The Grid Is 'Not Going To Work' As Is For Data Centers Says FERC's Swett

[00:00:00] Speaker 1: When we consider the proposals you're making today, the accelerating of this grid connection process, something that could take years under the current regime, how quickly might this be [00:00:10] Speaker 2: able to happen now? Well, under my leadership, the Federal Energy Regulatory Commission is going to ensure that our grid, which is very slow moving and has many barriers to it, is going to be accelerating our country into the future. And that means faster study timelines, faster connection of data centers, faster connection of generation that will power these data centers. But we're going to do all of that while protecting the American ratepayer and ensuring that no American will pay an unfair cost for data center connection. Well, so talk to us about how you're going to achieve [00:00:48] Speaker 1: that component, who ultimately is the bearer of the cost here, because there are costs associated. [00:00:53] Speaker 2: Yes, there are billions of dollars of costs associated with the data centers. And this is something that is very personal to me. I am the daughter of a Vietnamese immigrant and a 40-year civil servant. And my parents realized the American dream. And I very much felt the stress of the cost of utility bills as I was growing up. And that is something that I am vigorously safeguarding as the head of this federal agency that is tasked with ensuring that the cost of electricity in America is fair. Now, the president led a ratepayer protection pledge, which many of the hyperscalers have adhered to or pledged to. And now it is upon FERC in our federal jurisdiction to ensure that the hyperscalers are held to that agreement that they made with the president. And we at FERC ordered today, part of our order in the markets across the country, which each received individual orders tailored to how they are run. We are requiring more cost transparency on what is required to connect the data centers and the generation that they need than we have ever required before. And that transparency will make it such that no one can point a finger and say, Well, we don't know how much it costs to the data center. We don't know how much the hyperscalers need to pay. We are going to have all of the data that we need, how much it costs to upgrade the grid to connect them. And they will pay everything that is required to get them the power that they need. And the American right payer will not absorb that cost. [00:02:24] Speaker 1: Well, this is obviously a big change that you're looking to make. It's relatively sweeping. And I wonder if we should read this as a signal that your agency is going to have a more interventionist approach to this going forward. [00:02:40] Speaker 2: We are going to vigorously protect Americans more than we ever have before. And that is incredibly important. I don't want to say that we are it's just a cost really. There is a way to integrate the data centers so that they can give the massive money injection into our economy that they are prepared to make with their investments of keeping what they're doing in our country. And we're just going to make sure that everything is fair. And I want to just make a point here, which is what FERC is doing is not limited to data centers. There's also massive industrialization that we are looking at. And that is another massive injection of money into our economy. And we need to make sure that people and investors are comfortable making that investment in our country. And FERC has a mind to ensure that there are clear rules and predictability so that the investors have that confidence. [00:03:33] Speaker 1: Well, so how should an investor in a hyperscaler someone who's just considering what this means for a company like Amazon or Meta consider what you are doing here? [00:03:43] Speaker 2: Well, I think if I were them, I would view this as for the first time the electric regulator in this country is very aware of the economic benefit that we may give to our country because data centers are the intersection of not just energy, but also national security and jobs. And the same is true of industrial manufacturing. And the fact that today we are requiring the markets across the country to have come back to us with very clear rules on how they are going to study what the data centers need, come up with transparency and tight timelines for them to come online. The investor should see that as a favorable regulator who is motivated to move quickly and ensure that everyone knows exactly what the rules are and how we're going to do this. [00:04:33] Speaker 1: Well, what about a resident in Loudoun County, Virginia, for example, just a few miles outside of the district who is considering not only what this means for their pocket books and the utility costs that you were speaking to, but also wondering what this will mean for their reliability and simple access to power. Are grids able to keep up with this kind of scale of data center build out that we are seeing? [00:04:57] Speaker 2: Yes. Well, I actually grew up just a few minutes from Loudoun County and driving around data center alley. Reliability is critical. And I will answer you frankly, the way that our electric grid is now with the generation that we have today, it is not going to work. That is why we have to be aggressive. We have to look at everything with it. fresh eyes and make interventionist and unprecedented action, which is what fork did today. And I'm so proud to say that and we are requiring the markets to actually look at what generation is necessary and come back to us 30 days from now and give us reports on how they're going to handle this generation issue. Now, getting to the local level in your question of Loudoun County, for example. So Americans bills are about one third of them are under first federal jurisdiction. The rest of that bill that you pay is depending on what state you're on, the cost of providing power and a additional state riders and programs that will inflate bills. So unfortunately, I don't have any control over that, but I do have a control over one third of Americans bills and I guarantee that we are going to drive that as low as possible. [00:06:07] Speaker 1: Just in our final moment here, chair, as you suggest that at least with the current state of play, this wouldn't work. Is our grid able to act fast enough to make the state of play ultimately work for all this build out or do you see current data center build out projections as potentially being unrealistic and going to have to be scaled back some as you consider that reality? [00:06:27] Speaker 2: Well, under the rules before today, no, I don't think the grid could act fast enough, but I'm sure giving everything that I have into trying to get it there. And we are pulling all the stops down and working with all our state and federal partners to ensure that our country can satisfy this and push us into the future and success.