Why It Matters

The House Subcommittee on Rural Development, Energy, and Supply Chains held a hearing September 2 examining how rising demand for energy, water and infrastructure could affect small businesses as manufacturing, data centers and other industries expand.

The hearing, titled "Fueling The Golden Age: Future Resource Needs And Small Business Opportunity," brought together witnesses from the America First Policy Institute, Center for American Progress and Texas House of Representatives to debate energy costs, infrastructure needs and how policymakers should respond to rising resource demand.

The Big Picture

Energy costs are a significant concern for small businesses. Trevor Higgins of the Center for American Progress cited a recent survey finding that 80 percent of small business owners said energy costs significantly affect their businesses and that the same share reported their energy costs had increased over the previous three years.

The hearing arrived as electricity markets face pressure from rising demand. In the first quarter, wholesale power costs in the PJM regional market, which covers the Mid-Atlantic and parts of the Midwest and has a high concentration of new and planned data centers, increased nearly 76 percent from the same period a year earlier. Data center demand has contributed to rising costs in the region.

Higgins argued that Trump administration policies have compounded those pressures. He pointed to restrictions on wind and solar development, changes to clean energy tax incentives and tariffs on materials used in grid equipment. He testified that the administration had sought to block new offshore wind projects, issued stop-work orders for projects under construction and spent nearly $4 billion in agreements encouraging developers to abandon clean energy projects.

Higgins also argued that changes enacted through the One Big Beautiful Bill Act eliminated more than half of the new electricity generation capacity that otherwise would have been added through 2035, including up to 72 percent of projected new clean energy additions. He cited analysis estimating that those changes could increase commercial electricity rates by 12 percent by 2035.

Global energy shocks have compounded the problem. Higgins testified that gasoline prices were 30 percent higher and diesel prices were 52 percent higher than a year earlier, citing U.S. Energy Information Administration data. He attributed a significant portion of the increase to the war in Iran and argued that the conflict had increased energy costs for households and businesses.

What They're Saying

The hearing exposed a disagreement over how federal energy policy should respond to rising electricity demand and costs.

Rep. Kelly Morrison (D-MN), the ranking member, criticized the administration's energy policies, focusing on tariffs, restrictions on renewable energy development and changes to clean energy incentives.

Ted Ellis, deputy director of Energy & the Environment at the America First Policy Institute, defended an approach focused on expanding domestic energy production and ensuring reliable energy supplies as electricity demand increases.

Trevor Higgins, senior vice president for Energy and Environment at the Center for American Progress, focused on rising energy prices and argued that administration policies restricting clean energy development and changing federal incentives would further increase costs for households and small businesses.

Rep. Jake Ellzey (R-TX), who chairs the subcommittee, framed the hearing around growing energy and water demand associated with manufacturing, population growth and emerging technologies. Ellzey said small businesses depend on reliable and affordable electricity and water and argued that policymakers should ensure the costs of infrastructure expansion do not fall unfairly on Main Street businesses.

Ellis brought an energy policy perspective aligned with the Trump administration's emphasis on domestic energy production. Higgins previously worked at the Department of Energy during the Obama administration and on energy and environmental issues for the Senate Appropriations Committee. Cody Harris, a member of the Texas House of Representatives, provided a state-level perspective on managing energy, water and infrastructure demands associated with economic and population growth.

Higgins argued that restricting lower-cost sources of new generation at a time of rapidly rising electricity demand would increase costs. He called for additional transmission and distribution infrastructure, transformers and inverters, as well as new wind, solar, nuclear, geothermal, battery storage and demand-response resources.

Political Stakes

Republicans on the subcommittee emphasized the need for reliable domestic energy and infrastructure to accommodate manufacturing, technology and industrial growth. Ellzey argued that rising demand creates opportunities for small businesses involved in construction, equipment manufacturing, energy and water infrastructure while warning that households and small businesses should not bear an unfair share of the costs created by large new users.

Democrats focused more heavily on rising energy prices and the effects of Trump administration policies. Morrison and Higgins argued that restrictions on renewable development, changes to clean energy incentives and tariffs on materials used for grid infrastructure could increase costs as electricity demand rises.

The disagreement reflects a broader debate over how to meet growing electricity demand. Republicans at the hearing emphasized domestic energy production, reliability and infrastructure development, while Higgins called for expanding lower-cost generation and grid infrastructure and requiring large electricity users such as data centers to pay the costs associated with connecting to and expanding the grid.

What's Next

The hearing highlighted data centers as one of the most significant emerging sources of electricity demand. Higgins testified that data center electricity demand grew nearly 150 percent between 2014 and 2022 and could grow another 300 percent by 2030. He called for data center developers to cover the upfront infrastructure costs associated with connecting new facilities to the grid and pay rates reflecting their ongoing system costs.

Ellzey similarly pointed to policies under consideration in states that require large electricity users to pay for infrastructure upgrades they trigger, rather than shifting those costs to households and small businesses.

The House Oversight and Government Reform Subcommittee on Economic Growth, Energy Policy, and Regulatory Affairs held a related hearing September 2 titled "No Flame, More Pain: How State and Local Bans on Natural Gas Increase Costs," reflecting continued congressional attention to energy prices, electricity demand and the policies governing new energy infrastructure.

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