[Senate Hearing 118-338]
[From the U.S. Government Publishing Office]
S. Hrg. 118-338
THE OPPORTUNITIES, RISKS, AND CHALLENGES
ASSOCIATED WITH GROWTH IN DEMAND FOR
ELECTRIC POWER IN THE UNITED STATES
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HEARING
BEFORE THE
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
MAY 21, 2024
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the
Committee on Energy and Natural Resources
Available via the World Wide Web: http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
55-900 WASHINGTON : 2025
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
JOE MANCHIN III, West Virginia, Chairman
RON WYDEN, Oregon JOHN BARRASSO, Wyoming
MARIA CANTWELL, Washington JAMES E. RISCH, Idaho
BERNARD SANDERS, Vermont MIKE LEE, Utah
MARTIN HEINRICH, New Mexico STEVE DAINES, Montana
MAZIE K. HIRONO, Hawaii LISA MURKOWSKI, Alaska
ANGUS S. KING, JR., Maine JOHN HOEVEN, North Dakota
CATHERINE CORTEZ MASTO, Nevada BILL CASSIDY, Louisiana
JOHN W. HICKENLOOPER, Colorado CINDY HYDE-SMITH, Mississippi
ALEX PADILLA, California JOSH HAWLEY, Missouri
Renae Black, Staff Director
Sam E. Fowler, Chief Counsel
Daniel Palken, Professional Staff Member
Justin J. Memmott, Republican Staff Director
Patrick J. McCormick III, Republican Chief Counsel
Valerie Manak, Republican Deputy Staff Director for Energy
C O N T E N T S
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OPENING STATEMENTS
Page
Manchin III, Hon. Joe, Chairman and a U.S. Senator from West
Virginia....................................................... 1
Barrasso, Hon. John, Ranking Member and a U.S. Senator from
Wyoming........................................................ 9
Risch, Hon. James E., a U.S. Senator from Idaho.................. 12
WITNESSES
Fowke III, Benjamin G.S., Interim CEO and President, American
Electric Power Company......................................... 13
Onaran, Karen, President and CEO, Electricity Consumers Resource
Council 32
Gatzemeier, Scott, Corporate Vice President, Front-End U.S.
Expansion, Micron Technology................................... 41
Mills, Mark, Executive Director, National Center for Energy
Analytics...................................................... 49
ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED
American Clean Power Association:
Letter for the Record........................................ 91
Barrasso, Hon. John:
Opening Statement............................................ 9
Chart entitled ``U.S. vs. China: Cumulative Change in Coal
Power Since 2015 Paris Agreement........................... 11
Clean Energy Buyers Association:
Letter for the Record........................................ 93
Electricity Customer Alliance:
Letter for the Record........................................ 95
Fowke III, Benjamin G.S.:
Statement for the Record..................................... 13
Written Testimony............................................ 16
Responses to Questions for the Record........................ 78
Gatzemeier, Scott:
Statement for the Record..................................... 41
Written Testimony............................................ 43
Responses to Questions for the Record........................ 84
Manchin III, Hon. Joe:
Opening Statement............................................ 1
Chart entitled ``Total Manufacturing Construction Spending:
U.S. vs. EU, Percentage Change''........................... 2
Chart entitled ``NERC: 5 U.S. Regions at Elevated Risk of
Outages This Summer''...................................... 5
Chart entitled ``Wind Capacity Additions (GW)''.............. 7
Mills, Mark:
Statement for the Record..................................... 49
Written Testimony............................................ 51
Responses to Questions for the Record........................ 88
Onaran, Karen:
Statement for the Record..................................... 32
Written Testimony............................................ 34
Responses to Questions for the Record........................ 80
Risch, Hon. James E.:
Opening Statement............................................ 12
(The) Williams Companies, Inc.:
Statement for the Record with attachments.................... 97
Zero Emission Transportation Association:
Statement for the Record..................................... 127
THE OPPORTUNITIES, RISKS AND CHALLENGES ASSOCIATED WITH GROWTH IN
DEMAND FOR ELECTRIC POWER IN THE UNITED STATES
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TUESDAY, MAY 21, 2024
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The Committee met, pursuant to notice, at 10:02 a.m. in
Room SD-366, Dirksen Senate Office Building, Hon. Joe Manchin
III, Chairman of the Committee, presiding.
OPENING STATEMENT OF HON. JOE MANCHIN III,
U.S. SENATOR FROM WEST VIRGINIA
The Chairman. The meeting will come to order.
Today we are here to discuss the opportunities, risks, and
challenges associated with the growth in demand for electric
power in the United States. In the half century after World War
II, demand for electricity grew steadily in this country, along
with our economy, but in the decade following the
implementation of the North American Free Trade Agreement,
which was in the 1990s, annual electricity demand growth fell
by nearly 45 percent--45 percent. And for the past two decades,
electrical demand--or ``load''--has been flat across the
country.
We are here today because that era appears to be coming to
an end rapidly. With exponential growth in the domestic
technology and manufacturing sectors, utilities and grid
experts across the country are telling us that electricity
demand is poised for truly remarkable growth. Meeting this
demand growth may prove to be one of the greatest challenges--
and also opportunities--that we will face in 21st century for
our citizens, our economy, and the defense and security of our
country.
I want to thank our witnesses for being here to share their
perspectives on this historic load growth and what is at stake
if we do not meet it. The load growth is being driven by three
main factors as we evaluate it. First, it is the reshoring of
industry and advanced manufacturing spurred by the Bipartisan
Infrastructure Law, the CHIPS Act, and the IRA. Construction
spending on manufacturing has more than doubled since we signed
these bills--and I think you see this behind you--signed these
bills into law as shown in the chart behind me.
[The chart referred to follows:]
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The Chairman. This is unbelievable. Unbelievable. People
don't realize how much is coming into the U.S. and how rapidly
demand--that tells you the spread of energy that we need and
what we don't have, maybe. So look, the EU has been flat as a
pancake. Most of all, the world's been flat as a pancake, and
here we are. We are seeing new factories to build advanced
energy and semiconductor technology spring up practically every
week.
Second, it is a revolution in advanced computing
applications, especially artificial intelligence and the rapid
growth in data centers to provide the processing power needed
for those technologies. And I understand that they just have an
unquenchable thirst for power as far as the data centers. And
third, it is the push to electrify technologies across multiple
sectors, like the administration's push to flood the market
with EVs, which I think they are way over their skis on, and I
have been cautioning and warning them from day one.
The North American Electric Reliability Corporation, or
NERC as we know it, projects in its 2023 long-term reliability
assessment that there will be 90 gigawatts of demand growth by
2030. Put that in perspective. That is over ten percent of this
peak of the U.S. electrical demand, which is about 750
gigawatts. But even that number is likely conservative. NERC
relies on data submitted in the previous year from industry and
the forecast just keeps growing unbelievably faster than what
they can keep up with.
This is unbelievable. Last month, the Texas grid operator
revised its 2030 load forecast from last year to add 40
gigawatts of new expected load growth. One state. That is like
adding the demand of the entire State of California to the
Texas grid six years from now. That should be a wake-up call. I
hope it is. We need to be prepared to meet this demand. Let me
be clear: the load growth is an opportunity of a generation,
and it is ours to lose.
The reason we have the growth is that industries that will
define the 21st century--chips, AI, advanced manufacturing--are
tripping over one another to build in America. They are coming
from all over the world, but there is no guarantee of success.
To put it plainly, we can't be open for business if we can't
keep the lights on.
If America can't build the energy infrastructure needed to
support these industries with reliable and affordable power, we
will be forfeiting the opportunity to be on the forefront of
technologies of the future and ceding control to China and
other nations that we cannot necessarily trust. And right now,
between the Administration's policies and our inability to act
in Congress, it seems like we may be in the real danger of
doing just that.
We have heard from both FERC and NERC that our grid's
reliability and affordability are at risk because we are
retiring baseload dispatchable generation faster than we can
replace it. They came in and spoke with me and told me that
basically we are taking off dispatchable 24/7, whether it be
coal, nukes, whatever it may be that we can depend on, and now
even natural gas because of an environmental movement, trying
to replace it with intermittent power. And they are very, very
concerned across the board.
NERC's summer assessment came out last week. These are
brand new numbers, and they show half the country at elevated
risk of blackouts this summer, as shown in this chart.
[The chart referred to follows:]
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The Chairman. If you live in or represent one of these
areas, tell them to watch out. They are going to be in trouble.
The potential is great that they may be having rolling
brownouts and even blackouts, and that should be concerning to
everybody in this Administration and every Senator and
Congressmember who represents those areas.
Last July, NERC even added energy policy as a brand-new
category of major risk facing our grid. When NERC, which is
basically nonpartisan, says the policies that you are putting
out in Washington--and only Washington can fix it--are
basically putting us at risk, you should take heed. It is
ridiculous that government action is creating new categories of
grid risk instead of preventing the risk.
As if to prove NERC's point, EPA recently finalized four
new power plant rules that, as far as I can tell, aim to kill
coal completely and stop natural gas from replacing it. It's a
double-whammy. I don't know what they are thinking. These
dispatchable resources are essential for reliability. And I
have said this to them: the transition is going to happen, but
you can't take something off before you have something equally
as good if not better to replace it with.
You might not like coal, but coal has built this country
into what it is today. We are doing it better and cleaner than
any place else in the world. And the transition is there, no
one's fighting the transition. Just give us other jobs that we
can do to take care of our families and make a living, and
that's fine. The bottom line is, we don't have that technology
yet. We are not there, but they are just damned to do it
because of the political reasons. And that is what we are
trying to make sure they understand, that it's not going to
work.
These dispatchable resources are essential for reliability,
I have said, and if this Administration were serious about
onshoring critical industries, the ones driving the load
growth, they would not be in a race to take power offline, they
would be racing to bring new generation on. But instead, it is
getting harder and harder to admit and build new energy
infrastructure and connect new generation to the grid. It just
is. We now have 2.6 million megawatts of generation waiting an
average of five years to connect. Think about that. So 2.6
million megawatts waiting to go and nowhere to go with it.
For example, in West Virginia, in my little state, we have
one plant over 1,800 megawatts, a state-of-the-art, combined
cycle gas plant with carbon capture. The cleanest it can
possibly be. The cleanest. But the company's telling me they
have to wait half a decade before they even get the green light
to even start the permitting. It's unbelievable. And to be
clear, these are not just problems for fossil plants. It is as
bad or even worse for wind. I can't believe this chart. This is
where wind demand, this is what's happening in wind, how far it
has gone down. They can't connect. There is nowhere to connect.
[The chart referred to follows:]
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The Chairman. Solar is doing much better because solar can
get into the grid system faster. It's in areas where the grid's
already there. Wind is coming in areas, whether it be offshore
or whether it be somewhere out to where there is no grid system
whatsoever, and they can't get there because they can't get
permitting. And if the Majority Leader, Senator Schumer,
believes that what was done cured all the problems, I got news,
it didn't do it.
American Clean Power just published their 2024 figures, as
you can see. We are on pace to install less wind in 2024 than
we did during the worst year of the Great Recession, as shown
in the chart. Here was the recession coming out of it here. Now
we are down to there. We have to make it easier to build
generation pipelines and transmission lines to meet the moment,
and that is why the permitting is needed so, so desperately.
FERC finalized two rules last week, which in time may help
build new transmission. But let me be clear, these rules are
using the tools FERC currently has and are not a replacement
for Congressional action. These rules help with one aspect of
one part of a bigger set of the grid permitting problems. I
know you all have looked into this, but as my friend Senator
Hickenlooper said, ``They are a Band-Aid on Congress's
inaction,'' which you are totally right, Senator.
For example, the new rules took action on transmission
lines within regions--transmission lines already within the
regions, not for the interregional lines that truly have the
most reliability and affordability benefits to offer. It didn't
happen, did not affect them at all. And only if the rules prove
durable in courts and under future administrations. They are
all going to be challenged.
I want to quote FERC Commissioner Clements two days after
the rules came out--and she is retiring in June--and she said:
``Considerable work remains to be done both at the Commission
and in Congress if we are to realize the modern electricity
grid on which the continued vitality of the United States'
economy and security increasingly depends . . . for some of
these next steps, particularly in regional planning and
permitting reform, Congressional action could be critical in
providing direction and momentum to the commission.''
And just so we are clear that permitting and transmission
legislation is not a partisan priority, let me also quote Mario
Layola, a senior fellow at the Heritage Foundation, who served
in the White House during the Trump administration. He said,
after FERC issued its new rules, ``Transmission expansion has
only become more difficult. These are problems only Congress
can solve.'' I have to say I couldn't agree more. There are
critical permitting problems for all types of energy
infrastructure that only Congress can fix, and I remain
committed to addressing that.
Myself and Senator Barrasso's team have been working
diligently for quite a while. We finally have language. We are
going to start sharing this language with everyone, so that
people can see where we are and hopefully maybe we can all get
our act together here. In fact, each of the industry witnesses
before us today submitted testimony that speaks in stark terms
to the permitting challenges facing new sources of electric
supply and demand. I look forward to hearing more from our
witnesses on this topic shortly.
With this, I am going to turn to Ranking Member Barrasso
for his opening remarks.
OPENING STATEMENT OF HON. JOHN BARRASSO,
U.S. SENATOR FROM WYOMING
Senator Barrasso. Well, thanks so much, Mr. Chairman.
Thanks for holding today's important hearing. America's demand
for electricity is expected to grow rapidly through 2030. In
fact, we may be entering a period of sustained demand growth
unlike anything we have seen since the two decades following
World War II. As you said, Mr. Chairman, we cannot be open for
business if we cannot keep the lights on.
The biggest source of new electricity demand is expected to
come from data centers. Data centers enable cloud computing,
Bitcoin mining, and artificial intelligence. How we meet this
growing demand for electricity will have serious economic and
security consequences for our nation. The stakes couldn't be
higher. In fact, many believe that the race for artificial
intelligence with Communist China will be more consequential
than the space race with the former Soviet Union. And the AI
race has already begun.
Data centers running artificial intelligence consume
massive amounts of electricity. Some estimates suggest that
electricity demand for these data centers will double between
now and 2030. Whoever secures affordable and reliable electric
power, China or America, will have a big head-start in the race
for artificial intelligence. And right now, America is not
positioned well.
Our grid is already strained. For years, the North American
Electric Reliability Corporation, NERC, has raised alarm about
grid reliability. It has warned that the premature retirement
of coal and natural gas-fired power plants has increased the
risk for blackouts and brownouts in much of the country. Yet
the retirements continue, and President Biden is making the
situation worse.
Last month, the Environmental Protection Agency issued new
rules that will force the premature closure of even more coal
and natural gas-fired power plants. These plants play a major
role in ensuring electric reliability. They also help make
electricity more affordable. President Biden doesn't seem to
care at all. He wants the cost of complying with EPA rules to
be high. He wants to force operators to shut down these plants
before the end of their useful life. It is a disgrace.
We cannot regulate our way to more electric generation.
When it comes to data centers, the quality of the generation
source is as important as the quantity of electricity
generated. Now, I acknowledge wind and solar can help, yet they
are weather-dependent. Batteries, too, can help. Yet batteries
are expensive and can't provide power for extended periods.
They also require vast amounts of minerals from China, from the
Congo, from Indonesia, and other countries with horrible human
rights and environmental records.
We need a reliable, steady, and balanced supply of
electricity. Nuclear, coal, natural gas, and hydropower can
provide that. With demand poised to surge, it only makes sense
to keep our existing power plants operating while also building
new generating capacity. Our goal should be addition, not
subtraction. Mr. Chairman, the 20th century was the American
century. Which country will lead the 21st century is still up
for grabs. Much depends on how America capitalizes on the
potential of artificial intelligence. The president's
opposition to coal, to natural gas, and even to hydropower, the
fuels that generate 65 percent of our electricity, is a white
flag. It is a surrender, an act of surrender to China.
Mr. Chairman, this chart shows that China has added 262
gigawatts of coal-fired electric generation since the Paris
Climate Agreement in 2015.
[The chart referred to follows:]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Senator Barrasso. The red lines show how much China has
added from coal-fired power plants to electric generation.
Meanwhile, the United States has shut down over 100 gigawatts
of coal-fired electric generation. What does this mean? It
means that when China's AI developers need electric power, the
Chinese Communist Party is going to make absolutely sure that
they will get it, and they will get it from coal. When
America's AI developers need power, will it be enough, will it
be reliable, will it be affordable? Right now, under Joe Biden
and the Democrats, the answer is no.
The race for artificial intelligence is one America cannot
afford to lose, and we cannot win this or any other race with
China if we are unwilling to use the very energy sources that
China is going to exploit to the fullest.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator. I would like to turn to
our panel of witnesses. I am going to introduce you all and
then I am going to go to Senator Risch, if I may.
Mr. Ben Fowke, he is interim CEO and President of the
American Electric Power Company, one of our home-state
utilities in West Virginia. Ben, it's good having you here. We
have Karen Onaran, President and CEO of the Electricity
Consumers Resource Council. We have Mr. Scott Gatzemeier,
Corporate Vice President of Front-End U.S. Expansion at Micron
Technologies, and we have Mr. Mark Mills, back again, Executive
Director of the National Center for Energy Analytics.
At this time, I am going to turn to my friend, Senator
Risch.
OPENING STATEMENT OF HON. JAMES E. RISCH,
U.S. SENATOR FROM IDAHO
Senator Risch. Well, thank you, Chairman Manchin. I
appreciate that, and to Ranking Member Barrasso, thanks to both
of you for holding what is really an important hearing today,
which covers a lot of ground and underscores some real
shortcomings that we have but that we can address.
It is my privilege today to introduce to you a
distinguished Idahoan, Scott Gatzemeier, who is Vice President
of U.S. Expansion for Micron Technology. Micron Technology was
founded in Boise, Idaho, and had a very humble beginning, to
say the least. And it has grown today to be one of the top four
semiconductor companies in the world. Idaho ingenuity drove
this growth and continues to drive the company's innovation in
advanced memory and storage technologies. Micron's advancements
have given the United States a competitive edge in data
storage, security, and supercomputing.
However, all is not well in the semiconductor industry. For
those of us that serve on the Foreign Relations and
Intelligence Committees and who work in the national security
lane, over recent years, we have heard over and over and over
again the shortcomings of the semiconductor industry. And it
was driven by the semiconductor industry following the siren of
cheap wages and moving production offshore. This has caused us
some real difficulties, and it is very much a national security
problem.
With semiconductors, I think everybody is aware, and no one
more than the defense industry and the defense contractors, of
how important microchips and semiconductors are in the
construction of certain products. They are in everything now.
They are in refrigerators, TVs, and in automobiles. But very
importantly, they are in just about everything that we
manufacture that has to do with defense. Thus, those of us who
saw this came up with the CHIPS Act, a $52 billion addition to
our budget to stimulate bringing this industry back to the
United States. This was not driven by a desire to subsidize the
semiconductor industry. It was designed to meet what was a
great challenge in semiconductor production, and to bring it
back here to the United States and close this gap in national
security.
It appears to me it's working. We thought it would. No one
ever knows until you actually try it, but right now, this is
happening, and Micron is leading the charge in onshoring chip
production again. The company recently broke ground on a new
fab in Boise, Idaho, and has plans to build four additional
fabs nationwide. Mr. Gatzemeier, who brings more than 25 years
of experience across fab engineering, operations, and
technology development, is Micron's leading expert on domestic
expansion. His experience and expertise position him to offer a
unique perspective on how Congress and industry must rise to
the challenge of returning the American-born semiconductor
industry to the United States.
A key component of meeting that challenge is sufficient and
dependable energy. And it is no accident that companies like
Micron continue to invest in Idaho. Our state's all-of-the-
above energy policies and support for clean, reliable,
affordable, always-on hydropower make it a prime location. This
issue of national security and semiconductors fits very well
with the subject of what we are talking about today because it
does demand a tremendous amount of energy. And Mr. Chairman, I
think you did a really good job of underscoring what the
experts are telling us we are going to need for energy in the
future.
So Scott, thank you for being here today, and we look
forward to hearing your testimony on this important issue.
The Chairman. Senator Risch, thank you. I know you have a
very, very important Foreign Relations Committee meeting that
you have to be involved with coming up right now, so I am sure
Scott will get you up to date as quickly as possible after you
have to go.
Senator Risch. Thank you.
The Chairman. With that, let's start with our testimonies,
and Mr. Fowke, you are first.
STATEMENT OF BENJAMIN G.S. FOWKE III, INTERIM CEO AND
PRESIDENT, AMERICAN ELECTRIC POWER COMPANY
Mr. Fowke. Chairman Manchin, Ranking Member Barrasso, and
Committee members, thank you for the invitation to testify at
today's hearing.
My name is Ben Fowke, and I serve as Interim CEO and
President of American Electric Power Company. AEP is one of the
largest electric utilities in the United States, serving
customers across an 11-state footprint. We have a diverse
electric generation fleet, and we own and operate the largest
transmission system in the United States. This is a significant
moment for our country, our industry, and our company. We at
AEP are excited about the opportunities and challenges ahead of
us as we meet the growing demand for electricity in our
regions.
Demand for electricity was almost flat for two decades. We
are now beginning to see this trend reverse, driven by large
customers such as industrial manufacturers, data processors,
and others who require significant amounts of power. The
efforts of Congress to support the development of these
businesses have been remarkably successful and companies are
now building and growing here in America because in part we
have abundant and diverse energy resources and reliable and
affordable power. However, in some areas of the country, the
demand for electricity is growing faster than the available
capacity. Just a few years ago, a large-scale industrial
manufacturing facility might require 100 megawatts, or about
enough to power 100,000 homes. A facility that size would
typically be one-of-a-kind in a region and would be a major
source of economic activity for that area. Now it is common for
a single data center to require up to 15 times this amount of
power for a single site.
As technology evolves, power demand from data processing is
expected to double nationwide in three years. One small example
of this demand surge, Open AI's Chat GPT, requires 2.9 watt-
hours for a request. Now that is nearly ten times more power
than a typical Google search. AEP currently has requests from
large customers that would more than double the existing peak
demand we serve on our system today.
It took over 100 years of planning and building to create
our current system, and a step-change in infrastructure
investment on an accelerated timeframe will be required to
serve even a fraction of this future demand in a reliable
manner. As demand is rapidly increasing, our nation's
electricity system is transforming to accommodate new forms of
energy. The pace of this transformation must not overtake the
reliability needs of our system. Independent assessments by
NERC find that the risk of electric power supply disruptions
are steadily increasing. Our society depends on a reliable
power system. As we embark on this era of economic growth and
technological transformation, customers need an energy system
that is available to deliver reliable, affordable, and
environmentally sensitive power where and when they need it.
Continued development of the electric system must be a
central priority of U.S. energy and economic policy, and we
need to think bigger and more comprehensively to address the
many opportunities and challenges in front of us. For your
part, we ask that Congress work with regulators to ensure
electric system resource adequacy and prevent premature
retirements of dispatchable power plants. This includes
considering the impact of recent EPA regulations, which could
hasten the pace of plant retirements and diminish reliability;
collaborating with FERC and other federal and state
constituents to evaluate the establishment of a central
planning authority focused on reliability; and directing FERC
to ensure that viable reliability safety-valve mechanisms are
in place to prevent premature plant retirements.
Congress should also expedite the development of new 24/7
dispatchable and clean energy resources to meet the growing
consumer demand. This could be done through encouraging FERC to
allow for fast-tracking of generation resources in the
interconnection queues that have been selected by utilities to
meet their obligation to serve customers; encouraging the
development of advanced technologies such as next generation
nuclear; passing a siting and permitting package that
accelerates the development of critical infrastructure; and
maintaining the Inflation Reduction Act and the technology-
neutral and nuclear tax credits, which serve to reduce costs
for customers.
Finally, Congress should encourage FERC's recent efforts to
support the efficient development of necessary regional and
interregional electric transmission facilities to ensure
reliability and accommodate economic growth and development.
The electric power industry will play a crucial role in helping
the U.S. remain a global leader in advanced manufacturing and
technology innovation. With the help of Congress and our
federal and state regulators and agencies, we can serve this
emerging demand and secure America's role as a leader for
generations to come. To do so, we will need to work together to
quickly build new sources of electric generation and high-
voltage power lines to deliver electricity where it is needed.
Thank you.
[The prepared statement of Mr. Fowke follows:]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you.
Ms. Onaran, we have you next, if you will.
STATEMENT OF KAREN ONARAN, PRESIDENT AND CEO, ELECTRICITY
CONSUMERS RESOURCE COUNCIL
Ms. Onaran. Chairman Manchin, Ranking Member Barrasso, and
distinguished members of the Committee, thank you for the
invitation to appear before you today.
My name is Karen Onaran. I am the president and CEO of the
Electricity Consumers Resource Council, or ELCON. ELCON is the
trade association for large industrial consumers of
electricity. Our mission is to ensure that we have reliable and
affordable power, and so we support the development and
adoption of rational and coordinated policy to ensure electric
reliability at low cost. The purpose of my testimony today is
to represent the industrial sector as one of the drivers of the
electricity demand that we are speaking of today.
So after decades of decline in manufacturing, domestic
manufacturing is seeing a resurgence in the U.S. According to a
recent report from the Deloitte Research Center for Energy &
Industrials, the number of manufacturing facilities in the U.S.
grew by over 11 percent between the first quarter of 2019 and
the second quarter of 2023. Construction spending on
manufacturing has nearly tripled since June 2020 and was up 37
percent year over year in January 2024, when construction
spending reached a high of $225 billion. As a result, the
industrial sector is projected to add 36 gigawatts of
additional power by 2030. Bringing manufacturing back to U.S.
shores has many implications and benefits, as we have talked
about. This is bringing investment into communities that have
been neglected in the past, bringing thousands of jobs, whether
that be through construction, the permanent jobs to run the
operations and manufacturing, and the secondary jobs to support
those workers, including retail and food and housing.
According to the National Association of Manufacturers, the
industrial sector contributed at a yearly rate of $2.9 trillion
to the U.S. economy in the third quarter of 2023, and it
projects that we will need approximately 3.8 million
manufacturing workers in the next decade. We have already heard
about the national security implications. We can no longer rely
on hostile foreign nations to supply our critical
infrastructure, our critical minerals, and our computing power.
And we saw the devastating impacts during COVID of supply chain
interruptions. It behooves us to create more and manufacture
more here on our shores.
So at this point, we must right-size our grid, and we must
meet this demand by reducing some of the regulatory barriers
that we are seeing. We all know the risks. We have heard them
today, from varying energy supply to extreme weather like we
saw in Houston last week. So we cannot take any options off the
table right now. We need all-of-the-above resources, and we
need the infrastructure to support those resources. We need an
agile and flexible grid that can manage variable supply as well
as variable demands. Demand is going to change their profiles.
So we really, really implore this Committee and the
Congress to pass significant permitting reform for transmission
infrastructure and other energy infrastructure. We have seen
that the Federal Energy Regulatory Commission has taken some
measures to address interconnection backlogs and transmission,
but we still have a lot more work to do. I really ask everyone
to come to the table and work on solutions. Take nothing off
the table now.
And finally, even though we all appreciate and wish to be
good stewards of the environment, the EPA rules that recently
came out further complicate a tenuous situation on our grid.
And so we cannot be further impeding our reliable and safe and
affordable electricity. Electricity underpins our national
economy, our national security, and the prosperity and
ingenuity here in the United States.
Senators, again, I thank you so much for your invitation. I
will conclude my remarks and look forward to your questions.
[The prepared statement of Ms. Onaran follows:]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you.
Now we have Mr. Gatzemeier.
STATEMENT OF SCOTT GATZEMEIER, CORPORATE VICE PRESIDENT, FRONT-
END U.S. EXPANSION, MICRON TECHNOLOGY
Mr. Gatzemeier. Chairman Manchin, Ranking Member Barrasso,
Senator Risch, and members of the Committee, thank you for the
opportunity to testify today and represent Micron regarding the
importance of affordable, reliable, and sustainable energy.
I serve as the corporate Vice President for Micron's
expansion in the United States. Micron was founded more than 45
years ago in Boise, Idaho, in the basement of a dentist's
office. Today, Micron is a world leader in design, development,
and manufacturing of memory and storage technology. We have an
expansive IP portfolio of more than 55,000 patents. We operate
in 17 countries, and we have over 40,000 team members
worldwide.
Micron plans to invest $125 billion with the support of the
bipartisan CHIPS and Science Act to build fabs in Onondaga
County, New York and Boise, Idaho that will transform these
regions and create over 75,000 jobs. We are also seeking CHIPS
funding for our existing fab in Manassas, Virginia, and would
be excited to host you or your staff on a tour.
Washington has been focused on the vital role that
semiconductors play in American economic and national security.
Micron is the only manufacturer of memory. Our memory and
storage products are essential to all computing and storage
capabilities in phones, data centers, computers, and numerous
other devices. Without memory, none of those devices would be
able to operate and provide the remarkable capabilities that
shape our modern world. Micron has an expansive memory product
portfolio, from the DRAM chips that will be made in Idaho and
New York to the NAND and NOR in Virginia, to Micron's latest
product, high bandwidth memory, HBM3E.
Our high bandwidth memory powers today's generative AI
models by enabling them to break through data bottlenecks.
Micron's HBM is the fastest, highest capacity, and 30 percent
more energy efficient than other products available across the
industry. As Micron manufactures, we have made significant
efforts to reduce our consumption of energy, which is detailed
in my written report.
However, as the expansions of U.S. semiconductor
manufacturing, new data centers, and other manufacturing in the
U.S. have been highlighted, electric demand will grow faster
over the coming years than it has in decades. For all those
planned investments in U.S. manufacturing and data centers to
actually work, the U.S. needs to modernize its grid and expand
electricity generation capacity. When it comes to energy
permitting, I am an Idahoan, and I will speak to the challenges
that we face.
The western U.S. produces an abundance of sustainable
energy, including hydropower in the northwest, wind in Wyoming,
and solar in the desert southwest, but capacity is constrained
on the transmission lines that move energy from the places
where it's generated to the homes, farms, and businesses that
need it. There is no transition to sustainable energy without
transmission. To power our fab in Boise, we plan to import 400
megawatts of affordable, reliable power from the Pacific
Northwest in the summer, when a surplus of energy is available
there. In the winter, when the Pacific Northwest energy demand
peaks, utilities there will import energy across the planned
Boardman to Hemingway (B2H) transmission line from Oregon to
Boise.
B2H began in late 2006. Idaho Power has a Record of
Decision but does not have a Notice to Proceed from the Federal
Government. The cost to build B2H is between $1.5 and $1.7
billion. On top of that, permitting costs have already exceeded
$220 million. Construction is finally slated to begin later
this year, with completion in 2027, over 20 years after this
project began. A federal permitting process that adds two
decades to the project timeline and adds hundreds of millions
of dollars in the cost is not a permitting process that will
enable a U.S. manufacturing renaissance or AI leadership.
Above all, Micron supports efforts which will ensure
affordable and reliable electricity, which could include a
balanced approach to permitting reform that utilizes all
avenues to support the growth of domestic manufacturing,
improves reliability of the grid, maintains low energy costs,
and addresses the need for sustainable energy sources.
I will leave you with this: Micron's main product is memory
chips. It is an intensely competitive and dynamic business.
Micron succeeds because we provide an edge, often in power
requirements or better performance metrics, but we have been
growing and planning to grow and invest to meet our customers
in the digital economy. It is imperative that Congress also
plan for the energy demands of the data-driven economy of today
and tomorrow so the United States can remain competitive and a
destination for manufacturers like Micron.
Thank you, and I look forward to your questions.
[The prepared statement of Mr. Gatzemeier follows:]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you. And now we will hear from Mr.
Mills.
STATEMENT OF MARK P. MILLS, EXECUTIVE DIRECTOR, NATIONAL CENTER
FOR ENERGY ANALYTICS
Mr. Mills. Good morning. Thank you, Chairman Manchin and
Ranking Member Barrasso for the opportunity to testify. And
Senators, if I may, as a personal observation, as a longtime
observer of this great Committee and occasional witness, just
note that it's music to my ears, I will have to say, to hear
such significant bipartisan convergence on such a critical
issue.
It is of personal interest, because I began my career as a
young physicist in semiconductor fabs in New Jersey and Ohio.
And we are, as you said, Senator, at a rare pivot in history.
We are witnessing the emergence of a significant and ostensibly
unanticipated new vector for electricity demand. And as you
know, I am referring specifically to the emergence of useful
artificial intelligence (AI), especially when it's combined
with the next phase of expansion for the cloud computing
infrastructure that was pioneered in the United States and has
expanded to the world.
While there is debate, of course, and outright guesswork
about where the future specific uses for AI will come from--
both civilian and military--no one doubts that the AI boom is
here. Utility planners and energy pundits have rediscovered a
basic truth--the arrival of new ways to boost the economy
illustrates a longstanding correlation, a kind of iron law that
links growth with rising energy use and especially electricity
use. We have a good idea why we are now seeing such surprising
leaps in the near-term forecast for electricity demand.
Put in monetary terms, not the physics terms that I grew up
with, but in monetary terms, every billion dollars spent on
data centers leads to over $60 million a year in electricity
purchases. And last year, before the AI acceleration kicked
into high gear, capital spending on U.S. data centers was
running at over $100 billion a year. Now, the addition of AI-
enabled hardware is accelerating both the rate at which data
centers are being ordered, and the energy use per data center.
So a billion dollars spent on a new AI-infused data center will
likely drive something like $200 million a year in energy
purchases.
Now, for context, a billion dollars spent on new EVs, for
example, or a billion dollars' worth of new chip factories,
generates only about $20 million a year in annual electricity
demand. That AI has a voracious energy appetite is not news in
the technical community. There have been myriad studies
pointing out that the so-called ``training'' phase that is the
equivalent of building, not flying, an aircraft, can use as
much electricity as driving a Tesla anywhere from 300,000 to
four million miles. And then the use phase--flying the AI, so
to speak--can consume ten times more electricity. And there
are, for all practical purposes, nearly unlimited numbers of
potential applications for both training and using AI.
Of course, AI will become more energy efficient. The latest
AI chips are already a hundredfold more energy efficient over
the last half-dozen years, and they will get another
hundredfold more efficient before the year 2030. But efficiency
won't solve the so-called problem of rising electricity
demands. It will do the opposite, just as it did in the rise of
the first cloud era. Improving energy efficiency lowers costs,
which is what makes the proliferation of the benefits of the
product or service possible, especially in digital domains.
Operating at the computing efficiency of a 1980 computer, a
single smartphone today, just one of them would use as much
electricity as a skyscraper. A single data center would use the
entire grid. It is because of electricity gains that the world
has billions of smart phones and thousands of data centers.
Consequently, today's global cloud infrastructure already
rivals the energy use by global aviation, and that is before
AI. We can count on the pattern repeating with AI.
Electricity demand coming from the expansion of the cloud
will continue to overshadow the combined impact of new EVs and
new chip factories. But whether the AI expansion is in fact
fully realized, and the expansion of chip factories and EVs as
well in America, that will be determined, as other witnesses
have said, on whether we have adequate electricity, whether
it's affordable, and whether it's available when it's needed.
And given the scales of electricity demand from the cloud, and
AI particularly, when added to the demands from reshoring
manufacturing and promoting EVs, the nation's electricity
producers now need full access to all options. Electric power
planning now needs to focus on additions to--not transitions
away from--existing electricity production.
The U.S. is the world's cloud leader today. We pioneered
it. We pioneered AI, much as the U.S. was a dominant aluminum
producer just 25 years ago. Producing, again in monetary terms,
a billion dollars of aluminum requires purchasing some $400
million of electricity, which today happens mainly on low-cost
coal-fired grids in China, which has become the world's
dominant supplier of aluminum, while the U.S. now has a single-
digit percentage share of global aluminum supply. Aluminum and
silicon are different materials and different industries, but
the energy implications of the two domains, I suggest, has a
relevant lesson for us.
Thank you.
[The prepared statement of Mr. Mills follows:]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you. And now we are going to start with
our questions, and I will begin. I have so many questions, I
don't know where to start to be honest with you.
But first of all, I would ask you all, you heard about the
rules that FERC came out with, and some people are thinking it
took care of everything. Do any of you believe that what FERC
did cleared or took care of our permitting problems that we
have getting things built, especially transmission or getting
pipelines built or any of the things we need? Anybody believe
that it cured it? Nobody? Okay. And you know, we all understand
it stays within the region, so all it did is allowed, if you
have a regional transmission line, it applies there, but it
does not take care of interregional, right? Okay, so we are on
the same page there.
We all agree with the charts that we had here? Let me just
show you on this chart here.
[The chart referred to appears on page 5 of this hearing
document.]
This chart shows that if you live in these areas or you
represent any of these areas, coming this summer is where they
are predicting you are going to have rolling brownouts or
blackouts because demand will be so great. It doesn't account
for the winter now. It will change around in winter when the
load is different in the winter. We understand that. I would
ask you, Mr. Gatzemeier--coming from the technology end of it
where you are all looking to put your new databases and things
of that sort--do you look at this, and finding out where you
might have more reliable power, where you might go and
recommend putting a plant or a center in an area where they are
going to be reliable and not basically intermittent?
Mr. Gatzemeier. Yes. Power reliability is incredibly
important to our industry. A minor----
The Chairman. Did that factor into basically making
decisions on where you are located?
Mr. Gatzemeier. Yes, yes it did. In fact, when you look at
New York, one of the reasons why I made the decision to go
there is there is a nuclear power plant 40 miles directly north
of our facility with a direct-line connection to a 345-kV
substation across the street from that site. And in looking at
it, it was one of the most reliable substations on the grid
when we were looking at where to select our site.
So reliability of the system is incredibly important to
semiconductor fabs, because a small millisecond blip in our
power would take down our factory for up to a week by
interrupting processing. So reliability is incredibly important
to semiconductor fab manufacturing.
The Chairman. I am going to put a chart that I used before
on wind, and truly all of our environmental friends and
everything are big on the wind thinking it's going to come.
[The chart referred to appears on page 7 of this hearing
document.]
I know our Majority Leader is big on wind. Wind has hit a
slump and it's going down because it takes so long to build
transmission lines. Solar--it's easy to bring solar on. Solar
is record high. Wind has dipped clear down to here. Do you all
agree or disagree with this analogy of what happened to wind,
because we can't get transmission built?
What I am trying to make a point on is that we all have to
have permitting reform, and we have worked on this Committee in
a bipartisan effort. Mr. Mills, you pointed out, we all
understand, we just can't get the Administration to understand
how desperate that we are in need of this. Have you all had any
contact with the White House, John Podesta's office, the
climate department there about the need to get permitting done,
to get the lines to be able to deliver the--have you had any
input at all? Have they reached out to you at all?
No? None? None of you? Have you tried to reach out to them
and tell them how desperate we are of trying to get
transmission and get things built? I would encourage you to do
so if you haven't. Please do so and reach out to them.
The other thing is on China. Do you believe that China has
a competitive edge with the amount of power they have
dispatchable to them? Mr. Mills, do you want to comment on
that?
Mr. Mills. Well, Senator, they have a profound competitive
edge in low-cost, high-reliability, electric power, as you well
know, and a profound competitive edge on exporting the critical
minerals materials that we use to build our unreliable power.
The Chairman. If we don't have the capacity, Mr. Gatzemeier
back to the production end of it, with AI coming on so strong,
if we are not able to keep pace and be the leader of the world,
are we in jeopardy because of the lack of power that we have in
our manufacturing?
Mr. Gatzemeier. Yes, I think you said it, you can't run a
business if you can't keep the lights on. We need additional
generation, and so we encourage investigation in all sources of
new generation, like new hydro, new nuclear, small modular
reactors, geothermal, battery technology for wind and solar to
make them more reliable, because our fabs run 24/7. So we
encourage looking at all sources of generation and requiring
new generation to be created before you retire existing
generation.
The Chairman. Mr. Fowke, if I could ask you, since I am a
customer of yours.
[Laughter.]
Mr. Fowke. Thank you.
The Chairman. Anyway, are you concerned about the amount of
EPA regulations coming out in power plants that you are going
to have to be closing more reliable power than what you intend
to do?
Mr. Fowke. Yes, very much so. The EPA is a big fan of CCS,
and they think that is the best available technology. As you
know, we had a pilot program to explore the carbon capture, and
we have some experience with it and it has its challenges in
front of us. And it's not a proven technology today, and nor is
the infrastructure to move the carbon to sequester it
available. So while it might be a viable technology, a proven
technology in the future, it's not today, and it's unrealistic
to expect that it will be available by 2032.
The Chairman. Do you have any coal-fired plants that are
being retired earlier than their time?
Mr. Fowke. We will have to have that conversation with our
commissions. They were not scheduled to be retired in 2032. And
these rules--if you don't comply with these rules, you need to
shut the plants down and that would be a premature shutdown.
The Chairman. And also, for the record, on the premature
shutdown, who continues to pay? Because your rate was based on
the life of the plant, correct?
Mr. Fowke. Correct.
The Chairman. So it's based into the rate that West
Virginians and anybody in your system are going to be paying
for shutting down earlier and bringing on other power too. So
it's a double-whammy for the most hard-pressed and challenged
people, basically. It doesn't make any sense at all. No sense
whatsoever, sir. I hope you speak up loud and clear and you put
statements out--what is going to happen, and who's going to pay
the freight.
Mr. Fowke. We plan to do just that, Senator.
The Chairman. Thank you, sir.
Senator Barrasso.
Senator Barrasso. Well, thank you. Just to follow up, Mr.
Fowke--so, in 2021, you testified before a different committee
in the Senate that ``renewable energy can only take us so
far.'' You went on to say, ``at higher levels of intermittent
renewables, the cost of the energy system begins to skyrocket,
and the reliability degrades.'' Still true today?
Mr. Fowke. Yes, I made that testimony when I was CEO of
Xcel Energy, but that statement still holds true because it
reflects the physics of the grid. I am a big proponent of
renewable energy. I think it's part of the solution and it's
part of how we address climate change and the risk of it. But
the reality is, the more renewable generation you put on the
grid, at some point that grid reaches saturation point, and
then the value of that renewable energy diminishes and the
integration cost increases. And it's the reality that the big
grid that we are all part of needs 24/7 spinning mass
dispatchable generation. And that's just a fact, and we have to
accept that.
Senator Barrasso. So it's dangerous to force all these
natural gas and coal-fired plants offline at this point.
Mr. Mills, let me go to you. What would be the consequences
if federal and state regulators effectively prohibited the use
of natural gas and coal to meet the growing demand for
electricity?
Mr. Mills. Well, in simplest terms, the stifling of
economic growth and opportunity and the profound disadvantage
geopolitically. You can only consume the energy you produce.
And since all of the witnesses and all of the members of the
Committee understand now that we have soaring demand and
economically driven need for electricity, we would not get that
growth without the power.
Senator Barrasso. So, some argue that electric batteries
will also play a big role in meeting the growing demand for
electricity. They argue that rapid deployment developments in
battery technology are going to enable us to store energy for
longer periods of time at lower costs. What is your assessment
of the state of battery technology, and what are the
implications for the affordability of electric service if we
rely significantly on these batteries?
Mr. Mills. Well, I'll make a point--a technical point, a
physics point: batteries don't produce energy, they store it.
They are extraordinarily expensive ways to store energy. On an
engineering/physics basis, roughly 100 times more expensive
than the traditional ways to store energy--tanks, caverns,
piles of coal. They will play, and are playing a very
significant role in short-term stabilization. For long-term
energy storage, the United States would have to deploy tens of
trillions of dollars of batteries at scales that the world
cannot now manufacture, nor produce the minerals for.
Senator Barrasso. So let me follow up. So Jigar Shah, who
is the head of the Department of Energy's Loan Programs Office,
recently argued that the projected growth and demand for
electricity that we have all talked about and has been reported
broadly in the press, he said that is significantly overstated.
He claims many large energy users can control when they need
electricity. He said they might agree to stop using power
during times of peak demand. He also said that individuals will
stop using electricity during times of high demand in response
to high prices.
Mr. Mills. Right.
Senator Barrasso. In your view, will this be enough to
address the growing demand for electricity? And if not, why
not?
Mr. Mills. Well, first another physics point. Demand-side
management does not produce energy. It is avoiding the use of
energy. Economic growth requires more energy. Also, utilities
have been very, very good at managing demand for about a
century. It's not a new discovery in the utility industry. I
would say the principal discovery is that our society is more
electrified and that there are fewer and fewer sources of
``low-hanging fruit'' where we would turn to.
And I will pick on Micron because they are a spectacular
company, where you would turn to them when they are running
their factory, who will tell us, as the fabs I worked in, if
you take power away for milliseconds, you cause astonishing
economic destruction. I have had that happen to me when I ran a
fab as a young man. So you don't get to ask them to please turn
it off right now, the wind isn't blowing and our batteries have
run out, because when you have a four-hour battery, at four
hours and one second, you are black. You don't have a pile of
coal nearby. You don't have more electricity if there is wind
lull and it's cloud covered.
It is not a solution, but it is a tool in managing cycles.
Society is cyclical. Humans are cyclical. So peak demands can
be shaved, but they don't produce energy.
Senator Barrasso. Well, since you turned to Micron, let me
turn to Micron. I understand that both the availability of
electric service and the quality of the electric service that
you get are incredibly important to Micron. What is the impact
of the temporary voltage dips that we just talked about on
facilities like yours?
Mr. Gatzemeier. Yes, I also unfortunately have had the
opportunity to recover a fab from a minor power blip--
milliseconds, you know, tens of millions of dollars of product
loss in that fab recovery. This would be on the order of
hundreds of millions of dollars product loss on these other,
you know, larger facilities that we will be building. So
absolutely a large economic impact.
And while we are putting in all sorts of energy savings
types, opportunities--variable speed drives, heat capture
recovery--we are putting all that in to try to lower our
demand, the ability to fluctuate, we are what we call a
baseload. You know, we run 24/7, 365 on all the time at peak
out, and you can't just shut it off.
Senator Barrasso. Thank you, Mr. Chairman.
The Chairman. Senator Cortez Masto.
Senator Cortez Masto. Thank you. Thank you, Mr. Chairman
and the Ranking Member. I am one of those that believes we
still need permitting reform. And Ms. Onaran, let me start with
you, and I want to express my appreciation for ELCON's
endorsement and support of one of my bills. It is the
Expediting Generator Interconnection Procedures Act--EGIPA--for
short.
I was pleased to see your testimony call on Congress to
consider this legislation as soon as possible, really in order
to ease what we are talking about--interconnection, backlogs,
enhance grid reliability, and lower energy costs. As we have
all been talking about and are aware, Lawrence Berkeley
National Lab recently determined there were over 2,600
gigawatts of generation in storage pending in U.S.
interconnected queues at the end of 2023.
Ms. Onaran, can you talk a little bit about why--expanding
on some of the ways--that this legislation works to alleviate
the bottlenecks, and it will have a positive impact on energy
development and grid resiliency?
Ms. Onaran. Yes. Thank you for the question, Senator.
And yes, ELCON was a supporter of that proposed bill. We
are at a point where we need, again, as my testimony stated,
all of the above resources. We have a lot of resources that are
hung up in the interconnection queue that are ready to put
steel in the ground and start producing power. And
unfortunately, due to regulatory constructs in the markets,
these are being held up through red tape and, you know,
restudies, and so we really need to find a way to standardize
and perhaps automate some of these study processes so that we
can do it more quickly, and get these resources on the grid.
FERC has done some work with their Order No. 2023, but we
still need to go further, and it's just the first step. Thank
you.
Senator Cortez Masto. Thank you. And while I have you,
because you mentioned this, and this is always a concern of
mine because I think as we build out our portfolio around
energy, including clean energy, we need to ensure we have a
workforce.
Ms. Onaran. Yes.
Senator Cortez Masto. And you talked a little bit about it.
So when considering the severity of literally growing and
moving forward in clean energy and all of these projects, what
do we need to be thinking about for that workforce?
Is it there, or should we be putting more investments, and
what type of investments in the workforce?
Ms. Onaran. Yes, absolutely. You know, coming from the
utility side, before I joined the consumer side, that was
something we heard from the utilities quite a bit, that the
workers, to come, even managing our electric system, the same
for manufacturing, you know, trade schools, things like that
have, you know, declined. There was a more prominent focus on
say, you know, liberal arts education. We moved away from sort
of the trade education that we need. We need to encourage more
workers to look at some of these new and emerging jobs. We need
to make sure that they are well paid, we need to make sure that
they can exist in this society and can prosper. And so we
really need to be investing in our future workforce, and we
need to start doing that now.
Senator Cortez Masto. Thank you. Mr. Fowke, are you
familiar with advanced reconductoring?
Mr. Fowke. Yes, very much so.
Senator Cortez Masto. Can you talk a little bit about that?
Because there is an opportunity, as we are talking about
building out the grid and transmission, the technology is also
going to help us with capacity. Isn't that correct? So can you
talk a little bit about that?
Mr. Fowke. Yes. It's a grid-enhancing technology. We
actually have just used it a couple years ago down in South
Texas where we used the advanced conductor technology to--I
think a 330-mile transmission line of 345-kV. And to your
point, it increased capability by about 40 percent. I would
caution though that you do have to find specific applications
in specific regions and a lot of other technical things before
it can produce those sorts of results that I mentioned. But we
have been a very big proponent of grid-enhancing technologies,
making sure that they also have a cost benefit, you know,
favorably score out on that. And when they do, we are all in.
Senator Cortez Masto. Are other countries already using
this type of technology, advanced reconductoring?
Mr. Fowke. Are other utilities?
Senator Cortez Masto. Countries.
Mr. Fowke. Countries? I believe so, but I would have to
check with my team to see how extensively they are.
Senator Cortez Masto. I appreciate that. Thank you. Thank
you, Mr. Chairman.
The Chairman. Thank you.
And now we have Senator Cassidy.
Senator Cassidy. Mr. Fowke, the Chairman just reminded me--
do you also have that coal-fired plant in Shreveport,
Louisiana, or did you all shut that down?
Mr. Fowke. I believe that has been shut down.
Senator Cassidy. So the Chair just reminded me that my
ratepayers in Louisiana are still paying for that----
The Chairman. Absolutely.
Senator Cassidy [continuing]. Because it did not go to its
life, so when we speak about higher energy costs, and they have
risen significantly during this Administration, part of that is
the kind of unrealized productivity of sunken assets. And let's
be clear: that's regressive. That is regressive. Poor people
pay a greater percentage of their income for this unrealized
potential.
But I will note, by the way, in Northwest Louisiana, and
Louisiana, you guys and Cleco, I think, supply that area, and
you all have great reliability. So I just also want to give you
a congratulations and a shout-out. Our state consumes a lot of
energy, and you guys are providing reliable energy. So I
appreciate that.
Let me ask you this: I recently toured Sempra--building a
little bit off of Senator Cortez Masto--Sempra in Southern
California, and 100 percent of their electricity right now is
being supplied by renewables. You just got to hand it to them.
It's remarkable. Now, I don't think of Southern California as
being huge in manufacturing, but there is more than I thought
there was. Now, they admitted in another time of the year it
would have a mix. But just to say, this kind of load balancing,
it is possible, correct? I mean, as much as I believe in fossil
fuel and the necessity for baseload, in a place like Southern
California with lots of renewables, et cetera, it is certainly
possible, correct?
Mr. Fowke. I will tell you, in all sincerity, they are
connected to a big grid that somewhere has that dispatchable
24/7, likely fossil fuel, that is supplying them. And you can
stream renewables from different places, but at the end of the
day, they are still connected to grids that have fossil
capability on that.
Senator Cassidy. So I was struck that Micron located
downstream from a nuclear power plant. And that was one of the
reasons you did that. Somehow, I think state subsidies had a
role to do with it, but that's okay. You know, we will leave it
at that. So for that ``always got to be on,'' even if you are
like this great utility in Southern California, in which at
that time they were using 100 percent renewables, you've still
got to have that baseload.
Mr. Fowke. Absolutely. And you know, that nuclear power
plant, I assume, is not behind the meter of Micron. It's on the
grid, so it's supplying its resources to the entire grid for
the benefit of many customers, not just Micron.
Senator Cassidy. Okay. Thank you.
Mr. Mills, going to permitting reform. I have been
interested in the judicial review aspect of permitting reform.
Any comments on that?
Mr. Mills. Well, I think, as you well know, Senator, one of
the big challenges for large manufacturers of any kind is that
the permits are effectively in an infinite period of potential
review, judicial and other forms of review, which is why we see
exactly the kind of challenges, especially to the transmission
line--in Idaho--the same was true in Maine, where I spent my
summers, a transmission line that just never got built.
Senator Cassidy. So again, the Chairman knows how lawsuit
after lawsuit can effectively tie up something and effectively
kill the project. So I like to say that the folks on the other
side of the dais want powerlines, and the folks on this side
want pipelines. But we really want both because we know that
both are essential. So is it fair to say that the permitting
reform that would benefit both power and pipe are the same ones
that would benefit pipe and power?
Mr. Mills. Well, yes sir. That would be a terrific outcome,
to accelerate the permitting of both, because the world cannot
operate without both.
Senator Cassidy. Got you. Sir, I know that Micron has had
development in China. I just know that because the Chinese have
been somewhat non-cooperative with your economic development
there. Is the power source there coal? Or what is the typical
source that you get there?
Mr. Gatzemeier. I don't know what the power source is for
our back-end facility, but at Micron, we are one of very few
semiconductor manufacturing companies that do not have front-
end manufacturing in China.
Senator Cassidy. That do not have what?
Mr. Gatzemeier. Front-end. We don't have a fab in China.
Senator Cassidy. Got it. I want to point out that I just
learned this, that I think 60 percent of Chinese power is
generated by coal. They typically don't turn on their scrubbers
because that decreases the efficiency. Oftentimes, they are
built on the Pacific Coast, which means the trade winds blow
them over to the United States. So, to the degree that our
energy policy increases the cost of energy and therefore
encourages someone to move to China, we are actually worsening
global greenhouse gas emissions because we are increasing
consumption of Chinese coal-fired electricity as opposed to
clean-burning U.S. electricity, be it renewables, nuclear, or
natural gas.
And natural gas has accounted for a decrease in absolute
emissions in the United States, less than I think now, well,
certainly 2005--you guys will tell me it's probably even
earlier--despite a bigger population, a bigger economy, and
more electricity usage. I say all that, and I yield back, Mr.
Chair.
The Chairman. Right on, brother.
[Laughter.]
The Chairman. We have Senator Cantwell now.
Senator Cantwell. Thank you. Thank you, Mr. Chairman. Thank
you for highlighting the success of the CHIPS and Science Act.
This breakthrough legislation is on track to triple domestic
chip manufacturing capacity by 2032. So we should be excited
about that. And thanks to the Act, that is the largest
percentage of semiconductor growth rate in the world, so I
can't emphasize how important that is, and many people here
played a big role in supporting that.
But we have the same issues as the Chairman mentioned in
the Northwest. The Northwest Power and Conservation Council
calculates that the region will need 3,500 megawatts of
renewable generation by 2027 and 14,000 additional megawatts by
2040. I think it's a DOE estimate that puts the Pacific
Northwest in a need of 56 percent more transmission capacity by
2040.
So we are very proud of our AI, cloud computing, all of
that, but we have to figure out what we are going to do about
the power need. You mentioned hydro, so I wanted to ask you
about what you think the priorities there for hydro relicensing
should be. Do you think we need a tax credit to help spur
baseload, keep baseload power in place? And what other things
do you think we need to do in the transmission capacity that
would be interesting for your next phases of production?
Mr. Gatzemeier. So first, I mean, we are fortunate to
operate in Idaho, where we have a lot of access to hydro in the
Pacific Northwest generation. And then we will be operating in
New York, where again, there is additional hydro, you know,
access. So it's absolutely a good source of, you know,
sustainable energy that we should be continuing to invest in.
But I would also say we need to be looking at all sources of
sustainable energy--looking at nuclear, small modular reactors,
investing in that, investing in improved battery storage
technology for wind and solar, which we have discussed here as
well. And then geothermal and other sources. Any additional
generation that we can get is critical.
And then for the grid in the Pacific Northwest, I mentioned
the B2H transmission line, getting that put in place and
interconnecting, you know, Washington, Oregon, and Idaho more,
to where there could be seasonal demand fluctuation and
differences in generation being able to share. That's how that
transmission line is going to be critical for the Pacific
Northwest in enabling interconnectivity.
Senator Cantwell. Well, just to make clear, there are some
savings, right? I mean saving, I think it's like one-third or
one-fourth the cost to basically save an electron than it is to
produce one.
Mr. Gatzemeier. Yes.
Senator Cantwell. There is some capacity to build into the
grid on smarter technologies that would help us in moving power
around where we need it.
Mr. Gatzemeier. Yes. And when you look at the availability
of power from lower-cost sources during different seasonality,
and then also you look at the cost of an asset, if you will, of
a generation source that sits idle because wind or solar are
running at that time, if you could send that power somewhere
else to where it could be utilized as a lower cost, that could
help savings as well.
Senator Cantwell. What about the tax credit idea? We
already have it for wind and solar. Why not for hydro?
Mr. Gatzemeier. You know, one thing I will say, in New
York, they introduced zero-emission credit (ZEC) for their
nuclear power plants that they had, to work on, effectively,
maintenance activity that they had with their nuclear plants to
keep them online and running. So to continue hydro plants
funding, that could be a program that you could look at and
follow potentially.
Senator Cantwell. Okay. And what about other sources of
energy for the future? You mentioned battery technology. You
didn't mention fusion, but we have three fusion companies going
to work in Everett, Washington. Do you think that there are
some other things that Micron is looking at as we think about
these data centers and AI integration into the grid?
Mr. Gatzemeier. Yes, I mean, we produce semiconductors, not
energy. We are a consumer of energy, but I will say that we are
working to innovate in our factories to lower our consumption,
and then also our products. You know, it takes power to make
our chips, but then it's also about the power our chips use
after they get out in the data centers. So every generation of
our technology, we are working to reduce the power that they
consume. Since 2011, we have done a 10X reduction in our power
consumption of our chips. And as I mentioned, our high-
bandwidth memory is 30 percent more energy efficient than other
competitors' products on the market. So we are working to
effectively reduce our energy consumption in those ways.
Senator Cantwell. And, I don't have enough time, but that
is monumental success, right? And when you think about
driverless cars or other applications, it's an immense amount
of energy and memory that is required. So thank you.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator.
And now we have Senator Murkowski.
Senator Murkowski. Thank you, Mr. Chairman. I want to
follow on the comments from Senator Cantwell about hydro. Now,
just thinking about what we have in place with the hydro
production in this country and how it has provided us that
great baseload--wonderful. We can do more. We know we need to
be doing more, but when we are looking at the number of hydro
facilities that are now up for relicensing, and recognizing how
much it costs to relicense and how long it takes to do it, you
know, what's to say that we are not going to have some of these
facilities that are just like, not worth the time nor the
energy, and it goes back to the permitting, but it is something
that I think, as we think about our energy demands, we have got
to have some better projection here.
I was in a Defense Approps hearing not too long ago, and we
were talking about PACAF's number one priority at JBER in the
Anchorage area there. It is a training facility, and they just
very casually say that it's going to increase JBER's power
requirements by roughly 50 percent. And you're thinking about
what that means. This is in an area of the state where we are
talking right now about importing LNG from Canada because our
LNG reserves in Cook Inlet are going down.
So we are thinking about what it's going to mean. Are we
going to be seeing brownouts? What's happening? Where are we
going to get this resource? We have got a Governor that is now
saying we are going to go back to coal. I mean, there is more
than a little bit of panic and anxiety. We had our legislature
just shut down just last week. But so much of the focus has
been on our energy and the increased consumption, the increased
demand here.
So a question for probably Mr. Fowke and Mr. Mills, this
anticipated energy demand, we see the forecasts in filings by
the RTOs over the last couple years. But EIA's latest 2023
Annual Energy Outlook only forecasts demand would grow by about
one percent on average from 2022 to 2050. I cannot even begin
to think that that is reasonably or remotely sane. It's not the
world that we are living in, and we are seeing this every
single day.
What is the discrepancy here in terms of the forecast,
whether it's from EIA or the RTOs? Is the problem in how they
are collecting the information? The forecasting issues--we have
got to get a better handle on what's coming down the pike here.
What do we need to do?
Mr. Fowke. Well, I don't know where EIA is getting their
information. That sounds like a forecast that maybe would have
been accurate four years ago----
Senator Murkowski. Maybe.
Mr. Fowke [continuing]. But not with what we are seeing.
Not with what we are seeing in today's world. I mean, in
central Ohio, we are going to double our capacity in five
years. And we have talked extensively about the amount of
demand we are seeing. I think one thing that has to happen
within the RTO structures is, it is incumbent upon us as a
utility to get the updated forecast in a timely manner so they
can have full information.
Senator Murkowski. Do you think that they are collecting
the right data in order to give you a forecast that is
accurate?
Mr. Fowke. Well, the RTOs typically collect their data from
their members. So we need to tell them how much load we are
seeing. And then of course, there is a risk adjustment process
and how much of that is actually, you know, serious, how much--
maybe it's duplicate, et cetera. But we are working very
closely with them to get those forecasts right. And they are
recognizing it.
And you are starting to see it, Senator, in what is
happening with the pricing of capacity, for example, in the PJM
market. A three-year capacity window does not encourage the
capacity that needs to be built for a 30-year time frame. But
we are starting to see change.
Senator Murkowski. Mr. Mills, do you want to comment on
this?
Mr. Mills. I think the fundamental problem is the obvious
one--it's hard to predict the future, but one thing we do know
we can predict is that innovation occurs in episodes. There are
interregnums.
Senator Murkowski. Well, okay, but talk to me, because we
just passed the CHIPS Act a couple of years ago. We know that
is coming, right?
Mr. Mills. Correct.
Senator Murkowski. So how are we incorporating what we know
legislatively, what we know from an appropriations perspective
we should see coming our way?
Mr. Mills. Well, Senator, I would say this is blowing my
own horn, as they say, but when the CHIPS Act was passed, I did
write and did testify for the Committee that the effect of that
would be to radically increase electricity demand, because chip
fabs--in fact, in Taiwan, 20 percent of the entire country's
electricity is used to build semiconductor chips. And in
Ireland, because it's a data center hub, 20 percent of the
entire country's electricity is to run data centers. This was
predictable. It was predicted in the technical literature.
I am one of the players that tries to push it into the
public policy domains. But we are told that we will see
efficiency solve ``that problem.'' And what I have pointed out
in my testimony and said for years is, efficiency does not
solve the ``problem'' when you have net new demands from new
innovation.
Senator Murkowski. Right.
Mr. Mills. The invention of the car led to the demand for
gasoline, the invention of electric car, demand for batteries,
the invention of chips, demand for electricity, and so on. So
the hard part is that--and I have sympathy for the leaders of
electric utilities and RTOs--they are stuck with trying to
guess what innovators are doing in this market. They are stuck
with guessing that a new Micron might show up one day.
There aren't--I can promise you, as a student of this
industry--there are hundreds of new Microns brewing in the
country. Five or ten of them will succeed. In a very few years,
they will demand astonishing amounts of energy and we will all
act surprised. It's predictable that it will happen. What is
hard to predict is exactly when, but it's not a century, it's a
few years.
And I will sort of close by saying that the demands, as we
have discovered, occur faster than we can get permits to build
power plants or relicense hydro dams. And this is the part that
has to be resolved, the incommensurate velocity of what we want
for growth--we won't get it--and what we don't want to permit.
And it doesn't matter whether it's transmission lines for wind
or the gas turbines and the pipelines for the gas turbines.
Senator Murkowski. Thank you.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator.
And now we have Senator Hickenlooper.
Senator Hickenlooper. Thank you, Mr. Chair and Ranking
Member Barrasso. I have and continue to support your bipartisan
efforts to----
The Chairman. Now we have got contents for you. We are
going to have everything at your desk.
Senator Hickenlooper. Okay, well, I'm ready. I am looking
forward to it. I support that permitting reform and will assist
any way I can. Obviously, we need to accelerate all the points
that you all are making. And it's far beyond whether someone is
on one side or the other of the climate change debate. The
world is changing so rapidly, and a big part of the ability to
respond to the greater need is going to be our ability to move
electricity from one place to another.
I will start with Ms. Onaran. How would you say,
specifically, and just provide a couple of examples of how
permitting delays impact your members and their ability to
grow.
Ms. Onaran. Right, thank you. Yes, so, you know, we are
looking into communities, as is Micron. We are looking for the
reliable, we are looking for states and regions that are open
to infrastructure expansion, that are not shutting those
conversations down. The permitting, of course--when we delay
getting that infrastructure in the ground, we cannot expand our
operations there because we will not be able to reliably
support our operations. We need to have that infrastructure in
place. The longer it takes to permit, we either move to a
different state or we do not expand. And so we are curtailing
our economic prosperity by delaying this permit and getting
that infrastructure that we need.
Senator Hickenlooper. Right. And I think the same was said
in terms of reliability.
Ms. Onaran. Absolutely.
Senator Hickenlooper. The same constraints exist and
restrictions. And we have been discussing all about the
predictions that NERC has provided that the enhanced
interregional transmission would significantly lower costs and
enhance reliability. We have got a BIG WIRES Act to hopefully
help coordinate interregional build-out, as I have discussed
with several of you over a period of time. And the SPEED and
Reliability Act would streamline permitting reform on
nationally significant lines.
Mr. Gatzemeier, Micron is obviously making huge investments
in New York and in Boise. How does that reliability and access
to low cost influence those decisions?
Mr. Gatzemeier. On the reliability side, you know, we have
talked about the impacts that a millisecond dip in power can
have, right, in significant product loss for us. So reliability
is absolutely paramount. Availability as well. And that's
where, you know, the cost of inaction is extraordinarily high
here. We have a once-in-a-lifetime opportunity. You know, I
will just talk about DRAM for a second. Ninety percent of the
world's DRAM used to be made here in the U.S. in 1975. Today,
less than two percent of the world's DRAM is made here. And
that is at Micron's facility in Manassas, Virginia.
With our planned investment, right, in Idaho and New York,
we will get that up and we will get to where over 60 percent of
our capacity, you know, 12 percent of the world's capacity is
built here in the U.S. again, but if we are unable to get the
power, you know, either the generation or the transmission to
the locations where we want to build, it will be an opportunity
missed for the United States.
Senator Hickenlooper. Right. No, I appreciate that. And I
celebrate Micron, your innovation and your success. Even though
you are Idahoan, we still in the West take--of innovation. I
realize innovation occurs everywhere. I don't want to create
enemies. But we do appreciate all that you guys have done and
are going to take this CHIPS and Science investment and make
the most of it.
Mr. Fowke and I have known each other for many years, well
back into my gubernatorial days. AEP testified last year before
FERC that you are being asked to connect loads across the
transmission system footprint equal to roughly ten percent of
the total U.S. electricity demand today. And earlier this
month, DOE released that preliminary list of National Interest
Electric Transmission Corridors (NIETCs). And many of these
primarily designated areas fall within AEP's service area.
So how would that final designation of these high-priority
areas make it easier for you to access new transmission
infrastructure and connect new generation? How much of the work
has been done?
Mr. Fowke. Yes. First, good to see you again, and we are
very supportive of the BIG WIRES Act, by the way, and want to
continue to work with your staff on that. As far as the
national corridors, you know, at AEP, we have had a tremendous
amount of success working with our states to get transmission
sited, and I think we have had to use eminent domain in less
than three percent of the circumstances. So I think what's
important, what the national corridors bring--FERC doesn't have
the ability across the full grid--is in those rare cases where
we need a federal backstop to step in when it's a critically
important transmission line for reliability, that's where I
think FERC today only has that authority in these national
corridors.
So that to me is the bigger thing than having a national
corridor in my humble opinion, because states should be leading
the siting process. I think they are critical in that process.
Senator Hickenlooper. Totally agree.
Great. Thank you all. I appreciate your--I am out of time,
but I might come back for a second round of questions. Mr.
Chair.
The Chairman. Senator Hoeven.
Senator Hoeven. Mr. Chair, I am just glad I could be here
to help balance things out for you.
The Chairman. Oh, I'm so happy you're here.
[Laughter.]
The Chairman. I am looking forward to this.
Senator Hoeven. Well, I knew you would be. Thanks to all of
you for being here. I have got to start with Mr. Gatzemeier. I
don't know if anybody has mentioned it yet that you were a
four-year member of the University of North Dakota's
outstanding swim team and that you received a B.S. in
electrical engineering--double E. So obviously a jock on campus
and obviously managed to get an electrical engineering degree.
Pretty impressive. Then went on to, you know, reasonably good
schools, although not as good, to get an M.B.A. in Fort Collins
and an M.S. at Berkeley. So I just wanted to make sure people
were aware of your impeccable and outstanding credentials. If
you would have had something in West Virginia in there as well,
it would have been a trifecta.
[Laughter.]
Senator Hoeven. But seriously----
The Chairman. Now you see why we are happy he is here.
Senator Hoeven. Yes. He and I were Governors together for
about ten years. So we go way back.
The Chairman. Way back.
Senator Hoeven. Way back. But seriously, let me start with
Mr. Fowke. And that was serious, but I did want to welcome you.
Mr. Fowke, in your testimony, you say that EPA has finalized
new power plant sector regulations, and I quote, ``which could
hasten the pace of plant retirements and diminish reliability''
at the same time that FERC is saying we need to increase
electricity over the next five years. Increase it. So, don't we
need to be focusing on dispatchable resources 24/7 to provide
this additional electricity? I mean, it's not going to
magically appear out of thin air, right? So aren't we on the
wrong track, and don't we need to have EPA work with our
baseload industry to make sure we can meet our electricity
needs? And we're not like some third-world country with
blackouts and brownouts, which have already started to happen.
Mr. Fowke. Yes. I agree with you there. I love seeing
renewables on the grid, but you cannot substitute 24/7
dispatchable generation. In fact, if you look at the queue
right now, the generation queue, I think it's 2.6 terawatts,
which is more than double the existing capacity we have on our
system. But if you look at what is in those queues, Senator,
over 95 percent of it is non-dispatchable generation.
Senator Hoeven. What was the percent?
Mr. Fowke. Over 95 percent of it is--less than five percent
of it is dispatchable 24/7 generation. So we absolutely need to
hang on to what we have.
Senator Hoeven. I heard you the first time. I just wanted
to make sure everybody else did.
[Laughter.]
Mr. Fowke. We absolutely need to hang on to what we have.
And the EPA rules, I believe, will hasten the retirement of the
dispatchable generation we have on our grid today.
Senator Hoeven. Okay. Who wants to disagree with him and
why?
Let the record show that nobody disagrees. I think that is
pretty important. Now, from the user side, Mr. Gatzemeier, I
don't know, is dependable electricity important at all in your
business, or do you think it's important to anyone else?
Mr. Gatzemeier. It's incredibly important, and I know it's
important to all semiconductor manufacturers. Minor
interruption, milliseconds, can cause our factories to go down
for a week and cause, you know--millions--tens of millions in
product loss, so incredibly important, and our factories run
24/7, 365 at peak output operations, so we require, you know,
the baseload to meet our demand.
Senator Hoeven. So, would you argue it's vitally important
in terms of our economy, being competitive in a global economy?
And would you argue it's important for national security as
well to be able to generate energy for ourselves and our
allies?
Mr. Gatzemeier. Absolutely, yes.
Senator Hoeven. Okay. Any other thoughts on how we not only
maintain, but increase our baseload--from any of you that would
like to respond to that? Mr. Mills, sir.
Mr. Mills. Senator, the fastest way to increase power
supplies, as we are talking about demands that are occurring in
the next few years, not decades, is not things we don't know
how to build, but things we know how to build. So the fast
construction of dispatchable power will come from gas pipes and
gas turbines. That will be the primary source of new supply.
This will be true with the United States--almost every state--
and it's also true in Europe. It's what is happening in and
around the world, but especially here.
Senator Hoeven. And would you agree that American
technology and ingenuity is driving improvements to
environmental standards at the same time that we are producing
energy on a low-cost basis, and on a dependable basis in this
country, and that is a better approach than regulations that
shut us down and force us to get energy from other countries?
Mr. Mills. Well, you know the expression that the question
answers itself, sir.
Senator Hoeven. Good. Well, I really like that answer. So
again, I want to thank all of you.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator.
And now we have, let's see--Senator King.
Senator King. Thank you, Mr. Chairman. What's bothering me
about this entire discussion is that we are only talking about
half of the equation. We're like in a car on a railroad track
with a train coming toward us, and we're talking about the cost
of a tow truck. The cost of not addressing climate change
dwarfs the cost of addressing climate change. There are
reliable studies that indicate it is as much as five times. In
Houston today, the power is off.
Now, we can talk about this, and you can dismiss these
studies and talk about environmentalists and everything else. I
will tell you who is paying attention to this--the insurance
companies. They are cold-eyed businesspeople. And there was
just a report this morning that Texas has had to create a kind
of risk pool because people can't get homeowners insurance
because of the volume of these violent storms.
So I just want to put the context here. Nobody is saying we
should go back to hydro because they love the looks of dams.
They are saying we should be talking about renewable power
because the alternative to moving in that direction is
catastrophic in terms of dollars and cents. So I just wanted to
lay that little bit of context. I agree with you all, Mr. Mills
and others, about permitting reform. I have been working with
the chairman for years on this. It has got to include judicial
reform. So the whole point is that the process just can't take
forever. Last week we had the Secretary of the Interior. I
talked to her about it, and I informed her, because of the
delays that they have in doing their studies, that Eisenhower
retook Europe in 11 months. So I suggested she send an email to
her permitting staff with one word--Eisenhower.
And so we have got to address that. I understand that. But
to act like the transition is just something we are doing
because it's a nice thing to do, or because some elite group
says we should do it, is just not accurate. Transmission is
obviously a big part of the problem. Mr. Fowke, I like your
testimony about GETs, that's not the whole answer, but it's
part of the answer. And an indication, you increase the
throughput by 40 percent without building new poles. And I
think that is the kind of thing--and also dynamic line
management has got to be part of that as well.
The other piece is the queue. Nobody has talked about the
queue. I think one of you, I think you testified there is as
much power waiting in the queue of the various RTOs around the
country that's double the total amount of power being produced
in the country right now. And by the way, it's not all non-
dispatchable. Five hundred gigawatts is batteries. Batteries
are dispatchable. And that's a technology that is obviously in
development. There are other kinds of storage technologies.
Good old pumped storage has been around for 150 years. All
those kinds of alternatives.
But Mr. Fowke, how do we get there? I guess I will go back
to my original question. Do you believe we have to address the
threat of climate change?
Mr. Fowke. Yes, absolutely. And I think there is a lot we
can do, but we also have to balance that against the need for
reliable and affordable power. And we need to----
Senator King. Absolutely.
Mr. Fowke. I have spoken many times about this in my former
role, and I will say it as just somebody that is in the
industry. This industry can make tremendous strides to reducing
carbon emissions, and already has, more than we probably ever
thought possible. But that last--you picked a percentage--that
last 20 percent is going to require different technologies than
we have today. I am a big believer----
Senator King. For example, small modular reactors.
Mr. Fowke. You just took the words out of my mouth,
Senator. I am a big proponent of that. Maybe carbon capture
becomes viable. It's not now. Maybe there's something else, but
we have to have technology move at the speed of value. And I
worry that when we prematurely shut down power plants that are
running, that is going to have a very negative impact on
reliability and potentially the ability to fund this terrific
growth that we are seeing across the country.
Senator King. Do you agree though that the queue is a
barrier in itself, in terms of the what's waiting in line?
Mr. Fowke. Yes, I do. And that's why we think that FERC
should be encouraged to fast-track those resources that load-
serving entities that have the obligation to serve feel are
essential to preserve reliability. We don't have that today,
Senator.
Senator King. I think part of the answer here, and we
always talk about all of the above. There are so many options.
Everything from GETs to storage to more efficient conservation.
I used to be in the conservation business, where we could cut
energy usage significantly in a factory or a hospital. And
those are kilowatt-hours that you can use somewhere else. They
are not generation, but they free up generation to be used
somewhere else. So, plenty of options.
Thank you all very much for your testimony. Thank you, Mr.
Chairman.
I don't know what to say. You're----
Senator Hickenlooper [presiding]. I have gotten wiser.
Senator King. Say something in West Virginian.
[Laughter.]
Senator Hickenlooper. I can't quite speak that language
yet, but I am getting close.
Senator Hirono.
Senator Hirono. Thank you very much. I am glad that Senator
King noted how important it is for us to deal in this space
with climate change because I agree that the insurance industry
certainly has gotten it when you can't afford homeowners
insurance because of the need to cover the results of extreme
climate disasters, including, I have to say, wildfires, which
is what Maui experienced. Then, you know, at least we have one
major industry that has said we need to deal with climate
change. And thank you for agreeing that that's something we
have to do.
So I am interested in the importance of clean energy goals.
Mr. Gatzemeier, the analysis from S&P Global recently released
a study on data center power demand that concluded, ``Many of
the large technology companies and private equity groups that
own and manage data centers have pledged to use green-powered
electricity for their needs. And we expect renewables to
ultimately supply a majority of the incremental supply to the
facilities.'' Can you elaborate on Micron's renewable energy
commitments and the role they played in locating new plants
Micron is building with the help of the CHIPS and Science Act?
Mr. Gatzemeier. Yes, so at Micron, we have committed by the
end of 2025 to be 100 percent renewable in our factories in the
United States, and elsewhere in the world where available.
Fortunately, you know, you look at Idaho and New York, the
availability of renewables there was a play. The other thing
that we were looking at is entering into co-op solar projects
like we did with Idaho Power, with the Black Mesa project,
which was a 40-megawatt project. In addition to that, we'd be
looking at additional PPAs or renewable energy credits
purchased as well, to hit those goals.
Senator Hirono. So how much did the falling cost of
renewable power contribute to Micron setting its energy goals?
Mr. Gatzemeier. I'm sorry, what was the question?
Senator Hirono. How much did the falling cost of renewable
power play into Micron setting its energy goals moving toward
green energy?
Mr. Gatzemeier. Yes. Obviously, we look at the cost of
energy and we are in a cost-sensitive business, so we want to
continue to drive that and be effective. And fortunately, in
the U.S., you can get renewable energy credits, you can look at
renewables that are effective today. However, if there is not
more generation added onto the grid with the amount of demand
that we are talking about, the cost of energy would rise and
create problems.
So then you would run into availability issues, reliability
issues, and those are the things that we would like to avoid
through change here with transmission and additional generation
of multiple sources coming online. So solar, wind, battery
technology--to enable those to be more effective--geothermal,
and we have talked about nuclear with the small modular
reactors and other investments that could be done to continue
down that path to meet all of the goals that we are looking
for.
Senator Hirono. So I think you are an example of a private
company that pays attention to these issues.
For Mr. Fowke, you described how new data centers could
require 3 to 15 times as much power as a more typical
industrial plant. Do you think states and utilities should
require data centers with such a new demand for power to
install energy storage onsite in order to shave back their
demand for power from the grid at periods of peak demand?
Mr. Fowke. I think that's an interesting commentary and
it's something we need to look into. I mean, traditionally--and
I refer to my colleague--data centers are backed up because of
the importance to making sure you have backup power. But I
think increasingly as we look around, I think data centers are
more open to doing exactly what you described.
I also would want to call to your attention the data center
tariff that we filed in Ohio, recognizing that this
extraordinary growth needs to be funded fairly by the data
centers and not cost-shifting to other consumers. We think it
is a critically important first step as we move forward with
the data centers--the demand we see from the data centers.
Senator Hirono. I agree. Mr. Gatzemeier, do you have a
comment on this question?
Mr. Gatzemeier. Unfortunately, right now, we have power
conditioning coming into our site, but we don't have any co-
generation or large power backup that could sustain us through
a reliability event. So in the case of a reliability issue, we
would see a power implication that would impact our production
in a negative way.
Senator Hirono. I have run out of time. Thank you, Mr.
Chairman.
Senator Hickenlooper. Thank you, Senator.
So now I get to have a second round by myself, or at least
until the Chair gets back. He will be looming over my shoulder
soon enough. Oh my God, there he is.
[Laughter.]
Senator Hickenlooper. Looming over my shoulder, as
predicted.
The Chairman. You're on brother, take it.
Senator Hickenlooper. Let me ask a final question. Mr.
Mills, I will talk with you because you have been working on
this for such a long period of time, and I think you have a
perspective and, you know, part of what America values in this
strange creation of a democracy, that most of the time
functions pretty well--people have an opportunity to voice
their concerns. We spend a lot of time designing the process by
which neighborhoods and counties and states are heard.
Two of the biggest reasons put forward in terms of the
slowness of progress, especially in expanding transmission, but
also making sure that it's efficient where it needs to be, have
been the process, but then also the litigation. How would you
rank those, relatively speaking, in terms of where we should
put more attention to trying to move more rapidly? And again, I
am a big believer that climate change is real and is happening
at scale. And the costs of avoiding it, as Senator King said,
are enormous. By delaying our response, it's going to cost 5 or
10 times what it would cost now. So within that, where should
we be focusing our attention?
Mr. Mills. Well, you know, as a former practitioner,
building things as a physicist and engineer, you are asking me
to choose between process and litigation as the lesser of
evils. It's a tough challenge.
But seriously, I think what you would find from most
industries, the threat of litigation is real. And in the
hypertrophied examples, it becomes the critical--the
dispositive factor that kills things. But on average, I think
what you would find in business is that it's the regulatory
process, it's the sand in the gears that, as economists would
talk about, that faces businesses small to large in the United
States.
So the International Manufacturers Association puts out a
semi-annual study of the actual costs of process in the form of
regulations, but they monetize it. And of course, in the United
States, the last study came out this spring. For a large firm,
it's $18,000 a year per employee, and for small firms, $36,000
per year, if I recall correctly, per employee for the
regulatory compliance process. So that is a huge headwind for
businesses to start and expand in the United States.
So I would say, if I had to choose from the two, I would
say the process system, the regulatory systems--federal in
particular--but state as well, are big impediments.
Senator Hickenlooper. Right. And I appreciate that. And I
would argue that the process is, again, uniquely American and
critically important----
Mr. Mills. It is.
Senator Hickenlooper [continuing]. And we don't want to
eliminate it. But certainly, I think there are probably ways
when we look at something like this, where really both sides,
the Republicans and Democrats, rural and urban, everybody's got
an alignment of self-interest, and getting things built more
rapidly to address this energy challenge that we face, I think
it's maybe a time to go and re-look at some of the processes,
make sure people's voices are heard, that there is an inherent
sense of fairness in how decisions are made. But we can do it
more quickly.
With that, I yield back to the Chair. The man who must be
respected, who always is seeing both sides of the fence.
The Chairman. Well, let me just say to all of you, thank
you for your expertise that you bring to the Committee. I think
it's something that we need to continue to raise the alarm on.
Because I can see a real catastrophic situation happening in
our country and not being able to meet the demand, no matter
what side of the political fence you are on. And it's a shame
that politics has divided us up to what team you are on. There
is only one team, the American team. And every American expects
to have dependable, reliable, and affordable energy because you
know what, they always have.
We have built a system around what the needs of the country
are and the defense of our country. And we are getting to a
situation now because of the political will, if you will, and
whoever's in charge wants to push one agenda over the other.
And I have always said this, if it's not feasible, it's not
reasonable. It really isn't. If you can't do it, we are not
there. We haven't matured. Carbon capture sequestration, Mr.
Fowke, I remember, I was Governor at the time, and the Senator
will tell you this, Senator Hickenlooper here, you all went
into that venture.
It was a 900-megawatt plant--the Mountaineer Plant,
correct? I'm understanding in order to prove that we could
commercialize carbon capture sequestration, and you all did
that, and we showed that we could take Clearstream carbon off,
liquefy it, pressurize it, and put it back in the ground. But
it took about three--on scale, it would have taken a third of
your power. So when President Obama--I told him this--I said,
``President Obama, you have said go ahead and build a coal-
fired plant and I will break you.''
And you would, if you made us use carbon capture at that
time, we didn't have the maturity in technology. You can't
build a plant that costs 900 megawatts of investment and only
gets 600 megawatts of return. That's the problem. That's how it
would break you. So when they said it was a war on coal, there
was no alternative. It's either shut it down or get out of
the--you know. So that was the problem. I will tell you this--
politically, it changed my State of West Virginia from being
over 75 percent Democrat registration--old line conservative
Democrats--but they were still Democrats. That switched now to
80 percent Republican in one decade because of that. And the
only thing I have said about transitions, don't ever take
someone's job away from them unless you have something equally
as good, if not better, because you will pay the ultimate price
on that one.
So this transition is going on. We gave you the maps and
this and everything else. My state will be hit eventually
because if it wasn't for West Virginia two years ago with that
polar bomb or whatever they called it, remember, shut
everything down, every coal plant we had--and Ben, you can
confirm this--you were running about 110 percent, putting out
everything you had to keep PJM from falling apart. It would
have gone down. So that's all we're asking this administration
to realize, that I am not defending fossil over renewables or
either one. I am just basically looking at the load that we
have and the need.
And we have replaced--growing up, the only two dispatchable
24/7 that we had was at that time nukes and coal. Gas has
replaced the coal. And we saw gas freeze up in Texas and people
died. So we have some work to do there. SMRs are coming on, and
we are all in. Battery storage, we are all in. Wind has the
greatest challenge of all, I believe, of all the renewables
they want to use because of permitting. So we need permitting
for pipelines to move carbon capture and really get it matured.
They need it, we all need it. And that's all we are saying.
So when Senator Schumer said, you know, he thought it was
not going to go anywhere, I think it must go somewhere and we
have it ready to go, and we will, and we are working with our
Republican colleagues here, our Democratic colleagues, and we
will go and see if we can move this from this Committee forward
on the floor.
But again, your expertise means an awful lot to us. And I
want to thank you for that. And what we will do is, we are
going to go ahead and adjourn the meeting, but we are going to
give members until the close of business tomorrow to submit
additional questions for the record.
So with that, thank you. The meeting is adjourned.
[Whereupon, at 11:48 a.m., the hearing was adjourned.]
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