Data center opposition is now being called “the most bipartisan issue since beer.” In Indiana, Maine, Pennsylvania, Virginia, and Wisconsin, voters across the political spectrum are turning sharply against the large campuses powering AI. At least 28 of the 38 states that currently offer tax incentives are weighing whether to roll them back.

On this episode of Open Circuit, we dig into what’s actually driving the revolt, and why it’s more complicated than simple NIMBYism. 

Utilities are at the center of the backlash. Governors are increasingly targeting them as anger grows over opaque deals and rising rates.

Last week, Pennsylvania Governor Josh Shapiro sent a letter to his state’s utilities declaring that “the 20th century utility model is broken.” We break down what he’s actually proposing and what it says about the impossible position governors now find themselves in.

Later in the show, Latitude Media senior reporter Maeve Allsup to talk about her reporting on the backlash from Indiana, where a $5 billion data center has run headfirst into decades of broken promises and soaring utility bills.

We’ll also take a quick look at PJM’s reformed interconnection queue, open for the first time in four years. We’ll look at the dominance of gas, the pullback of renewables, and what it tells us about where grid buildout is actually headed.

Credits: Co-hosted by Stephen Lacey, Jigar Shah, and Caroline Golin. Produced and edited by Stephen Lacey, Sean Marquand, and Anne Bailey.

Want to watch this episode? Subscribe to our YouTube channel.

Open Circuit is brought to you by FlexGen, a leader in integrated battery energy storage solutions and energy management software. FlexGen helps owners and operators gain greater visibility and control across complex energy systems to maximize performance. Learn more at www.flexgen.com.Tune into Critical Capital, a brand new podcast from Crux and Latitude Studios. Hosted by Crux CEO Alfred Johnson, Critical Capital explores the interlocking forces powering clean and critical infrastructure. Join us every other Tuesday for in-depth conversations at the intersection of energy, government, finance, and global markets. Listen here, or wherever you get podcasts.

Transcript

TRANSCRIPT HERE

Stephen Lacey: Can we just talk for a moment about the fact that Jigar used a Mean Girls reference in our text exchange yesterday?

Jigar Shah: Honestly, I think Lindsay Lohan had so much potential that she squandered for five years or seven years in the middle. I really think that she could have been an extraordinary actress.

Stephen Lacey: Well, clearly you’re not watching Netflix Christmas movies because she’s back in action.

Jigar Shah: I mean, that is so beneath her.

Caroline Golin: My very good friend was one of the stars in Mean Girls II, which was even worse than Mean Girls I. But she’s a lovely person and she’s in my gardening club and she’s been a dear friend for 15 years. So I think she’s happy with her life generally.

Jigar Shah: I’m just saying, stop making fetch a thing.

Stephen Lacey: Yeah. “Stop trying to make fetch happen.” That’s what you texted me. That’s right. I’ll know you’re serious when you say on Wednesdays we wear pink. [laughter]

From Latitude Media, this is Open Circuit. There is a massive political realignment happening in America. It’s not over healthcare or climate change or the war in Iran. It’s over data centers. Data center opposition is being called the most bipartisan issue since beer.

In Indiana, Maine, Pennsylvania, Virginia, Wisconsin, and more, voters across the political spectrum are turning sharply against the large campuses powering AI. At least 28 of the 38 states that currently offer tax incentives are now weighing whether to roll them back. So this week we’re going to dig into what is actually driving the revolt and why it’s more complicated than simple NIMBYism. One major factor: distrust of utilities. It’s putting governors in a tricky spot, including in Pennsylvania where Governor Josh Shapiro is pushing utility reforms to keep prices down, while also cutting deals with hyperscalers.

Later in the show, Latitude Media reporter Maeve Allsup joins us to talk about Indiana. Where a $5 billion data center called Project Shirley ran headlong into decades of broken promises and soaring utility bills. We’ll also take a quick look at the PJM interconnection queue. After a four-year freeze, it’s back open and dominated by gas. What does it tell us? A dive into the heated politics of data centers and utilities is coming right up.

I’m Stephen Lacey, the executive editor at Latitude Media. Welcome to the show. Jigar Shah and Caroline Golin are with me as usual. Caroline is the chief growth and policy officer at NRG. And Caroline, you’re normally so poised and together, but what people don’t see is what happens right before we record. I take it this morning was quite chaotic.

Caroline Golin: Just a smidge. Just a smidge, but you know.

Jigar Shah: Nothing that a gummy can’t solve.

Caroline Golin: If only that was the first time I heard that. No. When you are raising four children and trying to really, really raise four children, you have the blessings of chaos. And this morning, including a very sick dog and a botched bathroom renovation was the sort of blessings of chaos. But I don’t-

Stephen Lacey: And you didn’t have the blessings of your partner, of your husband with you.

Caroline Golin: I do not. I do not have that. Nope. And so, as many of you know, the joke about me is that I am an extreme Luddite and can’t figure out how to put in microphones or lights or cables to save my life. And so we are, as I said, Stephen, getting back to the essence of the podcast with a simple 10 year old iPhone something microphone, and we’re going to make it work. So I apologize to everyone if I sound a little speckled, but just as entertaining as always, I’m sure.

Stephen Lacey: Jigar Shah is a clean energy investor and co-managing partner at Multiplier. And Jigar, you have joined the legions of laid off journalists and joined Substack.

Jigar Shah: Yeah. I still don’t get it, but everyone just keeps telling me, they’re like, “Substack Jigar, it’s the new thing.” So I was like, “Fine.” And so I’m posting there regularly and I think people enjoy the content, but I don’t understand the attraction of it at all.

Stephen Lacey: Well, wherever you land, Substack or LinkedIn, I’m just glad you’re not one of those LinkedIn influencers who write in that style where every sentence is its own paragraph and it has the rhythm of like a fortune cookie factory.

Jigar Shah: That’s ChatGPT. When I see that, I know that that was generated by ChatGPT.

Stephen Lacey: Totally. Unedited.

Jigar Shah: 100% unedited ChatGPT.

Caroline Golin: Do you know at my son’s school, they had all the teachers take a test to see if they could tell the difference between sentences, the exact same sentence, content written, based off it was AI generated or if it was human generated just by putting it in to the bot. Surprisingly, most of them did pretty well. They said they told all the parents it’s because I guess all the hyphens–

Jigar Shah: Yeah, the em dash.

Caroline Golin: Yeah, the em dashes.

Jigar Shah: The AI loves an em dash.

Caroline Golin: Yeah.

Stephen Lacey: And I was always such a heavy em dash user and now I’ve had to roll them back.

Caroline Golin: I was too. As were most great Southern writers of the early 20th century that introduced the em dash. You putting yourself in there. Sure. Why not? A girl can dream.

Jigar Shah: Oh gosh.

Stephen Lacey: Well, before we jump into the fray on the state level, let’s just turn to a major twist in PJM, the largest electricity market in the country. PJM shut down its interconnection queue in 2022 after its backlog of nearly 3,000 projects became unworkable. Two thirds of those projects, by the way, were renewables. And so PJM spent years redesigning the process and when the new queue opened this spring, natural gas represented nearly half of capacity. A lot of those renewables projects had dropped out of the queue. So just curious about your reaction to this. What does it tell us about the growing gas pipeline? What killed those renewable projects? Jigar, would you call this a dramatic reversal and what’s behind it?

Jigar Shah: I don’t love the fact that I don’t trust the PJM. And that’s the thing that bothers me the most about this news story is that the people who work there are amazing. So I’m not accusing anybody of anything. I just think that what I care about is deployment, right? I don’t care about queues. I don’t care about like all these fake projects, all the other stuff. What I care about is what do we think is actually going to happen? Because people like me who live in the PJM are paying $16 billion a year in excess capacity payments every year, right? That’s going to existing generators. I have no idea how that $16 billion is going to help new generation get built. And when I talk to everybody that I know, they’re saying there’s no way in hell they’re going to finance a new natural gas plant unless it has a rock solid offtake agreement from a hyperscaler or somebody else.

They’re not taking merchant risk in the PJM, right? So then you’re like, okay, is there going to be that many offtake agreements for all of those natural gas plants that are in the queue? I doubt it. And so like, I don’t know what to make of it except to believe that I need 10,000, 15,000 megawatts of stuff to show up to reduce my $16 billion bill back down to three billion in capacity payments, which is what every governor in the PJM wants. And so I find it more confusing than enlightening.

Stephen Lacey: Yeah. What do you think, Caroline?

Caroline Golin: Yeah. I mean, I think the biggest concern across the board with the auction is that the bilateral doesn’t show up, right? Because what’s interesting is we try to talk about PJM in isolation, but most developers and hyperscalers, if they’re doing it on their own or if they’re working with a third party or just a shell development company, they have a portfolio, of course, across the US and a similar, albeit I think more structured and trying to get ahead of the game process is going on in ERCOT. And I think you have a lot of money, which is waiting, like capital waiting to play PJM off ERCOT right now because in ERCOT, we’re going through what’s called the batch zero process, which is instead of saying, “We’d like you bilateral contracts to get together and work this through, we’re just going to tell you how this is going to go moving forward.” And there’s hiccups and it’s difficult, but it’s a different approach to this.

And I think the biggest concern with PJM is that, to what Jigar said, the demand waits. They wait a year because if they’re already not going to meet 2030, which none of these projects will, by the way, nothing that’s in there is unless it’s a potential uprate. And I think maybe the uprates get through and there’s significant capacity and uprates, but if you’re trying to build new, you’re not getting in by 2030. So who has the planning cycle post 2030? So my concern is that they just wait a year because the difference between 2031, 2032 right now in most developers planning cycle is de minimis because they don’t even have a load forecast that far out. So I think the biggest risk to all of this is that a few projects go through and everyone just waits and we’re back in the exact same space we were a couple years ago.

Stephen Lacey: So are you saying basically that this will not necessarily fix PJM’s capacity shortfall?

Caroline Golin: It might not. I mean, I think there’s a very good chance it doesn’t. And not because PJM didn’t try, but because they’re dealing with a very different planning cycle than they used to. When you’re just talking about a utility coming in and saying, “Here’s our 10 year planning cycle because we have a general idea of where load growth is going,” you can work with that. When 70% of the load growth that they’re trying to meet has no idea what’s going on past three, four years from now, that’s almost impossible to project. And so, and we’ll probably get into this for the latter part of the show, but if you’re worried about data center moratoriums, if you’re worried about losing economic development rates or tax incentives, yeah, you wait.

Stephen Lacey: I just find it incredibly rich that we’re sitting here talking about how to fix PJM and I can hear a buzz saw in the background.

Caroline Golin: This is my life, Stephen. Just so everyone knows, my shower is completely rotted out, which we did not realize. We are restoring a lovely piece of property on this very interesting farmhouse and my shower’s completely rotted out and I was kind of afraid I was going to fall through the ceiling so we’re in an emergency fix Caroline’s life situation. I can’t even take a shower without feeling like I’m going to fail.

Stephen Lacey: Does your contractor fix electricity markets?

Caroline Golin: You know what? I bet you if we put people who were just common sense people in the room, they would fix it with no political agenda, they would fix it. I believe that.

Jigar Shah: Well, the other thing though that’s confusing is that you’ve got 10,000 megawatts of requirements for batteries to get deployed out of Illinois, New Jersey, Maryland, and Virginia, and probably more that’ll come in for Pennsylvania and Ohio, right? And so, and those are largely getting built on the distribution grid, right? So these are generally projects that are not visible to PJM, but they’re batteries all the same and they can bid into the capacity market in the demand response sort of market, right? And so you’re in this weird spot right now where my sense is you’re actually going to get 10,000 megawatts of batteries to get deployed just like you have in Texas and California over the next three to four years and they’re not part of this queue process. They’re part of the utility distribution network.

Caroline Golin: Yeah. Or the behind the meter backup generation that’s going to be deployed. Whether that’s diesel, not ideal for air quality, but storage that’s behind the meter for the larger loads that are preparing for that need to be flexible. Incentivizing that for capacity, how you would configure that, how you would maybe incentivize that being front of the meter and grid tied. There’s a lot more interesting nuances that could have been worked through, but the consensus was never there. I mean, the consensus around this process wasn’t even there from the major suppliers, major retailers, major hyperscalers. I mean, there was no consensus. So I think PJM’s doing what they think they can do with a lot of pressure and encouragement to think outside the box, but to think faster and more aggressively from the administration.

And my fear is that it didn’t really take into account the scale of the money that’s at risk here or on the plate here and no one is going to put good money after bad. And the deadline for energization is the next three to four years for where a lot of this capital wants to go.

Jigar Shah: Well, they still can’t find a CEO or two board members to fill, right?

Caroline Golin: Yeah. Who wants to come to that?

Jigar Shah: Everyone’s like, “Do you want this job?” I was like, “Well, no, nobody wants this job. Are you kidding me?” They do not know where they’re going to get their next leadership, so it’s probably going to be an internal candidate.

Stephen Lacey: Well, let’s get into the state level story. We’re going to spend the rest of the episode talking about the most important story right now in state politics, which is you guessed it, data centers and energy prices. At the center of this bipartisan backlash we’re seeing, there are a few main characters. You’ve got the data center developers, the utilities, and the governors, and I want to focus primarily right now on the governors and utilities, but we’ll talk about all three.

The governors are in an impossible situation. Many have spent the last few years racing to attract AI investment. They have historically really embraced and loved having data center development in their states. And now they’re seeing this unprecedented wave of bipartisan backlash and they’re shifting course and they’re looking for someone to target. And in some cases, that is the utilities. And we saw this last week with Pennsylvania Governor Josh Shapiro sending a letter to the Commonwealth’s utilities declaring that the 20th century utility model is broken.

And he said utilities should no longer prioritize corporate profitability to drive infrastructure development decisions and that we should justify every investment with hard data on reliability and customer benefit. So it’s an interesting moment because this comes as Shapiro previously went all in on AI just last year and helped lure a hundred billion dollars in planned data centers to his state and he’s now navigating treacherous political waters as voters rebel against the industry and he is reportedly eyeing a presidential nomination. And so there’s just an interesting political situation all around. So I’m just curious, Caroline, if we can step back and talk about Shapiro’s latest letter, what do you make of his letter to utilities?

Caroline Golin: Not to be too cute, but 70 to 80% of what he asked for in that letter is just called good rate regulation. It’s almost sad to me that he felt like he had to write that letter.

Of course, utilities have to service their shareholders, but that’s what regulators are for, to make sure that it is at the balance of customer value and at the balance of ensuring largely that they are making wise and reliable investments for the grid and for all of their customers. So a lot of … I feel like a broken record because there’s so much anger about data centers not being able to cover their costs, but that’s just a simple ring fence tariff or a separate load class or a different approach to critical peak pricing. There are regulatory tools that have existed for eons, well, eons is probably a little hyperbolic for a long time that- For millennia. For millennia, since the cavemen. Sometimes we act like cavemen.

Stephen Lacey: What do you think it says that he felt the need to write this letter, like stepping back.

Caroline Golin: I think he feels like he needs to say something. I think he feels like he needs to say something and it’s unclear what the end goal is, right? And I mean, I don’t think we should get angry at all these governors that wanted to attract data centers two years ago, because two years ago it was a really good deal for rural communities that were struggling with a tax base. And in many cases, it is still a really good deal. And it’s the way we’ve done business in this country for a very long time.

Most states had what was called a five for five deal, which is like, you locate here, you build jobs, you build a tax base, we’re going to give you five cents per kWh for five years all in. And states all throughout the Rust Belt and the Southeast had that. And then you see what’s happening in result is that data centers were just like any other industrial customer. They came in, they wanted the five for five deal too, right? But-

Jigar Shah: I feel like we’re at McDonald’s now. Is this like five hamburgers for $5?

Caroline Golin: Five, sure. I mean, it’s true. It’s true, but I think that would be … You just pivoted into marketing for fast food. That’s your future.

Jigar Shah: Taco Bell. I could do that.

Caroline Golin: Could you Taco Bell? I could see you in like a Sombrero on the side of the road. With a five for five deal. I think that’s going to happen on your birthday. We’re going to go to Taco Bell, you’re going to wear some barrels and you’re going to say-

Jigar Shah: A crunch wrap supreme.

Caroline Golin: Oh, not me. Nope. But it’s true. That’s what happened. And so this is what … And so Shapiro was doing what everyone else was doing and also doing what governors have done for eons, the same thing. And it just got way big, way quick. And what really happened was that when electricity got tough and no one foresaw that, powering these things got really irresponsible. And it’s the irresponsible way in which we’ve been going about powering AI that is causing so much backlash and it’s right to.

Stephen Lacey: Jigar, what do you make of the position Shapiro’s in?

Jigar Shah: So I mean, just a little bit of disclosure here. I mean, when I left office, I helped create a nonprofit called Deploy Action, which Arnab Pal runs. And the reason I created the nonprofit is that I worked with all 50 governors across the United States to get them to use LPO. And so it was very apparent to me through all of my interactions with all the governors that they were economic development first and infrastructure poor in terms of their knowledge around how this stuff worked. And when you looked at all of these things, right, like let’s take utility regulation for a second. It used to be the case that the utilities asked for permission through an integrated resource plan or whatever it is, and then they worked to the plan and then they got reimbursement, right? And they got rate base for that.

In Maryland, they don’t even file integrated resource plans anymore, not since deregulation occurred, right? And so now they just sort of do whatever they want at the utility level through some broad guidelines. And then they go back into the Public Service Commission. The Public Service Commission is almost forced to rubber stamp what they built because, I mean, if they decided to disallow a bunch of stuff that they did, well, it would sort of upset the regulatory apple cart, right?

All of this stuff is not understood by Wes Moore, who is the governor of Maryland, and I’m sure it wasn’t understood by Shapiro until like two years ago when he said, “I’m going to figure out this rate cap thing in the capacity markets in PJM, et cetera.” And he’s got people who work for him, right? And so I feel for the governors in the sense that this has been outsourced for 40 years and they’re like, “Well, I’m assuming that my big donor, the electric utility CEO in their PAC and my folks that I put on the regulatory commission.” But even there, you and I both know that some of those regulators are not experts in utilities. They’re folks who served in the legislature for 30 years, making $72,000 a year, and this is a way to bump their salary to $150,000 a year while their kids were going into college, right?

And so they learned how to do rate regulation through NARUC and like going to the conferences and doing other things. And so I think part of the challenge that we’re in right now is that a lot of people have taken advantage of this system. And for the longest time with LED lighting and whatever else, we didn’t have load growth. It didn’t really matter. I thought it mattered, but no one else thought it mattered. And now we’re in a place where it does matter, right? And so we basically have historically low utilization of assets, right? If you said that to a governor, they’re like, “I don’t know what that means.” We’re in a place where many of the utility companies have been spinning yarns for so long that they actually believe it.

So when you talk to utility companies, many of the CEOs and CFOs are like, even if I wanted to pursue distributed generation or figure out how to do virtual power plants, I’ve told the people who work for me that those are false solutions for 20 years. I can’t now go back to them and give them a new instruction set. And if I do, they push back on me and they have the ability to talk to the regulator sort of behind the scenes, behind my back and say, “We don’t think this stuff is going to work.” This is what was undermining Patti Poppe at PG&E for five years until everyone finally got in line in the last four months, right? And so I think part of the reason why he wrote the letter is that he’s like, “I need to be public about this. I can’t just privately have this conversation with the public service commission and tell them to do better.

I need to say it out loud in front of everybody so that everybody understands that they are on notice that like they can’t keep doing the same bad practices again and again and again because not only does it affect them politically, which it does, but it also affects the fact that like these uncomfortable bedfellows have gotten together, right? All of the anti-solar and anti-wind people are now no longer anti-solar and anti-wind. They’re now all anti-data centers, right? So that’s from the right. And then on the left, you’ve got a bunch of enviros, you see them in your Twitter feed who are like, “We think AI is going to be the death of all of human species.” And so they’re anti-data centers and then there are like water issues. But I was talking to Jeff Bladen, our friend at Verrus, and he was saying 50% of all of the data centers going in today still use evaporative cooling, not because they can’t move to advanced cooling mechanisms, but just that they’re lazy. They don’t want to redesign their data center, right?

Caroline Golin: Yeah, their specs have been done for a while.

Jigar Shah: So then when people say, “Well, there is a water issue with data centers,” there is a water issue with data centers because they haven’t updated their design. It’s not because they can’t. And so I just think that you’re in a place where Governor Shapiro has done more work than any other governor in the country to get up to speed on this because he’s so exposed on the PJM side that he felt the need to provide this. And I think actually he’s doing a lot of his fellow governors, 36 of whom are running for reelection or election this year, a favor because he’s trying to give them a bit of a roadmap on how to lead on this issue.

Stephen Lacey: Caroline, how do you read this situation?

Caroline Golin: Well, what’s interesting about the Mid-Atlantic states and the Northeast states in particular is the disconnect for me on the environmental side versus the affordability side, because you see a lot of governors, not a lot, but a handful of governors who ran on or reinstating RGGI in these areas, which at this point-

Stephen Lacey: That’s the regional greenhouse gas initiative.

Caroline Golin: Right. Which at this point is really just shifting gas plant to gas plant based on heat rate and where it is in the system. It’s not particularly driving enough, it’s not driving emissions and it’s not really pulling coal plants offline because it’s really just a tax or a pass through and then at the same … And it’s just going to raise rates across the board for any of the states that are in there. And then at the same time, there’s a call out for suppression of costs to customers. And I’m not going to sit here and say, “Oh, RGGI’s bad or RGGI’s good, or this is good, or this is bad,” but they’re all disconnected is what I see happening, is that there’s an environmental platform which is disconnected from the talking points of the affordability platform. And in large part, that’s to Jigar’s point, is because the solutions that sort of can bridge both, smart home VPP, distributed resources have not been included in sort of the resource plan.

And so you’re sort of stuck between a rock and a hard place. And if you layer on top of all of that, the fact that the populist sentiment in this country under Trump’s administration has been ignited on both sides. If there’s anything … I think if there’s … There’s a lot of things that will go down in history because of the Trump administration, but I think one of the more social longstanding parts of his legacy is going to be how he ignited populist sentiment. And when you put all of those together, there is no right answer. I mean, what I see for all of these governors is if they choose affordability based on the existing constructs, they potentially choose an environmental issue, right? If they choose the environmental side, they potentially raise costs. If they choose data centers, then they lose populace. If they don’t choose data centers, then they lose revenue, which is their job.

Governor’s job is economic development. That is their job and everyone knows that that’s what they’re hired to do. So there is no right answer. And I think what you’re going to end up seeing is a number of states kind of go into gridlock on this because as we can see at the federal level, when there’s this many competing issues, stasis happens. And that is incredibly unfortunate. And this is the same thing going back to PJM. I think the biggest concern for me is nothing happens. Both affordability and opportunity on innovation. Nothing happens because there is no right answer across this populist spectrum.

Jigar Shah: I mean, that is the risk. I think that in general, as you suggested, the group that was supposed to do or in the past has done that comprehensive work are the environmental groups. They are now out of favor. So Shapiro and a lot of the other governors don’t want to have environmental groups run their legislative agenda. And so that’s why I think you see the industry stepping up. You’ve got Deploy Action, you’ve got the Utilize coalition, you’ve got others that are coming up. I think the clean energy industry is doing that work.

Caroline Golin: The work there is huge. I think Jigar brings up a really interesting point. The wave of sort of startup policy shops is just another indication that everything is in gridlock. You used to have the major big players be able to parachute into states and give a middle of the road sort of policy recommendation. But every single major trade group, whether it’s the DCC or any of the clean … Well, what’s left of clean energy trade groups or supplier groups or utility groups, everyone is so divided that they can’t create consensus. So what you have is this vacuum now. And so these very nimble, interesting policy startups, policy … What do we call them? Policy think tank startup? Policy shops. And they’re scrappy and they’ve gotten in there. And I think there’s pros and cons to that, of course.

But it’s just another data point, which is to say the institutions in this country are not trusted. And at the very core of this, I think another legacy of this administration, and I think it started before Trump, is that people in this country don’t trust institutions anymore. They do not trust institutions.

Jigar Shah: Well, COVID hurt.

Caroline Golin: Yes. And that’s what I was going to say, which was like it started before Trump, which is … And so a utility represents an institution. A governor represents an institution. And you know what? These big tech companies represent institutions now too, because they are just as omnipresent as any other government body in this country. And so that distrust of institutions means gridlock everywhere. And I think we’re in for stasis more so than we’re in for revolution over the next couple of years.

Stephen Lacey: Yeah. I mean, my fear is actual violence. We saw an Indiana council member’s house get shot up recently and a no data center sign was left on his front porch. The New York Times, the Daily Podcast, just had this extraordinary episode on the broad acceptance of political violence now across both sides of the spectrum. And it’s really not just about Trump, right? It’s the broader systemic economic inequality combined with the vitriol on social media and this deep feeling that we can’t trust institutions and that the system is broken. And I think this also plays into data center opposition right now. And my fear is that this really nasty combination of political violence, acceptance of political violence, economic dislocation from AI, and just this deep disdain for tech companies in a lot of circles could turn very ugly. Well, it is. And it’s like more than just gridlock. I’m a little scared about where this could take us.

Jigar Shah: Well, but I mean, it is mostly about Trump. I just want to make sure we’re all crystal clear about this because I think everyone’s just afraid of blaming him. At the end of the day, when these kinds of things happen, it is the job of the US president to actually rise above it all and give a good speech. Oh, for sure. And he is incapable of doing that. When political violence occurs, he’s sort of like, if it’s against a Democrat, he’s like, “Well, they kind of deserved it.” And if it’s against a Republican, then he’s like, “Well, this is an outrage and whatever, whatever.” And I think in general, we do expect our presidents to help bring people together to quell this kind of political violence. And we have a president who doesn’t want to quell that, right? And so I think that is squarely on his doorstep. And I don’t think it’s something that Chuck Schumer or Hakeem Jeffries or some other person could do, right? There’s only one president of the United States.

In terms of the stasis though, I don’t see that happening. I think what occurs is that the institutions have stasis, right? So whether it’s PJM or whether it’s the utilities, right? But the startups don’t, right? I mean, Base Power will continue to sell a bunch of 60 kilowatt hour batteries and you’ve got Travis Kavula that’s there doing all the heavy lifting to get that done. You’ve got EG4 that just came out with their battery that’s now at $14,500 for a 60 kilowatt hour battery, which is crazy town. You’ve got folks at Carrier that’s like shipping heat pumps that have four kilowatt batteries associated with them. And so all of these solutions are going to fully proliferate, right? And there really is no chance that the utilities can escape now fully deploying VPPs because the alternative is that you have reserve margins that are so low that people have rolling blackouts during heat waves or polar vortexes, right?

And so if they can’t do their traditional approach, which is new central generation, upgraded transmission, upgraded distribution, if they can’t do that formula that raises rates at 9% a year, then they’re going to have to be forced to do this other stuff. There is no other choice and it’s worse for the institutions. It’s worse for the CEOs of these utility companies to be presiding over rolling blackouts, and it’s worse for governors to be presiding over rolling blackouts. And so the only thing you can do in months, not years, is demand flexibility. There is no other choice, right? And so I don’t know that we should be promoting stasis. I think we should be proactively leaning into demand-

Caroline Golin: I’m not promoting it.

Jigar Shah: I’m just saying that that is what you’re going to end up having if the institutions are in stasis.

Caroline Golin: And I’m not at all promoting it. It’s actually what I think about at night and trying to putting on with my day job is how do we bring a fully integrated smart home package to the east? How do we integrate C&I flexibility with residential flexibility for the first time ever in this country as a deliverable product? And that’s my biggest concern is that the commercial readiness is there. And even everyone’s pretty aligned on what the market signals need to be.

Jigar Shah: I mean, Gil Quinones is all in. I think Exelon is pushing BG&E and Pepco to be all in, and I think they’re generally open to it. PECO just lost their CEO, and so the new CEO hopefully will get on board. They’ve always sort of been the laggard of the four. But I think that my sense is Exelon is going to push this within the PJM.

Caroline Golin: Well, but I think Exelon’s motivation is reregulation.

Jigar Shah: I mean their motivation could be whatever they want. I’ve got a hundred startup companies that are commercially ready that wants to sell a crap load of stuff and go public next year.

Caroline Golin: I understand that. Those technology companies do not have deliverability responsibility. Those technology companies do not actually get the phone call if the lights don’t go out.

Jigar Shah: Well, yes, they do. If they bid into the PJM capacity auction and they get an allocation or they have a contract with hyperscalers to deliver, they have penalties that they have to pay. They have to sleeve stuff the same as anyone else has to do. And so I want to make sure that we’re being crystal clear about this. When you say that they’re commercial ready, I think that includes financial damages and all the structuring that we’re talking about. Now, not every one of those companies is doing that because some of them are hardware companies, but the aggregators like the Voltuses and the C Powers of the world absolutely have to provide that.

Caroline Golin: Oh, absolutely. Yeah. But what I was saying was that if the motivation is reregulation, then that’s not necessarily going … The playbook isn’t necessarily going to be about innovation and customer empowerment. It’s a different playbook. That’s all I’m saying.

Jigar Shah: Oh yeah. I mean, this fight has been going on for 20 years-

Caroline Golin: For a long time.

Jigar Shah: IPPs and the utilities, and the utilities want to use this moment to be able to build generation again, and they’re absolutely having that fight. But the reason I think this stuff matters is because Shapiro, I think, is putting out a letter and saying to all the other governors that if you do not educate yourself on these issues, you do so at your own political peril because if you allow the people that you used to trust, whether it was the utility CEO or whether it was some other person like Tom Condon in New York that seems to paralyze all the governors in New York, that those people are putting you at political risk. And I think that that has changed the equation in a way that, frankly, I for the last 20 years have been trying to get governors interested and it does feel like they are interested in this moment in a way that they haven’t been.

Stephen Lacey: Can I just say, I really appreciate you guys landing the plane for me. I’m over here fretting about political violence and then you brought it back to governors.

Caroline Golin: Well, I mean, energy is not the only reason why we should be afraid of political violence. I mean, there’s a lot in this country that we could go on, but I … Okay, I would say one other thing on all of this, and then we probably should move on before we just go into like a deep, dark, depressing hole, which is that when I go back to the trust, I don’t think the average person trusts what AI is going to do for the future. I think most people trusted that having a really smart email system was good. Having Google Maps was good. Being able to store all their photos on the cloud was good.

Jigar Shah: I never trusted Apple Maps to be clear.

Caroline Golin: It was never as good. Google Maps was better. But do you know … I mean, when it was present and they were using it, they got around on the trust piece. But I think at the end of the day, people still don’t trust what AI is going to do. And so they’re having a hard time bootstrapping and getting behind it when it comes to quote, the personal sacrifice of this economic transition. And we just have to say that and-

Jigar Shah: Say it loud.

Caroline Golin: And work through that, right? I mean, and that doesn’t mean that these companies have some nefarious agenda. It means that the conversation wasn’t long enough before the technology hit.

Jigar Shah: And they have a nefarious agenda.

Caroline Golin: I’m just saying- I don’t think all of them do.

Jigar Shah: I don’t trust Sam Altman for as far as I can throw him. He was AI for a long time. It’s only recently that you have Dario and everybody else who’s coming to the game, but for a long time you had a nonprofit who was like, “We really care about the use of AI.” And then when he was like, “I might be super rich.” Then he was like, “Let me turn it into a for-profit and let me put 26% of the ownership into a nonprofit and then let me use that nonprofit to fund biotechnology.” I mean, all of it, even the people who read a lot like me are like, “What the hell is going on?”

Caroline Golin: See, I got the rant, Stephen. I told you I’d get at least one in today’s podcast.

Stephen Lacey: I mean, Dario’s been out there for a while and I really like Dario, especially compared to someone like Sam Altman, but he’s been out there saying that half of the white collar workforce is going to be gone by 2030, right? So all the messages coming out of the AI leaders right now are starting to scale-

Jigar Shah: And then David Sachs, I mean, what the hell? Seriously, I am not following that guy in any battles, anytime, anywhere.

Caroline Golin: So my point on the trust is the solution that a lot of people are pushing, and I think rightly, and Jigar’s pushing it hard, is, okay, then trust these other companies that you have no relationship with, that have a new gizmo. And it’s honest, right? That they want to do the right thing. I know all these companies that Jigar is talking about, NRG included, we have phenomenal solutions and want to do the right thing, but it’s asking a customer to then put their trust in somebody else. And I think that’s a hard sell. I think it’s a really hard sell right now, because the trust in general is just broken.

Stephen Lacey: All right. Well, let’s get a few layers deeper on what is driving that distrust. And now I want to bring in Latitude Media senior reporter, Maeve Allsup, who has been digging into that in Indiana.

So everything we’ve been talking about, the utility distrust, the political tightrope, the bipartisan fury is happening all over America. And the reason the backlash is so ferocious isn’t just about data centers. It’s about everything that came before them. Maeve Allsup is a senior reporter at Latitude Media, and she just published a feature that details how this is playing out in Lake County, Indiana, a corner of the state on the southern shore of Lake Michigan where steel mills have closed and jobs have vanished.

And this New York developer, Sentinel Data Centers, wants to build a $5 billion, 500 megawatt data center on agricultural land in this township of 1700 people. And it has pitted the community against the utility, the developer, and the local government, and Maeve is here to talk through it all with us. Maeve, welcome to Open Circuit. How are you?

Maeve Allsup: Hi, guys. Thanks for having me. It’s so much more intimidating now that you’re doing this on video.

Caroline Golin: I know. I know. I keep saying, can we go back to audio so at least I can have my cat jump on the table or something.

Stephen Lacey: Cats are still welcome here, by the way.

Caroline Golin: That’s true. That’s true.

Stephen Lacey: So data center opposition is rising all around the country. We’ve been talking about this so far on the show. What made Lake County, Indiana the place where you focused?

Maeve Allsup: Yeah. I mean, maybe zooming out just for a second to Indiana as a whole, because I think the state itself is really interesting. It’s gone almost overnight from really not being a data center hotspot to having, depending on who you ask, between like 35 and 50 proposed data centers in the state. And the state itself has done a lot of work to kind of incentivize development. And Lake County, as you said, it’s kind of in the northwestern part of the state. And I was originally interested because there was this labor dispute between United Steelworkers and a local utility about whether contract workers or union workers would be used to build infrastructure to support data centers. But then as I started talking to folks there and kind of getting under some of the layers, I realized that so many of the narratives around AI and around energy that are playing out all around the country are kind of coming into conflict or converging in this one kind of rural, small part of the county where there’s been pushback against this data center project.

So really high electricity prices, concerns about kind of upheaval to an agricultural way of life, conflict with the utility, debate about whether local counties should regulate data centers or the state should do it. All of these topics that we hear about every day and every part of the country are kind of happening all at once in this one little spot.

Stephen Lacey: Caroline, Jigar, were there any elements of this story that popped out to you as either representative of what’s going on around the country or that felt unique to Lake County?

Jigar Shah: Well, the thing that, first of all, like, are you starting to write for the Atlantic and the New Yorker? Is that what you’re going for? I mean, this is a great piece and it was like so detailed. But the other thing I’d say is sort of a preamble is that if you remember, like all of our conversations about Indiana have really been about like AES and their ownership of a utility and how they were going to go 100% renewables, right? I think this was like 2018, 2019 and all of the work that we were going there. And so part of the thing that I found fascinating by the piece, but also by just stuff that I’ve been watching is that Lake County did put in a big solar project and it does feel like a lot of the data center opposition is coming from people that were opposed to solar and wind.

Maeve Allsup: 100%. Yeah.

Jigar Shah: So can you talk a little bit about that and like some of the motivations and …

Maeve Allsup: Yeah, absolutely. I mean, this is a county that has a long history of opposing sometimes successfully and sometimes unsuccessfully all kinds of projects. So as you mentioned, there was a solar project, a substation, there was a landfill project, a refrigeration project. There’s, I think just a sense that a lot of these projects have been forced down their throats. So they really balk at having kind of a top down implementation of another big project. And I think as to your point, it’s not just data centers. There are a lot of data center specific concerns, but they didn’t really want any of these other projects either.

Stephen Lacey: Yeah. And there’s also just a lot of distrust about NIPSCO, the utility, one of Indiana’s biggest gas and electric utilities. Why are residents so cynical about the utility? There are kind of a few layers of distrust.

Maeve Allsup: Yeah. I mean, I think the top layer is rate increases. There has been so much concern around rising electricity bills from NIPSCO. There was a pretty big protest I think outside their headquarters earlier this year and folks talking to local news outlets were saying like, “My bills have doubled or tripled in just the last few years.” So that is the number one issue. And then of course there are kind of general billing and communication problems and it all layers into this sense or concern that NIPSCO is prioritizing shareholders and now big projects over residential rate payers. And then as I mentioned, there’s kind of this labor element as well, this dispute with the union around who is going to build this new generation and this new infrastructure.

Stephen Lacey: And I’m trying to understand this like Genco structure that NIPSCO has created. How would you describe this entity that they’re standing up and why does it like impact transparency? Why are people worried that it’s not going to be transparent? It’s not going to protect rate payers? Help me understand how that is being used.

Maeve Allsup: Yeah. So NIPSCO Generation Company or Genco is a subsidiary that NIPSCO created that’s going to build and own generation specifically for data center loads. So Genco will build generation, they’ll sell power back to NIPSCO via a PPA, and then NIPSCO will serve data centers via special contracts that they negotiate on a project by project basis. So instead of kind of standard terms, standard NIPSCO terms for data centers, there might be different durations or exit fees negotiated for each project. So that’s where some of the transparency concerns come in. I will just say that the concerns about Genco and that structure are really coming from analysts that I talk to or like energy advocates. The folks in like these Facebook groups in the local area, that’s not in their top list of grievances. They’re not particularly worried or maybe even paying close attention to how the data center might be served on the grid. They have a lot of other concerns, but kind of potential wear and tear costs that they may end up paying, I don’t think are on the top of their list.

Caroline Golin: I mean, so just, I think the general structure is NIPSCO wants something off balance sheet so that they can upsell the earnings on whatever they make in the generation sale, so it can be outside the regulated book. It’s a smart model for a couple of reasons. One, it allows them to ring fence any costs and sleeve it directly to that wholesale customer. And it allows them to charge upwards of 15% if the demand is there for the electrons, right? So it works on both ends. The problem is, if the load doesn’t show up and they hold it on the balance sheet of the overall balancing authority, what are the regulatory treatments for absorbing that back into sort of the local rate regulated entity, right? So that’s the risk about these types of structures. And generally, I’m actually a fan of these types of structures if done well, where the risk is on the shareholders.

The risk and the reward is on the shareholders because you are creating a competitive entity and just like other competitive entities, the risk and the rewards are held by the company, not by the rate payer.

Jigar Shah: The one thing I was struggling to figure out though, because I don’t think you really covered it in your piece, is sort of what the state’s bias is, right? Because usually governors want data centers to get built, right? So the governors generally are pro-economic development. And like today is the day that President Trump is going after all the people who wronged him around the state Senate races, right? And he’s primarying everybody who wronged him on like redistricting in Indiana, right? And so I’m just trying to figure out the mood of like the state government from the legislature to the governor and what they want from all these county supervisors.

Maeve Allsup: And my impression is that there’s a little bit of conflict almost between the state government and then local governments. There are a couple of counties in Indiana that have imposed their own temporary data center moratoriums at this town hall that I describe in the piece where Sentinel Data Centers goes to answer some questions. There were some statements from local representatives who effectively said, “We either need to let these projects in and govern them on our own terms or we’re going to hand off governance of these projects and we may end up with them in our communities anyway and we won’t have a say really in how they come online.” So I think there’s a sense that data centers getting built is inevitable, not necessarily this specific project, but that these are going to get built and we as a community need to decide what we want from them instead of just trying to kind of blanket block the projects.

Caroline Golin: And I think that’s the most important line. And a new friend of mine said this, “There are a lot of birds out there and this is a big capital stone, so what is it you want to do with it?” And that’s where I keep saying the opportunity is still there and the trade off is what do you want for it? The problem with a lot of these setups is that you’re asking community organizers to be negotiators on things that they are supposed to have collective foresight into, and that’s not their day job.

Jigar Shah: They need to bring in William Shatner. He’s a good Priceline negotiator.

Caroline Golin: Absolutely. Absolutely. Yes. I mean, actually we’ve got so many things we have to do now as memes. We have to do you as a Taco Bell guy with a five for five. Now we have to have William Shatner negotiate-

Jigar Shah: I’m still trying to understand your birds and capital stone thing. Is this a slingshot?

Caroline Golin: You kill two birds with one stone, right?

Jigar Shah: Oh, got it. Got it.

Caroline Golin: Okay. Oh my goodness. Well, all right, if you didn’t get it, I guess, I guess, I guess you can kill multiple birds with one stone, but it’s a large … Here’s the indication, if they’re creating a special interest generation co, they know that there’s more capital there to acquire or to do business with, and they know that they want it, right? And so the question to these communities, which I’m not sure is right to ask them to do, but it is the reality, which is to say, go in and know what you want in return. What do you want in return for this land being utilized for something that you may or may not have been bought into, but is inevitable. If you can’t beat it, get everything you want out of it.

Maeve Allsup: Well, and I think that, to your point, these are not like professional organizers. These are folks who are kind of moonlighting on Facebook-

Caroline Golin: Dairy farmers.

Maeve Allsup: So yeah, they don’t have a list of demands per se. And at the same time, I don’t think there’s a lot of information, easily accessible information, and it doesn’t seem to be coming from the developer itself around, okay, what are the benefits that we could and should be asking for? What there is a lot of information out there on the depths of Facebook and Reddit is all of the kind of nightmare scenarios that can happen with the data center. So I don’t … I think there’s this sort of mismatch in where people are getting their information and the concerns that they have and that is so easy to access. And then when it comes to what benefits they could ask for or should be asking for, I think that’s harder to find. And I was thinking about this, I’m sure there’s kind of a chicken and egg problem for developers because when you’re at the very early stages of a project where you’re literally just trying to get like a zoning permission, you also maybe don’t have all of the details about how a project would play out, but at least in this community, they want real specifics.

They want kind of the ins and outs of how this project would work and what’s going to happen if like X, Y, Z thing takes place. They really want to know. And so I think there’s just kind of …

Caroline Golin: But in theory, the utility should know. One of the things at NRG that I’m challenging and we’re building is like, if you partner with us, we’re going to know that community and we’re going to know exactly how to invest in it, because we care and we’ve done the due diligence on it, right? But in theory, the utility should know its community and if it doesn’t, that’s poor on them.

Maeve Allsup: For sure. The work being done, not being a data center developer myself, but it seems like there’s a lot of kind of backtracking, right? They hit this opposition and now they have to go back and address it. And so I think there’s this sense, at least in Eagle Creek Township, that the developers are kind of trying to sneak the project in under the radar.

Caroline Golin: I think if any developer is doing that, they deserve to sort of be kicked out.

Jigar Shah: Well, and this is what we’ve said about solar and wind developers, right? That they should not be trying to get it under the radar screen. They should be preparing and educating consumers all along the way. I guess the last question I had was really more around the role of the governor, right? We just talked about like Governor Shapiro and his letter in utility stuff, but I mean, in this case, it’s about data centers, right? I mean, shouldn’t the governor be the one who’s actually saying, “Here’s the best practices, and here is how people at the local level should be negotiating with data centers, and here’s how we’re going to streamline the process of getting the right partners into the state of Indiana.” This feels like it’s screaming and crying out for leadership at the governor level.

Maeve Allsup: Yeah, maybe. I mean, I also don’t know whether local communities would balk and kind of see that as kind of stepping on their own toes. Things feel really muddled and confused, at least in this particular project right now, but it’s a good question. I don’t actually know what the relationship is like between the governor’s office and the 1700 people who are living in this community that’s likely going to get a data center.

Stephen Lacey: Well, I mean, I think it’s an important point, Jigar, and it gets to the whole theme of this episode, and that is data center developers, utilities, governors are really getting caught off guard, and we need to see a lot more leadership, serious, coherent messaging. And this story that Maeve wrote, I think, reflects almost every kind of tension that we’re seeing right now, the scale arriving overnight, skepticism about the utility, distrust of institutions, the feeling that there’s secrecy, the feeling like the data center developer hasn’t done everything they can to educate the community. And then layered on top of these promises about jobs and growth that never materialized in the past. So it’s a great piece, Maeve, and I think we’re just at the beginning of local political figures really trying to figure this out.

Maeve Allsup: Yeah. Well, thanks guys so much for having me.

Stephen Lacey: Thank you so much. Yeah, go check it out at latitudemedia.com. Maeve Allsup is our senior reporter. Really appreciate it.

Maeve Allsup: Thanks guys.

Stephen Lacey: All right, that’s going to do it for the show. Caroline, great to see you.

Caroline Golin: Thank you. I will be on another renovation next time, I’m sure, with more background noise. But I’m sure I’ll have the right microphone.

Stephen Lacey: Yes. It’s okay. As long as you are here, we will figure it out. And Jigar, go pop that Mean Girls DVD in and enjoy the rest of your day.

Caroline Golin: Eat your tacos.

Jigar Shah: I skipped the entire DVD phase. I just went straight to Netflix.

Stephen Lacey: Why did you skip the DVD phase?

Jigar Shah: I never ever bought a DVD player ever.

Stephen Lacey: Wow. All right.

Jigar Shah: Went straight from VHS to streaming.

Stephen Lacey: That’s really wild. Okay. Well, take that VHS of Mean Girls and pop it in and make sure you be kind and rewind at the end. Open Circuit is produced by Latitude Media. The show is edited by me, Sean Marquand and Anne Bailey. All of our episodes are on YouTube, subscribe to Latitude Media’s channel, and of course our audio episodes, our whole back catalog is at Latitude Media or anywhere you get your podcasts. Sign up to Latitude Media’s newsletters to get reporting like Maeve’s. We are diving deep into the AI energy nexus and all sorts of other subjects in the clean energy markets. Thanks so much for being here. We’ll catch you next week.

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