Extending the life of current energy infrastructure will bridge to new supply: Citi's Ryan Levine

Electricity Market Trends & Drivers - Electricity prices have increased by approximately 23% over the past 5 years due to various factors including data center demand, overall inflation, storm costs, and renewable energy policies [2] - Data centers are a contributing factor to electricity price increases, particularly in the Northeast and Mid-Atlantic regions, but their impact is regionally focused [2][3] - Increased electricity demand from data centers is driving the need for increased electricity supply [1][5] Utility Strategies & Solutions - Utilities are negotiating long-term contracts (e g, 12-year agreements) with large hyperscalers to protect residential customers from rising electricity bills [3] - Some utilities have created mechanisms or structures outside the regulated utility model to shield residential customers from the impact of data center electricity consumption [4] - Increasing electricity supply is seen as the primary solution, with an estimated growth of over 28% annually through 20240 [5][6] Energy Supply & Resources - Short-term solutions include restarting old nuclear assets and utilizing less efficient forms of gas generation, as well as extending the life of existing coal plants [6][7] - Natural gas is considered a meaningful resource for new power plants, with potential future contributions from small modular nuclear, large-scale nuclear, and other developing technologies [7] - Renewable energy policies have faced slowdowns, and intermittent renewable resources are not considered ideal for meeting the 24/7 power needs of data centers [8][9] Investment Opportunities - DTE Electric (Midwest utility) is favored due to its data center growth story, with potential for additional hyperscaler partnerships and behind-the-meter generation [10] - First Energy (Mid-Atlantic, Ohio, Pennsylvania wires company) is also highlighted for its potential earnings growth driven by data center demand in its service area, with meaningful upside potential [10] - These companies are seen as having solutions to lower bills for residential customers while driving EPS accretion for shareholders [11][12]