Subscribe
Share
Share
Embed
The Northwest power system needs to decarbonize to fight climate change. That will allow transportation, buildings and other sectors to decarbonize, too. But how does the energy industry get there?
Guest Steve Wright, former head of the Bonneville Power Administration and Chelan County PUD, talks to Newsdata reporter and host Dan Catchpole and co-host Josh Keeling of Cadeo Group about how the Northwest energy industry already is changing and how much more it has to evolve to meet new challenges, such as maintaining reliability when renewable energy resources make up the bulk of generation.
NewsData's "People in Power" is an exciting new biweekly podcast that explores issues in the energy industry, featuring expert guests from a wide range of backgrounds. Hosted by veteran energy journalists Jason Fordney and Abigail Sawyer of California Energy Markets and including appearances by writers from sister publication Clearing Up, People in Power will explore trends such as development of a Western wholesale electricity trading market, the transition to a more electrified world of new infrastructure and transportation, renewables integration and reliability, wildfire response and mitigation, and many other topics. "People in Power" draws from an unprecedented pool of expertise and insight in a way never seen before! It's available on all major podcast platforms as well as at www.newsdata.com.
Intro:
Welcome to NewsData's Energy West, a podcast about the energy
industry today and where it's going tomorrow.
Dan Catchpole:
Welcome, everybody, to the NewsData's Energy West podcast, where
we talk about what's happening in the energy industry in the
Northwest, California and beyond.
And today I'm joined with cohost Josh Keeling of Cadeo Group.
And we're talking to former BPA administrator and former Chelan
County PUD General Manager, Steve
Wright. There are few people who have more experience and are
more
saturated, soaked in the northwest power industry than Steve
Wright.
So, Steve, thanks for joining us today.
Steve Wright:
Hey, thanks for having me.
Dan Catchpole:
Steve, you ran two of the major power wholesalers in the
northwest.
You spent 13 years as head of Bonneville Power Administration.
And then after retiring from there, you jumped back in to take
over Chelan County PUD as general manager, and you just retired
from there in December.
How's retirement going so far?
Steve Wright:
Good. You know, there's been a nice ramp down.
I had some things that were carryovers from my last job.
I had this invitation to testify before Congress around
cryptocurrency issues and how it affects the electric utility
industry, and a couple of speeches about western power markets.
But at the same time, I have had the opportunity to ski a lot
more.
I've never really downhill skied very much and always wanted to
get better because my kids are better than me.
And it wasn't much fun when they were waiting for me at the
bottom of the hill.
So I've got to ski a lot more.
I skied four days last week, and it's just been good to be able
to engage and make up my
mind every morning, what do I want to do?
And then go do that and not have a schedule associated with it.
So I really enjoy it.
Dan Catchpole:
That's great. Yeah. I love [it], you retire, but then you go
testify to Congress.
It seems on brand.
Steve Wright:
You know, it's just a very interesting thing.
I like to keep my mind active.
I'm trying to write a vision statement for my retirement because
I think these things matter.
Everybody should have a vision statement for their retirement.
Josh Keeling:
Continue to be an executive through your retirement.
Steve Wright:
Yeah, my wife is worried that I'm going to start thinking that
I'm delegating things to her, but that will not work, that's for
sure.
Dan Catchpole:
No, that never goes well.
Steve Wright:
Well, I definitely would like to have active body, active mind,
positive impact.
That's my vision statement.
And it's been nice so far.
I've been able to do all three.
Dan Catchpole:
Well, that's great.
Josh Keeling:
That's great.
Dan Catchpole:
Yeah, I heard you talking to actually on the Chelan County PUD
podcast
"Power Hour with Chelan County PUD." You mentioned something
that I want to kick off our
conversation today with that the number one issue that is facing
the energy industry right now is climate
change. And you gave some recommendations.
Do all the energy efficiency possible, decarbonize the power
system, use that decarbonized power system
to decarbonize other sectors, and then go after the really hard
areas for fuel
switching like aviation.
So four point plan.
Let's do it. I mean, it seems really doable.
Let's just knock it off tomorrow.
But, I mean, we're facing — I thought — I was going to get it
more of a laugh from you guys.
We'll have to insert laugh track there.
I mean, there's some huge structural impediments to doing that.
And this is one of the things I start talking, and I'm hoping
that a question forms and I don't really have a
specific question. I don't know if you've kind of thought of how
to jump into there.
But I mean, one thing that struck me is utilities are handcuffed
in terms of offering incentives on electrification.
There's, like I said, there's a lot of structural impediments.
Who do you see in the northwest as — do we need somebody, some
entity, to take the lead?
We don't have an organized market, so there's no CAISO or MISO
or anybody who can kind of drive the vision.
So how do this disparate, organized, what, 17 balancing systems
or bouncing
authorities? How do you get the region to work towards a common
goal like that and
say, let's address climate change.
Have that be the lens for policy making?
Steve Wright:
Well, I do have a view about that.
So, look, first of all, we live in a democracy.
And in democracy, it's kind of messy because you have all these
different jurisdictions.
You have states and local entities as well as the federal
government all being involved here.
And the governments are responding to the people and the people
are telling them in different ways what they want.
In some states it's go faster and some states go slower.
Although there I don't think there are any states that are
saying do nothing.
So I think there is a general sense that we are going to be
moving with respect to climate change.
It's a question of how far, how fast.
I don't know that you need somebody to be in charge.
I think what you do need is hopefully a common sense approach
that
looks at how do we achieve the fundamental goals simultaneously.
And there is nobody, I think, who objects to the idea that we
want to be clean, affordable and reliable.
That's the components.
Now again, how far?
How fast? Some folks would do more to compromise cost, for
example, or reliability.
But there are challenges there with respect to the pace that you
would go at.
But that framework that you described at the beginning is not
something I came up with.
I mean, that's been around for probably ten years.
I can't remember the first time I saw it.
But it's the basic approach focused on what would be a least
cost approach to carbon emission reductions, which should be our
goal. We should be trying to achieve carbon emission reductions,
at least cost, just like we always had tried to achieve
reliability, at least cost.
That's why we had the least cost planning, integrated resource
plans.
And if you go after the energy efficiency, you begin to
decarbonize the electric sector.
Then you move that decarbonized electricity into other sectors
like buildings and
transportation, and finally go after the most difficult sector,
which is the aviation fuels,
heavy duty fuels that those are the places that make sense in
terms of what helps
achieve our environmental goals, but do so in a way that's
cognizant of the fact that we have economic goals, too.
We need to produce jobs.
It's very important that these jobs and that people have
disposable income in their pocket.
And in fact, you will undercut the environmental movement if you
go too far on one side.
And you impact affordability and reliability.
One of the things that we worked on in Chelan and then PGP
really picked up the ball and ran with it in a fantastic way, was
trying to find that at least cost approach to carbon emission
reductions in the electric sector.
And I think that the more we can talk about that, how do we
achieve these three big goals simultaneously
and how do we work together to then follow a paradigm that is
seeking to make
the public happy, which is our fundamental goal in life.
We're trying to satisfy the public.
In terms of environmental and economic objectives, then I think
we can come together around things.
So I'm actually optimistic that the conversations that we've had
around these cost approaches to carbon emission reductions create
the framework for being able to move out and move
collaboratively.
Josh Keeling:
Hey, Steve, this is Josh.
I think that totally makes sense.
And it seems like one of the interesting things is that's
particularly true in the Northwest, right?
Like we have this abundant clean power resource.
We have amazing infrastructure that's been built over the last
few decades around energy efficiency, program deployment, market
transformation. We have all these great examples of how we can
make that change happen.
And we have a lot of the tools in place.
It seems like — not to mention that the industry as a whole has
sort of we're getting to this point where a lot of these
technologies are just making good common sense from an economics
perspective.
Like a lot of the decarbonization technologies [inaudible] now
it's like, well, renewables just make sense.
You know, it doesn't have to be a policy thing.
There's a lot of like utility scale renewables in certain places
that make a ton of sense just on economics based on a level as
cost of energy basis.
Same for electrification in certain applications.
But I think the interesting thing is like a lot of it is
connecting the dots, finding there are new players that are
coming into the market and new ways that that old players have
to interact with each other.
I'm interested in sort of how you see the role of the utility
evolving, both in your time at Chelan and into the future
in that new paradigm.
Because it seems like working with cities, working with
transportation agencies, regional coordination is really
changing.
Steve Wright:
Utilities are public service organizations.
I think it's always been true in public power land because by
statute that's true.
Josh Keeling:
Right.
Steve Wright:
So investor-owned utilities are as well, though.
I mean, this is my experience in working with investor-owned
utilities.
They recognize that they are public service organizations, that
they're so heavily regulated that they need to
be responsive to what the public is seeking in terms of their
power supply in order to be successful as an organization.
So that the key here, I think, is just the connection back to
the consumer and trying to figure out
where is the, what is the consumer interest and how do we solve
for that interest and work together to make
that happen? You know, we've gone through big discussions around
markets and those kinds of
issues, and a lot of that came down to was there a value for
consumers?
And there were different perspectives about that in the
Northwest.
And I've tried to actually mediate some of those disputes a
number of times, and including in the discussions around
Indigo and Grid West in the early part of the century, and then
the power pool MC effort
. That debate is mostly going away.
I think there is a general agreement that markets, for example,
will be able to help us achieve our economic and environmental
objectives done right with the right governance and all the
caveats that come with that.
Josh Keeling:
Of course.
Steve Wright:
But there is more of a coalescence of interest around that.
And now the question is timing and who, when and when.
And some of those key thoughts about how you put it together.
But there's a lot less debate about whether it should go forward
or not.
So I do think that just the way that the industry is evolving,
the way the public policy debate is
evolving, that it's going to cause people to come together more
in the next few years.
Now, maybe there's a debate about CAISO versus SPB and some of
those kinds of things.
But the general trend line if the public was looking at this
would say, Yeah, but you're talking about a different way of
moving wholesale electricity around.
So some of these things, just the time is ripe for more
conversation and more ability to actually bring people
together.
Josh Keeling:
Yeah, it definitely seems to be the case and glad to hear that
from you.
I think the other thing is your point on like what the consumer
wants.
Who the consumer is, is evolving a lot in that new paradigm,
right?
You talked about cryptocurrencies coming into the region, but
also things like how cities show up with
resilience efforts, how fuels play a different part as we look
at things like hydrogen or decarbonization of the fuel
sector. It's interesting, you know, the players, my experience,
I spent a number of years at Portland General Electric, and,
you know, the people that we were talking to down the road
started to evolve.
You know, you start talking to transportation network providers
and things like that where folks you would never talk to before.
So it seems like there's also this interesting dynamic in terms
of the job of a utility has become a
lot harder or more interesting depending on how you want to look
at it.
Dan Catchpole:
Yeah, I mean, especially like EVs, I think are such a great
example of that with utilities getting
involved with charging stations and offering incentives.
I mean, it feels almost like in some sense utilities are having
to become car salesmen.
I mean, I say that tongue in cheek.
But yeah, to Josh's point, it is incredible how much they're
evolving.
Steve Wright:
Well, there are a lot of expectations, certainly.
And I'd say one of the biggest things that's changed over the
course of my career is rates was pretty much all that the public
mattered about in the first half of my career.
And because we delivered reliable power and the environmental
qualities were an issue, but
not the way they are today, and certainly not that they would
drive a consumer to seek to get their own power supply because
they wanted to control the environmental quality of the resource
that they were receiving.
And yet today you have the Renewable Energy Buyers Alliance,
which is very large companies that are choosing their own power
supply because they want to drive the environmental quality even
more than they want to drive the rates quality of their resource.
So that's a really big change and that does cause a challenge
for utility because you're trying to solve
for that rate of affordability, reliability, clean and the
public may
not have the same answers for all three.
And so they're pushing for, as individual consumers for
different outcomes and then seeking to find
alternatives to the utility.
I do think that that is going to make it difficult for utilities
because this whole issue of I'm investing on behalf of a service
territory, and where do I end up in terms of my risk of stranded
costs and the rest of my customers bearing those
costs, and particularly the affordability issues, are going to
be a real challenge.
And you can see it in California today with the debate over net
energy metering.
I mean, this is a heck of a debate going on there to the point
where you have companies running television commercials trying to
change public policy about how someone who puts solar on the
roof will get compensated for that.
So the fact of the matter is, I've always said one of the things
I like about being in public administration is the public cares
about what you do.
And today they care even more than they did 20 years ago about
what we do in the electric utility industry.
And so we can expect that we're just going to have a lot of
input and a lot of trying to figure out how to balance issues,
which is what government does.
Government is constantly trying to balance an array of issues.
Josh Keeling:
Yes. No, Steve, on your point on rates, I think is really
interesting because it's you look at things like DER
compensation, but also just like time dynamic rates in general,
as we saw in this last power plan,
you know, the nature of energy costs is just going to change
dramatically in the near future.
Like do you see the Northwest sort of like moving in the
California model, maybe not the total California,
but at least like towards dynamic rates?
Or do you think that the sort of like standard volumetric
paradigm sort of is going to keep on for a while?
Steve Wright:
Well, I think we're headed towards dynamic rates.
For a bunch of really clear reasons that make a lot of sense.
We need consumers to be more involved on their side of the meter
to help balance this power supply system.
I am not optimistic.
I will admit about the reliability components right now.
I've been very concerned about resource adequacy going back to
2017, 2018, when we first started to do these studies showing
what would happen if we went to 80% or higher clean energy
standards in the Northwest.
And that's why I've been so active in the resource adequacy
issue and trying to encourage that we take that really seriously
and begin to put in place standards that will hopefully then
encourage utilities to be able to develop and to
create the public impetus for development of transmission and
generation that I think will be necessary.
But the time frame that we're looking at with some of the,
particularly the Washington state legislation, and the time frame
that it takes to develop resources don't seem to match up very
well to me.
And I think that means we're going to have to have a lot more
demand response.
In order to have really good demand response on this system,
given how this is a totally different system than we're one we
thought it was five years ago because now we're surplus during
the day.
The peak load hours are not the peak hours of even I can't even
say our grandfather's system or even of my system [inaudible]
hours. So we've got to find a way to get more demand response
into the system.
And we're at a lucky time.
I think it's, I saw some numbers recently that 75% of the meters
in the country are now smart meters.
There's an awful lot of utilities in the Northwest that are
rolling out more expansive smart meter programs.
The smart meter programs are much better today than they were
five or six years ago.
They're connected at the back end to meter data management and
the ability to be able to put in place time of use rates in a
more efficient way than what could have been done in the past.
So the timing is good to be able to figure this out.
And it is one of the reasons why we're going to need to move to
market pricing, because we have got to find a way to be able to
send that price signal through to consumers so that they can
understand where the value is in the market and then have them
respond, hopefully appropriately.
Dan Catchpole:
There are like ten different ways I want to dig into what you
just said.
But in terms of that, those price signals, we've got the lowest
rates
in the retail rates in the country.
Technology is allowing customers, at least customers who have
enough upfront money to potentially create
micro-grids and go off and turn away from utilities.
So given that there's I mean, there's very, very little demand
response in the northwest.
We're really lagging behind most of the country, in part because
of those super low rates.
Do we need to build in the social cost of greenhouse gases into
our rate structure to be able to
really send the necessary price signals to customers?
Steve Wright:
Yes, but there are two reasons that we're behind the rest of the
country.
One is our low rates, and the second is because we've been an
energy constrained and not a capacity constrained system.
So we didn't really have the incentive to go develop demand
response programs.
We were happy with energy efficiency and just saving kilowatt
hours because that's what met the system need.
And that has changed over the last ten years, I would say.
We talked about this as North West Energy Efficiency Leadership
meetings back more than ten years ago that there's going to have
to be a transition for the energy efficiency community to
recognize that there are capacity needs there.
There are three primary components of rates and cost, energy,
capacity and
carbon. And what we are seeing is more sophisticated markets
that are beginning to
place value on capacity and carbon.
And we will need that in order to be able to send the right
price signals, in order to get the right kind of demand response,
and also to get the right types of generation to be built.
The carbon pricing is happening.
It's not a question of whether we should or not.
It happens today in wholesale markets.
The carbon price, the California Air Resources Board price sends
a signal up and down the West Coast on a pretty regular basis as
to what the carbon value is.
And there's been a pretty dramatic increase in that value in the
last even six months.
The capacity values have become a lot more clear since we had
the the difficulties with price spikes
in the last couple of years.
They were momentary lasted for less than a week, and they were
high prices.
And that sent the right signal to many people about the value of
capacity.
So it's happening right now.
It's increasingly sophisticated, I would say, about how
utilities are able to keep track of those prices and then
be able to send price signals through to the generators and
ultimately to consumers.
And it is necessary because it's the only way you're going to
get a system that responds.
We need things to happen fast.
It's the only way you're going to get things to happen fast.
Given the time frames that are out there for carbon emission
reduction strategies.
Josh Keeling:
Steve, I just wanted to follow up on your comments about dynamic
rates and sort of capacity generally
which I totally agree wholeheartedly, I think.
I think there's a lot of transformation happening, and they'll
need to be more.
How do you see our traditional energy efficiency programs
evolving in that space?
I mean, do you see, like what impacts do you see in the broader
region, like across different
organizations and within utility programs as we transition
towards a more dynamic sort of need beyond just like demand
response, which obviously has a big role there?
Steve Wright:
I think they need a pretty significant transformation.
Unfortunately, you know, we've trained a lot of folks that
kilowatt hours saved is the right thing to do.
I mean, we've done that for 40 years now, and it's just not what
the power system needs today.
And this is the thing that has made energy efficiency so
powerful in the Northwest is that we got the alignment right
between what the power system needed and our environmental
objectives.
Josh Keeling:
And our rates.
We had rates that were volumetric, right, so they reflected that
as well.
Steve Wright:
Right. That's exactly right.
And so now we've got this paradigm shift that we need to make
that will focus on when is it that is the high
value time periods.
And it's going to be focused on two things.
It's going to be on the shoulder hour afternoon peak when the
sun sets, and it's going to be based on temperature excursions,
whether they be high temperature or low temperature.
More than three days, particularly, more than five days, what can
be done to reduce usage in those
periods? Those are very specific needs, but they're going to be
what drives
the high marginal cost on our system.
And we do have this advantage in the northwest of having this
low cost system.
And it's true, our base system is very low cost, but the
marginal cost in our system is pretty similar to the rest of the
country at this point, because we don't have the huge
advantages, some.
We have it's easier to build wind in the northwest than it is in
the southeast.
But they're not the kind of advantages that we have historically
enjoyed.
So the types of programs that we would offer, I think, are the
ones that will be able to import from other
parts of the country, that will be able to learn from others,
which we haven't done in the past.
So there's a lot of opportunity here and it's a matter of making
that translation of what that
need is that drives costs for consumers and then making sure
that your demand response program is
tied to that. And I'm also going to say it's going to need to be
flexible, which we haven't been very good at either.
Because it's hard to deal with consumers, and it's hard sending
them shifting signals.
But we're going to need to prepare them for the fact that what
we know today and the way the system operates today, it may well
operate differently five years from now.
And so we'll want to stay in touch with them and keep
communicating with them about where the value is and what actions
they can take that will help to keep their bills low.
Dan Catchpole:
I mean, it seems like that's one of the big challenges in terms
of shifting the culture of customers.
I've got three kids, a job.
I have other commitments.
My attention is being pulled in ten different directions.
And it just kind of seems like that's the normal now.
The savings of dynamic timing, time of dynamic time rates,
DR, those other tools to bring in that flexibility, that's got
to offer some big
economic incentives to me to get my attention.
And we kind of addressed this.
It sounds like you're optimistic about that.
Where do you see, how much work is it going to get to get to
that point, do you think?
Steve Wright:
Well, we have to make it easy for them, no question about it.
I mean, I'm not going to spend time wondering about what the
wholesale power prices are at 4:00 this afternoon and whether I
should stick my laundry in at 3:00 or 6:00.
None of us are going to do that, I think.
So we have to figure out ways to be able to make it easy for
them.
And this is where technology comes in.
This is something I am very intrigued with.
A few years ago here in Chelan, I hooked up with the guy who was
the head of our local hospital, and we had lunch and we were
talking about how we were concerned that there wasn't jobs for
our kids here in this community.
And we could see all the technology jobs in the Seattle area.
We needed to figure out a way to get them to come here.
And that sent us off on a journey where we started an Angel
Investor Network and started to become more connected to venture
capital funds.
Having nothing to do with my PUD work.
This is just a local interest project.
Boy, have I learned a lot from that.
And it turns out that a lot of it was valuable to me.
As I think about where the utility industry is going too.
First thing I learned is the way that we make decisions in the
utility industry is so vastly different from the way they're made
in the venture capital world.
We're pretty slow.
We're cautious because there's a high expectation.
These are costs that customers will bear, and you want to be sure
they're going to make it.
And the one out of ten hit rate in the venture capital world
would never work in the utility world.
But on the other hand, what the guys are really good at in the
venture capital world is when they do it, they come up with new
technologies that really do change people's lives.
And I've seen these massive changes that are occurring as a
result of things that seem like wild and crazy ideas
just a few years ago.
So that kind of change is coming towards us.
That ability to be able to make it easier for consumers to just
say, Would you like to sign up for a program that we
will mostly take care of this for you, and you'll be able to
check the box as to what kinds of things you are willing to
endure.
Dan Catchpole:
Kind of like taking The Energy Authority.
Their role for smaller utilities in terms of power planning and
applying that to customers.
Is that kind of what you mean?
Steve Wright:
Well, it could be an organization or it...
Dan Catchpole:
Or I mean, a company like that.
Steve Wright:
Yeah. It could be a third party company.
It could be your utility.
The technology will be available in the market, I think, in the
next few years to be able to make it easier for
consumers where you just sign up for a program and then you,
like I say, you check the box as to which elements of the program
that you want.
And then it's run for you, and you're not having to worry about
it because you're not going to worry about it.
You're not going to spend the time thinking about.
That kind of change is not something that we tend to see in the
utility industry because it's so radical,
so different from what we're accustomed to.
But there are disruptors out there, and the disruptors are
thinking through how to reach through to consumers.
And utilities are going to have to figure this out or else there
will be companies that will come in and will displace the ability
and provide that value to them.
Dan Catchpole:
Yeah, I mean, it's requiring a huge culture shift from not just
customers, but and maybe more importantly from utilities.
Like you said, by design, we move slow, move deliberately.
And now they're having to adopt that more venture, maybe venture
capital
mindset. Hopefully not to the point of — what is the I forget
what company it was — Apple I think whose mantra
was move fast and break things or something like that.
Hopefully they don't get to that point because that would be
disastrous.
But I just want to clarify, so you don't plan on doing your
laundry by looking at wholesale prices on the ICE index?
Steve Wright:
I do not plan to do that.
No, I can't imagine trying to convince my family to do that.
Josh Keeling:
Yeah. I think the other thing is, like I think we underestimate
how much change has
happened in the power sector.
We forget that like energy efficiency was not like a normal
thing at one point.
Like that was a huge transformation that happened.
And I think we perhaps underestimate our ability to make new
change happen.
So, you know, time of use rates exist all over the world in a
lot of different places.
And it's a very normal thing for people.
And a lot of the investments that we need to make are things
that we probably should be making anyways for a number of
reasons. A lot of the stuff you're talking about, Steve, in
terms of peak and weather sensitive loads, that's HVAC and
weatherization and you know, water heating and those are things
that we've worked on in the past, but will just become
more valuable for a number of reasons.
We need to build up thermal storage in end uses as well as on
the power system.
So, you know, there's still a lot of opportunity there.
I think it'll be hard, but there's a lot of infrastructure
there.
Steve Wright:
And I think we're going to need to recognize that there are
disruptors out there.
There are people out there who believe that their role in life
is to disrupt incumbent industries and that they look at the
electric utility industry, they have others and said, "Sure, why
not?
We could take that over." And it's going to be harder, I think,
because for
them, than it would be for others, because you do have this
reliability problem that is so critical, and you can't just walk
in and, you know, my telephone may go out in the middle of this
call or my Zoom call may go out in the middle of it.
And I'm not going to go crazy over that, but my electricity goes
out and I do go crazy over that.
So this is a little harder than the other industries to disrupt.
But we shouldn't think that there aren't people out there trying
to figure out how to come in and deal directly with consumers and
go around the utility.
Josh Keeling:
Well, you bring up an interesting point, Steve.
I think that's in a lot of the work that I do right now, we do a
lot of work with aggregators and how aggregators participate in
wholesale markets. And I think that's is another important
question that it is different about things like demand response
and more dynamic DERs is that you have an ongoing relationship.
And so I think how do you see the utilities role sort of
evolving in that space?
Because it is different than energy efficiency.
You put energy efficiency in, there's a widget, you walk away.
And you come back when their heat pump fails, and you give them a
new one.
That's different than like flipping their HVAC, you know, ramping
it up and down every day to
respond to wholesale market prices.
Steve Wright:
Well, I think you set that up really well.
It's a much more interactive process than energy efficiency has
been in the past.
Right, because you're responding to these price changes.
And moreover, the wholesale market is changing all the time.
And for example, you get these big price spikes and you really,
really need the demand response for a week out of the
year. And you kind of have the kind of conversation with your
customer where it's like, "Hey, this is the time when we really
need you, right? We're going to give you a lower rate, but it's
for this moment.
So we you've got to react to this at this moment." Yeah, that's
a change for us in
terms of the way that we do business.
And there are lots of businesses out there that have way more
customer interaction than we do.
And we're going to have to learn from other industries about how
to have those kinds of interactions.
But I have to come back to it, I don't think we're going to have
much choice.
Because the difficulty of maintaining reliability on this system
with the challenges, we're going to have to build large
transmission, large central station, renewable resources, t
here's just increasing resistance to that
. I admire PacifiCorp and Idaho Power for the decade plus that
they put into Boardman Hemingway.
But it's definitely a warning signal to us all that it's going
to be really difficult to build big transmission.
Yet we know we will need big new transmission to make all these
renewables.
Over on this side of the mountains, I'm discovering there are
solar facilities that want to locate up above where I live, to
the east of here on wheat fields, and there's opposition to
that.
And we've all seen the opposition to the wind projects in the
Tri-Cities.
This is a new thing in the last year or two that there had been
this feeling that we'll locate a lot of renewables in rural areas
and they will open their arms wide and say, "Come on in, and
we'll be happy to take the property tax benefit."
I'm not as confident of that now as I was a couple of years ago.
Josh Keeling:
Yeah, no, that's a good point.
I mean, I think like historically, like not even that long ago,
there was this sort of like, there was the mentality
around it's all central station.
We're going to do big renewables.
We're going to do a bunch of transmission projects.
And then on the other side, oh, we're going to do everything
distributed.
We're going to do DSM.
We're going to do DERs.
And I feel like we're getting this point where it's like, look,
we're going to just try everything.
Because it's all hands on deck, because it's all hard.
So it's going to be a lot of different solutions for sure.
Dan Catchpole:
To that point, what do you see?
Small modular nuclear, does that play a role in this, especially
in terms of our given our capacity
needs?
Steve Wright:
To meet the clean electricity standards, I think it has to.
You just run through the numbers of what it takes to be able to
accomplish these really high carbon emission reduction goals.
And I don't think you can get there with renewable resources
alone.
I spent the last couple of years chairing the APPA Climate
Change Task Force and dealing a lot with utilities in other parts
of the country. And they have such a bigger challenge than we
have.
It always seemed hard to be here.
And then I go spend some time with my friends in Missouri and
Wisconsin and Florida, Ohio.
And you just look at what they have coal plants that have been
built since 2010 that they're trying to figure out how to deal
with. And so you've got a big cost issue, but you also have a
big reliability issue because they don't have the same
accessibility to renewable resources that we have in the West.
And it seems like it's going to take something like a modular
nuclear operation in order to be able to — if we're
going to be really serious about hitting these goals, then it
will take something like that.
I will say it's going to take one more thing, though, something
that we don't have today.
It's going to take a clean capacity resource.
Hydro is our one real clean capacity resource.
Hopefully we will do everything we can to sustain what we have
in order to hit these aggressive goals.
But it's going to take something beyond that.
I'm not sure what it is.
The batteries are cool, but four hour duration is not enough.
It takes a much longer duration, especially to deal with the
temperature excursion problem that we talked about a few minutes
ago. Hydrogen is an option, but if you want the clean hydrogen,
then it's coming from water
and that means that you've got some loss of energy there.
And so there's a lot of challenges in terms of getting there.
But one way or another, we are going to have to find an answer
to that question.
Josh Keeling:
As a hydro guy, how are you feeling about pumped hydro and some
of the projects that are look promising in terms of moving
forward?
Steve Wright:
I think they're odds are actually growing and getting better
because I'm going to come back to you.
You've got to have clean capacity.
Well, it's expensive, and I think the biggest problem for the
pumped storage hydro has been the upfront capital costs.
It's generating that much revenue when the remember you're
playing off of the differentials, and we're going from a period
when we were a high priced market during the day and a low
priced market at night, and we're flipping that.
So from a from a pricing standpoint, you're bringing the prices
closer and closer together and then they'll separate
again. Well, in that period when they're closer together, it's
harder to make the case for a high capital cost resource like
pump storage. And you can look down the road and say, well, it
sure seems like this is going to be incredibly valuable.
Josh Keeling:
Yeah, it's a good point.
I mean, this is like that very tricky period, right?
Where I feel like you can you kind of saw some of that with the
latest power plant where they're like wrestling with this.
It's like, this is what's happening right now.
But we know we're going to get to this this area where it flips.
I mean, it does seem like that's a place where some of the
utilities can kind of take a leadership role.
And you've seen some of that where sort of getting out there and
saying like, "Look, we're going to buckle down,
and we're going to — we know we're going to need these
resources," and sort of putting their money where their mouth is.
But, yeah, it'll be interesting.
Long duration is a it's a tough business case to make.
But we all know it's going to matter.
We're all just waiting to figure out when.
Dan Catchpole:
It bears mentioning that in the power plan.
I mean, one of the most controversial aspects was the about face
they did on the loss of load
probability projections with their new upgraded model.
I mean, what do you make of that?
I'm sorry. I don't want to, and Josh raised a great point.
Please address that. But also I have to ask about the power
plans.
You know, hey, everything's going to be fine after, you know,
later this decade.
That said, they made the point that it's still worth investing
in capacity.
They're not saying don't worry about it.
Steve Wright:
Well, I think to Josh's point, capital allocation decisions will
be very difficult for utilities because they do have to choose
between these different types of resources.
And a lot of them right now are bet on the come, especially for
clean capacity.
How what's the resource that will actually be the winner in the
marketplace?
And yet I need it very quickly, if we're going to shut down coal
plant usage by 2025, that's not very far away.
So I think the capital allocation decisions are very difficult.
I'm glad I'm retired and don't have to.
With respect to the loss of load probability question, you know,
I have not been able to get myself to a point that I'm
comfortable with the way that played out, and maybe it's my own
fault for not spending enough time on it.
I did spend some time with Ben Kujala.
I know he's a really bright guy and very thoughtful.
I just have not been able to get myself to a point where I can
say that I'm comfortable that we're going to meet the reliability
objectives of the region with an imported variable energy
resource.
We used to call that non-firm in the Northwest.
It was done from hydro.
That's what the solar and wind is.
A certain amount of it is just non-firm.
And we generally said we can't count on that to meet firm load.
And it seems like there is a component of that discussion that's
coming up in this debate, and it
instinctually is not very comfortable for me.
I think the problems are bigger.
Josh Keeling:
Well, I mean, it's hard to do.
Like our models, getting our models to adapt to this new world
that is changing so rapidly, I think is part of what we're
struggling with, right?
I mean, you see this back to the long duration stuff.
I mean, that's been the tricky thing is like our definitions for
what peak capacity was have been relatively simple.
And therefore it was, you know, if you were a cheaper resource,
always look better.
And if you defined capacity as a four-hour need, then you
four-hour batteries would get built.
Because that just made sense.
That wasn't necessarily about what the system absolutely needed.
It had to do with what the model defined as capacity, right?
And we're asking for a lot more nuance out of the modeling that
we're doing today.
We have a lot more questions, and there's a lot more shades of
gray on what we need to know.
Steve Wright:
I think that's exactly right.
And in some places, or in some ways, I'd say that's okay because
we have much better tools today.
I'm going to come back to the technology revolution that we're
going through, ight?
The computer capabilities that we have today are so much better
than what we had 30 years ago.
And the ability to model really unusual circumstances is good.
The underlying data is still evolving because we're learning how
to run these resources that are still relatively new to us so
we can make projections about how we think things will work.
But we don't have the same historical database that we've had
with other resources.
That makes [inaudible].
Josh Keeling:
Oh, a 100%.
Dan Catchpole:
Yeah, I mean, with such a paradigm change, we don't know what we
don't know almost.
And you guys were leading the way in some ways at Chelan in
terms of setting up the hydro
institute to collect that big data and optimize your hydropower
operations
based on these new tools.
Steve Wright:
Yeah. I mean, that was an effort really led by the current
general manager there, Kirk Hudson, who did a great job putting
that together. The focus there was trying to understand in
particular the operation of the turbines themselves.
It wasn't so much being able to understand the fuel supply
question, but just the turbine operation.
And I think the conclusion that I came to a few years ago was
when you think about hydro, our greatest opportunity for being
able to increase the capability of the hydro system is not in
new turbines.
There are some advantages that you can get out of that, but
they're relatively modest.
I think the biggest opportunity on an aging hydro fleet is in
reducing the amount of forced outages, just being able to
understand what's going on inside these big turbines that are
not really that susceptible to opening them
up and taking a look and how are things going and trying to find
predictive metrics that will help us to
understand when a turbine is getting into trouble.
And if you can catch it before really bad things happen, you
reduced your forced outage time potentially significantly.
So we are going to be looking for ways to be able to increase
the capability of all of our clean capacity resources and
hydro is our natural advantage here in the Northwest, so we want
to do the best we can with that.
Josh Keeling:
I think the other hard part that we have to deal with is planning
inherently relies on assumptions around operations.
And as you're sort of talking about how we operate assets is and
needs to evolve considerably over
time. So I think that's the other part of it that we that we
really struggle with is making sure that operations and planning
can sort of talk to each other in a more coherent way.
Because how often do we see planning models may say this is how
the regions get to dispatch its assets and how things are going
to go down. And then we get into the field and that's just not
the case, right?
So having a better common language between those two will be so
critical.
Steve Wright:
Yeah, that is a classic problem.
I think it's probably true in every industry, but it's certainly
been true in the electric industry long as I've been doing it.
I started in the planning function, and I know the operations
people didn't think very highly of our planning work.
We didn't understand why they couldn't understand what was
fairly clear about the great work that we were doing in planning.
Yeah, there are definitely opportunities, there continue to be
opportunities to be able to work together better.
I'm excited about some of the again, new technologies that allow
us to be able to communicate more like we're doing right
here on a Zoom call.
And if used appropriately, I think they can help to break down
some of those silos.
I'm not a big fan, candidly, of everybody work from home for
just that reason.
I think it actually increases your silos.
And so the challenge is going to be to, I think, get people into
the office but also at the same time continue to be able to use
Zoom and other tools so that if you've got somebody working out
at a hydro project and somebody else downtown, but
they could communicate a lot quicker.
Or, you know, the Microsoft HoloLens, I've always been kind of
intrigued with where you can have someone in a hydro unit walking
around and showing somebody back in the office, "Hey, look,
there's a crack right here.
What do you think that crack means?" Or be able to talk to
somebody at one of the hydro vendors,
hundreds, if not thousands of miles away, about this thing and
be able to take action on it more quickly.
So technology, I hope, will help us to break down some of those
silos between operations and planning.
Dan Catchpole:
Wow. That sounds so sci-fi to think about that.
And I'm glad, yes, work-from-home does not seem like a
sustainable future.
People are social creatures.
All the little conversations you have because you bump into
somebody.
You know, we're not appreciating the value out of those little
interactions that are unplanned and
unscheduled, unlike a Zoom call.
There is one last thing I do need to ask you about before we let
you go.
In college, I understand you, initially wanted to be a
sportswriter.
Steve Wright:
I did. I went.
I started my first couple of years and got a journalism degree.
Dan Catchpole:
Oh, yeah. So what first settled on looking
to be a sportswriter?
Steve Wright:
Oh, I you know, I really would have loved to have been an
athlete, but I wasn't good enough.
And so I thought I would write about it instead.
And at least then I could go to the games.
And I did when I was a sophomore in college, get the football
heat, which was fantastic because you got set the press box and
the hot dogs were free.
And I just couldn't believe that I could have a better job than
that ever in life.
But then I discovered that as much fun as it was to watch the
games and write about them, I got involved a
little bit in politics and found that it was a lot more fun to
actually do things that made a difference in people's lives,
rather than just talk about things where other people were
making a difference in people's lives.
And so I decided public administration was what I wanted to do.
Dan Catchpole:
And I mean, I think you can definitely check the box off in
having made a difference in people's lives.
You have been an institution in the Northwest.
And I can't think of many people who've been more consequential
to our power system than you, Steve.
So I really appreciate you taking some time to join join us here
on NewsData's Energy West
Podcast. Listeners, you can subscribe to us on all the major
podcast platforms,
and please rate and review us.
It helps us show up higher in the search functions.
So Steve, any parting thoughts?
Otherwise, I'll let you go, and just thank you for your time and
thoughts.
Steve Wright:
Well, I want to thank you guys for the work that you do.
It's really important that we learn from each other.
Really important.
And Clearing Up has done this for 40 years now.
You're finding new ways to do it with something like this
podcast, which I think is a really fantastic tool.
I was talking earlier about how technology can make a big
difference in helping to accelerate our ability to be able to
work together. And so I want to appreciate you for the work that
you're doing and
say I really enjoyed being in this industry.
It feels like something that's really important that makes a
difference in people's lives.
And I couldn't have picked a better industry to be in for all
these years.
And so thanks to all of my colleagues out there that I've had
the chance to work with for the last four decades now too.
Dan Catchpole:
And I'm sure that they have not heard the last from you.
It's hard to imagine you sitting still for very long.
So, Steve, again, thanks for taking the time to sit down with us
today.
Steve Wright:
Thanks for having me.
Josh Keeling:
Thanks, Steve.
Outro:
You've been listening to NewsData's Energy West, a podcast about
the energy industry today and where it's going
tomorrow.