Can flexible electricity loads provide grid benefits? Is new electricity “demand” even real, given the hyper-competitive nature of today’s market? What is the airspeed velocity of an unladen swallow?*

Two of these questions were front and center at the National Association of Regulatory Utility Commissioners (NARUC) Summer Policy Summit here in Boston last week. We’ll get into a broader event wrap a bit further in, but for now, let’s focus on what’s pressing:

Utility companies have an obligation to serve, which means that when a new data center comes online and requires 100 megawatts of capacity, the utility must invest in new generation: transmission, distribution, and capacity. However, if that data center asserts that it can manage its energy load independently, the need for the utility to build such infrastructure diminishes. Of course, this scenario does not align with the data center’s incentive to maximize throughput. But due to the nature of these deals, with billions at stake, these considerations become political, involving the local community and broader stakeholder interests. 

In today’s competitive landscape, data centers often place bids across multiple markets to identify the most favorable conditions for their operations. This interconnection queue reflects an ephemeral demand: once a data center commits to a specific market, it typically withdraws its other bids. However, the introduction of collateral requirements by the large load tariffs has created a scenario where these centers may hesitate to bid across various markets. That said, data centers spend a lot of money just to hold their spot in line, and if a developer spends $1M across nine different markets and ultimately ends up with a 5% discount, they’ll do that all day.

Meanwhile, public utility commissions are striving to determine the fairest and most equitable approaches to accommodating new demand. Whispers from the field are that larger data centers are flexing their muscles to jump ahead in these interconnection queues, which seems neither fair nor equitable. This is why perhaps the most urgent question floating around NARUC last week was “How much demand is actually real?” 

Back to NARUC. For those unfamiliar, NARUC is an organization that represents state commissions responsible for regulating the economic and safety aspects of retail utility operations in the United States. It is an organization of organizations, and its members include government agencies from all 50 states, each tasked with regulating the rates, terms, and conditions of service for electric, natural gas, water, and telephone utilities within their jurisdictions. As you can imagine, it was a lively time. 

While the central theme of any NARUC shindig is to ensure that utility services are provided at just and reasonable rates, some additional throughlines caught my attention. 

Obviously AI and data centers remain hot topics. At the federal level, Department of Energy Deputy Secretary Danly highlighted the administration’s goal of AI Dominance. At the PUC level, discussions on how to reasonably account for increased infrastructure costs rang out. Non-profits and trade groups proposed various methods to ensure fairness, while utilities reviewed their Large Load Tariffs for data centers.

Federal Energy Regulatory Commission (FERC) orders were frequently mentioned throughout the summit. From advancements in transmission technology to interconnection reform, keeping track of the status and technicalities of various dockets requires an almost superhuman memory – or perhaps some sort of artificial intelligence ;) (sign up here for AI-powered summaries of new docket filings and docket updates across all 50 states).

Despite the thrilling content, it was truly the people who made the event. I had the chance to reconnect with old friends, meet new clients, and everything in between. We talked at length about the aforementioned flexible load benefits, data centers, and ephemeral demand. We also had some interesting conversations about how proactive investment reduces congestion and therefore demand for Distributed Energy Resources (DERs); as well as the extent to which AI can displace humans in the regulatory space. 

It was not lost on any of us that these critical topics were being discussed and deliberated not by investors, but rather by policy professionals, who sit upstream of everything in the broader energy markets (and who do not get enough credit for the policy innovation that eventually trickles down).

It was not lost on me, in particular, that Halcyon’s focus on making energy information easy to find and analyze occupies a similar position at the energy market headwaters. While we are focusing on different types of innovation (in our case, using AI to make energy information easy to find and analyze), our positions are fundamentally alike. 

NARUC was an epic policy summit in the cradle of American democracy. A tip of the hat to its events team, which hosted a very well-organized event in my neighborhood, and a wag of the finger to whoever decided to play Boston’s “More than a Feeling” between every session. Drop us a line if you’ll be in Seattle in November: sayhi@halcyon.io

*And if you know this reference without looking it up, let us know too!

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