Exelon CEO Calvin Butler sits down with CNBC's Brian Sullivan to talk the demand AI data centers are putting on the power grid and the possibility of looming shortages.

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Exelon CEO Calvin Butler has raised concerns about a likely power shortage in certain regions of the United States, citing the unprecedented surge in energy demand driven by artificial intelligence, data centers, on-shoring, and electrification. Butler points out that areas where utilities do not own generation assets, particularly within the PJM marketplace, are most at risk due to supply failing to keep up with demand.

To address these challenges, Butler notes that state governors are collaborating on proposals to increase generation and improve affordability for customers. He advocates for allowing utilities to re-enter the generation business and prioritizing investments in combined cycle gas turbines, community solar, and battery storage. Butler emphasizes the need for urgent, sustained action to prevent future power shortages and maintain grid reliability.

Exelon CEO Calvin Butler talks AI's power demand

Utilities, the third best performing sector so far this year, boosted by AI's voracious appetite for energy. Now companies are spending money to upgrade infrastructure and keep up with AI demand. So what does that mean for our grid system, for energy prices? Well, joining us now is Calvin Butler, Exelon CEO, with our Brian Sullivan. Brian. John, thank you very much. Calvin, good to see you. He is the CEO and president of Exelon and the chair of the EEI Conference, of which we are at. So great way to wrap up the day. You are big. John mentioned infrastructure on the way in. That's your world. And you've been very, very vociferous about a coming likely shortage of power places around the United States. Talk to us a little more about the supply-demand imbalance, because that's a scary thought. Absolutely. So first off, thanks for having me and thank you for being here. What we are trying to do is bring attention that we have increased load, increased demand like we've never seen in the last 30 to 40 years. And we continue to play by the same rules in what's been governing in our industry for the last 50. So we have to change the landscape. So especially within the PJM marketplace, where the utilities do not own generation, that's where you're seeing the greatest imbalance. So for those vertically integrated utilities around the 30, 40% of the country, no issue, because those utilities are stepping up. But where you see the utilities not owning generation, supply is not showing up to meet that demand. And who's filling it most are our customers because of affordability issues. Yeah, and PJM, the grid operator, they kind of did it about a year ago, whenever it was. It put out a report kind of late on a Friday night about basically there's probably going to be power shortages over the next few years. Yeah. To me, that sounds like maybe not crisis, but not far off. Yeah. What are we doing about this? Well, we're doing a few things. One, PJM recognizes its shortfalls, and they're really trying to work internally to focus on it. But more importantly, the governors across the states of PJM are saying, look, we've got to deal with a couple of things right away. What do we got to do to get more generation into the supply band? That's one. Two, what are we going to do with our constituents, our customers who are having affordability issues every day? So what you've seen is that the governors have banded together to submit proposals to help PJM through this process to really focus on short, mid, and long-term problems. This is not something that's going to be solved overnight, but everyone has to lean in. I'm not a genius, although sometimes I pretend to be on television. But I do know this. Electricity, in many ways, is a commoditized product, right? The power that's making these lights, whatever. If you have more of something, the price goes down. That's it. Okay, you don't produce power, you distribute it. How do we get more power so we don't have these AI-related shortfalls and people's bills go up more? Because people already, to your point, suffering affordability crisis across all aspects of their lives. So let me be very clear. Data centers and AI are part of the reason. That's not it, though. So you have on-shoring and manufacturing. You've got the electrification of everything all taking place at the same time, creating this perfect storm. And what you also have is that we have a generator base that's content to keeping the load where it is because they're maximizing the dollar value. So what we are proposing is that why not let your utilities get back into the generation business? The states control it. Manage this. You have control, cost certainty, and clarity on what's going to be done where and when. Would you build a nuclear plant if you could? I wouldn't build a nuclear plant. But what I could do is lean in on combined cycle gas turbines. What I could do is build community solar. What I could do is own battery storage, anything to help bring this load additional supply to the mix and drive progress. And what, again, it's going to take some time, but we need to start every day, all day to really work on this. Well, it's like air traffic, right? The government shut down. I was at the airport yesterday. I'm lucky to take off. Like, we kind of wait until it's like this crisis level before politicians, both parties, by the way, spring into action. I don't want to get there with power because lights and heat are kind of important. Yes, they are. And we've got examples of when it didn't work. And no one thinks about it until those lights don't come on. So we're working with them. And our governors are responsive to it, and they're listening. But we need to create the sense of urgency. We do, certainly. You're out here kind of sounding, maybe not an alarm, but definitely a warning bell. Absolutely. Calvin Butler, really appreciate your time. Thank you very much.

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Exelon CEO Calvin Butler talks AI's power demand

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