Unknown: Thanks, guys.
Unknown: See you next time.
Unknown: relating those down here
Unknown: So, here we are
Unknown: Chancellor
Unknown: Five seconds please, five seconds.
Unknown: Good evening and welcome to the Strategic Development Committee and Special Board Meeting
SPEAKER_09: of February 10, 2026.
SPEAKER_09: This room is equipped with a safety alarm.
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SPEAKER_09: the dais.
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SPEAKER_09: This meeting is being recorded and can be accessed on SMUD's website.
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SPEAKER_09: ends.
SPEAKER_09: Chief Legal Officer, please conduct the roll call.
SPEAKER_01: Chair Herbert.
SPEAKER_01: I apologize.
SPEAKER_01: Director Herbert?
SPEAKER_01: Here.
SPEAKER_01: Director Fishman?
SPEAKER_01: Here.
Unknown: Chair Samborn?
SPEAKER_01: Here.
SPEAKER_01: All committee members are present.
SPEAKER_01: Also present are directors Louie Thompson, Kerth, and President DeMaio.
SPEAKER_09: Thank you so much.
SPEAKER_09: Tonight we have on our agenda the board is going to have an internal and external presentations
SPEAKER_09: on large load grid integration and artificial intelligence.
SPEAKER_09: And we are very excited.
SPEAKER_09: We have our staff presenter is James Frazier, Director of Research and Development Grants
SPEAKER_09: and Partnerships.
Unknown: And we are going to have Ilya, I hope I say this correctly, Terna Kowski, the Senior Researcher
SPEAKER_09: and Group Manager of Grid Planning and Analysis Center at NLR, the National Laboratory of
SPEAKER_09: the Rockies here to present this item.
SPEAKER_09: So go ahead and turn it over to you, James.
Unknown: Thank you.
Unknown: Excellent.
SPEAKER_00: Thank you for the introduction and appreciate the opportunity to speak to the board and
SPEAKER_00: the community tonight.
SPEAKER_00: Before I jump into the presentation, I want to talk just a little briefly about the agenda
SPEAKER_00: and what we're going to cover.
SPEAKER_00: Data centers, large load, AI, these are evolving conversations and rapidly evolving.
SPEAKER_00: The speed of technology in this space is mind boggling.
SPEAKER_00: And that's coming from someone who has spent a majority of their career in research and
SPEAKER_00: development endeavors at the leading edge of technology.
SPEAKER_00: That GPT was initially released at the very end of 2022.
SPEAKER_00: And now when we have conversations around technology, you can't help but have AI data
SPEAKER_00: centers and the growing load from those services be part of all of the conversations that we
SPEAKER_00: see both in the utility base and also in the community on a larger basis.
SPEAKER_00: Given the scope and scale of that dialogue, I just want to call out that tonight's conversation
SPEAKER_00: is really an opening dialogue around what is a very large conversation.
SPEAKER_00: If we don't cover all of the topics or all of the questions that folks are interested
SPEAKER_00: in, don't worry.
SPEAKER_00: There's going to be more opportunities to build this dialogue.
SPEAKER_00: We want to start with the foundational information.
SPEAKER_00: We want to build an understanding.
SPEAKER_00: We've invited our guests here from the National Lab of the Rockies to speak to some of the
SPEAKER_00: national landscape and technologies around this conversation.
SPEAKER_00: We're really hoping to build this dialogue forward.
SPEAKER_00: So to the extent that there's feedback, questions, other topics that we want to cover, we're
SPEAKER_00: very much listening and excited to keep diving into those.
SPEAKER_00: One thing that we can say for certain is that a year from now, two years from now, this
SPEAKER_00: conversation will be very different than it is today and this technology will have moved
SPEAKER_00: a significant distance forward.
SPEAKER_00: We're excited to be part of that.
SPEAKER_00: When we talk about data centers and we talk about Sacramento, it's a natural question
SPEAKER_00: of are data centers actually considering the area?
SPEAKER_00: If so, why Sacramento?
SPEAKER_00: Before we dive into what that conversation looks like on how many folks may be looking
SPEAKER_00: at Sacramento, I wanted to dive in and talk just a little bit about why those data centers
SPEAKER_00: are looking here.
SPEAKER_00: It's important that we start by understanding that not all data centers are the same.
SPEAKER_00: When we go back five, six, seven, eight years, a lot of the data centers that we see are
SPEAKER_00: focused on hosting websites or particular data servers or information exchanges.
SPEAKER_00: That's not the type of data center that we're talking about when we're talking about artificial
SPEAKER_00: intelligence.
SPEAKER_00: With artificial intelligence, there's really two types of data centers.
SPEAKER_00: On one side we have a training data center and on another side we have an inference data
SPEAKER_00: center.
SPEAKER_00: I want to bring that down a little bit to an analogy to kind of simplify that for folks.
SPEAKER_00: The training center is where the AI models are made.
SPEAKER_00: Think about that in the movie industry like Hollywood.
SPEAKER_00: It's where the actual production happens.
SPEAKER_00: It's where the animation happens.
SPEAKER_00: It's where you shoot the scene and then shoot it again and keep tuning it until you get
SPEAKER_00: it just right.
SPEAKER_00: At the end of that effort in that Hollywood studio, you're able to put that film in a
SPEAKER_00: can and then you distribute that can to movie theaters all around the country, all around
SPEAKER_00: the world and they unpack that and then they utilize the film on that can to actually show
SPEAKER_00: that movie to the end user.
SPEAKER_00: That user experience and that interaction that they have at the edge of the grid or at
SPEAKER_00: those local movie theaters, that's the inference.
SPEAKER_00: Our training data centers are massive complexes.
SPEAKER_00: They're taking in huge amounts of information from all over the world, from all of the data
SPEAKER_00: sources that they have access to.
SPEAKER_00: They're processing that.
SPEAKER_00: It's a huge computational resource.
SPEAKER_00: These facilities are often hundreds of megawatts and consume energy nearly 24-7, 365.
SPEAKER_00: Very steady load consumption.
SPEAKER_00: What you'll notice is that there's no user interaction.
SPEAKER_00: The output of that effort is the AI model.
SPEAKER_00: It is the chat GPT tool that is actually used by other data centers when you have that information
SPEAKER_00: exchange.
SPEAKER_00: On the inference side, you'll see that it's now a two-way data communication.
SPEAKER_00: It is a user's computer interacting with a data center to submit a question that a
SPEAKER_00: GPT engine or a large language model is going to provide a response to.
SPEAKER_00: It's a call center where a chat bot picks up the phone on the other side and you have
SPEAKER_00: a conversation.
SPEAKER_00: These are often high speed end use cases where latency matters.
SPEAKER_00: They're not nearly as large as the training centers and the load shapes at these sites
SPEAKER_00: are not nearly as steady.
SPEAKER_00: When folks are interacting with AI models, it has a lot to do with when they're at work
SPEAKER_00: and in the office, when they're at home on their home computer.
SPEAKER_00: Not so much 24-7, 365 overnight.
SPEAKER_00: Why is this difference important?
SPEAKER_00: It's because Sacramento, when we're thinking about data centers, is well suited for those
SPEAKER_00: inference data centers.
SPEAKER_00: We're very strategically located in Northern California with good access to the broader
SPEAKER_00: technology area for low latency communication.
SPEAKER_00: When you have a communication with a chat bot and you ask a question, it's not half
SPEAKER_00: a second before that response comes back which creates a very awkward type of conversation.
SPEAKER_00: It's near instantaneous.
SPEAKER_00: It creates the human type interface that folks are looking for when they're engaging with
SPEAKER_00: AI tools.
SPEAKER_00: We have more land availability than several areas of California, especially highly built
SPEAKER_00: out areas like the Bay Area, for example.
SPEAKER_00: Our low cost of energy is a major driver for this opportunity.
SPEAKER_00: I like to call that out because maintaining that low cost of energy is also a key theme
SPEAKER_00: for ensuring that this becomes a long-term destination for those data centers.
SPEAKER_00: When we think about what that looks like, it often boils down to what is the actual
SPEAKER_00: interest that we're seeing?
SPEAKER_00: How many inquiries are coming into the region and what is this conversation looking like?
SPEAKER_00: The thing there is that it turns out it's not as simple to answer that question of how
SPEAKER_00: many people called and asked if they could build a data center.
SPEAKER_00: How many megawatts are we looking at?
SPEAKER_00: Because there's different scales of those inquiries.
SPEAKER_00: At the national level, if we think about all the inquiries that are coming into our regional
SPEAKER_00: partners, the local governments or the economic development councils that represent the region,
SPEAKER_00: that number might be over 2,000 megawatts, a massive number.
SPEAKER_00: But it's important to understand that in that 2,000 megawatts, there are site selectors
SPEAKER_00: for large hyperscalers that are sending out that same inquiry to hundreds of sites across
SPEAKER_00: the entire country.
SPEAKER_00: They're lurking for preliminary information.
SPEAKER_00: They're kicking the tires.
SPEAKER_00: These aren't what we would consider genuine requests for service.
SPEAKER_00: But it is a conversation that they are looking to start and it is information that they
SPEAKER_00: are looking to collect from the region, whether that's SMUD or our other regional partners
SPEAKER_00: and local governments.
SPEAKER_00: It does create a resource burden.
SPEAKER_00: When we boil that down to regional interest, we start to think about what does the customer
SPEAKER_00: count look like or what does the capacity look like where they maybe aren't reaching
SPEAKER_00: out to the region in general, but they're starting to reach out to SMUD directly.
SPEAKER_00: It's a phone call.
SPEAKER_00: It's an email.
SPEAKER_00: That probably cuts that number at the national level in half, from over 2,000 down closer
SPEAKER_00: to 1,000.
SPEAKER_00: A much smaller number, but still a significant number.
SPEAKER_00: Important at this stage, we're not talking about somebody calling in and saying, I'm
SPEAKER_00: interested in address 1234 and I want to know about your load serving capability.
SPEAKER_00: It's a very high level conversation.
SPEAKER_00: It's not a detailed exchange, often still with these site selectors that are looking
SPEAKER_00: at hundreds of sites across the country.
SPEAKER_00: We then boil it down one level further to where we're talking about actual site interest,
SPEAKER_00: actual service requests.
SPEAKER_00: What we can say is what started as that 2,000 number at that national level, which was not
SPEAKER_00: a realistic number.
SPEAKER_00: When we get down to this specific site interest, we're now talking about something on the order
SPEAKER_00: of a couple hundred megawatts, which feels small because I just prefaced that by starting
SPEAKER_00: this conversation at 2,000 megawatts.
SPEAKER_00: That is a considerable number and something that we would need to be very, very thoughtful
SPEAKER_00: about in terms of how we plan and how we approach that opportunity.
SPEAKER_00: In order to be successful in this space, we need to make sure that we're quickly distinguishing
SPEAKER_00: between those speculative conversations and the real world conversations.
SPEAKER_00: Because from a resource standpoint, that's time that we're spending to get those responses
SPEAKER_00: out.
SPEAKER_00: That's resources that we're spending that could otherwise be committed to enhancing
SPEAKER_00: the service or bringing customers online that are earlier in the queue.
SPEAKER_00: The ability to respond quickly to these load serving questions also becomes critical.
SPEAKER_00: The industry around AI and data centers is moving so quickly.
SPEAKER_00: A lot of that is driven by a land grab type conversation of how quickly can I get my data
SPEAKER_00: center online?
SPEAKER_00: How quickly can I develop the compute needed to launch my service, to launch my business?
SPEAKER_00: There's a lot of interest in moving quickly.
SPEAKER_00: Understanding how we plan for that growth, but in planning for that growth, making sure
SPEAKER_00: that the data center customers or the large load customers that we're bringing online
SPEAKER_00: are sustained load growth.
SPEAKER_00: A customer that we help bring online that's here for two or three years and is tied in
SPEAKER_00: with a merger or an acquisition for a larger data center or doesn't have a sustainable
SPEAKER_00: business model has a significant risk that we need to be thoughtful about in terms of
SPEAKER_00: how we serve that load, how we commit investment into resources to bring that customer online.
SPEAKER_00: Because when we're successful and when these data centers grow, it does translate into
SPEAKER_00: regional economic growth.
SPEAKER_00: It does translate into new jobs.
SPEAKER_00: That's meaningful for us.
SPEAKER_00: It's meaningful for our community and the growth that we're trying to create for the
SPEAKER_00: region.
SPEAKER_00: Inference data centers, of particular note, are very interesting.
SPEAKER_00: Because while training data centers are very large facilities that run all the time, there's
SPEAKER_00: not a huge number of jobs associated with those.
SPEAKER_00: It's often largely construction, but not a lot of follow-on jobs and technical careers
SPEAKER_00: that are tied in with that.
SPEAKER_00: When we start talking about inference, inference also means that there's companies that are
SPEAKER_00: developing those technology solutions that are running on those inference data centers.
SPEAKER_00: There's software developers.
SPEAKER_00: There's coders.
SPEAKER_00: There are individuals that are actually doing the work to utilize those models to create
SPEAKER_00: those services.
SPEAKER_00: Those are jobs.
SPEAKER_00: Those are jobs that universities and colleges in our region are training for and that entrepreneurs
SPEAKER_00: are aspiring to deliver.
SPEAKER_00: To the extent that we are part of bringing these data centers here, especially inference
SPEAKER_00: data centers, we can be part of that economic growth story and we can be part of driving
SPEAKER_00: that job growth for the region.
SPEAKER_00: It's also important that we think about the alignment with other electrification sectors.
SPEAKER_00: If we go back three or four years, a lot of this conversation on capacity and load growth
SPEAKER_00: was centered around DC fast chargers, electric vehicle charging growth, and how we're going
SPEAKER_00: to serve the growing number of electric vehicles.
SPEAKER_00: We've recently passed 80,000 electric vehicles or plug-in vehicles now in territory and a
SPEAKER_00: significant number being adopted every single month in terms of percentage of new car purchases.
SPEAKER_00: That's still a growing load.
SPEAKER_00: That is still a capacity conversation that is happening and we can't have these dialogues
SPEAKER_00: in isolation of each other.
SPEAKER_00: We need to make sure that our electrification initiatives continue to be aligned with our
SPEAKER_00: growth strategies around data centers and how we're addressing both this opportunity
SPEAKER_00: but navigating those challenges of the resources and how we balance that.
SPEAKER_00: Part of that leads to what we're doing on the research and development side in terms
SPEAKER_00: of our R&D roadmap.
SPEAKER_00: The good news on the data center side of this conversation is that while data centers
SPEAKER_00: and AI are daunting, fast-moving technologies, at the core of these data centers are topics
SPEAKER_00: that we're very comfortable with from a research and development standpoint.
SPEAKER_00: Infrastructure utilization, cooling systems, demand flexibility, reliability, load management,
SPEAKER_00: these are all words that have been the centerpiece of pilots and technology work that we have
SPEAKER_00: done for the last 20 years or more at this organization.
SPEAKER_00: Energy efficiency has been a keystone for California, driven by the California Energy
SPEAKER_00: Commission for decades.
SPEAKER_00: Load flexibility and demand response are tools that we're utilizing to make best use of the
SPEAKER_00: infrastructure that we have and drive these solutions forward with limited investment
SPEAKER_00: and maximum affordability.
SPEAKER_00: We're also looking at on-site generation co-benefits.
SPEAKER_00: For data centers, uptime is a critical priority for them, which means that these data centers
SPEAKER_00: will be investing in backup power.
SPEAKER_00: They'll likely be investing in batteries or other energy storage technologies or solutions
SPEAKER_00: to the extent that we can partner with these data centers to utilize that technology to
SPEAKER_00: meet our grid requirements or to support our infrastructure during peak hours.
SPEAKER_00: That co-benefit where they maintain that reliability, that backup resource, but we can leverage
SPEAKER_00: that resource while they don't need it because we're providing reliable power to help support
SPEAKER_00: our market needs and our larger system needs, gives us pathways to collaboration and enhanced
SPEAKER_00: affordability for the overall portfolio.
SPEAKER_00: The bottom line here is that emerging technologies and advancements are something that we're
SPEAKER_00: anticipating in this space.
SPEAKER_00: It's a driver for a significant amount of our collaboration with folks like the National
SPEAKER_00: Lab of the Rockies and others in this space.
SPEAKER_00: Keeping our eye on the horizon from a research and development standpoint is a critical job
SPEAKER_00: that we have at hand and one that, while I use the word horizon, is only just barely
SPEAKER_00: on the horizon given the speed of the conversation that we're having.
SPEAKER_00: The last item that I want to touch here before I hand it off to our friends here from the
SPEAKER_00: lab is that it's not just the data center growth that we're having a conversation about.
SPEAKER_00: We're also very excited about the growth of the use of AI tools here at SMUD to the extent
SPEAKER_00: that these data centers are getting built, that more applications are being supported,
SPEAKER_00: that more innovation is happening in this space.
SPEAKER_00: It's driving the creation of new tools and we are embracing those tools here at SMUD.
SPEAKER_00: The tip of that spear is really our policies and governance as being at the heart of everything
SPEAKER_00: that we do with AI.
SPEAKER_00: We make sure that we're looking into all of the use cases and understanding those use
SPEAKER_00: cases and have appropriate controls in places.
SPEAKER_00: We bring those systems online.
SPEAKER_00: We're providing all of our employees training on how to utilize AI as a priority.
SPEAKER_00: It's not just enough to offer the tools, but making sure that individuals know how to use
SPEAKER_00: those tools.
SPEAKER_00: We have general purpose chatbots for our staff to engage with and our teams to engage with
SPEAKER_00: to help us brainstorm, draft papers, draft memos, reference material from the organization.
SPEAKER_00: For example, today I typed in Rule 16 because I wanted to make sure that I understood how
SPEAKER_00: Rule 16 would apply to data centers and making sure that I understood the cost correlation
SPEAKER_00: between bringing a new customer online and what their cost obligation was to pay for
SPEAKER_00: those services and facilities.
SPEAKER_00: That chat GPT tool or that SMUD GPT tool gave me the opportunity to quickly access
SPEAKER_00: that information, ask me follow-on questions about the different policies and procedures
SPEAKER_00: that I may also be interested in.
SPEAKER_00: SD2 about our competitive rates priority and how we have an underscored absolute priority
SPEAKER_00: of affordability and equity across our customer rates.
SPEAKER_00: Those are things that come to mind for me.
SPEAKER_00: With their GPT tools, it's able to actually be brought to the front with minimal effort
SPEAKER_00: and time and maximum efficiency to drive this conversation forward.
SPEAKER_00: We continue to customize these tools with our own material.
SPEAKER_00: All of the data that we're using within these tools starts here at SMUD, stays here at SMUD.
SPEAKER_00: This is not information that's going out to these large centers.
SPEAKER_00: We're keeping that here.
SPEAKER_00: We have a strong data custodianship over all of that information.
SPEAKER_00: Further beyond just chat bots, looking at applications and how we can enhance those
SPEAKER_00: services to not just be language but also image and workflows and overall operational
SPEAKER_00: efficiency.
SPEAKER_00: It's an area that we're very excited about.
SPEAKER_00: It's just the start of the conversation, but it's something that's moving very, very quickly.
SPEAKER_00: As an organization, we're very much embracing.
SPEAKER_00: We're excited for where this conversation is going and the opportunity to bring these
SPEAKER_00: types of customers and loads online and utilize these tools in a responsible way.
Unknown: Thank you, James.
SPEAKER_03: Real quickly, is the load associated with data centers, what percentage of it, I guess,
SPEAKER_03: is associated with the actual running the computers themselves, the servers versus the
SPEAKER_03: cooling?
SPEAKER_03: Is that different for a training data center versus an inference data center?
SPEAKER_03: Are we likely to see a difference in load for those facilities here seasonally, winter
SPEAKER_03: to summer?
SPEAKER_00: I can provide a general answer and then I will defer to the more technology experts
SPEAKER_00: and encourage you to re-ask that question.
SPEAKER_00: Cooling is a major load factor in the conversation.
SPEAKER_00: With cooling, the ramps and ebbs and flow in the load play a large part in the amount
SPEAKER_00: of cooling that is needed.
SPEAKER_00: For a learning data center, there is no ramp.
SPEAKER_00: It is maximum all the time.
SPEAKER_00: That becomes a significant load component.
SPEAKER_00: For an inference data center, it is not as significant because that ramp up only happens
SPEAKER_00: for a smaller period of time.
SPEAKER_00: There is a cool down window.
SPEAKER_03: Are these considered clean room facilities where you can't just bring in outside air
SPEAKER_00: when it's cool outside and cool them out?
SPEAKER_00: That's correct.
SPEAKER_00: A significant number of these facilities are also water cooled.
SPEAKER_00: It's not all forced air cooling.
SPEAKER_00: There are a number of different cooling solutions.
SPEAKER_00: In fact, some of the more newer technology is looking at potentially fully submerged
SPEAKER_00: cooling.
SPEAKER_00: The cooling space is an area where there is significant innovation going on.
SPEAKER_03: Thank you.
Unknown: Any other questions?
SPEAKER_09: I have a question.
Unknown: Sure.
SPEAKER_10: Say, James, help me remember here because I don't know this off the top of my head.
SPEAKER_10: Do we offer some kind of economic development rate to companies who come to locate here?
SPEAKER_10: At one point when I worked here, it was the number of jobs you created.
SPEAKER_10: I think we got rid of that.
SPEAKER_10: Can you bring me up to speed?
SPEAKER_00: We do have an economic development rate.
SPEAKER_00: That is to help drive new businesses and business growth and commercial development to the region.
SPEAKER_00: It is tied in with job growth.
SPEAKER_00: I don't know the specific percentages off the top of my head, but we could get you that
SPEAKER_00: additional information.
SPEAKER_00: What I do want to say is that the things that we got rid of or what you may be remembering
SPEAKER_00: back to is custom rate agreements.
SPEAKER_00: Custom rate agreements are not a standard offering.
SPEAKER_00: Any approval for a custom rate agreement would need to come back through the board for approval
SPEAKER_00: and governance.
Unknown: Thank you.
Unknown: Is that for any size contractor?
SPEAKER_00: Any custom agreement, yes.
Unknown: Great.
SPEAKER_09: Thank you so much.
SPEAKER_09: I think we are ready to move on to the rest.
SPEAKER_09: I'm sure more questions will come.
SPEAKER_09: Thanks for coming all the way from Colorado.
SPEAKER_05: Thank you.
SPEAKER_05: Great to be here.
SPEAKER_05: Thanks for having me.
SPEAKER_05: My name is Elliot Rynakowski.
SPEAKER_05: I'm from the National Laboratory of the Rockies.
SPEAKER_05: Here from Golden, Colorado.
SPEAKER_05: Really great to be with you today.
SPEAKER_05: I'll be talking about large load planning from a grid planning and analysis point of
SPEAKER_05: view.
SPEAKER_05: I come from the Grid Planning Analysis Center.
SPEAKER_05: I manage a group of researchers that develop models, tools, data sets for use within the
SPEAKER_05: National Laboratory Complex of the Department of Energy.
SPEAKER_05: Also we ensure that our tools and data are useful for regional planning authorities and
SPEAKER_05: utilities and municipal governments.
SPEAKER_05: Part of our mission is to get these capabilities out into the world and into industry.
SPEAKER_05: What we know and as Jay mentioned is that we've been working on the challenges of an
SPEAKER_05: evolving power sector for many years now.
SPEAKER_05: We know that the power system is changing.
SPEAKER_05: We know that technology does not stand still.
SPEAKER_05: We've been managing a changing supply side infrastructure.
SPEAKER_05: We've been managing extreme weather events on the power grid and planning for adoption
SPEAKER_05: of distributed energy resources, electric vehicles, a new suite of novel technologies
SPEAKER_05: that can provide generation on the supply side.
SPEAKER_05: At the same time, what we've seen over the last few years is that electricity demand
SPEAKER_05: is starting to grow in a rate that we haven't seen since the 90s.
SPEAKER_05: In different pockets of the United States, what we're seeing is growth both in magnitude
SPEAKER_05: and year over year percentage that we haven't seen since the 40s, 50s, and 60s in some cases
SPEAKER_05: when we have massive electrification of industry.
SPEAKER_05: That growth is in large part driven by data centers.
SPEAKER_05: Just in...
SPEAKER_05: Sorry, I'll skip ahead here for a second.
SPEAKER_05: Just in the end of 2023, we had about 4.5% of the U.S. electricity demand was attributed
SPEAKER_05: to data centers.
SPEAKER_05: There's a lot of uncertainty with that number, so I want to caveat all of these numbers and
SPEAKER_05: say that there are error bounds around them.
SPEAKER_05: The fact is that since the end of 2023, and if you look at the end of 2025, so in the
SPEAKER_05: course of just two years, we've had an explosion of data center capacity.
SPEAKER_05: We're now at about 47,000 megawatts across the U.S.
SPEAKER_05: Like all the numbers on this slide, take that with a grain of salt because there are big
SPEAKER_05: error bounds around them.
SPEAKER_05: What we do know is that the applications for new data centers, or the planned capacity
SPEAKER_05: and the capacity under construction, could see that number double by 2030.
SPEAKER_05: If we're going from 4.5% at the end of 2023, where we are today could be upwards of 7%
SPEAKER_05: across the U.S. and by 2030, between 6.7% and 12% of total U.S. energy consumption from
SPEAKER_05: data centers.
SPEAKER_05: That's really the challenge that we're dealing with is managing this growth within the bounds
SPEAKER_05: of the constraints that we put on the power system and on the consumer.
SPEAKER_05: To back up a second, a little bit about our laboratory's vision and the role that we play
SPEAKER_05: as a national laboratory.
SPEAKER_05: We focus on bringing best in class cutting edge grid planning and analysis capabilities,
SPEAKER_05: both in terms of technology and hardware testing, working with industry to test novel technologies
SPEAKER_05: in our laboratories and develop new capabilities, and to do analysis and applied analysis with
SPEAKER_05: utilities and with our industry partners.
SPEAKER_05: Across this space, we focus on a few pillars.
SPEAKER_05: We have abundance as one of the key visions of the Department of Energy is enabling load
SPEAKER_05: growth within the bounds of affordability and reliability.
SPEAKER_05: We ensure that when we are planning the system, we're not unduly burdening customers, and
SPEAKER_05: that we're ensuring a secure and reliable grid.
SPEAKER_05: Data centers are currently the largest source of growth for many utilities, but we see that,
SPEAKER_05: as James mentioned, other sources of growth are also continuing.
SPEAKER_05: In many places, electric vehicles are coming onto the grid, electrified industries as well.
SPEAKER_05: We do see technologies coming on that will further require the development of the system
SPEAKER_05: to require higher amounts of electricity.
SPEAKER_05: For example, hydrogen production from electrolyzers.
SPEAKER_05: I mentioned that data centers are growing, but they're also growing in size.
SPEAKER_05: What we're seeing is that the trend has been towards these very large training data centers
SPEAKER_05: that could be upwards of 100 megawatts per facility.
SPEAKER_05: If we're looking at inference data centers, those are smaller in size and closer to the
SPEAKER_05: grid edge, so closer to consumers, as James mentioned, to minimize that latency.
SPEAKER_05: One of the pathways to solve this challenge is to really understand the siting and how
SPEAKER_05: developers are thinking about their siting decisions.
SPEAKER_05: One of the ways we do that is we gather and understand data around the infrastructure
SPEAKER_05: that supports data centers.
SPEAKER_05: This map is from the Speed to Power Initiative that the National Lab of the Rockies implemented
SPEAKER_05: with the Department of Energy.
SPEAKER_05: It brings together a collection of data that is both nationwide and can provide insights
SPEAKER_05: for local governments and local utilities.
SPEAKER_05: It looks at transmission lines, high voltage transmission lines that can bring power to
SPEAKER_05: load centers.
SPEAKER_05: It also incorporates the data infrastructure and the fiber optic cables that move data
SPEAKER_05: between places and load centers across the country.
SPEAKER_05: The gray areas here are those data centers that are currently planned.
SPEAKER_05: Those are announced projects.
SPEAKER_05: You can see a lot of them are at such scales that we just haven't seen before added to
SPEAKER_05: the grid.
SPEAKER_09: I'm sorry, I'm having a really hard time with this slide in understanding what gray is.
SPEAKER_09: Are you talking about the white dots?
Unknown: Yes, so the gray bubbles.
SPEAKER_05: The gray bubbles are those data centers and those are the sizes of the data centers in
SPEAKER_05: terms of megawatts of capacity.
SPEAKER_05: Those are just the planned ones.
SPEAKER_05: All of the yellow and the orange dots, those are the capacity of the data centers that
SPEAKER_05: are currently existing.
SPEAKER_05: You can see the difference between the sizes of the historic builds and those builds that
SPEAKER_05: are coming on that are currently under construction.
SPEAKER_05: In many cases, they're double or triple the biggest ones that we've seen historically.
SPEAKER_09: It doesn't look like there's one really in California.
SPEAKER_09: It looks like there's a big one in Reno.
SPEAKER_05: That's what we see is under construction.
SPEAKER_05: These data are not complete of all applications.
SPEAKER_05: We go through a process of screening those data sources to make sure that we're in this
SPEAKER_05: map only displaying those that are high confidence that are going to come online.
SPEAKER_05: In many cases, you don't see the smaller data centers that are inferenced because they're
SPEAKER_05: too small to see at the scale of this map.
Unknown: Thank you.
Unknown: Pills.
Unknown: As James mentioned, not all data centers are made the same.
SPEAKER_05: We talked about inference.
SPEAKER_05: We talked about training.
SPEAKER_05: We also know that we need to understand how those data centers will operate from an infrastructure
SPEAKER_05: point of view.
SPEAKER_05: Building out the infrastructure for a data center that's going to operate at 40% of its
SPEAKER_05: planned capacity will be very different from the infrastructure needed to power a data
SPEAKER_05: center that's going to be running full on in both cooling and compute demand.
SPEAKER_05: Getting that information from developers is a key challenge and something that we are
SPEAKER_05: seeing is more and more important from utilities as they manage this application process.
SPEAKER_05: We're seeing utilities explore different options for actually incentivizing large load developers
SPEAKER_05: to provide that data and to provide it accurately, both in terms of technical design and the
SPEAKER_05: likelihood of a project reaching maturity.
SPEAKER_05: One number that we can cite is that in ERCOT, they calculated that the percentage of large
SPEAKER_05: loads that were expected to be in service at the end of 2024, about half of them were
SPEAKER_05: actually in service shortly thereafter.
SPEAKER_05: The project realization stage can be highly uncertain.
Unknown: I'm sorry, just to clarify.
SPEAKER_09: You're saying that almost half didn't actually get online on time?
SPEAKER_05: That's right.
SPEAKER_09: What was that due to?
SPEAKER_05: There could be various reasons.
SPEAKER_05: It depends.
SPEAKER_05: That's some of these interconnection requests for speculative.
SPEAKER_05: It could be that they have energized behind the meter before they have an interconnection
SPEAKER_05: with the utility.
SPEAKER_05: Another trend that we're seeing is that utilities are increasingly being challenged to be proactive
SPEAKER_05: in communicating to data center developers where they should be looking to connect so
SPEAKER_05: that we can more efficiently utilize the latent grid capacity that exists on the network and
SPEAKER_05: more proactively screen projects so that we can efficiently manage that interconnection
SPEAKER_05: process.
SPEAKER_05: Part of providing this information to data centers is understanding what they're looking
SPEAKER_05: for.
SPEAKER_05: What we've seen from the industry is that there are three pillars of the data center
SPEAKER_05: developers problem is they're looking for speed.
SPEAKER_05: They want to interconnect and energize as quickly as possible.
SPEAKER_05: They're looking for high levels of reliability so they're trying to understand where is the
SPEAKER_05: infrastructure that will provide them with the reliability metrics that they're looking
SPEAKER_05: for.
SPEAKER_05: They're looking for market opportunities in many cases that is translated into low rates.
SPEAKER_05: They're understanding where are the opportunities for both low electricity rates but also their
SPEAKER_05: water and land costs.
SPEAKER_05: We can take that data center developer problem and bridge the gap with what utilities are
SPEAKER_05: concerned about into a framework around data center siting.
SPEAKER_05: We have a lot of experience in doing this across the industry.
SPEAKER_05: We have experience in doing this on the supply side with renewable energy technologies that
SPEAKER_05: also have this interconnection queue process and siting challenges.
SPEAKER_05: We can apply that to the data center siting problem.
SPEAKER_05: In applying this framework, we can narrow down where are those locations where data
SPEAKER_05: centers in the short and medium term would be most efficient to integrate into the network.
SPEAKER_05: If we apply this to a national scale, we can identify where are those locations that might
SPEAKER_05: have those low hanging fruit opportunities.
SPEAKER_05: We can then take this framework and apply it to each individual municipality or state
SPEAKER_05: government so that they can tune the metrics that are most impactful to their policies
SPEAKER_05: and regulations and goals.
SPEAKER_09: So prioritizing long haul fiber connectivity, we have that here.
SPEAKER_09: And then access to natural gas, why that?
SPEAKER_05: In many cases, data center developers are interested in building natural gas generation
SPEAKER_05: behind the meter or inside the fence line.
Unknown: Good to know.
SPEAKER_05: Part of that is a bridging power solution.
SPEAKER_05: One of their goals is to speak to power.
SPEAKER_05: If they have an interconnection request that doesn't fill their full capacity that they
SPEAKER_05: want to bring online in the short term, they'll build some bridging power behind the meter
SPEAKER_05: and power it up either through mobile gas generators or through generators that they
SPEAKER_05: then use as backup power once the full grid connection is available.
Unknown: And I heard these diesel generators is backup a lot too?
Unknown: Yes.
SPEAKER_05: Yes.
Unknown: Thank you.
Unknown: So once we take that siting question, we can then apply our system reliability metrics
SPEAKER_05: and really think about evaluating how we maintain reliability and what opportunities there are
SPEAKER_05: for data centers to contribute to the reliability of the network and ensure that they are participating
SPEAKER_05: as what I would call a good grid citizen in upholding their reliability.
SPEAKER_05: So we think of reliability in four categories or four main pillars.
SPEAKER_05: One of them is capacity, so ensuring that you have adequate resources to meet the demands
SPEAKER_05: that are coming online.
SPEAKER_05: Another one is flexibility.
SPEAKER_05: So when in operations, once the data centers are energized and operating, do they have
SPEAKER_05: the ability to uphold the flexibility that the system needs to stay reliable on an hourly
SPEAKER_05: and weekly and monthly basis?
SPEAKER_05: And then stability questions.
SPEAKER_05: So on a more electrical engineering dimension, can they maintain the frequency of the system
SPEAKER_05: and the local voltage so that power quality remains high and then you have high reliability
SPEAKER_05: for all of the customers on the network?
SPEAKER_05: So one of the opportunities that we see is really evaluating what is the existing transmission
SPEAKER_05: hosting capacity and using novel technologies, like grid-enhancing technologies, one of
SPEAKER_05: those is dynamic line ratings.
SPEAKER_05: So that's a way of really evaluating what is the existing capacity of the transmission
SPEAKER_05: grid and using data to dynamically understand the latent hosting capacity that is there
SPEAKER_05: in the network so that you don't have to build new infrastructure in all cases.
SPEAKER_05: And one of the ways we do that is we apply our weather modeling and dynamic modeling
SPEAKER_05: of the heat of the network to understand where are there opportunities to increase the rating
SPEAKER_05: of existing lines.
SPEAKER_05: What we also see is that many data centers are connecting to the distribution system
SPEAKER_05: and at some level there will be a distribution system component to all data center interconnections.
SPEAKER_05: And distribution system reliability is often the source of reliability challenges.
SPEAKER_05: So what this figure shows is that the metric of reliability in terms of major interruptions
SPEAKER_05: on average for a year is actually a bigger challenge on the distribution system than
SPEAKER_05: it is at the high voltage bulk power system.
SPEAKER_05: And those are the blue bars there.
SPEAKER_05: The dark blue bars are interruptions in terms of minutes for an average number of minutes
SPEAKER_05: for a customer without major events and the light blue bars is if you add major events.
SPEAKER_05: So that distribution system reliability metric kind of pales the bulk power system.
Unknown: And so what we see is that there are different mechanisms for designing distribution systems
SPEAKER_05: to provide higher levels of reliability.
SPEAKER_05: This is an active area of work is bolstering the reliability of the distribution system
SPEAKER_05: that serves the data centers.
SPEAKER_05: But even with higher levels of reliability we're seeing that data centers are targeting
SPEAKER_05: reliability levels that are even higher than what we can do in the best designs that are
SPEAKER_05: currently in place.
SPEAKER_05: So that kind of four nines of reliability is what many data centers are targeting.
SPEAKER_05: And even higher levels, right, five nines or six nines.
SPEAKER_05: And that could be achieved with more behind the meter generation but of course that comes
SPEAKER_05: with tradeoffs.
SPEAKER_05: And then on the data center interconnection study process when we're evaluating how these
SPEAKER_05: data centers will impact reliability there's a real opportunity to use AI and incorporate
SPEAKER_05: AI into that process to speed that interconnection study timeline which is often a bottleneck
SPEAKER_05: and causes extra costs.
SPEAKER_05: And one novel application that we're seeing is injecting sort of AI in screening interconnection
SPEAKER_05: applications so that we can more quickly move through them and save time both for developers
SPEAKER_05: and for utilities in doing that study process.
SPEAKER_05: And then finally a really active area of work in the industry is to understand how we can
SPEAKER_05: evaluate large load customers in terms of their impacts on the wider customer base.
SPEAKER_05: And do understand their impacts on utility revenue requirements and utility rate design.
SPEAKER_05: Now utilities can design rates to ensure that customers can maintain affordable rates across
SPEAKER_05: customer classes.
SPEAKER_05: So in summary, you know, we've covered a lot of bases.
SPEAKER_05: We've kind of covered a large scope of the types of analysis that is currently being
SPEAKER_05: applied to this data center challenge.
SPEAKER_05: And what this requires is really solutions from the grid edge so understanding what the
SPEAKER_05: needs are at the customer interconnection point for data centers up to the regional
SPEAKER_05: and national scale planning that happens to understand what are the infrastructure requirements
SPEAKER_05: to meet these data center demands while maintaining those guardrails of affordability and reliability.
SPEAKER_05: So with that, I'm happy to take any questions.
Unknown: Any questions?
SPEAKER_03: We hear all the time that I mean, I forget which organization it is that's restarting
SPEAKER_03: Three Mile Island or one of the units of Three Mile Island.
SPEAKER_03: Everybody else is investing in fusion technology in Virginia.
SPEAKER_03: I mean, these are huge investments.
SPEAKER_03: And they're, I mean, there's still three, four, five years down the line at best and
SPEAKER_03: probably more like 10.
SPEAKER_03: I guess I'm a little boggled by that.
SPEAKER_03: And where else are you seeing that kind of interest in that large scale of investment?
SPEAKER_05: Yeah.
SPEAKER_05: Well, so what we're seeing is that developers are now still very interested in that area
SPEAKER_05: around Northern Virginia, but now starting to look at other parts of the country and
SPEAKER_05: very actively looking at other parts of the country where they can get faster speed to
SPEAKER_05: power and maintain low rates.
SPEAKER_05: And those are what are driving some of the big announcements of generator contracts
SPEAKER_05: and new generator procurement.
SPEAKER_05: What I'll say about the Three Mile Island example is that that is capacity that has
SPEAKER_05: already existed in the grid.
SPEAKER_05: And so that is some latent capacity that data center can look at to utilize.
SPEAKER_05: But what we'll need as this capacity grows is new capacity on the grid, right?
SPEAKER_05: Because at some point we'll exhaust and we're, I think, in the foreseeable future seeing
SPEAKER_05: that exhaustion of what is already built in the grid and we'll need new capacity.
SPEAKER_03: This is really more a question for my colleagues, I guess.
SPEAKER_03: Something we've made this zero carbon promise to our customers by 2030.
SPEAKER_03: What if somebody came to us and said, we'll give you $250 million for one of your power
SPEAKER_03: plants in South Sacramento.
SPEAKER_03: It's no longer yours.
SPEAKER_03: You're not producing any carbon.
SPEAKER_03: We need it.
SPEAKER_03: We're going to put in a 200 megawatt data center.
SPEAKER_03: And you can use the $250 million to keep your rates low or to invest in other zero carbon
SPEAKER_03: technology someplace.
Unknown: I'm really glad you brought that up because I will be bringing up an idea that I had about
SPEAKER_09: this that I think we need to actually do in ad hoc because there's so much around this
SPEAKER_09: that I think we need to dig into with the staff about the siting of these large facilities.
SPEAKER_09: I have like 100 questions by myself.
SPEAKER_09: So I just feel like there's no way we can get through all the detail.
Unknown: I mean, there's so many questions here.
SPEAKER_09: We could go on for hours.
SPEAKER_09: So that's my suggestion is that we do not have...
SPEAKER_09: I didn't expect an answer.
SPEAKER_03: But that is that.
SPEAKER_09: I'm glad you brought it up because I was going to bring it up anyway.
Unknown: But we can talk about that at the end.
SPEAKER_10: I'm just wondering what is it that an ad hoc committee would do?
SPEAKER_10: We've already heard about what's going on in the country.
SPEAKER_10: We've heard from our James telling us that we're getting some requests but not huge.
SPEAKER_10: I'm just...
SPEAKER_10: I'm confused about what it is that you want to study.
SPEAKER_09: Well, I'll ask this question.
SPEAKER_09: How many jurisdictions in this country have a policy about siting of data centers?
SPEAKER_05: It depends on what you mean by policy.
SPEAKER_05: But I would say that this is an active area of work across all utilities and state governments
SPEAKER_05: that we have worked with.
Unknown: Okay.
Unknown: Well, Greg and I both heard, Director Fishman and I, that we were at an event yesterday
SPEAKER_09: where we met with Sud, who is a gentleman we've known from other events.
SPEAKER_09: And he was saying that I think that San Jose has their own in their general plan siting
SPEAKER_09: policy for data centers.
SPEAKER_09: He's a city council member for Santa Clara.
SPEAKER_03: Santa Clara, sorry.
SPEAKER_03: And so he's on the Santa Clara utility.
SPEAKER_09: So I guess one of the things I would like to do in an ad hoc is gather up the policies
SPEAKER_09: that we've seen other jurisdictions do and contact them and investigate what policies
SPEAKER_09: do they have.
SPEAKER_09: Do they have them?
SPEAKER_09: Was something useful in there?
SPEAKER_09: This is a big deal.
SPEAKER_09: And if we're going to, we've already had our customers come and say, I still live in Texas,
SPEAKER_09: our rates went way up because our jurisdiction enticed these companies to come here.
Unknown: They didn't create a lot of jobs.
Unknown: They created a huge amount of demand.
SPEAKER_09: And then they sent the rates up throughout the jurisdiction.
SPEAKER_09: I'm not interested in a cost shift.
SPEAKER_09: And I'm certainly not interested in making natural gas or turning on diesel generators
SPEAKER_09: when we've promised zero carbon by 2030 either.
SPEAKER_09: So I just think there's a lot of things that we could look at as in an ad hoc committee
Unknown: around whether we think there should be a large power request policy that the board
SPEAKER_09: gives to the staff to give them some parameters on where the board's at.
SPEAKER_10: I don't disagree with wanting to set some parameters.
SPEAKER_10: I absolutely do think we should have a policy.
SPEAKER_10: And I'll look forward to working on that in the policy committee.
SPEAKER_10: But I don't think that our staff doesn't have their arms around this.
SPEAKER_10: Again, I'm more than happy to have the board set a policy if there are those that feel
SPEAKER_10: that we need to do this.
SPEAKER_10: But we're not doing all of the fearful things.
SPEAKER_10: We're not running into agreements and making our customers pay for other infrastructure.
SPEAKER_10: We're not saying come to Sacramento County no matter who you are.
SPEAKER_10: We're actually setting guidelines.
SPEAKER_10: We have our staff that are talking to folks.
SPEAKER_10: So I feel like we are on top of this.
Unknown: However, I think it's always good to have policies.
SPEAKER_10: So I don't object to bringing a policy forward to the policy committee.
SPEAKER_09: Well, and again, ad hoc may not even suggest a policy, but it's worth investigating at least.
SPEAKER_09: Yes, Director Kurt.
Unknown: Actually, I speak to the policy question.
SPEAKER_02: I had a question for our guest here.
SPEAKER_02: So we're very proud of the fact that we have some of the lowest rates in California.
SPEAKER_02: But I'm mindful of the fact that they're much higher than many other states.
SPEAKER_02: And so just how attractive are local lower in their equations that these site selection
SPEAKER_02: committees are making for the data centers, how big a deal is that to them, the lower rates?
Unknown: Yeah.
SPEAKER_05: So I'm not an expert on Sacramento's rates relative to nearby jurisdictions.
SPEAKER_05: But what I will say is that rates are only one of the components or one of the metrics
SPEAKER_05: that data centers are interested in looking at.
SPEAKER_05: And in the prioritization order, they're not on top.
SPEAKER_05: So it's speed to power and getting energized is their primary concern, is what we're seeing.
Unknown: Okay, thanks.
SPEAKER_02: And to the policy question, we have 47 policies now.
SPEAKER_02: I think within those is all the guidance the staff already needs.
SPEAKER_02: And so I'm not sure that we need to add a 48th policy just to talk about data centers.
SPEAKER_02: But see what we can come up with.
SPEAKER_02: I could be convinced otherwise.
SPEAKER_02: Thanks.
Unknown: It sounded like one of the functions of the ad hoc committee was gathering data and information
SPEAKER_06: wrong with it.
SPEAKER_06: That sounds more like a staff function to me.
SPEAKER_06: I was hoping that we would start talking here about what kinds of things should we be thinking
SPEAKER_06: about and giving staff some direction of hey, can you get us some information about
SPEAKER_06: this question, about this question, about this question.
SPEAKER_06: I don't see that there's a need to have an ad hoc committee.
SPEAKER_06: I do think it's something that we need to explore more.
SPEAKER_06: And once we get more information, maybe a policy would come out of it or maybe not.
Unknown: What I hope is if people have questions, doubts, things like that, express them here.
SPEAKER_06: That's what I was hoping to get out of this particular meeting.
SPEAKER_06: Let's get those out on the table.
SPEAKER_06: We might not necessarily get answers at this point.
SPEAKER_06: But express our concerns.
SPEAKER_06: So, no.
SPEAKER_09: That's fine, too.
SPEAKER_09: I just have so many questions.
SPEAKER_09: I don't know where to begin, honestly.
SPEAKER_09: I would have to write them all down.
SPEAKER_09: We heard one of the Santa Clara conditions for a data center was they had to be carbon neutral.
SPEAKER_03: He also talked about the big difference is he's on the city council and they control
SPEAKER_03: the utility so they also have land use authority.
SPEAKER_03: So they were doing things like requiring, I forget exactly what, something about how
SPEAKER_03: much water they use and reducing water use.
SPEAKER_03: They had aesthetic aspects to the building.
SPEAKER_03: So it wasn't just another big white box somewhere.
SPEAKER_03: It had to look decent.
SPEAKER_03: We don't have that kind of authority.
SPEAKER_03: But I mean, I think, and I don't know if we even have the authority to require them to
SPEAKER_03: be carbon neutral.
SPEAKER_03: If somebody wants to build a business here and we can serve the load, I'm not sure that
SPEAKER_03: we can say, and you must be carbon neutral or you must be environmentally sensitive in
SPEAKER_03: other ways.
SPEAKER_03: I don't know if we have that authority.
SPEAKER_03: But I guess it's my question for Paul and maybe other staff who's here.
SPEAKER_03: How much more direction do you want from us in regards to our decision making about how,
SPEAKER_03: where, when, if we cite large loads, regardless of what kind they are?
SPEAKER_04: So I'll actually try to attempt to answer that.
SPEAKER_04: I think what it is is that when you talk about data centers, that is what we call general
SPEAKER_04: load increases, like just no different than industrial load.
SPEAKER_04: I think we have policies now that kind of give us, govern us how to work with those
SPEAKER_04: developers.
SPEAKER_04: I think the question actually came in because right now that you are beginning to see and
SPEAKER_04: maybe possibly in the future to see what happened if you have load coming at 100 megawatts,
SPEAKER_04: which is like five of our neighborhood substations.
SPEAKER_04: And the other piece too is that actually the load gets bigger than the whole conversation
SPEAKER_04: I think that we're thinking about is that we may be established really thinking about
SPEAKER_04: when you look at other policies as we're collecting right now, what is the best way for us to
SPEAKER_04: protect our ratepayers, our customers from stranding investments?
SPEAKER_04: And there's different ways to do that.
SPEAKER_04: I mean, some are out requiring, like certain jurisdictions are requiring the new load to
SPEAKER_04: come in and bring everything in upfront.
SPEAKER_04: And then as the load materializes through the years, then there was still, because you're
SPEAKER_04: collecting the revenue through the rates, then you slowly pay them back.
SPEAKER_04: Some is actually requiring them to put a big deposit in the escrow account and then
SPEAKER_04: say, well, you know what, after five years or 10 years, load is going to be there.
SPEAKER_04: We're covering our money, it's not stranding investment.
SPEAKER_04: You get them back.
SPEAKER_04: So I think what staff is looking at right now is when the large load is that we're looking
SPEAKER_04: at, well, first we as staff is actually reviewing the different policies, like, for example,
SPEAKER_04: people from Washington, Oregon, Virginia, Oklahoma, that right now are seeing the big
SPEAKER_04: and also a comment in the Chicago area.
SPEAKER_04: So we as staff is actually looking at those and say, you know, this is really what other
SPEAKER_04: jurisdictions and other cities are putting together.
SPEAKER_04: And we are looking at it to say, you know, what they're putting together, do we need
SPEAKER_04: to bring it back to the board?
SPEAKER_04: If we don't think the existing policy is not enough to giving us, or maybe we want the
SPEAKER_04: board's input, what is the best way to protect it?
SPEAKER_04: Is it collecting a bonds upfront?
SPEAKER_04: Is it, you know, do we just say, you know what, for this size, we're not going to take
SPEAKER_04: the risk at all.
SPEAKER_04: We're not going to spend $500 million, $300 million and expect it to happen.
SPEAKER_04: So we're thinking about from a staff perspective, maybe the best way for us to do it is let
SPEAKER_04: staff maybe do the analysis, see what policies out there compared to what we have.
SPEAKER_04: And then if we think there's a gap, there may be something that we will actually bring
SPEAKER_04: it back to the, you know, have a discussion with the board, maybe with the policy chair
SPEAKER_04: and say, hey, this is something that I think would be a really good board discussion to
SPEAKER_04: give staff directions, because sometime when you look at the different policies, there's
SPEAKER_04: just one way to do it.
SPEAKER_04: And maybe this is a good time, instead of staff making the decision and say, well, we're
SPEAKER_04: just going to make you pay everything upfront.
SPEAKER_04: Maybe we want to solicit the board's input and create a policy that we want the developer
SPEAKER_04: to pay it upfront and then pay it back through the years.
SPEAKER_04: And then here's some of the conditions that we've got to put into it.
SPEAKER_04: So this is what staff is thinking right now.
SPEAKER_04: So I mean, you can, I agree with, you know, President Tamayo that, you know, collecting
SPEAKER_04: some of the data right now is not, it wouldn't be useful for the ad hoc.
SPEAKER_04: But I think what would be useful is once we find all those information to bring it back
SPEAKER_04: to the policy committee and then have a conversation with the board.
SPEAKER_04: And then as part of the pre-brief, I mean, now the board actually have a chance, look
SPEAKER_04: at it and ask the questions to see how we do it.
SPEAKER_04: And just, you know, if look, hearing the conversation, this is what I recommend is
SPEAKER_04: maybe have staff do the collections of different policies out there compared to what we have.
SPEAKER_04: And then let staff make a determination and say, do we think we have the policy that we
SPEAKER_04: need to address it?
SPEAKER_04: Or maybe right now what we have is not enough to cover the big data center that's coming
SPEAKER_04: through.
SPEAKER_04: That is bringing their own, you know, their own, basically their own generation behind
SPEAKER_04: the meter.
SPEAKER_04: And do we want to set a policy on that?
SPEAKER_04: Because right now we don't have a policy, you know, we have an obligation to serve,
SPEAKER_04: and we don't really have a right to say, well, you're going to put 100 megawatts here, I'm
SPEAKER_04: going to bring my own backup generator with diesel.
SPEAKER_04: We don't really have, we don't really have any policy or anything that we can't serve
SPEAKER_04: you because it's not legal.
SPEAKER_04: So there's a lot of work to be done there.
SPEAKER_04: So I think I would suggest to the board is maybe we'll put this on the parking lot, let
SPEAKER_04: staff do the data collection and summarize is what we found, summarize compared to what
SPEAKER_04: we, you know, with existing policy and then maybe if it triggers some policy question
SPEAKER_04: that we need the board to have, we'll bring it back to the policy chair and say let's
SPEAKER_04: have a conversation.
SPEAKER_03: Paul, when you collect all that data, you can feed it into chat GPT and let it do the
SPEAKER_03: analysis.
SPEAKER_12: You know, Director Fisherman, it's funny that you say that.
SPEAKER_04: There's a lot of folks actually doing that and actually using that to say, you know,
SPEAKER_04: based on all those policies, give me a summary or take the best out of those and create a
SPEAKER_04: new policy and then with the different prompts, you can actually get it to write it for you.
SPEAKER_04: So that's possible.
SPEAKER_04: But we haven't got that, we haven't got that really.
SPEAKER_04: I see James back there smiling right now.
SPEAKER_04: Let staff decide the best way to do the analysis.
SPEAKER_03: Why do I suspect I know the answer?
SPEAKER_02: It'll be good.
SPEAKER_04: So would that satisfy the board?
SPEAKER_09: That's fine with me.
SPEAKER_09: I just want to get a lot more information about this and get it in the public sphere
SPEAKER_09: about where having a more robust discussion, I thought we might get more into details about
SPEAKER_09: like what kind of conditions might we want to have.
SPEAKER_09: If they're going to come in with these big load demands, are we going to say, you know,
SPEAKER_09: we need you to produce some of your power.
SPEAKER_09: We need you to do backup battery, not diesel.
SPEAKER_09: I mean, here we are promising our customers zero carbon and we're going to power the thing
SPEAKER_09: that's going to maybe start burning a bunch of diesel.
Unknown: I think the question is a little more complicated than that, right?
SPEAKER_04: Because a lot of data centers actually have operation requirements that they will last
SPEAKER_04: not more than what the battery can handle.
SPEAKER_04: So a lot of right now, when you actually look at data center operations, I don't know all
SPEAKER_04: the, because I don't run the data center, but I know there's actually rules and regulations
SPEAKER_04: about what they need to put in and what's allowable.
SPEAKER_04: But this gets to my point.
SPEAKER_09: Is that undermining our entire policy on zero carbon by 2030?
Unknown: I think these are just big questions we have to discuss.
SPEAKER_09: That's all.
SPEAKER_09: It's just not a one hour presentation.
SPEAKER_09: We're done.
SPEAKER_09: Like we have a lot more work to do on this.
SPEAKER_09: And at least in my book, I look forward to hearing from the staff and doing a lot more
SPEAKER_09: digging, but I would hope it'd be a mutually beneficial agreement if we do get these big
SPEAKER_09: guys coming in and it's not just a one way ticket and we just, you know, I just want
SPEAKER_09: to protect the repairs.
SPEAKER_04: I think we all do.
SPEAKER_04: So, but I guess fortunate for us right now that we are not getting those, I need a 500
SPEAKER_04: megawatt in 18 months.
SPEAKER_04: Well, our system can't handle it anyway because we just don't have such a massive system and
SPEAKER_04: we don't have a lot of spare capacity that we can actually do.
SPEAKER_04: And a lot of those I think, you know, you see, you actually put on there a lot of actually
SPEAKER_04: requires transmission, anything more than that, you know, to create it, you need to
SPEAKER_04: create transmission and transmission at least five years out.
SPEAKER_04: So I think this is really what I think is actually brought up a very good point.
SPEAKER_04: Right now, when we talk to the data centers, it is the speed to power.
SPEAKER_04: That's why they're bringing in and they're bypassing the utility saying that, well, we
SPEAKER_04: can't make it.
SPEAKER_04: Well, we're going to put our generation in and then when the grid gets ready, we'll switch
SPEAKER_04: it over.
SPEAKER_04: So whether we like that answer or not, that's actually happening in the industry right now.
Unknown: Can I ask how long do you think it will be in the parking lot before we can bring it
SPEAKER_04: back?
SPEAKER_04: I would say probably collecting the data probably a month or two and then we'll bring back because
SPEAKER_04: I don't think it's that hard to get the policy.
SPEAKER_04: The policy will just, it is what they have out there right now.
SPEAKER_04: And we know and we have access to those policies available.
SPEAKER_04: I think what's going to take time is for us to balance that against existing policies,
SPEAKER_04: everything that we have and say, is it sufficient or not sufficient or what are some of the
SPEAKER_04: questions that we need to bring back to the board for the board to actually give directions.
SPEAKER_04: So I would imagine no more than three months.
Unknown: That'd be great.
Unknown: I'm looking at staff right now before I speak.
SPEAKER_04: I see James nodding his head all over there.
SPEAKER_04: Yeah, because I don't think compiling the policy is going to take that long because
SPEAKER_04: they already exist.
SPEAKER_04: And then I think we know what kind of mechanisms available to not to have cost shift or protect
SPEAKER_04: cost shift.
SPEAKER_04: I think that's actually very straightforward.
SPEAKER_04: It is now bringing back and say, okay, well, if there's some of the things that you just
SPEAKER_04: asked in terms of what we bring on new load, what is the impact to our zero carbon plan?
SPEAKER_04: I think we can answer that because that actually happens on new load that we bring on now and
SPEAKER_04: we have policies on that now.
SPEAKER_04: So I think we can actually get a lot of, at least within three months, you actually get
SPEAKER_04: the first round of discussion.
SPEAKER_04: I don't know.
SPEAKER_04: We can answer every single question even on the next round, but I think we're definitely,
SPEAKER_04: within six months, I think we have a policy.
SPEAKER_07: Okay, that'd be great.
SPEAKER_07: I guess I was going to say, I think we have existing policies that can support what our
SPEAKER_07: goals are, but we also need to be careful because saying things like you can't put a
SPEAKER_07: gas generator because it goes against a zero carbon, you have to be very careful of that
SPEAKER_07: because not just with data centers, but any large facilities that are emergency care centers
SPEAKER_07: like hospitals, you can't say they can't put a gas generator because we have requirements
SPEAKER_07: to be up.
SPEAKER_07: You can't over dictate things like that because then it becomes a safety issue.
SPEAKER_07: I know in this room, we care about zero carbon by 2030, but people care about being alive
Unknown: and that trumps, I would say, most people's concerns.
SPEAKER_07: So we just need to tread lightly when we are over prescribing policy because you have to
SPEAKER_07: look at human life, safety, predictability and reliability, whether it's a data center
SPEAKER_07: or a hospital or what have you, we can't be reaching into or hearsay regulations and joint
SPEAKER_07: commission regulations which regulate many industries, especially healthcare, because
SPEAKER_07: we're here to serve and keep people alive generally today.
SPEAKER_07: So we need to be careful when dictating policies as to what we're allowing people to build
SPEAKER_07: on their sites to protect their business and the people that they serve.
SPEAKER_07: You have to remember that it's not just, it's a goal, remember, it's a zero carbon by 2030
SPEAKER_07: goal and goals of healthcare facilities and other facilities that serve humans, their
SPEAKER_07: goal is to keep people healthy and alive.
SPEAKER_07: So you just need to be careful about that.
SPEAKER_03: So absolutely, I think there's a difference between what kind of backup generator a facility
SPEAKER_03: puts in place and somebody who's coming in and saying we're going to do our own generation
SPEAKER_03: behind the meter to run 24 seven.
SPEAKER_03: So Laura, I guess I have a question for you and if it takes whatever amount of time to
SPEAKER_03: research it, we don't have the ability to say, sorry, you can't come in behind and build
SPEAKER_03: something behind the meter like that.
SPEAKER_03: Does a local land use authority or the air quality management district have the ability
SPEAKER_03: to say, no, you cannot build a data center with a 50 megawatt diesel generator that you're
SPEAKER_03: going to run 24 seven.
SPEAKER_03: I suspect somebody has the ability to say no, but I'm not sure who.
SPEAKER_08: It's Laura Lewis, Chief Legal and Government Affairs Officer.
SPEAKER_08: So SMUD has limited authority and we have an obligation to serve other entities like
SPEAKER_08: the California Energy Commission, the Air Resources Board.
SPEAKER_08: There's also federal permits that have to be acquired, for example, for the large data
SPEAKER_08: centers that have diesel generation, they have to have a permit to run those.
SPEAKER_08: So there's other regulatory agencies that ensure that if those things are built that
SPEAKER_08: they're properly permitted, but that's not within SMUD's purview.
SPEAKER_06: So I like the idea of identifying where we might have gaps.
SPEAKER_06: It strikes me that there's – the other thing I'd like to find out other than just policies,
SPEAKER_06: I'd like to see what sort of business models are out there of how – what the arrangements
SPEAKER_06: are between utilities and these data centers.
SPEAKER_06: I'm actually a little bit more interested in the – it sounds to me like from what
SPEAKER_06: James put forward, it sounds to me that we're a lot more likely to get the – and I forget
SPEAKER_06: the term for the smaller ones, the inference data centers.
SPEAKER_06: It sounds like that's a lot more likely based on our proximity to Silicon Valley and the
SPEAKER_06: state of California.
SPEAKER_06: And also because our rates are so much higher, it's hard to imagine that somebody's going
SPEAKER_06: to want to locate – buy our electricity when we might be twice as expensive as in
SPEAKER_06: Nevada or Nebraska or wherever they can get cheaper electricity.
SPEAKER_06: And when they don't – they don't – those big ones don't need to worry about the latency.
SPEAKER_06: They're just creating a product, right?
Unknown: But I would like to learn more about what those potential business models – and I'd
SPEAKER_06: like to learn more about what are we thinking, what are the different pathways that we might
SPEAKER_06: be thinking, and how do those help our system and then how – what are we thinking is the
SPEAKER_06: best way to protect our ratepayers from the stranded assets.
SPEAKER_06: So not just a compilation of policies, but what are we thinking about how we're going
SPEAKER_06: to do that?
SPEAKER_06: I think I'm kind of comforted that we're unlikely to attract those big data centers,
SPEAKER_06: but – because then we won't face those – at least not the same magnitude of the
SPEAKER_06: issues as some other places apparently are.
Unknown: So thanks.
Unknown: Thanks.
Unknown: And I just want to say I'm really glad that you brought this up, Chair Sanborn, because
SPEAKER_10: it is a topic that a lot of people are talking about.
SPEAKER_10: I really like the idea of having staff collect the different policies that are out there.
SPEAKER_10: I'd like to know a little bit about how other communities are handling this.
SPEAKER_10: And then a discussion back here would be good, because I think we all share the same
SPEAKER_10: goal that we don't want our ratepayers to have to pick up the tab for a new AI business.
SPEAKER_10: So I think this is good that we're talking about it, and I'm glad that it will come
SPEAKER_10: back.
Unknown: Yeah.
Unknown: Me too.
SPEAKER_09: And I do think that – I mean, I don't know if you saw that Europe is now really cracking
SPEAKER_09: down on the tech folks, and I think we've gone fairly unregulated, and I think that
SPEAKER_09: might change in the future as information gets out with what they're identifying in
SPEAKER_09: Europe.
Unknown: So a lot of things could change soon on the demand side too.
SPEAKER_09: So thank you.
SPEAKER_09: This was very helpful.
SPEAKER_09: I know I haven't gotten any comment cards.
SPEAKER_09: Do we have any public comments?
SPEAKER_09: We do have one comment from John.
SPEAKER_08: And John, are you there?
Unknown: John, are you there?
SPEAKER_09: You can please go ahead and speak.
Unknown: Yeah, this is John Weber.
SPEAKER_11: Can you hear me?
SPEAKER_09: We can, John.
SPEAKER_09: Great to hear you.
Unknown: Just so you know, there's a pretty significant delay when you say I can speak until I get
SPEAKER_11: the button that says unmute.
SPEAKER_11: So just so you know, we'll cover that in the future.
SPEAKER_11: Yeah, a couple of things.
SPEAKER_11: So good evening, Chair, Board and committee members.
SPEAKER_11: Thank you for the presentations from the staff and from the person from Colorado.
SPEAKER_11: So I would really like to know what are SMUD's plans for a new rate class for large data
SPEAKER_11: centers to ensure other classes aren't impacted with increasing bills.
SPEAKER_11: It seems like that's the best solution from the utilities have already dealt with this
SPEAKER_11: before is they set up a specific new class for large data centers.
SPEAKER_11: And that protects the rest of the data centers from increasing bills.
SPEAKER_11: And then also, what will the impact be for SMUD's commitment to zero carbon in 2030 if
SPEAKER_11: two or three 50 megawatt centers come in?
SPEAKER_11: Is SMUD still going to be able to meet the zero carbon commitment?
SPEAKER_11: So those are my things.
SPEAKER_11: I thought you had a very good discussion.
SPEAKER_11: Coming from Texas, there is no community that welcomes data centers.
SPEAKER_11: Every community in Texas has been fighting them, fighting them because their rates go
SPEAKER_11: up and mostly because of water.
SPEAKER_11: Water is very scarce now in Texas and they use a ton of water for cooling.
SPEAKER_11: So I don't think we should incentivize any of these.
SPEAKER_11: I think we should disincentivize them through a new rate class because I do think there
SPEAKER_11: will be huge massive public outcry if these data centers are built here because I've seen
SPEAKER_11: it already in Texas.
SPEAKER_11: I know Virginia is dealing with it and other places.
SPEAKER_11: Thank you and have a good evening.
SPEAKER_09: Thanks John.
SPEAKER_09: And comment noted.
SPEAKER_09: Yeah, I have, again, a lot of questions about the environmental stuff outside of the energy
SPEAKER_09: side.
SPEAKER_09: There's a lot more questions that are coming up from data centers and cancer clusters and
SPEAKER_09: a whole bunch of stuff from the water.
SPEAKER_09: And that's you can all read online.
SPEAKER_09: It's all there.
SPEAKER_09: Are there any other comments?
SPEAKER_09: No, they're not.
SPEAKER_09: Okay.
SPEAKER_09: And none in the room?
Unknown: Not now.
SPEAKER_09: Then I think we will go ahead.
SPEAKER_09: The next item on the agenda is public, well, I guess we'll wrap that one up.
SPEAKER_09: So I want to say thank you to James and to our friends from Colorado for coming all the
SPEAKER_09: way out and presenting to us.
SPEAKER_09: Thank you so much.
SPEAKER_09: So now we will go on to the public comment for items, not on the agenda if we have any.
SPEAKER_09: I do not see any hands raised.
SPEAKER_09: Okay.
SPEAKER_09: So if we don't have any more comments, written comments that are received on items not on
SPEAKER_09: the agenda will be included in the record if received within two hours at the end of
SPEAKER_09: the meeting.
SPEAKER_09: And this last item on the agenda is to provide a summary of committee direction.
SPEAKER_08: Staff will collect information about large load policies from other utilities, how utilities
SPEAKER_08: are partnering with data centers including potential business models as well as potential
SPEAKER_08: rates and agreements to protect existing customers and bring that information back to the board
SPEAKER_08: for discussion at a future policy committee meeting.
SPEAKER_08: And does that include what John just suggested, the rate class?
SPEAKER_09: Yeah, that would be the...
SPEAKER_09: Okay, good.
SPEAKER_09: Yeah.
SPEAKER_09: That's what I thought.
SPEAKER_09: Thank you.
SPEAKER_09: Okay.
SPEAKER_09: Fantastic.
Unknown: So with that, I think we can wrap up the meeting.
SPEAKER_09: And we will now enter into a closed session to discuss the recruitment process of our
SPEAKER_09: new CEO since Paul's decided to leave us pursuant to Section 54957B1 of the Government Code.
SPEAKER_09: Thank you so much.
SPEAKER_09: Have a good night.