Calvin Butler, CEO of Exelon, the nation’s largest utility company by customer count, compared the current state of the U.S. energy grid to a vehicle being driven to the brink of failure, in conversation with Fortune‘s Executive Editorial Director Diane Brady at the Fortune Brainstorm AI conference in San Francisco.

“We are telling policy makers the warning lights are on,” Butler said. It’s like you’re driving your car, the check engine light is on, and you just don’t want to take it into the shop. “You’re like, I’m going to keep pushing this and no one’s going to pay attention until it breaks down,” Butler told Brady. From his perspective, he sees a malfunction as inevitable. “I’m telling you on that hottest day or that coldest day, you might have a supply crunch and people are going to suffer. I’m telling you, you have to fix it now.” 

Butler’s warning comes, of course, amidst a historic surge in electricity demand as AI usage gobbles up compute, which in turn gobbles up energy across the country. There’s a bit more to it than that, Butler said, with pressure coming from a “convergence” of factors, including the onshoring of manufacturing and the broader electrification of the economy.

“I’ve been in the utility industry for about 25 years … and probably the last four decades we have never had a moment of this amount of load growth,” Butler said.

The supply crunch

The crux of the problem, according to Butler, is a disconnect between rising demand and the incentives to build new power generation. Exelon, which spun off its generation business (Constellation Energy) three years ago, now operates as a regulated utility that delivers power but does not generate it.

Butler argued independent power producers currently lack the financial motivation to construct new power plants. “The independent power producers have no incentive to build anything new because they’re maximizing their assets,” he explained, allowing that this is a fair thing to do under current market conditions. But because producers are squeezing maximum revenue from existing infrastructure rather than expanding capacity, the risk of a shortfall is growing, on the one hand, and price hikes are also inevitable.

When asked for a prediction regarding electricity prices for the coming year, Butler offered no comforting ambiguities.

“I can tell you with certainty the prices are going to go up,” Butler said.

He pointed to market dynamics within the massive PJM Interconnection—a regional transmission organization serving 13 states and the District of Columbia—as a driver. State governors in the region previously implemented a price cap that saved customers roughly $3 billion, but as those caps face expiration or adjustment, the suppressed costs will likely resurface. (Pennsylvania Governor Josh Shapiro threatened in September that the state would go its “own way” if energy conditions don’t change.)

A conservative approach to tech

Despite the pressure to power the AI revolution, Butler emphasized that utility companies themselves should not be on the bleeding edge of technology adoption.

“You don’t want your utilities to be the leaders in technology … because when we lead and something goes wrong, bad things happen,” Butler said.

He added that Exelon prefers to be a “follower” rather than a laggard. (Butler didn’t mention the infamous name of Enron, the last major innovator in the energy space and also a famous blow-up 25 years ago.)

While Exelon uses AI for customer service and proactive grid maintenance, Butler said he remained cautious, particularly regarding cybersecurity. He highlighted the vulnerability of third-party suppliers, rating his comfort level with the supply chain’s security protocols as only a six or seven out of 10.

Building for resilience

To address the looming capacity issues, the industry plans to invest $1.1 trillion over the next five years. This includes massive infrastructure projects, such as a newly announced 765-kilovolt transmission line stretching 220 miles across Pennsylvania and West Virginia to improve reliability.

However, Butler reiterated that physical infrastructure alone won’t solve the problem if the policy framework ignores the “check engine” light. “We’re the backbone. We’re 5% of the economy, but we power the next 95%. And we have to get this right.”