential power rates are up since he took office. How do you think the President handled the reality of what Americans are seeing on their electricity bills? Well, Zach, it's a great question and we just finished a study with Charles Reiber and Associates that really looked at the cost of electricity across the country. There's a lot of attention around the areas that have increased in prices, but 68% of the states in the country have kept their prices below inflation. So it's really a state-by-state issue and a region-by-region issue. I think we've been focused at EEI on keeping those prices low while keeping reliability for every American as the best we can. Well, at the same time, there are a lot of people who are pretty concerned about electricity rates. You do hear this. I mean, I know you've addressed this in other forums. Do you think the President directly addressed the pain that people are feeling on their utility bills? Well, as I said, it's a state-by-state issue and if you have almost 70% of the states that it's staying level in, I think what the administration has done is they focused on the areas that need improvement. And we just saw an announcement recently on PGM, a real focus. The challenge in PGM is nobody's building new generation. I think the administration, and I think we and I think the governors all agree we need more steel in the ground in the PGM, the Mid-Atlantic region. We need more generation. We at EEI and our utilities are ready to build that. We just got to continue to work with the state governments in order to make that happen. Yes, there's a big supply demand problem as what you're saying. What is kind of the culprit of these places where there are higher rates or you are seeing some upward pressure on prices? Each area has a little bit different challenges. California has the wildfire exposure and that's driven some cost out there as well as some net metering issues. The Northeast has some challenges around the fact that they just don't have the pipeline capacity to get more gas into the system. They rely on imported LNG, during the peak of the storm they had to rely on oil. They need better access in this Mid-Atlantic region. It's an area of the country where they deregulated. We are just wires, transmission and distribution country companies and don't control the generation. There's just been no new build of generation. That's I think the thing that's a big focus of the administration. That's a big focus of ours. I know that's a big focus of the governors in that area is how do we bring more generation online in a quicker way. Yeah, so I know a lot of your members are regulated utilities. They're investor-owned utilities. They have a lot of room to play in this space. One thing that a lot of your members do want is more solar. That is one of the things that you can quickly hook up to the grid right now where you have years long delays on natural gas turbines. What have you seen from the administration in terms of it's well, there have been some throttling of solar permits in the past few months. Have you seen any sort of lessening up by the administration? Are you seeing solar starting to flow through? Look, we've been consistently supportive of and all of the above approach. We are seeing more solar with backup batteries getting built. I think there was a recent press conference with Secretary Wright where he did talk about solar and backup batteries. So I think that is going to be a component of what we see going forward as well as natural gas. Well, I think that the president has equated solar to expensive energy. Is that the case? Look, every, you know, the United States is blessed with an abundance of different resources. And depending on where you are in the country, some resources are better than others. And, you know, our focus is on identifying the best resource in the area and making sure it contributes to the reliability and the affordability. So it's really again, a state-by-state issue as we sort of look across what the generation mix should be. So during his speech, the president called the grid, quote, "old." And he said it simply can't handle the amount of new electricity to power the modern economy. To what extent is that an accurate statement? Well, look, the, you know, if you go all the way back to Thomas Edison when he started the first generation state station and distribution station in New York City. I mean, the grid has grown and met the needs of the country even through the industrial revolution. And, you know, we look at it as the grid is the most important economic and national security engine that we have. And we're investing, you know, $200 billion a year in that grid to make sure it works. And I think what you have to look at is, you know, recent examples that really test the resiliency and reliability of the grid. You take winter storm, a firm that was the ice storm that went across the, the southeast and into the mid-Atlantic. And, you know, we were able to get most of the power back up within seven days where 90, 90% back. You look at the winter storm that we just had in the, you know, blizzard conditions in Boston and New York. And the grid head up will very well. So I think what you've seen is our industry invest over time in new technologies and resilience that make that grid as reliable as possible. And if you look at what's going on today with a lot of the reshoring of manufacturing, you look at the data centers coming online, you know, we're hooking up 3,200 new customers every day, all that is happening on the grid. And the grid is holding up. That doesn't mean we're not going to stop investing. We have to keep investing more and more. And, and I think you're going to see us continue to do that over the next 10 years. I'm glad you brought up data centers because you know we're going to get there. But before we get there, I wanted to ask you a little bit about some of those costs, pressures that you had mentioned earlier. I mean, to the president's point about it being an old grid, isn't it the transmission and distribution, the polls and wires that kind of maintenance has really driving up costs for a lot of people right now. Again, Zach, if you have to look at it on a state-by-state basis, like sort of in the mid-Atlantic, what's been driving up the cost is generation because it's scarce. And there's not enough generation. So it really depends on what areas of the country you're in. And then it goes back to the fact that, you know, we have almost 70% of the states that their electricity rates have largely stayed in check with inflation. Okay, data centers. I mean, I know you knew we were going to get there at some point. It is the hot topic everywhere. One of the newsier items that came out of the state of the union was this rate-payer protection pledge at the president's reference. He said that tech companies would bring additional power supplies on the grid. They would pay for it. They'd pay for the grid upgrades. But the detail is about that pledge have been scarce. So what would tech companies actually have to do to ensure that people like you and me don't pay more for electricity? Well, I think we've already seen several agreements. I think 19 states have already passed these sort of large load agreements, I would say. And I think another nine states have impending. And what that really calls on is it protects the customer. And if you look at some of the recent announcements, you have the Amazon announcement in Mississippi, which is a $10 billion data center, $2,700 full-time jobs, $1.3 billion in new generation costs, savings, $700 million in future costs, Louisiana, another big $10 billion data center. Again, it's going to save customers, $650 million over 15 years. Where these states are getting these large load agreements put in place, I think it really has the potential to enhance the reliability and modernization of the grid. Because you're taking all this new investment, putting it onto a fixed system, and allowing us to put even more technologies on and make the grid more reliable than it is even today. But how can these companies really ensure that they're paying for the full cost of what these investments are doing to the grid? I mean, there's more strain on the grid. These are large users. All these facilities are coming on at the same time rapidly. How do you properly assign the cost to the user? Well, look, the data centers are not new. Data centers have been around for, you know, 20 years. And they, you know, they were sort of a necessary load growth is new for it to all be happening in such a condensed timeframe. Yes, look, we are seeing unprecedented amount of load growth right now. And that's why you're seeing that states, which are largely the regulators of this, working closely not only with the utilities like us, but also working with the data centers to make sure that we get it right, to make sure that the customers are protected, but also to make sure that, you know, if a data center doesn't make it that the customers aren't less left with this stranded cost. So it's a very careful planning exercise that goes on. And that's really what we're good at. And that's why it's so important that this is all being done regulated utilities because we have that obligation to serve and that obligation to provide power every day to Americans across the spectrum. And we can't just, you know, pick winners and losers. That's why, you know, we see these big load agreements out there that are going to protect the customer. So I think you've done a bit of addressing of this, but you know, the growth of artificial intelligence and data centers is obviously challenging the decades, old business models, along with state and federal regulation. You've seen some adapting here. What are you doing to coordinate with the tech sector and the administration to ensure there's harmony across perhaps the biggest build out of electricity of our lifetimes? Every day our members and our trade association are interacting with whether it's people in the data center coalition, whether it's meta Amazon Google, open AI and Thropic. We are having, we are engaged in discussions with them all the time. We are constantly talking to folks at the National Energy Dominance Council in the White House at DOE, at Interior. These conversations are ongoing. So we all have the same goal. The same goal being is that we need to get as much generation online, keep it as affordable as possible and make sure that electricity continues to be a reliable source of power for all businesses, industries and families. Well, we live in a political world. The tech companies, a lot of them had already made some of these pledges to pay for their own electricity and grid upgrades before the White House issued its rate-payer protection pledge. I just wanted to know, was there any coordination between your industry and their industry saying, hey guys, like you're maybe getting a little bit of public backlash about data centers, about rising prices, even if we don't think that you're the cause of it, how do we triangulate the public pressure here? How do we get on the right side of this story? Has there been that kind of message coordination with the industry? Yes, we are constantly talking to our partners in the AI data center space. If you look at our Charles River study that was conducted, not only did we look at where the states and the state prices individually are, but we looked at whether data centers are driving cost. And if you look at where a lot of the data center development is, it hasn't been driving cost other than in this mid-Atlantic area that is sort of generation constrained. But the recent announcement with the Southern company, with Energy on the Southeast, all are going to help stabilize power prices as well as enhance reliability in that region of the country. But can we be honest here, I mean, saying except for this mid-Atlantic region, that is the most populated regional grid in the country. That's not nothing. Absolutely. And I think that's why you've seen such a focus between the White House and the governors in that region on how we need to fix those markets because they're broken and they're not working. But this rate-payer protection pledge, it's a pledge between the tech companies and the White House. Now that White House announcement that the president made last week during the say of the Union Address, was about tech companies being able to bring their own electricity onto the grid. What do you think about that concept? Well, I look, we've been working closely with the White House on how this is going to play out. I think bring your own means a lot of different things. Bring could be building, it's buying. So there's a whole range of things. If you look at most of what the current data center development has been, it's all been grid access generation. And for most of the data center companies we're talking to, they want the reliability of the grid. They don't want to have to build a power plant because you know, when the advantage of having a grid is oftentimes a power plant has to either go down for maintenance or something trips it off, is that you've got the grid that can balance that out. And that's very hard to replicate just at an individual data center. So we're very confident that we're going to have a very significant role to play. We've had these conversations with the White House. And there's enough generation that needs to be built that we need everybody sort of lending whatever expertise they have to get the generation online as quick as possible. Now, a majority of data centers do have some connection to the grid or want some connection. There's 56 gigawatts of off grid data centers in the pipeline according to CleanView, which tracks data center development. So it seems as if there is a trend away from this. I mean, what does that mean for your members who count on these revenues if there is a trend towards not relying on the grid? Well, they've already been 31 gigawatts connected to data centers by utilities on the grid. Our experience talking to these data centers is they want the grid reliability and they want the mix of fuel source that you get from being on the grid. So, you know, are there going to be some data centers that do a behind the meter and build their own pipeline? Probably, there will be and that's fine. But ultimately, I think they're going to want that reliability to still be connected to the grid at the end of the day and we're prepared and continuing to work with them on these types of activities and announcements. Right now, though, it seems like they want to get on the grid faster. They think speed to power is the number one priority. They're willing to do it a different way if the utilities aren't willing to play ball to get quicker on giving them power. This seems like the White House endorsed a behind the meter concept from the state of the union addressed. Doesn't that threaten your business model? Well, I wouldn't say that, you know, I wouldn't take sort of one sentence out of the state of the union and say that's what the pledge is going to look like. I think that this is going to be much more about flexibility and how you get your generation, where you're buying it, whether, you know, there are still pockets in the country where there is excess generation capacity and that's where you're seeing a lot of these announcements being made. So there's a lot of partnerships. I mean, the energy, the Southern company partnerships are all partners with a lot of these data centers and, you know, building power, whether it's a hybrid power source or whether, you know, Southern's building it, like all these things, we're all being very innovative to try to figure out how do we get as much generation online as fast as possible? Well, if this is a partnership, why is it not utilities also signing this pledge? Why, were you in the room for this? Look, we have, as I said, we are in constant communication with the White House. You know, this has been a focus on data centers that they've had. I think, you know, we've talked to them about it. I think the White House recognizes the important role that we are going to play. You know, as I said earlier, you know, we operate what we is America's most important engine, which is the electric grid. If that's not working, America's not working and that's why you see an enormous amount of capital going into making sure that that grid is resilient and reliable as possible. And let me add that, you know, and I think that, you know, the White House would agree with this. Just yesterday, you had DOE announce a loan guarantee with Southern company that is going to be, I think it's the largest loan to a regulated utility and history of $26 billion. It's going to result in $7 billion of savings to customers in Georgia and Alabama. The advantage of that is that's exactly what we should be doing is we're taking, building, putting new technologies on the grid, we're enhancing the grid because I think everyone recognizes that the grid that we operate is the most important engine that we have in America. And I think the administration recognizes that too. They've clearly prioritized AI and growing the grid. The Department of Energy even directed the Federal Energy Regulatory Commission to clarify how large energy customers like data centers can locate near existing power sources. How concerned are you though that the federal government is stepping too far into the spaces traditionally regulated by states and regional operators that oversee broad stretches of the grid? I'm not too worried about it. I mean, I think we'll see what FERC comes out on their large load, no per that they're considering there. And, you know, we filed comments, you know, for years and years, you know, this has largely been regulated at the state level. I think that will continue. I don't think that's going to change. And I think the advantage that you see at the state level is the states sort of understand what they need on a local level and they're best equipped to protect the customer. Now, what I think FERC will end up focusing on is fixing the markets that are not working. And right now that largely is PGM in the bit Atlantic, and that seems to be the larger focus of the administration. And FERC is like, how do we get that market fixed? At the same time though, there has been direct intervention from the federal government by keeping coal plants open past their intended retirement dates. Isn't this the type of federal intervention that the private sector is long criticized? Well, I think, you know, when some of those decisions were made to, you know, curtail power or whatever facilities you have, you know, they were they were based on a time where the the load growth wasn't what it is today. And I think why you're seeing these decisions is there's tremendous load growth. We've had some challenges to the system with these big storms. So we need as much power and as many electrons on the grid as possible at all times. And I think that's why you're seeing these decisions being made because the load growth is just so enormous right now. And if we can extend the life of existing generation longer, then we should be doing that. So your members and shareholders are okay with that pattern. Again, every generation facility is going to be different, but a lot of them they're fine keeping these plants going if they can for a longer amount of time. But again, each each facility is different on how how you would approach it. So your members do have a unique model. You get a dedicated customer base and fund your improvements based on the fees you charge them in many cases. You also have to get regulators to approve fee increases. Many of those same regulators are under increasing political pressure given the rising electricity to bills. Many of us have experienced. So what kind of vibe shift or additional attention have your members notice during these regulatory hearings? Look, everybody is focused on affordability. And that's really our north star. I mean, we have affordability and reliability. Everybody expects when they go wake up in the morning, they turn their lights on that their phone is charged and everything in their daily life works. And that's what we were responsible for. And we take that very seriously. If you look at sort of the 20 year energy wallet on electricity, we are at that historic low period. 1.3 cents of your energy wallet is dedicated to electricity where somewhere 16 cents is dedicated to healthcare and even higher on groceries. So, you know, we we are a component. So if you think about it for basically a box of cereal a day, we keep your lights on and keep your life, you know, you know, going your heat and everything else. So we are very cognizant of that. That's why we are really talking about and we're talking about our campaign of the energy of every day is reminding people the value that we provide in their everyday lives. And we're hoping that that is helpful with the regulators as they continue to, you know, sort of examine the investments that are needed in order to make sure that we keep the lights on in a reliable and affordable way. So we have rapidly rising demand and age and grid. A need to pay for expensive infrastructure upgrades. Meanwhile, there's a lot of tech companies that are willing to pay for their own power sources to contract with independent merchants just to do things differently. So I'll just ask bluntly, are the tech companies killing your business model is this is your model fit for this moment? I think this is going to be a unique time period when we look back and we say this was the time where regulated utilities working with data centers were able to do an enormous amount of building to the grid, more generation and make our energy grid even stronger than it is today. Well, thanks so much for your time Drew. I really appreciate it. Great, Jack, great to be with you today. Thank you. All right, that's it for Politico Energy. For more news on energy and the environment, subscribe to our free newsletter Power Switch and subscribe to Politico Pro to read our morning energy newsletter. Stefan Tadorevic is the show's video producer. Normal Malaykul is the show's executive producer and co-host Debra Khan, Matt Daly, Saisineski and Alex Keene are editors of the show. Our theme music was made by Pran Banti. Please subscribe to Politico's YouTube page if you like our content and follow our show on Apple Spotify or wherever you get your podcasts. I'm Zach Coleman and see you Wednesday. [Music] A nation isn't just built. It's powered by people like us. Learn more at chevron.com/america.