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Frederick Kempe:

Welcome everybody, and thank you for joining us. I’m Fred Kempe. I’m president and CEO of the Atlantic Council.

And it’s my pleasure to welcome you to today’s conversation on powering the AI future. I’m honored to have the opportunity to speak in a few minutes with Calvin Butler, the president and chief executive officer of Exelon, one of our nation’s leading utility companies, on how the rapid development of AI is impacting the energy sector. And I’ll come back to introducing him in a moment.

Reliable and affordable electricity is the bedrock of America’s economic strength and national security, powering its industry, cities, and digital infrastructure. And of course, we’re all caught up right now in what people are calling the intelligence age, and that is the AI revolution and all the impact it’s going to have.

After years of relatively flat electricity demand, the US and much of the world now face surging demand on a scale not since the industrial mobilization of World War II.

The surge is driven primarily by electrification, the return of domestic manufacturing, and data centers supporting AI development. Meeting this moment of sustained energy demand growth requires getting more from existing infrastructure and, of course, building new infrastructure more quickly.

And power supply is now also a strategic geopolitical issue. If the US electricity system cannot keep pace with the demand placed upon it, the United States risks losing its edge in innovation and AI leadership to geopolitical opponents.

So a reliable and abundant power system enables the US to support allies and partners and to counter adversaries’ AI ambitions. So before we begin the discussion with the Exelon CEO, I’d like to welcome Representative Sean Casten to provide opening remarks.

He serves one of the districts in the Exelon coverage area. And I hope in your remarks you’ll talk a little bit about who you represent in Chicago and what you represent in Chicago. But here’s what I want to say about him. Congress has no shortage of lawyers, but very few members who can read an energy model, build a clean energy company, and then write the laws that shape America’s technological future.

Congressman Sean Casten of Illinois is that rare combination. He’s a trained scientist and engineer, a successful clean energy entrepreneur, and now one of Congress’s most knowledgeable voices on climate, power markets, and the electrical grid. And he has the committee assignments to get it done.

We were talking outside before this, and I just said it’s a pretty unusual path to Congress. So I hope you’ll talk a little bit about that as well.

As artificial intelligence drives an extraordinary new appetite for electricity, he brings something Washington urgently needs: An understanding not only of what policy should accomplish, but of how energy is actually produced, financed, and delivered. So please join me in welcoming Congressman Sean Casten.

Sean Casten:

Thank you, Fred. So I wasn’t going to put this in my remarks, but because you asked, I was joking that I had some students recently ask me what they should do to, if they wanted to get into Congress someday.

And I said, it’s super easy. You just go get an undergraduate degree in molecular biology, do cancer research for a couple years, you go back to grad school, get a degree in chemical engineering, you do some technical consulting, you start a couple companies, you sell them, and 100 percent of the time you can get into Congress on your first try if you do that.

So I thought I’d give just a little bit of perspective on AI and data centers and energy as it comes from Washington. And I have to start this with the caveat that’s one of my great frustrations on energy policy in Washington—hello, Mr. Secretary—is that we often do energy politics.

We sometimes call it energy policy. And we’re in one of those moments where I think we are vastly over-indexing on conversations about policy as related to data centers and their impact on energy. We are vastly under-indexing on the actual politics that’s driving this in terms of our public conversation. And we’re under-indexing on the point that Fred made about the fact that we are at a point where the world is electrifying for a whole lot of structural and fundamental reasons.

If you have a power plant that does not consume fuel to make power, whether or not you’re getting a return you’re happy with on that power plant is an entirely separate question from the fact that that power plant energy dispatches ahead of everything else on the grid. And whether you’re in China or in Illinois, your nuclear plant, your solar plant, your wind plant is driving down the long-term cost of power, which is pushing more and more industries to electrify.

And for the first one hundred years of our history, electricity growth grew with GDP. It then flatlined from 2008 to 2020, and now it’s growing again. And we’re having conversations again that we used to be more comfortable having about when big loads come in, how do you deal with rate equity? How do you deal with serving? With building all these things out?

And what I’d submit to you is that from a policy and technical perspective, is that it’s not very hard to build out the grid and to deal with the rate equity questions and to put the appropriate controls in so that this spiky load doesn’t lead to voltage instabilities. We know how to do all that stuff. And historically, we’ve not perfectly, but we’ve dealt with the rate equity questions of what happens when the big company comes to town that’s going to  generate some property tax revenue.

But the governor says, “wink wink, nudge nudge, could you give them a little bit of a discount on the rate?” And is that fair? I mean, you know, that happens. We know how to deal with that stuff.

I think what is particularly hard in this moment, because I said we under-index on the politics, is that you could not have a worse advocate for data centers than the tech industry.

And they are making all of the politics way harder because remember, the electric load growth started under the Biden administration, before we were talking about AI, because we were seeing manufacturing return to the United States. We were seeing vehicle electrification. It’s different, but it’s also kind of the same question of how you deal with that load growth. But we didn’t have the case of an industry saying, “I grew up on Section 230, which says I cannot be held accountable for anything that is said on the platform I operate. I want liability waivers. If you don’t give me liability waivers, I’m going to throw money in your next election. When I go and I want to build a data center in your community and the utility says I can’t build here, I’m going to say, well, forget about you, I’m going to bring my own gas turbine and I got a sweetheart deal with the administration to get an air permit.”

All of that has created a deep hostility to the industry, which is manifesting in, I would like to have closed water heat exchange loops, I would like you to not have backup generation, I’d like to have more like, you know, local participation. And I’m not saying any of that is invalid, but that anger is coming from, I think, a hostility to the tech industry writ large. And I think this sense among a lot of parts of our country that the future that I thought I had as an American and the levels of equity that I thought I was entitled to doesn’t seem to be there anymore. And I want some heads on pikes.

I think that’s a very dangerous moment. But I think that’s sort of coming and is informing a lot of that. Now, having said all that, and I’m really delighted to have Calvin Butler here because you’ve been really at the forefront of this.

I think there is a  really legitimate conversation that is somewhat unique to this load growth, that we’re in this period where you’ve got massive amounts of capital being deployed in a space where everybody kind of knows that this is looking kind of bubbly.

It’s looking like there could be a washout. I need to make sure that if the washout comes, I’m in a position to sort of control my own future and be the person who consolidates.

And when you’re in that kind of a world, there’s a huge incentive to build fast. There’s not necessarily an incentive to build particularly efficiently. There’s not necessarily an incentive to be thoughtful about all the equities. It’s sort of like, who’s going to be the first across the post?

So I think it’s putting a lot of pressure on  both regulators and, you know, and the utilities, especially the regulated ones, to say how do I not deploy capital for something that’s not real? How do I do this in a fair way? And I’m sure you’ll talk about it, but I think it’s creating some challenges. As we think about, maybe the washout never comes; but we know what bubbles look like, we know what this looks like, and how do we make sure that we’re doing things that are in the greatest interest of the larger public good?

So I hope that’s helpful. Really looking forward to the conversation. You couldn’t be in better hands than with my favorite utility CEO. And thanks for humoring me up here.

Frederick Kempe:

Thank you, Representative Casten. And now I’m pleased to introduce Calvin Butler, president and CEO of Exelon. So artificial intelligence may live in the cloud, but it runs on the grid. And few leaders understand that better than you. As president and CEO of Exelon, one of America’s largest utility companies, which I think is responsible for networks that deliver electricity to nearly eleven million customers across six utilities.

Calvin Butler:

Yes.

Frederick Kempe:

And where are they located?

Calvin Butler:

So let me begin by saying hello to everyone and thank you for including me. So Exelon is headquartered in Chicago, Illinois. And so our congressman’s utility is ComEd, which also happens to be the fourth largest utility in the country. Through a series of acquisitions and combinations. In 2000 we combined with Philadelphia Electric Company, PECO. And in 2012 we combined and we bought Constellation Energy and BGE. So that gave us that Mid-Atlantic footprint further into Maryland. And in 2016 we acquired Pepco Holdings, which consists of our nation’s capital, Atlantic City, and also Delaware. So those are the jurisdictions that we operate in. And we have the privilege and responsibility, as you said, to serve eleven million customers. And I think we do it better than anyone else.

Frederick Kempe:

And including me through Pepco. So there we go.

Calvin Butler:

Thank you. I did check on that. Thank you for paying and just being on point.

Frederick Kempe:

Oh, I didn’t say it.

Calvin Butler:

And congressman, he’s in a suburb of Chicago. We have the privilege of serving him.

Frederick Kempe:

And by the way, you noted that Secretary Moniz is in the audience, also a member of our International Advisory Board, former Secretary of Energy. It’s great to have you here, sir.

So you’re at the center of one of the defining questions of our time: Can America produce and deliver enough power quickly enough for the AI race without sacrificing reliability, affordability, and our climate ambitions? You’ve said the energy industry will change more in the next decade than in the previous century. Can you talk about that, the big picture? How is the rapid growth of AI data centers changing the way that Exelon works, utilities work, how you think about the grid?

Calvin Butler:

Yeah. I think the congressman did a wonderful job of framing the discussion. We are in a time of transformation. And let me tell you why I say that. One, the unprecedented load growth that we’re experiencing. Since I’ve been in the industry—and I started out right out of law school in the industry, and then I’ve been with Exelon for eighteen years—this was never a concern. You’d flat, or you would grow at best case scenario 1 to 2 percent.

So now with this load, and we have shaped our regulatory and legislative routines on that flat to moderate load growth. And our grid was very simple but complex: Simple in what we were asking it to do, to deliver electricity one way and let it function, and we would communicate with our customers.

Now you have a level of growth that we don’t have adequate supply to meet. You also are asking the grid to do something it has never done before: bidirectional communication and delivery. We’re taking load now. If you have rooftop solar, you’re giving back to the grid. If you have battery storage units, they’re harnessing this for peak demand. If you have your F-150, you’re plugging it up and you’re supplying power. So that is the complexity. And I didn’t even talk about all of the technology that is going on.

The data that we have and what we’re providing, that technology also makes the grid more efficient, but also more vulnerable. When you talk vulnerability around physical and cyber attacks, how do we manage that? How do we communicate to our customers? Those are all the things that are making this time for the energy sector transformational. But it’s also exciting, because when done well, it can benefit all customer classes, because we know how to do this. It has to be thoughtful. Thoughtful doesn’t mean slow. And it has to be very intentional about how we show up across the country in doing this. I think the grid is ready. We have the most reliable grid in the world. And I know the leaders of this industry are up to the challenge.

Frederick Kempe:

Thank you for that answer. I didn’t go through a long biographical introduction of you, and that was—

Calvin Butler:

Thank you.

Frederick Kempe:

No, but that was intentional because I want you to share a little bit what experiences you’ve been through that help you now. What’s fundamentally different about AI-driven electricity demand, how you see it from your past jobs? How is this different than previous waves of load growth? What does it mean for how you plan, how you invest? And then you were talking about the cyber threats—he cyber threats also come from AI. So how do you manage the grid differently?

Calvin Butler:

A lot in there. So let me try to frame it for you. And I’ll use Exelon as context, because I can speak to that. And I’ll talk a little bit about the industry. I just finished my term as chair of Edison Electric Institute, the investor-owned utility trade association. So I’ll give you a different perspective there.

Through 2029, we have committed to invest at Exelon $41.7 billion of capital. The industry has committed significantly larger overall to making sure we’re ready for this wave of growth. What’s different about this wave of growth right now is the speed at which it’s happening. Now, whether you think it’s ten times or five times, it’s significant.

So put that in perspective for those of you who don’t talk utility jargon all the time: I just shared with you that ComEd is the fourth largest utility in the nation. Peak demand of Commonwealth Edison in 2024 was twenty-three gigawatts. What’s a gigawatt? Think about one reactor. One nuclear reactor generates about one gigawatt of power. ComEd at peak demand was twenty-three gigawatts. We have estimated by 2030 we will add another thirty gigawatts to ComEd’s system.

That’s just Northern Illinois. That’s the level of growth that we’re talking about. So how do you manage that across the country and keep up with adequate supply? So when you say, “what’s different,” that’s the magnitude in which we’re talking. That’s what makes it different, and the speed at which it’s needed to go. Because as the congressman said, the speed is for technology innovation, but also, I would, argue national security. Because we do not want to fall behind in this race as we go forward.

You had also asked the question, about my background as a lawyer. It has helped. But it’s that regulatory and legislative space. And here’s the challenge. In the political sense, the congressman talked about the federal side. But on the state and local side, you run the race that you know. And over the past ten to twenty years, we’ve had that flat-to-low load growth. So your policies were centered around dealing with that.

Now, your policies have to change. The markets in which we operate, PJM, the largest regional transmission organization, works across thirteen states and 65 million customers. All of the utilities are deregulated, meaning that we don’t own generation. So now you’re in a time of load growth.

You’re trying to meet this demand. I’m responsible for delivering your electricity through transmission distribution, and I have none of the supply stack. So that’s why within the PJM marketplace, costs are higher than anywhere else in the country: Because the regulators haven’t adjusted accordingly to respond to this new era of demand. Because we’re still playing by the old rules to meet a new game. That is the challenge.

Frederick Kempe:

Thank you for that. I just want to mention for those listening to us—also those in the room—you can pose questions questions to askac.org. And I think we’ll also have a microphone in the room for questions later on. But I’ll look around for a signal on that.

The congressman talked about this. We had an Atlantic Council AI commission that reported out a little while ago from our Atlantic Council technology programs.

And the commissioners were really an impressive bunch, and together they represented close to a quarter of the US stock market. And what was really striking to me—we made some really fine recommendations, and I thought some of them were quite groundbreaking and interesting—but what was interesting is the commissioners worried most about public opinion toward AI, and that it was being not given high enough attention by public officials. And they gave some suggestions about how to address it. Part of this in a competitive sense is that the Chinese aren’t facing this. Singapore is not facing this. Even Europe doesn’t seem to be facing this level of it. How are you experiencing it and what do you do about it?

Calvin Butler:

It’s real. Public sentiment and backlash against data centers within their backyard is very real. I think what utilities do well is engage in local jurisdictions, our on-the-ground game, because we’ve been building infrastructure in communities for a long time. So we have to be connected to talk about siting of transmission distribution lines or substations. So it’s what we do. And I always say this: all politics is local. A congressman responds to me when he has local questions come up from his constituents, and we deal with it in the district. That’s how it should be done, and that’s how it is done.

What I think customers are saying more now than anything is that they want control. We always talk about the this: that any development, large or small, communities need to feel as if it is done with them instead of to them.

Right now, early on, the data center developments have been done to them. They would come home and they would see this construction, and many people would not know what was going on. And then they would ask the question, and they’d get the Heisman about, “hey, don’t worry about it, it’s going down, it’s going to add to our tax base. It’s going to be part of this,” and that was it.

What you are seeing, I think, is the backlash to that because of all the red flags. Now, whether the red flags are genuine or not doesn’t matter because they’re concerns, and to not address those concerns would be missing the point. We have to have the conversation.

We have, as an industry, worked with the data center developers and the hyperscalers about how we need to show up together, but more importantly, what they can do in the communities in which they operate. And we can give you examples of when it’s done right. But unfortunately, there’s a lot of examples of when it’s not.

I do believe when done well, responsible growth, responsible development can benefit everyone. But that narrative has been pushed down so far, it doesn’t bubble up.

And I also believe a lot of this discussion is also centered around people’s concern with AI. People’s concern that they’re going to lose jobs, that where does this go from here? What I’m concerned with, and you didn’t ask this part of the question, but I’ll tell you, is that some communities, because of this narrative, will lose out on the development opportunities: The community benefits agreements that come with it, the tax base. And they will go to other communities that are welcoming. And what will happen is that those communities who need it most from a tax base perspective, job creation, will be left out once again.

So we are on the forefront of advocating responsible growth, responsible build out, and community benefits agreements that benefit those communities if you’re going to show up. And the data centers have done a wonderful job in signing a ratepayer protection pledge that any new developments that we have put in, we’re going to pay for.

We’re going to make sure that any generation we need, we’ll bring our own. So you see that the tide is shifting, but we lost the narrative up front, and it’s tough to get it back, to get that genie back in the bottle. One of the things that we did within our company, is we structured what we call a transmission security agreement—that has been reaffirmed by FERC [Federal Energy Regulatory Commission] as a best practice,—where any developer commits to 80 percent of their revenue over a ten-year period and they put a line of credit up.

Why is that important? Because as you know, the building of the initial investment in the initial infrastructure is only one piece. You have to continue to build out over the years. And we want to protect the homeowners and small businesses so that they do not end up carrying that burden in case that load never materializes. That’s key because you’re not going to be happy at Pepco if I go out and put one billion dollars in infrastructure and that data center runs for two years, because it’s going to go back to you.

So, what can we do? And so, for six projects, we were able to collect or get a line of credit of one billion dollars from these developers saying, “we’re on the hook for this and we’re committed to it.”

Frederick Kempe:

So there are so many questions coming in, and this is really interesting and telling to me because, I’m telling you, if a couple of years [ago] I would be doing an interview with the CEO of a utility or utilities, I wouldn’t have this number of questions coming in.

Calvin Butler:

Lucky me.

Frederick Kempe:

But, a lot of them refer to things you’ve answered, but they go a little bit deeper. So let me tee up one of them here.

Calvin Butler:

Sure.

Frederick Kempe:

I have a way of showing this too. Yeah. Anyway, I’ll read it here. Exelon’s utilities are fielding an enormous queue of data center interconnection requests. How do you separate speculative load from real demand and what happens to planning and ratepayers if forecasts prove too high?

Calvin Butler:

Great question. I just alluded to that, but let me put a little finer detail. I see Gil Quiniones, our CEO of ComEd, who was one of the leaders in this process.

So initially, let me just paint it for you. We put a process in place—what we call the cluster studies—where every developer has an opportunity to submit a million-dollar investment to get engineering study and so forth to get into that cluster. That cluster takes a few months for us to vet it out, to say, “where are you gonna site it, what are you gonna do,” and so forth. And once the cluster’s done, we go back to that developer and we say, “hey, you’ve been done, you’ve been done, but now you need to submit that paperwork or that line of credit to meet that 80 percent of revenue over the ten years.”

And what’s amazing, is that you find out what’s speculative or not because they will fall out before they give you that letter of credit. So it’s working just as it’s intended. My last earnings call, I believe we went from roughly thirty-three gigawatts, thirty-four gigawatts of expected load down to eighteen. And everyone said, “oh no,” but that’s why it works. Because you do not want to build out on speculation. You want real load, and the real developers are going to show up, and they’re happy with it because it cleans out the noise and the queue. That’s how we’re dealing with it, and it’s working, and that’s a significant load. But when you go down because everybody’s chasing the next horizon, from thirty-eight to eleven, they’re like, “oh, look at that.” No, that’s exactly how it should happen.

Frederick Kempe:

So question from Zach Valdez, along the same lines, of NEMA: You can strengthen the grid and supply chain without raising costs for existing customers?

Calvin Butler:

No. No, you can’t. So let me be very clear. I just told you: we’re investing $41.7 billion in through 2029, and I’m a part of that cost increase. So the ability to manage reliability, affordability, and sustainability all have to coexist.

So what does that mean? 75 percent of all my bill increases for my customers are because of the supply and demand issue. It’s a supply. But that still leaves a portion of that that I’m responsible for. You can’t get there and have a resilient grid if you don’t invest in the grid. You can’t get there and have a reliable grid with all the storms that are coming out more often than not. You can’t get there and say, I want a new load, a new tax base, and economic development without investing in the grid.

So make no mistake. Zach asked a great question. I’m not saying it’s an either/or, but you have to balance it. And how we’re balancing it is very clear. We came out with our Exelon Promise, and we said, look, we’re going to help control our costs. At the end of this year, we will have taken out one billion dollars of operations and maintenance costs out of our system. You say, one billion dollars, what does that mean? We do know this: for every dollar of O&M I take out, I can invest seven to eight in capital without increasing my customer bills.

So that’s eight billion dollars I’m going to invest in the grid without increasing your bill. I committed to another $350 million out in 2027. That is showing my regulators and legislators that I’m showing up as a partner.

But you can’t get there, you can’t expect me not to invest and have the number one, two, four, and seven most reliable utilities in the nation. Now, you have to determine, they have to determine, whether that’s valuable to them. I think it is.

Frederick Kempe:

Thank you for that answer. So I guess we’ve run out of time. I’ve been misreading my list here thinking that we could go on for another hour. There’s so many other questions.

Calvin Butler:

Another hour.

Frederick Kempe:

Do you know anything about Tokyo Bay Disney EPCOT Sea Academy? I have a question from Japan of all places.

Calvin Butler:

No, sir.

Frederick Kempe:

I think we may skip that because he’s asking for—well, just for fun. You know, we—you know, this is great. We got people listening in from Japan. Uh, should Tokyo Bay Disney EPCOT Sea Academy Consortium: “Will using AI be managed with adequate energy security and resilience infrastructures powered by LNGs, SMRs, or solar cell battery power semiconductors?” I think it’s an interesting question because he’s basically picking out the various choices that one has to make.

Calvin Butler:

Good luck.

Frederick Kempe:

Nothing on this one? OK. Then let me add the last question. Are we overestimating what we’re going to need in energy? And this gets to the question of whether AI itself could make the power system more efficient through better forecasting, optimization, demand management, and software. Where do you see the most promising applications today and in the future? What are the biggest barriers to deploying these technologies at scale? And maybe we’ll end there.

Calvin Butler:

It’s a great question. I believe technology can be an enhancer for all of us, and the grids included. I believe by working with the tech companies, we will have an opportunity to get better, and we should push ourselves to be more efficient and students of their technology on how to get it. You notice I’m not even going to talk about how we will deploy AI within our business to transform it. I’m talking about the grid.

We will learn from them on how to be more efficient in getting it done. Grid-enhancing technologies on the transmission system—we have a latent capacity within our system that needs to be fully utilized. I think technology and our technology partners will help us get there because the cheapest kilowatt is the one that’s never used.

So we have to continue to push that whole dynamic about how we get smarter and better. And that’s not gonna come from us. It’s going to come from our tech partners and the utilization of AI and so forth to manage our business.

The second thing I would tell you, how we interact with you, Fred, as a customer? Customers are experiencing their utilities differently today than yesterday. They no longer look at us as a utility company. They look at us as a service provider, just as you would with Amazon. They want their utilities to be a twenty-first century utility to show up. It’s no longer okay to wait for a four-hour window. Tell me what I need, how I communicate. If you want to talk to me, I should give you a live person. You should be able to get everything you need on your phone. That is the transition which we’re making, and we’re not there, but that is how our tech partners are helping us.

Frederick Kempe:

What an exciting time to be in your position. Thank you to Congressman Casten. Thank you to Calvin Butler, President and Chief Executive Officer of Exelon, and thank you all for being here.

Calvin Butler:

Thank you.