Concerns over the reliability and resilience of the U.S. electric grid have heightened over the past year or so, as policymakers, regulators and operators look closer at what it takes to assure adequate supplies of power at the least cost. And the issue is likely to remain one of the top energy priorities in Washington and state capitals in 2019.

On this edition of the Columbia Energy Exchange podcast, host Bill Loveless sits down with Andy Ott, President and CEO of PJM Interconnection, the largest power grid in North America. PJM coordinates the movement of wholesale electricity in all or parts of 13 states in the Mid-Atlantic and Midwest as well as in the District of Columbia. Andy joined PJM 21 years ago and has been responsible for the design and implementation of PJM wholesale power markets. He became CEO in 2015.

Bill and Andy got together in Washington, D.C. to talk about PJM, which is attracting close attention, given its size. Their discussion took place just after PJM released a study examining fuel security for the system in coming years and amid efforts in Washington, D.C. and some states to keep old nuclear and coal plants from shutting down.

They talked about that study, which included both good news and some warnings, as well as the challenges of accommodating new policies and regulations without disrupting the economic efficiency of the power market. They also looked at wholesale power markets in general and how they have weathered the passage of time since the U.S. government authorized their establishment some 20 years ago. After all, more than half the country is served by such markets. Can they still meet their original objectives of keeping the cost of electricity down while at the same time promoting innovation?

View the transcript

Bill Loveless: Over the past year or so, there has been heightened concern over the reliability and the resilience of the U.S. electric grid as policy makers, regulators and operators look closer at what it takes to assure adequate supplies of power at the least cost. And the issue is likely to remain one of the top energy priorities in Washington and state capitals in 2019. Hello and welcome to the Columbia Energy Exchange. A weekly podcast from the Center on Global Energy Policy at Columbia University. From Washington, I’m Bill Loveless. Our guest today is Andy Ott, the President and CEO of PJM Interconnection, the largest power grid in North America. In all PJM coordinates the movement of wholesale electricity in all parts of 13 states in the mid-Atlantic and mid-west as well as in the district of Columbia. Andy joined PJM 21 years ago and has been responsible for the design and implementation of PJM wholesale power markets. He became CEO in 2015. We get together during his recent visit to Washington to talk about the reliability of the PJM system which is attracting close attention given its size. Our discussion took place just after PJM released a study examining fuel security for the system in coming years and the debate over efforts by some states to save old nuclear plants from shutting down. We talked about that study which included both good news and some warnings as well as the challenges of accommodating policies and regulations designed to keep nuclear plants running without disrupting the economic efficiency of the power market. We also looked at wholesale power markets in general and how they have weathered the passage of time since the U.S. government authorized their establishment some 20 years ago. After all, more than half the country is served by such markets. Can they still meet their original objectives of keeping the cost of electricity down while at the same time promoting innovation? Well, here is our conversation. I hope you enjoy it. Andy Ott, welcome to the Columbia Energy Exchange.

 

[00:02:16]

Andy Ott: Thank you. It’s great to be here.

 

[00:02:18]

Bill Loveless: Andy, let’s start with you. Talk a little bit about yourself. You’ve been in the business in PJM for quite some time now. More than 20 years. But how did you get into energy and what have you been doing all these years at PJM?

 

[00:02:33]

Andy Ott: Well, thank you. Well, I got into energy actually, I got a degree in mining engineering and I was working in a West Virginia coal mine. Realized that the mine was four foot seven and I was six foot five. So, I realized, I needed a career change pretty quickly. So I was a surveyor in the underground mines. So I went back to school after six months and got a degree in electrical engineering and I had two degrees, mining and electrical which sort of makes sense to work for electric utility because you know, I was in Pennsylvania. So, then I got as I worked through transmission engineering, I got graduate work in mathematics and I got then involved in, if you know, transmission and you know mathematics, you get involved in power market design. So my career evolved into as the industry was restructuring. I got involved in how, you know, these regional operations called RTOs and markets evolves because of my background.

 

[00:03:31]

Bill Loveless: Yeah, yeah. And it was timely too because it was, you’ve been with PJM 21 years as I recall and it was about 21 years or some 20 years ago that the Federal Energy Regulatory Commission adopted landmark orders that paved the way for competitive wholesale electricity markets in the united states. PJM of course is the largest of them, of those competitive markets, covering 13 states in the district of Columbia. You were responsible for the design and implementation of the PJM wholesale electricity market. Is that withstanding the test of time?

 

[00:04:07]

Andy Ott: Yeah, so the original design was to effectively allow efficient trading of electricity throughout the various regions and states and really the energy market has done that. It’s delivered essentially what we call value to customers, value to members and I think it sustained over time. So the actual energy market which is, you know 80, 90% of the total cost and revenue that is exchanged there has been viewed as widely successful. There is controversy over something called a capacity market and reliability services but the energy market has been quite successful.

 

[00:04:07]

Bill Loveless: Yeah. And it probably should make clear Andy, what is capacity market, what is the energy market for anyone who may not understand those concepts to a great extent.

 

[00:04:56]

Andy Ott: Well, the energy market again is basically realtime or daily and it allows you know power producers and power consumers to essentially trade across utility boundaries, state boundaries etc. We have a lot of retail competition within the states in PJM. So the energy market really efficiently allows buying and selling of electricity on an hourly basis. The capacity market in contrast is really more of a long term. It’s really looking at a commodity that ensures reliability into the future. So, it ensures there is enough electricity to buy and sell at some point in the future. So, there is a bit of a difference in timing between the two. And that one of course is more controversial because it involves investment and other aspects of increasingly state policy.

 

[00:05:47]

Bill Loveless: Well, and of course, the basic premise of the market is that you provide reliable electricity, provide reliable electricity at a low cost, lowest cost.

 

[00:06:00]

Andy Ott: The least cost.

 

[00:06:01]

Bill Loveless: Least cost possible. That’s been the premise for all along still is.

 

[00:06:06]

Andy Ott: And actually what’s fascinating is the price of electricity now, the wholesale price for electricity now in PJM is the same as it was or as low as it was in 2004. What are the commodities. So this is 2018. So, when people ask has competition worked? You actually look at states like Pennsylvania, Ohio, New Jersey, Maryland, Delaware. Customers at the wholesale level are actually paying prices, you know, that people paid, you know 15 years ago and they think, so well, electricity rates may have gone up because they have to invest in wires and other things like that. The actual commodity which is electricity has actually stayed flat.

 

[00:06:46]

Bill Loveless: And why is that?

 

[00:06:47]

Andy Ott: It’s intense competition, I think. So we did see prices by the way flowed up in 2008 when we saw a spike in gas prices and other fuels. But what we’ve seen in this region, you have shale gas, you have this enormous resource which is, you know, natural gas availability. You also have new technologies coming in, demand response, alternate technologies, batteries. The technology to burn the gas is more efficient. So, all these together have driven intense competition and kept prices low.

 

[00:07:19]

Bill Loveless: Interesting and how does that compare to other parts of the country, the price?

 

[00:07:23]

Andy Ott: So, again the PJM region 20 years ago used to be one of the highest cost regions in the country. Now, we are below average essentially and you saw, so effectively what you’ve seen is this area of the country has enjoyed, you know, essentially a much better trajectory for price than other parts of the country have.

 

[00:07:44]

Bill Loveless: And despite that consistency, over the years price, the game has changed. Those were your words recently in an interview, I saw that you did with the trade publication utility. What did you mean by that?

 

[00:07:58]

Andy Ott: Well, essentially, our mandate, if you will or our reason for being was to obviously preserve reliability and make sure that the citizens got reliable power. But also at least cost. And so the mandate, if you will was not only in short term but also in the long term make sure that this region of the country which we cover for 13 states plus DC. It’s a big area is gonna have reliable electricity at least cost. But when I say the game has changed, that’s now folks are saying, wait a minute, yeah, I’m getting reliable electricity at low cost but I also want green. I also want state policy to be effectuated. So, these other aspects now that folks are asking for especially states are saying, wait a minute, I don’t want a certain power plant to close for competition. I want to keep it within my state. Well, that’s different, right because now, it’s not just reliability at least cost. It’s also state policy.

 

[00:08:50]

Bill Loveless: And we’ve seen this happen now in several states Illinois being one, state where they, New York is another because that’s outside of your region. But still some states now have adopted policies to save old nuclear plants.

 

[00:09:07]

Andy Ott: Correct.

 

[00:09:10]

Bill Loveless: What is the effect of that kind of policy on a PJM market?

 

[00:09:14]

Andy Ott: Well, again, obviously the state has the right, you know, to effectuate whatever policy they want. But what the effect becomes is it becomes more expensive because obviously, if that whatever power plant whether it be a nuclear plant, coal plant whatever is slated to retire because it’s not able to get enough revenue, then obviously, it must be higher cost and the other alternative. So, let me also, the PJM market in addition to being, you know, almost low cost back to you know, 15 years, it’s also the carbon footprint is down 30% in that same period. So, not only is it cleaner and lower cost but the trajectory is that we’re essentially seeing that kind of benefit to customers.

 

[00:09:55]

Bill Loveless: And that’s largely because of what the introduction of natural gas, more gas generation and the retirement of coal power plants?

 

[00:10:01]

Andy Ott: The introduction of new technologies like demand for conservation is to swap over to more gas and less coal which again is lower carbon. And again, I think the type of technology innovation you’re seeing are driving significantly that too.

 

[00:10:18]

Bill Loveless: Well, you just came out where PJM just came out with a big study on fuel security and that looked at hundreds of scenarios that in terms of how reliable is this system and I’ll let you describe the report but the immediate results are pretty good, right in pretty good shape for the time being.

 

[00:10:39]

Andy Ott: Yeah and the question being asked by folks at the federal level, folks at the state level with the department of energy folks on the senate, energy committee. Question, they are asking is were you know, as we see this trajectory of traditional power plants like coal and nuclear retiring into gas coming on and we are kind of over dependent upon gas infrastructure is a security problem. That’s a legitimate question and the answer in the near term is we’re fine and in fact, today, we are more diverse from a fuel perspective than we have ever been. We’re now about a third, to third to third, gas, coal and nuclear which is very balanced. But before we were much more coal heavy. So, I think the answer today is, we’re fine, we’re reliable. We’re better than we were before.

 

[00:11:22]

Bill Loveless: And those findings also take into consideration the retirement or the anticipated retirement of a large number of coal power plant.

 

[00:11:29]

Andy Ott: Essentially, another essentially maybe another 8% of our fleet actually turning from gas to, from coal to gas.

 

[00:11:39]

Bill Loveless: Over the next five years.

 

[00:11:40]

Andy Ott: Over the next five years. Yeah, so as we look though into the further into the future and say, look if we more of these trends and we also look at these concerns about, there are people out there. Now, they are attacking infrastructure. This notion that…

 

[00:11:55]

Bill Loveless: Physically _____ [00:11:55].

 

[00:11:56]

Andy Ott: Physically or cyber. But the point is there are folks out there whether it be nation, state or criminals or terrorists or whoever who may intentionally attack infrastructure and that might be powerlines, it might be gas pipelines, it might be other installations. So, as we look at those increased risks, the question is being asked, are we looking at all those dimensions of reliability and we are calling that fuel security. We are calling that resilience and it is something that PJM and entities like us need to look at. And what I can tell you is as we look at those future trends, we do see the system is secure into the future but there could be time when we need to evaluate fuel security more closely.

 

[00:12:40]

Bill Loveless: Right. As I recall that report said that big problems including rotating blackouts could occur under extreme but plausible circumstances.

 

[00:12:51]

Andy Ott: Correct.

 

[00:12:52]

Bill Loveless: In five years. What’s that mean?

 

[00:12:53]

Andy Ott: What that means is, so for example, if we see an acceleration of retirement of coal plants and nuclear plants, meaning it’s much faster than what we’ve seen. And we couple that with the risk of a large gas pipeline being out of service because of a you know, a natural event or some attack. You sort of line up all those ifs and we have very cold weather that day. And everybody is depending on the gas system. Under all those circumstances that could occur. So, it’s our job than to say, okay, what can we, what should we be doing today to make sure we never get there. And that’s, and I can tell you with a high degree of confidence, we have plenty of time to deal with those issues.

 

[00:13:36]

Bill Loveless: What are some of the options?

 

[00:13:37]

Andy Ott: Well, the options again are obviously working closely with the federal government and state government to say, as we get the various risks. Are there ways to mitigate those risk. You can have alternatives to some of the gas pipelines could be on site liquid fuel as a backup. And you know, pay for that and it just sits there and it becomes our insurance policy. You could have expanding either the power grid or the gas grid. So there is plenty of options because we have five or six years to do it.

 

[00:14:08]

Bill Loveless: It sounds in a way like some of the things or have been under consideration here in Washington. The, as you know the Trump administration, the Department of Energy looked at this issue of reliability and offered a proposal back a year ago. That would have provided for some sort of compensation for coal and nuclear plants to remain online if they had, because they would offer so many days of guaranteed supply on site. And it was, you know, some saw it as political, some saw it as a way of you know, bailing out coal plants. There were otherwise uneconomical. The Federal Energy Regulatory Commission rejected the idea. But it’s still is something that is receiving consideration here in town. I mean Department of Energy then begin to look at it in terms of a, as a matter of national defense and whether or not defense statutes could be used to somehow provide this sort of reliability to keep coal plants online for example. And what do you make of that? I mean, what is the best way and I know PJM is concerned about what the Department of Energy was doing. Why is that and what is the best way to go about it from a public policy?

 

[00:15:24]

Andy Ott: Well, again, I think the regional power grid is reliable today in like as we indicated in our study show that this reliable was as we look into the future. Unless we look at very extreme trends and the point is that as we, there is no emergency. There is no need for us to take a breathless action. And I think we can analytically look at this. We can look at it from an engineering perspective and we can look at to say, the resource attribute that we would value which is again this notion of fuel security, we can actually do what we’ve done with other commodities is to say let’s price that into the regional market. Let’s price that into the cost of reliability. That way, you have the best resource actually provide the service. You have the most reliable resource provide the service and then customers pay the least amount for that increased security. Everybody wins. If you, the other alternative would be to just pay blindly pay, other, you know resources who never really studied but they are the best resource to provide. So our argument was not to ignore the problem. It was really, let’s look at this real problem and the solution more systematically and from a regional perspective the least cost.

 

[00:16:40]

Bill Loveless: How they go about doing that? You have, you know, in one hand, you have state policies and as we’ve discussed certain state policies are adopted in places like Illinois to keep old nuclear plants online. And at the same time, you have federal policy, that’s gonna look beyond PJM to assure reliability across in power markets across the United States. How do you reconcile the differences, you may see in federal and state policy?

 

[00:17:07]

Andy Ott: Well, first I think, if the state wants to make a certain policy decision and pay for a certain type of resource whatever that resource is, as long as that cost remains within the state, no problem from our perspective, right. The challenge would be if the states action shifts cost to another state that I have _____ [00:17:26] because I’m a regional power grid operator that is responsible for reliability economics. Then I haven’t to figure out a way to mitigate that cost shift. So as I look at it, I think marrying, the allowing or accommodating the state interest while protecting, you know the regional market from cost shifts between states is really our mandate and we think, we can essentially solve that issue.

 

[00:17:50]

Bill Loveless: The federal energy regulatory commission clauses is requiring you and PJM to take a look at your capacity markets. It has questions about the way it operates. How is that inquiry going?

 

[00:18:01]

Andy Ott: So far, I mean, obviously, it’s very controversial and as you would expect in any time you have discussions between state and federal jurisdiction becomes controversial. I think the way FERC has approached it, has been constructive. I think they’ve stepped back, asked the questions and proceeded in a way that is systematic. So, this notion that state jurisdiction matters and state should be able to make their own decisions but there is an issue of cost shift should be directly addressed so that one states policy actions don’t affect from a cost perspective another state. I think they’re still looking at it from that point of view and I am optimistic that we’ll solve that problem and still have the benefits of regional efficiencies and that’s really the key. Preserve the benefits that we’ve seen of these large scale regional markets because they are efficient but also allow states to do what they need to do for their only policy and decision.

 

[00:18:58]

Bill Loveless: Yeah, that comes too at a time when, you know the FERC is undergoing changes itself. It’s got a new chairman, Neil Chatterjee. It’s got a new member now, Bernard _____ [00:19:08]. You know, what might we expect of the agency now as it undergoes some change?

 

[00:19:14]

Andy Ott: And again, I’ve been here 20 years. I’ve seen a lot of folks change at FERC and I think the agency itself again has a lot of horsepower. There is a really good folks there and I think as time goes on, the notion that their mandate effectively is to look at interstate commerce and fair and equitable solution. So I’m highly confident, no matter who is in chair, I think this notion of we’ll have a reason to process, evidence based process to go through it. You know, so I’m optimistic to get there and I think the key there is that the reliability of the grid essentially is paramount and I think everybody gets that.

 

[00:19:57]

Bill Loveless: Yeah. So, it’s a healthy debate. Right, again the reliability has been controversial. It has been political here in Washington but you see it working as a dialogue is one that is playing out in a relatively healthy way.

 

[00:20:12]

Andy Ott: Well, I think it is. I do think we’ve seen an evolution of the debate. I think initially folks were taking, you know sides on one side or the other. I think now people are, I think the reactions are fuel security study has been quite positive. Because we are trying to address the issue from analytical perspective and what I hear from folks on Capitol Hill, folks at the DOE, folks at the White House or the state. The positive reaction to say, you’re engaged in the right debate that’s actually attack this problem. So it makes me optimistic. The folks are looking at this from a perspective, that I think is constructive and I think we do have a good path forward.

 

[00:20:53]

Bill Loveless: Yeah. So much of the conversation these days on energy and the environment has to do with climate change.

 

[00:20:59]

Andy Ott: Yeah.

 

[00:21:01]

Bill Loveless: You know, we’ve seen the series of ominous reports come out in recent weeks about the global warming and the increasing, you know, carbon dioxide levels are going up again after having tailed off for a couple of years. You know, let’s talk about, how do we tackle this and it’s very political.

 

[00:21:23]

Andy Ott: Well, if I could tell you a story. So, let’s contrast Germany to, at least my part of the U.S. will call PJM. So the Germans have you know, very aggressive energy policy and they have over time, you know, they are gonna shut down their nuclear plants because they are worried about the Fukushima type risk. They really pushed solar and renewable resource which I think it was great and they have actually led the world. So, price of electricity in Germany has gone up by a factor of four. It’s four times more expensive than it is here in the PJM region. Their carbon footprint is going up. So, the amount of carbon per megawatt of electricity delivered is actually higher now than it was back when, you know, they were starting this out. PJM in contrast, electricity prices as we talked about are lower than they were in 2008. Our carbon footprint is down 30%. And we are making a lot of noise. But essentially the competition is working and again the key here is, the reason Germany is going the wrong way both in price and carbon is they had, they started with state policy and federal policy and you know, they are driving it by policy and saying, we know the best answer, the market doesn’t. In our case, we are saying, let’s effectuate these policies through competition. And so although we are certainly where we need to be from a carbon footprint perspective, we moved in the right direction. So, if we want to accelerate that move my advice, it maybe the best alternative is to look at are there ways, we can price in these characteristics and again, it’s difficult politically, carbon price. But the key is, you know, if you look at examples around the world, the best answer generally speaking is to decide what you want to incent and create a market to incent it.

 

[00:23:20]

Bill Loveless: Well, the reduction in emission has been largely because of the introduction of natural gas power generation as you discussed but also there have been state policies that require minimum levels of renewable energy.

 

[00:23:34]

Andy Ott: So the key is there has been, so PJM wholesale market covers like you said, the 13 states plus DC. We’ve had a growth, so 10,000 megawatts. 7% of our total electricity supplies now provided instead of by generators is provided by customers curtailing their use of electricity in response to our signal, reliability signal. So, think about that. We’ve displaced 10,000 megawatts, that’s the equivalent of it is actually nine nuclear power plants or maybe 15 coal plants just by customers not using electricity when the system is stressed. Talk about low, that lowers emission. So the point is that it has been partly due to state policy, partly due to this swap of shale gas. But also partly due to the regional market creating incentives for conservation, changes in the way we use electricity. Effecutating the shale gas revolution through investments and new technology. So, all of the above, right.

 

[00:24:38]

Bill Loveless: And the demand, and the so called demand response type programs were largely the result of efforts to find a more economical way to operate the grid, the wholesale grid.

 

[00:24:49]

Andy Ott: Basically an economical way not to operate the grid but also preserve reliability into the future which is the concept of the capacity market because one of the answers in the capacity market instead of building a new generator was to say, well, let’s, have a contract with a factory or a store or a group of retail customers being homeowners, they’re aggregated. Let’s have a contract with them to say, they will pledge to use electricity when it’s a hot summer day or a cold winter day and they’ll agree in advance that they will move their electricity use down and they will get paid for it in advance. So that was a different way of looking at things. No other place in the world had done that. We have the largest, of course power market in the world. We also have the largest demand response. Meaning, customer responsive in the world. No one else has done this. So, it’s been tremendous success and again part of that is beneficial in price. The part of it is beneficial in cleaning up the grid.

 

[00:25:46]

Bill Loveless: But was cleaning up the grid or reducing emissions a big factor in say the business decisions that were made to promote efficiency?

 

[00:25:56]

Andy Ott: No, and it wasn’t. And I think it was more economic and this is my point though. So, if customer, if what customers or states or government want is to focus more on lower carbon green, can you imagine if we actually try. Before we were getting that just based on, you know competition and, you know, the market signals on a regional basis. If we said, well, let’s actually price in, you know some of these other attributes, can you imagine what can happen because if people actually focused on it and said, we actually value it in the market, I think that instead of a 30% reduction, can you imagine what we can get if we… You know, so I think my point is we achieve that through efficiency gains. So we got more efficient on a regional basis. So we needed a less total power. People willing to conserve during high use times. All driven by economics. Can you imagine, if they are willing to do the same things to say, I’ll actually during high emission times I’m willing to curtail just the power of, you know, I’ll say that competition, I think the potential is tremendous.

 

[00:27:04]

Bill Loveless: Okay. So do you anticipate there may come the time where there will be that much more pressure as a result of public policy either at the state or the federal level to do that?

 

[00:27:16]

Andy Ott: Well, you know, I think where the pressure is coming from frankly and this is what I hear from CEOs every day, I think it’s the, I call it corporate stewardship. I think you are from whether it be, you know, executives that, you know, at Walmart or executives at other, you know, they want to know how, what percentage of the total electricity supply is green right now or renewable or low carbon. Because they want to use that in their own. So whether it would be, you know, Microsoft or Google or other types of corporations, I’ve seen a lot more emphasis from a corporate perspective on that. And again, I think state policy and federal policy may follow. But what I’m seeing is the customers themselves are driving it and certainly as I look at the public opinion, I think is shifting to say, more general acceptance to, you know, there is some value if you will to green, becoming greener. So I just think, it’s happening on many levels.

 

[00:28:20]

Bill Loveless: It’s happening gradually. What do you make of discussions on carbon fee, carbon price, carbon tax?

 

[00:28:26]

Andy Ott: Well, again I’m not a policy maker. My point is that I think my observation is we do value as a society lower environmental impact. So the best way to deal with that would be through some incentive mechanism. Again, whether it be a tax or what else is beyond my area. But I think the way to effectuate it is to allow people the choice, to say, I’ll respond to, you know, a price signal to address it or now. How that’s actually effectuated through various mechanics within the state or federal, I’m not.

 

[00:29:11]

Bill Loveless: Yeah, you can do that right making for example to provide incentives to people to turn down power or companies. They kind of do that through demand and response now.

 

[00:29:21]

Andy Ott: Right. Well and again, but I think the most efficient way to do it is through a regional market if we see ourselves through a regional carbon price for example in our market, I think we’ll probably one of the more efficient ways to do it. Whether that’s acceptable and if there is too many cost and other things like that and for policy makers. They are certainly from the market designer perspective, that will be the most efficient one.

 

[00:29:43]

Bill Loveless: Yeah. And of course in the northeast, you do have the RGHGI, the Regional Greenhouse Gas Initiative among a number of states. That maybe looks like that’s gonna be expanding into New Jersey.

 

[00:29:55]

Andy Ott: Sounds like, yeah and I think Virginia is also was talking about to some extent. So we already have Maryland, Delaware or part of it.

 

[00:30:03]

Bill Loveless: Yeah, how does that work for you?

 

[00:30:06]

Andy Ott: I think the price they are putting on is so low it doesn’t really effect too much at this point. I think, as time goes on, you know, if they raise it or whatever. But at this point, I don’t see it having much impact on our market.

 

[00:30:21]

Bill Loveless: And where sitting here looking to at 2019. Just a couple of miles from Capitol Hill. What do you anticipate on Capitol Hill so that it might affect your business in the new year?

 

[00:30:35]

Andy Ott: Well, you know, as we look forward certainly, I think this notion of resilience and you know, national security and the concern of you know as our infrastructure protected and it’s gonna be a continuing say bipartisan discussion and certainly, you know, electricity is one major sector as is telecom and banking, petrol and natural gas. So I think all of the infrastructure sector making sure, we are keeping up with the risk and threats and I think the power industry is in the need frankly in some of those areas. So, I think we are gonna continue to see that. I think there will be an ongoing dialogue on the, you know, this issue of, you know, environmental policy, I think you certainly can get, I’ve seen it in time and time again, there is a lot of debate there and we are having to navigate through the various constituencies there. So I think that will continue. And I think the other aspect of this discussion will be focused on what’s the, what’s the division of distributed technologies, of alternative technologies and I think that again is just a tremendous asset to this country.

 

[00:31:49]

Bill Loveless: Yeah and you talk of technology. What do you think will be the big game changers over the next few years?

 

[00:31:54]

Andy Ott: Well, certainly storage has been, the electrification of transportation is also gonna be, you know, quite an evolution. So, and again, I think that’s part of, as we look at policy, this notion of more innovative ways to store electricity whether it would be better batteries or whatever, I think distribute technologies how we essentially have building control systems that are much more smart and how they change the way we use electricity. So all of those combined and I think there is probably some discussion that’s gonna happen at the national and certainly at state level on how does the power grid evolved into those circumstances. Certainly the way we regulate the power grid today, to pay for the wires, the volume based wire charge is probably addressing that issue as long as we do.

 

[00:32:43]

Bill Loveless: You know, we have very different types of markets for electricity across the country. I suppose, it would be, some might say, geez, if we had just one national grid, how much easier it might be to develop it, operate it and active policy and regulation for it but we are very different across the country. Over the long term, does that those differences present much difficulty for the nation as it tries to establish a secure grid take into consideration where power can be generated cheaply, move it, that sort of thing.

 

[00:33:20]

Andy Ott: Yeah. I think, well certainly in the U.S., the power grid has evolved differently in different regions for, you know, for a reason. I mean, there are, obviously having a power grid in the middle of the country is much different than one having along the coast. Having one in a desert is different than the mountains. Sparsely populated areas versus a densely populated area. So, there are good reasons that it developed the way it did and from a point of view, I think having one big national, we tried that before with the national market thing. It didn’t come out very well because there are regional differences that matter and state differences that matter. So, I think where we are, I think we have the most robust and strongest power grid in the world. So, we can get there by accident. So I think we are doing just fine there. I think the real question is as we evolve and have increasing interdependencies between states, you know, how we are gonna, you know, manage that evolution. So, I think, it’s more how we are gonna interact more efficiently between various jurisdictions rather than change the whole debate.

 

[00:34:23]

Bill Loveless: You’re not ready to toss it all out.

 

[00:34:25]

Andy Ott: No. _____ [00:34:26] doing just fine.

 

[00:34:28]

Bill Loveless: Andy Ott, thank you for joining us on the Columbia Energy Exchange.

 

[00:34:31]

Andy Ott: Appreciate being here, thank you very much.

 

[00:34:34]

Bill Loveless: Well, that’s our conversation. I hope, you enjoyed it. For more information on the Columbia Energy Exchange and on the Center on Global Energy Policy, go to our webpage at Energypolicy.columbia.edu or follow us on social media at Columbiauenergy. For the Columbia Energy Exchange, I’m Bill Loveless. We’ll be back again next week with another conversation.