Can the Grid Keep Up? A Regional Look at Electric Reliability, Costs, and Demand Growth

**Todd Snitchler** (0:03)
Welcome to Energy Solutions Podcast. I'm Todd Snitchler, President and CEO of the Electric Power Supply Association.
Summer is often the season when the electric grid faces its toughest test, but this year the conversation goes beyond heat waves and air conditioning, and across the country, electricity demand is rising for the first time in decades, driven by AI, data centers, new manufacturing investment, and electrification. Today, we're joined by leaders from across the country's major electricity markets to discuss reliability, affordability, and what policy makers, businesses, and consumers should be watching this summer and beyond. My guests in this episode are Gavin Donohue of the Independent Power Producers of New York, Glen Thomas, covering the Vin Atlantic region as head of the PJM Power Providers Group, Jan Smutny-Jones of the Independent Energy Producers Association, which represents more than one-third of California's power supply, Dan Dolan of the New England Power Generators Association, Scott Miller of the Western Power Trading Forum, and Michele Richmond of the Texas Competitive Power Advocates. Here's our conversation.
So because we've got pretty much the whole country represented here, we're going to do a quick tour around the country. And I'm going to start with this question for everyone. So as you look ahead to this summer, what's the biggest issue that you're watching in your region? So, Gavin, why don't we start with you in New York, and then we'll work our way around the country.

**Gavin Donohue** (1:32)
Well, thank you, Todd. Thanks for the opportunity to be here today. It's great to be with some great friends and colleagues who've worked well together for years. I think here in New York, there's a similar theme you'll see in most of the regions about affordability, reliability, growth, things you just touched on in your introduction. What's unique to New York is we have the oldest electricity system in the country. And that really concerns me. We are running units in New York City for reliability every day that are somewhere between 55 and 72 years old. And I'm concerned about the age of the system. And the other problem that I see this summer, there's really a lack of market signals to attract private investment.
In New York, we have chosen over the years to go down a path to have contracts with a lot of different resources. We've subsidized different initiatives, particularly renewable investments, and we've lost the market signals. And unfortunately right now, my members are really struggling with trying to find an appropriate market signal to build with the backdrop of the climate law requirements of reductions of greenhouse gases to zero emissions by 2040 So coupled with the lack of market signals and the CLCPA, those are two big issues. And the third one I'll leave you with is Governor Hockele has come out and says she supports all of the above. Well, all the above means to mean all the above. And unfortunately, natural gas doesn't seem to be all the above, in my opinion.
So those are three big issues for this summer, but unique to New York is just the age of our system in New York City, and our margins are becoming very, very, very tight.

**Todd Snitchler** (3:09)
Yeah, thanks, Gavin. Jan, I've got you next in the doc, so Jan Smutny-Jones with IEPA in California. Jan, California doesn't always get all the attention, maybe, that it should, so why don't you walk us through what you're facing?

**Jan Smutny-Jones** (3:22)
Yeah, well, as indicated, everybody wants to talk about affordability, and that is obviously a significant issue, particularly in California, we have the second highest rates in the country.
But a lot of that's driven by things that are not directly related to the energy market. We have the highest bills, or rates rather, but a lot of that rate is being driven by wildfires. So you have events occurring, the wildfires have a tremendous impact. It's something like 17 percent of a PG&E bill comes from wildfires, either paying people whose houses had burned down for property damage, or remediation, basically, or rebuilding the systems. So this is a major, major issue. And right now, the state has added, if we were having this conversation in 2020, 2022, we were very tight on resources. As a matter of fact, like New York, we currently have about 3,300 megawatts of beautiful 1950s and 1960s generators that used to burn oil, then burn gas that are in reserve. But since 2022, we've added, you know, in 2020, we had about 300 megawatts of battery storage in California. We now have 17,000 megawatts. So that's pretty significant. And what nobody likes to talk about is we also have about 26,000 megawatts of natural gas that shows up during those high peak periods, normally in September. Now, tying all these little points together is very important. Well, it's reported that we have a surplus of about 2,600 megawatts, 30 percent reserve margin there. That can go down really quickly. And we had a bootleg fire several years ago in Oregon, which cut off the Pacific Intertide. We got lucky because it was cool in Los Angeles and Southern California. And so the West was able to ride that out. The worst case scenario is in fact, we have a heat dome sitting over the California desert and the coast. We lose a major transmission line and the back begins to become problems. The key area, I think, is always September, because that's when it is actually the hottest in California. We have lower solar output. This year, although I don't want to steal an issue that you're going to hear more from, Scott, is the Colorado River has a significant strain on it. It may go Deadpool, meaning no hydro in the fourth quarter.