 Often that we have a crowd this size and keep the crowd this size for as long as we have, and so that just sort of speaks to your expertise in the field and the genuine interest in this topic, but also perhaps the attraction of our keynote speaker for today. We are very, very pleased to have Chairman Cheryl LaFleur from the Federal Energy Regulatory Commission here today to provide some remarks. As I said earlier, she was with us for our previous discussion, so she knows what we've been through and the perspectives that we've talked about and will speak to some of her perspectives on some of those issues and her role and her current capacity. Chairman LaFleur joined the commission in 2010 and before that had about 20 years, more than 20 years of experience as a leader in the electric and natural gas industry, working as executive vice president and CEO of the National Grid and previously before that, New England, excuse me, electric systems as chief operating officer, president of the New England Distribution Company and General Counsel. As under her role in FERC, she's taken special care to have priority issues and priority focus on issues like reliability and grid security, regional transmission planning and supporting a clean and diverse power supply. We are very excited to hear about the issues on her plate, but also to extend what is fundamentally a New Englanders conspiracy because both the chairman, Charlie and I are all sort of diehard New Englanders. So that's sort of the pretext for why maybe as Linda pointed out, we've got sort of that New England focus these days, not only in our sporting events but also in our energy topics. So without further ado, the chairman is very graciously offered to provide some comments and then answer some questions. We ask, please, when you pose a question, pose it in the form of a question and do you identify yourself and your affiliation so that we have the benefit of knowing who you are and what perspective you have? Great, so thank you. Please join me in welcoming the chairman. Well, thank you so much, Sarah. What a great group and it's an honor to be here. As I was sitting listening to the luminaries who preceded me, I was getting increasingly daunted at the thought of getting up after I think Charlie said, our chairman Curtis said, we're a think tank, not an answer tank or something like that. After all the questions had been posed, I was increasingly daunted but it was even more daunting to think of going back to work and having to decide any of these things. So I decided it was easier to stay here and talk about them. I won't try to cover the waterfront of everything that's come up. What I thought I would do is talk a bit about the evolution of competitive markets because I really see that as one of the biggest priorities we have right now and as I look over the next several months of some of the cases we have about the competitive markets. And then I will talk about a few key areas where I think there's not just the opportunity but really the necessity for federal state cooperation. As always, my views are my own. I won't talk about pending adjudicated cases but I'll try to take questions on any topic that I can. So the competitive markets, certainly don't consider myself the parent of them like Chair Moeller, but I was kind of in the delivery room in New England at least. So I saw a little bit of how they came together and they're 15 to 20 years old. Really started in the high cost regions of the country where there was quite a lot of customer desire to get at the new technologies that had been unleashed by PERPA and so forth but have now spread where almost two thirds of the citizens in the country are served by a competitive market for at least some part of their electricity service. They were designed very specifically to do certain things. First and foremost to shift generation investment risks from the customer to the shareholder, allow customers to choose suppliers, thereby hoping to introduce new services, new options for customers, operate previously balkanized systems more efficiently over broader geography, reduce regulatory lags so changes in fuel prices would hit the customers more quickly and incent investment we're needed. For the most part, they have done those things they were designed to do superbly I think. But they went into the system with very large reserve margins. In fact, we all remember or some of us remember that was one of the slams on the old system, right? The utilities padded their balance sheets. So we had 30 to 40 and sometimes above reserve margins across the country as we went into the system. And mostly they have the system has reallocated revenues among generation that was built in the old vertically integrated system more effectively brought in resources on the edge and run the system better. Now we're in a different time. We're in a major investment cycle both for generation and transmission seeing a tremendous amount of turnover of the fleet because of natural aging and all the new environmental requirements. So we're asking the markets, we're really putting them through the stress test of really attracting the capital that we need. Secondly, there's a host of environmental rules being introduced at the state level, renewable portfolio standards that are now in place in 29 states. The EPA and the state implementation plans that are coming that we, I'll talk about in a minute that are really putting demands on the markets in terms of how do they work with those various constructs? And people are now almost every day I hear somebody criticize the competitive markets for something they were never designed to do like how do they support fuel diversity? Well, that wasn't a goal. The goal was the cheapest resources to the customers when they need them every five minutes. How do they support renewable portfolio standards? Weren't in place when the markets were designed. How do they get pipelines built? Again, that was just taken for granted. They were not set up to build the pipelines. So there's quite a lot of pressure as we look at the needs of the system now. We've also, Chair Moeller mentioned the production tax credits. We're seeing for a host of reasons downward pressure on energy prices because of primarily the moon and domestic natural gas but also all of the new renewable technologies that have lower variable prices really bringing down the informational measures, revenues of the generators say that 10 times and it's putting a lot of pressure on the markets. So really my highest priority as chairman right now is to really assess the state of our competitive markets and figure out where we need to continue to work on them. We've done the commission has done a lot of work over the last five to 10 years on evolving the markets so new resources such as demand response, variable generation, storage can fairly participate but I think we need to continue that work but have a piece of work really looking at whether the markets are giving the investment signals that all resources need including base load, mid merit, peak generation whether they're getting the investment signals where we need them, whether reliability is all the various increments of reliability are properly valued. For more than two years we've been looking at how the gas and electric markets work together looking at first some of the lower hanging fruit like communications, looking at the scheduling of the markets but the real core of the issue there is that the gas and electric markets attract capital very differently. On the gas side we look to a 10, 15, 20 year firm firm contractual commitment to build a pipeline. Generators get a award at most three years ahead and then get called the day ahead. That's a very different system. And at the tech conference that we had last spring after the polar vortex to look at the winter performance I issued a challenge and we've really talked a lot about how we can, do we need to do anything to price fuel assurance, fuel security into the electric markets so that we can assure that if the growing dependence on natural gas in places like New England are not coming with the security of reliability because of the just in time gas delivery how do we price that reliability we need into the electric markets? And is there a way we can define the core capacity product in a way to help incent either types of generation that have onsite fuel or the investment in just in time fuel for generation that needs it or dual fuel or others. We've seen ISO New England do some very significant work on its capacity definition in their market. PJM as many of you probably know is doing work in its stakeholder process right now really looking at how it defines capacity in response to the winter. These are not easy topics at all, but if we don't I think do the hard work to think about how we address these issues within the markets then they will be addressed outside the markets and we already have a very complex system, but if we start doing a lot of things outside the market and still have a market we'll find after a while that the market is not gonna do what we're asking it to do. That's a little bit of a fast run through capacity markets, but what we heard when we started talking about them last fall is that we can't just look at capacity markets in isolation, 85% of the money comes from energy markets. And so we're doing a rather comprehensive staff project right now looking at some of the key issues around energy and ancillary services markets. We have a staff led workshop next Monday on all day workshop on uplift payments. And we have ones upcoming on mitigation rules, scarcity pricing and out of market operator actions. Really looking at is too much of the revenue going outside the market structures? Should we redefine how the markets work if we expect them to attract investment for reliability that we need? That's gonna be a very big piece of my focus over the next several months because I think it's very timely right now. So far all I've talked about is FERC in the markets and not reflecting the very interesting discussion that we just heard on the fault lines and tensions between federal jurisdiction and state jurisdiction. Almost everything we do at FERC really involves regulating an aspect of a subject where state regulators regulate other aspects of the same thing. Almost all energy issues come down to trade-offs between reliability and security, cost, and the environmental impact of the energy. And the states right now are very actively making those choices for their states where they want their electricity to come from, what choices they're making in terms of renewables and EPA requirements and so forth. But the power as we all know doesn't flow just within a state, but within much larger interstate constructs. So that puts FERC in the position of having to figure out how those state decisions can be reflected in the pricing or how that relates to the pricing of the wholesale power. I think that the Fourth Circuit decision, the Nazarian case that Commissioner Brenner referred to was correctly decided. I guess that's probably not a bombshell news since I'm the chairman of FERC, but I do think that FERC has jurisdiction over the rules for pricing in the wholesale markets. If we don't, we shouldn't even try to regulate wholesale markets. On the other hand, I talked about all the efforts that states are making with renewable portfolio standards and so forth. In the long run, if we don't find a way to have the competitive markets work that states feel they wanna get their power from the competitive markets, they'll just take their ball and go home. As Larry also said, it's voluntary. I mean, states are not forced to be part of a multi-state construct. And if the multi-state constructs don't work for what the state is trying to do, they won't hold. So it's not as simple as just saying we have jurisdiction, that's the end of it. We have to make these markets work in a way that the state resource decisions are somehow getting played in. And that's a pretty complicated enterprise when the state resource decisions are valuing different things than the market is valuing. But that's where I think the work is. I think it's worth doing the work because I think the markets had had a lot of benefits. And I think in some parts of the country, putting Humpty Dumpty back together was almost unfathomably complex. So doing the work to make the markets work for what the states are trying to accomplish, I think will serve us well in the long run. So that's one big area between the states and federal is what are the resource choices and how do the state resource choices work in the competitive markets? Big piece of work for the next several years. The second area that really bears on this is the EPA Clean Power Plan. The Clean Air Act does things by state by state, state implementation plans, and that's how the Clean Power Plan draft that was released last June is set up. The power markets, of course, do not operate state by state. So I think there will be very considerable, potentially considerable implications for the operation of the markets as the states make all their implementation decisions. That's, I don't know why EPA does things, but I noticed that they gave very high praise to regional efforts where states get together and do things regionally. That, of course, meshes quite well with regional power markets. We see that in New England where all of the six states are in Reggie and ISO New England just assumes Reggie allowances in their dispatch stack and it's gone on very well for many years. To the extent that states can do things regionally that will help make this problem easier, but one way or the other, I think we're gonna have to think through how state decisions that are made in order to meet an implementation target play in the markets and that's part of this effort. I also think another big job for FERC and the states is that certainly because of the EPA Clean Power Plan but also because of the things I mentioned at the top of the speech, the changes in resources, the aging infrastructure, we see, I believe we have a tremendous need for investment in infrastructure in the country and infrastructure of almost any type does not get built without federal state cooperation. In transmission, we're starting to see the, I think the fruits of order 1000 and the regional processes to plan transmission coming together. I think FERC has taken an important step that has been affirmed by the courts to require regional planning, regional cost allocation, but the states still control where the transmission gets cited. In some cases, control who can build the transmission, control the policy drivers that sometimes call for the transmission in the first place to meet state renewable standards. So transmission cannot get built at 888 First Street. It requires an effort between the two parts, the two big parts of our government. And I think there's a tendency sometimes, by the way, to say like states and federal as if we're kind of a bilateral negotiation when in fact all the states are in many different places on these things. And so, but we cannot build the infrastructure that we need to keep the lights on without state federal cooperation. The second big piece of infrastructure that I think we'll be increasingly needing is to build out our gas pipeline infrastructure. If we as a country are making a pivot to the use of more natural gas for generation, rather than some of the fuels that are not being replenished in the supply mix, we're gonna need considerably more pipeline infrastructure in some parts of the country to get that done. While the FERC permits the pipelines, state agencies are very involved, states control whether to allow extraction methodologies in their states, and we need in many cases regional buy-in in order to have these projects go forward. And every morning I read my news clips and they're divided into first, the ones that like a FERC commissioner has quoted in. So I read all the dopey things as I said the day before and grown. Then there's usually a big set of articles about the polar vortex and the markets and mopers and DR and capacity markets and so forth. And we need more this and we need more that. And then there's a huge set of articles of everyone who's opposed to everything everywhere. Cases against pipelines, people fighting transmission lines, people fighting hydro. And I think how do I reconcile this first batch of articles with the second batch of articles? And it's gonna require the people who are involved in keeping the lights on both at the state and the federal level to work together to decide, if we're serious about using more gas for generation then we need to get the pipelines built or the storage facilities in order to do so. If not, then we have to build whatever resources we need for the other resources we're gonna need but we have to be kind of clear eyed in what it's going to take. And I think it's gonna take significant collaboration and a real push to do the investment in infrastructure that we need. Similar to what we saw maybe in the 80s when the first nuclear wave was being built, not the first, but after the Arab oil embargo and people were getting off oil and there was a major push to kind of get things built, I almost see us going into that sort of cycle again but with building different things. So that's a little bit of just a scatter shot but as you think about all these things, what resource choices are we gonna make? How are the markets gonna respect the state choices? How can we make that work? How do we adjust that both the markets and the infrastructure for the EPA Clean Power Plan? I think a lot of what we heard today emphasized is that we're doing these things in a very, very complex ecosystem. If you ever try to explain this to people who don't work in energy and you try to explain like what is FERC, what do they even do? What I thought there was one right in Boston or Hartford, what is FERC, what do they do? And you have to try to explain the different things their eyes glaze over. Then there's the power marketing and the municipal and the cooperatives and all the different forms of ownership. It's not a system set up where we can say we as a country are gonna move from this to this and this is how we're gonna do it. We have a very messy ecosystem to work in. I go on the assumption that we probably won't have new federal laws passed, that we have to continue to interpret the ones from 1935 and 2005 and 1992 and all the times it's gone along. And I try to be aware of the jurisdictional lines around FERC. That's something I'm very mindful of, but within those jurisdictional lines I think we have to be willing to make decisions and act even if they're not popular with everyone because this is just the complicated ecosystem we have. We can't be paralyzed by the fact that people don't like things because that's just the system we have. I don't know that we're gonna have the state federal forums that Bob spoke of because of the need for legislation, but I'm very willing to work with NARUK and regional groups and others on some of these issues where cybersecurity, which I haven't talked about is one, but where federal state have to work together. I think that's essential. As I was listening to the kind of closing of the people talking, I was thinking of the old Beatles song, we'll work it out because someone said, and I mean, we will work it out. But how well we work it out depends on what we do. And when you look at the triangle that I talked about with reliability, that's not optional. We are going to keep the lights on. That is just essential. That's what we have to do. There's absolutely no, people will cut us no slack. This is an essential product. So that has to happen. Environmental response, I believe that beginning to address climate change is a responsibility of our generation. I know there's not a national consensus on that, but I believe there's, the laws are pointing in that direction and making environmental progress is on our plate right before us right now. So the third piece of it costs, how economically we do these things will depend on all the work we do. If we make the markets work, how the regulation works, how the state and federal plans work together, whether states in a region work together, because we're going to keep the lights on because that you have to do what you have to do, but how well we do it while meeting environmental aspirations really depends on all this geeky regulatory stuff that we do for a living. So that's what gets me up in the morning. And I think I'm within just about in my half hour. So thank you very much. I know it's 1.30, but I'm happy to take a few questions. Yes, hi. I'm just curious about that. Can you identify yourself, sorry. I'm doing Sarah's job. Identify yourself at the start of the question. Oh, hi, I'm Laurie Anita. I work for the Energy Information Administration on forecasting electricity prices. Yes, Adam and his whole gang do great work for us, yeah. Thank you. So I have a question. You said this was just the start of a huge infrastructure building. And I was just wondering, we just had a huge increase in transmission infrastructure investment. We've had a huge increase in distribution infrastructure investment with the American Recovery and Reinvestment Act. And so a lot of people where we are thinking, well, it's kind of starting to come to an end. So as far as the huge increase, do you see that? Or do you think there's even more? Well, I think I misspoke if I said it's just starting because we've seen increased transmission investment for the last several years. I think that if you look at many of the competitive markets, however, they're seeing needs for generation that they haven't seen really in this level for decades. And I think the level of gas pipeline investment we're seeing, while not unprecedented, is very sustained. So we're not really at the beginning. But I think if we're going to keep the lights on and meet our environmental objectives, it will require more than we have now. Sustained investment. Yes. Mitzi? Thank you for having such a big name tag that I can even read. I bring it with me. Everybody else can. It's renewable. I don't understand why other people don't because they always say. Anyway, I'm Mitzi Wertheim with the Naval Postgraduate School. You gave a terrific talk. Could someone read that on your website? When I was responsible, part of the responsibility of getting the line in Bush's State of the Union, the nation is a problem we're addicted to oil and ran an energy conversation for three and a half years. And one of your predecessors was part of our group. And I'd never heard of FERC. And I think the rest of the country needs to understand how important you are and the complexity of your job. Well, thank you. I'll take that as a request to put more things on the website. Right now, there's a lot of congressional testimony and some TV interviews because those are recorded. And I have more scribbles than type in what I'm looking at. But I think your point is well taken that asking people to read 1,000 FERC cases or even 200 a year to figure out what FERC is doing is quite a tall order. So we need to explain what we're doing. So. Christy? Yeah. I'm sorry. Christy Tezak from Clearview Energy Partners. One of the things that we've been working on internally is looking at net metering and microgrids and the latest fashion on resiliency. And so a lot of the conversation in this room talked about the grid writ large and all the things we can accomplish at the economy of scale. But right now, we seem to have this fashionable conversation about microgrids and distributed generation. And how do you see that working into the conversation going forward this year? Because it definitely is striking us as one of the ways that they're going to make that all affordable is by foregoing all the things that the folks in this room talked about. Well, I don't really think it's an either or. I do expect that as long as I'm around, we will have probably a high voltage grid, a pipeline network. But there's no question that we see a lot of growth of technology at the customer and at the distribution level. People have been talking about this since at least 1980, that combined heat and power in every neighborhood. What's really different now is that the rooftop solar, the photovoltaic has just crossed into such a much of a more affordable price category that it's a very broad based solution that's available. I think that that's a piece of how states and the country are meeting energy needs. It affects from my little fur lens. It affects demand, certainly. It affects the shape of the power. It's going to require a lot more ancillary services and ramping power. One of the reasons I think, I'm looking at Mr. Epsa right behind you, one of the reasons I think that defining FERC jurisdiction over the demand side of the market, at least insofar as the wholesale pricing goes as important is because those, when they're sufficiently widespread and aggregated, do affect what happens on the wholesale level. I think if you really see full out solar penetration as we're starting to see just in buckets here and there. Right now, I think the central station generators get their money, maybe 85% the energy market, 12% or 13% the capacity market where there is one and the rest ancillary services. We might be, as a nation, paying a lot of gas generation to stand by where they can have their money from ancillary services to stand by when the solar load influx, that's all part of if the states are really making these choices to invest in that solar, if that's the way they're going to meet all their targets and their aspirations, it's going to really change how the grid operates. So I do think it has an impact. It's not just big building, but you still need, I think, the central grid to pull it all together. Sorry, I'm not using the mic very well. I don't like to have static. Yes, I think you have a mic on the way. Maybe you can use it better than I'm using this one and not get the blowback. Yeah, Emily from Energy Intelligence and my question specifically to nuclear power plants, because we've seen these two shutdowns announced or happened for economic reasons and we've heard the DOE talk a little bit about working with FERC to address those issues, but it's not clear to me what tools are available to address them and what's on the table, basically, for you all. Well, that's a tough question. I think the effort that I talked about in general terms in the capacity market to ensure that the capacity products are defined in a way that we're really valuing reliability. I mean, if you're talking about on-site fuel, nothing is as fuel secure as a nuclear unit. They're there, they're baseload. So I think what we're seeing is stakeholder processes going on right now to begin to price in reliability value that could have a benefit for some of the challenged baseload. The problem, I think we see, the problem, big picture that I see with the nuclear fleet is there's such a mismatch and I think I heard Joe Lin say this is something I heard her speak, but there's such a mismatch between existing and new. It's something else, if your water heater and your house breaks, then that one goes away, but you just buy a new water heater. If your nuclear power plant closes, you just don't build a new one. The entry costs and all of the challenges of building new nuclear makes the decisions about existing nuclear, puts them in sharp relief. We do see a little bit of nuclear construction, but I don't know anyone who thinks we're seeing replacement of the entire fleet that was put up in an earlier time. So it's important that we value what we have. I think so. Please join me in thanking each other before.