AI and the Grid: Meeting Growing Power Demand While Protecting Ratepayers

Well, good morning. The sub-community energy will now come to order, and the chair recognizes himself for five minutes for an opening statement. Again, good morning and welcome to today's legislative hearing to discuss proposals to improve the power sector during this time of historic load growth and affordability challenges. Access to reliable affordable energy is the linchpin to US leadership in AI development. This subcommittee has spent considerable time examining the opportunities and challenges that arise from US leadership in artificial intelligence. From that work, it is safe to assume AI is one of the defining challenges of our time. It encompasses the race for economic strength, technological leadership, and national security in the twenty-first century. Today, ai is already driving a significant share of economic growth. It is making businesses more productive, workers more efficient and and industries more competitive. We also examined the risk of the United States losing this global ai race. The ability of of malign actors like Russia and Communist China using ai models to disrupt global economies are no longer theoretical, but a reality. at the same time the american people are understandably uneasy many question whether ai in data centers that power it will ultimately do more harm than good particularly when it comes to individual energy costs these concerns deserve to be taken seriously our global competitors are not slowing down china is investing heavily in ai with explicit goal of surpassing the united states that's why it's vital that we ensure that interconnecting new data centers lower costs and bring and bringing these benefits to households like grid modernization, more dispatchable energy resources, and significant state and local tax revenue. In fact, the Lawrence uh Berkeley N uh National Lab and others have found the data center load growth lessens retail electricity costs. While we may not agree on every provision, the legislation under consideration today raises policy solutions to ensure this outcome is replicated across the country. However, demand growth continues to outpace our generation resources. The North American Electric Reliability Corporation's recent yearly assessment estimated that peak demand over the next ten years will grow by two hundred and twenty-four gigawatts, while a hundred and five gigawatts of dispatchable generation is expected to retire. There therefore we're gonna be three hundred and twenty-nine gigawatts short. Earlier this Congress, we advanced several bills to resolve the reliability crisis caused during the Biden administration and bring dispatchable base load energy to keep the lights on year-round. These efforts have been boasted by the Trump administration's decisive action to refocus federal authorities on policies that matter most to the American people abundant and reliable energy supplies at an affordable price the rate to payer protection act would ensure that states have necessary policies to in place to safeguard households from footing the bill for data center energy needs. The load forecasting enhancement act would usher in bottom-up planning to improve the accuracy of demand growth projections to right size cost effective generation and trend transmission build-out. The fair allocation of interstate rates act introduced by our colleague from North Dakota is a practical solution to place the burden of renewable portfolio standard costs on the states that choose to adopt those requirements. The advanced transmission technologies to reduce rates act would leverage the important work that DOE enhances, the use of advanced transmission technologies to bring more cost-effective solutions to our growing energy needs. I look forward to our discussion with our witnesses, who have valuable expertise and experience to provide key insights into the bill before us. And with that, I will yield back the balance of my time and recognize the General Lady from Florida, the ranking member of the subcommittee for five minutes for an opening statement.

Well, uh, thank you, Mister Chairman. Welcome to our witnesses. I hope this hearing is the beginning of a bipartisan effort to efficiently grow our energy resources and lower electric bills, because we all know that hardworking American families are really suffering right now. More than eighty million Americans are struggling to keep up with the cost of housing. health care, food, and keep the lights on at the same time. Uh, the president's war in Iran is causing gasoline prices in the United States to climb to their highest level in four years and the price spikes are rippling throughout the economy and touching every one of our neighbors back home.

Well

At the same time, electricity demand in the United States is rapidly growing at a rate we have not seen in decades cleaner, cheaper energy is what is most available right now to meet forecasted electricity demand, and studies point to the fact that we should improve transmission at six times the rate we have been over the past few years. That would help lower costs for everybody and provide more power, uh, but we know the President and Republicans in Congress, uh, don't like it,

Mm-hmm.

they don't want it, they don't seem to care that Americans will have to pay more. But, I do think we can find common ground on upgrading and utilizing more of the existing grid. Most of the US power grid was built in the nineteen sixties and nineteen seventies. It's reaching the end of its life, which means we need to make significant investments in our grid transmission infrastructure. For every one dollar uh invested in well-planned long-distance high-capacity transmission we get five dollars in reliability and economic benefits. But there is so much more that we can agree on to make the existing grid more efficient by utilizing uh modern and fast emerging tools. In doing so, families and businesses can save money while we power our homes, the vehicles we drive, and AI. So let's dive into how we can squeeze more out of the existing grid. The current generation, transmission, and distribution system is built for the peak, the hottest summer days or the coldest winter nights. And most of the time the US electric grid operates at just fifty-three percent of its total capacity. That's right, most of it sits idle much of the year, or a large part. It's like building a highway for every car and truck that exists in America. But not every car and truck is on the road at the same time, right? Uh, recent studies have analyzed the problem and suggest that if we increase grid utilization, existing rate payers could save more than a hundred billion dollars over the next decade. This is a win-win-win. Families, small business owners can save money while we provide abundant energy, and most efficiently use the grid that we have already paid for. And the good news is that we have quick, ready deploy, ready to deploy solutions like batteries, grid enhancing technologies, and distributed systems. But the challenge is that there are barriers to deployment. Uh, and savings. There are misaligned incentives. that reward utilities for selling as much power as possible and making large capital investments rather than efficiently using the right power in the right place at the right time. Uh, we also should be rapidly scaling virtual power plants, using the batteries, the smart thermostats, electric vehicles distributed in communities across the country to provide grid reliability faster and at a lower cost. These are big opportunities. The Department of Energy estimated that scaling VPPs could serve ten to twenty percent of peak load and save about ten billion dollars in annual grid costs. And I, after living through a terrible hurricane season, I see a future of great resilience for communities across the country if we can deploy these batteries and distributed systems at a time when the grid suffers from a natural disaster. Large load customers like data centers uh should be part of this solution, and in some places they already are. Uh, and we should be able to agree that data centers must foot the bill for their grid upgrades rather than offload that cost on families the families we represent. I think together we can find ways to require these data centers to be good citizens of the grid rather than impose their cost on others and help us solve real problems, like the interconnection queue. financing, the supply chains, and permitting. Some of the bills we're discussing today move us in the right direction, but they don't really meet the moment. Uh, we need real reforms to federal transmission planning, permitting, and a major focus on utilizing the grid that we have now. So I hope today's hearing is a starting point. I yield back my time. Thanks.

Thank you very much. The general yields back. The chair now recognizes the gentleman from Kentucky, the chairman of the full committee, for five minutes for an opening statement.

Thank you, thank you Chairman Latta for holding this hearing and and I I thank my, my good friend from Florida, the ranking member for those those words. I think there is some common ground that that we need to find and we need to get this process moving forward and we have bills before us today, but we're always open to sit and and to to talk and and I appreciate actually the highway uh analogy not every car is on the tr- road at the same time. No, you went to college in Atlanta. My son did. And uh you could if you timed yourself right, you could get to Atlanta. uh to go pick him up from from downtown. But there were peak times in the afternoon, I know uh it's not always daily peak in electric grid. And so you need to make it more efficient, but you also at times just need new highways and new generations. So so I I think being more efficient is absolutely something we have to work on together. But I also think there's gonna be the need for more generation as well as we've seen. So well thank you for that and and we will figure out a a way to try to find common ground on these. Uh I'll make that commitment if we can do that. Um so but throughout this Congress we spent a lot of time talking about US leadership in artificial intelligence. We evaluated the benefits of AI across every sector of the economy, uh the national security issues with AI and adversarial nations like China and having whose values control AI is it's vitally important. We looked at ways that AI data growth and how it interacts with our electric system. Uh, the world is at a precipice of great change, and we must get this right. It is no secret that energy demands coming from data centers are raising concerns about affordability in our communities. But we are charting a path to ensure, and uh, as w- as the ranking members said, we can find common ground on that data center growth works for all Americans and not just big tech companies. When done right, research and evidence continue to show that low growth coming from data centers actually lowers costs for communities, cuz new data centers bring needed investment into the grid, modernization while connecting base load energy that keeps the lights on for everybody for three hundred and sixty-five days a year. Even more, these investment raise significant tax revenue. We're looking at one in in my district that's gonna raise significant significant tax revenue and they'll they can use that to pay for local communities and and schools, and pay for benefits to local communities like schools and public safety and recreational parks. it should generate a a nice source of revenue for uh if you're gonna locate in the community it should generate revenue in that community. And that is why uh legislation before us today focuses on ways to methodically pan plan build and pay for a grid that works for all of the American households. These bills enhance the state's important role in planning a more affordable and reliable grid. We're also ensuring that data centers are paying their fair share. data center should pay for the load that comes into the data center. So while we may not agree with every provision in the bill, these proposals will foster discussion about how to implement a vision of our electric system that keeps costs low for hous- low low for households and ensures US leadership in the next generation economy. So I look forward to today's discussion and I absolutely do look forward to continued discussions amongst uh this committee all members of this committee, to see that we Be China in the race to AI. And thank you and I yield back.

Well, thank you very much. The gentleman yields back the balance of his time. The chair now recognizes the gentleman from New Jersey, the ranking member of the full committee, for five minutes for an opening statement.

Thank you, Mister Chairman, it's been fifteen months since Republicans took control of all levers of power here in Washington, and it's a nightmare for the American people. Electricity prices have increased as much as thirteen percent, and the same goes for natural gas prices. American families are now paying well over four dollars for gas at the pump, and all indications are that things will continue getting worse. Prices will continue to soar as a result of Trump's reckless war in Iran, and Republicans' relentless attack against cleaner and cheaper energy. And these actions are resulting in our nation becoming less energy secure. Making matters worse, data centers fueling artificial intelligence technologies are throwing the grid into a generation crisis. at a time when we need almost all the energy we can get republicans have proceeded with their illogical war on clean energy dedicating themselves to taking vital sources of power off the grid and american families are paying the price uh last year republicans used reconciliation to wreck our power grid and repeal billions of tax incentives and programs that would have financed hundreds of gigawatts of clean, reliable power the problem is that i fundamentally find it difficult to trust proposals to fix our problems from the same people who caused those problems in the first place. President Trump promised that he would cut energy bills in half his first year back in office instead they're higher than ever his so-called rate payer protection pledge isn't worth the paper it's written on because it doesn't have any mechanisms to hold big tech companies accountable for their promises. And given this track record we should all be suspicious if any Republican promised that they can actually prevent America's bills from going up, I don't believe it. And this is the backdrop to today's legislative hearing. Our nation's grid is facing enormous challenges, and those challenges call for big solutions. Unfortunately, I don't think the bills we will review at today's hearings meet the moment. Some of the bills before us today include good ideas, improving the accuracy of electricity demand may be critical to ensuring that we're not making families pay for data center related grid infrastructure, that's never needed. using advanced transmission technologies and more efficient conductors to get more out of the existing grid is is a promising idea to keep costs down. And given the difficulties that AI technologies are creating for the grid, the least we can do is try to ensure the grid is some is getting something positive out of these technologies too. I am also pleased for considering HR six five two nine from representative Landsman, which should require FERC to convene federal experts, state regulators, tech companies and utilities to find pathways to protect American families from rising electricity costs, ensuring that data centers pay their fair share, will take cooperation across all these groups, and we need to ensure that they're engaging with each other and are working together to reduce costs for repairs. And while I think some of these bills need tweaks or technical alterations, they're largely small steps in the right direction. But we don't need small steps, we need big steps, because we have big problems. And I also want to mention that there is one bill that would be a major step in the wrong direction, and that's HR six three three six. The so-called Fair Act is anything but fair. It's a purely partisan attack that would make it harder for us to build out the regional and to regional grid infrastructure that all of us know we need to build faster. The Fair Act would give red states a free ride, say they don't pay for the economic and reliability benefits they receive from a build-out of a power grid. the bill is a distraction from the work we should be focused on. So this committee should be holding a hearing on proposals that could help fix the long-term drivers of the current grid reliability crisis and make it easier to, plan, permit, and pay for the expansion of the power grid. Unfortunately, committee Republicans turned down an opportunity to include Representative Peters' Speed and Reliability Act, a bill that would do just that. So, Mister Chairman, I think that's a real missed opportunity. And I'm disappointed that it was not included. With that though, I thank you and I yield back the balance of my time, Mr. Chairman.

Well, thank you very much, the gentleman yields back the balance of his time, and this concludes member opening statements. The chair reminds members that pursuant to committee rules, all members' opening statements will be made part of the record. And uh, just to let uh everyone know that votes have been called and um, as we do take a a r- our recess to go vote, uh what we'll do is at the uh conclusion of the last vote um at at the start of it uh ten minutes later we'll resume back here in committee so we wanna thank our witnesses for appearing today and taking time to testify before the subcommittee each witness will have the opportunity to give an opening statement followed by a round of questions from our members our witnesses today are mister nick meyers the chairman of the arizona corporation commission mister tom falcone the president of the large public power council miss whitney muse the president of muse energy and mister nelson peeler the senior vice president of grid strategy planning and integration of duke energy thank you very much for our witnesses for appearing today just real briefly uh we wanna pull that mike up close uh when you uh speak and also you'll notice the lights uh when it goes yellow you have uh one minute left and it goes red if you could uh Uh, again we appreciate you being here and Miss uh, Mister uh, Myers, you are recognized for five minutes for your opening statement.

Great. Thank you and good morning, Chairman Lotta, uh and Ranking Member Castor, members of the Energy Subcommittee. My name is Nick Myers. I serve as the Chairman of the Arizona Corporation Commission, and the views that I'm sharing this morning are my own. As you're fully aware, our nation is experiencing an unprecedented growth in demand for electricity. A significant part of that growth is driven by artificial intelligence, data centers, and advanced manufacturing. These are positive developments. They represent investment, innovation, economic growth, and perhaps most importantly, a strengthening of our national security. We are facing a pivotal moment in history, a digital revolution. How we structure that growth so that it remains sustainable and fair for all customers, while also putting downward pressure on residential rates wherever possible is critical. The principle we in Arizona have relied on to handle large load customers is straightforward, growth needs to pay for itself. This approach to handling large load responsibly appears to be gaining national consensus. That means when large new loads come onto the system, the infrastructure required to serve them needs to be funded by those loads, not partially, not over time in a way that shifts risk to other rate payers, but fully with real financial commitments backed by financial security instruments such as letters of credit. The Arizona Commission recently hosted a large load workshop where we heard from our electric utilities consumer advocates data centers and other stakeholders. One thing became very clear, our utilities can serve this demand, but only if the financial structure is disciplined. Generally, most agreed that a strong tariff design provided stability, transparency, and consistency in combination with the use of a of energy service agreements as a layer on top to provide flexibility for unique characteristics of any given large load. Uh, that allows for growth and protects customers from cost shifts. The proposed Rate Payment Protection Act, which ensures that large load customers are responsible for the full incremental cost of the systems required to serve them, aligns with what we are doing in Arizona and what I'm seeing across the country. The bill defines a large load customer as a hundred megawatts, which raises an issue we are dealing with in Arizona. How should we define large load customers? At our recent workshop, there was an agreement that fifty megaw megawatts would be a large load. But what about the twenty megawatt customer, that is the proverbial straw that broke the camel's back, and requires substation upgrades, potential reconductoring, and new transformers? We are finding that whether a com- customer is considered a large load or not, may often be context specific. The Protecting Famil- Families from AI Data Center Energy Cost Act likewise highlights the importance of protecting residential and small commercial customers from increased By requiring a FERC technical conference, it could help raise the national attention on this critical issue, but at the same time various strategies and rate structures to protect rate payers are already being implemented through state-level tariff design and regulatory oversight. Federal efforts in this area are most effective when they complement those structures rather than attempting to replace them. On the transmission side, there's an understandable push to expand capacity. The High Capacity Grid Act focuses on improving efficiency Those are useful tools, but perhaps not a universal solution. While advanced conductors increase line ratings, they may not necessarily improve system reliability and could simply shift the bottlenecks. In many cases, substations, transformers, and interconnection facilities are the actual limitating limiting constraints. A flexible approach can help ensure the investments deliver the intended benefits without unintended consequences. The Fair Allocation of Interstate Rates Act reinforces the principle that costs should follow the entities that cause them, and that states should not be required to absorb costs tied to policies they did not adopt. I was very involved in the Markets Plus greenhouse gas task force that developed the the GHG tariffs. The most important principle unifying the states involved was that rate payers should not have to pay for energy policies adopted in other states. In the West, the grid is heavily intertwined with non-jurisdictional ente- entities such as BPA SRP and WAPA. In Phoenix alone, SRP and APS are tightly intertwined, and fully separating cost is unrealistic. This reality creates a level of complexity that broad uniform federal approaches do not always account for. States must retain their authority to ensure that the system operates properly and costs are allocated fairly. Thank you, and I look forward to your questions.

Well, thank you very much. And uh, Mister Falcone, you are recognized for five minutes for your s- your opening statement.

Uh, thank you. Chairman Latta, Ranking Member Caster, Chairman Guthrie and Ranking Member Pilon, members of the subcommittee, thank you for inviting me. Uh, I don't have as many jokes in my testimony as King Charles who knew he would be such a hard act to follow. Uh, my name is Tom Falcone. I'm President of the Large Public Car Council. I previously spent a decade as the CEO and CFO of the Long Island Power Authority, serving one point two million customers outside of New York, and part of that worked as an investment banker to the utility industry. LPPC represents twenty-nine of the largest state and locally owned, not-for-profit public power systems. I emphasize the not-for-profit. We are in the business of serving our customers and communities, and we have no financial incentives other than the right thing for our customers and communities. Our members provide reliable, affordable electricity to more than thirty million uh Americans across the country, including many districts represented by members of the committee. And our members own approximately eighty gigawatts of generation and operate more than fifty thousand circuit miles of high voltage transistors. uh, transmission. The issues before the subcommittee are not theoretical for us. Uh, LPPC members currently power approximately eighteen percent of the nation's AI and data center load. And looking at various forecasts, we anticipate approximately serving thirty-six percent of the uh interconnections over the next five years. Over the next decade, we will invest more than a hundred and sixty-seven billion dollars in infrastructure and build approximately sixty gigawatts of new generation. Uh, the policy challenge is straightforward. The United States should build the infrastructure needed to support AI leadership and economic growth while ensuring existing customers do not subsidize large or speculative loads. I agree with my fellow panelists from Arizona that growth has to pay for uh growth has to pay for growth. That requires three practical considerations. First, load forecasts must be credible and load forecasting is the beginning of the planning process uh process that affects generation planning transmission, resource adequacy, market signals, customer rates, and reliability. But those forecasts are inherently uncertain when a very few large customers drive the projected growth. Utilities and regulators need to distinguish between committed load from probable or speculative load. Second, rates and contracts must follow cost causation. Uh, existing customers should not provide a free option to large customers that request service, cause utilities to build infrastructure, and then do not use the capacity that they request. No developer would build a large skyscraper without an anchor tenant, financially committed to use and the same principle applies to the electric industry. Especially when those grid investments may last sixty to a hundred years, while uh the technology cycle for those customers is closer to ten years. Large load tariffs and contracts can protect existing customers through minimum demand obligations deposits collateral fee, and other tools. Those tools are not a barrier to growth, they're a safeguard that allows growth to proceed without shifting costs to families small businesses and other customers. Third, federal policy should support best practices while preserving state and local discretion. PURPA has historically been used to require state commissions and utilities to consider federal standards without requiring adoption. If Congress uses that framework here, it should maintain the ability of state commissions and public power governing boards to apply appropriate forecasting and rate barrier protection practices through existing public processes without uh creating duplicative proceedings or conflicting standards as the current bill does. There's also a related public power specific federal regulatory issue that deserves your attention. Treasury's private business use rules for tax exempt bonds, which are issued by our members. Those public power utilities need long-term commitments from large retail customers to protect protect existing customers and finance infrastructure but current tax regulatory rules can make those prudent commitments difficult when tax exempt bond facilities are involved. LPPC is working with Treasury on a narrow regulatory solution. Finally, transmission policy should be disciplined. Planning should begin with an accurate load forecast, evaluate available resources, and then compare the best ways to meet the deficiency, whether through generation, transmission, storage, demand response, reconducting, grid enhancing technologies, or other tools. Transmission projects should deliver tangible net benefits to the customers who fund them. Costs should follow benefits and cost causation. Affected states and communities should have meaningful input. And the Federal Power Act's protections for public power should be preserved. For inter-regional projects, uh, we agree that affected regions should consent before customers are assigned costs, uh, that is simple customer protection. And advanced technologies should be encouraged for useful but not mandated without project-specific review. LPPC's message is practical. We serve new loads and build the infrastructure the country needs, but we should do it in a way that protects existing customers, respects state and local authority over retail rates, and gives utilities the tools to distinguish real demand from speculative requests. Thank you and I look forward to your questions.

Well, thank you very much. Uh, Miss Mues, you are recognized for five minutes for your opening statement.

Thank you. Good morning, Chairman Lotta, Ranking Member Castor, Chairman Guthrie and Ranking Member Pallone, as well as members of the subcommittee. Thank you for the opportunity to testify this morning. My name is Whitney Mues and I am president of Mues Energy, an energy consulting firm, and I'm here in my personal capacity and not on behalf of my firm. Prior to founding Mues Energy, I served as senior policy advisor in the Office of Clean Energy innovation and implementation at the White House, and also served at the US Department of Energy. First as Chief of Staff in the Office of Electricity Electricity, and subsequently worked to establish the Grid Deployment Office serving as Chief of Staff and Senior Advisor. Across these roles, I had the privilege of working on implementation of many of the policies and programs from the Energy Act of twenty twenty the Infrastructure Investment and Jobs Act and the Inflation Reduction Act. This energy subcommittee hearing is a timely moment to discuss opportunities and challenges of load growth that we are seeing in the power sector after two decades of flat growth. The US is now in an era of load growth driven by multiple sources, data centers and AI usage, increased manufacturing, and electrification of transportation, heating, and more. This load growth is happening as we are seeing rising electricity prices and escalating concerns about affordability with a growing need to ensure that consumers and rate payers are protected. The grid underpins nearly all aspects of our lives. Transmission connects generation resources, and across the system and moves power from where it is generated to locales where it is consumed while the distribution system delivers power to individual homes and businesses. Transmission provides many benefits, including improved resiliency and reliability of the grid, reduced congestion on the grid, and allows for faster incorporation and interconnection of new generation and load. A proactively planned transmission grid that incorporates high capacity regional and inter-regional transmission lines to connect the lowest cost generation resources yield savings for consumers relative to a more piecemeal or siloed approach. During this hearing, we have the opportunity to review a number of the introduced and draft bills. The Advanced Transmission Technology to Reduce Rates Act and the High Capacity Grid Act offer pathways to accelerate the deployment of various advanced transmission technologies and grid enhancing technologies to increase the capacity of the existing grid. Bills such as the Load Forecasting Enhance Enhancement Act, the Affordable Innovation for the Grid Act, uh, the Protecting Families from AI Data Center Energy Costs Act all provide opportunities for the Department of Energy and FERC to improve its load forecasting processes and to work with stakeholders to protect families from data center costs as well as to accelerate innovation on the grid. The Ratepayer Protection Act brings forth, uh, many of the topics that have been in discussion quite frequently around having large load customers cover all of the incremental costs of the upgrades, I think there is opportunity to further refine the definition of how a large load is considered as we look at both data centers as well as large loads in the manufacturing and industrial base across the country and then there's the fair allocation of interstate's rate act, which really offers pathways that would block and significantly stymie and slow the construction of much needed inter-regional transmission across the country. I look forward to the discussion of all of these bills during this hearing. In this time of load growth, build pressures and more, we need action to maximize the existing grid and expand transmission capacity. DOE, the National Labs and many other entities have produced many studies that point to the value of transmission and of the grid and more recently provide numerous estimates of the coming load growth. What we need now is investment, technology deployment and stealing the ground to meet the demands of the moment. Thank you.

Thank you very much, Mister Peeler, you are recognized for five minutes for an opening statement.

Uh, Chairman Latta, uh, Ranking Member Castor, uh, Chairman Guthrie, members of the subcommittee, uh, thank you for the opportunity to be here today to testify. Uh, I serve as Senior Vice President of Grid Strategy, Planning and Integration at Duke Energy. One of the largest investor on electric utilities in the United States. Serving more than eight million electric customers across the Midwest and the Southeast. Duke Energy shares this subcommittee's focus on reliable, affordable energy to support an economic growth and America's leadership in AI. Duke Energy serves customers under a vertically integrated utility model in all of our states, except Ohio. This model allows us to plan, build, and operate generation, transmission, and distribution resources in a coordinated and accountable manner under federal and state regulatory oversight. As a result, rates in all of our vertically integrated states are below the national average. alignment of long-term resource planning with strong state oversight ensures infrastructure investments are prudent and deliver measurable customer value. Power demand is growing rapidly, and I appreciate the opportunity to share how we are serving growth or remaining committed to delivering reliable power at the lowest possible cost. Being a regulated utility carries both the privilege and responsibility to serve all customers, regardless of background or circumstances, in a way that is affordable and reliable. Duke Energy has a culture of continuous improvement, focused on delivering value for customers. Our scale enables cost-effective operations through strong cost controls and operational discipline. Maintaining a strong balance sheet, leveraging tax incentives, financing cost recovery during construction, scrutinizing storm recovery expenditures, and operating within constructive, stable regulatory environments all help lower cost to customers. We're also leading with customer protections, on large load as large loads come online. Under the oversight of our regulatory commissions, we're implementing well-designed arrangements to ensure that new large load customers pay the full cost of serving them, enter long-term service agreements that reduce risk of stranded assets, and provide financial security measures that protect existing customers. When integrated responsibly, large customers can support economic development and help limit rate growth by spreading fixed grid costs across a broader customer base. To meet growing demand, we're investing more than a hundred billion dollars over the next five years to add fourteen gigawatts of new capacity and associated network transmission. This includes new generation resources including natural gas, solar and storage with nearly five gigawatts already under construction. Efficiency improvement shielding an additional one thousand megawatts from existing nuclear natural gas and hydro assets and grid enhancing technologies to improve efficiency, performance, and resilience. We're also expanding and modernizing our transmission system through a combination of new lines targeted upgrades and grid enhancing technologies, such as advanced conductors. We coordinate closely with regional grid operators and state regulators to ensure projects are properly scoped cost-effective and aligned with system needs. To be clear, transmission does not exist to meet abstract policy goals. It exists to transfer, scale, and distribute generation to serve all customers reliably and affordably. In regulatory proceedings before state commissions, including North Carolina, I've consistently testified that integrated planning produces lower long-term system costs and produces stronger reliability outcomes than fragmented or siloed approaches. Federal policies should therefore avoid substituting national prescriptions for regional judgment. Even with strong planning and customer protections in place, infrastructure cannot move forward efficiently if national environmental permitting processes are unpredictable or protracted. Duke Energy supports targeted practical reforms that improve efficiency without weakening environmental protections, including clear timelines and efficient judicial review under NEPA, the Clean Water Act, and the Endangered Species Act. Duke Energy is delivering the outcomes this subcommittee is focused on. disciplined investment, prudent planning, and reliable operations to achieve speed to power while protecting customers. We look forward to continue to work with Congress to advance policies that reinforce reliability, affordability, state-led solutions, and lower customer costs. Thank you.

Well, thank you very much, and that will conclude our witnesses' opening statements. And, uh, we have, uh, two hundred and six members to go to vote, so we are going to recess right now. and we will resume uh ten minutes after the last vote's uh starts thank you

wait we need someone in the chair

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andrew

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oh oh yeah i i do need that timer run

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well thank you very much the subcommittee will reconvene and again i thank the witnesses for the uh short interview we had there for that series of votes and the chair will recognize himself for five minutes for questions meaning growing electricity demand for data centers will require significant capital expenditures for more generation and transmission infrastructure build-out chairman meyers mr. peeler and mr. falcone how can you insulate residential rate pairs from costs uh caused by the large data centers. Mr. Myers, if you'd like to start.

Yeah, thank you. Um, the the biggest way we're we're isolating those costs currently is by using specialized tariffs with the energy services agreements on top of it, and requiring that all costs be paid by uh that agr- you know, within the confounds of that agreement by the person that needs the energy. Um, there are various ways we're doing that. So, one of our utilities is using a subscription model. Um, another one is is requiring that they, and depending on the situation, it's all very situational, but um, some of them just flat out are are asking them or are providing their own generation, and then at some point they may turn that over to the utility. But um, fundamentally we are the the the big thing we struggle with is the transmission portion of it because um all of that transmission build-out is tends to be regulated by FERC, and then that comes down as a single um number to the state to be dispersed appropriately but we have no no insight into who caused that particular portion of the cost so what we're doing is in the energy services agreement having them pay for the estimated cost and generally a little bit more, so if it's twenty million dollars of intere- infrastructure cost, they're agreeing to pay forty million to cover the cost and a little bit more which puts downward pressure on rates. So that's kind of how we're dealing with that.

Thank you. Uh, and Mr. Farah Cohen?

Yes, uh, the same. I, I think it's important to recognize, Sherilata, that the way that utilities have operated for a hundred and twenty years is to divide customers into rate classes and to charge those customers based on the characteristics of their load. What is new here is not that, uh, this is a, an old, a new concept, but that data centers as a rate class prior to ChatGPT in twenty twenty three we really didn't see that much load growth and uh we weren't building infrastructure just for a data center now that that's happened you've seen a tremendous number of states including Arizona start breaking customers into rate classes and charging them the appropriate rate and that rate's going to be higher because if you're building infrastructure for a new customer new stuff costs a lot more than the old stuff and so you wanna charge them the marginal rate of the new stuff so that you don't have to raise rates on the old customer So that's generally the philosophy. There's about sixty tariffs among the states and utilities that are either in place or pending. And it's an old solution. What's new is that this load growth came out of nowhere.

Oh, thank you. Uh, Mr. Peeler?

Yeah, so, ver- very similar response. I'll just, specifically we use, um, uh, electric service agreements for large load customers. It requires commitment from them up front, both financially and a commitment to their load ramps. And the intent is that they pay their share of infrastructure cost up front, uh, and that other other rate payers not impacted, but ultimately it becomes a a rate structure that they pay uh the larger portion of the fixed cost of the system based on the needs that they have. So the customers are protected by the electric service agreements which are long-term binding contracts from uh those requesting customers.

OK.

Yeah, uh, Mr. Peeler, you know, amid this historic low growth that is outpacing infrastructure development. How will uh utilities like Duke take advantage of cost-effective solutions such as advanced transmission technologies that you're gonna get more juice out of the existing system?

Yeah, certainly, so we we could we could currently u consider ad advanced technologies like, you know, the var- various gets technologies, more specifically we have a lot of application of advanced conductors. Uh, we are able to apply those typically in a reconductoring uh environment that allows us to use existing right-of-ways uh that lowers cost for those upgrades and in many cases, speeds the uh the service to those uh upgrades. So uh we evaluate them uh on a case-by-case basis. Uh it's not always the best solution, but in many cases those advanced conductors are uh a a very viable solution for both economics and speed uh for new loads.

In my last twenty-six seconds, you know, when we're talking about these issues, what about supply chain? You have any supply chain issues and I have about twenty seconds left.

Yeah, so advanced conductors are new, you know, fairly new technology. There are a lot of options out there. Some are uh tested, some are not. So it it's a matter of, you know, selecting the right ones. They have different characteristics uh than traditional conductors. They can be more brittle. They can be less resilient to damage from uh the elements for example so it's very important to select the right things but supply chain is an ongoing challenge uh with the demands uh that we're seeing for new um new loads all types of electrical equipment not just conductors but uh electrical breakers transformers the lead times for those have have increased over the past few years

and i'm and i'm sorry i'm gonna have to uh cut myself off there my time has expired but i'd like to get some more information on that but uh at this i

yeah

Yeah, thank you, Mister Chairman, and thanks again to to the witnesses. We really need your help because we we wanna provide

Mm.

a lot of relief for for our neighbors back home. We're just being crushed by by higher electric bills right now, and it seems that one of the answers, uh of course we're gonna talk about transmission, but in in distribution and really squeezing greater efficiency out of the grid, that we have right now if it it i know that the efficiency number um across the country was about seventy percent we were getting seventy and now it's down you know fifty three percent of the that means there's a whole lot of time when we have uh a lot of the the the grid that's not operating so how do we how do we build the foundation from this from the federal level what can we do since uh utilities are regulated at the state level What is in the power of the Congress to make uh sure our existing infrastructure is more efficient? Getting the the gets of uh getting utilities to to to actually uptake their reconductoring. Miss Mews, maybe you have some ideas on how we get those cost-saving technologies onto the grid. Th and think of it as a member of Congress. Uh yes, we can direct FERC, we can make some changes to FERPA. uh maybe set different incentives. What do you recommend?

Thank you, Congresswoman. I think all of those, all of the above would be helpful. I think we saw even in the last administration that there was an uptick in deployment of grid enhancing technologies with support of some of the fin financial incentives that came out of the Congress including funding for the Grid Resilience and Innovation Partnership program that DOE ran as well as work at the loan program's office where utilities came in for uh lower cost debt and used that in part to upgrade their transmission systems and so there is financial incentives that have been helpful. I think the other options that you mentioned in terms of working with FERC, uh, as well as, uh, the PIPR one eleven D standards are also options to pursue. I think we really wanna get to a point where we're really accelerating deployment, right? We have examples of pilot programs across the country. The National Labs, including Idaho National Lab has done great work on, you know, different types of conductor, advanced conductor technologies and sharing best practices in partnering with EPRI and utilities and others so that we are starting to get beyond pilot projects and to get to see more wide spread deployment of these technologies.