Electricity bills are on the ballot

0:00Latitude media covering the new frontiers of the energy transition. Hey, it's Stephen. I hope you all had a wonderful end to your summer. We were intending to be back on our normal fall schedule this week, but the influenza virus had different plans for me and I needed to trade my microphone for a hospital bed for a bit. Get your flu shot this year. This one's a doozy. I am recovering and we will be back next week. But in the meantime, we've got a conversation about a storyline dominating so much of our energy discourse, electricity prices. We are less than two months away from the US midterm elections and it's fair to say that electricity is shaping politics in unprecedented ways. Could this be the first election at the national scale and US history where utility bills and electricity cost specifically could be a defining issue at the ballot box? And frankly, I struggled to find a historic parallel. That is Charles Waugh. He's the founder and executive director of Power Lines. He was

1:00speaking on stage at Latitude Media's transition AI conference earlier this year. Power Lines is an organization working to make utility regulation more transparent and accessible. And it's been closely tracking the historic utility spending and rate increases. And in this conversation, Charles talks with Latitude Media editor Lisa Martine Jenkins about the very small window of opportunity to get this spending right. And the answer runs through regulators. And if you want more conversations like this, come to our Flex Summit in Austin, Texas on October 14th and 15th. We're bringing together the top voices and experts who are turning flexibility into vital grid infrastructure. And our listeners get 10% off their tickets, follow the link in the show notes to Flex Summit and use the code pods 10 when you check out. And now on to the show. So electricity prices in the US, they've been increasing to the point where, as Stephen himself said on Open Circuit last year, they're the new price of eggs in political rhetoric. And even though these rising rates have many contributors, there's

2:00transmission and distribution costs, there's extreme weather recovery, data centers have become a bipartisan punching bag, especially in PJM. This all came to a head in January when even the White House realized that having hyperscalers pay their own way for infrastructure costs could win them points with voters. But as our next speaker knows, better than anyone, the decisions that actually inform electricity rates come from the regulators. But in the last couple of years, those regulators have been caught largely unprepared for load growth. As one of my colleagues said this week, they're basically like deer in the headlights. They don't want to be seen as stymying economic activity that's associated with AI. But they also have a pattern historically of just saying yes to whatever the utilities want. But that has clearly led to record high rates and an angry public. And so things have gotten a little complicated, both for the regulators themselves and for the developers that are trying to get things built. So here to parse this for us, is Charles Swah. He's the founder and executive director of PowerLines, which advocates for modernizing

3:03the utility regulatory system. Thanks for being here, Charles. Thanks for having me. So I'd love to start by zooming out a little bit. In 2025, utilities requested a combined $31 billion in rate increases across the US. And it really feels like this year, things have reached a fever pitch. How did we get here? Can you walk us through the things that have led to this intense focus on affordability? Sure. Well, thanks again to the latitude media team for hosting this wonderful convening. Look, just to start and level set utility affordability has always been an issue. 80 million Americans based on Census Bureau data have been struggling to pay their utility bills. They're trading off food, groceries, rents. Sometimes we're even seeing folks utility bills larger than their mortgage payments. So this is a very significant challenge that frankly has always been an issue. But suddenly now it's entered our political discourse. And that's reshaping the ways in which we're talking about energy affordability. And there's a couple of

4:03reasons for that. One of which is the new elephant in the room, which is data centers and the role that they could be playing or not playing in driving up bills. But certainly there's a perception among the public that that's a key cause. And we're also now seeing the middle class engage on these issues because they're feeling the pressure point around utility bills. And we're seeing elected officials and politicians talk about this because they're feeling the pressure from the voter. So that's creating the storm where energy affordability as we've been talking about is reshaping the entire energy landscape. So what actually drives up bills? There was this green analysis last year by the Lawrence Berkeley National Labs, which one analyst said at the time, which I really loved. It found that surging electricity prices are like tolls toys unhappy families, each unhappy for their own reasons. Can you help me parse precisely what that means? Like what actually is driving up rates as far as we can tell so far? Yeah, great question. And just to start, I think there's often a conflation in the political and media discussion around what has

5:10driven up bills of the last five years versus what could drive up bills of the next five years. And it's sort of hard to parse through for consumers that are experiencing this in real time. But if you just look at the last five years long before data centers even really entered the scene to the extent that they are now, it's three boring things. One is an aging grid that is in desperate need of modernization, replacement, and repair. Second is extreme weather events. They're battering our grid infrastructure, particularly hurricanes in the southeast, winter storms across Texas and New England and wildfires out west. And lastly, it's volatile fuel costs during the Russia Ukraine crisis. When prices spiked, that impacted domestic utility bills and costs there. And so that is the boring stuff that I worry if we over index on this shiny new thing with data centers. And even within that, there's a lot of nuance as to the role that they're playing around utility bill trends. I worry that we're going to lose sight of these fundamental boring structural factors driving upward pressure on rates. And if we don't corral that spending, we are going to face some

6:15serious challenges going forward to connect new load. And on that note, going forward, power lines, I understand, put out some new research just this morning about what rate increases look like in the next five years. Can you walk us through what you guys found? So this is, you all are getting the not sneak peak, but first preview, a first live setting where we're debuting this research, which finds that utilities are planning to spend $1.4 trillion in catbex by 2030. And that is a year of a year, 21% increase over last year's roughly 1.1 trillion figure. That is a tremendous amount of spending. I don't have the exact numbers in front of me and I like the way that Shail on stage yesterday broke down different models of catbex. But if I remember correctly, it's like three interstate highway systems worth of spending. It is thousands of Hoover dams worth of spending. That is a lot of money. A significant chunk of that capital will definitely need to be spent just

7:19to replace poles and wires that are reaching the end of the year's full life. But what we don't know because there's so little transparency and regulatory accountability is what chunk of that 1.4 trillion is truly the necessary stuff that if you don't spend it, the system is going to break versus what's the nice to have stuff that may or may not actually be in the interest of the, not just the residential consumers that are footing the bill ultimately, but also the data center customers as well as the large industrial customers. So we put out that research, got picked up in the Wall Street Journal this morning. That is now the benchmark for what utilities are telling their investors as to how much they're looking to spend. And I think at a moment where affordability is top of mind for all stakeholders and where utilities requested a record $31 billion in rate increases last year, we are all about leading indicators up power lines. So you can look at the backwards looking data around price increases, but in terms of leading indicators, 31 billion, a lot of that is yet to hit consumers wallets 1.4 trillion. That is what they're planning to spend. And I think that raises

8:22some serious questions around whether we're prioritizing the most cost effective solutions like grid enhancing technologies, demand flexibility, distributed energy resources, a lot of the solutions that we've been talking about. But what stands in this way is ultimately a regulatory paradigm that systematically and structurally rewards catbex over op-ex and rewards the build out a new infrastructure over the optimization of existing infrastructure. And happy to dive into that further, but that is the top line takeaway from that analysis for lease this morning. Lattitude Media is hosting its next conference this October in Austin, Texas. Flex Summit will bring together the senior leaders and practitioners working to scale flexibility as an essential grid resource across planning, markets, technology, and finance. Join speakers and attendees from Excel Energy, base power, octopus, Irkha, Tesla, and more for two days of forward thinking

9:24programming on distributed capacity, grid edge flexibility, and the AI demand economy. Head on over to latitudemedia.com slash events, or you can click the link in the show notes to see the full agenda and register for Flex Summit 2026. And of course, our listeners get a discount, use the code pods 10, PODS 10 pods 10 for a 10% discount. Open Circuit is supported by the building and advanced energy ecosystem conference, where leaders from clean tech utilities, power generation, national laboratories, and investment convened to shape what's next for energy and innovation. From critical minerals and microgrids to quantum and AI, this conference is designed to spark partnerships that move from ideas into action. Building an advanced energy ecosystem is happening September 14 through 16th in Albuquerque, New Mexico. Register now at nmwomenlead.org using code circuit to join the conversation. Open Circuit is supported by fish tank PR, an award-winning PR firm focused on climate and energy

10:25tech renewables and sustainability. Fish tank is known for providing smart relations that connect brands to journalists on both today and tomorrow's most important energy stories. If you want a PR partner that's thoughtful, shoot straight and gets results, you'll like fish tank PR. To learn more about fish tanks approach, visit fishtankpr.com. That's f-i-s-c-h-fishtankpr.com. And in your conversations with regulators, you're probably talking to them far more than anyone else this room. What is the tenor of those conversations, specifically when it comes to their preparedness for these rates going up? Yeah, look, it's a great question. So first off, who are these people? We like to call the public utilities commissioners the US Supreme Court Justices of Energy because there's 200 of them. They oversee $200 billion a year in utility spending, although with our new research, we might need to ratchet up that number. But at $1 billion a commissioner,

11:27they are incredibly powerful. They set retail electricity rates. They oversee that at least. They oversee the build out of new infrastructure, the siding of transmission lines and other energy infrastructure. So these guys are so powerful yet very, they need to hear from everybody in this room in terms of what the pain points and bottlenecks are that different folks in this room are experiencing. And really the two things that are on their minds are the same things that are on all of our minds, which is load growth and affordability. And how do I meet new demands? And how do I do so with affordability top of mind? But just to feel back the current a little bit, most of these commissioners are appointed by the governors. So whether or not they're in name independent agencies, they often feel some degree of the governor looking over their shoulders. And the governor's top job is economic development. Now though, it is also affordability. And as we talked about, the only way to advance both economic growth in this moment and affordability by connecting new load is by

12:31getting more out of our grid, squeezing more electrons out of our existing infrastructure. And so that's where actually I think the incentives between the governors and PUCs can be increasingly aligned because historically the governors haven't necessarily focused on utility affordability. And so they've got that to consider. But the other thing that I'll just say is most of these PUCs, they are working, grueling hours around the clock, 60, 78 hours a week, many of them. I shouldn't say most, many of them. And they're often doing so with teams of staff of double digits, you know, 30, 40, 50 folks. They have to regulate not just the electric companies, but also the gas, the water, the telecommunications, rail safety, pipeline safety, public transit in some instances. So their jobs are incredibly difficult. And I don't think they've been resource enough to be able to meet this moment. And so I think there's a lot more that needs to be done to just understand what's the psychology of a regulator and to engage effectively. And that's a call for everybody in this room is to engage with your PUC. The FERC chair recently said at zero week that she wants

13:37to see data center companies, developers engage more with FERC. And I think there's a critical opportunity for that. Yeah, that's something I've heard echoed in the last two days. There's definitely room for more conversation with regulators. When it comes to grappling with load growth from data centers specifically, how are regulators thinking about that? Like, does that feel to them like a completely new problem for them? Or is this just more load across the board? I don't know, this is going to be provocative, but I think that we are all thinking way too small in terms of this opportunity set, which is you have a grid, the 1.4 trillion figure alludes to this, you have a grid that is desperately in need of investment. It is again, just to replace repair, modernize, build, basic polls and wires. It's going to cost a lot of money. And suddenly, who comes onto the scene is a customer that desperately wants to invest in that resource. And five, ten years from now, if we can't figure out a way to put those two puzzle pieces together,

14:41we will have failed. It is not that complicated at a macro level. Now, to be very, very clear, in the weeds, that is where the complexity lies. And we are seeing various efforts in terms of large-o-terriff design, especially in the upper Midwest, clean transition tariffs in Utah and Nevada. There's a lot of efforts going on in different jurisdictions. But what I'm encouraged by is that in this moment, policymakers and regulators across the board are suddenly paying way more attention to this issue. I mean, the fact that bad bunny talked about the grid in the Super Bowl halftime show, the fact that President Trump talked about it in the state of the union, the fact that President Trump called, for commissioners, the most important people in America, not one of the most important, but the most important people in America, speaks to the fact that these guys, these 200 US Supreme Court justices of energy, 205 plus the fur commissioners, these are the folks that will have an outsized influence in shaping how the direction of this all goes. And if we can't

15:45figure out a way to square that circle, then we'll have failed. And are there any places in the country that you think are handling this particularly well, and alternatively, particularly badly? The short answer is no. Nobody's doing it well. As in, everybody has an opportunity to ratchet up both the level of ambition and the strength of these. And I don't mean to say that too flippantly. There's a ton of effort being happened by a variety of stakeholders. So I want to be very, very clear about that. But I think that the fact that electric prices have increased 40% of the last five years, the fact that utilities requested 31 billion increases last year, the fact that they're looking to spend 1.4 trillion of the next five years speaks to the fact that we have fundamentally lost sight of the reason why we built the utility regulatory system that we have now, which is that we invented and commercialized electricity as a resource that we said was so

16:45important to powering our modern economy that every consumer should be able to access it. And the fact that you have one in three Americans, 80 million Americans that are struggling to pay their utility bills, which are seen as such a small expense, suggest the fact that across the board, we are not meeting the moment as much as we need to. There's a couple examples that I would point to though in terms of signs of optimism. So in Indiana, Governor Braun recently signed into legislation, he signed into a bill that would change the way that utility companies are compensated based on performance, based on outcomes, not just on how much they're spending, which is something that a lot of folks wouldn't have had on their bingo card last year. Governor Cheryl, first action was an executive order looking at utility business model reform. And if we don't address the root cause of this challenge right now around CAPEX spending, there's a risk that we're going to blow through consumer rates. And if you think that the consumer sentiment right now is bad and the political pressure right now is bad around electricity,

17:49which has gone up 40% of the last five years, if they go up another 40% or even double over the next five years, I don't think any of us can imagine what that would do in terms of not just the new politics of electricity, but also the new markets around electricity. And we're coming up on the midterms. Do you think that either candidates or other lawmakers are looking to what the governor of Indiana is doing, what Mikey Cheryl is doing in New Jersey and saying this is something that I should also be leaning in on or are these kind of one-off efforts? I recently got asked this question, could this be the first election at the national scale in US history where utility bills specifically, not energy affordability, not oil and gas, which you paid the pump, but utility bills and electricity cost specifically could be a defining issue at the ballot box. And frankly, I struggled to find a historic parallel. If anybody knows one, I would welcome that, but I don't know if that's ever happened. And this year with 36 governor's elections, with many, many congressional races,

18:57we are seeing candidates from mayor to state legislator to attorney general to governor, to member of congress, pucs, commissioners and states that elect them. They are all talking about this issue. And there are some states where it's very clearly becoming a major flash point. I would point to Michigan and the governor's race. I would point to Wisconsin and the governor's race, Nevada and the governor's race, some key senate elections like in Maine. And so I expect this to be a hotly contested issue. And this is a moment where policymakers and elected officials have the opportunity to demonstrate their leadership to their voters, to their consumers as to what they're going to do on this. And we're going to be putting out some polling in the next few weeks in update to our 2025 polling showing where consumer sentiment is at now relative to a year ago. And I will just say as a preview, there are some statistically significant changes even in the last year on that. And I want to drill in specifically into data centers. You've surveyed

19:59the entire country on this. What is real in terms of what data centers are doing to influence these rates? Yeah, great question. So I think one of the common misconceptions is centers around Econ 101 around this, which is there's this idea that rising demand automatically means rising prices, because that's what you're taught in Econ 101. But what Econ 101 also teaches you is that if there's a monopoly, that that paradigm does not exist. And that is what we're talking about and dealing with, which is a monopoly utility structure. So what actually is a driver of cost, especially in vertically integrated regions, is the supply side. And what are we doing? That's the new cap expend. Now to be clear, there are definitely instances where demand does impact price at the most prominent being PGM and the capacity auction market, which is not your entire bill, but is a component of your bill. And so in that case, what we saw was constrained supply, rising demand led to this rupture such that capacity auction price is significantly spiked

21:00and consumers felt it across the 67 million consumer footprint. But that's key because particularly across the rest of the country, load growth based on the Lawrence Berkeley National Lab study has actually been shown to reduce rates, or at least correlated with a reduction in rates. And the general idea there is that if you can take the fixed cost of the grid and spread it over more consumers, you can put down a pressure on rates such that you're lowering the per unit price of electricity and therefore you're lowering people's utility bills. And there are some examples like Georgia Power has is doing this. There's other examples across the country, but what it ultimately comes down to is making sure that your numerator, which is new capital spends, you're minimizing the amount needed for that, and you're maximizing the denominator of rising demand so that you're basically putting downward pressure on that fraction, which is your electricity price. On October 14th and 15th, latitude media is offering the chance to hear from

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24:13Fish is spelled F-I-S-C-H, fishtankpr.com or follow the link in the show notes. So the reason that all of this politics that we've been getting into really matters is that affordability has become this huge source of risk for both energy and data center developers that are trying to get things built. I'm pretty sure our next conversation is going to get into this in a lot more detail, but have we gotten to a point in your opinion or based on what you've seen where these public concerns that are informing where and when infrastructure can be built and what are the specific impacts you're seeing? Yeah, this is very much in live development and it goes back to what I said earlier, which is that voters, consumers, members of the public, the same folks, but slightly different hats. Whether perceived or real, whether correlation or causation, they are feeling that their bills are going up, their utility bills are going up, and the data

25:13shows this, by the way, based on inflation data, electricity and gas are the two fastest drivers of inflation. So they're seeing their bills going up in a moment where cost-eliving concerns are top of mind for folks, and they're trying to figure out why the hell is this happening, and nobody is really coming to them with a credible answer as to why their bills are going up. And so if they're seeing over here, suddenly all these data centers are coming in and they're using all this electricity, the natural conclusion that people are reaching is, well, it must be the data centers. Even though their bills have been going up long before the data centers entered the scene, largely again, because of an aging grid, extreme weather events and volatile fuel costs. And so we've got to correct that narrative so that folks understand that there are structural drivers that all of us are going to need to figure out how to tackle utilities, developers, customers. The pressures facing utilities in the grid are immense, you know, just looking at the southeast in terms of Hurricane Helene and how much damage that it, that are rot across the

26:15region, we have got to put our minds together to figure out what solutions can be can be had there. So, you know, for example, here in California, how can we leverage AI solutions to tackle wildfire risk? And there's any number of startups and companies that are working on that issue, or tapestry, for example, I don't know if the page is in here, but how do we harness AI to improve the way that we do grid planning or even load forecasting so that we are maximizing the benefit of the technology that we have and figuring out how to problem solve. And then in parallel, there's a ton of consumer education that's needed around why bills are going up, how utility rates are set, who makes those decisions, what the traditional utility business model looks like. That is a lot of the work that power lines is trying to do, but frankly, that's something that all of us in this room need to be doing is explaining and educating to consumers why their bills are going up and what they can be what they can do about it. And that last piece is also important because most consumers have been

27:16told that if you want to lower your bill, just turn off your lights. And if you go on Reddit and next door and Facebook and TikTok, what you're seeing now is I moved from a two-bed to a one-bed, I'm using less energy, I'm gone half the time, yet my bills went up, how could that be? And so they're not trusting or believing that turning off their lights is a viable solution. And frankly, that's because what is at risk here is that the size of the pie of spending on the grid is rapidly ballooning and we've got to figure out a way to get that in check. Let's end on some practical advice, especially for the developers in the room, how should they be engaging with regulators and with affordability more broadly? First is to engage. I can't stress that enough because I wouldn't assume that every one of the 200 PEC commissioners that I mentioned is automatically aware of all of the challenges that you're experiencing or the solutions that you're providing. I would not make that

28:19assumption. And that it's critical to engage with these regulators because they got to understand that your solution or your product even exists. And in integrated resource planning proceedings, they can think about, oh, if we deploy these solutions, how would that impact the final end outcome which they care about, which is residential retail electric rates, for example? So first is to engage. The second is what I alluded to earlier, which is it's critical in this moment, especially that all stakeholders take the time to educate policymakers, consumers, regulators about why bills are going up and to not lose sight of that. Because I think there is definitely a focus on the data center piece. But again, what I worry about is that we lose sight of the fundamental structural drivers, which is an aging grid, extreme weather events, and that if we don't get that in check, then we're not going to prevail. I guess the other thing that I would say is just this, which is that we have seen the story before of rising electricity demand and rising electricity

29:26prices. And for better or worse, that led to some of the most significant disruption and market restructuring that our grid has seen. And I think what I would just end on is that I don't know if we can fully predict five years from now what any of this is going to look like. And I think what to me, that means is that it's an opportunity for us to rethink, reimagine, and re-envision what is the grid of the future that we're trying to build, not just the physical grid, not just the physical infrastructure, but also the regulatory infrastructure. And use this as a moment to make sure that we're advancing a system that truly can unlock more out of our existing grid infrastructure while making it easier to build new infrastructure that can lower utility bills while advancing economic development opportunities. And that can take us back to that original vision of the grid that we had, which is we've got electricity, we've got to figure out a way to get it to people so that everybody can use it because it's the lifeblood of our modern

30:27economy. And we've got to do so in a way that's affordable and reliable. And now is the moment for us to reimagine what that looks like. Open Circuit is a production of latitude media. You can of course find all of our episodes on Apple, Spotify, or wherever you get your podcasts. And give us a rating and review if you haven't done that already. Also, you can find us on YouTube starting this year where you start posting all of our episodes on YouTube. And if you want to watch our episodes each week, go subscribe to latitude media on YouTube. Thanks so much. We'll be in our regular cadence soon. We'll catch you next time.