Key Takeaways
- •The committee examined the widening gap between stagnant grid capacity and surging demand from AI and data centers, concluding that current permitting and infrastructure are insufficient for economic growth.
- •Liza Reed (Director of Climate and Energy, Niskanen Center) urged federal siting for interregional lines, while Travis Fisher (Director of Energy and Environmental Policy Studies, Cato Institute) proposed private power.
- •Sen. King (I-ME) cited AI-generated data suggesting the technology accounts for 50 percent of projected load growth, questioning if data centers should be required to provide their own power.
- •Sen. Lee (R-UT) argued that regulatory uncertainty and EPA mandates hinder reliability, while Sen. Heinrich (D-NM) emphasized that grid-enhancing technologies and clean energy integration are the most cost-effective solutions.
- •This testimony informs upcoming legislative efforts to modernize the Federal Power Act and streamline permitting to ensure the U.S. remains competitive in the global race for AI leadership.
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Hearing Analysis
Overview
This hearing addressed the growing strain on the U.S. bulk power system caused by a significant surge in electricity demand from data centers, artificial intelligence (AI), advanced manufacturing, and widespread electrification. Witnesses and lawmakers examined the regulatory and physical bottlenecks preventing the grid from expanding quickly enough to maintain reliability and affordability. The discussion centered on the necessity of permitting reform, the deployment of advanced grid technologies, and the potential for private or "consumer-regulated" electricity systems to bypass traditional utility delays.
Key Testimony & Policy
Witnesses highlighted a critical imbalance where demand is projected to grow exponentially while the retirement of dispatchable generation continues. Todd Snitchler, President and CEO of the Electric Power Supply Association (EPSA), emphasized that competitive wholesale markets are the most efficient way to manage this transition because they shift investment risk from ratepayers to private developers. He stressed the importance of accurate load forecasting to prevent "overbuilding" that could lead to stranded assets and higher retail rates.
Travis Fisher, Director of Energy and Environmental Policy Studies at the Cato Institute, proposed a "Consumer Regulated Electricity" (CRE) model. This policy would allow large-scale customers like data centers to develop off-grid, physically separate power systems under voluntary contracts, bypassing the "sclerotic" regulatory environment and interconnection queues. Dr. Liza Reed, Director of Climate and Energy at the Niskanen Center, focused on the need for a robust interregional transmission backbone. She advocated for the use of High-Voltage Direct Current (HVDC) technology and Grid-Enhancing Technologies (GETs) to increase capacity on existing lines. Dr. Reed specifically called for a narrow but clear federal siting authority for interstate transmission, similar to the authority used for natural gas pipelines, to overcome state-level permitting delays.
The hearing also touched on specific regulatory frameworks, including the Federal Power Act Section 216, which provides federal backstop siting authority that has yet to be fully utilized. Witnesses discussed the legacy of FERC Order 1000, with Fisher arguing it led to "small ball" local projects rather than the necessary large-scale interregional lines.
Notable Exchanges & Partisan Dynamics
A significant point of contention involved the role of fossil fuels versus renewable energy in grid reliability. Chairman Mike Lee (R-UT) criticized the Environmental Protection Agency (EPA) for regulatory uncertainty and the "weaponization" of Section 401 of the Clean Water Act, which he argued has blocked essential natural gas infrastructure in regions like New England. Conversely, Ranking Member Martin Heinrich (D-NM) argued that the current administration's "fossil-only agenda" and the propping up of uneconomic coal plants were driving up costs. He championed virtual power plants (VPPs) and GETs as "no-regrets" actions to unlock capacity.
Sen. Angus S. King (I-ME) expressed frustration with permitting reform discussions, stating he would not participate as long as the administration "arbitrarily" canceled renewable projects, arguing that reform must benefit all energy sectors equally. Sen. Bill Cassidy (R-LA) raised concerns about the use of eminent domain for interstate transmission, highlighting a libertarian tension between the desire for a deregulated market and the federal overreach required to seize land for high-voltage lines.
Several new legislative efforts were highlighted. Sen. Catherine Cortez Masto (D-NV) discussed the Secure Grid Act, aimed at state-level risk assessment for extreme weather and cyber threats, and the Expediting Grid Interconnection Procedures Act. Sen. Ron Wyden (D-OR) introduced the Wildfire and Grid Reliability Act to address the "trifecta of punishment" facing rural communities: wildfires, drought, and high energy prices.
Organizations Mentioned
- Federal Energy Regulatory Commission (FERC): Discussed as the primary federal regulator responsible for transmission planning, market oversight, and the potential implementation of backstop siting authority under Section 216. - Environmental Protection Agency (EPA): Criticized by Republican members and some witnesses for creating regulatory uncertainty through emissions rules that target coal and gas-fired generation. - PJM Interconnection (PJM): Cited as an example of a regional transmission organization (RTO) where transmission costs have risen significantly as a percentage of wholesale electricity costs. - Southwest Power Pool (SPP): Praised for its innovative approach to managing interconnection queues by studying generation and transmission needs holistically. - Electric Power Supply Association (EPSA): Represented by Todd Snitchler, this trade group advocated for competitive markets and protecting ratepayers from investment risks. - Cato Institute: Represented by Travis Fisher, this organization promoted free-market solutions and the "Consumer Regulated Electricity" model to bypass grid bottlenecks. - Niskanen Center: Represented by Dr. Liza Reed, this group advocated for federal permitting reform and the expansion of interregional HVDC transmission. - North American Electric Reliability Corporation (NERC): Mentioned as the authority for reliability assessments that recently recommended adding 35 gigawatts of interregional transmission.
What's Next
The committee will continue to deliberate on permitting reform as part of a broader legislative series. Lawmakers are expected to refine the Energy and Permitting Reform Act from the previous Congress, incorporating new language regarding HVDC technology and interconnection procedures. The record for the hearing remains open for additional questions and statements until April 1, 2026. Future actions may include votes on the Secure Grid Act and the Wildfire and Grid Reliability Act.
Transcript
Good morning. The committee will come to order. Today the committee will receive testimony on the current state of the bulk power system in the United States. Before giving my opening statement, I'll set forth how exactly we're going to proceed this morning. Ranking Member Heinrich and I will each give our opening statements followed by witness testimony, and then we'll move to questions. Members of the committee will be recognized in order of seniority for those who were here at the gavel and based on the order of arrival for those arriving after the gavel. I also want to thank Ranking Member Heinrich and his team for working with us on today's hearing. This hearing is one of a series on the importance of permitting reform to inform our committee's deliberations on the challenges facing the nation's bulk power system and what Congress should do to address them. We'll hear from three experts on this matter. They are Travis Fisher, the director of energy and environmental policy studies at the Cato Institute; Todd Snitchler, president and chief executive officer of the Electric Power Supply Association; and Dr. Liza Reed, director of climate and energy at the Niskanen Center. On behalf of the committee, I want to thank each of you for being here, and we look forward to hearing your testimony. We're facing a growing imbalance between supply and demand. Over the last decade, we in the United States have retired dozens of gigawatts of reliable, dispatchable generation. For a time, that may have been manageable. Demand was relatively flat, the system had some margin, but that's no longer the case. We're entering a period of sustained demand growth that will require more and more dispatchable energy. Data centers, advanced manufacturing, the electrification of vehicles and home appliances, these are structural changes in our economy that require really large amounts of electricity around the clock. Our grid was designed to meet peaks. Most of the time it operates with excess capacity, but that cushion is shrinking. In some regions, the margin is already gone, and we're running out of headroom. Without additional supply, we face severe consequences: higher costs, greater volatility, and increased risks to reliability. Some look at this surge in new demand and suggest that the solution should be to limit demand, to slow or restrict data center development, to constrain growth. I don't believe that that's consistent with how this country approaches or ought to approach opportunity. The United States has never faced challenges, certainly hasn't ever solved them, by capping progress. We solve them by building. The better path is to unlock new supply, to ensure that our regulatory framework allows infrastructure to be built in a timely and a predictable way, to ensure that markets are structured to send the right signals to attract investment, and to ensure that reliability remains the foundation of the system. The Federal Power Act envisioned a robust and interconnected grid, one that spreads costs, one that provides redundancy built into its own system, one that delivers affordable electricity reliably to consumers. That idea still matters, but it requires a system that can respond to these changing conditions. Right now we're falling behind that need. Permitting delays are slowing projects across all forms of energy infrastructure. Market distortions are affecting investment decisions, and the pace of innovation in the electricity sector is not where it needs to be. So we have an opportunity in front of us. If we allow supply and demand to function, if we modernize permitting, and if we ensure that markets are truly competitive, we can solve this challenge. But if we don't, the imbalance we're seeing today will become more severe, and the consequences will be felt by American households and businesses. So this hearing is about understanding those risks and identifying solutions to meet them. How can we reform permitting at the federal level? How can we build a regulatory framework that supports reliability and affordability? And how can we foster the kind of innovation the electric sector requires amid this very rapid demand growth? America needs to build, and we need to do it in a way that keeps ratepayers at the center of our decisions. This is the standard that we should be aiming for: the benefit to the consumer. I look forward to hearing from our witnesses. And now the chair recognizes Senator Heinrich, the ranking member of the committee.
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