0:10

Hello everyone, this is Volts for

0:12

May 24, 2024. FERC's

0:17

new rule and other exciting

0:19

transmission news. I'm your

0:21

host, David Roberts. When

0:24

I talked with transmission expert

0:26

Rob Gramlich, head of the

0:28

Policy Shop Grid Strategies, in

0:31

November of last year, we

0:34

discussed what might be included

0:36

in the hotly anticipated upcoming

0:38

rule on transmission planning from

0:41

the Federal Energy Regulatory Commission, or

0:44

FERC. With

0:46

no substantial legislative progress

0:48

on transmission on the

0:50

horizon, the rule, Gramlich argued,

0:52

is likely to be the most significant

0:54

federal policy on transmission of

0:57

Biden's term.

0:59

Well, FERC issued the

1:01

final rule last week. It

1:04

will require regional transmission system

1:06

operators to make

1:08

longer-term plans and

1:10

to take into account a wider

1:12

range of possible benefits from regional

1:15

transmission. And that's not

1:17

all that's happened since Gramlich and I talked. Last

1:20

month, the Biden administration announced a

1:22

whole series of significant moves on

1:24

transmission, on everything from permitting to

1:26

funding. That is

1:28

a lot of action in the comparatively

1:31

sleepy transmission world. Given

1:33

everything that has unfolded, I thought it would

1:35

be great to have Gramlich back on the

1:37

pod to take stock. We're

1:40

going to discuss the new FERC rule,

1:42

what it requires, who's for it and

1:44

against it and its future. We'll

1:47

also touch on the rest of

1:49

Biden's transmission announcements, what

1:51

it all adds up to, and what is

1:54

left to do to get

1:56

the transmission needed for the clean

1:58

energy transition. With

2:09

no further ado, Rob Gramlich, welcome

2:11

back. Great to be back, David. Great

2:14

to have you. You know, Rob,

2:16

I'm old enough to remember when

2:18

transmission was a

2:20

boring, sleepy backwater

2:23

in the clean energy discussion,

2:27

like a year or two ago. And

2:29

now here we are, things are just hopping,

2:31

just hopping. Exciting times. So

2:34

let's start with the rule. How

2:36

close is it to sort of what was proposed

2:39

or floated, you know, originally

2:41

what we talked about in November? Are

2:43

there any sort of striking or interesting

2:45

changes from then to now that are

2:47

worth pointing out? Sure. Well,

2:50

it's a great week. It's a really big order.

2:53

I do think it meets the billing of,

2:56

I call it biggest energy policy in

2:59

the country post IRA, just

3:01

because of the significance of the

3:04

grid for meeting clean energy goals

3:06

for reliability, for

3:08

economic rates and all

3:10

that for consumers. People

3:13

should go back and listen to our original pie for

3:15

background on this stuff. I'm not going to spend a

3:17

lot of time on why we need a bunch of

3:19

transmission. I think people get

3:21

that. I think, you know, or what exactly

3:23

FERC is doing, people should go listen to

3:25

that previous pod. We're just going

3:27

to like get into the FERC rules so we

3:29

can skip all the transmission rules. We're

3:32

just going to assume everybody knows transmission

3:34

rules. Can I give you my

3:36

one sentence summary of the 1300 page rule? Sure.

3:41

1300 pages, that was the total? 1300

3:43

pages is the order of 1920. Yes.

3:47

So that is a lot of rule. Yes. Give

3:49

me your one sentence summary. Plan

3:52

for the future with the best

3:54

available information, select the best plan

3:56

for consumers and allocate costs according

3:58

to the best information. There's

4:00

a lot packed in there. Yeah.

4:03

So transition providers are required to do those things.

4:05

So that's all, you know, we discussed on the

4:07

last one, but for those who, you

4:09

know, didn't listen to that and haven't listened

4:11

to it since then, you know, that's what

4:14

it does. And you asked

4:16

what's changed. I think it got stronger

4:18

in some key ways. Oh, interesting. And

4:21

we discussed those ways. You asked me

4:23

back in November, you know, is the

4:25

proposed rule good? Does it need to

4:27

be different or stronger? And

4:30

there were some key ways in which

4:32

I suggested it really should be stronger.

4:35

And they did that. The final order,

4:37

I think people should be very, very

4:39

happy that it is, in fact, stronger

4:42

than the proposed rule. And

4:44

I think it will actually succeed in its

4:46

objectives. Well, that's not usually the way these

4:48

things go. They usually do

4:50

not get stronger over the course of the process.

4:53

Well, let's start then with plan. This

4:56

applies to regional transmission

4:58

system operators, sort of

5:00

the RTOs and ISOs. So

5:03

govern regional transmission in areas

5:05

that have been, you know,

5:08

deregulated or unbundled or whatever you want to

5:10

call it, where they're overseeing wholesale

5:12

energy markets. What about utilities

5:15

that remain vertically integrated, that have not been

5:17

unbundled, that have not been deregulated? Are they

5:19

affected by this rule at all? Or how

5:21

does that work? Yes, the

5:24

rule applies equally to them.

5:26

So all transmission providers, and

5:28

capital T, capital P, term

5:30

of art in FERK-LINGO, all

5:32

transmission providers must do

5:34

all these things. And we can talk about the

5:36

planning methods and the factors. Yeah. So

5:39

it applies to everyone across the country. Everybody's

5:42

under this rule. Okay. That's the one

5:44

thing I wanted to... Right. And by

5:46

and large, the expectation is utilities outside

5:49

RTOs would be working with their neighbors

5:52

to put in together joint plans, but

5:54

a utility doesn't necessarily have to... Part

5:57

of this is it remains to be seen how

5:59

utilities are going to... play it, but technically, FERTS

6:02

regulations apply to the utility, the transmission

6:04

provider, and so the regulations technically apply

6:06

to them, just, you know, and just

6:09

them. Got it. Okay.

6:12

So let's start with the planning then. It says that

6:14

transmission operators have

6:17

to make 20-year plans. What

6:20

is the significance of that? Because

6:22

I've heard, you know, one

6:24

of the objections to this rule is that

6:27

20 years is just too long a horizon

6:31

because it's just very, very

6:33

difficult, especially at a time of

6:35

extraordinary sort of ferment

6:38

and change. It's

6:40

very difficult to know how much transmission we

6:42

really will need in 20 years. You

6:44

know, there's a school of thought that says, you know, like energy

6:47

storage will take the edge off that and reduce the

6:49

amount we need or something else. There's a lot of

6:51

different theories about how things are going to play out.

6:54

What do you make of the 20-year planning horizon

6:56

and how is that supposed to work and what's

6:59

the significance of it? Yes. Any

7:02

forecast is necessarily wrong, right? And

7:06

that, you know, that point has been made

7:08

in the FERTS proceeding by many,

7:11

many people. My view

7:13

on that and I think a lot

7:15

of parties and the majority who voted

7:17

for this rule is, yes,

7:19

but a lot of things are known. So

7:23

things like adding new

7:25

load when new manufacturing plants come online

7:27

or data centers, you know, they are

7:29

where they are. They don't just

7:32

pick up and leave. The generation sources

7:34

are largely the same. The places where

7:36

it's windy, you know, whenever you're a

7:38

kid and there was a windy place,

7:40

it's probably still windy now. Places

7:43

where it's sunny and there's lower

7:45

cost available land for solar farms

7:47

probably still going to be that

7:49

way in 20 years. So

7:53

Look, the whole history of electric utilities

7:55

is, you know, you have to, I

7:57

Mean, these are the sort of shared

7:59

public infrastructure. You're so whether you're

8:01

talking about roads, bridges or anything else,

8:03

obviously things change. but these are long

8:05

lived assets. They are long lead time

8:08

assets. Ah you know that if if

8:10

you get yourself with wrapped around the

8:12

actual over some uncertainty you're never going

8:14

to build anything and then you know

8:17

so you have to. you know with

8:19

the risk of doing nothing or commissioner

8:21

comments at for talks a lot about

8:23

that consider the cost of inaction if

8:25

you're worried about the cost and know

8:28

and the risk. Yeah. Me One

8:30

of the things we'd discuss the November that I

8:32

found a little gobsmacked thing I think a lot

8:34

of people do is is that this twenty

8:36

year planning horizon is not necessarily replacing for a

8:38

lot of utilities are are two years. A

8:41

Tenure Horizon it's replacing. No plan to his.

8:43

it's replacing know planning at all. which is

8:46

which I still find mild sort of this

8:48

me to play with it. Would you Horizon?

8:50

That just means you have to show your

8:52

work. You have to show Burke that you

8:54

did this. You have to issue a a

8:57

twenty year plan basically on some. Time.

8:59

Horizon. The other try

9:01

while others a set of

9:03

factors he have to take

9:05

into account the Snc the

9:07

the amount and location of

9:09

generation them mode games right

9:11

So again they're slow growth,

9:14

new manufacturing coming at sat

9:16

around the load side and

9:18

generations. You have a reasonable

9:20

sense from consumer preferences, from

9:22

state policies and from just

9:24

with the businesses are doing

9:26

in terms of interconnection said

9:28

new generators. there are various.

9:30

Metrics on how much power uni get

9:32

some displacer that place and to the

9:34

polls in that place and that's what

9:36

friends are some planners and always done.

9:38

You know it starts out kind of

9:40

like crude with be no bubbles and

9:42

lines on a on a map and

9:44

then it gets are a lot. You

9:46

know it with each iteration gets a

9:48

lot more fine tuned. And

9:50

another big aspect of this

9:53

is that the transmission planners

9:55

have to take. This.

9:57

Set of. benefits

10:00

of regional transmission into

10:02

account when doing these 20-year

10:04

plans. So

10:06

I'm curious, your thoughts about the—I'm not

10:08

going to list all seven benefits. There's

10:11

some obscures that's reduced transmission,

10:15

losses, reduced congestion,

10:18

all sorts of—there's seven of them. And

10:20

I'm curious your thoughts on the benefits they

10:22

have to take into account. And I'm curious,

10:24

speaking of Clement, Allison Clement, one of the

10:26

members of FERC, one of the Democratic members

10:29

of FERC, wrote up an op-ed that just

10:31

came out recently, who

10:33

said that originally there was a list

10:35

of 12 benefits that got whittled down

10:37

to seven. So I'm curious,

10:39

just your thoughts on whether

10:42

this array of benefits sort

10:44

of adequately captures

10:46

the landscape. Yeah, they had

10:49

the 12 benefits before, and then they had

10:51

these scenarios. We haven't

10:53

talked about scenario planning, but it includes

10:55

scenario planning. And in the original proposal,

10:58

I think it struck a lot of people as like a

11:00

little micromanager, like do

11:02

these exact scenarios and do these

11:04

exact list of 12

11:06

types of benefits. So

11:09

I think the commission said, okay,

11:11

we'll give you a little bit

11:13

more flexibility. They consolidated some

11:16

of them down and kind of recategorized

11:19

some of the benefits. So, yes,

11:21

in response to your question. I

11:23

think these eight cover

11:25

the topics. The transmission provider has

11:27

the ability to add some other,

11:30

but ultimately, we'll get to cost

11:32

allocation at some

11:34

point. But FERC has to show

11:36

that the beneficiaries pay, and so you have

11:38

to say, well, what are the benefits? And

11:40

so it's very helpful for, I

11:42

think, for just to provide the industry guidance

11:45

of, you know, here are some

11:47

benefits and a couple sentences on

11:49

how to calculate them. I'll

11:51

just pick out one that's a big

11:53

one and often underappreciated, and that's reduced

11:56

reserve margins. So most folks

11:58

know that, you know, You

12:00

have a generation reserve margin,

12:03

so you have to have very

12:05

expensive generation capacity sitting around in

12:08

case there's load isn't what you thought

12:11

or in case the other generators failed

12:13

because they have

12:15

outages. Well, that's where a

12:17

lot of the money is, right? From a

12:20

consumer standpoint, there's a lot of money that

12:22

you have to pay for these generation capacity

12:24

reserve margins for generators to just sit there.

12:27

Well, very often with transmission,

12:30

you're able to capture the diversity, like

12:32

low diversity. And if somebody's using power

12:34

over here, well, three states away, they're

12:36

not. And so you can, you

12:38

end up sharing that way if you have enough

12:40

transmission so you can save yourself on the reserve

12:43

margin. So there's a lot of money from a

12:45

consumer standpoint. Right. So right

12:47

now, transmission area is a little island,

12:50

and that island has enough reserve margin to

12:52

cover the island. And then it's sitting right

12:54

next to another island that has its own

12:56

reserve margin to cover its island, whereas the

12:58

two islands could just share some

13:00

of their reserve margin and then these wouldn't

13:03

need to duplicate those efforts. It's

13:05

a little ridiculous that reserve margins are duplicated

13:08

over and over again across the country. We

13:10

just end up with, in aggregate,

13:13

wildly excessive amounts of reserve

13:15

margin, which is, as you say, a lot of wasted

13:17

money. Exactly. So do

13:20

these seven benefits mean that

13:22

transmission planners have to

13:24

use them? Like show that they've acknowledged

13:27

all these, or is this more of like a guidance,

13:30

do this kind of thing? I'm

13:32

just, I'm wondering how prescriptive and

13:34

how much sort of like legal

13:36

force these things have. Yeah. No,

13:39

they do need to calculate these benefits. And you're right, it's

13:41

seven. I think I might have said eight, but it's seven

13:44

benefits. So they have

13:46

to basically calculate and show the

13:49

world these benefits. They

13:51

do have to do that much. It

13:53

gets a little bit more nuanced when

13:55

it gets to how exactly do they

13:57

use them because there's two different stages.

13:59

stages of the remaining process.

14:02

One is the selection of projects, what's

14:04

sort of the decision

14:06

rule of once

14:08

you know all the benefits and the costs, what

14:11

do you do then, that's the

14:13

selection process. And then

14:15

there's separately the cost allocation process.

14:18

So there's some kind of flexibility

14:21

applied at each stage. So I

14:23

don't want to oversimplify it, but

14:25

it would be the rough

14:28

approximation of the whole process

14:30

is calculate all the benefits,

14:32

compare the benefits to the

14:34

costs, pick the one that's best for

14:36

consumers, meaning maximize the

14:38

net benefits, and then allocate

14:41

the costs according to those benefits.

14:43

That's just a very simple process

14:45

consistent with the one sentence version

14:47

of the 1300 page rule

14:49

that I said. Again, there's

14:52

important nuance in there. Right.

14:54

So there's two, as I understand it, the rule

14:56

1920 has two major parts. The first is, do

14:59

the 20 year plan based

15:01

on these seven benefits or taking

15:03

these seven benefits into account.

15:06

And then the second has to do

15:08

with grid enhancing technologies or something like that. What

15:10

is the second part? Yeah,

15:13

well, there's another part. I mean, there's, I don't

15:15

know, there's 1300 pages. I'm sure

15:18

there's lots of parts. There's lots of

15:20

parts. But yeah, the advanced technology part,

15:22

I think it's really interesting. We

15:25

talked about it before, and you've

15:27

had grid enhancing technologies on

15:29

your pod before. You had Julius Salker,

15:31

for example, on one that's a good one

15:33

to pull up. But grid

15:35

enhancing technologies are sort of the

15:37

more like operational technologies on how

15:40

you can deliver more power over

15:42

existing assets. Right. Getting more out

15:44

of the existing grid, basically. Exactly. Right. Is

15:46

what they do. Right. With, call it new

15:49

technologies or advanced, but they've been widely deployed

15:51

in other countries in other places. So they're

15:53

definitely like in the commercially ready category.

15:55

So anyway, you're required to consider those

15:58

in the plan in case of those

16:00

might be the more efficient option. And

16:02

advanced conductors, which is

16:04

a difference in the strengthening from the

16:06

proposed rule. Oh, re-conductor-ing, we did a

16:09

pot on that too. Exactly,

16:11

you did, and that's getting a

16:13

lot of attention lately and it's

16:15

great, it's just the actual wire,

16:18

the cable, modern high-performance conductors can

16:20

deliver twice as much power,

16:23

and they don't sag, which is really nice for kind

16:25

of a resilience standpoint

16:28

and also on hot days

16:30

and delivering a lot of power, they're kind of

16:32

more resistant to the heat that's

16:34

created. So at any rate,

16:37

that technology also needs to be considered

16:39

here in this final rule and in

16:41

the planning process. So when you're doing

16:43

your 20-year plan, you have

16:45

to take into account, would it be

16:47

cheaper just to upgrade our existing lines

16:50

rather than build new lines? Yeah,

16:52

or it's usually a portfolio of an

16:54

actual transmission plan

16:57

contrary to what I think some people

16:59

imagine, it's not usually like big

17:02

line from A to B, it's usually a set

17:05

of 120 items. One

17:08

of them is some substation upgrade

17:11

and then replace transformer and then

17:14

re-conductor this line and then new right-of-way,

17:16

30-mile right-of-way from

17:18

here to here, and that's the

17:21

efficient thing for consumers, right,

17:23

because this is a network,

17:25

really, there's so much physical

17:27

electrical interaction between all of

17:29

these interconnected assets and

17:31

of course power moving at the speed of light.

17:33

Like these interactions are really important

17:36

and it's usually so much more efficient from

17:38

a consumer standpoint to plan the whole thing

17:40

holistically for the multiple

17:42

benefits and purposes and with

17:44

all of the options on the table. They

17:48

didn't specifically talk about storage

17:50

as transmission but you're certainly

17:52

allowed to and that's one

17:54

of many things I think people

17:56

engaging in these processes would

17:59

say, consider. all these various options

18:02

and make sure you've really identified

18:04

the most cost-effective for the need. You

18:07

know I think a lot of people hear about grid enhancing

18:09

technologies and re-conductor and they're like well that's obvious

18:11

why don't they just do that. So

18:14

we discussed on those previous spots why

18:16

they don't some of the

18:18

reasons they don't just do that so it's

18:20

nice that FERC is basically saying you have

18:22

to pay attention to this stuff. This

18:25

is the planning part and then once

18:27

you've got a plan and you've written

18:29

out the benefits based on these on

18:32

these seven benefits you've got a plan

18:34

you got the benefits then

18:36

you have to according to the

18:39

rule divide up the cost of

18:41

the transmission plan based

18:43

on who's getting the

18:45

benefits basically you have to cost

18:47

allocate based on

18:49

benefits and that is done

18:51

through an agreement of states.

18:55

What the heck does that mean? What is this state

18:57

agreement process what is that going

19:00

to look like? That's

19:02

right so the first

19:04

way to look at it is cost allocation

19:07

has to follow the beneficiary

19:09

pays rule and that's as

19:12

governed by court decisions

19:14

over the years and FERC

19:17

policy long-standing FERC policy

19:20

including from order 1000 in 2011 and so the cost allocation part

19:22

of the rule is

19:26

actually very short it just says well we

19:29

said beneficiary pays 13 years ago and

19:32

we say that again. Yeah but just

19:34

to note like how that plays out

19:36

in practice varies enormously

19:40

based on what you are taking as benefits

19:42

right? Yeah right so it's

19:45

kind of the highest level okay beneficiary

19:47

pays oh and by the way it

19:49

is economic and reliability benefits those seven

19:52

benefits are economic and reliability benefits

19:54

which is something we can return

19:56

to about the political situation. Yeah

19:59

I noticed. The reduced greenhouse gas

20:01

emissions is not on that list

20:03

of benefits threat. so anyway it

20:05

is kind of Arab middle of

20:07

the road straight down the fairway

20:09

of traditional for policy nine that

20:11

regard despite what some of the

20:13

young policymakers say as some of

20:16

the criticisms I think our that

20:18

by choosing these particular benefits for

20:20

is trying to sort of juice

20:22

the process to produce outcomes that

20:24

it has in mind beforehand and

20:26

will will return to That will

20:28

return to the criticism scared and

20:30

here in a minute. Sorry. But

20:33

they get a D or point

20:35

sort of as anywhere the first

20:37

level is gonna be a beneficiary

20:39

taste second level as oh but

20:41

there's the state process and terrorists

20:43

were Farc. After many discussions with

20:45

the states in this foremost joint

20:47

First State Task Force process, they

20:50

came up with this our farm

20:52

at that as an unprecedented expansion

20:54

of the state role in this

20:56

area. Soon were states are given

20:58

this opportunity to say sort of

21:00

a it you know exactly what.

21:02

That cost allocation formula is

21:04

for the region and this

21:07

is built upon just like

21:09

this whole rule is built

21:11

upon. Best. Practices that

21:13

has. Been sort of

21:15

learned from successes and failures over

21:17

the years. I think they were

21:19

looking at the Southwest Power Pool

21:21

and my So regions in the

21:23

Midwest so kind of regions. They

21:25

have this active engagement of states

21:27

that are involved in the planning

21:29

and costs allocation process and that

21:31

works pretty well And minutes, you

21:33

know, nothing really moves forward without

21:36

pretty good regional support, and that

21:38

formal engagement where they're really at

21:40

the table has been beneficial. Aren't.

21:42

All states still kind of trying to maximize the

21:44

benefits they get in minimise him minimize the amount

21:46

they pay. I mean, I guess they're all doing

21:48

that. Did. You come out of

21:50

the middle somewhere. That's right. Well, I

21:53

mean said saw You Know is such

21:55

a complicated industry, and in almost every

21:57

state as part of just a sea

21:59

of a regional network, they don't really

22:01

know what's going on around them. yet.

22:04

It's You know, They're all resource constrained

22:06

and I'm also confused. Maybe you can

22:08

clarify. Like the regional transmission organization, you

22:10

know their territory is several states. So.

22:13

They make the plan and in a

22:15

hand it to states and they say

22:17

to states you figure out how to

22:20

pay that the basically the process. Yeah

22:22

other states have so little more role

22:24

than that in May and various stages

22:26

of developing the plan as well. But

22:28

the key one and the one they

22:31

care most about as the cost allocation.

22:33

So so yes they have a role.

22:35

Now there was a ah the issue.

22:37

This is one point one of the

22:39

I think four major points you and

22:41

I discussed in November. David in

22:44

terms of you know what what

22:46

needs to change about this rule

22:48

them really make it work and

22:50

in a one of the pointers

22:52

yes in case the states but

22:54

at the end of the day

22:56

as they can't agree on a

22:58

decision needs to be made okay

23:00

enough the proposed rule of as

23:02

somewhat unclear maybe somewhat contradictory language

23:04

on that but the final rule

23:06

is quite clear that like yes

23:08

a decision has to be made

23:10

to so we can't just like

23:12

have that disagreement. Be the reason of

23:14

the whole process ends and nothing it's

23:16

belted so universally sort of us a

23:18

default policy has to be in place.

23:20

In other states can just get together

23:23

and agree on something different. Great. Go

23:25

with that. But. If they can't than

23:27

one. Yeah. Well then there's this

23:29

sort of call it a default costs

23:31

allocation policy that needs to be in

23:34

place and this is also something that

23:36

sticks in the cross of of of

23:38

opponents of Israel. Yes this yeah says

23:41

idea that states you to agree on

23:43

costs allocation but if the chance they

23:45

get to scrap the the whole thing

23:47

a default playing it's put in place

23:50

instead. Bright. As there was

23:52

really one of course difference between

23:54

the to vote majority that voted

23:57

for the rule and of. one

24:00

one commissioner who opposed it and

24:02

dissented, that's really it. Is it

24:04

that latter commissioner, commissioner Mark Christie,

24:07

wanted the states to be able

24:09

to opt out essentially? And the

24:11

majority said no. I mean, I

24:14

think the reason the majority

24:16

didn't go with that is that,

24:19

you know, there are going to

24:21

be red states involved in these

24:23

processes that don't want new transmission

24:26

at all because it threatens fossil

24:28

fuels and have every

24:30

incentive just to tank the process

24:32

entirely, tank new transmission

24:34

entirely. And if they had

24:37

that power, they would use it unless transmission

24:39

would get built. I mean, that's the basic

24:41

motivation here for this provision,

24:43

is it not? Well, I

24:45

look at it in terms of just

24:47

the need to get infrastructure built and

24:49

paid for. Think of every

24:52

other shared public infrastructure and

24:54

whether it would actually get

24:56

funded if everybody

24:58

got to opt out. Okay,

25:00

so the classic public good is national defense. What

25:02

if we all had a, you know, there was

25:04

a box on the 1040 form where you could

25:06

say, do you want to play for the Pentagon?

25:08

If not, you get to pay 30% less.

25:12

Like everybody would say, yeah, I'll pay 30%

25:14

less. Yeah, if you can be a free writer,

25:16

you will be a free writer. I

25:18

mean, that's just sort of basic economics

25:20

about public goods and free

25:22

ridership. You know, so that was really

25:24

a sticking point, I think,

25:26

between the commissioners. And look, Mark Christie,

25:29

to his credit, he's been consistent on

25:31

this position through the entire time he's

25:33

been on the commission and in these

25:36

discussions with the states. And

25:39

that was his opinion. Before we get to

25:41

Christie, because I want to dive into what he says, but just

25:43

on the agreement process,

25:47

do we expect states to

25:49

engage in this in good faith?

25:52

Do they still have the power to sort of

25:54

like monkey wrench this process if they don't like

25:56

it, if they don't like new Transmission,

25:59

just like, how do we do it? How much wiggle room

26:01

I do these states have in this.

26:04

Wells there is wiggle room in

26:06

multiple places in this order so

26:09

there and I will say it's

26:11

You know it's all like. Nailed

26:14

Down now that they've issued

26:16

the final rule. But I

26:18

do think it is an

26:20

unprecedented opportunity for states to

26:23

engage in a more formal

26:25

way in these important decisions

26:27

that affect their states. And

26:29

so I think any given

26:31

state would be crazy not

26:33

to take that opportunity and

26:36

participate. But I

26:38

remember when aka issued climate rules

26:40

ferber and with the power plants

26:42

and was the same thing. like

26:44

states come up with a plan

26:46

to do this If you don't

26:48

were going to impose a plan

26:50

on you and you would think

26:52

states would be crazy not to

26:54

come up with their own plans

26:56

suited to them best but like

26:58

there were still intransigent jerks defeats

27:00

the did that did that so

27:02

I don't know Begin the entirely

27:04

project rational behavior on to all

27:06

states. He. As well, Athena

27:09

hooked up again. It's last

27:11

utilities is add to that.

27:14

But has ah I do

27:16

thank you. You can look

27:18

to these states a let's

27:21

take the South as powerful

27:23

as Pp. States of these

27:25

are not radical progressive state

27:27

of muscle mass, Kansas you

27:29

know Dakota's parts A New

27:31

Mexico yeah that mellow the

27:33

country. Canada read us to

27:36

the red. States. The

27:38

states have been actively involved and regional

27:40

transmission planning over the years and you

27:42

know I think most of them the

27:44

individuals who been involved with say it's

27:46

great to they were able to be

27:49

involved and the outcome has generally been

27:51

goods know, hopefully other states look at

27:53

that type of example and say you

27:55

know we can do that too. Yeah,

27:58

I actually meant to miss an earlier

28:00

we're talking about who this rule applies

28:02

to. I think we both forgot to

28:04

mention it does not apply to Texas.

28:06

Credit has not apply to or got

28:09

in Texas which is it's own island

28:11

and not really part of a larger

28:13

regional grid is that the whole different

28:15

topics. So the main thrust of the

28:17

rule than is you gotta make a

28:19

plan. And. Then the states

28:21

have to get together and figure out

28:23

how to divide up the costs. Of

28:26

the plan. You. Have to

28:28

choose the plan that's best for consumers

28:30

and in the states have to divide

28:32

up the costs. This. Is

28:34

the process has been set up. The

28:37

third commission supposed to be five people, but

28:39

it's down to three. This. To Democrats

28:41

in one republican. The to Democrats voted

28:43

for the republican Mark Christie. Objected.

28:47

Quite strenuously. I.

28:49

Would say odd Lee's strenuously

28:51

in waste for reasons I

28:54

don't totally understand, so maybe

28:56

you can unpack that fourth,

28:58

why is he? Angry.

29:00

And for what is it that

29:02

in the rule that that bugs

29:05

him so much? And also while

29:07

I'm at it kneeled Shattered G,

29:09

former member of Farc republican tweeted.

29:12

This. Is a bipartisan rule. I would have

29:14

voted for it. I'm a republican

29:16

and I would have voted for it,

29:18

so it's clearly not just a partisan

29:20

thing. So to help us understand the

29:23

politics here like who who objects and

29:25

why. Not rights. Yeah,

29:27

and not to mention you

29:29

know he said twenty five

29:31

years of our really thirty

29:34

years of bi partisan for

29:36

commissioners and commission's issuing rules,

29:38

trying to do the same

29:40

thing. some transmission planning most

29:42

the time not achieving their

29:45

goals. But yeah, a transition

29:47

planning generally has been supported

29:49

on a bipartisan basis. And

29:51

not to mention a lot

29:54

of these transmission federal transmission

29:56

policies. buffer dia we

29:58

insert were really led by Republicans

30:00

in the early 2000s, Bush

30:02

administration, Senator Domenici in the

30:04

Senate, Energy Policy Act

30:06

of 05, those were

30:08

a lot of these same policies and Republican

30:10

led at that time. And

30:13

that I think sort of changed when

30:16

most members of Congress forgot

30:18

about transmission or it just wasn't on

30:20

their radar for 20 years. But

30:24

then it became on Democrats agenda when

30:26

they realized, oh, wait a minute, there's

30:28

no transition without transmission, as we say.

30:31

Well, now I think it's getting coded as a renewables

30:34

versus fossil fuels thing, right? It's getting

30:36

coded basically as like new transmission is

30:39

for renewables and against fossil

30:41

fuels. That's kind of how it's getting politically coded,

30:43

but not totally. Like I said, Chatterjee is for

30:45

it. So what's Christie's

30:47

deal? Yeah. So Neil Chatterjee has

30:49

hopefully said this is not partisan.

30:51

He would have voted for it.

30:53

I think that's true for other

30:56

former Republican commissioners. But

30:58

the way things work is it's not, even though

31:01

the commissioners have a party attached

31:03

to their name, they don't usually

31:05

sort of align with any particular

31:07

political. Supposed to be independent.

31:10

Right. And they are. I

31:13

mean, all the three current ones certainly are. They

31:16

have their own minds and

31:19

positions and there's not any discernible

31:21

sort of party policy

31:24

on these issues. Even

31:27

if they wanted to just align with the party. The

31:31

party is confused as well. Both

31:34

parties are. Yeah. So

31:36

you have three commissioners. And of

31:38

course, when you're down to three,

31:40

the individual views really factor prominently.

31:43

So yeah, this one commissioner is

31:45

dissented. And again, to his credit,

31:47

I mean, he's been honest and

31:49

straightforward and he's also very open

31:52

as commissioners go. Like he'll, he'll listen

31:54

to, you know, groups

31:57

on all sides of this and

31:59

he'll consider. his views and he's been

32:01

doing this for a long time and taught

32:03

law school and he's been

32:05

a regulator. So it's just that

32:08

his, you know, one of his views is

32:10

that states should be able to opt out

32:12

of paying for this shared regional infrastructure.

32:16

And I think the problem with that as

32:18

I think I've heard Chairman

32:22

Phillips or Commissioner Clements or both

32:24

say is it's just hard to

32:26

imagine getting infrastructure built if again you

32:28

get to opt out and

32:31

you know, you look across the economy

32:33

and other types of infrastructure and you

32:35

know, sure enough, at some

32:37

point some policymaker needs to make a

32:39

decision about which taxpayers or rate payers

32:41

need to pay. And

32:44

while it'd be nice if everybody get to

32:46

sort of make their own decision without being

32:48

compelled like that's probably a recipe for the

32:50

thing not getting built. So yeah, it's not

32:53

a neutral, you know, opting out is not

32:55

a neutral thing. It

32:57

is a decision of sorts itself. Right. So,

32:59

you know, my disagreement and I

33:02

think the majority that

33:04

Chairman Phillips, Commissioner Clements view

33:06

of it is just

33:08

like that view is

33:10

fundamentally irreconcilable with a

33:13

meaningful transmission planning rule. And

33:16

so they're just observing from the outside. It

33:18

just looked like that was just

33:20

a bridge too far. Like there wasn't a

33:22

way to reconcile and of course everybody would

33:24

prefer to have a unanimous bipartisan rule. It's

33:26

always better to do things that way. But

33:29

just because of the individuals who are there

33:31

and their views and convictions that

33:33

appears not to have been possible. Well

33:37

how idiosyncratic is that to

33:39

Christie? Is that a commonly

33:41

held view that

33:44

states should have this right? I don't

33:46

think that's a very widely held

33:48

view. Now, you know, these days, you know,

33:51

who knows? I mean most policy makers haven't

33:53

been asked the question or been put on

33:55

record. But you know what I... Or wouldn't

33:57

even know what you were talking about. Right,

34:00

you asked me, right. Certainly

34:02

historically at FERC policy, the last

34:04

30 years that I've been watching,

34:06

that's an anomaly. There was

34:08

another order, there were two orders. There's 1920 and then there's

34:10

1977. Where, by

34:12

the way, is there anything against all of these

34:15

numbers? Is there some mystical, is this like a

34:17

Taylor Swift thing where if you do enough numerology,

34:19

you're going to find hidden meeting here or like

34:21

who comes up with these? No,

34:24

there is actually a method to the

34:26

madness. First of all, the chairman gets

34:28

to decide the number and

34:30

Chairman Phillips wanted to, I think,

34:33

point to the history and tradition

34:36

of the agency and the need

34:38

for sort of shared infrastructure. So 1920 comes

34:41

from the year the

34:43

Federal Power Commission was originally created.

34:45

Oh, hilarious. That's awesome. What about

34:47

1977 then? That

34:50

is the year that the law was

34:52

passed to change it from the Federal

34:54

Power Commission to the Federal Energy Regulatory

34:56

Commission. How about that? That's hilarious. That's

34:58

fun. Okay. So what is 1977? So

35:02

order of 1977 is the FERC

35:04

implementation of the Federal

35:07

Backstop Transmission Citing

35:10

legislation that was originally

35:12

passed in Energy Policy

35:14

Act of 2005, notably a couple of

35:17

years after the Northeast blackout. Yes,

35:19

never exercised. That's right. The authority

35:21

has never been exercised even though

35:23

it's been around for ages. That's

35:25

right because there were a couple

35:27

of court decisions that really defanged

35:29

it and rendered it useless. And

35:32

so essentially what the Infrastructure

35:34

Investment and Jobs Act, IIJA,

35:36

otherwise known as Bipartisan Infrastructure

35:39

Law, what that did,

35:41

that bipartisan law did

35:43

was to essentially undo

35:45

the court decisions that had

35:48

rendered it useless and

35:50

re-strengthen it to the way most of

35:52

us originally thought it was supposed to

35:54

work. But without

35:56

getting into the details, it essentially made it

35:59

again a struggle. strong, or a meaningful

36:01

at least, federal backstop

36:03

siting approach where

36:05

if the Department of Energy

36:08

designates some line or path

36:10

as a national interest electric

36:12

transmission corridor and NITC, then

36:16

the process goes to FERC and FERC

36:18

can issue a permit somewhat similar to

36:20

what FERC does with the gas pipeline

36:23

side. Of course, the pipeline authority is

36:26

plenary, meaning it's not backstop,

36:28

it's full stop. Yeah, they

36:30

can approve pipelines anywhere, anytime. They

36:32

can permit transmission projects

36:34

in these NITC's, in

36:36

these corridors. And they just released like a

36:39

week ago, I think the first information

36:41

about where these corridors would be. And just to

36:43

my eye, I'm like, that's it. These

36:46

little, these tiny little squiggles on the

36:48

map, there's nothing in the southeast. Like

36:51

what did you make of the NITC's?

36:53

This is slightly off topic, but I'm

36:56

curious. Yeah, this is an important Department

36:58

of Energy activity going through the new

37:00

grid deployment office. And it

37:02

was sort of, you know, a little

37:04

here, a little there set of designations.

37:07

Kind of a sad trombone effect. I

37:10

thought they were going to be much more ambitious with that. Well,

37:12

you know, it's a step by

37:14

step process, I think. And also,

37:16

you know, testing out the process

37:18

for a few where it really

37:21

made sense, I think, is probably

37:23

a good strategy, especially

37:25

given what happened, you know, 15, 20 years

37:27

ago when they

37:29

tried to implement it and got beat back

37:31

by the courts. So you know, doing

37:33

it where it made the most sense or they had the

37:35

best data probably made some sense.

37:38

I don't think anybody expected that it was

37:40

going to, you know, have a

37:42

dramatic effect right away. Moreover, most people

37:44

think that, you know, it's sort of

37:46

a, you know, carry a big stick

37:49

type of policy that, you know, may

37:51

rarely, if ever, actually be used and

37:53

result in a federal permit. But

37:55

just the fact that it exists means, you

37:58

know, things like, you know, my state of

38:00

Maryland has this line we're hoping

38:02

to get cheap power through

38:04

Pennsylvania and the Pennsylvania Commission

38:07

said, no, there's plenty of benefits to the

38:09

region and to other states, but not enough

38:11

here, so we're going to reject it. So,

38:13

you know, that was kind of a classic

38:16

problem and this NITSI policy could

38:18

remedy that in situations. Oh, are

38:21

you in a NITSI? Not

38:23

really. Well, there is actually one kind of near

38:25

here in the DC area, partly because we've

38:28

got this massive load growth from data

38:30

centers in Virginia. Yeah, so,

38:32

I mean, FERC's rule in 1977, order 1977, essentially implements their

38:34

part of it. The one change from the proposed

38:41

rule on that was they agreed with

38:43

states. States had pushed back and said,

38:45

no, don't do the simultaneous

38:47

FERC and state process,

38:50

which, you know, a lot of the industry

38:53

had said, please do it that way, it's

38:55

faster. But FERC agreed

38:57

with the states that said, no, instead

38:59

do a sequential process, let the states fully

39:01

do their thing and then FERC steps

39:04

in. And so I think it's

39:06

a little slower the way

39:08

they did it. But, you know, I understand

39:11

they're trying to work with states and they

39:13

did actually get a 3-0 unanimous vote with

39:16

all three commissioners on that, I think largely,

39:18

probably because they, you know, they did work

39:20

with the states and do what the states

39:23

asked. And

39:25

is there anything in either of these orders

39:28

on inter-regional lines? Like,

39:30

these are about longer

39:33

lines within RTO regions

39:36

or within utility regions. Obviously, you

39:38

know, the vision, I think, the

39:41

future vision for a lot of

39:43

transmission advocates is we

39:45

also need inter-regional lines sharing

39:48

between regions. My understanding

39:50

is that they basically punted on that, is that

39:52

correct? That's right. So Does

39:54

this rule, you know, handle everything?

39:56

No, this is a one step

39:58

in a process. And the

40:00

main sort of and on thing

40:03

that is the into regional case.

40:05

Through this lengthy three or four

40:07

your process they sort of jettisoned

40:09

a few things I think it's

40:11

it's is coming out to they

40:14

to handle so they focus on

40:16

the region. All that gonna get

40:18

strong regional order now and nineteen

40:20

Twenty they really haven't addressed in

40:22

turn regional transmission meaningfully and that

40:25

course that's really important from both

40:27

a reliability standpoint and a clean

40:29

energy integration. Stand for me so that

40:31

remains to be done. Also, Congress is

40:33

considering acting in that area that would

40:36

be of course more effective as they

40:38

would do that so that would be

40:40

great as far as permitting legislation and

40:42

whenever deal they may come up with

40:45

to I'm in Ohio, any such deal

40:47

was ever a transmission purpose and no

40:49

question about that and as in a

40:51

regional I think would be a up

40:53

of the focus of that. So yeah,

40:56

there's more to do on the into

40:58

regional case. On the politics

41:00

of this possible permitting and further

41:02

transmission legislation. One of the things

41:04

you hear conservatives complain about is

41:06

that these recent moves from D

41:08

O Easy. On. Permitting.

41:11

Transmission. Have sort of poisoned

41:13

the well and now Republicans are going to

41:15

take their bomb go home and not going

41:17

to work on bipartisan permitting or transmission stuff.

41:19

How seriously do you take that. Well.

41:21

It just to clarify I do

41:23

here Republicans upset with our the

41:26

administration has implemented see out you

41:28

know the debt ceiling deal had

41:30

some Nepa reforms and so the

41:32

by demonstration agreed to that is

41:34

part of so Hard that are

41:36

paying our deaths and keep in

41:38

the global economy afloat and so

41:40

they're not happy about that And

41:42

that has soured somebody our conversations

41:44

on the Hills about permitting reform

41:46

but they're not dead. I do

41:48

think there are earnest discussions going

41:50

on in particular. at the center energy

41:53

committee and so you know a little

41:55

bit of time heals all wounds can

41:57

we how can we though assume that

41:59

prob probably not until after the

42:02

election, I mean. Well, for final

42:04

passage, yeah, I think most people say the

42:06

lame duck period after the election, you know,

42:08

if it's going to pass this Congress, that's

42:10

the most likely time. But of course, there's

42:13

a, you know, there are steps you have

42:15

to go through at the committee level and,

42:18

you know, there's a lot of work to

42:20

do between now and then. So I'm hopeful

42:22

that those discussions continue. Obviously,

42:26

there will be lawsuits. It's just

42:28

America these days probably

42:30

going to be a bunch of red

42:33

state attorneys general suing

42:36

against this rule. Like they sue against

42:38

every rule issued by the federal government,

42:40

it seems like these days. So

42:43

let's talk a little bit about legal

42:45

vulnerability if there is one. I mean,

42:47

it seems like to me, you know,

42:50

a layperson that everything

42:52

FERC is doing is pretty obviously

42:54

within FERC's authority. But

42:57

I think the threat, the cudgel that's

42:59

being waved around is once

43:01

again, our old friend major

43:03

questions doctrine, which

43:05

is the doctrine that

43:08

agencies may not do things

43:10

that strike John Roberts as

43:12

too ambitious. So

43:15

what's your read on the legal

43:18

vulnerability here? I mean, you

43:20

agree the lawsuits are inevitable, I assume you

43:22

agree that probably going to end up in

43:24

the Supreme Court eventually. What's your

43:26

take on how it fares? That

43:28

wouldn't surprise anybody. Yeah, I mean, you

43:31

know, big things get challenged. I have

43:33

to say really, you want to spend

43:35

your time on something that's planning infrastructure

43:37

for the future based on best available

43:39

information like that. They

43:42

do, Rob. They do want to spend their time on that. Yes,

43:44

the answer is yes. I,

43:47

you know, I'm just an earnest kid from

43:49

Michigan. I think people just

43:52

should trust each other and get along.

43:55

But yes, you're right suited to our times. But

43:59

Is that the vulnerability? The major questions like if

44:01

it gets dinged that's probably gonna be

44:03

the rationality is a yeah Well David

44:06

I think the lawyers it's for could

44:08

be shocked to hear you say or

44:10

anybody alleged that there are courts and

44:12

judges out there. there will. Be.

44:15

Inclined to find a weakness with

44:17

this rule. Oh dear. Oh

44:19

heavens you know the same Smash The

44:21

Act and Mack Christensen on staff and

44:23

particular. This is the first the that

44:25

thought would have occurred to them. These

44:27

challenges could have and. Plasma

44:31

Cells. Luck with that in mind. I

44:33

think they've put together a legally bulletproof

44:35

order to and the only reason I

44:37

have any hesitation there is that I'm

44:39

not a lawyer really even qualified to

44:41

comment on it. But I do, in

44:44

my work, have the privilege of being

44:46

able to talk to a lot of

44:48

really good lawyers. And everybody

44:50

I've spoken with says this is

44:52

legally is bulletproof as you can

44:54

make it by being liam legally.

44:56

Bullet proof by itself doesn't a

44:58

sure what any in a random

45:00

judge from a a bad circuit

45:02

you know we could do with

45:04

this or any other order for

45:06

that matter. Yes sir,

45:09

being legally sound is.

45:12

Necessary. But not sufficient for

45:14

getting sir who fits the

45:16

supreme court, I think. Okay,

45:18

so let's briefly. Touched.

45:21

On the other stuff, the other transmission

45:23

stuff that happens. Biden made a bunch

45:25

of announcements a couple weeks ago. There

45:27

was something on permitting something on. Funding

45:30

some line, a bunch of stuff on what,

45:32

What was all that? what happened? He.

45:34

our bunch of things in that

45:37

last week his april say announced

45:39

soon further projects using their transmission

45:41

facilitation program this is the one

45:43

that people god anchor tenant to

45:45

or it's where the government can't

45:48

take some financial position non aligned

45:50

can stimulate other you know a

45:52

on the other other private subscribers

45:54

to the line can get it

45:57

over the hump do not know

45:59

really love policy. I think transmission

46:01

developers love that policy. Not

46:03

a lot of funding for it, but that's,

46:06

you know, put that on the to-do list

46:08

if there's ever another budget. Do you know

46:10

the number off the top of your head?

46:12

How much? Yeah, they've got $2.5 billion authorized

46:14

to use for that program. Senator

46:17

Cantwell originally introduced it at a

46:19

$20 billion back in the IIJA.

46:22

So hopefully that can get

46:24

expanded in the future. But look, this is

46:26

all very helpful to kind of go fully

46:28

through the process with some actual projects because

46:30

there's a turns out to be a lot of

46:33

details of how to

46:35

iron those out. So they've anyway,

46:37

they made another announcement about that.

46:39

They announced a goal of upgrading

46:42

100,000 miles of

46:44

transmission lines. This gets

46:46

back to that grid enhancing technology

46:48

and advanced conductor. The

46:50

administration is very excited about trying

46:52

to do that, you know, to

46:55

maximize our existing network. But what

46:57

does the goal mean? Are they

46:59

going to pay for it? What

47:02

does that mean? Yeah. Is

47:05

that symbolic? I mean, you know, it's

47:07

a goal. I think the intent is

47:09

to kind of galvanize both the industry

47:12

and the various parties, you know, the

47:14

utilities, their state regulators, federal regulators, and

47:16

certainly DOE, which is the only one

47:19

that specifically in the federal government can

47:22

do something. They don't have a ton of money, but they

47:24

do have some money and discretion to

47:26

support some of those lines. So that was a

47:28

goal. And then there's been also recent administration

47:31

activity and a great deployment

47:34

office activity at DOE related

47:37

to their lead agency authority. This

47:39

is where it's another thing that

47:41

passed in 2005 that never was

47:44

actually implemented where sort

47:46

of the idea is a lot of

47:48

lines, particularly in the West, will need

47:50

a bunch of federal permits from different

47:52

federal agencies. Yeah. It's so relevant in

47:54

the West because there's so much federally

47:57

managed land. Yeah. Right. So

47:59

the idea is to have, and

48:01

that just gets to be a morass

48:03

of a process, probably just because, you

48:05

know, understaffed agencies trying to

48:08

do a lot, but, and

48:10

so the funding certainly helps, I should

48:12

say, but the lead

48:14

agency role also can really help

48:16

in the view of most transmission

48:19

developers anyway, because just the coordination

48:21

and the timelines and the consolidation

48:23

of the NEPA, the energy, or

48:26

the environmental impact statements, et cetera, that

48:29

efficiency, administrative process efficiency can

48:31

be really valuable. So the DOE has

48:34

been implementing that. So what that means, the Grid

48:36

Deployment Office just sort of gathers

48:38

all that together and administers

48:40

it basically and simplifies that

48:42

process? That's right. There

48:44

was sort of an informal process

48:46

for that in the Obama administration,

48:49

and then the FAST Act with

48:51

a policy passed, I don't know, five or

48:53

10 years ago that encouraged

48:55

some of that. So there's been sort of other ways this

48:58

has been done, but this is now

49:00

really formally doing that specific

49:02

provision in the

49:04

Federal Power Act, and so

49:06

that should really help. And by the

49:08

way, the administration got nine agencies to

49:11

sign a memorandum of understanding to do

49:13

that. Like- That's a lot of cats to herd.

49:16

I might be naive, but I'm not naive

49:19

enough to think that nine agencies in the

49:21

federal government can just, you know, quickly agreed

49:23

to, you know, give one of the

49:26

agencies lead authority over anything. Right.

49:29

There's a lot of turfiness. So the White House, I

49:31

mean, nothing like that happens without White House leadership.

49:33

So the White House really, I think, helped kind

49:35

of broker that. You know, I'm required

49:38

by a lot of ask this.

49:40

It seems like what's impeding lines out

49:43

West is kind of what is impeding

49:45

a lot of other stuff, which is

49:47

the endless environmental review, endless NIPA, sort

49:50

of like, do any of these

49:52

things that the

49:54

administration did address NIPA at

49:56

all or change NIPA at all, or address

49:58

that whole kind of- Yes,

50:01

two things. That lead agency role

50:04

does try to aim to

50:06

cut that the NEPA implementation time

50:08

in half. So

50:10

that's great and then also I didn't

50:13

mention yet but the there's a

50:15

categorical exclusion from NEPA for re-conductor

50:17

and so if you're doing what

50:19

we were talking about with you

50:21

know replacing to you know the

50:23

old cables and assets with new

50:25

modern advanced conductors that

50:28

can go forward under a

50:30

categorical exemption from NEPA so

50:32

that's another really good one credit to

50:34

the you know the lawyers at Department

50:36

of Energy for putting that

50:38

together and that can apply to a line

50:40

of any length which is very important because

50:43

obviously some of these are hundreds

50:45

of miles. Mm-hmm let's

50:48

reflect then you got all these moves

50:50

from DOE and the administration

50:53

and then you have this FERC

50:55

rule you know this is

50:57

vague but like what's it all

51:00

add up to Rob? Yeah. Like

51:02

you know what I'll frame it

51:04

this way you know everybody's panicked about load growth right

51:06

now all of a sudden everybody's panicked about load growth

51:08

oh no the data centers are coming the data centers

51:11

are coming people are you know utilities out there trying

51:13

to build gas plants to serve these. One

51:15

way you can subvert the

51:18

need for new generation

51:21

for these new loads is by hooking up

51:24

broader transmission networks right exactly.

51:26

Legendarily that's one of the

51:28

benefits of transmission you can

51:30

share generation over larger fields

51:32

so is this package

51:34

of reforms enough to

51:37

meaningfully address this load growth and

51:39

take some of the edge off

51:42

it or sort of like what's the cumulative significance

51:44

of all this? So

51:46

maybe we've got a third to a half

51:49

of the job done chipping away at these

51:51

things with the with the regional FERC rule

51:54

these DOE programs

51:56

that's helpful but

51:58

look on a more map macro level,

52:02

we still don't have

52:04

a solution to the following

52:06

problem. We've got lines,

52:08

really the big high capacity

52:11

lines crossing multiple regions, the

52:13

interregional transmission. You

52:15

need those for a resilient grid

52:18

and for clean energy

52:20

integration. We haven't had

52:22

any real significant

52:24

action from anybody

52:27

to really make

52:29

that happen. We talk about the three P's

52:33

that are the barriers for transmission,

52:35

planning, permitting and paying. I think

52:37

that paying part or cost allocation

52:39

in the jargon is

52:41

the big problem because whereas

52:44

a transmission line

52:46

might cross a couple of

52:48

dozen utility footprints, each

52:50

of those couple of dozen utilities have

52:53

a way to recover costs of their

52:55

own little island, the industry just didn't

52:57

grow up with any way to recover

52:59

costs across many of them. It's

53:02

significant that cost allocation for

53:04

regional transmission is if

53:06

not solved at least on

53:09

paper now. At least there's a process

53:11

now on paper. To me, that's the

53:13

biggest thing in this FERC rule is

53:15

cutting through that knot in regional transmission.

53:17

Do you agree with that? Yes.

53:19

Yeah, that's right. You need

53:22

to do that for interregional basically. Right.

53:24

You've got the planning and the paying,

53:26

the planning and cost allocation in a

53:28

regional context in order 1920. Then the

53:30

interregional context, we don't

53:32

have anything. Now, there was a policy

53:34

that got most of the way through

53:36

the build back better into the IRA

53:40

process, a transmission tax credit

53:42

for these big long

53:44

lines. That got left unfortunately on

53:46

the cutting room floor. That would

53:48

have been really helpful. That's a

53:51

30% investment tax credit

53:53

so it doesn't pay for 100% Of

53:56

the line, but it does make the cost

53:58

allocation challenge. The easier

54:00

for him so it would really

54:02

be nice in the nests if

54:04

there is an opportunity at some

54:07

point in our future tax package

54:09

and and when I get into

54:11

all the scenarios but there is

54:13

a massive see of Trump's tax

54:15

cut saying that comes up next

54:17

year ha ha ha. As you

54:19

can do this through reconciliation right?

54:21

it's all circle tax policy as

54:23

as another reconciliation billie certainly could

54:26

do that. Interesting. But.

54:28

This will do you think like,

54:30

do you anticipate this spring? Any

54:32

kind of sort of. Renaissance

54:35

of regional transmission lines.

54:38

I think it does help a lot

54:40

of a all these tools together collectively

54:42

that have been implemented in these last

54:44

four years. So the for planning and

54:47

these d o he sort of enabling

54:49

programs they do help a lot of

54:51

meet our moreover all the region's gonna

54:54

got the memo so the the transmission

54:56

providers and manual transmission organizations got the

54:58

memo from you know Chairman Black when

55:01

he started these, then Chairman Rich Black.

55:03

you know that this is what they're

55:05

supposed to do by the regulator and.

55:08

Even though you know he didn't

55:10

issue the final rule, his term

55:12

expired and is no longer there

55:14

by. like you know, a lot

55:16

of them started doing this. They

55:18

started doing regional planning pretty consistently,

55:20

in fact, in a New England

55:23

just even very recently. sort of

55:25

file their own approach that's quite

55:27

similar in New York's My So

55:29

Pjm of Almonds or working on

55:31

it, so I think it already

55:33

stimulated a lot of activity even

55:36

before there was a file. Rules.

55:38

so and others have a bunch

55:41

of lines around can an honor

55:43

to of areas that for example

55:45

california i are so has really

55:47

been working with other states and

55:49

with the hunter agencies in california

55:51

on a lot of this and

55:54

my so as as long range

55:56

transmission plan so it's definitely in

55:58

the state regulatory world and the

56:00

electric industry world, a lot of people have been

56:02

talking about transmission and working on these things.

56:05

So this sort of environment

56:07

has really encouraged a lot of activity.

56:11

But again, it's still, we need to, I think,

56:14

mark and I think celebrate the

56:16

issuance of a major rule like

56:18

this, order 19, 20, especially. It's

56:22

the big one. It's definitely the

56:24

biggest in grid policy in the last

56:26

20 plus years.

56:30

And I think because of

56:32

the importance of the grid, it's the

56:34

biggest energy policy since the inflation reduction

56:37

act. But that

56:39

said, it doesn't take care of all

56:41

the issues because we have this big

56:43

inter-regional need. So we're gonna have to

56:45

look to the next Congress and

56:47

administration term for future FERC

56:50

action to address that. Does

56:53

this in any way exhaust what

56:55

federal agencies are capable of doing

56:58

without Congress? Or is there still

57:00

much more that say FERC could do? And

57:03

if so, what is the significance of

57:08

the five member commission being down to

57:10

three? Clement is leaving, I believe, in

57:12

a couple of months. Joe

57:16

Manchin is a big jerk

57:18

about new nominees for FERC.

57:21

So A, what's the situation

57:23

with FERC? And then B, what else could

57:26

FERC do on transmission beyond this? So

57:29

there are three FERC nominees. The

57:31

president has nominated one Republican, two

57:33

Democrats. And it is the

57:36

task of Senate Energy

57:38

Committee's Chairman Manchin to schedule their

57:40

business meeting to vote those out

57:42

of committee. All the

57:45

signs look good. They all did great in their

57:47

testimony. So none of them

57:49

are being held up. None of them are being

57:52

made an example of by a- No, no,

57:54

there's no, I mean, there's no evidence of

57:56

that. And they're good from your, I

57:58

mean, maybe you can't say honestly. but like what do

58:01

you make of the nominees? Since it's

58:03

just you and me chatting here, David, and

58:05

you promised not to bring your recording equipment, I'll tell

58:07

you what I really think about these individuals. Yeah, give

58:09

me the scoop. No,

58:12

look, it's a good slate, and they're all very

58:14

qualified and smart. And I

58:16

don't see any political, you know, roadblocks. I

58:18

think it's just, I think it's just a

58:20

matter of, you know, scheduling it and getting

58:22

it done. So you think FERC

58:24

will be back up to full five person strength

58:26

maybe by the end of the year? Well,

58:29

I would think this summer, I mean, as you

58:32

said, Allison Clement's term is up June 30th, it's

58:34

the exact day. You have to

58:36

have three to do anything, right? Yeah, I mean,

58:39

the expectation is, you know, she was gonna serve out

58:41

the term. And so, I mean, that's what I assume

58:43

is, you know, she would leave. So they need to

58:45

get going, but I think they plan to, and they've

58:47

been on track to process

58:50

them. And again, there's been no

58:52

indication of any problems. So I expect this

58:55

summer, they'd be back up to

58:57

five. So then, you know, turning to your

58:59

broader question of what's next, I

59:01

do think there's some actions for

59:03

FERC still in the potential this

59:05

year. One is on dynamic

59:08

line ratings, which again, we discussed

59:10

before in the planning context, but

59:13

since those are very useful,

59:15

even forget about new lines, just on the

59:17

existing grid, if you never have a new

59:19

line, you still have this huge opportunity to

59:21

squeeze more out of the existing grid. And

59:24

there are really good proposals to

59:27

say where and when dynamic

59:29

line ratings could be required. So I

59:31

could see something like that

59:33

happening in the near term. I mean, there

59:36

is stuff, I mean, that's one of the

59:38

grid enhancing technologies that are

59:40

covered somewhat in 1920, right? I

59:42

mean, at least they suggest that utilities take

59:44

them into account. Yes, but again,

59:47

as part of a transmission plan,

59:49

like an expansion plan. So, you

59:51

know, I think it's a

59:53

somewhat separate, certainly related question

59:56

of just look around at the existing

59:58

grid, are there pathways? repeated

1:00:01

congestion where it might

1:00:03

be a windy area where dynamic line

1:00:05

ratings could be very beneficial. So in

1:00:08

those cases. Yeah, I

1:00:10

have to say, I mean, it's just

1:00:12

crazy that FERC has to make them

1:00:15

do that. Like, it's

1:00:17

crazy that FERC has to

1:00:19

force this. Like, of

1:00:21

course you should be doing that already.

1:00:23

Yeah, you know, under a different regulatory

1:00:25

model, like there's no great way to

1:00:28

regulate natural monopolies in the UK, they

1:00:30

do have more of a performance regime.

1:00:32

And guess what? They actually do really

1:00:35

widely deploy all these grid-enhancing technologies. So,

1:00:37

you know, that would be great

1:00:40

if we could get to that. But in

1:00:42

lieu of that, it's kind of like carrots

1:00:44

or sticks. You know, choose one or the other

1:00:46

or both. So that's one. And

1:00:48

then again, interregional, FERC has authority

1:00:50

to do something on interregional. Congress

1:00:54

has obviously better, stronger authority.

1:00:56

It's sort of clear and

1:00:58

more decisive and

1:01:00

much less subject obviously to court challenge. So

1:01:02

if Congress acts on that, that'd be fantastic.

1:01:05

But in lieu of that, or

1:01:07

even regardless of that, FERC can act

1:01:09

and do some things. So I think they're gonna,

1:01:12

you know, once the staff gets a

1:01:14

well-deserved break and breath in summer vacation,

1:01:17

including the Chairman Phillips or

1:01:19

all his work on that, you

1:01:22

know, then hopefully they can kind of turn to

1:01:24

the interregional case. And they

1:01:26

do have a team, I know, working

1:01:28

on this. And a lot of folks

1:01:30

are giving them ideas on what and

1:01:32

how. There's no way that's any

1:01:34

of that's gonna get done before the election,

1:01:36

right? Yeah, no final

1:01:39

action. I'd love, personally, I'd love to see

1:01:41

a process started where

1:01:44

they could, I mean, they could get

1:01:46

a proposed rule, not any kind of final

1:01:48

rule. Interesting. So there is more

1:01:50

FERC could do, and we do expect FERC to

1:01:53

be at it at full

1:01:55

strength soon. That seems

1:01:57

positive. And so then finally, then...

1:02:00

you know, as you keep saying Congress needs to act,

1:02:03

I'm wondering, you know, you say

1:02:05

that the top priority here is

1:02:07

inter-regional. You need basically Congress to

1:02:10

plead or beg or induce

1:02:12

or bully regions

1:02:15

into cooperating with other regions

1:02:17

and having transmission lines that

1:02:19

cross regions for all the

1:02:21

reasons we all understand. What

1:02:24

else would you like Congress to put

1:02:26

in and is there in

1:02:28

your political judgment a

1:02:31

serious prospect of

1:02:34

bipartisan legislation that does this? Like,

1:02:36

is there enough will on both

1:02:39

sides of the aisle to do

1:02:42

this? Because as I said, transmission

1:02:44

is sort of like in danger

1:02:47

of getting coded as blue, getting

1:02:49

coded as renewable. And it seems

1:02:51

like that sentiment is kind of spreading on

1:02:53

the right. So I'm just curious, like, what's

1:02:56

your take on the temperature of Congress

1:02:58

on this? On the substance

1:03:00

of it, I think that kind

1:03:02

of inter-regional transmission could be sort of a

1:03:04

more of a planning type of thing, or

1:03:07

it could be this minimum transfer capacity idea,

1:03:10

which has some nice elegance

1:03:13

to it. Which is just to say quickly

1:03:15

what that is, because I feel like that's an important concept

1:03:17

in these discussions. Yeah, you have

1:03:19

region A next to region B,

1:03:21

and just the idea is you've

1:03:24

got to have X percent capacity

1:03:26

between those two regions. They do that in

1:03:28

Europe. Right, just the ability to pass energy

1:03:30

back and forth. Yeah. The

1:03:32

line capacity. Yeah, so it's kind of an insurance

1:03:34

policy, and that's part of the problem is, you

1:03:36

know, it's for, how do you decide the right

1:03:39

insurance policy? Congress can eat

1:03:41

more easily, just say, all right, well, just like

1:03:43

we don't know the exact number, but here's an

1:03:46

insurance policy that's due to this minimum level, and

1:03:48

then go and argue about the optimum level, but

1:03:50

let's just make sure we're protected and safe with

1:03:52

some minimum level. Yeah, so

1:03:55

that's an option. And then, of

1:03:57

course, well, and then I

1:03:59

guess two other areas. One is, you know, in

1:04:01

the more sort of NEPA

1:04:03

related, I do think

1:04:05

there are some process reforms that could speed

1:04:07

things up in that context.

1:04:09

And I think that would be

1:04:11

very helpful for getting infrastructure built.

1:04:14

And then thirdly, this whole NITSI

1:04:16

thing we were talking about, the

1:04:18

backstop siting, there's some really clunky

1:04:21

parts of that that I don't think

1:04:23

were intentional. So for

1:04:25

example, you have to go, I mentioned there's a

1:04:28

role for DOE to designate and FERC to issue

1:04:30

the permit. But you have to go through the

1:04:32

full NEPA at each separate stage. In fact, you

1:04:35

could argue a third stage because the

1:04:37

corridors are also used for DOE financing.

1:04:39

So let's say you get a loan

1:04:41

guarantee also, so you got to get

1:04:43

like three NEPA rounds. So

1:04:45

it's just, you know, there's a lot of just

1:04:47

cleanup, just let's, you know,

1:04:49

get some process hocks to clean up

1:04:51

some of these clunky steps. And that's

1:04:54

another category for reform. So I

1:04:56

think that would all be very useful. Now, politically,

1:04:59

is there room for a deal? I mean, I think we

1:05:01

were very close just recently

1:05:03

that fall after the Inflation Reduction

1:05:05

Act. Of course, you

1:05:08

know, Pelosi, Biden and Schumer

1:05:10

had all committed with Senator

1:05:12

Manchin to do something

1:05:15

on permitting that was, I

1:05:17

think, part of the overall deal to

1:05:19

pass IRA. And it was really knife

1:05:21

edge then. I think honestly, the Republicans

1:05:24

didn't want to give Manchin the win

1:05:26

because they thought he might, you know.

1:05:28

Yeah, everybody blames progressives for that, Rob.

1:05:31

Let's just say that your Republicans were,

1:05:34

they were not on paper in support

1:05:36

either. Right. So for whatever, you know,

1:05:39

political reason there. So I do think

1:05:41

still there's room for a deal. Now,

1:05:43

both sides, you know, have some like

1:05:45

hard thinking to do about this. Republicans

1:05:49

need to ask themselves, go look

1:05:51

in the mirror and say, wait a minute, why

1:05:53

do I dislike transmission again? So what's

1:05:57

so bad about this infrastructure? Do I really need

1:06:00

to oppose getting this

1:06:02

infrastructure built. And so they need to come

1:06:05

to the table, even if they might

1:06:07

be getting utility lobbying from their hometown

1:06:10

utility. And I think probably progressives need

1:06:12

to also look in the mirror and

1:06:14

say, well, let's see. Do

1:06:17

we really love NEPA? Yeah, well, I

1:06:19

mean, NEPA is going

1:06:21

to be there. But let's say a proposal

1:06:23

comes out. Let's take a serious look at

1:06:25

what the net carbon impact would be. Because

1:06:28

it could be the case that there's

1:06:30

something that enables certain fossil

1:06:33

infrastructure. And yet the carbon benefit

1:06:35

of the transmission provisions are so

1:06:37

good that it's in that positive.

1:06:39

Yeah, this was always the argument,

1:06:41

right, is that if you just

1:06:43

make permitting in general easier, clean

1:06:46

energy wins. That was always kind of the

1:06:48

argument for this. That's where we are, right?

1:06:50

That's the big state we're in. It's just

1:06:53

it's kind of like the

1:06:55

same issue. And didn't I see your

1:06:57

tweet, David, about a Sierra Club person

1:07:00

testifying in favor of housing in

1:07:02

some area, right? So like

1:07:05

you said, check your priors on this

1:07:07

one, right? So you know, that's the

1:07:09

thing. It's just like, you know, NIMBY

1:07:11

stuff in urban housing, you know,

1:07:14

I think on kind of clean energy

1:07:16

infrastructure. First of all, there are

1:07:18

very strong proponents of transmission across

1:07:20

the environmental community. But you know,

1:07:23

but when it comes to a legislation that

1:07:25

might have involved fossil, that's where obviously it

1:07:27

gets really tough. Right, right. I

1:07:30

mean, this is all seems like a lot

1:07:32

more than one might have anticipated if one

1:07:34

were looking at transmission, say two or three

1:07:36

years ago. So at the very least,

1:07:38

I think we could take some pleasure in the fact

1:07:40

that like, it really does seem

1:07:42

to have gripped the political class

1:07:44

at last, the need for this

1:07:46

or at least partially gripped. So

1:07:50

and you're probably as responsible

1:07:52

as anyone in the world for that happening.

1:07:54

So I hope you're taking some satisfaction in

1:07:56

all this. Kind of you to say always

1:07:58

good to be with you, David. Thank

1:08:06

you for listening to the Volts

1:08:08

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1:08:11

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1:08:13

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1:08:16

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1:08:18

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1:08:21

that's Volts.wtf so that I

1:08:24

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1:08:27

Thank you so much. I'll see you next time. Bye.