EEI executives: ‘Energy transition is transformational’

The power industry outlook for America’s investor-owned electric companies is one of opportunities and challenges being created by the country’s increasingly data-driven economy, according to the leaders of the Edison Electric Institute (EEI).

“I’ll give you one interesting fact. I think all of you can relate to Chat GPT or maybe doing a search on the internet that uses AI. Well, that one search uses about 10 times more electricity than a standard Google search, if you will,” EEI President and CEO Dan Brouillette said Tuesday. “So we’re already starting to see that load come on. We’re already starting to see that demand come on. It’s a very exciting opportunity.”

Brouillette said that’s also why the industry is seeing estimates for growth move from roughly 2.5 percent to north of 4 percent, and in some cases up to 4.7 percent.

“That’s an enormous amount of load that’s going to come on in the next five years,” he said, “and certain estimates are saying it could be as high as 38 gigawatts by 2028. That’s an enormous opportunity for this industry. It’s also an enormous challenge, which is why we’re going to continue to work with you, continue to work with the finance community, because obviously more infrastructure needs to be built and we’re going to have to partner with you to get that money to get it built.”

Each February, EEI highlights its achievements and new policy priorities, as well as those of its member companies, during an industry outlook presentation to Wall Street.

On Tuesday, Brouillette and members of EEI’s executive team briefed Wall Street analysts, bankers, investors, and other industry stakeholders on the state of the U.S. electric power industry and addressed industry priorities, including clean energy and environmental, social, and governance considerations; customer affordability; industry financial health; policy and regulatory implementation; preparation for increased electrification; resilience and grid security; siting and permitting reform; storm response and wildfire mitigation; and workforce development.

Philip Moeller, EEI executive vice president of the Business Operations Group and regulatory affairs, agreed that many challenges face the industry over the next several years. “But it’s a pretty good challenge to have when you’re looking at the kind of growth that a lot of our member companies are looking at,” he said. 

To meet the challenges associated with the rising demand for more electricity, Brian Wolff, EEI chief strategy officer and executive vice president of public policy and external affairs, said investor-owned utilities “are starting to get creative” when they approach the public utility commissions (PUCs) about how to meet that growing demand.

For instance, many IOUs are bringing representatives from their large customers along to PUC meetings. These large companies are planning to build large data centers or huge AI, chip manufacturing, or retail facilities, Wolff said.

“So we’re actually encouraging them and they are starting to get the rhythm of taking those customers in with them to be able to explain what the need is,” he said.

Rate designs also can help address the demand growth, according to Moeller. 

While it’s challenging because every state is going to be doing them a little bit differently, the industry is at a point now where companies have to be more efficient in their rate structures, “not only to send better price signals to customers, but also to allocate the costs within rates in a more equitable way,” Moeller said.

“But really, you can’t expect customers to be altruistic. They will respond with proper education,” he added. “So we’re empowering customers to make choices about how they use their electricity and there is a growing sense not only amongst regulators but also amongst consumer advocates that they are willing to reconsider some of these ideas about rate structures.”

In the last year, Moeller said he’s become much more positive and part of that’s because of the concern about resource adequacy. “But I think the coming year will show a lot more discussion and awareness and encouragement of more modernized rate structures at the retail level,” he said. 

The EEI executives also discussed the Bipartisan Infrastructure Law and the $272-billion clean energy tax package in the Inflation Reduction Act (IRA) — laws EEI strongly supported.

The laws make more tools available to help address climate change by facilitating investments in smarter, more resilient energy infrastructure and the deployment of more clean energy, they said, while also passing on critical cost-savings benefits directly through to customers.

“We have to take advantage of the Bipartisan Infrastructure Law and the IRA,” Wolff said, particularly regarding more transmission. And he noted there’s ongoing efforts EEI maintains with Congress, the U.S. Department of Energy (DOE), and at the state level with regards to transmission around the country.

“What we’re talking about right now in Congress is what inter-regional policy might look like on transmission,” he said. “So more to come on that. I’m very hopeful about the end of the year effort and as usual, EEI will be working throughout the year teeing that up so that it’s ready to go if there’s a window of opportunity there.”

Emily Fisher, EEI executive vice president of clean energy, general counsel and corporate secretary, said that at the end of the year, DOE is for the first time going to exercise its authority under Section 216 H of the Federal Power Act to be the lead agency for environmental rules for transmission buildout.

“And I think there’s some real opportunities to cut through some of the red tape there and they’ve shown an interest in categorical exclusions and other sorts of programmatic environmental reviews that could really facilitate transmission buildout,” Fischer said. “It doesn’t take us that long to actually build the transmission, it’s the environmental reviews… and no questions asked, there will be litigation over that. So if we can make some headway there, I think we might be able to make some progress even if it takes a little longer on the congressional side.”

Brouillette also pointed out that the IRA should remain relatively solid if, hypothetically, the Republicans capture the White House and or both chambers of Congress during elections in November.

“If Republicans take both the House and the Senate and the White House, you’ll see some changes,” said Brouillette, who formerly served as the 15th U.S. Secretary of Energy. “But I would dare say those changes will be largely at the margins, not at the heart of what was passed in the IRA.”

During the presentation, EEI execs also highlighted the need for siting and permitting reform to facilitate investment in much-needed critical energy infrastructure, including transmission, renewable energy facilities, and natural gas pipelines and facilities, among other topics.

“What is happening today in the industry, I think, is truly transformational,” Brouillette said.