WEBVTT - Boeing’s Safety Record Under Scrutiny 0:00:02.920 --> 0:00:10.719 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business 0:00:10.720 --> 0:00:13.960 Week Inside from the reporters and editors who bring you 0:00:14.000 --> 0:00:18.360 America's most trusted business magazine, plus global business, finance and 0:00:18.400 --> 0:00:22.880 tech news. The Bloomberg Business Week Podcast with Carol Messer 0:00:23.040 --> 0:00:25.800 and Tim Stenebek from Bloomberg Radio. 0:00:27.760 --> 0:00:30.360 Shares of United Airlines they are surging. They are up 0:00:30.400 --> 0:00:32.640 sixteen percent. As Charlie mentioned, that's the most of more 0:00:32.680 --> 0:00:34.480 than three years. You got to go back to November 0:00:34.840 --> 0:00:36.920 of twenty twenty to see that kind of a move. 0:00:37.360 --> 0:00:40.440 This is after the carrier forecast more than it's better 0:00:40.479 --> 0:00:44.360 than expected profit this quarter, tempering concerns that Boeing aircraft 0:00:44.360 --> 0:00:47.640 delays and regulatory pressure will put expansion plans at risk. 0:00:47.680 --> 0:00:49.440 So that's what's going on with United. We talked about it. 0:00:49.440 --> 0:00:51.880 We broke those numbers after the closed last night. 0:00:52.000 --> 0:00:52.159 Yeah. 0:00:52.240 --> 0:00:55.160 Meantime, Boeing is the subject of two Congressional committee hearings 0:00:55.160 --> 0:00:57.560 today on the company safety culture in the wake of 0:00:57.600 --> 0:01:01.000 a near catastrophic accident in January, as well as two 0:01:01.000 --> 0:01:04.120 crashes of seven thirty seven Max aircraft a few years ago, 0:01:04.360 --> 0:01:07.679 and also Carol on its relationship with regulators yeah. 0:01:07.560 --> 0:01:10.120 It's a full plate. Senator Richard Blumenthal, Democrat from the 0:01:10.120 --> 0:01:14.080 state of Connecticut, who chairs the second Session Congressional Session today, 0:01:14.360 --> 0:01:16.720 says today's hearing is the first of several who weighed 0:01:16.760 --> 0:01:17.399 in earlier. 0:01:17.920 --> 0:01:25.600 There are mounting serious allegations that Boeing has a broken 0:01:25.680 --> 0:01:30.760 safety culture and a set of practices that are unacceptable. 0:01:33.440 --> 0:01:37.240 These whistleblowers have come forward at great personal risk. 0:01:38.880 --> 0:01:41.840 That was, of course, Senator Richard Blumenthal, Democrat from the 0:01:41.959 --> 0:01:44.840 state of Connecticut, he chairs the session today, with more 0:01:44.880 --> 0:01:46.680 on all of it. Let's bring in a Bloomberg Intelligence 0:01:46.720 --> 0:01:50.360 senior Aerospace, Defense and Airlines analyst, George Ferguson, who joins 0:01:50.440 --> 0:01:53.200 us from Arizona, Georgia. First up, I want to talk 0:01:53.200 --> 0:01:55.600 about Boeing in the hearings today. The hearing this morning 0:01:55.840 --> 0:01:58.000 was the first of two in Washington today to explore 0:01:58.040 --> 0:02:00.640 Boeing safety record. The second panel focus claims by a 0:02:00.640 --> 0:02:04.120 Boeing engineer turned whistleblower who alleges that the company has 0:02:04.160 --> 0:02:07.960 cut corners on the production of its seven eighty seven Dreamliner. 0:02:09.320 --> 0:02:10.000 What do you. 0:02:10.000 --> 0:02:12.919 Watch for during events like this? What should our audience 0:02:12.960 --> 0:02:15.000 watch for during events like this? 0:02:17.040 --> 0:02:21.200 So on the Dreamliner specifically. You know, I think what 0:02:21.200 --> 0:02:23.640 we're watching for is to figure out whether or not 0:02:23.720 --> 0:02:26.359 this is part of an earlier issue that Boeing had 0:02:26.400 --> 0:02:29.800 with the seven eight seven, with joining the fuselage pieces. 0:02:30.400 --> 0:02:33.600 They negotiated or discussed with the FA the right way 0:02:33.639 --> 0:02:36.480 to fix a shimming problem they had with the airplane. 0:02:37.040 --> 0:02:39.240 They you know, what we've heard is they'd fixed that 0:02:39.360 --> 0:02:42.600 problem and they had a better process in place to 0:02:42.680 --> 0:02:45.640 join the aircraft together. So if this is part of 0:02:45.639 --> 0:02:48.799 that same issue that I'd say, you know, for investors, 0:02:48.800 --> 0:02:52.240 then it's it's there's nothing here. If it's an additional 0:02:52.280 --> 0:02:55.040 issue with the seventy eight seven and not that shimming problem, 0:02:55.680 --> 0:02:57.400 then I'd be concerned. Right then it's going to be 0:02:57.440 --> 0:03:00.880 additional costs for Boeing and it could lead to concerns 0:03:00.919 --> 0:03:03.239 about safety and flying the airplane. 0:03:03.480 --> 0:03:05.680 You know, I think about it, and just watching all 0:03:05.680 --> 0:03:07.680 of the issues that have kind of hit Boeing over 0:03:07.680 --> 0:03:09.679 the last few years, it's like, why are they having 0:03:09.760 --> 0:03:12.119 these problems? And I do wonder, George, if you think 0:03:12.160 --> 0:03:15.400 these committee hearings will help get to the bottom of it, 0:03:15.520 --> 0:03:18.880 especially when one of the things that lawmakers are concerned 0:03:18.880 --> 0:03:21.160 about is that the FAA has been too soft on 0:03:21.200 --> 0:03:23.640 the company, and I'm curious if you could weigh in 0:03:23.680 --> 0:03:26.200 on that, if you agree that maybe Boeing has been 0:03:26.240 --> 0:03:27.639 too cozy with its regulators. 0:03:28.840 --> 0:03:31.800 Yeah, I think even more than cozy. Right, So the 0:03:31.840 --> 0:03:35.240 sense I really get is the relationship between Boeing and 0:03:35.280 --> 0:03:39.000 the regulator, the FAA, for many many years, has been 0:03:39.040 --> 0:03:42.360 one of Boeing being in a superior position. You know, 0:03:42.400 --> 0:03:46.920 I think they Boeing probably had more engineering talent than 0:03:46.960 --> 0:03:49.840 the FAA, and I think they you know, sort of 0:03:49.840 --> 0:03:53.080 told the FA what they thought was needed rather than 0:03:54.120 --> 0:03:55.760 you know, how to sort of a one on one 0:03:56.960 --> 0:03:59.760 balanced relationship with the FA. And that's clearly going to 0:03:59.840 --> 0:04:02.400 have to change. The FA has had its challenges too, 0:04:02.480 --> 0:04:05.320 through through the pandemic that they've had a lot of turnover, 0:04:06.080 --> 0:04:08.560 They've lost some some talent there as well. They have 0:04:08.600 --> 0:04:11.320 the batfill, so that that creates more you know, that 0:04:11.360 --> 0:04:14.560 creates a problem too with the with that whole relationship. 0:04:14.880 --> 0:04:17.320 So I mean, I think, you know, again, I think 0:04:17.400 --> 0:04:19.600 we've heard this previously. We've also heard previously from the 0:04:19.640 --> 0:04:22.880 FAA that the safety systems that Bowe were broken, that 0:04:22.960 --> 0:04:27.120 people uh you know, were centivized, not to speak up there, 0:04:27.560 --> 0:04:31.440 and you know, if they spoke up, they would potentially 0:04:31.440 --> 0:04:33.919 be you know, have some sort of recourse brought against 0:04:33.960 --> 0:04:37.919 them if people were concerned about safety over moving aircraft 0:04:37.960 --> 0:04:39.600 through uh through production. 0:04:39.720 --> 0:04:40.279 So I think. 0:04:40.320 --> 0:04:43.159 Congress is getting to something that we already know. But 0:04:43.240 --> 0:04:46.640 Congress is probably rightfully concerned because this is the most 0:04:46.640 --> 0:04:52.200 important aerospace company, aerospace manufacturer, fuselage manufacturer in the country. 0:04:52.360 --> 0:04:54.719 So good, this is a good part of the process 0:04:54.800 --> 0:04:56.599 to getting to the bottom of what's wrong at Boeing. 0:04:56.640 --> 0:04:59.240 In your view, this is this this should result in 0:04:59.240 --> 0:05:00.240 getting to the bottom of it. 0:05:01.240 --> 0:05:03.720 I guess I'd like to see. I'm going to look 0:05:03.760 --> 0:05:08.200 for more out of the FAA and it's and it's investigations. 0:05:08.600 --> 0:05:12.240 You know, Congressional hearings can get a little bit political, 0:05:14.440 --> 0:05:17.080 so there's going to be some grand standing and things 0:05:17.160 --> 0:05:21.240 like that, right, But I think Congress is rightfully you know, 0:05:21.360 --> 0:05:24.880 expressing their view that hey, something is broken and we 0:05:24.920 --> 0:05:27.560 want do attention paid to it, and it needs to 0:05:27.560 --> 0:05:30.160 be fixed. It's in the best interest in the country. 0:05:30.600 --> 0:05:33.320 Along that road, we'll get you know, some political actors 0:05:33.320 --> 0:05:33.920 in the whole game. 0:05:34.040 --> 0:05:38.599 Okay, George, So let's think about potential outcomes here post 0:05:38.760 --> 0:05:43.520 FA investigation, given that we've already seen leadership turnover at Boeing. 0:05:44.240 --> 0:05:46.800 The CEO Dave Calhoun is on his way out by 0:05:46.839 --> 0:05:50.240 the end of the year. We saw reshuffling of executive 0:05:50.279 --> 0:05:53.360 ranks is there as well. So what could potential outcomes 0:05:53.400 --> 0:05:56.359 be post FA investigation, Like what could repercussions be. 0:05:58.440 --> 0:06:01.880 So I don't know what rep cushions and I haven't 0:06:01.880 --> 0:06:05.040 really sort of dialed into my analysis repercussions. One I'm 0:06:05.120 --> 0:06:08.640 more dialed into into my analysis is you know, adjustments 0:06:08.680 --> 0:06:12.159 to the Boeing production process, and that is going to 0:06:12.200 --> 0:06:16.119 include I think a lot more oversight both from the FAA, 0:06:16.160 --> 0:06:18.000 and I think the FA is going to expect Boeing 0:06:18.400 --> 0:06:21.880 to do a better job of overseeing the factory floors 0:06:23.040 --> 0:06:26.280 and ensuring safety and quality, which I think is going 0:06:26.360 --> 0:06:28.719 to slow things down. But it's important. You got to 0:06:28.720 --> 0:06:31.479 build quality products in aerospace or nobody's going to trust 0:06:31.520 --> 0:06:35.040 your product. And I think it's interesting that the FAA 0:06:35.200 --> 0:06:39.120 did give the exercise to Boeing to propose how they 0:06:39.120 --> 0:06:41.839 were going to improve it, because you know, I guess 0:06:41.880 --> 0:06:44.919 they could sort of scrutinize from there what Boeing comes 0:06:45.000 --> 0:06:47.280 up with and it'll be interesting to see if they 0:06:47.279 --> 0:06:49.200 have additional measures they want to put on top of it. 0:06:49.200 --> 0:06:50.640 But I think a lot of it's going to be 0:06:50.680 --> 0:06:52.200 training and oversight. 0:06:53.160 --> 0:06:56.119 All right, let's talk about United, because man, this stock 0:06:56.240 --> 0:07:00.440 is up sixteen percent, the most since November of twenty twenty. 0:07:00.440 --> 0:07:02.440 In terms of the size of the jump that we're seeing. 0:07:02.720 --> 0:07:05.919 Earnings came out after the close yesterday. A lot of 0:07:05.920 --> 0:07:07.600 it has to do with the outlook. But tell us 0:07:07.600 --> 0:07:09.359 how you see it and how you look at this quarter, 0:07:09.360 --> 0:07:11.320 and they, of course, we're dealing with some of those 0:07:11.400 --> 0:07:14.760 challenges that Boeing has been dealing with because of the 0:07:14.800 --> 0:07:16.040 grounding of planes and so on. 0:07:17.480 --> 0:07:19.920 Yeah, so I guess the way I look at United 0:07:20.040 --> 0:07:23.520 is it was a nice quarter. I totally agree. I 0:07:23.560 --> 0:07:28.280 think they did more premium seat sales this quarter. They've been, 0:07:28.480 --> 0:07:31.440 you know, these airplanes, they've been taking delivery of the 0:07:31.960 --> 0:07:34.920 larger aircraft, their aircraft that have premium seats in it. 0:07:35.280 --> 0:07:37.400 Right now, in the marketplace, you want to be offering 0:07:37.480 --> 0:07:40.320 premium seats. I think there's maybe a little too much 0:07:40.760 --> 0:07:44.280 basic economy seating, but there's not enough premium, it appears, 0:07:44.360 --> 0:07:47.559 and I think that helped drive the quarter. I would 0:07:47.600 --> 0:07:50.560 note that when we look at the yields they're making on, 0:07:51.000 --> 0:07:55.440 for example, their domestic business, their yields came up, you know, 0:07:55.520 --> 0:07:58.120 a couple I think it was almost three percent, where 0:07:58.160 --> 0:08:01.320 Delta was flatish. But the absolute yield, which is the 0:08:01.320 --> 0:08:05.000 price paid you know, per mile, but the price the 0:08:05.000 --> 0:08:07.440 customer pays per mile flown. If you look at the 0:08:07.480 --> 0:08:12.080 actual yields, there's still beneath Delta for United, which tells 0:08:12.080 --> 0:08:14.240 me that there's more room to grow, which I think 0:08:14.280 --> 0:08:17.080 the market is probably responding to more room to grow 0:08:17.160 --> 0:08:21.920 those premium offerings, you know, to get better yields out 0:08:21.920 --> 0:08:25.040 of it. And I think that that's a lot of 0:08:25.080 --> 0:08:29.000 what's going on here now. Obviously Boeing problems are going 0:08:29.040 --> 0:08:32.560 to mean less aircraft delivery for United this year, although 0:08:32.559 --> 0:08:34.440 they appear to be tapped into eight three twenty one 0:08:34.559 --> 0:08:37.439 from Airbus. So the continue to increase the size of 0:08:37.480 --> 0:08:41.040 their aircraft, which has improves their efficiency and again allows 0:08:41.040 --> 0:08:43.520 them these premium seats of front that they can command 0:08:44.000 --> 0:08:46.079 a better price for. And I think that's that's working 0:08:46.080 --> 0:08:48.240 for them. They're they're closing that gap. I would note 0:08:48.240 --> 0:08:52.600 too real quick that United is still valued if I 0:08:52.600 --> 0:08:55.240 just look at quickly on a pe ratio, there's still 0:08:55.320 --> 0:08:59.000 valued below delta, you know, so that I think that's 0:08:59.000 --> 0:09:01.559 what you're seeing a reaction to in the marketplace. 0:09:01.640 --> 0:09:04.920 George, how should investors think about the FAA review that's 0:09:05.040 --> 0:09:08.800 already begun at this point regarding safety incidents? 0:09:08.840 --> 0:09:12.360 For United has a lot of reviews going on, right 0:09:12.400 --> 0:09:17.160 and so it really does and look again, all important again. 0:09:17.200 --> 0:09:19.560 I think the regulator has been through a couple rough 0:09:19.640 --> 0:09:22.560 years during the pandemic, and hopefully this means they're getting 0:09:22.600 --> 0:09:26.880 their footing underneath them and getting out and influencing these 0:09:27.000 --> 0:09:32.160 you know this these marketplaces or these industries. Look United 0:09:32.160 --> 0:09:35.160 has every incentive to do, uh, do the utmost for 0:09:35.200 --> 0:09:38.079 safety inside their network. I think they had a spate 0:09:38.120 --> 0:09:41.040 of challenges. I think there's been a lot of turnover 0:09:41.160 --> 0:09:44.160 at all the airlines during the pandemic, and the maintenance 0:09:44.160 --> 0:09:46.719 turnovers hard because you've got to train new people, You've 0:09:46.679 --> 0:09:49.199 got to make sure they're very thorough. My guess is 0:09:49.200 --> 0:09:52.160 we're going to find out is that turnover created the problem. 0:09:52.640 --> 0:09:55.160 But I would expect that you know, maybe there's some 0:09:55.960 --> 0:09:58.640 uh you know, some processes that United has to tighten 0:09:58.760 --> 0:10:01.199 up but I think you're going to find out it's 0:10:01.240 --> 0:10:04.599 again it's an employee turnover issue. In that time to 0:10:04.720 --> 0:10:07.600 get better as people are more trained and understand their 0:10:07.679 --> 0:10:09.200 job better and turnover goes down. 0:10:09.320 --> 0:10:11.559 All right, great stuff, so appreciate you, weigh in Bloomberg 0:10:11.600 --> 0:10:15.079 Intelligence Senior Aerospace, Defense and Airlines analyst George Ferguson joining 0:10:15.120 --> 0:10:18.600 us from Arizona. We mentioned shares of United up about 0:10:18.600 --> 0:10:22.160 sixteen percent here, the most in terms of the percentage 0:10:22.160 --> 0:10:23.719 gain since we've seen going all the way back to 0:10:23.760 --> 0:10:26.199 November of twenty twenty. But the whole airline sector tim 0:10:26.360 --> 0:10:29.400 looking at the S and P five hundred Supercomposite Airline Index, 0:10:29.440 --> 0:10:32.720 it is up almost five percent. Today's session, you're. 0:10:32.559 --> 0:10:36.120 Listening to the Bloomberg Business Week podcast. Catch us live 0:10:36.200 --> 0:10:39.240 weekday afternoons from two to five pm Eastern Listen on 0:10:39.280 --> 0:10:41.840 Apple card Play and then brought auto with a Bloomberg 0:10:41.880 --> 0:10:45.480 Business app, or watch us live on YouTube. 0:10:46.559 --> 0:10:49.120 Well earlier this year, Bloomberg News reporting stress on the 0:10:49.200 --> 0:10:53.560 nation's electric rids is accelerating at an unprecedented clip. Demand 0:10:53.640 --> 0:10:57.280 is climbing just as aging infrastructure strains under the massive 0:10:57.280 --> 0:11:01.560 overhaul needed to adapt to renewable energy. The convergence is 0:11:01.600 --> 0:11:04.560 making it harder to maintain safe, reliable power quality, and 0:11:04.640 --> 0:11:07.839 some regulators and utilities are not tracking the problem all right. 0:11:07.920 --> 0:11:10.840 And so last fall, the Department of Energy announced up 0:11:10.880 --> 0:11:12.520 to three and a half billion dollars in funding to 0:11:12.600 --> 0:11:15.520 upgrade the US grid. This topic among the many at 0:11:15.520 --> 0:11:18.880 this week's Bloomberg ANYF Annual Energy and Climate Summit. Our 0:11:18.920 --> 0:11:21.600 next guest participated in a panel at the event. It 0:11:21.640 --> 0:11:26.120 was entitled Leveraging largest ever grid investment to Enhance Resilience. 0:11:26.160 --> 0:11:28.640 So there is a lot going on with us. In 0:11:28.679 --> 0:11:31.680 the studio to talk about the nation's grid is Maria Robinson. 0:11:31.679 --> 0:11:33.920 She's director of the Grid Deployment Office at the US 0:11:33.960 --> 0:11:37.160 Department of Energy. I feel like I don't even need 0:11:37.200 --> 0:11:38.640 to ask you how bad is the grid because I 0:11:38.640 --> 0:11:40.240 feel like we do stories on it all the time 0:11:40.280 --> 0:11:42.720 about how bad it is, but how bad is it really? 0:11:43.240 --> 0:11:45.400 So we're facing a lot of different problems here on 0:11:45.440 --> 0:11:45.760 the grid. 0:11:45.800 --> 0:11:46.120 Today. 0:11:46.440 --> 0:11:48.720 You are talking about we have new demand. It's great 0:11:48.760 --> 0:11:51.280 that we're bringing manufacturing back to the United States, but 0:11:51.320 --> 0:11:53.560 that's a strain on the electric grid. The electric grid 0:11:53.600 --> 0:11:56.240 is aging. It's not just older than me it's older 0:11:56.280 --> 0:11:59.520 than my grandparents. So then we're looking at ways that 0:11:59.559 --> 0:12:03.160 we need to upgrade our existing infrastructure while continuing to 0:12:03.160 --> 0:12:07.000 build new ones. I think of it. We released a 0:12:07.040 --> 0:12:12.520 report just yesterday on advanced and innovative grid deployment mechanisms 0:12:12.559 --> 0:12:15.120 of being able to take advantage of some of the 0:12:15.200 --> 0:12:19.959 existing infrastructure and figuring out ways at relatively low cost to. 0:12:20.000 --> 0:12:23.080 Upgrade what we currently have. The joke that I make 0:12:23.200 --> 0:12:25.200 is so we cannot do upgrades. It's not like a 0:12:25.240 --> 0:12:26.520 massive rebuild. 0:12:26.240 --> 0:12:28.440 Right, we have to do both. Okay, we are definitely 0:12:28.440 --> 0:12:31.240 going to have to continue to build in order to 0:12:31.280 --> 0:12:33.679 meet all the demands, but we can take advantage of 0:12:33.679 --> 0:12:35.760 those existing rights of way, right, we don't have to 0:12:35.760 --> 0:12:37.679 deal with as much permitting, which we all know is 0:12:37.720 --> 0:12:42.880 a really difficult topic to deal with. But you know, 0:12:42.960 --> 0:12:48.040 oftentimes folks are taking our existing lines and replacing the 0:12:48.120 --> 0:12:50.840 metal part that's inside of it. It's called a conductor, 0:12:51.440 --> 0:12:54.640 and oftentimes they're just replacing that like for like instead 0:12:54.640 --> 0:12:57.920 of upgrading it to a newer technology that can move 0:12:57.920 --> 0:12:59.800 more electrons every single day. 0:13:00.200 --> 0:13:02.240 And so it's so funny. There's a story in the Bloomberg. 0:13:02.320 --> 0:13:04.160 It's probably a connection with this, but it's a central 0:13:04.520 --> 0:13:06.599 transmission line is getting a twenty first century upgrade, and 0:13:06.600 --> 0:13:09.439 it's about a startup that's created a wire that's lighter 0:13:09.480 --> 0:13:12.320 and can carry it to three times more electricity. I mean, 0:13:12.360 --> 0:13:14.560 we talk about this with battery usage, right for evs, 0:13:14.559 --> 0:13:18.800 about just about making things even chips, right, accelerators, making 0:13:18.840 --> 0:13:21.120 them more productive, making them more energy efficient. 0:13:21.200 --> 0:13:23.719 Like this is what it's about, exactly. And so all 0:13:23.760 --> 0:13:26.320 these great technologies are already out there. They're really proven 0:13:26.320 --> 0:13:28.240 in the field. We just need the market to pick 0:13:28.240 --> 0:13:28.720 them up. 0:13:29.520 --> 0:13:32.120 Is it more of a state issue right now? I mean, 0:13:32.160 --> 0:13:34.400 I think if states that have struggled with their grids 0:13:34.440 --> 0:13:37.320 Texas and California certainly come to mind. Is it a 0:13:37.360 --> 0:13:40.200 federal issue or is it a utility issue? 0:13:40.480 --> 0:13:45.160 It's all three. The fun part about the electric grid 0:13:45.280 --> 0:13:47.000 is that it doesn't follow political lines. 0:13:47.080 --> 0:13:47.200 Right. 0:13:47.240 --> 0:13:50.400 We have an eastern interconnect a western interconnect, and they 0:13:50.440 --> 0:13:53.320 don't follow necessarily. They're like time zones, right, They just 0:13:53.360 --> 0:13:56.480 sometimes split a state down the middle. So we have 0:13:56.559 --> 0:13:59.360 to figure out how we mix some federal policy with 0:13:59.480 --> 0:14:03.320 individual state policy. Some states are really looking to decarbonize 0:14:03.320 --> 0:14:04.760 and the way they want to build their grid might 0:14:04.760 --> 0:14:07.760 be different than their neighbor who has different goals ultimately, 0:14:08.400 --> 0:14:10.240 and so we're trying to mix and match all those 0:14:10.240 --> 0:14:12.640 different priorities in order to make sure that we have 0:14:12.800 --> 0:14:14.920 a strong grid that can withstand anything. 0:14:14.960 --> 0:14:17.200 There's nothing like a federal incentive or a tax break 0:14:17.280 --> 0:14:19.000 or something to get us to do something, whether you're 0:14:19.000 --> 0:14:21.000 a company where you're an individual. So what are the 0:14:21.000 --> 0:14:24.760 incentives that you guys or that utilities need to actually 0:14:24.800 --> 0:14:27.360 adopt better technologies and some of the technologies that you 0:14:27.360 --> 0:14:28.280 guys are talking about. 0:14:28.440 --> 0:14:31.280 So there are certainly some ways from the regulatory structure 0:14:31.480 --> 0:14:34.560 that utility commissioners at the state level or at the 0:14:34.560 --> 0:14:37.680 federal level could incentivize the use of some of these 0:14:37.680 --> 0:14:38.440 different technologies. 0:14:38.560 --> 0:14:40.560 They do we need to really make it happen. 0:14:40.960 --> 0:14:42.280 I think we need to make a bit of a 0:14:42.280 --> 0:14:44.240 push here, just because we have so much to deal 0:14:44.280 --> 0:14:46.120 with over the next three to five years, and that's 0:14:46.160 --> 0:14:48.240 when we can deploy some of these technologies while we're 0:14:48.240 --> 0:14:51.040 still building out major transmission lines that you know take 0:14:51.080 --> 0:14:52.080 ten to twelve years. 0:14:53.200 --> 0:14:54.880 Is this a national security issue? 0:14:55.200 --> 0:14:57.360 It certainly is a national security issue, and this is 0:14:57.360 --> 0:14:59.760 something that we continue to face every day. Our grid 0:14:59.840 --> 0:15:02.240 is one of our greatest assets that we have in 0:15:02.560 --> 0:15:07.480 our country and making sure that we can withstand cybersecurity attacks, 0:15:07.480 --> 0:15:11.520 physical attacks, and just frankly weather. One of the biggest 0:15:11.520 --> 0:15:14.680 issues is wildfires and making sure that we can prevent 0:15:14.720 --> 0:15:16.040 those from happening moving forward. 0:15:16.160 --> 0:15:18.120 Yeah, we were talking about this another story that's on 0:15:18.120 --> 0:15:21.440 the Bloomberg today that's about that. You know how investors 0:15:21.480 --> 0:15:24.320 have looked at the debt at utilities as kind of 0:15:24.360 --> 0:15:27.120 a sure thing in the past, right in terms of investing, 0:15:27.160 --> 0:15:29.760 but because of what's happening with climate change, that is 0:15:29.800 --> 0:15:32.160 not necessarily the case. That there's a lot more questions 0:15:32.160 --> 0:15:34.800 that are out there in terms of the unpredictability and 0:15:35.080 --> 0:15:37.960 the costs that are mounted against some of the nation's utilities. 0:15:38.280 --> 0:15:40.120 And I think part of this is incent trying to 0:15:40.120 --> 0:15:43.160 incentivize utilities, and they're really coming around to realize this. 0:15:43.680 --> 0:15:45.480 You're not going to if a pole gets knocked down 0:15:45.480 --> 0:15:47.720 from one hundred and fifty mile an hour WINS, you're 0:15:47.720 --> 0:15:49.960 not going to replace it with another pole like was 0:15:49.960 --> 0:15:52.040 there before that could get knocked down. You want something 0:15:52.080 --> 0:15:54.400 that can stand two hundred and fifty mile an hour WINS. 0:15:54.640 --> 0:15:56.680 And so we have to make sure that the regulatory 0:15:56.720 --> 0:15:59.640 structure is there in place to allow them to think 0:16:00.080 --> 0:16:01.360 in a forward leaning way. 0:16:01.680 --> 0:16:03.120 What can I just ask you? So, what is that 0:16:03.160 --> 0:16:04.320 regulatory structure? 0:16:04.520 --> 0:16:08.200 So there are these very fun organizations called utility commissions 0:16:08.240 --> 0:16:10.960 public utility commissions. They're the people who decide how much 0:16:10.960 --> 0:16:13.680 you pay on your electricity bill and on your gas bill. 0:16:14.000 --> 0:16:17.320 And those are the folks that hold utilities accountable and 0:16:17.480 --> 0:16:20.840 also figure out how those costs are being allocated to 0:16:20.920 --> 0:16:24.000 regular folks like us and to major industry as well. 0:16:24.600 --> 0:16:26.640 How much are we talking here? If you could wave 0:16:26.680 --> 0:16:30.960 a magic wand and get enough funding to completely upgrade 0:16:31.240 --> 0:16:33.760 the grid in the US, how much would it be? 0:16:34.280 --> 0:16:38.520 So we are really lucky under the bipartisan infrastructure law, 0:16:38.560 --> 0:16:41.520 the Inflation Reduction Act rate my office has about twenty 0:16:41.560 --> 0:16:44.320 two billion dollars to upgrade the grid. We talked about 0:16:44.400 --> 0:16:46.080 three and a half of it going out last year. 0:16:46.440 --> 0:16:48.920 To be honest, that's a drop in the bucket. Every year, 0:16:49.600 --> 0:16:52.360 utilities spend about twenty three billion dollars just to maintain 0:16:52.400 --> 0:16:55.880 their existing assets in order to continue to upgrade. What 0:16:55.920 --> 0:16:58.280 we do find though, is that some of those costs 0:16:58.360 --> 0:17:02.200 could just be shifted instead of paying to replace l 0:17:02.240 --> 0:17:04.520 like for like, we could be paying a slightly lower 0:17:04.520 --> 0:17:06.520 cost even to do some of those upgrades. And that's 0:17:06.560 --> 0:17:08.640 where we have to continue to push the market as much. 0:17:08.520 --> 0:17:12.159 As west so is twenty plus billion dollars enough. 0:17:12.119 --> 0:17:15.080 Twenty bus plus billion I think per year. But you know, 0:17:15.600 --> 0:17:18.719 we're blessed with having Inflation Reduction Act money and by 0:17:18.760 --> 0:17:21.840 Parson Infrastructure Law of course that expires after a period 0:17:21.880 --> 0:17:22.160 of time. 0:17:22.280 --> 0:17:23.520 Is there a chance that we're all going to end 0:17:23.560 --> 0:17:26.600 up paying as users consumers that to in other words, 0:17:26.600 --> 0:17:28.000 to help pay for this, that we are going to 0:17:28.000 --> 0:17:29.480 pay higher utility costs. 0:17:29.560 --> 0:17:32.120 I think if folks are smart and we do good planning, 0:17:32.160 --> 0:17:34.560 and we think years out and make sure that we're 0:17:34.600 --> 0:17:36.920 being preventive about it, that we're not going to bear 0:17:36.920 --> 0:17:38.800 the cost. I think about how much a cost for 0:17:38.920 --> 0:17:41.200 recovery after a major storm at the lights go out? 0:17:41.359 --> 0:17:43.960 How many billions of dollars of revenue is y here 0:17:43.960 --> 0:17:44.560 we are? 0:17:45.400 --> 0:17:47.200 So what like hope do you have that it kind 0:17:47.200 --> 0:17:47.720 of changes? 0:17:48.080 --> 0:17:50.000 I do have a lot of hope. I think that 0:17:50.040 --> 0:17:52.439 folks are really come this issue is coming to a 0:17:52.440 --> 0:17:55.600 head for the first time at least in my career. 0:17:55.840 --> 0:17:58.960 Folks are really realizing that our grid needs a lot 0:17:58.960 --> 0:18:02.200 of investment. Everyone focuses on the generation side. They're excited 0:18:02.240 --> 0:18:05.480 about new plants and new gas, and new solar and 0:18:05.560 --> 0:18:06.240 new wind. 0:18:07.280 --> 0:18:09.880 I hate to end on this, but what's like one 0:18:09.880 --> 0:18:11.200 scenario that keeps you up at night? 0:18:11.640 --> 0:18:13.520 There are a lot of scenarios that keep me up 0:18:13.520 --> 0:18:15.520 at night. Hurricane season keeps me up at night. Hurricane 0:18:15.520 --> 0:18:17.280 seas and it absolutely keeps me up at night. And 0:18:17.320 --> 0:18:19.720 so we just want to make sure that we can 0:18:20.240 --> 0:18:22.560 invest in our grid as much as possible, to make 0:18:22.600 --> 0:18:25.160 sure that instead of the light's going out for five hours, 0:18:25.160 --> 0:18:26.320 they only go off for five minutes. 0:18:26.400 --> 0:18:29.520 Well, Maria Robinson, thank you so much. Reality check there, 0:18:29.560 --> 0:18:31.639 director of the Grid Deployment Office at the US Department 0:18:31.640 --> 0:18:32.159 of Energy. 0:18:34.280 --> 0:18:38.160 You're listening to the Bloomberg Business Week podcast. Listen live 0:18:38.240 --> 0:18:41.040 each weekday starting at two pm Eastern on Apple car 0:18:41.160 --> 0:18:44.119 Play and Android Auto with the Bloomberg Business ad. You 0:18:44.160 --> 0:18:47.440 can also listen live on Amazon Alexa from our flagship 0:18:47.480 --> 0:18:51.280 New York station, just Say Alexa playing Bloomberg eleven thirty. 0:18:52.600 --> 0:18:54.720 Well Line is the operator of a shared e bike 0:18:54.760 --> 0:18:57.160 and scoter network. It's backed by Uber and it's seeing 0:18:57.160 --> 0:18:59.920 its business growing. Bloomberg News reports that the privately held 0:19:00.040 --> 0:19:02.520 company is planning to invest more than fifty five billion 0:19:02.560 --> 0:19:05.360 dollars this year to expand its global fleet and add 0:19:05.359 --> 0:19:08.240 more than thirty thousand net new bikes across North America, 0:19:08.280 --> 0:19:12.120 Europe and Australia, while also replacing aging ones. That story 0:19:12.200 --> 0:19:15.159 last week by Bloomberg's Natalie Young, We've got with us 0:19:15.240 --> 0:19:18.040 Wayne Tang, the CEO of Lime. He joins us from 0:19:18.080 --> 0:19:20.720 New York. Wayne, good to have you with us this afternoon. 0:19:21.160 --> 0:19:23.879 Really interesting to see this story, especially at a time 0:19:24.160 --> 0:19:27.919 when the micromobility industry has hit so many speed bumps. 0:19:27.920 --> 0:19:30.600 I mean, we're talking about Bird Global and its bankruptcy, 0:19:30.960 --> 0:19:35.760 super pedestrian shutting, US operations, Lift on City Bike popular 0:19:35.800 --> 0:19:37.919