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On this week’s Energy Capital Podcast, Joshua Rhodes talks with Ellis, now research director at MarketClear Utility Policy Research and an expert witness for consumer groups in rate cases. They discuss why the gap persists and how an auction could close it. Chapters 00:00 – Introducing Mark Ellis 00:57 – How utilities make money 07:08 – From Sempra insider to utility critic 12:53 – What makes a return fair 17:56 – The math behind a 6 percent return 22:39 – Lower returns and credit ratings 28:08 – Walking through a $10 billion project 33:15 – What utility stock prices reveal 36:49 – Why regulators keep returns high 42:12 – Letting investors bid: the MarketClear auction 45:11 – Who would invest, and how much 50:09 – How the utility business would change 54:12 – Why utilities resist non-wires alternatives This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.texasenergyandpower.com/subscribe

In ERCOT’s new interconnection process for large loads, a data center can connect sooner as a provisional controllable load resource. That is, ERCOT can curtail power above an agreed firm level. A study from Base Power and Piq Energy shows batteries near the transmission lines to a data center could stand in for most of that curtailment. In the study, 80 megawatts of batteries would clear every transmission constraint created by a 100 MW data center near Burleson, Texas, on Oncor’s system. A battery beside a strained line relieves it about one-for-one, while curtailing a more distant data center may relieve half as much. Any battery near the line has that edge. On this week’s Energy Capital Podcast, Joshua Rhodes talks with Chase Dowling, head of market operations for Austin battery company Base Power. The business model is Base Power retains ownership of the batteries it installs for retail customers, and homeowners subscribe to the service.Dowling puts the batteries’ reach at “80 percent, 85 percent of all of the constraints.” The rare failures that sever part of the system, he says, still need new transmission or generation. * The limits: the battery fleet needed grows faster than the load, and West Texas lacks enough homes for large fleets. No market yet pays batteries to act as transmission. * Who pays: Dowling proposes that a data center facing curtailment fund a battery fleet near its constraints, and the host homes get outage protection. * Utility fleets: for El Paso Electric and CoServ, Base builds co-branded fleets and hands control to the utility. It now installs in Chicago, in PJM. * Backup: Dowling says a portable generator can stretch a Base battery through a multi-day outage like Winter Storm Uri. Dowling says the challenge now is getting ERCOT to model these fleets at the transmission substation, where planners can see them. Chapters 00:00 – Chase Dowling and the new Base Power study01:01 – What Base Power has built since 202302:22 – Manufacturing home batteries as a grid resource05:10 – The homeowner value proposition07:50 – Base Core's generator port and extended backup11:43 – Deployment speed and what limits it14:43 – Regulated utilities and who controls the batteries16:28 – Lessons from Texas for PJM18:23 – Flexibility Without Curtailment: the paper's premise22:32 – Why location matters: 100 MW at Burleson Switch26:52 – How 80 MW of batteries hosts 100 MW of load28:47 – Bigger loads, the long tail, and the 80/20 rule35:13 – Batch Zero, curtailment risk, and who pays38:17 – Data center PR and how big this can get Resources People & Organizations * Joshua Rhodes (LinkedIn) * Energy Capital (Podcast - LinkedIn - YouTube) * Chase Dowling (LinkedIn) * Base Power Company (Website - LinkedIn - Base Core) Company & Industry News * Base Power raises another US$1 billion in Series D financing for US residential BESS * Base Power brings cheap batteries to residents in power-starved PJM * Base Power to launch 100-MW home battery network for Texas utility Books, Articles & Filings Discussed * Piq Energy and Base Power - Flexibility Without Curtailment * ERCOT - Aggregate Distributed Energy Resource (ADER) pilot project * ERCOT - Trending topic: new batch connection process for large electricity users * Texas Legislature - SB 6, 89th Legislature, enrolled bill text * El Paso Electric - El Paso Electric and Base Power install first home battery in El Paso as part of new reliability pilot program * Farhad Billimoria and Conleigh Byers - The value of compute load: what cloud markets reveal about the potential for flexible data centers Related Podcasts by Energy Capital * Creating a Distributed Battery Network with Zach Dell * How Load Flexibility Could Unlock Energy Abundance with Tyler Norris * What batch zero settles and what it leaves open * How Texas plans to serve infinite demand * How Data Centers Can Strengthen the Texas Grid with Camus Energy CEO Astrid Atkinson Related Posts by Texas Energy & Power * $6.5 billion in transmission projects, batch zero closure, and the questions that follow: Texas Grid Roundup #93 * Flexibility and Speed to Power, Reading & Podcast Picks, December 7, 2025 Transcript Joshua Rhodes: Hey everyone, and welcome back to another episode of the Energy Capital Podcast. I’m really excited to have Chase Dowling here from Base Power Company to talk about what the company’s been doing, as well as a new study they’ve put out looking at the impact of distributed energy resources on the ability to unlock firm load for places like large loads, data centers. But yeah, really excited to have Chase here to talk about it. Chase has a PhD in electrical and computer engineering from UW, University of Washington. In and around there, he also worked 10 years at the Pacific Northwest National Lab, ending as a senior applied scientist before switching over to machine learning at Tesla. Very recently, actually, as of recording this podcast, he’s a founding power systems engineer at Base Power Company. Chase, welcome to the Energy Capital Podcast. Chase Dowling: Thanks, Josh. Sorry for the mouthful. Yeah. Ten years at DOE and then a couple years at Tesla working mainly in energy. Joshua Rhodes: Yeah. Yeah. Well, energy’s kind of the thread that brings us all together these days, right? It’s like energy is AI, is transportation— Chase Dowling: Is everything. Joshua Rhodes: —is now politics too, which we won’t get into. So it’s been a while since Doug originally interviewed Zach about Base Power, and so, you know, a lot has happened since the last time we checked in. You know, you started as a pretty novel combination of retail electricity and batteries in Texas, but now you’re manufacturing your own hardware, working directly with utilities. Kind of before we get into kind of the specific study, what’s going on at Base right now? Like, what are y’all working on? Chase Dowling: Yeah, no, it feels like a while, but it’s crazy to say founded at the end of 2023 that we’re scaling up. We’ve got 600 MWh of batteries in the ground, and we’re just now speeding up. We’re installing all over Texas, and we’re now entering our first new markets outside of Texas, installing in Chicago and trying to get at the capacity problems in PJM. But the biggest changes maybe since you talked to Doug or since Doug talked to Zach was we’re installing in deregulated territory as a retailer, but now we have a lot of regulated utility partnerships as well, where we come in and help facilitate the construction of a large distributed peaking resource for these regulated utilities. But that’s the story since then, is that we’ve been scaling, growing, and installing resources faster. Joshua Rhodes: I mean, you’re manufacturing these units in Austin. I know you’re looking— you’re also building a new facility out by the airport, but, you know, you’re currently in the old, you know, Austin American-Statesman building. I actually took a tour of the place, I wanna say, like 7 months ago, and you had, like, you know, half of a line going. But I was there last week. I mean, you had multiple lines going, robots following magnetic tape all around, and lots of folks putting stuff together. Tell me about the manufacturing process and kind of what you’re doing, you know, here in Austin. Chase Dowling: Yeah. So this is a big piece of being a vertically integrated designer, manufacturer, developer, and operator of an energy resource and how we build our kind of like technological advantage that we’re providing to the grid. And so manufacturing is like a key piece to the advantage here. If you look at distributed resources, and this is what we do as a company, we go and we install batteries on homes, residential batteries on homes, and we can talk more about like how this model works or what the value proposition to the homeowner is. But we’re manufacturing these home batteries to be a grid resource first. If you go out on the market today and you look at, like, what are your options, you could buy a battery from Enphase, you could buy a Powerwall. These are very modular, very flexible consumer products that carry a margin for that manufacturer. But we’re a grid resource first. And so to be a grid resource, you need to be robust, you need to be easy to install, you need to be capable of certain functionalities that you don’t necessarily need on, like, a consumer home battery. You need to be thinking about it here, like in Texas. You may have noticed it’s hot in Texas. Batteries don’t like super hot and super cold, and so we have designed a battery that is exceptionally good at rejecting heat, and is gonna be available when the grid needs support from that peaking resource when it’s super hot outside and load is super high. And so in order to build such an effective resource, you need to control the destiny of the hardware that you’re deploying with. And so by manufacturing, we’re able to assure that the batteries that we put out in the world are gonna be able to stand up to the Texas summers and the Texas winters, and now the Chicago winters. It’s like an important key piece of why manufacturing is so important. And what’s really cool about it being in the Austin American-Statesman building right across the street from the offices is that, for example, I work a lot on the software that does the grid coordination and the grid participation of the aggregate resource. But whenever we notice a problem of like, oh, an inverter maybe derates under certain conditions, we just walk across the street and say, “Hey guys, check this data streams that we’re seeing. What’s going on?” And we can fix that problem right then and there. It’s a super incredible advantage to building a really performant resource. Joshua Rhodes: Let’s talk about the value proposition to the customer, right? ‘Cause like you’re a grid asset, but y

The PUCT approved the southernmost of three 765 kV paths into the Permian on September 13. It has not approved the center path: administrative law judges recommended denying it in August, and chairman Thomas Gleeson sent it back asking what the lines are needed for and what they would save customers. Michael Webber’s answer is that Texas has run this experiment. CREZ, the Competitive Renewable Energy Zone program finished around 2014, was primarily 345 kV and lowered costs, cut emissions and improved reliability. His case for 765 kV is right of way: more capacity per corridor means fewer corridors, and corridors are what landowners object to. The same answer runs through most of what is moving on the grid. On this week’s Energy Capital Podcast, Joshua Rhodes talks with Webber, a professor at the University of Texas at Austin. * The case for AI: Anthropic, OpenAI and xAI leaders called for a global slowdown in September. Webber says nobody has explained what the technology is for. “The case has not been made strongly.” * Who is resisting, and why: degrowth politics on right and left, a youth movement against data centers, and law firms pushing associates toward AI while the partners who would have trained them work remote. Webber reads the water-and-noise objections as displaced anxiety about AI. * Where the gas goes: a bigger grid lets Texas sell gas at $8 to $15 rather than burn it at $3, and lets Houston draw West Texas solar instead of adding gas plants to its airshed. * Hormuz: about 20 percent of world oil moves through the strait, plus fertilizer and chip inputs. US diesel averaged $6.06 a gallon on September 11. Texas will be fine, Webber says; Bangladesh and Pakistan will not. * Affordability in November: electricity bills creep up through distribution costs, transformers and wildfire hardening, while fuel prices move by the day. Webber expects an anti-incumbent mood. * Scarcity and abundance: US electricity demand was flat for 20 years and is growing again. Webber wants data centers treated as a way through scarcity, not its cause. * Plus: why the headline numbers frightened everyone inside six months, what the next six months hold, and why the grid needs helicopter pilots. Chapters * 00:00 – Introduction * 01:03 – Where Texas is building fast, and where it is not * 02:19 – Why the data center mood flipped * 05:18 – The AI slowdown letter * 08:45 – Why younger workers are pushing back on AI * 12:32 – Junior lawyers, junior engineers, and mastering the fundamentals * 16:42 – Whether energy for AI is a social good * 19:26 – The case the hyperscalers have not made * 21:51 – The argument for 765 kV * 26:34 – West Texas solar and Houston's peak * 28:54 – Hormuz, molecules, and what Texas exports * 33:00 – Affordability heading into November * 39:05 – Scarcity, abundance, and a drama-free summer * 42:02 – What the next six months hold Resources People & Organizations * Joshua Rhodes (LinkedIn) * Webber Energy Group (Website - LinkedIn) * IdeaSmiths (Website - LinkedIn) * Energy Capital (LinkedIn - YouTube) * Michael Webber (Website - LinkedIn - X) * LBJ School of Public Affairs (Faculty page) * Walker Department of Mechanical Engineering (Faculty page) * Kay Bailey Hutchison Energy Center (Website) Company & Industry News * Regulators approve controversial southern 765-kV transmission line * Texas grid expansion splinters conservatives as data center backlash grows * Facing an estimated 474 GW of interconnection requests, Texas hits pause on data centers * The AI industry faces a bipartisan grassroots fight Books, Articles & Filings Discussed * Economic impacts of 765kV transmission development in support of Texas and Houston-area reliability * ERCOT - Trending topic: 345-kV and Texas 765-kV strategic transmission expansion * ERCOT - Reliability plan for the Permian Basin region * PUCT - Approval of the first extra high voltage transmission lines in the ERCOT region * Judges recommend regulators reject proposed 765-kV line * Top regulator recommends remanding transmission project to administrative law judges * Costs and emissions reductions from the Competitive Renewable Energy Zones wind transmission project in Texas * Anthropic, OpenAI CEOs call for slowdown in AI development * Using AI, mathematicians find hidden glitches in fluid equations * EIA - Strait of Hormuz is chokepoint for 20% of world’s oil Related Podcasts by Energy Capital * Build Fast or Fall Behind with Michael Webber * Texas competes on everything except transmission * Inside the PUC’s Cost-Allocation Overhaul with PUC Chairman Gleeson * What the Sierra Club wants from the Texas grid * Texas Got Tested, Grid Stayed Upright Related Posts by Texas Energy & Power * Data centers say they pay their way; Texas will hold them to it * More Generation, More Transmission, More Load, More Challenges: Texas Grid Roundup #90 * A Tale of Three Performance Reviews: Texas Grid Roundup #94 Transcript Joshua Rhodes: Hey everyone, and welcome back to another edition of the Energy Capital Podcast. I’m really excited to have Michael Webber back. I think we’re probably gonna get on some kinda six-month rotation with him just to kinda talk about all things energy in Texas, ‘cause there is never a shortage of things to talk about related to those. But for those who may have not seen the first episode that we’ve had about six months ago, we’ll put that in the show notes. But Michael’s a professor at the University of Texas at Austin, where he’s a Sid Richardson Chair at the LBJ School of Public Affairs, as well as the Cockrell Family’s Chair in Mechanical Engineering in the Engineering Department. He’s also the former CTO at Energy Impact Partners, a former Chief Science and Technology Officer at ENGIE in Paris, and the founding partner of IdeaSmiths. Since then, has been— is now running an energy opinion column regular every couple weeks for the Houston Chronicle. His work sits at the intersection of energy, engineering, policy, and commercialization. Michael Webber, welcome back to the Energy Capital Podcast. Michael Webber: Thank you. It’s always fun to have a chance for a conversation with you. Joshua Rhodes: For sure. So about six months ago, you know, one of the big themes in the podcast when we were talking was that Texas needed to build faster or kinda fall behind, or one of your big things was Texas needed to build fast or fall behind. So looking back since then, do you think we’re building fast enough? Or are we falling behind? Challenges changed? What’s really changed in the last six months? Michael Webber: We are building quickly on some things. We’re building new power plants, especially solar and some power capacity like batteries and a little bit of wind and gas. So we’re doing a good job building new sources of power. Doing a pretty good job building load, new factories, gigafactories, advanced factories or data centers. So that’s a good news story in terms of our ability to keep up with things. We are not as fast today at building transmission, although we have been fast in relatively recent history, so I’m optimistic we can do that again. And we’ve had issues building gas pipelines and sometimes water facilities we’ve been slow at. So there are places where we have a lot of success on the power side, some success on the gas infrastructure side, but also some shortages on transmission and other things. So it’s like we got a mixed record, but still pretty good. We’re better at it still than anywhere else in the United States and almost as good as anywhere in the world. Joshua Rhodes: Absolutely. Are there two or three developments in the past six months that have maybe has challenged your view the way Texas is headed? You have any idea what they’d be? Michael Webber: Yeah. The two big political things that have emerged that I see is sort of a anti-development or degrowth movement on the right and the left politically around data centers and transmission. So we’re seeing non-traditional political bedfellows in opposition to getting some things done, so that feels relatively new, especially the flipped opinion on data centers. That’s gone from very exciting to data centers are gonna pay all our property taxes and save the world, to now a lot of suspicion and concern around data centers and also the environmental impacts or anything else. So a lot of flipped mood on data centers, some of that’s rippled over to transmission lines. So that has changed. I haven’t really perceived that to happen as much for batteries and solar. We’ll see if that happens there as well. So some changes in the last six months since we’ve spoken before that I really didn’t see coming. Joshua Rhodes: The conversation really kind of went pretty quickly from how do we attract these projects? And so I’m talking about data centers, like, how do we attract these projects to, can the grid actually accommodate all of this stuff that’s gonna come to, wait, do we actually want all that? Do we need to slow this down? And that’s really kind of happened over the past kind of six months. What do you think is really happening there to really shift something so big, so fast? Michael Webber: I think there are so many things happening, it’s hard to fully digest in real time what’s going on. But part of it, the pace of construction and the pace of the headlines is really jaw-dropping. The headlines especially, and I don’t believe that we’ll build anywhere close to what the headlines say. So if we put numbers on it, data centers might require over 400 GW of new power. You’ve talked about that on your show several times already. I don’t believe we’ll build all that. We might only build 10 percent or 20 percent. Even 10 or 20 percent is still a lot, but it’s really just incredible headlines. And so that has freaked people out, like, whoa, that’s a lot. Can we really do tha

Rayburn Electric Cooperative broke ground in June on a 570 MW gas plant in Sherman, backed by a $411 million Texas Energy Fund loan at 3 percent, the fund’s seventh generation loan and first to a cooperative. Rayburn is also putting batteries in members’ houses. Both run on the same logic: Rayburn generates the power and owns the transmission, so it earns on both. An independent power producer earns on energy alone. On this week’s Energy Capital Podcast, Matt Boms talks with Christian Nagel, senior director of power supply and production at Rayburn. * Home batteries as a transmission asset. Texas allocates transmission costs on four summer peaks, so discharging batteries then cuts Rayburn’s bill, worth more, Nagel says, than the energy. * Telling real load from speculative. Rayburn screened data centers with its own questionnaire before ERCOT standardized one. Abbott’s audit has since pushed ERCOT’s Batch Zero study past April 2027. * Plus: the 12CP fight and what comes after gas. Whether Rayburn is a model or a special case turns on rules the PUCT has not written. Chapters 00:00 – Introduction 01:36 – Wind development and the landowner conversation 06:02 – The video that went viral 08:17 – Using your service to open doors 10:23 – The Atlantic Council years 12:19 – Her graduate research on energy and national security 14:44 – From Annapolis to flying Growlers 19:54 – Grounded, and the move to cryptologic warfare 23:59 – Why veterans run down their own service 30:08 – Advice for veterans trying to get into energy 32:56 – How to plug into Project Vanguard 34:49 – Closing thoughts This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.texasenergyandpower.com/subscribe

Last month the Public Utility Commission of Texas held public hearings on plans to build giant 765 kilovolt transmission lines. The controversial plan drew complaints from influential voices, including Senate Business and Commerce Chairman Charles Schwertner, who asked commissioners to deny the pending applications for the lines in a letter. Cyrus Reed sat through the roughly 15 hours of testimony, and we recorded with him the morning Schwertner’s thoughts came out. On this week’s Energy Capital Podcast, Joshua Rhodes talks with Reed, legislative and conservation director of the Sierra Club’s Lone Star Chapter, about what it means to run an environmental group in a state with no renewable mandate, and about nearly everything happening on the Texas grid this summer. Chapters: 00:00 – Introduction and guest background 00:46 – What it means to be an environmental group in Texas 02:50 – How property rights and an energy-only market built out renewables 06:54 – The Lone Star Chapter's platform for the 90th Legislature 08:48 – County authority, HB 40, and codes instead of bans 10:46 – How load growth, 765 kV, and data centers got tangled together 15:43 – ERCOT versus SPP, and who carries the risk 17:11 – Schwertner's letter and what the PUCT could actually do 20:47 – How a CCN works, and the 180-day clock 23:07 – A bigger grid and more oil and gas extraction 25:37 – What a fairer routing process would look like 29:18 – Batch Zero, the large load queue, and the disclosure problem 33:19 – Mitigation fees and community benefit agreements 36:02 – Behind-the-meter gas and the minor source permit threshold 38:33 – The Green Tea Coalition, unlikely allies, and the 2027 platform This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.texasenergyandpower.com/subscribe

Wind, solar, and storage are the only new categories of generation to reach the US power system at scale in fifty years. Craig Gordon thinks his company is adding one. Mainspring Energy’s linear generator drives magnets through copper coils rather than burning fuel in a flame, switches between natural gas, biogas, propane, and hydrogen under load, and ramps from minimum to full output in 25 seconds. The same modular unit is going into a municipal utility’s fleet in Utah, an islanded truck depot in Los Angeles, dairy digesters in California, and data centers. It is still a gas-fired resource. The flameless reaction suppresses NOx rather than carbon, and the carbon case rests on burning less fuel per megawatt hour than the engines and turbines it displaces. In ERCOT it arrives at a useful moment. Large load requests run into the hundreds of gigawatts, most of them data centers, against a small fraction approved to energize. The Batch Zero process approved in June will sort which projects get firm grid capacity, and generation on a customer’s own site never enters it. Gordon does not treat that as a substitute for building the grid, and says the answer is both. On this week’s Energy Capital Podcast, Matt Boms talks with Craig Gordon, head of business development for Mainspring, who heads global policy and regulatory affairs at Mainspring after 12 years at Invenergy. The conversation covers: * How a linear generator works, magnets driven through copper coils 13 times a second, with no flame, water, or oil. * Where the units are going, a 48 MW project for a Utah municipal utility and a Los Angeles depot charging 96 electric trucks with no grid connection. * What it burns, natural gas today, with dairy and landfill biogas running in California at small scale and hydrogen far off at current production costs. * Running alongside solar and batteries, covering the hours renewables do not, and how it compares with engines, turbines, and fuel cells. How much of ERCOT’s queued load ends up served on site rather than through the grid will shape what Texas has to build. Chapters: 00:00 – Introduction and Guest Background 00:40 – From Ameren to Invenergy to Mainspring 03:43 – What Mainspring Builds and Why It Matters 06:19 – How a Linear Generator Works 08:39 – Why Customers Are Generating Power Locally 11:02 – Data Centers, DERs, and Grid Investment 12:16 – Ramping and Efficiency vs Engines, Turbines, and Fuel Cells 14:27 – UMPA's 48 MW Project and the Prologis Microgrid 17:28 – Maintenance, O&M Hubs, and Field Lessons 18:39 – Fuel Flexibility, Biogas, and Hydrogen 20:36 – Scaling to Hundreds of Megawatts, and Islanded vs Grid-Parallel 25:37 – ERCOT's Cluster Study and the Interconnection Queue 29:21 – Policy Barriers, Air Permits, and Behind-the-Meter Value 33:57 – Linear Generators in 10 Years This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.texasenergyandpower.com/subscribe

About 6 million electric vehicles are on American roads, and roughly 1 million of them can already export power back to the grid. A typical one sits parked about 95 percent of the day, plugged in for 12 to 14 hours while needing 2 to 3 hours of charge. Texas still meets most of that capacity as load. That works out to roughly 10 gigawatts of export capacity. In ERCOT the value of tapping it splits three ways, because transmission and distribution utilities own the wires, competitive retailers sell the electricity, and generators sell the power. A TXU Energy customer in Oncor territory can collect free overnight charging from the retailer and a separate rebate from the utility, with nothing combining the two. On this episode of the Energy Capital Podcast, Matt Boms talks with Joseph Vellone, chief executive of ChargeScape, the vehicle-grid venture owned by BMW, Ford, Honda, and Nissan, about what it takes to move a parked car from load to capacity. The core argument: the hardware is arriving on its own, and what holds the resource back is incentive design and interconnection policy. For years EVs have been cast as a threat to grid stability. Vellone calls that a misconception and points to record adoption without failure: “we haven’t brought the power grid down.” During the episode, Boms and Vellone work through: * Split incentives in ERCOT, why a deregulated market gives the wires company, the retailer, and the generator each a reason to pay an EV driver and none of them a reason to coordinate. * Grid-parallel interconnection, the argument that a vehicle backing up a home without exporting to the grid should not need an interconnection agreement. * V1G, V2H, and V2G, the three tiers of vehicle-grid integration, what each requires in hardware, and which are running commercially today. * The lease-return wave, Cox Automotive’s forecast of 300,000 EVs coming off lease in 2026 to second owners more price-sensitive than the first. How the Public Utility Commission draws the line between grid-parallel operation and export will shape how much of that parked capacity ERCOT can call on. Chapters 00:00 – Introduction: Joseph Vellone and ChargeScape 02:34 – Why competing automakers built a shared platform 05:49 – When an EV becomes a grid resource 07:35 – V1G, V2H, and V2G in plain English 10:48 – Six million EVs and 10 gigawatts of export capacity 12:07 – The consumer progression to bidirectional charging 15:57 – Texas incentives and what moves customer behavior 18:07 – The changing profile of the American EV driver 21:04 – Policy barriers: unstacked value and interconnection queues 24:58 – Splitting EV value across ERCOT wires, retail, and generation 28:00 – Grid-parallel interconnection at the PUCT 30:05 – Scaling from pilots to full market participation 32:50 – Secondhand EVs, multifamily, and fleets 37:15 – Why record EV adoption has not strained the grid Resources People & Organizations * Matt Boms (LinkedIn) * Texas Advanced Energy Business Alliance (Website - LinkedIn) * Joseph Vellone, CEO of ChargeScape, previously North America head at ev.energy and a consultant at Boston Consulting Group (LinkedIn) * ChargeScape (Website) * Energy Capital (Podcast - LinkedIn - Apple Podcasts - Spotify) Company & Industry News * BMW, Ford and Honda Agree to Create ChargeScape, the 2023 agreement forming the joint venture, built on the Open Vehicle-Grid Integration Platform * ChargeScape Welcomes Nissan to Its Alliance of Automakers, making Nissan an equal 25 percent investor alongside BMW, Ford, and Honda * PUCT Project No. 54233, Technical Requirements and Interconnection Processes for Distributed Energy Resources, the rulemaking covering new 16 TAC 25.210, amendments to 25.211, and the repeal and replacement of 25.212 * Vehicle-Grid Integration Council comments in Project No. 54233, addressing grid-parallel bidirectional charging and the V2G DC and V2G AC configurations This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.texasenergyandpower.com/subscribe

Cattle prices swing, goat prices swing, and the drought comes whether or not the ranch can afford it. For a fifth-generation West Texas operation, the search for income that holds steady through all of it comes from an unexpected source: the wind. A wind lease pays the same in a dry year as a wet one, creating a floor under an operation otherwise exposed to weather and commodity prices. When neighbors saw the turbines going up, the reaction was not opposition. It was a question about how to get their own. On this week’s Energy Capital Podcast, Joshua Rhodes talks with John E. Davis, a fifth-generation rancher and former Texas state representative who chaired the House Economic and Small Business Development Committee. They talk about the seven turbines Davis hosts from the Cactus Flats project in Concho County. Davis, a conservative Republican, argues that a landowner’s right to host wind or solar is the conservative position, and the politics of renewables have drifted from the economics that drive rural Texas. Davis says the income is what allows the ranch to keep producing food and fiber, and he calls it “a lifeline for us.” In the episode, Rhodes and Davis get into: * The property rights argument, why Davis reads hosting wind or solar as a conservative right, not a Green New Deal one. * Behind-the-meter power and local storage, how rural West Texas could host data centers that bring their own generation, with batteries as community backup when the grid goes down. * The Queensland parallel, what a trip to rural Australia showed him about moving power from where it’s generated to where people live How Texas resolves the gap between the power it wants and the wind it is slowing will shape what rural landowners can build and what keeps their ranches running. Timestamps * 00:00 – Introduction * 02:48 – How Wind Came to the Ranch * 06:20 – The Jane Davis Check * 08:35 – Running Sheep and Goats Under the Turbines * 09:43 – What Landowners Should Know Going In * 11:44 – What Changed After the Build * 13:31 – Sheep Royalty and the Committee Chair * 14:39 – Neighbors, Suburbia, and the Politics * 16:13 – The Queensland Parallel * 21:23 – Data Centers, Behind-the-Meter Power, and Storage * 24:37 – A Recovering Politician's Views * 27:09 – The AI Race and Stopping Wind * 31:12 – The Elon Musk Story * 36:05 – The Menard Station Buildout Resources People & Organizations * Joshua Rhodes (LinkedIn) * Webber Energy Group (Website) * IdeaSmiths (Website) * John E. Davis, fifth-generation rancher and former Texas State Representative (HD-129), former chair of the House Economic and Small Business Development Committee * Joe Straus, former Speaker of the Texas House (Texas Legislature) * Energy Capital (LinkedIn - Spotify - Apple Podcasts) Company & Industry News * Cactus Flats Wind Facility, the 148 MW, 43-turbine project in Concho County where Davis hosts turbines. Developed and built by RES, sold to Southern Power (a Southern Company subsidiary) in 2017 (RES - Southern Power) * Johanna Wilhelm, the “Sheep Queen of Texas” and Davis’s great-great-grandmother, who ran a large Menard County sheep operation (Heritage Park San Angelo) * SpaceX, whose founder Elon Musk visited Davis’s committee during a 2013 SpaceX incentives bill (SpaceX) * The Menard station, Davis’s two-acre development on a former Exxon site (EV charging, a beer garden with Wagyu franks, a farm stand, and a book exchange), funded with wind income This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.texasenergyandpower.com/subscribe

Some of the largest electricity buyers in the world have a message for Texas: charge us. The Texas Energy Buyers Alliance was the first organization to propose that large loads pay transmission charges tied to their approved capacity. The idea is to protect other customers as the grid builds out. The scale explains why. ERCOT estimates up to 110 gigawatts of new large loads could seek to connect over the next five years, more than double today’s system peak of about 86 gigawatts. Before any of that generation arrives, about $37 billion in transmission costs are already baked into the system, pushing rates up roughly 3.5 percent a year for every customer. The open question is how much of the new bill supports the new demand. On this episode of the Energy Capital Podcast, Matt Boms talks with Bryn Baker, senior director of policy for organized markets for the Corporate Energy Buyers Association and leader of the Texas Energy Buyers Alliance, the state chapter representing large energy buyers. Baker walks through TEBA’s proposal: charge minimum demand charges on large loads at levels that studies suggest would leave other customers’ rates neutral or lower. Chapters: 00:00 Introduction and who TEBA represents 02:47 The corporate buyer market and Texas' share 04:13 Why Texas beats PJM for large loads 06:45 What data centers offer the average ratepayer 10:02 The batch process and batch zero 12:25 Grading the compromise and the qualification problem 15:33 Transmission planning and the case for 765 kV 19:13 4CP vs 12CP and who pays for the wires 23:05 Energy attribute certificates: the sleeper story 26:54 EACs and unlocking demand flexibility 28:19 The EAC program: process, timeline, and what's novel 30:10 What makes Baker optimistic 32:13 The real mood in the market 35:16 Renewables, batteries, and keeping costs down 37:09 Rethinking economic transmission planning This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.texasenergyandpower.com/subscribe

Texas built a competitive retail electricity market: consumers choose among roughly a hundred providers, and generators build power plants at their own risk with no guaranteed return. Transmission, the high-voltage lines that move power from where it is made to where it is used, runs on a different model. One utility builds each line and recovers every cost from ratepayers, plus a return, on time and on budget or not, and faces no competition. ERCOT’s latest reserve-margin forecast goes negative in 2029 and 2030. To close that gap, ERCOT and the PUC have directed utilities to build a high-voltage backbone from West Texas to the I-35 corridor, which Smitherman puts at $33 billion, rising toward $40 to $50 billion by completion. Under the monopoly model, that cost lands on ratepayers. On this week’s Energy Capital Podcast, Joshua Rhodes talks with Barry Smitherman, the only person to have chaired both the Public Utility Commission and the Railroad Commission of Texas and now chairman of Texans for Affordable Transmission, about bidding transmission out to non-incumbents under cost and timeline caps. He sat on both commissions during the CREZ buildout, Texas’s early-2000s program that moved West Texas wind to market, and saw competitive transmission work firsthand. 00:00 - Introduction & Texas Energy Landscape 05:31 - Permian Basin Load Growth and the 765 KV Lines 12:11 - Data Center Demand: Real vs. Speculative 14:09 - Texas Energy Fund and the Energy-Only Market 21:28 - How Texas Transmission Gets Built Today 23:13 - The Case for Competitive Transmission 31:46 - The Eastern Backbone and Cost Accountability 33:54 - Private Lines and Large Load Options 43:04 - Repealing SB 1938: The Path Inside ERCOT 44:34 - Getting Transmission Right: Future Tech and Landowners This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.texasenergyandpower.com/subscribe

Batch zero stops being theoretical on July 11. That is the day ERCOT’s rule for connecting large new customers takes effect. The new policy replaces a process that involved studying each giant load independently, then ordering restudies when new giant loads joined the queue, leaving projects stuck in a serial loop. Two prior episodes of this show traced how the new rule was designed. This one asks the people who connect the load what to fix before the next round. Already projects are sitting in the interconnection queue as new regulatory deadlines loom. ERCOT figures show more than 445 gigawatts of large loads in the process, and the rule sorts them into base load, studied load, and excluded load. Developers have until July 10 and July 24 to meet certain filing deadlines, and the full batch study is targeted for early April. The policy also shifts more of the analysis from individual utilities onto ERCOT. CenterPoint has been connecting large loads in Houston for decades. That experience drives a question the design phase mostly deferred: does a 75-megawatt cutoff for loads to participate in the program fit the manufacturing and industrial loads that move at the speed of business? On this episode of the Energy Capital Podcast, Joshua Rhodes talks with Caitlin Smith, chair of ERCOT’s Technical Advisory Committee and senior vice president at Jupiter Power, and Jason Ryan, executive vice president of regulatory services and government affairs at CenterPoint Energy. Smith walks through how stakeholders developed the rules on a compressed timeline. Ryan presses the forward question of whether the 75-megawatt threshold and an annual batch process fit the loads Houston routinely connects. Ryan’s concern is timing. When the batch becomes “the long pole in the tent,” he says, developers with real projects start to walk. The conversation works through: * WL-PUN and PCLR, the withdrawal-limited private-use-network and provisional controllable-load resource programs ERCOT is repurposing to fit more load onto the current grid. * The 75-megawatt cutoff, why Ryan questions whether mid-sized manufacturing loads belong in the batch at all, and the risk of projects sizing themselves at 74.9 to stay out. * Non-firm service and reliability, how a load that agrees to curtail differs from the century-old obligation to serve, and what testing CenterPoint needs before it trusts the switch. * What is permanent versus triage, which parts of batch zero survive into batch one and beyond as the Texas Legislature returns next year. New to the batch zero mini-series? Start with Eric Goff on how batch zero took shape and Tiffany Wu on the mechanics. How ERCOT sets the threshold and batch cadence will determine which loads get power on their own timeline and which wait for the next cycle. Timestamps: * 00:00 - Introductions: Caitlin Smith and Jason Ryan * 02:43 - What Batch Zero is and why ERCOT needs it now * 05:14 - Houston's diverse large loads, not just data centers * 08:13 - Timeline: the July 11 effective date and key deadlines * 10:44 - Base load, studied load, excluded load: winners and losers * 12:55 - Inside TAC: compromises, new stakeholders, and fairness * 16:10 - Does the queue mean a transmission build-out? * 19:01 - The real number: CenterPoint's 40 to 50 GW prediction * 23:18 - New constructs: WL-PUN and PCLR explained * 28:13 - Non-firm service, reliability, and trusting curtailment * 32:01 - Tracking success: what is permanent versus triage * 36:07 - The 75-megawatt threshold and how often to run a batch * 43:38 - Data centers, the final timeline, and what comes next Resources: People & Organizations * Joshua Rhodes (LinkedIn) * Webber Energy Group (Website - LinkedIn) * IdeaSmiths (Website - LinkedIn) * Caitlin Smith (LinkedIn) * Jupiter Power (Website - LinkedIn) * Jason Ryan (LinkedIn) * CenterPoint Energy (Website - LinkedIn) * ERCOT (Large Load Integration) Company & Industry News * ERCOT Again Revising Large Load Interconnection Process Books & Articles Discussed * Texas Senate Bill 6, 89th Legislature * PGRR145, Batch Zero Process for Large Load Interconnections Related Podcasts by Energy Capital * Batch Zero, Explained with Tiffany Wu * How Texas plans to serve ‘infinite demand’ * Open Season vs. Batch Zero with Travis Kavulla Transcript: Joshua Rhodes: Hey everyone, and welcome to another episode of the Energy Capital Podcast. I’m really excited today to have not one but two guests to talk about kind of what’s going on in the ERCOT Batch Zero process and kind of how that may continue to play out. So today on the podcast, we’ve got Caitlin Smith. Caitlin has a BA in econ from University of Texas and a JD Law from Penn State. She’s a policy consultant for CLEAResult for going on counsel at Jewell & Associates. She’s a vice president of AB Power Advisors and is currently the Senior Vice President for Federal and Regulatory Affairs at Jupiter Power, one of the largest pure play energy storage companies in the US. But she also is the current chair of ERCOT’s Technical Advisory Committee, the highest committee comprised of stakeholders, which makes recommendations to the ERCOT board. And that’s going to really come in handy today as we talk about one of the biggest policy shifts that’s working its way through the system. We also have Jason Ryan. Jason Ryan has his Bachelor’s of Business Administration and JD from the University of Texas. He was a Global Projects Associate at Baker Botts, managing partner at Ryan Glover LLP. And he’s also the information dominance warfare officer for the US Navy, which I kind of just want to stop and talk about that. If you can, you may not be able to talk about that. But now he’s the executive vice president of regulatory services and government affairs at CenterPoint Energy. Caitlin and Jason, welcome to the Energy Capital Podcast. Jason Ryan: Thank you for having us. Caitlin Smith: Thanks, Josh. Joshua Rhodes: I’m really excited. So I’ve got two lawyers and two government affairs folks here today. So we’ll see how bad I do at managing this. Great. It’s gonna go great. But I know we’re under a bit of a time crunch, so we’ll get started because Caitlin, you’ve got a date for Elmo’s Got Moves. Is that right? Elmo’s Got The Moves. Okay. Caitlin Smith: Almost got the moves. Almost got the moves. I’m seeing it tonight. I don’t know when this will air, but it’s in Austin Friday in San Antonio Sunday. Joshua Rhodes: That’s some free advertisement there for almost got moves. But anyway, so we’ll go ahead and get started. And so the arc of this podcast is really I want to kind of catch up with what’s going on with the batch zero process. We’ve done two episodes, which we’ll link in the show notes, one with Eric Goff and one with Tiffany Wu, where we kind of looked at the overall kind of structure of the batch zero process and then with Tiffany got into kind of some of the details. But one of the things that it really was brought out, at least for my knowledge, during those podcasts, was We really had a framework for how things were going, but we hadn’t filled in all the details. And so I was just curious, Caitlin, if you could kind of refresh us on what batch zero is, where it stands, and why do we need it right now? Caitlin Smith: Sure. And the impetus for me coming on, or one of them was Eric Goff said that the demand for load is infinite. I don’t believe it’s infinite. So I wanted to come on and correct. But maybe Jason thinks it’s infinite. So we could debate that. So batch zero, previously in ERCOT, there was not a uniform process for load interconnect. You know, before, I don’t know, six, seven years ago, nobody was really thinking about. Connecting these large loads when I was consulting, you know, we would have a call about a gigawatt hydrogen load or something that wanted to come online. This was starting in 2020. ERCOT hadn’t really heard about it or contemplated it at that point. So in the last five or six years, we had a major change to the system, which was ERCOT was actually seeing these applications for very large loads to connect and a lot of them What happened then was for the utilities, it was just either too much to process or they didn’t really know how to process it. Jason can correct me. And I think the other thing was there was not a uniform way amongst utilities on how to process these studies. And so they would study a load, another load would come on in their area, or maybe not even in their area. And ERCOT would say, No, we have to restudy. So people were getting caught in this infinite loop. So we are changing from that serialized process to a cluster or a batch, as we’re calling it, process where you can study a whole group of loads to make sure the system can accommodate the whole amount or the whole allocated amount of it at once and you can have a clear study. The other thing that does is really shift more responsibility to ERCOT. Before this was really each TSP. Was performing these studies and now there is a much larger ERCO component. And so batch zero is our way from transitioning from the status quo to the batch Joshua Rhodes: process. Got it. And Jason, I guess the old process, like large loads were coming to transmission service providers like CenterPoint. Can you give us a feel for like when did the problem start to feel intractable in terms of like you going from having maybe one load at a time to dozens or hundreds of loads at a time? Can you give us a feel for when that started to come along to push this new process or to push talking about getting a new process? Jason Ryan: Yeah, and so maybe I can answer it from a general perspective and then I can answer it from my company’s perspective. Sure. Because I think those timelines are a little bit different or the experiences are a little bit different. Between two years, you know, eighteen months, two years ago, I

ERCOT made a choice years ago that most of the country is now reconsidering. Texas runs an energy-only market with no capacity payments, connects generation through connect-and-manage, sorts out delivery in dispatch, and pushes interconnection risk onto developers. That design is a big part of why Texas has added generation faster than any other U.S. grid. PJM, the operator for much of the eastern U.S., is now weighing whether to move in that direction. A white paper from the operator describes a shift from managing surplus to managing scarcity as data center demand outruns new supply. The paper lays out three pathways: long-term bilateral contracts, differential reliability standards for new loads, or an ERCOT-style tilt toward an energy and ancillary services market with a smaller role for capacity. The scale is large in both regions. ERCOT is now considering roughly 445 gigawatts of large-load interconnection requests against an 85-gigawatt system, while in PJM, one Dominion territory alone projects 70 gigawatts of new demand against a 24-gigawatt peak. On this episode of the Energy Capital Podcast, Joshua Rhodes talks with Josephus Allmond, Virginia’s chief energy officer, about what separates the two grids and what PJM can take from the Texas model. Allmond points to ERCOT’s interconnection speed as the clearest lesson, given PJM’s projected 700 days from queue to agreement before construction even starts. He also points to the state line, where borrowed fixes hit a wall. Virginia’s State Corporation Commission requires large customers to pay a generation charge for 14 years, even when a data center builds its own power. A load that sources its own generation, Allmond says, ends up “paying their own way and then turning around and paying Dominion.” The conversation works through: * ERCOT versus PJM structure, energy-only and connect-and-manage against PJM’s capacity market and consensus-driven stakeholder process, and why one moves faster. * PJM’s three pathways, and how the energy-market tilt is the one Allmond reads as closest to ERCOT. * The large-load tools, controllable load resources, and behind-the-meter generation in Texas, and the Virginia charge that makes the same moves uneconomic. * Interconnection speed, ERCOT’s developer-risk model against PJM’s roughly 700-day queue. What PJM borrows from ERCOT, and what it refuses to give up, will shape how fast the East Coast grid can serve the load now lining up. Timestamps * 00:00 - Introduction and Guest Background * 01:52 - Virginia’s Chief Energy Officer Role * 04:15 - Data Center Alley and Virginia’s Hub Status * 06:29 - ERCOT vs. PJM: Governance and Transmission * 10:53 - PJM’s Shift from Surplus to Scarcity * 19:29 - PJM’s Three Reform Paths * 24:19 - Virginia’s Minimum Demand Charge Problem * 29:36 - The Data Center Tax Exemption Fight * 31:50 - Path C and the ERCOT Parallel * 35:17 - What Has to Give: Allmond’s Closing Answer Resources People & Organizations * Joshua Rhodes (LinkedIn) * Webber Energy Group (Website - LinkedIn) * IdeaSmiths (Website - LinkedIn) * Micalah Spenrath (LinkedIn) * Matt Boms (LinkedIn) * Texas Advanced Energy Business Alliance (Website) * Energy Capital (Website - LinkedIn - YouTube) * Texas Energy & Power (Substack) * Josephus Allmond (LinkedIn) * Office of the Virginia Chief Energy Officer (Website) * Southern Environmental Law Center (Website) * PJM (Website) * Monitoring Analytics — PJM Independent Market Monitor (Website) * ERCOT (Website) * FERC (Website) * Dominion Energy (Website) * Virginia State Corporation Commission (Website) * Virginia Department of Energy (Website) Books & Articles Discussed * Powering Reliability Through Market Design — PJM White Paper (PDF) * How Will Data Centers Pay for Power? — Travis Kavulla, American Affairs (Website) Company & Industry News * PJM floats options for capacity market overhaul (Utility Dive) * Spanberger creates new cabinet position, appoints Allmond chief energy officer (Virginia Mercury) Related Podcasts by Energy Capital * How Texas Plans to Serve Infinite Demand, with Eric Goff (Texas Energy & Power) * NRG’s Gigawatt VPP in Texas, with Travis Kavulla (Texas Energy & Power) * Who Pays for Texas Grid Growth? — Roundtable Discussion (Texas Energy & Power) * Who Pays for the New Grid, with Pablo Vegas (Texas Energy & Power) Transcript Joshua Rhodes: Hey everyone and welcome to another episode of the Energy Capital Podcast. I’m really excited to have Josephus Almonds on today to get us out of our comfort zone a little bit here in Texas and ERCOT and talk a little bit about PJM, kind of some of the things that are happening in other grids. PJM is one of the other grids that is experiencing large amounts of load growth, particularly from things like data centers. Texas is no stranger to that. And so it might be useful to figure out kind of how other regions are doing it, approaching it, and maybe we can Cross-collaborate on some of those. So Josephus got his JD from Duke, where he did a couple of stints at BakerBots and Kirkland and Ellis. And then he was an attorney with the Southern Environmental Law Center, where I should say that we worked together on Dominion’s IRP a couple years ago, intervening in that. But recently was named CEO, should say Chief Energy Officer, although this may be one of the few podcasts where Chief Energy Officer might get you more kudos than Chief Executive Officer for sub. But Josephus was recently named Chief Energy Officer from Governor Spanberger. Josephus Alman. Welcome to the Energy Capital Podcast. Josephus Allmond: Yeah. Thank you so much for having me, Josh. It’s good to see you. Joshua Rhodes: Yeah, it’s good to see you too. So first I gotta ask, how’s dad life treating ya? Josephus Allmond: It’s great. We actually just had his first birthday party this past Saturday. So awesome. We went all out with a clues theme, had paw prints all over the house, a bunch of decorations. We had my in laws were in town from California and some of her aunts from Texas. So full house, lots of friends and family over and a blue smash cake that Josephus really loved. Joshua Rhodes: Nice. That’s awesome. You know, Aiden’s only just about a month ahead there. I remember when I when we were working together when you were at SELC and I was like, hey, I’m not gonna be able to make this like super important meeting that I said I’d be at because it’s literally on the day of my son’s birth. I think you told me that y’all were also expecting. So that’s awesome. We’re right in there together. Neither of us are probably getting any sleep at all. So we’ll see where this goes. Let’s start out with the job title. So Virginia now has a chief energy officer. So what was the problem that the Commonwealth was trying to solve with creating that role? And what does success look like for you there? Josephus Allmond: Yeah. So historically we’ve got a Virginia Department of Energy, used to be known as the Department of Mines Minerals and Energy. And so they do all of the permitting for mines for oil and gas, mostly out in Southwest Virginia, and recently started to do more of the state energy office stuff as Virginia created the RPS and started its clean energy journey six years ago with the Clean Economy Act. So that’s sort of one agency within the Secretary of Commerce and Trade, but We all know that energy sort of touches everything. And so the governor really wanted to create a more nimble cabinet level position that could work with the different secretariats on energy issues as they pop up and as they’re impacting the different secretariats. And so the Virginia Department of Energy is still under the Secretariat of Commerce and Trade and we’re working really closely together. They’re doing some modeling to inform an energy plan that we gotta put out later this year. But I’ve really got sort of the ability to work not only with them, but with the Secretary of Labor when it comes to apprenticeship requirements or the Secretary of Education when it comes to apprenticeship programs in K twelve or energy savings performance contracting, as we’re looking at trying to get more efficient government buildings to even working with our Secretary of Public Safety and thinking about Can we develop some distributed solar facilities at our jails and prisons and incorporate some training there? So really trying to bring energy to the forefront in sort of everything that we’re doing. And in today’s world where affordability is sort of dominating the conversation, having that position at a cabinet level, I think really just elevates the importance of it and puts more of a high profile on it, just given how much it sort of seeps into everything that we’re doing. Joshua Rhodes: Yeah, totally. I mean, particularly on the affordability front with all the load growth and with electricity and data centers. I mean, Virginia’s no no stranger to data centers. You’re kind of the original area. Can you talk about data center alley? Where is that located and what’s the importance of that region and the energy that it consumes? Josephus Allmond: Yeah, so we are sort of the data center capital of the world. Loudoun County is home to Data Center Alley up in Northern Virginia. And there are a number of reasons why I think that emerged as a hub. We’ve got a great fiber network already built out, the proximity to DC for the three letter agencies and their needs. And then our tax exemption is something that we’ve had on the books for a really long time and gives an exemption for Basically all of the equipment that you purchase for your data center facility, that’s going back, you know, fifteen years at this point. And the way that that exemption has played out over time is that once a data center sort of obtains that exemption in a specific county, everything else that they do in that county is r

Texas spent five years rebuilding its electrical grid based on the lessons of Winter Storm Uri. Now regulators face a harder question: who pays for the surge of large new customers trying to connect? The projections for electricity demand run far above what will actually get built, and hyperscalers want to power their data centers within 18 months, a pace much faster than the three-to-five years large industrial loads once took. ERCOT has run out of spare capacity, and the cost of building more lands squarely on residential and small-business customers if the projected load never arrives. The state’s answer is to make new load prove its intention and viability to build and pay for the grid it requires. On this episode of the Energy Capital Podcast, Matt Boms talks with Thomas Gleeson, chairman of the Public Utility Commission of Texas, the regulator who must write the rules to make that principle work. Gleeson’s North Star is SB6, the 2025 law that rewrote how large loads connect. He explains the trade-offs behind the decisions commissioners are weighing, from financial gates that screen speculative projects to a December deadline to overhaul who pays for transmission. Gleeson returns over and over again to the demand side, arguing that “the megawatt we don’t use is just as important as the megawatt that we generate.” The conversation works through: * Batch zero, ERCOT’s first round of committing firm capacity and the financial security and fee requirements, recently set at $50,000 per megawatt and meant to screen out projects that are purely speculative. * 4CP to 12CP, the proposed overhaul of transmission cost allocation, with a minimum demand charge so that large customers cannot zero-out their shares by curtailing at a few predicted peaks. * The reliability standard, a new three-part measure of how often, how long, and how large an outage Texas will tolerate. * Demand-side resources, the aggregated distributed energy resource pilot, virtual power plants and a $1.8 billion backup-power program funded through the Texas Energy Fund. How Gleeson and the commission write these rules will set how much cost current ratepayers must shoulder and which projects ever get built. Timestamps * 00:00 - Introduction and Chairman Gleeson’s PUC background * 00:48 - A new chapter for the Texas grid: from Uri reform to implementation * 04:19 - The core problem: interconnection capacity and speculative vs. real load * 08:28 - SB6 and ERCOT’s Batch Zero process * 15:10 - Large-load ride-through and performance standards * 19:18 - The reliability standard and load modeling assumptions * 23:39 - The ADER pilot: lessons and whether to scale it * 25:01 - Virtual power plants and the NRG proof of concept * 27:29 - Standardizing DER interconnection across the state * 29:20 - The backup power package: resilience for critical facilities * 32:33 - From 4CP to 12CP: reallocating transmission costs * 39:30 - Closing: taking a breath, and what the era will be remembered for Resources People & Organizations * Matt Boms (LinkedIn) * Texas Advanced Energy Business Alliance (Website - LinkedIn) * Thomas Gleeson (PUCT Biography) * Public Utility Commission of Texas (Website) * Other Orgs * ERCOT (Website) * ADER Pilot Project (Overview) * Batch Study Process for Large Loads (Overview) * Texas Energy Fund (PUCT Program Page) Company & Industry News * Texas PUC Approves TEF Backup Power Program (RTO Insider) * ERCOT’s Batch Zero Proposal and What It Means for Large-Load Projects in Texas (Seyfarth) * ERCOT’s Proposed Batch Zero Process: What Developers Need to Know (Foley & Lardner) Related Podcasts by Energy Capital * How Texas Decides Which Data Centers Connect (Tiffany Wu) (Listen) * How Will Data Centers Pay for Power? (Travis Kavulla) (Listen) Related Posts by Texas Energy & Power * How Texas Decides Which Data Centers Connect (Read) * Price the Grid or Keep Rationing (Read) Transcript Matt Boms: Today, we’re very pleased to welcome back Chairman Thomas Gleeson of the Public Utility Commission of Texas. Chairman Gleeson was appointed to the commission and named Chairman by Governor Abbott in January 2024, but his service to the state of Texas goes back much further than that. Over more than 15 years at the PUC, he has served in a number of important leadership roles, including Executive Director, Chief Operating Officer, Director of Finance Administration, and Fiscal Project Manager. That gives him an unusually deep understanding of the agency, the Texas electric market, and the work required to turn major policy decisions into real world implementation. Chairman Gleeson, thank you for your years of service to Texas and welcome back to the Energy Capital Podcast. Chairman Gleeson: Absolutely. Thank you for that introduction. Looking forward to the discussion. Matt Boms: Awesome. Well, thank you for your time. We know that you’re really busy. This interview happens in the middle of a million conversations that are happening right now around energy in Texas. We’re gonna try to hit on as many as we can. And you know, just to kind of set this up, Texas is growing fast. The commission is trying to separate real projects from speculative ones, protect existing customers, use flexibility and customer side resources more efficiently. And build a grid that can support economic development without sacrificing reliability or affordability. So I want to start with, you know, since you last came on the podcast and Doug had you on, it feels like the Texas grid conversation has shifted a little bit from post-Uri reforms and market design and broad policy ideas into a very serious implementation phase. So, from your perspective, do you see this as a new chapter for the Texas grid? Chairman Gleeson: Yeah, I absolutely do. I think you’re right. I think the reforms coming out of Winter Storm Uri, for the most part, have all been implemented. And I think the legislature, the governor, citizens are all happy with the reforms that we’ve put in place. You know, the grid has been tested a few times since Winter Storm Uri and has performed really well. So I think, yeah, the conversation has definitely now shifted to large loads, data centers, hyperscalers, how we’re going to incorporate those reliably and safely onto the grid. And then really, who’s going to pay for it? And I think as we move forward from today onward, who’s gonna pay for all of this is gonna take f you know, primary focus for everybody. Matt Boms: Yeah, absolutely. And I think Texas has always been a growth state if we look back to our our history. But does this load growth moment feel different to you? Chairman Gleeson: It feels a lot different. And the main reason for that is the speed at which it’s changing. You know, historically when large loads have come onto the system, it’s taken three, four, five years for those facilities to need their power. When you’re talking about hyperscalers, these companies want power sometimes within eighteen months to be fully operational. So the speed at which we’re being asked to make decisions that impact the economy is going quicker and having a much, you know, more difficult effect on us coming up with the right decisions in a short amount of time. Matt Boms: And, you know, given all those decisions that need to be made and looking down, you know, over the next few years, what are two or three things that you think Texas absolutely has to get right here moving forward? Chairman Gleeson: Yeah. So the first part again is who’s going to pay for this? We want economic development in Texas. You know, as the governor says, Texas is open for business, but we want to make sure that residential rate payers and small businesses are not bearing the brunt of all the costs that are going to come along with hyperscalers moving to the state. So I think figuring out how to effectively and efficiently allocate costs to those that are actually putting those costs on the system is going to be the number one thing that we do. Number two, and this will always be an issue coming out of Winter Storm Uri, I think, for for the rest of time for Texas and the ERCOT market. How do we ensure that we’re getting the right resource mix on the grid for generation resources? You know, we continue to see a proliferation of batteries and renewables on the grid, particularly solar. And that’s great for the state. You know, those resources keep prices down. When it comes to batteries and solar, you know, they help us a lot in the winter during our two peaks and the summer during our afternoon peak. But I think there’s a growing concern that we need more what we would consider baseload twenty four by seven generation, mostly thinking about gas generation. And so continuing to have discussions about how we incent that type of generation to come onto the grid, I think will continue to be really important for the state. Matt Boms: Absolutely. And for listeners who are not living inside of ERCOT stakeholder meetings, that we certainly have listeners that do live inside of those meetings, but plenty of listeners that are new to the energy space. What is the actual problem that Texas is trying to solve here with large loads and data centers? Just for a beginner who is, you know, hearing this for the first time. Chairman Gleeson: Yeah. So historically the grid has always had a lot of excess capacity. So the transmission system has capacity. A new customer can come and interconnect and not have a problem getting the service that they need. But because of the size of these facilities and the speed at which they are looking to interconnect into the grid, we’ve run out of existing capacity on the system. And so what was happening over the last say six to eight months was large loads were looking to interconnect and not being able to, because as soon as they would have a study validating. Their ability to interconnect, another load would

Right now, connecting a data center to the grid works like Texas hog season: no defined season, no bag limits, first-come-first-served, file as many interconnection requests as you want. Travis Kavulla’s recent essay in American Affairs argues the power industry needs something closer to deer season, with defined rounds, allocation rules, and prices that reflect what grid access actually costs. The mechanism he favors is an open season, borrowed from interstate gas pipeline regulation. Rather than processing interconnection requests on a rolling basis, a grid operator would design an engineering plan reflecting realistic demand and tender it to the market in a structured bidding process. Winning bidders receive transferable property rights to grid access, comparable to water rights or spectrum licenses, rather than vague regulatory permission that reverts to the grid operator if a project fails. That difference matters for financing: a transferable property right holds residual value even if a data center company does not survive the artificial intelligence boom. Kavulla has worked as a utility regulator at the Montana Public Service Commission, on market design at California ISO, in policy at R Street, and in regulatory affairs at NRG. He now leads policy at Base Power and teaches at the University of Chicago. The conversation also covers three other mechanisms: * Data center prepayments for discrete capital costs are, in Kavulla’s framing, the most direct fix for protecting existing ratepayers. Utilities resist them because prepayments erode the rate base growth that regulated utilities depend on for earnings. * Transmission service agreements (contracts requiring upfront financial commitment before interconnecting), widely adopted across the eastern United States, rank a distant third. They base the commitment on average embedded rates rather than actual incremental cost, which overcharges some projects and undercharges others. * Bring your own generation addresses a separate problem: demand growing faster than supply pulls the clearing price higher for all customers. Data centers that source their own capacity or pay for flexibility elsewhere ease that pressure. Utah and West Virginia are among the first states opening pathways for large loads to do this. On ERCOT, host Joshua Rhodes frames the gap: the batch zero process rations grid access but does not price it. Kavulla affirms the distinction and argues cost-of-service regulation has been stretched past its breaking point. How Texas resolves these issues will shape its next interconnection rules and what current ratepayers carry as load climbs. Timestamps * 00:00 - Introduction & Travis Kavulla * 01:59 - The Essay’s Core Premise * 03:45 - Open Season: From Hog Season to Deer Season * 08:07 - What Actually Gets Auctioned * 09:45 - Data Centers Fronting Capital, and Why Utilities Resist * 13:37 - Transmission Service Agreements and Their Flaw * 17:41 - Do Data Centers Raise or Lower Rates? * 22:55 - The ComEd and Dominion Problem * 25:14 - Bring Your Own Generation * 26:53 - Reforming Monopoly States: Utah and West Virginia * 30:51 - Batch Zero vs. Open Season in ERCOT * 35:43 - ERCOT’s Flexibility Tools and Speed to Power * 42:08 - Which Idea Has the Best Shot Resources People & Organizations * Joshua Rhodes (LinkedIn) * Webber Energy Group (Website - LinkedIn) * IdeaSmiths (Website - LinkedIn) * Travis Kavulla (LinkedIn) * Base Power Company (Website) * American Affairs (Author page) * Energy Capital (Website - LinkedIn - YouTube) * Texas Energy & Power (Substack) The Essay at the Center of This Episode * How Will Data Centers Pay for Power? — Travis Kavulla, American Affairs (the essay this conversation is built around) Studies, Cases & References Discussed * Factors Influencing Recent Trends in Retail Electricity Prices — the Lawrence Berkeley National Lab / Brattle study on load growth and rates, explained by a Brattle researcher (the North Dakota “headroom” finding Kavulla references) * FERC Rejects the Amazon–Talen Co-location Agreement at Susquehanna — the co-location dispute Kavulla cites * FERC Upholds the Amazon–Talen Rejection on Rehearing — the March 2026 follow-up * Kavulla Outlines His Data Center Interconnection Proposals — RTO Insider coverage summarizing the open season, prepayment, TSA, and BYOG ideas Related Energy Capital Episodes * How Texas Decides Which Data Centers to Connect — Tiffany Wu on ERCOT’s Batch Zero process * Who Pays for the New Grid with Pablo Vegas — ERCOT’s CEO on load growth and who pays * Texas Growth Is Running Into Power Grid Limits with Katie Coleman — large load interconnection and cost allocation Transcript Joshua Rhodes: Hey everyone and welcome to another episode of the Energy Capital Podcast. I’m really excited to have Travis Kavulla here to talk about an essay that he recently wrote in American Affairs, where he’s the energy editor about how data centers will pay for power. It’s a really hot topic right now, and I’m excited to dig into that and how it kind of ties in to what ERCOT is doing for data centers. Before that, if you’re in the energy nerd space like you would be if you were listening to this podcast, you probably know Travis already, but He’s got a pretty impressive background that I’m going to go ahead and go through now. So Travis went straight from Harvard to the University of Cambridge, which I found funny that you went from one Cambridge to another, I guess. I guess that was easy for the well, I guess postcard you’re going from Massachusetts to the UK, but still. Travis Kavulla: The imitator to the original. Joshua Rhodes: Yeah, fair enough. Should I call this New Cambridge? But that’s not a thing. That’s not what we call those. Anyways. After that, you spent some time in the media with National Review and some freelance work in the UK, East Africa, and the US. But then I did not go back and look to see what you wrote for National Review. But at this point it looks like you kind of pivoted into energy and in particular the regulatory space around energy, which is what we’re gonna talk about today. But you started out as a board member for the Western Electricity Coordinating Council before becoming a commissioner at the Montana Public Service Commission, then jumping over to California to work on the energy and balance market with CAISO, the California independent system operator. Then going to R Street, where you’re the director of energy and environmental policy. And then I think your longest period of time, and probably most people know you as the VP of regulatory affairs at NRG. NRG is big in Texas, and so that brought you into Texas quite a bit. And so we were very happy to have you here. Currently a lecturer at the University of Chicago and the head of policy at Base Power, also based in Texas and Austin actually, Travis Kavulla. Welcome to the Energy Capital Podcast. Travis Kavulla: Thank you for having me, Josh. Great to be here. Joshua Rhodes: Yeah, so we wanted to bring in and talk about this essay where you’re talking about of how data centers should pay for power. And really this essay, we’ll link to it in the show notes. It’s brilliant. And I think it’s getting read pretty widely, including I saw on LinkedIn from FERC Commissioner David Rosner. So that’s great. One thing I was gonna say when I was going through your list of things is that I’ve already put my money in Polymarket that one day you’ll be a FERC commissioner. So I don’t know. It’s a pretty good bet right now. Just kidding. Not not the case. But at least your work’s getting read by them, so that’s great. So and I’ll go ahead and try to lay out the premise of your essay, and you can tell me where I get this wrong. But essentially, it’s like that the US should stop treating hyperscale data centers demand as just another low class to be included inside traditional utility rate making, with a core idea that scarce grid access should be explicitly allocated and priced, and new data center loads should pay its incremental cost, and that new generation, the bring your own generation, should be essentially required. Other than, you know, socialize through the utility rates. Did I get that roughly right? Travis Kavulla: You got it down and you didn’t even need ten thousand words, Josh. Yeah. I mean the basic premise here is that the typical utility business model, which involves estimating what load is going to be on the system in the future and beginning to make capital outlays in advance of that load showing up in a lack of knowledge about whether it will appear, is not a good fit, given the amount of uncertainty over which loads are going to show up, or in terms of cost allocation when you have obviously an inflationary price environment. Where serving the next unit of demand is so costly. So it’s compounding risk and costs that need to be better tied back to the future users of the system. That’s the fundamental insight. Joshua Rhodes: That totally makes sense. I mean, you know, I’ve been steeped in ERCOT for a long time and I haven’t believed these large load numbers for years, right? And they just keep getting bigger and bigger and bigger and bigger. And I know in other regions that we’ll get to like PJM are also, you know, experiencing these large increases. And so one of the things you do is you kind of argue for a few different ways around if we’re going to try to connect as many of these large loads as possible, you argue around a few different concepts. One of them is like an open season for access. And I just wanted to translate this into Texas Speak just for the audience. So open season. So right now it feels like that connecting large loads is kind of like hog season, where there is no season. And it’s just anyone all the time, as much as you can, please, like first come, first serve, whatever. But kind of m

ERCOT now has roughly 445 gigawatts of large loads asking to connect to the Texas grid, a figure so large that Joshua Rhodes says it might as well be infinite, because the system cannot physically build for all of it. To sort real projects from speculative ones, ERCOT is launching a new screening process called batch zero, and stakeholders voted to advance it at last week’s Technical Advisory Committee meeting. On this episode, Rhodes walks through the mechanics with Tiffany Wu, an energy markets and regulatory consultant at McAdams Energy Group and a former adviser to Public Utility Commissioner Will McAdams. The mechanism traces back to SB6, the 2025 law that standardized how large loads connect to the grid and set a 75-megawatt threshold for what counts as a large load. Wu describes a sequence built to thin the field at each step. ERCOT screens which projects qualify and studies what transmission they would require, then puts the survivors through a financial gate that filters out developers unwilling to commit real capital before final studies on whatever clears. The first batch is not expected to finish until late 2027. Running alongside the batch process is a fight over who pays for the transmission. PUC staff want to charge large loads based on their contracted peak capacity rather than the four coincident peaks that currently let flexible customers shave their bills. Wu says this shift would make much of the demand-response incentive evaporate. The episode explores: * How ERCOT separates base load projects already in the queue from those still being studied and allocated. * Why the shift from 4CP to a contracted-capacity charge changes who pays for transmission. * How loads can use ERCOT pathways to pull more power than their allocation while transmission gets built. ERCOT is moving to approve the framework now and tweak it as the first batch works through. (It’s the same build-it-in-motion approach ERCOT CEO Pablo Vegas described on an earlier episode.) The vote sets the rules. The studies will decide who actually connects. Timestamps * 00:00 - Introduction & Tiffany Wu * 01:47 - Why SB6 Exists * 07:42 - Batch Zero Status * 10:03 - Who Gets Into Batch Zero * 16:49 - Financial Obligations and Commitment Gate * 22:44 - Batch Zero Study and Timeline * 27:49 - Load Estimates and Flexible Load Options * 31:37 - Transmission Build-Out and 765 kV Lines * 35:46 - Batch One and Future Batches * 37:43 - Transmission Cost Allocation and 4CP Reform * 46:43 - Reliability Standard Study Resources People & Organizations * Joshua Rhodes (LinkedIn) * Webber Energy Group (Website - LinkedIn) * IdeaSmiths (Website - LinkedIn) * Tiffany Wu * McAdams Energy Group (Website - LinkedIn) Company & Industry News * ERCOT’s TAC Sends Batch Zero Guidelines to Board Books & Articles Discussed * Texas Senate Bill 6, 89th Legislature * PGRR145 - Batch Zero Process for Large Load Interconnections * NPRR1325 - Related to PGRR145, Batch Zero Process for Large Load Interconnections * PUC Project No. 58481 - Large Load Interconnection Standards Rulemaking Related Podcasts by Energy Capital * How Texas Plans to Serve ‘Infinite Demand’ with Eric Goff * Who Pays for the New Grid with Pablo Vegas * Is Texas Ready for Winter Now? with Will McAdams Related Posts by Texas Energy & Power * Energy Policymakers Grapple with Reliability, Fairness, and Flexibility Transcript Joshua Rhodes: Hey everyone, and welcome to another episode of the Energy Capital Podcast. I’m really excited to have Tiffany Wu here to talk more about what all is happening in ERCOT, particularly around SB6, large loads, transmission cost allocation, all of the hot topics right now. Tiffany Wu is an energy markets and regulatory consultant with McAdams Energy Group. And for more background with McAdams Energy Group, you can go back and listen to Matt Boms’s interview with Will McAdams just a couple months ago. So before working at McAdams Energy Group, Tiffany was a DOE Solar Energy Innovation Fellow and also an advisor to Will McAdams while he was a commissioner at the Public Utility Commission of Texas. But between that, also was a senior project manager at TEPRI, the Texas Energy Poverty Research Institute, which is, I think we actually met. We had our first conversation when you were at TEPRI, and I was asking you questions about how these 9.9 megawatt batteries, what they were paying for electricity and how much they got paid for electricity, because that was a big deal for a while. Tiffany Wu: That’s right. Yeah, I remember that there are a lot of questions around whether or not those batteries which support the grid, whether or not we should be paying for some of those distribution level costs as transmission level costs. Yes. Joshua Rhodes: Yeah. Anyways, we probably won’t get into that, but we can leave that as a thing. But that was super helpful back then. Thanks. And I know you you also spent 10 years with Mitsubishi Heavy Industries as a process engineer, commissioning engineer. I’m really excited to have another engineer on this podcast. That’s kind of rare, to be honest. Well, thank you. You got your BS and chemical engineering at UT Austin before getting your masters at the LBJ School of Public Affairs. So Tiffany Wu, welcome to the Energy Capital Podcast. Tiffany Wu: Thank you. Thanks for having me. Joshua Rhodes: Yeah. So the day we’re recording this podcast, we we just released a podcast with Eric Goff where we talked we hit on some broad topics around how ERCOT policy is made. And we talked a lot about the large load process. I’d encourage folks to kind of maybe listen to that podcast first in terms of like kind of setting the broader goal. But with this one, I think I’d like to get a little bit deeper in this conversation around some of the intricacies of the process, kind of where it’s at. And to be fair, this kind of fits in my teaching philosophy of any time I give a lecture, I try to say the same thing three times in three different ways as a way of like some people learn one way versus the other way. So there will be some overlap between this and and the podcast with Eric, but I still think there’s so much there that I think this is gonna be, I think we need to be having a lot of conversations around this. But we’re gonna get deeper into some of these things. But let’s start bigger picture, maybe for folks who haven’t had the one with Eric. So The whole reason we’re having this conversation about large loads and batch zero and transmission cost allocations based on SB6 or Senate Bill 6. Can you lay out what problems Senate Bill 6 was looking to solve and kind of how the batch zero process, you know, fits into that effort? Tiffany Wu: Yeah, sure. So Senate Bill 6 is trying to balance a few different things. So previously in ERCOT, most of the large loads were coming from the cryptocurrency industry. It wasn’t until recently that more of the data centers have been looking for interconnection into ERCOT. So historically, the way that you would connect into the system is you would go and talk to your transmission provider or your distribution provider and ask them, hey, I want to set up a business. Can I connect to the electricity system? And they would figure it out. But because there are so many loads coming in now, there was some concern that with the size. Historically they were working on one project at a time and TSPs were conducting the studies, but ERCOT started to see that there may be a reliability issue with how many loads are coming onto the system and how big each of these loads are. The other issue is that with the cryptocurrency miners, you may remember that a lot of people were worried that they were not paying transmission costs because the way that we paid transmission costs historically is based off of the four coincident peaks during the summertime. And so if you’re able to avoid that, then you don’t have to pay transmission costs. So, so in SB6, what they’re trying to do is provide more guidance and more standardization around how you interconnect into the system. So that would support business development. And on the other side, they’re also trying to make sure that whoever does come into the system will pay their fair share of the interconnection costs. Joshua Rhodes: Yeah, no, totally. So there is that distinction in SB6 and I know there’s this distinction of like seventy five megawatts and above that defines kind of the large load. And I know the public utility commission can change that number in the future, I think if they want. Where did that number come from? Do we have a feel for kind of where that seventy five megawatts came from? I Tiffany Wu: Honestly not sure where seventy-five megawatts specifically came from. But I think that what they’re trying to do is make sure that this is capturing the data center loads, which we know are potentially like hundreds of megawatts to gigawatts to even multi-gigawatts now. Yeah. Versus some of the traditional loads that are like the oil and gas industry, petrochemicals manufacturing. So not making it more burdensome for those traditional loads to interconnect into the system still. But PUC did try to reduce that threshold to twenty-five megawatts. They’re allowed to reduce the threshold that they think that it’s necessary. They originally wanted twenty-five megawatts for the load forecasting rulemaking, but that was gonna capture so many things and that was going to be so burdensome that multiple people push back against that. Joshua Rhodes: Got it. When the seventy five megawatts like threshold kinda came out, a lot of people said, Well, we’re just gonna see a bunch of seventy four point nine megawatt, you know, data centers show up. Are there any of those? Are we seeing a bunch of those pop up under the radar now? Or I guess maybe we’re not seeing them. Do you know if they’re there? Tiffany Wu: I think they are there a