1 00:00:02,520 --> 00:00:13,480 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:18,040 --> 00:00:21,840 Speaker 2: Hello and welcome to another episode of the Odd Lots Podcast. 3 00:00:21,920 --> 00:00:24,200 Speaker 3: I'm Joe Wisenthal and I'm Tracy Alloway. 4 00:00:24,880 --> 00:00:27,800 Speaker 2: Tracy, I feel like we have already done kind of 5 00:00:27,840 --> 00:00:31,200 Speaker 2: one episode or maybe multiple depending on how you define them. 6 00:00:31,200 --> 00:00:39,080 Speaker 2: But you know, we're understanding the incredibly complex, opaque, crucial 7 00:00:39,120 --> 00:00:41,680 Speaker 2: world of how electricity markets work in the US and 8 00:00:41,720 --> 00:00:43,600 Speaker 2: what's good about them and what's bad about them. 9 00:00:43,840 --> 00:00:45,280 Speaker 4: We just got we gotta do more. 10 00:00:45,520 --> 00:00:48,159 Speaker 3: Here's what I've learned from multiple hours. 11 00:00:48,400 --> 00:00:49,839 Speaker 2: This top serious summary. 12 00:00:50,280 --> 00:00:54,120 Speaker 3: It's complicated, No it is, but that's it. And also 13 00:00:54,400 --> 00:00:56,600 Speaker 3: also actually I'll add one more thing. It seems to 14 00:00:56,600 --> 00:01:00,080 Speaker 3: be kind of the worst of multiple worlds. Like in 15 00:01:00,160 --> 00:01:02,840 Speaker 3: a sense there's a lot of regulation, but in another 16 00:01:02,880 --> 00:01:06,160 Speaker 3: sense there's a lot of deregulation. In one sense, you 17 00:01:06,280 --> 00:01:09,440 Speaker 3: have these dominant players. And I have to say a 18 00:01:09,440 --> 00:01:12,720 Speaker 3: lot of this is informed by my experience in I 19 00:01:12,760 --> 00:01:15,760 Speaker 3: guess New York and Connecticut where you have con Edison 20 00:01:16,160 --> 00:01:18,679 Speaker 3: and then ever Source, and so you have these big 21 00:01:18,720 --> 00:01:21,400 Speaker 3: players that you have to pay a lot of money 22 00:01:21,440 --> 00:01:24,800 Speaker 3: to in terms of distribution, but then if you want, 23 00:01:25,040 --> 00:01:29,080 Speaker 3: you can go out to an independent energy supplier and 24 00:01:29,240 --> 00:01:32,720 Speaker 3: pay them for the actual electricity that is going through 25 00:01:32,720 --> 00:01:36,119 Speaker 3: the pipes or the wires of con ed or an 26 00:01:36,120 --> 00:01:39,600 Speaker 3: ever source. But it never ends up making a difference 27 00:01:39,720 --> 00:01:42,199 Speaker 3: as far as I can tell, because the distribution costs 28 00:01:42,280 --> 00:01:43,279 Speaker 3: are still so high. 29 00:01:43,680 --> 00:01:45,959 Speaker 2: Yeah, I mean, I think the part about it that 30 00:01:46,120 --> 00:01:49,480 Speaker 2: like why it feels like a mess intuitively, is this 31 00:01:49,520 --> 00:01:53,440 Speaker 2: attempt to essentially create a market on top of something 32 00:01:53,480 --> 00:01:57,160 Speaker 2: that we know is a natural monopoly, right, because obviously 33 00:01:57,200 --> 00:01:59,920 Speaker 2: you're not going to have like multiple companies or ideally 34 00:02:00,160 --> 00:02:01,880 Speaker 2: I don't think it makes sense. Maybe it does to 35 00:02:01,960 --> 00:02:05,400 Speaker 2: have multiple companies like running their own wires and distribution. 36 00:02:05,480 --> 00:02:07,520 Speaker 2: I think we all sort of get why there is 37 00:02:07,560 --> 00:02:10,239 Speaker 2: this natural monopoly aspect, But then of course you try 38 00:02:10,280 --> 00:02:14,880 Speaker 2: to introduce market aspects and so different producers whether it's solar, 39 00:02:14,880 --> 00:02:17,400 Speaker 2: whether it's nuclear, whether it's coal, whether it's natural gas, 40 00:02:17,639 --> 00:02:20,200 Speaker 2: whether it's wins, et cetera, are kind of in a 41 00:02:20,280 --> 00:02:22,760 Speaker 2: market and it depends. So I think in Texas there's 42 00:02:22,800 --> 00:02:25,160 Speaker 2: probably different than Virginia versus Tennessee. 43 00:02:25,280 --> 00:02:27,320 Speaker 3: That's the other thing. There's state by state differences. 44 00:02:27,400 --> 00:02:30,320 Speaker 2: Obviously, Texas there's a lot of competition where you can 45 00:02:30,360 --> 00:02:32,520 Speaker 2: basically just do whatever you want, and whoever is the 46 00:02:32,560 --> 00:02:35,560 Speaker 2: cheapest price at any given moment, that's who is supplying 47 00:02:35,600 --> 00:02:38,639 Speaker 2: the power. So you try to like overlay on top 48 00:02:38,680 --> 00:02:42,280 Speaker 2: of this natural monopoly some sort of market ish thing 49 00:02:42,440 --> 00:02:45,520 Speaker 2: where different people compete, and then of course you have 50 00:02:45,600 --> 00:02:48,560 Speaker 2: the issue of because it's not a market. These utilities are, 51 00:02:48,600 --> 00:02:52,120 Speaker 2: as you mentioned, heavily regulated, constrained on what they can invest, 52 00:02:52,240 --> 00:02:55,000 Speaker 2: constrained on what they can price, constrained in the connection 53 00:02:55,080 --> 00:02:58,600 Speaker 2: they can link between their own investment and say renewables 54 00:02:58,680 --> 00:03:02,920 Speaker 2: versus then capture during that with higher prices, and everyone 55 00:03:02,960 --> 00:03:06,080 Speaker 2: complains that for whatever kind of energy they make, the 56 00:03:06,120 --> 00:03:06,920 Speaker 2: system isn't working. 57 00:03:06,960 --> 00:03:09,920 Speaker 3: Well yeah, but I think you put it perfectly. It's 58 00:03:10,040 --> 00:03:14,360 Speaker 3: like imposing market forces on a natural monopoly, and it 59 00:03:14,520 --> 00:03:18,080 Speaker 3: just seems like there are some downsides to that model. 60 00:03:18,120 --> 00:03:20,880 Speaker 3: I'm going to put it that way. Downsides for consumers 61 00:03:20,960 --> 00:03:23,720 Speaker 3: and then downsides in terms of maybe the transition to 62 00:03:24,080 --> 00:03:25,280 Speaker 3: decarbonized energy. 63 00:03:25,560 --> 00:03:27,560 Speaker 2: And this is the key thing we are putting. There's 64 00:03:27,639 --> 00:03:30,720 Speaker 2: so much riding at stake of the power system, right 65 00:03:30,800 --> 00:03:34,080 Speaker 2: because obviously we're attempting to take the old model that 66 00:03:34,160 --> 00:03:36,360 Speaker 2: was in place for decades and then replace a lot 67 00:03:36,360 --> 00:03:40,680 Speaker 2: of the generation sources with zero carbon versions, whether they're 68 00:03:40,720 --> 00:03:43,120 Speaker 2: solar or wind or maybe nuclear, though there's not a 69 00:03:43,120 --> 00:03:46,280 Speaker 2: ton of nuclear construction, but that is one attempt. Then 70 00:03:46,320 --> 00:03:49,400 Speaker 2: there's also booming demand for the first time in decades, 71 00:03:49,440 --> 00:03:51,400 Speaker 2: and this is something we have talked about in the 72 00:03:51,400 --> 00:03:54,640 Speaker 2: context of AI data centers. Tracy wrote that great post 73 00:03:54,680 --> 00:03:58,280 Speaker 2: recently just talk about how like every question on analyst 74 00:03:58,360 --> 00:04:00,920 Speaker 2: calls now for these companies is basically demand from AI. 75 00:04:01,080 --> 00:04:03,280 Speaker 3: Oh it was crazy. I looked at the transcript for 76 00:04:03,640 --> 00:04:06,800 Speaker 3: Dominion's most recent earnings call, and I think there were 77 00:04:06,840 --> 00:04:09,400 Speaker 3: like five or six questions asked, and four or five 78 00:04:09,440 --> 00:04:12,000 Speaker 3: of them more about data centers. And Dominion's doing a 79 00:04:12,000 --> 00:04:15,440 Speaker 3: bunch of interesting things, but people only want to hear 80 00:04:15,480 --> 00:04:17,400 Speaker 3: about data centers at the moment totally. 81 00:04:17,440 --> 00:04:19,400 Speaker 2: So you have two really novel things. You have the 82 00:04:19,400 --> 00:04:23,240 Speaker 2: decarbonization effort and you have the increase in load growth 83 00:04:23,240 --> 00:04:25,120 Speaker 2: I think they call it for the first time in decades. 84 00:04:25,480 --> 00:04:27,799 Speaker 2: And so it's like, are the markets that we've designed, 85 00:04:27,839 --> 00:04:32,400 Speaker 2: this combination of natural monopolies with some sort of market mechanism, 86 00:04:32,720 --> 00:04:35,320 Speaker 2: do they work for all this? And I think the 87 00:04:35,400 --> 00:04:37,680 Speaker 2: jury is still out to save the minimum. 88 00:04:37,520 --> 00:04:40,920 Speaker 3: I am ready to confirm my prior that this whole 89 00:04:40,920 --> 00:04:44,120 Speaker 3: space is very complicated and I don't quite get how 90 00:04:44,160 --> 00:04:46,960 Speaker 3: we ended up with this particular system, So let's do. 91 00:04:46,920 --> 00:04:47,400 Speaker 4: It all right. 92 00:04:47,440 --> 00:04:50,239 Speaker 2: Well, I'm psyched to say that we have two perfect 93 00:04:50,240 --> 00:04:52,839 Speaker 2: guests to sort of help us understand how we got 94 00:04:52,880 --> 00:04:55,800 Speaker 2: here in these markets and what the flaws might be. 95 00:04:55,880 --> 00:04:57,919 Speaker 2: We're going to be speaking with Matt Huber, who is 96 00:04:57,920 --> 00:05:02,120 Speaker 2: a professor at Syracuse in the Department of Geography and Environment, 97 00:05:02,320 --> 00:05:04,520 Speaker 2: and we're also going to be speaking with Fred Stafford. 98 00:05:04,800 --> 00:05:08,680 Speaker 2: He's a pseudonymous energy writer who works in a separate industry, 99 00:05:08,920 --> 00:05:11,000 Speaker 2: but he's someone who's writing I have enjoyed for a 100 00:05:11,000 --> 00:05:13,279 Speaker 2: long time. I've learned a lot from and so we're 101 00:05:13,320 --> 00:05:15,760 Speaker 2: disguising his own voice so that he can keep his 102 00:05:15,839 --> 00:05:19,799 Speaker 2: professional life and his writing life separately. So Fred and Matt, 103 00:05:19,800 --> 00:05:22,400 Speaker 2: thank you so much for coming on outlaws. 104 00:05:22,080 --> 00:05:24,680 Speaker 5: Thanks for having me, thanks for having us. Happy to 105 00:05:24,760 --> 00:05:25,080 Speaker 5: be here. 106 00:05:25,520 --> 00:05:27,520 Speaker 2: So why didn't I just start with the simple question? 107 00:05:27,600 --> 00:05:30,159 Speaker 2: You two have been writing in various places at at 108 00:05:30,200 --> 00:05:33,920 Speaker 2: piece recently, and I think Damage magazine and Jacobin and elsewhere. 109 00:05:34,400 --> 00:05:38,320 Speaker 2: Why what is it about the nature of electricity markets 110 00:05:38,680 --> 00:05:41,200 Speaker 2: that you feel like you have to write about and explain. 111 00:05:41,839 --> 00:05:44,120 Speaker 5: So I love to answer the question why electricity hy 112 00:05:44,120 --> 00:05:47,560 Speaker 5: electricity markets because for me, as kind of a stem 113 00:05:47,600 --> 00:05:51,320 Speaker 5: brained person on the political left, I got excited hearing 114 00:05:51,360 --> 00:05:54,679 Speaker 5: about things like nuclear power and that seems really important 115 00:05:54,720 --> 00:05:57,800 Speaker 5: and really necessary for climate issues and so on. And 116 00:05:57,920 --> 00:06:01,960 Speaker 5: what I found was that inlectricity, once you start looking 117 00:06:01,960 --> 00:06:04,920 Speaker 5: at like why isn't there more nuclear power, you quickly 118 00:06:05,000 --> 00:06:09,960 Speaker 5: run into this fascinating domain in which central planning runs 119 00:06:10,040 --> 00:06:13,520 Speaker 5: right up against all these markets and this really interesting 120 00:06:13,600 --> 00:06:16,440 Speaker 5: tension of some things are planned some things or markets, 121 00:06:16,839 --> 00:06:19,279 Speaker 5: why is it like that? And then what I also 122 00:06:19,360 --> 00:06:22,200 Speaker 5: saw on the political left is that nobody really was 123 00:06:22,240 --> 00:06:26,080 Speaker 5: talking about this. There wasn't really any clear analysis of 124 00:06:26,200 --> 00:06:28,320 Speaker 5: why there wasn't more nuclear power or anything, because I 125 00:06:28,320 --> 00:06:30,719 Speaker 5: think a lot of this sort of discussion was really 126 00:06:30,720 --> 00:06:33,800 Speaker 5: guided by kind of environmental politics. So that's really what 127 00:06:33,880 --> 00:06:37,000 Speaker 5: drove me into this as like an intellectual subject. 128 00:06:37,760 --> 00:06:38,039 Speaker 4: Yeah. 129 00:06:38,240 --> 00:06:41,400 Speaker 6: Also, when you look on the political left, there's tendency 130 00:06:41,440 --> 00:06:45,359 Speaker 6: to kind of fetishize the kind of like smallest beautiful 131 00:06:45,480 --> 00:06:51,359 Speaker 6: vision of small scale decentralized energy generation, and when you 132 00:06:51,400 --> 00:06:53,720 Speaker 6: look at the scale of the climate crisis, and how 133 00:06:53,800 --> 00:06:55,760 Speaker 6: much we need to build and how much we need 134 00:06:55,800 --> 00:07:00,839 Speaker 6: to transform. That vision of decentralized energy sits well with 135 00:07:00,960 --> 00:07:04,279 Speaker 6: kind of decentralized markets and price signals, but it doesn't 136 00:07:04,320 --> 00:07:08,479 Speaker 6: really sit well with the need for centralized planning for 137 00:07:08,720 --> 00:07:12,239 Speaker 6: large scale building and investment and to try to deal 138 00:07:12,320 --> 00:07:16,000 Speaker 6: with the kind of load growth that you both mentioned 139 00:07:16,000 --> 00:07:19,360 Speaker 6: at the top, and so the smallest beautiful visions seemed 140 00:07:19,360 --> 00:07:21,120 Speaker 6: to be totally out of step with the kind of 141 00:07:21,240 --> 00:07:24,200 Speaker 6: large scale challenge we have in front of us and 142 00:07:24,800 --> 00:07:27,440 Speaker 6: trying to kind of think through how we could reform 143 00:07:27,480 --> 00:07:30,000 Speaker 6: the electricity system to meet that challenges. I think why 144 00:07:30,080 --> 00:07:31,520 Speaker 6: we got into this topic. 145 00:07:32,120 --> 00:07:35,760 Speaker 3: So I'm going to ask the obvious question then, which 146 00:07:35,800 --> 00:07:38,720 Speaker 3: is how did we end up with this system? Because 147 00:07:38,760 --> 00:07:41,920 Speaker 3: my understanding reading some of your work is that there 148 00:07:42,040 --> 00:07:45,080 Speaker 3: was a time in the early nineteen hundreds where we 149 00:07:45,280 --> 00:07:52,640 Speaker 3: had very centralized, very regulated power companies utilities basically, and 150 00:07:52,680 --> 00:07:56,400 Speaker 3: then later on in the century we moved to this weird, 151 00:07:56,520 --> 00:08:00,680 Speaker 3: sort of pseudo deregulated market where we had independent operators 152 00:08:00,760 --> 00:08:06,400 Speaker 3: plus the regulated utilities. How did that transition actually happen? Like, basically, 153 00:08:06,480 --> 00:08:09,440 Speaker 3: walk us through the history of the US energy industry 154 00:08:09,560 --> 00:08:12,080 Speaker 3: in under twenty minutes, preferably. 155 00:08:12,400 --> 00:08:16,040 Speaker 6: You know, it really does go back to early twentieth 156 00:08:16,080 --> 00:08:19,080 Speaker 6: century where a lot of sort of progressive lawyers and 157 00:08:19,160 --> 00:08:23,560 Speaker 6: progressive political thinkers sort of realized there were these parts 158 00:08:23,600 --> 00:08:26,520 Speaker 6: of the economy that were seen as sort of essential 159 00:08:26,640 --> 00:08:32,880 Speaker 6: services like water, like gas, like railroads even that were 160 00:08:32,960 --> 00:08:36,680 Speaker 6: sort of not really best left totally to the private 161 00:08:36,720 --> 00:08:39,559 Speaker 6: sector and totally to the market, and that are better 162 00:08:39,679 --> 00:08:43,400 Speaker 6: sort of regulated as public utilities because there's a fundamental 163 00:08:43,520 --> 00:08:48,080 Speaker 6: kind of public interest in making sure that those utilities 164 00:08:48,120 --> 00:08:51,360 Speaker 6: are kind of running smoothly and offering those essential services. 165 00:08:51,920 --> 00:08:55,040 Speaker 6: And pretty soon when electricity came on the scene, it 166 00:08:55,040 --> 00:08:58,800 Speaker 6: became pretty clear that electricity was one of those essential 167 00:08:58,840 --> 00:09:04,200 Speaker 6: services before it came under the domain of public utility law. Now, 168 00:09:04,240 --> 00:09:09,000 Speaker 6: the problem was the sector of electricity was controlled by 169 00:09:09,320 --> 00:09:13,520 Speaker 6: capitalists like people like Thomas Edison and others, and eventually 170 00:09:13,559 --> 00:09:17,400 Speaker 6: like Samuel Ensall, who wanted to run the system for profit, 171 00:09:18,040 --> 00:09:20,199 Speaker 6: and that kind of tension kind of played out for 172 00:09:20,280 --> 00:09:23,360 Speaker 6: a while, but eventually they realized that, okay, doesn't make 173 00:09:23,400 --> 00:09:27,600 Speaker 6: sense for society to have multiple competing electric distribution companies 174 00:09:27,640 --> 00:09:30,360 Speaker 6: sort of laying wires against each other. So what we 175 00:09:30,400 --> 00:09:34,600 Speaker 6: really need is to actually have a single electric utility, 176 00:09:35,080 --> 00:09:37,920 Speaker 6: and the industry sort of fought and compromised to make 177 00:09:37,960 --> 00:09:40,640 Speaker 6: sure that that electric utility would be run by a 178 00:09:40,720 --> 00:09:45,199 Speaker 6: private investor owned utility. They'd be given a monopoly franchise 179 00:09:45,280 --> 00:09:48,480 Speaker 6: over a given territory, and in exchange, they would be 180 00:09:48,520 --> 00:09:51,880 Speaker 6: regulated by public utility commissions, which we still have in 181 00:09:51,920 --> 00:09:55,920 Speaker 6: this country. They still regulate your distribution utilities, and they're 182 00:09:55,920 --> 00:09:58,160 Speaker 6: supposed to regulate them for the public good, for the 183 00:09:58,200 --> 00:10:02,719 Speaker 6: public interest, make sure these private utilities aren't like gouging consumers. 184 00:10:03,200 --> 00:10:06,800 Speaker 6: And so that created a kind of compromise or utility 185 00:10:06,800 --> 00:10:10,640 Speaker 6: consensus that lasted throughout much of the twentieth century. And 186 00:10:10,280 --> 00:10:14,600 Speaker 6: these sort of monopoly regulated utilities. You know, they built 187 00:10:14,720 --> 00:10:17,080 Speaker 6: the grid. You know, if we talked today about the 188 00:10:17,120 --> 00:10:19,360 Speaker 6: return of load growth, there was a lot of load 189 00:10:19,360 --> 00:10:22,000 Speaker 6: growth in the post World War two era, and they 190 00:10:22,200 --> 00:10:25,079 Speaker 6: developed this model where their investments were regulated and the 191 00:10:25,720 --> 00:10:28,120 Speaker 6: prices they charged to consumers were regulated. But they were 192 00:10:28,160 --> 00:10:31,240 Speaker 6: really effective at at building out the grid and building 193 00:10:31,240 --> 00:10:36,079 Speaker 6: out generation transmission distribution. Now by the nineteen seventies they 194 00:10:36,080 --> 00:10:40,080 Speaker 6: started to come into disfavor. There was, as many would 195 00:10:40,160 --> 00:10:44,839 Speaker 6: call it this kind of shift towards neoliberal ideology where 196 00:10:45,400 --> 00:10:48,880 Speaker 6: really all the kind of big hulking institutions of the 197 00:10:48,880 --> 00:10:53,360 Speaker 6: post war era, like government and unions and utilities were 198 00:10:53,400 --> 00:10:56,600 Speaker 6: seen as kind of inflexible and not competitive, and we 199 00:10:56,679 --> 00:11:00,720 Speaker 6: need to kind of really smash these institutions and deregulate 200 00:11:00,760 --> 00:11:04,160 Speaker 6: them and break them into smaller and competing parts. And 201 00:11:04,240 --> 00:11:07,679 Speaker 6: so at that point you get this long process of 202 00:11:07,720 --> 00:11:10,760 Speaker 6: trying to break up this utility system that again used 203 00:11:10,760 --> 00:11:13,440 Speaker 6: to be run by a single entity and they could 204 00:11:13,520 --> 00:11:17,880 Speaker 6: use central planning, they could really invest with long term considerations, 205 00:11:18,240 --> 00:11:20,160 Speaker 6: and then you break it up, and as you both 206 00:11:20,200 --> 00:11:22,960 Speaker 6: talked about in the introduction, now we kind of have 207 00:11:23,320 --> 00:11:26,880 Speaker 6: competition and generation. You have all these different independent power 208 00:11:26,920 --> 00:11:30,920 Speaker 6: producers that are competing to sell electricity onto wholesale markets, 209 00:11:31,360 --> 00:11:34,640 Speaker 6: and the wires, the transmission and distribution still tend to 210 00:11:34,679 --> 00:11:38,000 Speaker 6: be owned by utilities, but they've also found ways to 211 00:11:38,120 --> 00:11:41,720 Speaker 6: insert competition into the retail side, where consumers can have 212 00:11:41,840 --> 00:11:44,280 Speaker 6: so called choice over things. And so what they've done 213 00:11:44,400 --> 00:11:47,640 Speaker 6: is kind of broken up this highly integrated and complex 214 00:11:48,240 --> 00:11:51,600 Speaker 6: physical system called the grid and broke it up into 215 00:11:51,640 --> 00:11:54,679 Speaker 6: parts where they can subject it to competition and markets 216 00:11:54,679 --> 00:11:55,439 Speaker 6: and price signals. 217 00:11:55,480 --> 00:11:58,000 Speaker 4: Now, this is where we kind of. 218 00:11:57,960 --> 00:12:01,360 Speaker 6: Reached this in pass where where if we really want 219 00:12:01,400 --> 00:12:04,920 Speaker 6: to totally restructure the grid, totally grow it in ways 220 00:12:04,920 --> 00:12:08,760 Speaker 6: that can serve decarbonization and AI and all this stuff, 221 00:12:09,080 --> 00:12:12,280 Speaker 6: that perhaps, like maybe this sort of more integrated, more 222 00:12:12,320 --> 00:12:16,680 Speaker 6: central planning, more coordinated and socialized investment model could be 223 00:12:16,720 --> 00:12:20,800 Speaker 6: more useful than this very scattered and sort of fragmented 224 00:12:20,840 --> 00:12:21,880 Speaker 6: system we have now. 225 00:12:37,040 --> 00:12:39,520 Speaker 2: So Fred, why did you jump in? Because, as you 226 00:12:39,559 --> 00:12:42,080 Speaker 2: said in the intro, you got interested in nuclear power, 227 00:12:42,160 --> 00:12:46,120 Speaker 2: and in your view, the current market model is not 228 00:12:46,320 --> 00:12:49,680 Speaker 2: amenable to the scale of nuclear power expansion we need, 229 00:12:49,720 --> 00:12:51,719 Speaker 2: and we know that there's hardly any building. I think 230 00:12:51,720 --> 00:12:54,000 Speaker 2: there was a new reactor last year, but was incredibly slow. 231 00:12:54,200 --> 00:12:58,160 Speaker 2: What is the core flaw of putting nuclear into the 232 00:12:58,240 --> 00:12:59,600 Speaker 2: existing electricity model? 233 00:13:00,160 --> 00:13:06,040 Speaker 5: The major issue is that nuclear is this extremely capital 234 00:13:06,080 --> 00:13:10,560 Speaker 5: intensive infrastructure that costs so much, and it produces very 235 00:13:10,640 --> 00:13:13,760 Speaker 5: cheap power once it's built, where the operational expenditures are 236 00:13:13,840 --> 00:13:16,720 Speaker 5: very low, and it does so in a way that 237 00:13:16,880 --> 00:13:19,520 Speaker 5: is just sort of constant. It's not flexibly moving like 238 00:13:19,600 --> 00:13:24,000 Speaker 5: power increasing and decreasing. It's just sort of dumping twenty 239 00:13:24,000 --> 00:13:26,960 Speaker 5: four to seven what people call baseload power out into 240 00:13:27,000 --> 00:13:31,360 Speaker 5: the grid, and because someone has invested so much capital 241 00:13:31,360 --> 00:13:34,120 Speaker 5: in this thing, to recoup the costs, they have to 242 00:13:34,200 --> 00:13:37,199 Speaker 5: run this and try to get revenues twenty four to 243 00:13:37,280 --> 00:13:42,319 Speaker 5: seven max capacity. Unfortunately, the way that revenues are assigned 244 00:13:42,480 --> 00:13:45,720 Speaker 5: and for power generators in these sort of restructured areas 245 00:13:45,720 --> 00:13:49,400 Speaker 5: that are really dictated by marginal prices. At any given 246 00:13:49,480 --> 00:13:52,400 Speaker 5: unit of time, the price of electricity on the market 247 00:13:52,559 --> 00:13:55,160 Speaker 5: is the price of the marginal unit, which often tends 248 00:13:55,240 --> 00:13:58,040 Speaker 5: to be a price of natural gas. Sometimes it's even 249 00:13:58,320 --> 00:13:59,920 Speaker 5: close to zero because there will be a lot of 250 00:14:00,040 --> 00:14:03,520 Speaker 5: renewables at that particular time and place. But you kind 251 00:14:03,559 --> 00:14:06,199 Speaker 5: of lose the guarantee that you can recover your costs, 252 00:14:06,400 --> 00:14:09,360 Speaker 5: you being the owner of the nuclear plant. So it 253 00:14:09,520 --> 00:14:11,960 Speaker 5: just makes it very hard to know you're going to 254 00:14:11,960 --> 00:14:15,880 Speaker 5: recoup that investment. It means that all this wind and 255 00:14:15,920 --> 00:14:19,280 Speaker 5: solar energy, which is at any given time might be 256 00:14:19,320 --> 00:14:21,800 Speaker 5: on the grid, maybe isn't, but when it is, it's 257 00:14:22,440 --> 00:14:26,640 Speaker 5: bringing down the market prices. So it basically just disturbs 258 00:14:26,680 --> 00:14:30,840 Speaker 5: this way that nuclear and hydro electric power, pumped hydro 259 00:14:30,880 --> 00:14:35,280 Speaker 5: storage facilities, all these big, big infrastructures were invested in 260 00:14:35,280 --> 00:14:38,920 Speaker 5: in the way they recouped costs, and because the utilities 261 00:14:38,960 --> 00:14:42,480 Speaker 5: had this sort of cost of service regulation where the 262 00:14:42,560 --> 00:14:46,680 Speaker 5: idea is they would invest in the infrastructure and they 263 00:14:46,680 --> 00:14:49,280 Speaker 5: would get a profit on the capital investment. They'd be 264 00:14:49,320 --> 00:14:52,480 Speaker 5: allowed that roughly nine to ten percent profit. But the 265 00:14:52,520 --> 00:14:55,080 Speaker 5: total costs for everything that they had invested in and 266 00:14:55,160 --> 00:14:58,880 Speaker 5: were spending to run the electricity system to provide electricity 267 00:14:58,920 --> 00:15:03,040 Speaker 5: service to customers was being socialized to those customers. When 268 00:15:03,040 --> 00:15:07,040 Speaker 5: you don't have that model, the revenues are less guaranteed. 269 00:15:07,080 --> 00:15:09,760 Speaker 5: The revenues are just whatever the market revenues are. And 270 00:15:10,240 --> 00:15:12,840 Speaker 5: there's just various reasons why that competition from the other 271 00:15:12,880 --> 00:15:15,400 Speaker 5: forms of energy and the way the prices are set 272 00:15:15,400 --> 00:15:17,840 Speaker 5: according to whatever the marginal unit of power is, it 273 00:15:17,920 --> 00:15:20,960 Speaker 5: just doesn't work well for these big power projects. 274 00:15:21,520 --> 00:15:25,600 Speaker 3: Wait, can you give us a specific example of a 275 00:15:26,240 --> 00:15:30,680 Speaker 3: utility that might be doing something or have more money 276 00:15:30,840 --> 00:15:34,240 Speaker 3: to make renewable energy investments. I'm sort of leading you 277 00:15:34,320 --> 00:15:36,960 Speaker 3: on here, but one thing that you mentioned in your 278 00:15:36,960 --> 00:15:41,120 Speaker 3: writing and going back to our intro, is Dominion building 279 00:15:41,240 --> 00:15:46,160 Speaker 3: its own ships to install wind turbines. And that was 280 00:15:46,240 --> 00:15:48,360 Speaker 3: kind of stunning to me. I hadn't heard that before, 281 00:15:48,440 --> 00:15:50,920 Speaker 3: So talk a little bit more about like the concrete 282 00:15:51,000 --> 00:15:55,680 Speaker 3: examples of utilities maybe doing this at a larger scale 283 00:15:55,720 --> 00:15:58,040 Speaker 3: than some of the independent operators. 284 00:15:58,320 --> 00:16:00,560 Speaker 5: Yeah, so I love the dominion example. Well, I think 285 00:16:00,640 --> 00:16:03,000 Speaker 5: it's so interesting, and we do open our recent essay 286 00:16:03,040 --> 00:16:06,200 Speaker 5: with that. So let's say you're a state and you're 287 00:16:06,240 --> 00:16:10,040 Speaker 5: a state that has democratically determined that you want offshore 288 00:16:10,080 --> 00:16:13,200 Speaker 5: wind to be part of resources that the state is using. 289 00:16:13,680 --> 00:16:15,920 Speaker 5: That a result of some kind of democratic process. People 290 00:16:15,960 --> 00:16:19,080 Speaker 5: might agree disagree with that, but that was a state 291 00:16:19,120 --> 00:16:22,040 Speaker 5: policy aim. Now, if you're the state of New York 292 00:16:22,400 --> 00:16:25,040 Speaker 5: and you want offshore win, you say, all right, we 293 00:16:25,120 --> 00:16:28,200 Speaker 5: have some power markets already, but that's not going to 294 00:16:28,200 --> 00:16:31,040 Speaker 5: be enough to attract any investors in this massive, massive 295 00:16:31,080 --> 00:16:35,000 Speaker 5: capital intensive project that's long term infrastructure. So instead, we're 296 00:16:35,000 --> 00:16:37,160 Speaker 5: going to design we the state, are going to design 297 00:16:37,160 --> 00:16:42,240 Speaker 5: increasingly bespoke financial policy instruments called the Offshore Renewable Energy 298 00:16:42,240 --> 00:16:46,080 Speaker 5: Certificate as a subsidy, and we're going to force all 299 00:16:46,080 --> 00:16:48,920 Speaker 5: the utilities, like the con ads and your utility you're 300 00:16:48,920 --> 00:16:51,720 Speaker 5: paying goes to to have to purchase a certain number 301 00:16:51,760 --> 00:16:55,160 Speaker 5: of these instruments. These certificates, so that it's kind of 302 00:16:55,200 --> 00:16:58,960 Speaker 5: socializing the cost of the subsidy among electricity consumers. But 303 00:16:59,120 --> 00:17:01,880 Speaker 5: now we've designed this new kind of financial instrument. We 304 00:17:01,920 --> 00:17:04,840 Speaker 5: are augmenting the existing power markets with this as a subsidy. 305 00:17:04,880 --> 00:17:08,760 Speaker 5: Because the power markets weren't enough to attract investors. Then 306 00:17:08,800 --> 00:17:11,680 Speaker 5: we're going to design the competitive auction process to take 307 00:17:11,720 --> 00:17:15,920 Speaker 5: competitive bids. So we say, please, please somebody, Oh my god, 308 00:17:15,960 --> 00:17:18,359 Speaker 5: we want offshore win. Please someone come and build it. 309 00:17:18,640 --> 00:17:22,120 Speaker 5: Here's the subsidy on top of the power markets. And 310 00:17:22,440 --> 00:17:26,280 Speaker 5: whatever forecasted revenues you think you'll make based on your 311 00:17:26,320 --> 00:17:29,479 Speaker 5: forecast of the market price, you get to keep whatever's 312 00:17:29,560 --> 00:17:32,159 Speaker 5: left place your bids. We want to procure it, and 313 00:17:32,240 --> 00:17:35,040 Speaker 5: we'll see which one offers the best price for us 314 00:17:35,080 --> 00:17:38,639 Speaker 5: the state. Now that is the kind of deregulated or 315 00:17:38,640 --> 00:17:42,480 Speaker 5: restructured market approach this. Now let's look at Virginia, which 316 00:17:42,520 --> 00:17:46,800 Speaker 5: has Dominion as an investor owned public utility. Virginia passes 317 00:17:46,880 --> 00:17:50,520 Speaker 5: legislation we want offshore win. They then just task the 318 00:17:50,560 --> 00:17:55,040 Speaker 5: public utility to build offshore wind Dominion. Then it doesn't 319 00:17:55,080 --> 00:17:57,600 Speaker 5: need to No one needs to design all these additional subsidies, 320 00:17:57,600 --> 00:18:00,720 Speaker 5: These additional markets or auctions or anything. Now, the State 321 00:18:00,760 --> 00:18:04,359 Speaker 5: Public Utilities Commission just needs to be working in tandem 322 00:18:04,400 --> 00:18:07,600 Speaker 5: with Dominion Energy to kind of approve whatever investments they 323 00:18:07,640 --> 00:18:10,919 Speaker 5: think are needed, determine what's prudent of those investments, what 324 00:18:10,960 --> 00:18:14,679 Speaker 5: they're allowed to socialize to the customers. And they have 325 00:18:14,840 --> 00:18:16,800 Speaker 5: such a scale it's actually the largest of all the 326 00:18:16,920 --> 00:18:20,600 Speaker 5: Atlantic Coast offshore wind projects by a fairly large margin. 327 00:18:21,200 --> 00:18:24,119 Speaker 5: And because of the economies of scale here, well that 328 00:18:24,359 --> 00:18:26,440 Speaker 5: you mentioned the ship. One of the major kind of 329 00:18:26,480 --> 00:18:29,719 Speaker 5: supply chain issues that offshore wind projects are facing is 330 00:18:30,160 --> 00:18:33,119 Speaker 5: there's not enough ships. Because there's this law that Jones 331 00:18:33,160 --> 00:18:36,080 Speaker 5: Act from one hundred years ago that says it's a 332 00:18:36,119 --> 00:18:39,399 Speaker 5: common Yeah, everyone mentions it, and everyone just acts like 333 00:18:39,440 --> 00:18:41,320 Speaker 5: there's no legitimate basis for that. I'm not going to 334 00:18:41,359 --> 00:18:44,040 Speaker 5: make that argument. That's a fact regardless. So there's not 335 00:18:44,119 --> 00:18:47,120 Speaker 5: a lot of ships. So Dominion just says, Okay, we 336 00:18:47,200 --> 00:18:49,679 Speaker 5: know we can recoup the costs of all this stuff 337 00:18:50,119 --> 00:18:53,600 Speaker 5: because we're a public utility, a regulated monopoly utility. So 338 00:18:53,720 --> 00:18:55,879 Speaker 5: we're just going to build a ship. And just a 339 00:18:55,880 --> 00:18:57,560 Speaker 5: couple of weeks ago that ship was built and it 340 00:18:57,640 --> 00:19:00,119 Speaker 5: sailed out of a port in Texas. It's called the Shribda. Yes, 341 00:19:00,480 --> 00:19:03,520 Speaker 5: like Scilla and Shribdis, you know, questionable sea monster naming 342 00:19:03,560 --> 00:19:07,400 Speaker 5: for your offshore win vessel. But now they can keep 343 00:19:07,440 --> 00:19:09,960 Speaker 5: this project going despite what kinds of cost increases there 344 00:19:09,960 --> 00:19:12,679 Speaker 5: are with supply chain issues and so on, Whereas in 345 00:19:12,720 --> 00:19:15,000 Speaker 5: New York State, a lot of the contracts that were 346 00:19:15,000 --> 00:19:18,080 Speaker 5: the results of these competitive processes had to be canceled 347 00:19:18,359 --> 00:19:21,760 Speaker 5: because supply chain problems and other issues meant that the 348 00:19:21,760 --> 00:19:24,639 Speaker 5: projects at the agreed upon contracts and subsidies were no 349 00:19:24,720 --> 00:19:27,560 Speaker 5: longer profitable, and the state said, wholloa, we're not going 350 00:19:27,640 --> 00:19:30,840 Speaker 5: to let you renegotiate the price. We're canceling it. Rebid later, 351 00:19:31,440 --> 00:19:32,800 Speaker 5: all right, So what are the people of New York 352 00:19:32,880 --> 00:19:33,400 Speaker 5: left with? Then? 353 00:19:34,119 --> 00:19:37,480 Speaker 2: Tracy and I were just talking earlier today about how 354 00:19:37,520 --> 00:19:39,359 Speaker 2: the Jones Act has probably now come up on like 355 00:19:39,400 --> 00:19:41,800 Speaker 2: twenty episodes, but we've never actually done a proper Jones 356 00:19:41,800 --> 00:19:44,240 Speaker 2: Act episode, and now I think we'll just never do one, 357 00:19:44,280 --> 00:19:46,720 Speaker 2: so it can be this running joke of never having 358 00:19:46,760 --> 00:19:49,520 Speaker 2: done a Jones Zach episode. Matt, I want to go 359 00:19:49,600 --> 00:19:52,360 Speaker 2: back to you. You know, you said something that certainly 360 00:19:52,480 --> 00:19:55,479 Speaker 2: rings true to me. In fact, I brought up recently 361 00:19:55,520 --> 00:19:59,600 Speaker 2: on another episode, do you say the political left pushing renewables, 362 00:19:59,600 --> 00:20:03,040 Speaker 2: the certain the fetishization of the smallest beautiful. I sort 363 00:20:03,040 --> 00:20:05,320 Speaker 2: of put it as like the more bucolic forms of 364 00:20:05,480 --> 00:20:08,800 Speaker 2: energy solar and wind. But what is the problem with 365 00:20:09,000 --> 00:20:11,440 Speaker 2: relying on solar wind? Because as far as I can tell, 366 00:20:11,440 --> 00:20:13,639 Speaker 2: when I look at charts, and especially when you augment 367 00:20:13,680 --> 00:20:16,359 Speaker 2: them with batteries, it looks like we're installing more and 368 00:20:16,440 --> 00:20:19,960 Speaker 2: more and more. Why is that not the path? If 369 00:20:19,960 --> 00:20:23,520 Speaker 2: we're installing more under the existing market structure, why is 370 00:20:23,560 --> 00:20:26,640 Speaker 2: that not the path towards decarbonization decarbonizing the grid? 371 00:20:27,040 --> 00:20:30,960 Speaker 6: Well, it's certainly part of the path in one sense. 372 00:20:31,119 --> 00:20:34,119 Speaker 6: We are trying to figure it out. But the intermittency 373 00:20:34,520 --> 00:20:38,119 Speaker 6: issue is still an issue. You know, it's you know, 374 00:20:38,480 --> 00:20:41,359 Speaker 6: you'll see headlines like once I remember the UK and 375 00:20:41,400 --> 00:20:43,440 Speaker 6: the Financial Times that it was like sixty six percent 376 00:20:43,480 --> 00:20:46,040 Speaker 6: of the energy was coming from wind one week, But 377 00:20:46,119 --> 00:20:48,680 Speaker 6: if you read the whole article two weeks before that, 378 00:20:48,720 --> 00:20:50,879 Speaker 6: two percent what's coming from wind? 379 00:20:51,000 --> 00:20:51,200 Speaker 5: Right? 380 00:20:51,760 --> 00:20:55,880 Speaker 6: And so there are challenges to what they call firming 381 00:20:56,200 --> 00:20:58,720 Speaker 6: that intermittency, and you know, you can do some with 382 00:20:58,960 --> 00:21:01,760 Speaker 6: lithium batteries. Those batteries can only last about four to 383 00:21:01,800 --> 00:21:04,960 Speaker 6: eight hours, so there's really still a challenge of long 384 00:21:05,080 --> 00:21:08,720 Speaker 6: duration energy storage that we're still told we're sort of 385 00:21:08,720 --> 00:21:12,159 Speaker 6: a couple of years away from. But obviously solar and 386 00:21:12,200 --> 00:21:15,240 Speaker 6: wind are going to be part of the decarbonization equation. 387 00:21:15,920 --> 00:21:18,320 Speaker 6: One thing our writing has tried to point out is 388 00:21:18,320 --> 00:21:22,480 Speaker 6: that because of this deregulation process, and because of very 389 00:21:22,680 --> 00:21:25,159 Speaker 6: specific policy on the part of the United States to 390 00:21:25,600 --> 00:21:30,720 Speaker 6: incentivize renewable energy production with tax credits, it's virtually ensured 391 00:21:30,760 --> 00:21:33,879 Speaker 6: that all the solar and wind development, nearly all, is 392 00:21:33,920 --> 00:21:37,560 Speaker 6: being developed by the private sector and by these independent 393 00:21:37,560 --> 00:21:40,760 Speaker 6: power producers who are sort of dislodged from the old 394 00:21:40,880 --> 00:21:45,080 Speaker 6: utility system. So one issue we have is that the 395 00:21:45,200 --> 00:21:48,920 Speaker 6: large majority of solar and wind development, independent power producer 396 00:21:48,960 --> 00:21:52,800 Speaker 6: development are kind of just these capitalists who are separated 397 00:21:52,880 --> 00:21:56,879 Speaker 6: from the kind of social good of the utility system, 398 00:21:56,920 --> 00:21:59,199 Speaker 6: where they kind of have to sort of, again like 399 00:21:59,240 --> 00:22:03,159 Speaker 6: the Dominion case, justify their investments to a public commission 400 00:22:03,640 --> 00:22:06,720 Speaker 6: and kind sort of try to integrate their investments into 401 00:22:06,760 --> 00:22:10,440 Speaker 6: a sort of larger public infrastructure. No, they're just scattered 402 00:22:10,800 --> 00:22:14,200 Speaker 6: capitalists trying to compete with each other to sell renewable 403 00:22:14,320 --> 00:22:17,639 Speaker 6: energy into the grid, and as Brett Christopher's book has 404 00:22:17,640 --> 00:22:19,920 Speaker 6: pointed out, you know, it's actually quite hard for these 405 00:22:19,960 --> 00:22:23,919 Speaker 6: sort of scattered renewable producers to actually make profits on 406 00:22:24,040 --> 00:22:27,760 Speaker 6: these complicated wholesale markets. So we think solar and wind 407 00:22:27,760 --> 00:22:29,800 Speaker 6: that's going to be a crucial part of the equation, 408 00:22:29,880 --> 00:22:32,840 Speaker 6: but unfortunately the investment model for it so far has 409 00:22:32,960 --> 00:22:37,440 Speaker 6: been more aligned with these quite chaotic and quite fragmented markets. 410 00:22:37,760 --> 00:22:41,400 Speaker 6: And so trying to plan a whole sort of decarbonization 411 00:22:42,200 --> 00:22:44,840 Speaker 6: of the whole grid would really be about trying to 412 00:22:44,920 --> 00:22:48,840 Speaker 6: integrate solar and wind with nuclear and geothermal and long 413 00:22:48,920 --> 00:22:52,400 Speaker 6: duration storage, and that again requires a much more central planning, 414 00:22:52,720 --> 00:22:55,320 Speaker 6: much more of this kind of socialized investment model. And 415 00:22:55,359 --> 00:22:57,960 Speaker 6: I would just add on to what Fred said earlier. 416 00:22:58,480 --> 00:23:02,360 Speaker 6: The utilities do have a socialized model of investment, which 417 00:23:02,400 --> 00:23:04,760 Speaker 6: is really what you need if you want to grow 418 00:23:05,119 --> 00:23:08,720 Speaker 6: the system rapidly, but they socialize it through the rate base, 419 00:23:08,840 --> 00:23:12,080 Speaker 6: through rate payer financing, which is actually kind of a 420 00:23:12,119 --> 00:23:17,520 Speaker 6: pretty regressive form of financing because it's coming from the customer. 421 00:23:17,800 --> 00:23:20,520 Speaker 6: And that's one reason why you're not going to find 422 00:23:20,560 --> 00:23:24,600 Speaker 6: a lot of people who love their utility and sort 423 00:23:24,600 --> 00:23:28,560 Speaker 6: of really love getting those utility bills. So we actually 424 00:23:28,920 --> 00:23:31,920 Speaker 6: advocate that the most progressive way to finance this kind 425 00:23:31,960 --> 00:23:35,119 Speaker 6: of investment, in the socialized way would be more towards 426 00:23:35,160 --> 00:23:39,840 Speaker 6: progressive taxation and actually, you know, taxing the rich more 427 00:23:39,880 --> 00:23:43,920 Speaker 6: to actually fund this kind of essential public infrastructure that 428 00:23:44,200 --> 00:23:46,720 Speaker 6: really all of society needs. And it shouldn't be that 429 00:23:47,240 --> 00:23:49,720 Speaker 6: the poor are paying the same rates as the rich 430 00:23:49,760 --> 00:23:52,680 Speaker 6: and that's what's financing our decarbonization of electricity. We should 431 00:23:52,680 --> 00:23:55,359 Speaker 6: have a much more progressive sort of tax approach to 432 00:23:55,400 --> 00:23:56,080 Speaker 6: that investment. 433 00:23:56,480 --> 00:23:58,880 Speaker 5: I'd like to jump in on this question of renewables 434 00:23:59,040 --> 00:24:02,840 Speaker 5: and why not have them. I think sometimes if you 435 00:24:03,000 --> 00:24:05,000 Speaker 5: advocate for big things like nuclear, you can be put 436 00:24:05,040 --> 00:24:07,960 Speaker 5: in a box where you're a NeuPro you hate renewables, 437 00:24:08,280 --> 00:24:10,439 Speaker 5: And that might describe some people, but for us, our 438 00:24:10,520 --> 00:24:15,159 Speaker 5: concern is that by restructuring the entire way that the 439 00:24:15,200 --> 00:24:18,639 Speaker 5: electricity sector is organize and the way revenues are accrued 440 00:24:18,640 --> 00:24:23,480 Speaker 5: and all that in finance in the interest of supporting renewables, 441 00:24:23,640 --> 00:24:25,800 Speaker 5: that's what we think the problem really is. It's not 442 00:24:25,840 --> 00:24:27,680 Speaker 5: so much the fact that they're there, it's the fact 443 00:24:27,720 --> 00:24:31,399 Speaker 5: that things are being reorganized to promote them, and then 444 00:24:31,480 --> 00:24:33,480 Speaker 5: let's just kind of ignore the fact that it also 445 00:24:33,520 --> 00:24:36,080 Speaker 5: has led to an explosion of natural gas power everywhere. 446 00:24:36,400 --> 00:24:40,280 Speaker 5: Because when you have these markets, if you're forecasting some 447 00:24:40,760 --> 00:24:43,400 Speaker 5: high wind output and then high wind output doesn't come, 448 00:24:43,520 --> 00:24:47,080 Speaker 5: something changes. You need a really liquid market of traders 449 00:24:47,080 --> 00:24:50,240 Speaker 5: and others who are ready to jump in and produce 450 00:24:50,320 --> 00:24:53,239 Speaker 5: the power and sell to whoever was banking on that 451 00:24:53,280 --> 00:24:56,240 Speaker 5: wind power to be there. So it's like the desire 452 00:24:56,320 --> 00:24:58,399 Speaker 5: to integrate them at such a huge scale is what 453 00:24:58,560 --> 00:25:01,879 Speaker 5: brings the restructuring that we're saying is maybe not the 454 00:25:01,920 --> 00:25:02,600 Speaker 5: wisest thing. 455 00:25:18,600 --> 00:25:21,000 Speaker 2: Tracy, this was like a light bulb moment for me 456 00:25:21,320 --> 00:25:23,160 Speaker 2: at some point because I remember at the start of 457 00:25:23,240 --> 00:25:26,720 Speaker 2: my career, I remember the Pickens plan and T. Boone 458 00:25:26,720 --> 00:25:29,200 Speaker 2: Pickens was like this big start advocating all this wind, 459 00:25:29,200 --> 00:25:30,679 Speaker 2: and I like, I didn't really get it because I 460 00:25:30,720 --> 00:25:32,119 Speaker 2: was like, I thought you were a fossil fuels guy. 461 00:25:32,119 --> 00:25:35,360 Speaker 2: Why are you advocating wind? And only years later did 462 00:25:35,400 --> 00:25:39,080 Speaker 2: a click that this idea of natural gas as the 463 00:25:39,160 --> 00:25:42,080 Speaker 2: compliment for wind and that when the wind isn't blowing, 464 00:25:42,600 --> 00:25:43,760 Speaker 2: then you're gonna need T. 465 00:25:43,920 --> 00:25:46,080 Speaker 4: Boon's natural gas. 466 00:25:46,080 --> 00:25:47,800 Speaker 2: But this is one of those things that took me 467 00:25:47,880 --> 00:25:50,280 Speaker 2: many years to understand, like why it was him that 468 00:25:50,400 --> 00:25:52,000 Speaker 2: was advocating so much wind power. 469 00:25:52,200 --> 00:25:55,000 Speaker 3: Yeah, I guess in retrospect it was obvious, Yeah, but 470 00:25:55,400 --> 00:25:58,600 Speaker 3: I wasn't gonna Yeah, And I was reading the piece 471 00:25:58,640 --> 00:26:00,520 Speaker 3: that Matt and Fred did, and I think there's an 472 00:26:00,640 --> 00:26:04,680 Speaker 3: estimate in there that companies contracting for renewables in fact 473 00:26:04,760 --> 00:26:08,080 Speaker 3: draw between twenty percent and fifty percent of their annual 474 00:26:08,119 --> 00:26:13,920 Speaker 3: electricity from the regional grid, partially from fossil fuels like 475 00:26:14,080 --> 00:26:16,880 Speaker 3: nat gas that you just mentioned. So, you know, we've 476 00:26:16,920 --> 00:26:21,000 Speaker 3: gone through the sort of downsides of the current model, 477 00:26:21,080 --> 00:26:24,600 Speaker 3: which seems to be this weird combination of both regulation 478 00:26:24,760 --> 00:26:29,120 Speaker 3: and deregulation. How would you design a system such that 479 00:26:29,320 --> 00:26:33,040 Speaker 3: it moves away from where we are currently, Like, what 480 00:26:33,080 --> 00:26:36,440 Speaker 3: would the ideal system to address some of these issues 481 00:26:36,480 --> 00:26:37,199 Speaker 3: actually look like? 482 00:26:37,240 --> 00:26:37,439 Speaker 5: To you? 483 00:26:38,560 --> 00:26:42,000 Speaker 6: It sounds almost like too nostalgic, But part of me 484 00:26:42,119 --> 00:26:44,640 Speaker 6: wants to say, we really should just return to that 485 00:26:44,960 --> 00:26:49,960 Speaker 6: model of public utility law and regulation of the electricity system, 486 00:26:50,000 --> 00:26:54,360 Speaker 6: because again, I think we've kind of lost touch with 487 00:26:54,760 --> 00:26:58,000 Speaker 6: what it took to build a grid and build a 488 00:26:58,040 --> 00:27:01,040 Speaker 6: society like we did in the twentieth century, and it 489 00:27:01,080 --> 00:27:04,720 Speaker 6: was very clear that electricity was this sort of underpinning 490 00:27:05,280 --> 00:27:09,359 Speaker 6: societal scale infrastructure that was sort of foundational to modernity 491 00:27:09,400 --> 00:27:13,240 Speaker 6: and foundational to the thriving of all of society. And 492 00:27:13,320 --> 00:27:15,920 Speaker 6: so we really thought, like, okay, for the public good, 493 00:27:15,920 --> 00:27:18,640 Speaker 6: we've got to sort of plan and charge one single 494 00:27:19,320 --> 00:27:22,000 Speaker 6: into the utility to kind of take control of that 495 00:27:22,040 --> 00:27:26,360 Speaker 6: system and plan its investments to integrate it for society. 496 00:27:26,400 --> 00:27:26,960 Speaker 4: And then, of. 497 00:27:26,840 --> 00:27:30,280 Speaker 6: Course, once the grid was built and once all that 498 00:27:30,400 --> 00:27:32,919 Speaker 6: growth of the post war era was starting to stagnate, 499 00:27:33,520 --> 00:27:36,760 Speaker 6: people kind of became disillusioned with that model, right, But 500 00:27:37,040 --> 00:27:39,120 Speaker 6: we are in a different context here in the twenty 501 00:27:39,119 --> 00:27:39,639 Speaker 6: first century. 502 00:27:39,680 --> 00:27:42,040 Speaker 4: We have to return to growth. 503 00:27:42,160 --> 00:27:44,440 Speaker 6: And you know, in the post World War two era, 504 00:27:44,520 --> 00:27:46,719 Speaker 6: the utilities had something they called it the grow and 505 00:27:46,760 --> 00:27:50,359 Speaker 6: build strategy because they knew they could actually make profits 506 00:27:50,400 --> 00:27:53,000 Speaker 6: on actually growing their investments. And that was a real 507 00:27:53,320 --> 00:27:56,040 Speaker 6: specific strategy. The more they invested in the grid, the 508 00:27:56,040 --> 00:27:58,960 Speaker 6: more they could get profits and get their investments sort 509 00:27:58,960 --> 00:28:02,080 Speaker 6: of approved by the public utility commissions. But we are 510 00:28:02,200 --> 00:28:04,760 Speaker 6: back right here in twenty twenty four. We're back to 511 00:28:05,000 --> 00:28:08,760 Speaker 6: a need to grow and build a grid, and we 512 00:28:08,880 --> 00:28:11,400 Speaker 6: you know, some say we got to triple it or 513 00:28:11,720 --> 00:28:14,679 Speaker 6: quadruple it, and to do that we need a totally 514 00:28:14,680 --> 00:28:19,320 Speaker 6: different institutional model of investment, and the public utility one 515 00:28:19,440 --> 00:28:22,000 Speaker 6: it worked, you know, and you know, again I've mentioned 516 00:28:22,040 --> 00:28:25,040 Speaker 6: Brett Christopher's book again. You know, if the problem is 517 00:28:25,080 --> 00:28:29,080 Speaker 6: that renewable energy production is not profitable and these scattered 518 00:28:29,080 --> 00:28:32,200 Speaker 6: independent power producers can't make profits, well, one thing about 519 00:28:32,240 --> 00:28:35,600 Speaker 6: the utility model is the whole system was about guaranteeing 520 00:28:35,720 --> 00:28:39,280 Speaker 6: profits to the investor. It is guaranteeing a rate of 521 00:28:39,320 --> 00:28:43,520 Speaker 6: return on investments that were approved again by the Public 522 00:28:43,560 --> 00:28:46,160 Speaker 6: Utility Commission that has to kind of look at the 523 00:28:46,240 --> 00:28:49,040 Speaker 6: utilities books and open them up and kind of evaluate 524 00:28:49,040 --> 00:28:50,960 Speaker 6: whether or not the investments make sense and whether or 525 00:28:51,000 --> 00:28:53,560 Speaker 6: not the rates makes sense for the consumer. And so 526 00:28:53,880 --> 00:28:56,240 Speaker 6: it seems to me that was a really good model 527 00:28:56,360 --> 00:28:57,960 Speaker 6: in terms of growing. 528 00:28:57,600 --> 00:28:59,640 Speaker 4: The system and investing in the system. 529 00:29:00,080 --> 00:29:03,000 Speaker 6: And not many people, I think are thinking today about 530 00:29:03,040 --> 00:29:05,360 Speaker 6: returning to it. But I think that's because a lot 531 00:29:05,360 --> 00:29:09,040 Speaker 6: of the people talking today have forgotten what it takes 532 00:29:09,080 --> 00:29:12,400 Speaker 6: to build a societal scale infrastructure like we did in 533 00:29:12,400 --> 00:29:13,680 Speaker 6: the middle of the twentieth century. 534 00:29:14,480 --> 00:29:17,760 Speaker 3: Just to play Devil's advocate on this point, how would 535 00:29:17,760 --> 00:29:22,280 Speaker 3: you address the problem of regulatory or political capture in 536 00:29:22,320 --> 00:29:25,600 Speaker 3: that scenario, because this came up in the early twentieth century, 537 00:29:25,640 --> 00:29:28,320 Speaker 3: which you already sort of touched on. But when I 538 00:29:28,400 --> 00:29:31,720 Speaker 3: think of the electricity system in a place like Connecticut, 539 00:29:32,480 --> 00:29:35,160 Speaker 3: a lot of it seems to be ever sourced going 540 00:29:35,240 --> 00:29:38,160 Speaker 3: to its regulator and saying, WHOA, we need to raise 541 00:29:38,520 --> 00:29:41,760 Speaker 3: rates and distribution costs because we're going to make billions 542 00:29:41,800 --> 00:29:45,240 Speaker 3: of dollars worth of investment in renewable energy or in 543 00:29:45,280 --> 00:29:49,000 Speaker 3: the grid or whatever. How do you avoid that particular 544 00:29:49,120 --> 00:29:52,040 Speaker 3: risk because this seems to be what actually bothers people 545 00:29:52,080 --> 00:29:55,040 Speaker 3: when it feels like there is a monopoly and they 546 00:29:55,080 --> 00:29:57,800 Speaker 3: can basically raise prices as much as they want. 547 00:29:58,280 --> 00:30:00,440 Speaker 5: Yeah, I would say one thing to keep in is 548 00:30:00,480 --> 00:30:05,200 Speaker 5: that competition versus monopoly. This isn't Amazon having a monopoly. 549 00:30:05,240 --> 00:30:08,200 Speaker 5: This isn't Google having a monopoly. This is a regulated 550 00:30:08,240 --> 00:30:12,160 Speaker 5: monopoly where the retail prices and the investments are happening 551 00:30:12,200 --> 00:30:15,520 Speaker 5: in accordance with some kind of nominally happening in accordance 552 00:30:15,520 --> 00:30:19,560 Speaker 5: with some kind of state public process. With regulatory control, 553 00:30:19,840 --> 00:30:22,200 Speaker 5: you might even have commissioners who are directly elected in 554 00:30:22,240 --> 00:30:26,000 Speaker 5: some states and other places they're appointed by governors. But 555 00:30:26,480 --> 00:30:30,080 Speaker 5: we would never say there's no such thing as regulatory 556 00:30:30,080 --> 00:30:33,320 Speaker 5: capture and corrupt dealings with the utility model. As we 557 00:30:33,360 --> 00:30:37,240 Speaker 5: mentioned in our recent essay First Energy, a utility in 558 00:30:37,280 --> 00:30:41,760 Speaker 5: Ohio has been just embroiled in this horrible scandal where 559 00:30:41,800 --> 00:30:44,480 Speaker 5: there was like bribery with the government to support certain 560 00:30:44,480 --> 00:30:48,040 Speaker 5: initiatives they wanted. I mean that stuff does exist, But 561 00:30:48,160 --> 00:30:51,200 Speaker 5: what I would say is that generally we need more 562 00:30:51,400 --> 00:30:56,440 Speaker 5: public interest in the goings on of the public utilities commissions, 563 00:30:56,840 --> 00:30:59,920 Speaker 5: journalism around what's happening there. I mean, there's a reason 564 00:31:00,160 --> 00:31:02,440 Speaker 5: on your show you're talking so much about clean energy 565 00:31:02,440 --> 00:31:05,440 Speaker 5: growth and decarbonization. This is a mode of politics that 566 00:31:05,520 --> 00:31:09,960 Speaker 5: is increasingly pretty prevalent, pretty significant, very high dollar volumes 567 00:31:10,000 --> 00:31:13,920 Speaker 5: of investments being discussed, and I think it warrants a 568 00:31:14,040 --> 00:31:18,560 Speaker 5: kind of renewed democratic focus on exactly these sorts of things. 569 00:31:19,040 --> 00:31:22,040 Speaker 5: But also I would say that the opposite model, just 570 00:31:22,160 --> 00:31:25,960 Speaker 5: increasing competition doesn't mean you don't have like giant market 571 00:31:25,960 --> 00:31:29,360 Speaker 5: power and political dominance. The largest renewable energy developer in 572 00:31:29,400 --> 00:31:32,920 Speaker 5: the country's next era next era is this big company 573 00:31:32,960 --> 00:31:36,160 Speaker 5: that has subsidiaries that are public utilities, like Florida Power 574 00:31:36,200 --> 00:31:39,600 Speaker 5: and Light. They're being market competition doesn't mean you don't 575 00:31:39,640 --> 00:31:42,400 Speaker 5: have these giant firms that then for all that regular 576 00:31:42,480 --> 00:31:45,560 Speaker 5: vanilla reasons can kind of influence politics the way they've 577 00:31:45,560 --> 00:31:48,680 Speaker 5: always been able to. So it's not that like utility 578 00:31:48,720 --> 00:31:53,560 Speaker 5: means that, and competition means pure, beautiful price, natural price 579 00:31:53,600 --> 00:31:54,520 Speaker 5: competition and so on. 580 00:31:55,000 --> 00:31:58,440 Speaker 6: And it's also that the private model itself, like we 581 00:31:58,840 --> 00:32:01,160 Speaker 6: we try to make clear like we think the utility 582 00:32:01,200 --> 00:32:05,320 Speaker 6: model is preferable, But the ultimate, I think problem is 583 00:32:05,440 --> 00:32:08,120 Speaker 6: in the early twentieth century, we did decide that we're 584 00:32:08,160 --> 00:32:11,000 Speaker 6: going to hand over this crucial public infrastructure as a 585 00:32:11,000 --> 00:32:14,520 Speaker 6: monopoly to private capitalists who ultimately are answerable to their 586 00:32:14,560 --> 00:32:17,840 Speaker 6: shareholders and want to seek a return on their investment 587 00:32:17,920 --> 00:32:20,880 Speaker 6: above really the public interests, and they're regulated for that reason. 588 00:32:21,480 --> 00:32:23,400 Speaker 6: But ultimately, I think that was kind of at the 589 00:32:23,480 --> 00:32:25,440 Speaker 6: root of a lot of our problems that we have 590 00:32:25,520 --> 00:32:28,800 Speaker 6: with utilities, because they are they do seek profits above 591 00:32:28,920 --> 00:32:32,640 Speaker 6: the public interest, they do capture the public utility commissions, 592 00:32:32,640 --> 00:32:34,640 Speaker 6: and they are correct. So that's why in a lot 593 00:32:34,640 --> 00:32:37,760 Speaker 6: of our writing, we really do think ultimately the ideal 594 00:32:37,800 --> 00:32:41,760 Speaker 6: model for us is public ownership of this public utility, Right, 595 00:32:41,920 --> 00:32:45,040 Speaker 6: Why are we handing over public utilities to the private 596 00:32:45,120 --> 00:32:48,280 Speaker 6: for profit sector. Why aren't we doing something like the 597 00:32:48,320 --> 00:32:51,719 Speaker 6: Tennessee Valley Authority and like these again against the kind 598 00:32:51,760 --> 00:32:56,040 Speaker 6: of left smalls beautiful kind of community scale, local scale energy. 599 00:32:56,120 --> 00:32:59,000 Speaker 6: We like to think about this sort of big public power. 600 00:32:59,040 --> 00:33:02,719 Speaker 6: Examples of the Tennessee Valley Authority that you know is 601 00:33:02,760 --> 00:33:06,400 Speaker 6: not running their utility for profit, is planning that utility 602 00:33:06,440 --> 00:33:10,760 Speaker 6: area for their public mission of serving their customers and 603 00:33:10,880 --> 00:33:15,080 Speaker 6: also of decarbonization. They have really decarbonized their generation to 604 00:33:15,120 --> 00:33:18,760 Speaker 6: a significant degree. They're not done yet, but they're developing 605 00:33:18,920 --> 00:33:21,920 Speaker 6: new nuclear which is not happening a lot in the 606 00:33:21,920 --> 00:33:24,880 Speaker 6: private market, as we've talked about. So that kind of 607 00:33:24,920 --> 00:33:28,400 Speaker 6: model of public utilities where it's actual public ownership, I 608 00:33:28,440 --> 00:33:31,120 Speaker 6: think that's the best way to avoid those kind of 609 00:33:31,160 --> 00:33:33,960 Speaker 6: problems you have with the corruption and the kind of 610 00:33:33,960 --> 00:33:35,600 Speaker 6: graft and the private utilities. 611 00:33:35,920 --> 00:33:38,160 Speaker 2: I'm glad you brought up the TVA because I wanted 612 00:33:38,160 --> 00:33:39,880 Speaker 2: to sort of make sure we hit on that. I 613 00:33:39,960 --> 00:33:43,760 Speaker 2: remember first learning about the TVA probably in high school 614 00:33:43,800 --> 00:33:47,480 Speaker 2: when we like did some you know, section the New Deal, 615 00:33:48,000 --> 00:33:50,320 Speaker 2: and then I sort of just forgot about it and 616 00:33:50,360 --> 00:33:52,000 Speaker 2: in my mind, I only think of it in I 617 00:33:52,040 --> 00:33:54,800 Speaker 2: had context, But then I realized it's actually still a 618 00:33:54,840 --> 00:33:57,040 Speaker 2: thing in the almost it looks like the entire state 619 00:33:57,040 --> 00:33:59,920 Speaker 2: of Tennessee or Almost get their power from the ten 620 00:34:00,120 --> 00:34:04,000 Speaker 2: See Vlidy Authority. What was special about the TVA and 621 00:34:04,040 --> 00:34:06,360 Speaker 2: why is it sort of like loom so large when 622 00:34:06,360 --> 00:34:09,600 Speaker 2: they teach school kids about the new Deal? And how 623 00:34:09,640 --> 00:34:10,800 Speaker 2: does it operate today? 624 00:34:11,200 --> 00:34:11,960 Speaker 3: What is it like? 625 00:34:12,200 --> 00:34:15,919 Speaker 2: Is it okay, here's a federally owned electric utility, talk 626 00:34:15,960 --> 00:34:18,600 Speaker 2: to us, like, is it actually delivering on the promise 627 00:34:19,040 --> 00:34:22,080 Speaker 2: of what you both claim that can happen under the 628 00:34:22,200 --> 00:34:23,080 Speaker 2: publicly owned model? 629 00:34:23,960 --> 00:34:27,560 Speaker 5: I am so glad you're asking this question, as perhaps 630 00:34:27,680 --> 00:34:30,279 Speaker 5: the political lefts number one defender of the TVA a 631 00:34:30,680 --> 00:34:33,880 Speaker 5: uniquely positioned to answer it. So as I was saying earlier, 632 00:34:34,000 --> 00:34:36,880 Speaker 5: like we need a mode of politics. Decarbonization so important, 633 00:34:36,880 --> 00:34:39,040 Speaker 5: clean energy growth is really important. There should be a 634 00:34:39,080 --> 00:34:42,240 Speaker 5: lot of public attention on the investments and the actors 635 00:34:42,239 --> 00:34:45,560 Speaker 5: involved in that. Well, back in the Great Depression, that's 636 00:34:45,600 --> 00:34:48,400 Speaker 5: exactly what was going on the kind of major corporate 637 00:34:48,480 --> 00:34:51,120 Speaker 5: villains of the day were the public utilities holding companies, 638 00:34:51,320 --> 00:34:56,600 Speaker 5: these massive organizations of capital into these like pyramid entities 639 00:34:56,760 --> 00:35:00,919 Speaker 5: that controlled electric power utilities across the country. So when 640 00:35:01,160 --> 00:35:04,520 Speaker 5: Franklin Roosevelt FDR was running for office, first in New 641 00:35:04,600 --> 00:35:07,520 Speaker 5: York State and then for a president, really he kind 642 00:35:07,560 --> 00:35:11,200 Speaker 5: of cast the public utilities as these major villains and 643 00:35:11,239 --> 00:35:14,800 Speaker 5: as electricity as this key to modern living that everyone 644 00:35:15,400 --> 00:35:17,880 Speaker 5: was entitled to and that large parts of rural America 645 00:35:17,960 --> 00:35:21,080 Speaker 5: were not getting. So the TVA came out of that 646 00:35:21,160 --> 00:35:24,480 Speaker 5: kind of political context. You have the Great Depression, you 647 00:35:24,600 --> 00:35:29,280 Speaker 5: have a administration that was really interested in big, bold, 648 00:35:29,320 --> 00:35:33,520 Speaker 5: new experiments to address crisis, and the TVA was sort 649 00:35:33,560 --> 00:35:37,560 Speaker 5: of this way of adopting a model that was first 650 00:35:37,760 --> 00:35:39,879 Speaker 5: sort of starting to be set up in New York State, 651 00:35:39,920 --> 00:35:42,480 Speaker 5: where FDR was governor beforehand, in the New York Power 652 00:35:42,520 --> 00:35:46,839 Speaker 5: Authority of saying, hey, here's all this federally owned river 653 00:35:46,960 --> 00:35:50,480 Speaker 5: systems where the federal government has control for navigation and 654 00:35:50,640 --> 00:35:54,919 Speaker 5: other reasons like that, let's try to develop this part 655 00:35:54,960 --> 00:35:59,560 Speaker 5: of the country by focusing on controlling the devastating flooding 656 00:35:59,640 --> 00:36:03,920 Speaker 5: of the river. There was a nitrates production facility that 657 00:36:04,040 --> 00:36:06,680 Speaker 5: was being built for World War One that was kind 658 00:36:06,680 --> 00:36:11,280 Speaker 5: of being disused that was attached to a hydro electric 659 00:36:11,320 --> 00:36:13,920 Speaker 5: power station on a dam on the Tennessee River, and 660 00:36:14,000 --> 00:36:17,360 Speaker 5: so that was a key resource that the TVA was 661 00:36:17,360 --> 00:36:19,680 Speaker 5: being built around. But ultimately it was kind of a 662 00:36:19,760 --> 00:36:23,920 Speaker 5: regional planning to develop that economy and bring modernity to 663 00:36:24,160 --> 00:36:27,120 Speaker 5: an impoverished region which was like stricken with malaria at 664 00:36:27,160 --> 00:36:30,080 Speaker 5: the time, and as I said, lots of devastating floods. 665 00:36:30,600 --> 00:36:33,080 Speaker 5: So that was how the TVA came about. But it 666 00:36:33,120 --> 00:36:36,600 Speaker 5: really was simultaneously about this kind of attack on the 667 00:36:36,719 --> 00:36:40,400 Speaker 5: private utilities companies. I mean, we say it's kind of confusing. 668 00:36:40,440 --> 00:36:43,719 Speaker 5: Public utility is the notion of like a regulated utility, 669 00:36:44,000 --> 00:36:46,920 Speaker 5: but you know they're not publicly owned necessarily. So the 670 00:36:47,000 --> 00:36:50,560 Speaker 5: TVA very quickly became kind of a weapon, an aggressive 671 00:36:50,640 --> 00:36:54,840 Speaker 5: attack on the utilities to try to deliver cheaper power 672 00:36:55,320 --> 00:36:58,600 Speaker 5: for electoral reasons, but also just to help develop the 673 00:36:58,600 --> 00:37:01,600 Speaker 5: economy and bring more power to to people there. Bonneville 674 00:37:01,640 --> 00:37:04,200 Speaker 5: Power Administration in the Pacific Northwest was built up for 675 00:37:04,239 --> 00:37:07,120 Speaker 5: the exact same reason and the exact same model. FDR 676 00:37:07,200 --> 00:37:09,480 Speaker 5: had a dream of having four different areas of the 677 00:37:09,600 --> 00:37:13,120 Speaker 5: US would have such systems. But it really was like 678 00:37:13,680 --> 00:37:16,279 Speaker 5: this fascinating time where it was kind of build up 679 00:37:16,440 --> 00:37:23,560 Speaker 5: this deeply technical, institutionally complicated, technically complicated system like within 680 00:37:23,719 --> 00:37:26,840 Speaker 5: the state, have bureaucrats and kind of wonks like figure 681 00:37:26,880 --> 00:37:29,399 Speaker 5: this out and build this and put people to work 682 00:37:29,440 --> 00:37:33,200 Speaker 5: doing it. And the fact that it survives today in 683 00:37:33,200 --> 00:37:35,360 Speaker 5: a kind of different form. Today, it's really more of 684 00:37:35,480 --> 00:37:37,360 Speaker 5: just a I mean, it's not just a but is. 685 00:37:37,840 --> 00:37:39,720 Speaker 5: I like to think of it as it's America's major 686 00:37:39,719 --> 00:37:43,000 Speaker 5: state owned enterprise as a power company. But it still 687 00:37:43,080 --> 00:37:46,920 Speaker 5: does have some kind of regional environmental stewardship goals that 688 00:37:46,960 --> 00:37:49,640 Speaker 5: it has to satisfy and it has to look after 689 00:37:49,680 --> 00:37:52,160 Speaker 5: the river systems and so on. But yeah, it's really 690 00:37:52,200 --> 00:37:56,759 Speaker 5: from New Deal experiment and regional development bringing modernity to 691 00:37:56,960 --> 00:38:00,680 Speaker 5: the masses. Fast forward to now state owned enterprise that 692 00:38:00,920 --> 00:38:02,960 Speaker 5: is a political instrument in some sense. 693 00:38:03,320 --> 00:38:06,359 Speaker 6: Their slogan was electricity for All. It sort of sounds 694 00:38:06,400 --> 00:38:08,680 Speaker 6: like a Bernie Standers slogan, and you know it was 695 00:38:08,760 --> 00:38:12,560 Speaker 6: because the private capitalist utilities didn't see it as profitable 696 00:38:12,600 --> 00:38:17,560 Speaker 6: to serve everyone, right, And it's that commitment to this 697 00:38:17,800 --> 00:38:21,640 Speaker 6: electricity system is this essential public service and that everyone 698 00:38:21,719 --> 00:38:24,840 Speaker 6: should be able to have it. And again, just to 699 00:38:24,960 --> 00:38:28,279 Speaker 6: go back to today, I mean, there's all this realization 700 00:38:28,360 --> 00:38:30,560 Speaker 6: that we need a lot of growth in electricity. 701 00:38:30,600 --> 00:38:33,879 Speaker 4: But there's also some data centers and AI. 702 00:38:33,680 --> 00:38:35,600 Speaker 6: Producers who sort of think like, well, maybe we can 703 00:38:35,680 --> 00:38:38,839 Speaker 6: just build like a big micro nuclear reactor for our 704 00:38:38,880 --> 00:38:41,239 Speaker 6: own data server, like in sort of dlink from the 705 00:38:41,280 --> 00:38:44,640 Speaker 6: grid entirely right, And I think that kind of notion 706 00:38:44,760 --> 00:38:46,800 Speaker 6: that we can just sort of hunker down and produce 707 00:38:46,840 --> 00:38:49,919 Speaker 6: our own electricity isolated from the system is a real 708 00:38:50,000 --> 00:38:52,920 Speaker 6: danger in that TVA model of like, really, we need 709 00:38:52,920 --> 00:38:55,640 Speaker 6: to build a system that is for everyone, something we 710 00:38:55,719 --> 00:38:56,719 Speaker 6: need to bring back. 711 00:38:57,239 --> 00:38:59,960 Speaker 2: Bright and Matt, thank you so much for coming on, oddline. 712 00:39:00,280 --> 00:39:03,600 Speaker 2: I believe I am marginally closer to understanding a bit 713 00:39:03,640 --> 00:39:05,719 Speaker 2: about how the grid works and how he got here. 714 00:39:05,760 --> 00:39:07,279 Speaker 2: So really appreciate you both coming on. 715 00:39:07,560 --> 00:39:08,239 Speaker 4: Thanks so much. 716 00:39:08,400 --> 00:39:23,799 Speaker 2: Yeah, thanks a lot, Tracy, I really enjoyed that conversation. 717 00:39:23,880 --> 00:39:27,239 Speaker 2: I think to start, the simple thing between this and 718 00:39:27,600 --> 00:39:31,920 Speaker 2: the Brett Christopher's episode we did is that the uncertainty, 719 00:39:32,280 --> 00:39:35,799 Speaker 2: the lack of off take, etc. It clearly seems like 720 00:39:36,120 --> 00:39:38,160 Speaker 2: a real issue. We know we need the power, we 721 00:39:38,200 --> 00:39:41,640 Speaker 2: know we want power from decarbonized sources, Yet the at 722 00:39:41,719 --> 00:39:44,640 Speaker 2: least as of now, the market systems don't quite seem 723 00:39:44,719 --> 00:39:47,399 Speaker 2: to satisfy all things at once, right. 724 00:39:47,440 --> 00:39:50,000 Speaker 3: I think Brett described it as that sort of toxic 725 00:39:50,280 --> 00:39:54,279 Speaker 3: mix of a huge outlay, a very big investment for 726 00:39:54,640 --> 00:40:00,000 Speaker 3: generally a low expected return, with a dash of volatility, 727 00:40:00,160 --> 00:40:04,520 Speaker 3: an uncertainty over what electricity prices will actually be, and 728 00:40:04,560 --> 00:40:07,160 Speaker 3: so the model just doesn't work for financing a lot 729 00:40:07,200 --> 00:40:08,000 Speaker 3: of these things. 730 00:40:08,320 --> 00:40:10,399 Speaker 2: It's really interesting too, because when we talked to Brad, 731 00:40:10,440 --> 00:40:12,920 Speaker 2: obviously it was in the context of the constraints on 732 00:40:13,280 --> 00:40:16,319 Speaker 2: ongoing renewables growth, But that makes a ton of sense 733 00:40:16,360 --> 00:40:18,680 Speaker 2: to me with nuclear, Right, if the entire thing is 734 00:40:18,719 --> 00:40:21,560 Speaker 2: like the assumption is that once you turn on the 735 00:40:21,600 --> 00:40:24,839 Speaker 2: plant and it's constructed, it's supposed to run forever or 736 00:40:25,040 --> 00:40:28,520 Speaker 2: decades and decades. But if you have periods where the 737 00:40:28,600 --> 00:40:30,759 Speaker 2: sun is very shiny for a long time, or there 738 00:40:30,800 --> 00:40:33,520 Speaker 2: is a tremendous amount of wind and they're literally getting 739 00:40:33,640 --> 00:40:37,799 Speaker 2: zero revenue during those periods, you could see why. You know, 740 00:40:37,960 --> 00:40:40,239 Speaker 2: people talk about the environment and we forgot how to 741 00:40:40,320 --> 00:40:42,759 Speaker 2: do this, and maybe there's some thing, but maybe it 742 00:40:42,800 --> 00:40:45,640 Speaker 2: simply does not pencil out to make such a gigantic 743 00:40:46,080 --> 00:40:47,080 Speaker 2: upfront commitment. 744 00:40:47,239 --> 00:40:49,160 Speaker 3: Yeah, Well, I think the other thing that sort of 745 00:40:49,200 --> 00:40:52,120 Speaker 3: touches on is I do think, you know, I can't 746 00:40:52,120 --> 00:40:54,800 Speaker 3: remember if it was Matt or Fred who was talking 747 00:40:54,800 --> 00:40:58,520 Speaker 3: about like the need for more of a democratic focus 748 00:40:58,600 --> 00:41:02,320 Speaker 3: on this particular issue, but I do think it kind 749 00:41:02,360 --> 00:41:06,520 Speaker 3: of touches on I guess an innate sense that a 750 00:41:06,560 --> 00:41:10,880 Speaker 3: lot of electricity consumers i e. Almost everyone in America 751 00:41:11,000 --> 00:41:14,160 Speaker 3: actually has at this point in time, which is going 752 00:41:14,200 --> 00:41:16,920 Speaker 3: back to this idea of sort of the worst of 753 00:41:17,040 --> 00:41:21,600 Speaker 3: both worlds where you have like these big utilities who 754 00:41:21,960 --> 00:41:25,680 Speaker 3: are charging you know, a lot for distribution, and then 755 00:41:25,719 --> 00:41:30,279 Speaker 3: you have the independent power generators who maybe are more 756 00:41:30,320 --> 00:41:33,320 Speaker 3: competitive in their pricing, and then you have the financialization 757 00:41:34,040 --> 00:41:38,880 Speaker 3: of energy markets combined. And it doesn't seem to be 758 00:41:39,320 --> 00:41:41,080 Speaker 3: and I think there were some stats in the research, 759 00:41:41,280 --> 00:41:43,839 Speaker 3: but it doesn't seem to have actually brought down electricity 760 00:41:43,880 --> 00:41:47,239 Speaker 3: costs that much. And then secondly, it doesn't seem to 761 00:41:47,239 --> 00:41:52,920 Speaker 3: have delivered on the transition to renewables or decarbonized energy 762 00:41:53,280 --> 00:41:54,800 Speaker 3: at scale at the scale needed. 763 00:41:55,160 --> 00:41:55,319 Speaker 5: Well. 764 00:41:55,360 --> 00:41:58,320 Speaker 2: I thought it was interesting because just now you said 765 00:41:58,440 --> 00:42:01,719 Speaker 2: electricity consumers, which of course we are, but the industry 766 00:42:01,719 --> 00:42:05,359 Speaker 2: doesn't even consider us consumers. They call us rate payers, 767 00:42:05,440 --> 00:42:08,040 Speaker 2: which I think is a very telling thing that the 768 00:42:08,080 --> 00:42:11,239 Speaker 2: consumers of electricity, unlike in every other market, are not 769 00:42:11,360 --> 00:42:15,320 Speaker 2: considered consumers. We're considered rate payers. And I think it 770 00:42:15,360 --> 00:42:18,480 Speaker 2: speaks to exactly your point that there's this sort of 771 00:42:18,960 --> 00:42:22,040 Speaker 2: pretense of a market system for energy, but at the 772 00:42:22,120 --> 00:42:24,520 Speaker 2: end of the day, we're not like say, consumers of 773 00:42:24,600 --> 00:42:28,359 Speaker 2: cars or soda or sneakers were ratepayers of electricity. 774 00:42:28,520 --> 00:42:31,520 Speaker 3: Yeah, we are beholden to the power of electricity. Ooh, 775 00:42:31,560 --> 00:42:34,359 Speaker 3: power of electricity. There we go. Shall we leave it there? 776 00:42:34,440 --> 00:42:35,120 Speaker 2: Let's leave it there. 777 00:42:35,280 --> 00:42:38,160 Speaker 3: This has been another episode of the All Thoughts podcast. 778 00:42:38,280 --> 00:42:41,880 Speaker 3: I'm Tracy Alloway. You can follow me at Tracy Alloway. 779 00:42:41,560 --> 00:42:44,200 Speaker 2: And I'm Jill Wisenthal. You can follow me at the Stalwart. 780 00:42:44,520 --> 00:42:48,600 Speaker 2: Follow our guests Fred Stafford He's at Fred Stafford DCS 781 00:42:48,880 --> 00:42:52,160 Speaker 2: and Matt Huber at Matt Huber seventy eight. Follow our 782 00:42:52,160 --> 00:42:55,480 Speaker 2: producers Carmen Rodriguez at Carmen armand dash Ol Bennett at 783 00:42:55,560 --> 00:42:58,560 Speaker 2: Dashbot and kel Brooks at Kelbrooks. Thank you to our 784 00:42:58,600 --> 00:43:01,600 Speaker 2: producer Moses ONEm And. For more Oddlogs content, go to 785 00:43:01,640 --> 00:43:04,400 Speaker 2: bloomberg dot com slash odd Lots were have transcripts, a 786 00:43:04,440 --> 00:43:07,239 Speaker 2: blog and a newsletter. And you can chat about all 787 00:43:07,239 --> 00:43:09,920 Speaker 2: of these topics twenty four to seven in the discord 788 00:43:09,920 --> 00:43:13,520 Speaker 2: with fellow listeners. Go to discord dot gg slash oud. 789 00:43:13,320 --> 00:43:15,799 Speaker 3: Lots and if you enjoy odd Lots, if you like 790 00:43:15,840 --> 00:43:19,080 Speaker 3: it when we do deep dives into the system of 791 00:43:19,440 --> 00:43:22,120 Speaker 3: power provision in the US, then please leave us a 792 00:43:22,200 --> 00:43:26,120 Speaker 3: positive review on your favorite platform. And if you enjoy 793 00:43:26,200 --> 00:43:28,279 Speaker 3: odd Lots, if you like it when we get into 794 00:43:28,320 --> 00:43:31,719 Speaker 3: the history of US power markets, then please leave us 795 00:43:31,760 --> 00:43:35,760 Speaker 3: a positive review on your favorite podcast platform. And remember, 796 00:43:35,840 --> 00:43:38,440 Speaker 3: if you're a Bloomberg subscriber, you can listen to all 797 00:43:38,480 --> 00:43:41,480 Speaker 3: of our episodes absolutely ad free. All you need to 798 00:43:41,520 --> 00:43:45,359 Speaker 3: do is connect your Bloomberg account with Apple Podcasts. Thanks 799 00:43:45,440 --> 00:44:07,400 Speaker 3: for listening, Bead