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Speaker 1: Hi, it's West Kasova. We're taking a break this week,

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Speaker 1: so here's one of our favorite episodes you might have

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Speaker 1: missed and an update. Record heat means electricity demand in

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Speaker 1: Texas has reached all time highs about a dozen times

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Speaker 1: since June. Surprisingly, though the Texas grid has shown few

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Speaker 1: signs of stress. One big difference solar generation. It's come

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Speaker 1: in roughly double from last summer, and so much sun

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Speaker 1: means it's been coming in stronger than expected when it's

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Speaker 1: needed most.

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Speaker 2: It's going to be extremely humid, disrespectfully humid tomorrow.

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Speaker 3: So here's what's happening about.

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Speaker 4: One nineteen in Hillsborough, one fifteen in Corsic, fifteen in

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Speaker 4: Waksahatchet one sixteen and four one and Taro one.

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Speaker 3: O eight and debt in one oh seven and camp.

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Speaker 4: So you get the idea dangerous.

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Speaker 1: I'm West Kosova today on the Big Take. You think

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Speaker 1: it's hot now, well imagine if the AC went out.

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Speaker 2: The unrelenting temperature straining the power grid as the state

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Speaker 2: set a June record for energy demand, the historic heat

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Speaker 2: buckling roads from the Lone Star State to Louisiana.

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Speaker 1: The crippling US heat wave that's smothering Texas and spreading

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Speaker 1: across the South means millions of miserable people seeking relief

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Speaker 1: are doing what you'd expect. They're cranking up the air conditioning,

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Speaker 1: and that is pushing America's aging overtext power grid to

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Speaker 1: the max. With concerns about rolling blackouts or just playing shutdowns.

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Speaker 5: To say it's a lot of work as a massive understatement,

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Speaker 5: but there is an urgency to deal with this because

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Speaker 5: we do have this very real climate threat and we're

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Speaker 5: racing against the clock.

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Speaker 1: Nourene Malick reports on the power industry for Bloomberg. She's

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Speaker 1: here to tell us about why our grid is so

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Speaker 1: fragile and what can be done to future proof the

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Speaker 1: system for a world where extreme weather shocks are becoming

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Speaker 1: more frequent, and not just in summer, by the way,

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Speaker 1: these problems are just as bad in winter, and maybe worse. Noreen,

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Speaker 1: you have been writing a lot of stories lately about

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Speaker 1: this unbelievable heat wave across the South and especially in Texas.

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Speaker 1: Obviously it's making a whole lot of people miserable, but

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Speaker 1: it's putting a huge strain on the energy grid and

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Speaker 1: the ability just to keep up with the demands that

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Speaker 1: everybody has.

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Speaker 5: Yeah, So Texas is an outlier in the US because

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Speaker 5: demand is growing so fast in Texas, it's one of

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Speaker 5: the fastest, if not the fastest outright. What that means is,

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Speaker 5: over the last several years, they've had a population boom

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Speaker 5: with people moving in from California and other states, and

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Speaker 5: then you've had businesses expanding. On top of that, you've

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Speaker 5: had strong economic growth. And then you've also had bitcoins,

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Speaker 5: which are heavy power users, come in in the last.

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Speaker 3: Couple of years.

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Speaker 5: So you've set up this base demand for power is growing,

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Speaker 5: and then on top of that, every time you add heat,

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Speaker 5: it like multiplies how much demand because they're all cranking

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Speaker 5: up their air conditioners. And something you may not know

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Speaker 5: about Texas is that they use a lot of AC

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Speaker 5: compared to the rest of the country. Like one megawatt,

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Speaker 5: which is a unit of how you measure electricity, can

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Speaker 5: provide power for typically two hundred homes in Texas and

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Speaker 5: the rest of the country that's closer to like eight

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Speaker 5: hundred homes.

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Speaker 1: And that's all because of air conditioning.

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Speaker 5: Well, it's just Texas homes are bigger. Somebody wants described

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Speaker 5: to me, there's a lot of big foyers and big

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Speaker 5: homes there. They all use a lot of electricity, but

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Speaker 5: it's also swimming pools. And then of course gadgets and

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Speaker 5: evs are coming online, but that's more newer on the

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Speaker 5: EV side.

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Speaker 1: And the heat in Texas, even for Texas in the summertime,

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Speaker 1: is pretty extreme.

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Speaker 5: Yeah, So anytime you have any type of weather driven

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Speaker 5: demand and the amount of electricity or energy.

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Speaker 3: Use escalates very quickly.

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Speaker 5: And if you're talking about ninety to eight degrees versus

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Speaker 5: one hundred and two degrees, that may seem like four

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Speaker 5: degrees is not that much, but when it comes to

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Speaker 5: air conditioning demand, the increase is way bigger.

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Speaker 1: So noreene just to give people an idea of what

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Speaker 1: it means when there's so much demand put on the

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Speaker 1: energy grid. What's happened to energy prices in Texas?

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Speaker 5: Yeah, so electricity prices are extremely volatile. Just in the

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Speaker 5: first fifteen days of June, we've seen prices go from

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Speaker 5: like forty dollars per megawatt hour you know, normal demand,

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Speaker 5: to forty five hundred dollars when it was an extremely

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Speaker 5: hot day for several hours.

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Speaker 1: From forty one dollars to over four thousand dollars in

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Speaker 1: one day.

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Speaker 5: Yeah, I mean it's not impossible to see that type

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Speaker 5: of swing within a day, but then also across days.

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Speaker 5: So the way power is priced, it's pri on a

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Speaker 5: five minute basis hourly basis, so there's a lot of

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Speaker 5: way to splice it. So the average for the day

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Speaker 5: was not four thousand, It was probably a few hundred dollars.

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Speaker 5: But then there are certain hours around six seven pm

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Speaker 5: where it was four thousand dollars per megat hour.

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Speaker 1: And the reason why energy prices for natural gas, which

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Speaker 1: is what the grid mostly operates on, are so high

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Speaker 1: is I guess it's sort of akin to uber surge pricing.

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Speaker 1: When everybody is looking for an uber the prices go up,

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Speaker 1: and if everybody wants your energy, you get to charge

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Speaker 1: more for it because there's no other place to go.

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Speaker 5: Natural gas is the number one driver, and then you

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Speaker 5: also have wind and solar. But what happens is exactly

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Speaker 5: what you're saying, when you have those high demand periods,

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Speaker 5: the price of electricity is set by the most expensive unit.

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Speaker 5: So let's say on an average day, like if you're

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Speaker 5: thinking about uber, everyone's driving like a hond or a camera.

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Speaker 5: That's pretty fuel efficient. But let's say during rush hour,

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Speaker 5: in a thunderstorm or a heat wave, I guess in

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Speaker 5: Texas you have to like bring out the Lamborghinis and Ferraris.

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Speaker 5: Those are not fuel efficient, but everyone gets paid the

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Speaker 5: price of the Ferrari in a Lamborghini, even if it's

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Speaker 5: just some of the megawatts used.

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Speaker 1: So when it surges like that, how much more does

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Speaker 1: it cost? In total?

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Speaker 5: It can cost billions of dollars over the course of

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Speaker 5: days because you're pricing this every five minutes, every hour.

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Speaker 3: Yeah, it quickly adds up.

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Speaker 5: It takes time to filter out to customers depending on

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Speaker 5: how they get builled. Texas households may have locked in

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Speaker 5: a six month power rate, so that sets their price,

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Speaker 5: say like ten cents per kilowatt hour. Some power retailers

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Speaker 5: will have fine prints. Well, if there is a rally

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Speaker 5: in gas or power prices in real time, we will

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Speaker 5: push on those costs to you right away. For others,

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Speaker 5: there's a lag. Customers will eventually pay for all of this.

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Speaker 5: It just depends on how soon.

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Speaker 1: And so Texas has been taking all kinds of measure

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Speaker 1: to try to cut energy usage, asking people not to

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Speaker 1: use as much. Is that realistic?

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Speaker 5: So the Electric Reliability Council of Texas or ORCOTT, which

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Speaker 5: is what the state grid operator is called, has been

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Speaker 5: more proactive and they have been putting out weather watches

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Speaker 5: like this is the first summer they started putting out

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Speaker 5: a weather watch to warn people of tight conditions, asking

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Speaker 5: consumers to make cuts where it was safe to turn

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Speaker 5: up their thermostat to help keep the grid stable and

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Speaker 5: avoid a shortage.

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Speaker 1: Another thing you report, which I thought was interesting, you

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Speaker 1: mentioned bitcoin miners which have moved into Texas and they

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Speaker 1: use a ton of energy running those big hot supercomputers.

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Speaker 1: They have slowed down and kind of stopped operations sometime.

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Speaker 5: Yeah, so bitcoin mining is really interesting because these are

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Speaker 5: basically computing centers. They look like data centers from the outside,

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Speaker 5: but obviously very sophisticated machines on the inside. But they

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Speaker 5: have the capability to turn on and off really quick quickly.

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Speaker 5: There's about two thousand megawatts of bitcoin mining in Texas.

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Speaker 5: That's the equivalent of like, let's say, two large nuclear plants,

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Speaker 5: and so they see high power prices in the thousand

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Speaker 5: dollars range, it makes sense to shut down and not

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Speaker 5: operate because they're not using that much. But at the

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Speaker 5: same time, not only are they saving money, but some

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Speaker 5: of that is actually participating in a grid program where

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Speaker 5: they get paid to curtail. And that's when Urkott, the

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Speaker 5: grid operator, tells them, hey, can you like ramp down

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Speaker 5: a little bit or a lot so that we can

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Speaker 5: reduce stress on the grid and send that power to

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Speaker 5: somebody else.

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Speaker 1: We're talking about natural gas power, but you know, Texas

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Speaker 1: has a lot of sun, Texas has a lot of wind.

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Speaker 1: How much can those forms of renewable energy we talk

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Speaker 1: about all the time help.

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Speaker 5: Out in the current heat wave, Actually solar is doing

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Speaker 5: really well. It's maxing out. It's considered to have a

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Speaker 5: summer capacity of like more than twelve thousand megawatts, so

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Speaker 5: when the sun is shining mid morning to like when

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Speaker 5: the sun sets, it's operating pretty much close to max capacity.

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Speaker 5: And that's been a real benefit for the grid. If

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Speaker 5: you think about twelve thousand megawatts versus like record demand,

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Speaker 5: which was eighty thousand megawatts last year a little more

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Speaker 5: than that, that's a significant chunk. And then wind has

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Speaker 5: actually been low in the middle of the afternoon. That

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Speaker 5: has actually been one of the reasons that supply is

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Speaker 5: really tight in RKOT.

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Speaker 3: They now have so much demand.

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Speaker 5: Growth that they actually need renewables to kick in to

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Speaker 5: keep the lights on. A regulator recently told me that

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Speaker 5: Urkott is beholden to the breath of God. That basically

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Speaker 5: means if the wind picks up and it's supposed to

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Speaker 5: get stronger, then that gives more bandwidth for Urkott to

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Speaker 5: like operate the grids safely and not really worry.

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Speaker 1: And of course sun just goes down every day, so

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Speaker 1: at night you're never going to have that solar power.

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Speaker 5: Actually the riskiest part of the day Historically, you know,

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Speaker 5: the grids have always been set up to deal with

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Speaker 5: peak summer demand the hottest hour of the day, and

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Speaker 5: that was usually like five or six pm. But now

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Speaker 5: since we have solar, the risk has actually shifted to

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Speaker 5: late afternoon when the sun is starting to set, or

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Speaker 5: the evening hours when there is no sun, and that's

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Speaker 5: really when you need everything else to like ramp up

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Speaker 5: quickly or be strong, and so that risk can actually

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Speaker 5: be at like seven, eight or nine pm.

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Speaker 1: Noreen, we're talking all about Texas just because so big

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Speaker 1: and so hot, but it's also hot across the South,

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Speaker 1: and Texas is a bit of an outlier because they

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Speaker 1: run their own power grid. What are other states experiencing

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Speaker 1: right now and how are they dealing with it?

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Speaker 5: Yeah, so Texas is unique because not only do they

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Speaker 5: run their own power grid, but they have very few

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Speaker 5: links to other grids, so they have to kind of

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Speaker 5: be self sufficient. But the nearby grids are also facing stress.

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Speaker 5: The one directly to the east and it kind kind

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Speaker 5: of like has a slice of Texas and goes all

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Speaker 5: the way to the Great Lakes is the MISO Grid,

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Speaker 5: the Mid Continent Independent System Operator.

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Speaker 3: They have actually put out an.

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Speaker 5: Alert for operating the grid conservatively in their southern region,

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Speaker 5: which includes Mississippi, Arkansas, Louisiana, these different grids. When they

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Speaker 5: see a heat event coming, they will tell any power

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Speaker 5: plant or operator of transmission lines or other infrastructure to

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Speaker 5: cancel all maintenance so that basically everything is lined up

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Speaker 5: and ready to go. And so that's like a first

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Speaker 5: call to arms.

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Speaker 1: So the storage problem, which is one of the reasons

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Speaker 1: why we have these big spikes in energy prices because

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Speaker 1: there's no buffer, is something that other states are starting

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Speaker 1: to look at. You right about New York, which I

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Speaker 1: guess is testing out this giant battery.

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Speaker 5: New York's largest battery is about seven point five megawatts,

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Speaker 5: and it's a four hour battery. If you ran that

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Speaker 5: battery out for four hours at full capacity, that would

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Speaker 5: be enough to charge one point five million phones. It

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Speaker 5: makes a difference in extreme weather events, but it's the

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Speaker 5: tip of the iceberg.

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Speaker 1: And I guess that's a really big point that you

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Speaker 1: also write about, which is that the US Department of

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Speaker 1: Energy says the US is far behind in building what

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Speaker 1: we need to keep up with increasing demand.

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Speaker 5: Yes, so the energy transition is not going as fast

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Speaker 5: as it needs to be. The Energy Department has estimated

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Speaker 5: that about thirty to fifty gigawatts of clean energy is

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Speaker 5: built a year, and that pace needs to quicken to

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Speaker 5: ninety gigawatts. There's a lot of people in finance, in developers,

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Speaker 5: venture capital, policy makers on a state federal level trying

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Speaker 5: to find a way to make it easier to connect

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Speaker 5: these projects so that they could be connected faster. It's

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Speaker 5: going to take some time to figure this out, and

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Speaker 5: the concern is can you put all these pieces together,

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Speaker 5: get through all the red tape To.

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Speaker 3: Say it's a lot of work.

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Speaker 5: As a massive understatement, there is an urgency to deal

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Speaker 5: with this because we do have this very real climate

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Speaker 5: threat and we're racing against the clock.

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Speaker 1: After the break, even with the heat, the power industry

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Speaker 1: is racing for winter.

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Speaker 4: A snowstorm and brutal cold hit an unprepared energy system

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Speaker 4: and left nearly five million customers in Texas, North Dakota, Arkansas, Louisiana,

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Speaker 4: and Mississippi in the dark. Power companies in affected states

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Speaker 4: had to resort to rolling power blackouts to save their

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Speaker 4: networks from collapsing, leaving households and businesses without power and heat.

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Speaker 1: Norien. Here we are sitting in the middle of the

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Speaker 1: summer talking about heat. But one really interesting thing you

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Speaker 1: write is that the heat is only part of the problem,

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Speaker 1: and maybe not even the biggest. It's when winter comes.

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Speaker 1: It seems a long way off, but it's the cold

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Speaker 1: that often puts the biggest stress on the energy grid.

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Speaker 5: Yeah, and actually, how this summer plays out is going

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Speaker 5: to directly determine what happens next winter. And what I

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Speaker 5: mean by that is the summer months are when you

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Speaker 5: refill all the natural gas inventories. You know, the last

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Speaker 5: couple summers, demand has been super high for natural gas

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Speaker 5: being burned by power generators, and so that limited the

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Speaker 5: amount of inventories that were there ahead of winter. So

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Speaker 5: if we're burning through that gas now, there's going to

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Speaker 5: be less ready in stockpiles for next winter.

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Speaker 1: And I want to ask you about one big storm

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Speaker 1: that you write about which serves as the kind of

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Speaker 1: moment where the energy industry realized they needed to do something,

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Speaker 1: and that was Winter Storm Elliot in December twenty twenty two.

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Speaker 5: Winter Storm Elliot was a really big wake up call

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Speaker 5: because most of the attention at the time was focused

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Speaker 5: on like Kentexas survive this after the winter Storm Uri

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Speaker 5: like two years ago. And what happened was the greatest

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Speaker 5: risks emerged on the East coast. Elliott was a fast

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Speaker 5: moving winter storm that moved across from like the northwest

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Speaker 5: across the central US and it hit the East coast

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Speaker 5: on December twenty third, and the storm moved so quickly

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Speaker 5: it caused temperatures on the PJAM grid, which stands for

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Speaker 5: historically Pennsylvania, New Jersey and Maryland. It was the cornerstone

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Speaker 5: of what is now the largest US power grid, which

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Speaker 5: stretches basically from New Jersey to the northern edge of

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Speaker 5: North Carolina and out to Illinois. It serves more than

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Speaker 5: sixty five million Americans. The storm caused temperatures to fall

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Speaker 5: by twenty nine degrees in twelve hours. That was the

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Speaker 5: fastest drop in temperature in history for that grid. If

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Speaker 5: you had a slower moving storm and you knew it

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Speaker 5: was going to get cold, would have power plants that

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Speaker 5: would have time to find fuel or to make preparations.

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Speaker 3: This was so fast moving.

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Speaker 5: It was at the start of a three day holiday weekend,

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Speaker 5: when you know people are already on vacation, and so

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Speaker 5: there were not enough people around. Trading floors at natural

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Speaker 5: gas desks were closed. This is typical every weekend and

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Speaker 5: every long weekend, but when you have an extreme weather

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Speaker 5: come in, it creates a scramble.

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Speaker 1: And so what happened to all those people who were

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Speaker 1: supposed to be on the receiving end of all that

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Speaker 1: gas powered electricity.

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Speaker 5: What was difficult about this storm is that the failures

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Speaker 5: were really widespread. In terms of the causes. The gas

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Speaker 5: industry was probably the best indicator that there was trouble

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Speaker 5: to come. Because gas prices are really reactive to weather events.

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Speaker 5: They tend to look at a forecast two weeks out

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Speaker 5: in advance, and then if that forecast is reaffirmed every

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Speaker 5: day and is still as by the time you were

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Speaker 5: five days, three days or the next day out, gas

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Speaker 5: prices just like go off the charts. And so what

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Speaker 5: happened in the US and in Pjam gas prices started

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Speaker 5: rallying ahead of time. So that was a good sign

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Speaker 5: and that thing that there could be trouble or that

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Speaker 5: there were tight gas supplies. It was on the morning

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Speaker 5: of December twenty third.

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Speaker 3: It was still.

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Speaker 5: Fifty degrees in places like Pennsylvania, but you saw power

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Speaker 5: generators start to drop off the grid. And one of

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Speaker 5: the concerns we heard was that the rally in gas

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Speaker 5: prices was higher than power prices, and so if they

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Speaker 5: decided to run on December twenty third, they would have

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Speaker 5: been operating at a loss by the time temperatures dropped,

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Speaker 5: especially on December twenty fourth, that's when you actually started

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Speaker 5: to see significant drops in gas production. The Appalachian regions,

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Speaker 5: which is the Marcellus and Utica shale, dropped Significantlyica fell

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Speaker 5: by about half and Pennsylvania fell by about twenty percent.

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Speaker 5: Anytime you see gas production falling off, so there's less

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Speaker 5: gas going onto pipelines and there is high demand on

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Speaker 5: the other side, which is homes, businesses, and power plants

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Speaker 5: tapping those pipelines more, it creates a pressure imbalance.

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Speaker 1: Describe what you mean by pressure issues for people like

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Speaker 1: me who don't understand the technical aspects of delivering gas

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Speaker 1: through a pipeline to a power plant.

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Speaker 5: When you're expecting a cold weather event, pipeline operators will

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Speaker 5: do something called line pack. That's when they basically increase

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Speaker 5: how much gas is being pumped into a pipeline system,

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Speaker 5: and then you want to make sure that it evens

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Speaker 5: out like over like long distances. But if you can

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Speaker 5: pump these molecules and they're more condensed.

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Speaker 3: You have higher pressure.

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Speaker 5: The idea is you use the pipelines as a storage system,

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Speaker 5: so when demand comes online, you are already instantaneously to

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Speaker 5: tap that. Utilities we heard were taking a lot of

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Speaker 5: gas off the system because homeowners and businesses were turning

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Speaker 5: up their heaters. That means that they're taking off gas

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Speaker 5: at a faster rate than it can be put on,

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Speaker 5: and so that changes the difference in pressure and that

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Speaker 5: can create instability. It's like if you're in a traffic jam.

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Speaker 5: If suddenly you have a car that starts and stops

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Speaker 5: in the middle, it creates like this halted flow of traffic.

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Speaker 5: But if everyone just drives at ten miles per hour,

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Speaker 5: you'll all just suddenly keep moving in a flow and

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Speaker 5: the exits will keep flowing out if there's no other

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Speaker 5: accidents on the end.

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Speaker 1: And so the danger is if there isn't enough gas

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Speaker 1: coming through, then you lose that pressure. So they have

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Speaker 1: to keep up a constant supply.

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Speaker 5: Yeah, if the pressure gets too low, you cannot run

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Speaker 5: power plants at some level. That happened during winter Storm

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Speaker 5: Ury in Texas. There was a sudden drop in gas.

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Speaker 5: They couldn't maintain the pressure and power plants have to

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Speaker 5: shut down, and that contributed to the blockouts.

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Speaker 1: And in this winter storm Elliott in December, you right

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Speaker 1: that there is this scramble to try to find gas

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Speaker 1: to keep it flowing into the plant, to keep up

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Speaker 1: this pressure.

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Speaker 5: So there was a mad scramble because the gas industry

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Speaker 5: operates on a different schedule from the power industry. When

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Speaker 5: you're thinking about buying power for the next day and

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Speaker 5: the day ahead market, your day starts at midnight and

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Speaker 5: is you know, for the full twenty four hour it's

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Speaker 5: for that one day, but the gas day starts at

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Speaker 5: ten am. So on Friday, December twenty third, if you

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Speaker 5: had a problem at like nine am that you suddenly

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Speaker 5: needed gas, you actually had to have that secured on

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Speaker 5: Wednesday because that would have fallen into that day ahead

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Speaker 5: schedule for a gas So that is a fundamental issue

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Speaker 5: that exists every day and is a problem every weekend.

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Speaker 5: But you know you don't have a high demand day.

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Speaker 5: You know there's ways around it. There's enough spare supply

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Speaker 5: to like tap into. The other problem is this is

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Speaker 5: a three day weekend. The gas industry basically shuts down

380
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Speaker 5: every Friday. There are always traders and like some folks

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Speaker 5: around that can help you fill in for a last

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Speaker 5: minute fuel, but for the most part, people are out

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Speaker 5: for the weekend. And then on top of that, this

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Speaker 5: was a holiday weekend, so they were on vacation for real,

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Speaker 5: but also like for three days, So if you were

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Speaker 5: trying to buy gas for like Christmas, which is on Monday,

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Speaker 5: you had to know what that demand was going to

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Speaker 5: be on Friday. When you have a fast moving storm,

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Speaker 5: it's always hard to predict what actually is going to

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Speaker 5: show up. Usually demand on a holiday weekend is week

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Speaker 5: The fact that demand came in really strong was another

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Speaker 5: surprising factor, and that added to the scramble.

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Speaker 1: So this is obviously a pretty extreme example, but I

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Speaker 1: think a lot of people listening to this will be

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Speaker 1: pretty surprised to hear just how it kind of catches

396
00:22:03,400 --> 00:22:05,760
Speaker 1: catch can it can be to keep all of our

397
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Speaker 1: lights on how common an occurrence is this.

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Speaker 5: I've covered gas for a long time and then covered power,

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Speaker 5: and I remember gas every weekend were like, our price

400
00:22:16,840 --> 00:22:20,280
Speaker 5: is going crazy. It's an issue every weekend and every

401
00:22:20,320 --> 00:22:25,200
Speaker 5: long weekend. A power generator executive testified at the Federal

402
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Speaker 5: Energy Regulatory Commission at a mid June meeting, saying the

403
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Speaker 5: Intercontinental Exchange, which is where you buy a lot of

404
00:22:32,920 --> 00:22:36,119
Speaker 5: your spot gas purchases if you are a power plant,

405
00:22:36,520 --> 00:22:39,800
Speaker 5: is telling folks that for the upcoming July fourth holiday,

406
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Speaker 5: you have to buy your gas on Friday. The point

407
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Speaker 5: that this executive was making was that if there was

408
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Speaker 5: an extreme weather event, then that would create another big

409
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Speaker 5: round of uncertainty and another scramble.

410
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Speaker 3: If things got severe.

411
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Speaker 1: When we come back, what can we do to bolt

412
00:22:58,680 --> 00:23:10,199
Speaker 1: up the grid and of divert all these troubles? What

413
00:23:10,280 --> 00:23:14,280
Speaker 1: are the companies actually doing to try to fix this

414
00:23:14,440 --> 00:23:18,480
Speaker 1: boom and bus cycle that seems to happen with great regularity.

415
00:23:19,119 --> 00:23:21,439
Speaker 5: So the boom in bus cycle is kind of like

416
00:23:21,520 --> 00:23:23,960
Speaker 5: subdued or you can ride the waves like on a

417
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Speaker 5: normal day on extreme weather events. There have been a

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Speaker 5: lot of efforts in the last decade. This is not

419
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Speaker 5: a new issue to increase coordination communication with the gas

420
00:23:35,560 --> 00:23:40,560
Speaker 5: industry the power industry. Because power is considered a public

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Speaker 5: good and you need to keep the lights on to

422
00:23:43,600 --> 00:23:47,960
Speaker 5: keep the economy running. There are standards that power generators

423
00:23:48,119 --> 00:23:52,160
Speaker 5: utilities have to follow to ensure that they can operate

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00:23:52,480 --> 00:23:56,360
Speaker 5: throughout the year and especially during cold weather events. Now

425
00:23:56,400 --> 00:23:58,760
Speaker 5: there's a lot of criticism that those standards don't go

426
00:23:58,880 --> 00:24:03,320
Speaker 5: far enough, but the gas industry does not fall under

427
00:24:03,359 --> 00:24:07,000
Speaker 5: that realm of oversight, and there have been calls that

428
00:24:07,080 --> 00:24:11,520
Speaker 5: the gas industry needs to have weatherization standards and needs

429
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Speaker 5: to communicate more, disclose more information with the power industry.

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Speaker 1: You've talked about PJM and how they've faced some of

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00:24:19,600 --> 00:24:22,440
Speaker 1: these problems. What does the company say about this.

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Speaker 5: PJM is technically a corporation, but it's considered a quasi

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Speaker 5: government agency appointed by the federal government to run this

434
00:24:33,400 --> 00:24:38,080
Speaker 5: thirteenth state grid. They have said that the large number

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Speaker 5: of outages driven by natural gas plants was unacceptable and

436
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Speaker 5: that a large portion of them were because of equipment

437
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Speaker 5: outages versus gas availability.

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Speaker 1: Norim is there concern that we're going to start to

439
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Speaker 1: see more and more of this happening across the country.

440
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Speaker 3: That's certainly the fear.

441
00:24:56,840 --> 00:25:00,159
Speaker 5: I spoke to Mark Christi, who is a commissioner on

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00:25:00,240 --> 00:25:05,480
Speaker 5: the Federal Energy Regulatory Commission, which is the agency that oversees.

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Speaker 3: The power industry.

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00:25:06,400 --> 00:25:11,160
Speaker 5: He's been warning about these reliability concerns and concerns related

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00:25:11,240 --> 00:25:15,080
Speaker 5: to the gas deliverability issues for over a year now,

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00:25:15,240 --> 00:25:17,680
Speaker 5: but then when we spoke with him recently, he said

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00:25:17,720 --> 00:25:22,400
Speaker 5: that these concerns are accelerating because you can't save power

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00:25:22,480 --> 00:25:23,840
Speaker 5: like in a barrel of oil.

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00:25:24,040 --> 00:25:24,920
Speaker 3: The power grid.

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00:25:24,720 --> 00:25:27,240
Speaker 5: Has to be balanced every minute of the day.

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Speaker 3: It's very specific.

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00:25:29,240 --> 00:25:32,879
Speaker 5: If you lose that balance too much for too many minutes,

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00:25:32,920 --> 00:25:35,600
Speaker 5: the grid is subject to failure. That's what almost happened

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00:25:35,640 --> 00:25:37,160
Speaker 5: in Texas in twenty twenty one.

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Speaker 3: What Winter Storm Elliott was.

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00:25:39,440 --> 00:25:42,480
Speaker 5: It was a warning that you cannot say that you

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00:25:42,640 --> 00:25:45,480
Speaker 5: have a lot of extra power plants on the grid

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00:25:45,520 --> 00:25:46,479
Speaker 5: and you'll be okay.

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00:25:47,000 --> 00:25:49,040
Speaker 3: They are now taking another look.

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00:25:48,840 --> 00:25:51,879
Speaker 5: And saying, we need to see what actually shows up

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00:25:51,920 --> 00:25:54,640
Speaker 5: in these extreme weather events, whether it's in the summer

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00:25:54,760 --> 00:25:55,240
Speaker 5: or winter.

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00:25:58,200 --> 00:26:02,080
Speaker 1: Maurine is a power industry looking beyond natural gas to

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Speaker 1: get past some of these problems.

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00:26:04,560 --> 00:26:08,560
Speaker 5: Yes, the power industry is definitely looking beyond gas, but

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00:26:08,640 --> 00:26:13,480
Speaker 5: that is a complicated answer because there is no obvious

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00:26:13,520 --> 00:26:17,120
Speaker 5: replacement to natural gas. Natural gas right now is needed

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00:26:17,359 --> 00:26:20,359
Speaker 5: to provide a lot of the power on the grid,

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00:26:20,400 --> 00:26:22,760
Speaker 5: but as we go forward, as we have more renewables

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00:26:22,800 --> 00:26:25,000
Speaker 5: hook up to the grid, gas isn't going to be

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00:26:25,119 --> 00:26:27,920
Speaker 5: used as much every hour of the day, but you're

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00:26:27,960 --> 00:26:31,320
Speaker 5: gonna need it more and more to step in dependably

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00:26:31,600 --> 00:26:34,960
Speaker 5: on those most critical hours when the sunset and all

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00:26:35,000 --> 00:26:38,400
Speaker 5: that solar goes offline, or when there's a low wind day.

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00:26:38,800 --> 00:26:42,240
Speaker 5: There isn't enough battery storage to make up for all

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00:26:42,320 --> 00:26:45,600
Speaker 5: of that, and you still need to actually like produce

477
00:26:45,640 --> 00:26:49,000
Speaker 5: power to store in batteries. So the benefit we saw

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00:26:49,040 --> 00:26:52,679
Speaker 5: from gas in the last decade is it was easy

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00:26:52,720 --> 00:26:56,440
Speaker 5: to replace coal. It was an easy answer. One megawatt

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00:26:56,480 --> 00:26:59,400
Speaker 5: from a gas power plant was enough to replace one

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00:26:59,480 --> 00:27:03,000
Speaker 5: mega wat from coal and doing so it helped cut

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00:27:03,080 --> 00:27:06,920
Speaker 5: costs for consumers because you were tapping this cheap shale gas,

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00:27:07,200 --> 00:27:10,920
Speaker 5: but it also had a lot of environmental benefit because

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00:27:11,240 --> 00:27:14,520
Speaker 5: it burns cleaner than coal. We're now at a stage where,

485
00:27:14,680 --> 00:27:18,240
Speaker 5: given the climate crisis, gas isn't clean enough, and so

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00:27:18,359 --> 00:27:21,640
Speaker 5: there are technologies that are being considered, like carbon capture

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00:27:21,760 --> 00:27:23,439
Speaker 5: or shifting off of natural gas.

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00:27:23,720 --> 00:27:26,200
Speaker 3: There is a lot of energy.

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00:27:25,920 --> 00:27:28,879
Speaker 5: Part of my pun being put into trying to solve

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00:27:28,920 --> 00:27:31,199
Speaker 5: this problem of what does the grid of the future

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00:27:31,240 --> 00:27:35,160
Speaker 5: look like. But there is a really hard engineering problem.

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00:27:35,200 --> 00:27:38,199
Speaker 5: How do you keep this system running? Like a physics problem.

493
00:27:38,200 --> 00:27:40,480
Speaker 5: How do you keep this system running and keep the

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00:27:40,560 --> 00:27:43,520
Speaker 5: lights on. There's a saying that the power industry likes

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00:27:43,560 --> 00:27:46,919
Speaker 5: to use. Gas may only be seven percent of the economy,

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00:27:46,960 --> 00:27:50,280
Speaker 5: but it's the first seven percent the entire economy relies

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00:27:50,320 --> 00:27:50,680
Speaker 5: on it.

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Speaker 1: Noreene, thanks so much for talking with me today.

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Speaker 3: Thank you, it was great.

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Speaker 1: Thanks for listening to us here at the Big Tay.

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00:27:59,480 --> 00:28:02,800
Speaker 1: It's a daily podcast from Bloomberg and iHeartRadio. For more

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00:28:02,800 --> 00:28:06,840
Speaker 1: shows from iHeartRadio, visit the iHeartRadio app, Apple Podcasts, or

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00:28:06,880 --> 00:28:09,359
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00:28:09,640 --> 00:28:12,960
Speaker 1: Email us questions or comments to Big Take at bloomberg

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00:28:13,000 --> 00:28:16,159
Speaker 1: dot net. The supervising producer of the Big Take is

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00:28:16,240 --> 00:28:20,480
Speaker 1: Vicky Bergolina. Our senior producer is Katherine Fink. Our producers

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00:28:20,520 --> 00:28:25,959
Speaker 1: are Mow Barrow and Michael Falero. Philde Garcia is our engineer.

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00:28:26,320 --> 00:28:30,240
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