Data Centers, Gas, and Who Pays: Power Association Leaders Find Common Ground

When the heads of three of the power sector’s biggest trade associations shared a stage at Experience POWER on Sept. 30, the most notable thing was how little they disagreed. Whether the question was data center backlash, grid security, or what to do about gas-plant emissions rules, the answer came back to the same point: The grid needs a lot more infrastructure, it will cost more than the old infrastructure did, and no regulatory shortcut will let the sector avoid either fact.

The session, “Inside the Issues,” was moderated by Mark W. Menezes, president and CEO of the United States Energy Association (USEA). It brought together Jim Matheson, CEO of the National Rural Electric Cooperative Association (NRECA); Tom Falcone, president of the Large Public Power Council (LPPC); and Rich Powell, CEO of the Clean Energy Buyers Association (CEBA). Co-ops, the largest public power systems, and the corporate buyers that include the hyperscalers all feel load growth differently. They still arrived at similar conclusions.

Data Centers Have a Social License Problem

Falcone said that growth projections at today’s level did not exist three years ago, and that he would not have predicted them. Some LPPC members, he said, “have to double or triple in size over the next 10 years.” He also said that 18 months ago he would not have expected people to be coming to LPPC members and saying, “You shouldn’t be building this.” The members’ answer is consistent: “Hey, we serve the needs. We aren’t the ones permitting the projects. We aren’t the ones deciding the land use.”

Powell, whose members include the hyperscalers, was the bluntest about the risk. He said the data center industry has responded with a White House ratepayer protection pledge and voluntary commitments on costs and water, yet opposition has become a dominant narrative in many communities. His worry, he said, is whether data centers “end up in the place that nuclear power plants ended up 40 years ago,” a reference to the long moratoria on new nuclear construction. The industry is weighing a more concerted national push to show that data centers benefit communities through tax bases, jobs, and other community benefits, he said. “The burden right now is on the data center community to prove that to communities in a more profound way than they were doing before.”

Powell also made the case against building private power plants next to data centers. His members would prefer to buy from utilities, he said. “We like grids. Grids are good.” He added that he sees large co-located projects as a sign the grid could not serve a load in time, citing a Meta facility in Ohio that, he said, faced a seven-year wait for interconnection.

Security Rules Need One Standard

On the recent executive order directing utilities to identify equipment that could pose security risks, particularly equipment from adversary countries, all three leaders accepted that the threat is real. “There are actors out there that want to infiltrate our system,” Matheson said, though he urged regulators to rely on “actual, truthful, fact-based information, and not fear and rhetoric.” Powell asked that any requirements not be over-broad or discriminatory toward particular technologies.

Falcone offered the most specific prescription. Utilities cannot see their suppliers’ suppliers, he said, and asking each supplier to disclose that to roughly 1,500 registered entities is unworkable. He pointed to the nuclear industry and Europe, which he said use certification of origin handled by a single body. He also raised aggregation: Individual inverter-based resources may be too small to pose a risk, but enough of them together might. Falcone cited a news report, which he said appeared about six months before the panel, of about a dozen inverter-based resources being opened up and unauthorized communications equipment being found in every one. A patchwork won’t work, he said: “It can’t be 1,500 entities on the bulk electric system, each trying to solve the problems themselves.”

Flexible Load: Welcome in Theory, Hard to Sell

All three praised the Federal Energy Regulatory Commission for not imposing a one-size-fits-all approach to large-load interconnection and for letting regional grid operators tailor their own rules. Falcone and Powell differed on how much the flexibility option will matter.

Falcone said one grid operator launched a product about six weeks before the panel that offers faster interconnection to flexible loads. He said that when LPPC members met with the operator, the question was whether anyone had signed up: “the answer is no.” A data center’s cost of interruption is so high, he said, that “you really don’t want flexible load. You want firm service.” He put it this way: “The amount of flexibility on the grid is determined by the buyer’s economics, not by the seller.” His conclusion: “There’s no magic bullet here.”

Powell did not dispute the economics but argued for a wider definition of flexibility. A buyer running high-value inference workloads may not curtail, he said, but could add energy storage or invest in virtual power plants that give the grid the same relief. He wants solutions “as performance-based, and technology and business-model neutral, as possible.”

Gas Rules and the Gas Bet

Matheson said the Environmental Protection Agency’s repeal of the Biden-era carbon capture requirement for existing coal and gas plants was a major win for cooperatives, who he said faced forced closures. But he warned that the rule’s efficiency requirement for new gas plants remains, and that NRECA’s outside consultants concluded it would limit combined-cycle plants to running only about 40% of the time.

Falcone argued the cost is the problem. A plant forced to run less means more plants. “It just makes the grid operate very inefficiently and raises costs without reducing carbon,” he said, adding that LPPC’s members span red and blue states. “We’re just for rules that work.”

Powell, who said he is a longtime carbon capture advocate, was candid about the technology’s status. “We do not in the United States today have a working carbon capture system up and running on a gas plant,” he said. Members such as Google have contracted for gas with capture, he said, and the first are scheduled to come online around 2030.

An audience question from a representative of Old Dominion Electric Cooperative on a possible gas overbuild brought out the shared worry. “Everybody’s betting on gas,” Matheson said, and “if you want to order a gas turbine, you can’t get one before 2032.” Falcone said fuel diversity protects the grid, but that as reliance on gas grows, redundancy, generally oil in a tank, costs money, and not every market has a revenue stream to pay for it. “The oil in the tank solves a lot of problems if you have a problem with a pipeline,” said Falcone. But for a for-profit generator, the logic is simple: “If you don’t pay me for it, I’m not going to do it,” he said. Powell questioned whether the country has an adequate framework for evaluating gas concentration risk, adding that the North American Electric Reliability Corporation has been calling for some kind of gas-electric coordination standard for years, along with reliability requirements for gas pipelines.

Permitting: From Briefings to Bill Text

The panel took place as a bipartisan Senate permitting package was expected to surface. Powell, citing briefings from the negotiators, described the outlines then circulating: faster environmental reviews, less litigation risk, protections against permits being pulled after construction starts, and long-haul transmission reform. Matheson said the consensus that Congress needs to act on permitting is stronger than at any point in his career. “Let’s take the win. Let’s move down the field. Let’s get some progress. We can live to fight another day,” he said, adding that he is a believer in taking “the partial loaf” when the full loaf isn’t available. Falcone was cautious: “Devil’s in the details, and we really need to see the bill text.”

The text arrived later that day. The Bipartisan American Affordability and Jobs Act was introduced by Sen. Shelley Moore Capito (R-W.Va.), chair of the Environment and Public Works Committee, and Sen. Mike Lee (R-Utah), chair of the Energy and Natural Resources Committee, along with ranking members Sheldon Whitehouse (D-R.I.) and Martin Heinrich (D-N.M.). According to the sponsors, the bill would let permitted projects keep their permits absent extraordinary circumstances, violations of law, or court order, and would require data centers to pay their transmission costs. The Bipartisan Policy Center (BPC), in an Oct. 2 explainer, described a 417-page bill that, among other provisions, would bar cost-shifting to other customers for new data centers of 20 MW or more. BPC said it expects a Senate cloture vote on the motion to proceed on Nov. 9 and that amendments are possible. CEBA issued a statement from Powell the same day calling the package “a generational opportunity to unleash abundant American energy.”

The session’s last exchange, prompted by a question about Pennsylvania’s infrastructure grade, brought the theme home. Falcone said LPPC members’ capital budgets have on average doubled in three years, which “means you need double the engineers and double the linemen and double the supply chain.” The sector will muddle through, he said, but the cost arrives either way. “Everybody has to pay more, and that’s an affordability challenge.”

Falcone then invited Powell to weigh in. “We are paying our way,” Powell said.

— Aaron Larson is executive editor of POWER.

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