My inclination when learning about the proposed mega-utility company that would be created when NextEra Energy acquires Dominion Energy—and yes, that is what is proposed—was that this is the predictable growing distance from the consumer of companies that expand and merge and acquire in order to keep up with a federal regulating body that is way ahead of them.
However, I try to talk to people who know a thing or two regarding issues like this, and so I reached out to Dr. Bonner Cohen.
Dr. Cohen is a senior policy analyst with the Committee for a Constructive Tomorrow (CFACT), where he concentrates on energy, natural resources, and international relations. He also serves as a senior policy adviser with the Heartland Institute, senior fellow at the National Center for Public Policy Research, and as adjunct scholar at the Competitive Enterprise Institute.
He earned his B.A. from the University of Georgia and his Ph.D.—summa cum laude—from the University of Munich and is the author of two books, “The Green Wave: Environmentalism and Its Consequences” and “Marshall, Mao and Chiang: The American Mediations Effort in the Chinese Civil War,” and he takes my calls frequently.
Attached is an MP3 of the conversation we had, which is transcribed here. It has been lightly edited for clarity:
JOE THOMAS: Talk about the peril of a megalithic company. Their explanation is, oh, we have to merge because data centers. I’m getting a little weary of everything that happens in electricity these days being the fault of, or caused by, data centers. Am I wrong?
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BONNER COHEN: Data centers certainly provide an excuse in some cases, a reasonable explanation for some of what is going on. But what we have here, of course, is, as you pointed out, a mega-merger.
Two very large utilities—Florida-based NextEra being even larger than Dominion—want to merge. If they’re allowed to do so, and, by the way, that’s not a done deal, this thing has to pass regulatory muster in Virginia, the Carolinas, and Florida.
You can count on lawsuits—primarily from environmental groups—also being launched against this because even though NextEra and Dominion have paid proper homage to so-called green energy, both also have very strong commitments to natural gas.
That is something that the environmental groups obviously oppose. They will take this to court. This thing isn’t going to happen overnight.
What is true in the data center angle of it is that Northern Virginia is, of course, ground zero for data centers, not just in the United States, but actually around the world. These data centers do demand a lot of electricity, and electricity ultimately is going to have to be created on-site. We can’t have a system whereby data centers draw electricity away from residential and commercial customers.
I think we are moving in that direction nationwide, irrespective of the proposed merger, simply because it’s going to be a necessity.
There is also, I think, a very considerable chance that ultimately data centers may end up orbiting the planet—something Elon Musk and Jeff Bezos are going to put a lot of intellectual property into—but there are engineering problems of a serious nature that need to be solved. That’s several years away at best.
JOE THOMAS: The idea that it’s going to sap into the average Joe and his radio show’s electricity is really, if I understand it—and we’ve had this conversation a little bit on abstract, Bonner—because of these Green Agenda, Clean America of 2030 restrictive plans that have had Dominion.
And I don’t know about NextEra, but Dominion certainly has been shuttering power plants and now trying to open new ones, and they keep facing headwinds on that. If data centers are tapping into my electricity, it’s because these groups, the green groups, have restricted that output. Am I wrong?
BONNER COHEN: Oh, no, not at all, in fact. Data centers require electricity 24/7, 365. They cannot deal with any interruptions whatsoever. In the current climate, you get that kind of electricity from natural gas. You get it from coal-fired power plants, and where possible, you get it from nuclear. Currently, there’s no other source for that.
JOE THOMAS: Bonner Cohen is on with CFACT, the Committee for a Constructive Tomorrow. Bonner, and I appreciate your time going into this Memorial Day weekend.
Is there an upside to the fact that this megacompany will probably be based out of Florida? That’s where NextEra is right now—and that Florida is, let’s just say, “more evolved constitutionally” than Virginia is at this moment?
BONNER COHEN: Yes, there’s certainly a much friendlier business climate—by the way, tax climate—in Florida than there is in Virginia. We say that with great regret, but that’s simply reality.
If I were a Virginia-based employee of Dominion, I would have worries about future employment opportunities. I must leave the state with the company because it makes a lot more sense to have the employees in Florida than it does in Virginia, because things are simply cheaper there.
The various regulations that are being imposed statewide in Virginia that raise the cost of employment are simply going to make Florida look more attractive.
Yes, I think having the company based in Florida is simply better than having the company based in Virginia, which has emerged in the past couple of decades as certainly more blue than red, more hostile to entrepreneurship, and a less business-friendly climate than Florida.
JOE THOMAS: So, Bonner, you were saying there are no other sources that can be that reliable. What about the data centers that say, hey, we’ll build our own? They all seem to be OK with this. I’ve talked to some industry groups that say, “We don’t have a problem building our own electric grid,” if you will, to feed just our needs and not bother the local utility at all—and, in some cases, generate power that can go back into the grid and actually strengthen it.
Why aren’t we talking about that more?
BONNER COHEN: Actually, we should be, because the Trump administration is pushing for this.
They recognize that data centers—which are not the most architecturally beautiful things in the world; you don’t really want to live next door to one—are absolutely essential when it comes to American competitiveness in the latest iteration of the Industrial Revolution, which is AI development. We don’t have the choice of doing these things or not doing them. It’s a matter of how it is to be done.
We put ourselves in a very disadvantageous position by shutting down so many coal-fired power plants, and the Biden administration was very eager to shut down as many natural gas-fired power plants as it could get away with.
So developers now recognize that they’re going to have to produce this stuff on-site. The practice is called “behind the meter,” so that you’re not drawing electricity from other people.
This can and will be done. Currently, there are 4,000 data centers in the United States, with another 3,000 pretty well along in the development process, though many are being challenged in court and what have you.
But they are going to have to become self-sustaining with respect to energy. I think they have absolutely the financial wherewithal to make that possible. And so that’s going to make them less of a threat to energy security than is currently the case, simply because they’ll be producing their own power.
JOE THOMAS: Well, you talk about security as well. I would rather have these data centers on American soil than, say, Russian or Chinese soil—because of our Bill of Rights, because there is an abstract ability to protect people’s privacy and that kind of thing in a data center that’s in the United States more so than there is one that’s in Beijing, certainly, Bonner?
BONNER COHEN: Oh, certainly. We have something in the United States called the rule of law.
Now, as we all know, it’s imperfect. We get judicial decisions with which we agree and judicial decisions with which we do not. But nevertheless, there’s a rule of law here. There is none in China. There is none in Russia.
We also have a level of technological sophistication here that is superior to what you will find in Russia—and, by the way, also superior to what you’ll find in China.
We can do things that they cannot do, and we can also do them with participation from the public—something that is not possible in China.
Not all that participation here is desirable, because that also means endless lawsuits, but that’s the world in which we live.
JOE THOMAS: Bonner, what is the peril to a Virginian, a Floridian, or anyone in the Carolinas of this merger blowing up our rates and making it even more expensive to get our electricity?
BONNER COHEN: That isn’t necessarily going to be the case, provided that this new entity puts a focus on real energy—not wind, not solar, not batteries.
In its infinite wisdom, the Virginia General Assembly just amended the Virginia Clean Energy Act to provide more battery storage. No energy is produced by battery storage. That’s making a utility put resources into something that does not really produce energy.
We publish a variety of perspectives. Nothing written here is to be construed as representing the views of the Daily Signal.
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