 Thank you for inviting me to come speak in the seminar. This is about as far away as you could get. I think the class before this was CS, like one, introduction to CS. So this is an old guy looking back kind of at the 35 years I've been working kind of on the front lines of the industry, policy side, engineering side, economics side, finance side, and development side. And we really have devoted most of our careers to basically deploying capital to where we think it makes a difference. And initially when I wrote my first draft of my dissertation, John sent it to one of his advisors who was talking about market mechanisms to direct capital and said, you know, what do you think of this? I don't know if you remember this, John. And he didn't think much of it because he was basically busy developing locational marginal pricing at the bulk power system. We know what's happened to locational marginal pricing at the bulk power system is it's largely now become irrelevant in directing any kind of capital. And we're still working on it because we think it's still important, too, as part of the transition. But more and more and more it is, how do we get capital to where it should be? So what I'm going to talk about is what I think is needed and some of the main things that we're working on to try to help facilitate the direction of capital. Just a little bit about who we are and what we do. John mentioned most of it so we can quickly speed through them and also hopefully quickly speed through we still need a grid. So we're not building distributed systems for the unabomber. We are building an integrated grid. It will have lots of things in it and it will have two-way flows and lots of communications. And it will be different than the grid we have now, but we're going to need a grid. So hopefully nobody is. The grid is going away. So once we establish there is going to be a grid, what does it look like? What is the industry around it? And what are the driving forces behind that grid that are going to shape it? And then once we know what the grid needs to look at, like we can then talk about what do people think the people and the stuff and the institutions that can get us as quickly as possible to a grid that looks like that. The thing we've tried to do when I'm down on campus, which is once a year or so, I always go see somebody that I've known for a long time. I was sitting down with Jim Sweeney and Jim said to me, I know Jim gets to go out once in a while and then come back. And I said, as somebody who's on the front lines all the time, we don't get to throw as many rocks all the time, but we do try to stay right squarely in the middle. The middle of developers, state agencies, legislators, consumer advocates, along with environmental advocates, and utilities over there. And if you look at our projects every year, we do about 75 projects a year, and they're equally split among these. That's on purpose. We try to stay kind of squarely in between all of those interests, and we really learn a lot from staying in that middle place. Just quickly, if you looked back at what people were really saying in 2013, 2014, 2015, you saw a lot of stuff written about the grid going away. Grid parity was the big word everybody said. And grid parity meant all the distributed systems were going to grow so fast, so cheap, that we weren't going to need a grid. Now, I wrote about decomposing an electric power grid into time and area specific costs. And size specific costs 35 years ago. I didn't think the grid was going away. I thought it was going to be more integrated. This happened even much faster than I thought, and it is going to be much more integrated in the future. But it's certainly not going away. This is just when I left here, I went to work for EPRI, did a whole bunch of case studies on various what we call local integrated resource plans, which are how to embed solar storage, demand response inside utility systems to get maximum value. And then if you look back at the industry, we have Edison's Pearl Street Station here. And the grid has been the most fantastic example of engineering and economics coming together to create this massive machine that lowered costs, as we got more and more diverse loads over time. And we were able to lower costs and increase usage. What's happened more recently is economies of scope and scale have run out in the bulk power system. So we're basically flat. And the cost of locating big giant power systems has gone way up. Jasko wrote about this in a famous paper, Inflation and the Environmental Concern, so that about $0.50 on every dollar is spent on siting project development costs on that. So it is really hard to develop big giant bulk systems. That doesn't mean the grid is going away, because the marginal cost of the grid is almost nothing. You've got this grid. It's a wonderful, fantastic machine. Marginal cost is really low. We might not be building as much big giant bulk grid in the future, but we're certainly going to use the heck out of the bulk system we already have. And then you saw, and this is an old sun shot number here. And this is rooftop PV. Grid systems are down around $0.04 the kilowatt hour. But rooftop PV is down $0.13, $0.14, $0.15 unsubsidized. And we saw some electric utility all in embedded costs that got up higher than those amounts. This was not grid parity. This does not mean you throw away the grid. This just means it's a rate design problem. Basically, I've got my embedded cost of the entire grid against a rate that somebody sees for rooftop PV, and a lot of people can make a lot of money off of that. Looking forward, when you look at any of these pathways cases or any large decarbonization cases, a pathway through a lot of this is electrification. So we're going to have electrification of transportation, electrification of buildings, electrification of all kinds of different things. The last thing you want to do is throw away the grid and have big amounts of electrification. So to get ready for electrification, you need to begin to think what's going to be served locally, what's going to be served at the bulk, and how do we integrate them together. And then I stole this. The Japanese, as usual, are in front of everybody and not telling anybody. So they have whole cities who are working on, how do we basically take the cars, the utility systems, the power systems, the IT stuff, and stick them all together. And they have a government that can tell a utility what to do, tell the car company what to do, and everybody works together. So it's just a vision of the electrification system, how it might work 10, 20, 30 years from now. And there's lots of things connected to the grid. So I hope everybody will just agree with me that we're going to need a grid. The grid's going to need to be a lot more flexible than it is now. And it might need to be, and this is where we get to fat or skinny, it might need to have not a lot of the same people and other stuff attached to it. But there is a big need for the grid. And as we decarbonized, the utilities have called it plug and play, which means a lot of different things are going to connect to it. Anybody fundamentally disagree with kind of that general direction? It's not going to look like it is now, but we're going to need some kind of grid. It was interesting, a really good friend of mine went to work for Google, and I ride bikes with him every month. And he was running their whole energy practice. And I said to John, what do you think Google's main strategy is on energy? And he said, well, when I got there initially, it was totally disruptive, decentralized, blow apart the utility system. And if you think about the one company that depends on the grid, it is Google. I mean, grid is the grid of all grids, right? And so why it didn't translate that to another industry he didn't really understand. But I think there is some misunderstanding that fundamentally we still need a grid, and it's going to be a big grid. The three things that I think are with us and they're here to stay and the utilities don't understand are these three things. So technology in all kinds of data processing is here. And sensing and data analysis, I mean, you know of all people, that's getting really cheap. And solar is getting really cheap. Wind is getting really cheap. So we have a lot of technology pushing on the grid. The second thing is economics is not driving grid anymore. So all of this analysis that I was trained to do about economics of grid integration is pretty much irrelevant. Most of the stuff that's happening to the grid is driven by policy, right? So in California, the three investor-owned utilities spend about $6 to $7 billion a year on the clean energy plan, all the RPS stuff, all the energy efficiency, all the other battery storage and everything else. In the decarbonization plans, if you look forward, CARB's plans, those have to ramp up to $14 or $15 billion a year. So you've got to ask yourself, are the utilities up to it? Are our institutions up to it? And then this last thing, this is the most disruptive piece of all. And this is the question that all my old-time utility clients would always ask me. And it wasn't in terms of democracy. It was in terms of retail choice. Do you think customers really want choice? And I would say up until three or four years ago, I was kind of halfway in their camp. And I would say, you know, maybe not. Maybe all this choice thing's not real. This democratization of energy is real. And that is, and I heard somebody at a talk two years ago saying, he thought that major decision makers in energy were going to be small towns and cities. And I didn't really understand what he was talking about. But if you think about it in terms of democratization, it's people want to control what they're doing. And that's why this community choice aggregation has been so popular in California. It's because it gives people a vote. And it democratizes the energy choices. That piece is not going away. And that squarely at odds with a big, giant fat utility that makes all the decisions for you. As efficient as that may be, as technology efficient, as economic efficient as all that might be, it's squarely opposed to the democratization of energy. Because just somebody else is making a decision for you. So I think for utilities to evolve, whether they evolve fat or skinny, all three of those things have to be in their plans, whether they're doing it or somebody else is doing it. So you know this story, which is solar PV costs, whether it's rooftop or whether it's grade connected. I've just gotten cheaper and cheaper and cheaper. So this is the technology piece driving on that big fat utility model we talked about. You know this piece too. So storage as it becomes more mainstream, particularly lithium ion, is just cheaper and cheaper and cheaper. It hasn't really gotten super cheap yet. But it's projected to get cheap. So when you get rooftop solar or grade connected solar combined with wind, and you have some kind of storage, puts even more pressure on the big fat utility model. And then if you add democratization to it, now you've got potential jailbreak from the big fat utility that does everything. And then we know customers want to do things. So when you make it cheap, like Nest thermostat or any other kind of automation, then you can have not only generation moving to match load, but you can have end uses moving to match load too. And that's not really super expensive. And a lot of different small companies can participate in that. That adds to the whole democratization of the energy system. So policy, if all of those things, if making it your own, bringing in policy and technology can all come together to be consistent with our long-term overarching policy goals, that's when you get policymakers aligned with technology and with finance people. And it can blow apart a utility system and agree it unless it's responsive to it. In the, we've taken our pathways model and tried to make it digestible to the person who cares about energy choices. And if you look at all of these pathways cases to decarbonization, they have conservation of everything we're doing. They have some form of electrification. They have the R renewable portfolio standards to decarbonize the power system. And they have some decarbonize of the other fuels that we have left over. And those are all things that every one of these small little towns or community choice aggregators or just a group of people are interested in doing any one of these. So the utility doesn't offer you combinations of these things. And it line up with the policy that it puts more pressure on the power system. I don't have to go through these. These are just ways you decarbonize the grid. Most of the people who study energy are interested in all of these know. I will say that in the West, we are totally focused on renewables. But if you think about the northeast of the US, we've been doing a lot of work in New York and Boston. And an old friend of mine who I've known for 30 years, I said, John, what is your decarbonization plan for the eastern seaboard really look like? And he said, hurry up and do gas and then hurry up and get rid of it. Which just doesn't make much sense. And it's really hard to get wind all the way through from the Midwest through Pennsylvania, New Jersey, Maryland and up into the northeast. It's really hard for them to get new gas pipelines and push back on the policy. So we're gonna need multiple sources and multiple pathways and it's not gonna be all renewables all the time. I think there is room for other sources to decarbonize the power grid. And when you put all that together and you put it in a whole bunch of models and you have stakeholder processes, you end up in California with these kind of massive giant renewable plans on the power system. This is California in each year and this is solar utility and customer owned and then there's battery storage. And look at the size of these, these are megawatts. We have a system that is 50,000 megawatts at peak now. We flattened it. Gil, you know we've basically pushed back on the efficiency and totally flattened out the growth but we're gonna end up with 200, 250,000 megawatts of installed capacity. And there's a concept here that we learned only about three or four years ago and it came out of our analysis with this duck curve stuff that the California independent system operator was working on. And for 50, 60, 70 years we've been working on capacity which was the ability to produce energy in real time. There is no shortage of capacity. There's no ancillary service massive shortage of capacity in any of these high renewables cases. We are, you know, John my analogy is we got 40 good guys on the bench who could come in and play at any time. And so I don't worry, I just bring the next guy in. It's next man up. There's tons of people who could provide capacity. In any of that system I do not worry about capacity. In fact, capacity prices and energy prices are totally crushed in here. What do you think the energy or capacity or ancillary services market looks like in any of these things? It's almost nothing. In fact, it's negative because I've got over gen, right? But I still have billions and billions need to be financed in that market. So the question is how does it get done? Who's financing this? The state doing it? Is the utility doing it? You know, who's doing it? And who's serving it? That's why I wrote that paper, you know, fat or skinny. I think as a regulator now you need to decide are the communities doing this? Are the individual customers doing it? Are the utilities which have gotten us this far up this trail doing it? Or is it some other different kind of model? Because the road we're on now does not get up the summit. Doesn't even get close. There's no way that you could put this on the backs of the way the current utilities are structured now off of their balance sheets. And there's no markets that you can think of that come with short run capacity markets or even longer run capacity markets that would give you that either. So to make matters worse, in this case, you know, people, the existential question, if you're a regulator in New York or Hawaii or California, is what you'd really like to do is just stuff all this choice back in the box and tell it to go away, right? Cities you can't play in this, you know, we're gonna go back to our other model where we have this big utilities, they report to the governor, the governor calls up the Public Utilities Commission and then they talk to the utilities and they say, you know, do all these long-term contracts. And then do electrification of buildings too, do contracts for all those and do all the car stuff with that. We're not gonna be able to push that back. Try going to the legislature and trying to take democratization away from cities. You just can't do it. So we're in this kind of, we're on this trail that doesn't get there and utilities are an all-out war with these people now who have choice and feel empowered by it. And we don't know how to take the next step on the policy side. So where the rubber meets the road for a utility where the customer is through its rate making. That was the first job I had coming out of undergrad. Somebody told me make a spreadsheet of PG&E's, all of its costs and make all the rates because the guys they hired right after World War II, they were gonna retire and they were terrified those guys were gonna retire and nobody would know how to do the rate making. So I followed these guys around, made friends with them, they taught me how to do rate making. And basically rate making was you take the embedded cost of the utility, that's what it's spent and you try to put it in all the places that nobody will complain very much. Like kind of tax making here, had nothing to do with contestable markets. No segment of their markets were contestable. So it was all put it where nobody would find it or see it and nobody would complain. And that's the way rate making still exists and for every utility and that's why the rates are all screwed up and they don't reflect this fixed variable world we have. So when you look at Hawaii's, we just finished all the and I did in Gil's class last year, the Hawaii plan for 100% renewables. It's just, it's mind boggling when you look at each island and how much they have to do to meet that plan. But what you look, the first thing you notice is all the costs are fixed and there's just no variable costs anymore in that system. And so we've gone from a world where we had 50% variable to 50% fixed to like 90 or 95% fixed and a little bit of variable, right? And so what you really know in rate making is okay and now if I'm gonna open that market up to choice with democratization and part of it's gonna be contestable, demand response, storage, PV systems on the roof. Well, I better get that pricing right. I better get the variable right at the right time, the right size, the right location. And unless I get it right, what I get is what I would call an economic bypass. I get a whole bunch of rich people who have access to this through net energy metering, exiting the pool, and I get poor people who don't have access to capital stuck, right? It's just exactly like the healthcare analogy. So I can't basically leave the utility like it is. I have to do, I have to convert their rates to fixed variable. You know how much all the solar providers love fixed charges, right? They're totally against all fixed charges because it doesn't allow them to spin the meter backwards on the net energy metering and basically make the big giant returns. But if they're coming down in costs really fast, you can make a deal like I don't know if you saw the deal that was made in New York. You can make a deal between the solar providers and the utility where you say look, here's the deal you got, it's really rich, but we know it's politically popular. Here's a full value tariff which has fixed and variable in the right way. We know, let's just do a glide path between them and let's link those up. And that's gonna basically pave the way for it could be a fatter utility in the long line or a skinnier utility either way, but it's gonna preserve a grid. It's not gonna allow all these people to exit and make a huge amount of money and provide, there'll be a reasonable transition. Utilities who do not back the card up out of the mud and find this pathway really quickly are gonna be in a heap of trouble really fast. You also have to convince the big giant utilities that demand response once they do all this, which could include DGPV and batteries and everything else is a good thing for them. So we talk about the evolution of rate making needs to get to margin neutral rates. That is, if you come or go, they should be indifferent. They're non-participating customers should be indifferent. If you locate in a place that is really valuable, remember Gil, we talked about that, the locational marginal cost of all those things, then you should get paid for that. We've created a whole value of VDER, all the DER attributes that you could put in a locational system. And in New York, they've created this kind of platform and the utilities are trying to stand that platform up now that will pay distribution avoided costs for locational benefits for putting in DER resources. This is a good thing for utilities because it lowers their costs and makes them more competitive. So it's again, a sustainable way that high DER can live with a big grid. So now let's talk about, if we know that those are the three driving forces here, we know that utilities need to kind of unbundle their rates here. What are the things about what this utility might look like and what the industry structure might look like going forward to accommodate those forces? So without going through all of the detail of all this, you have the historical electric utility grid functions over here and there are a whole bunch of them. If you ask any utility in New York, we actually did stickers for all the things they do and I'll show you a little bit, a picture of that. And then over here, this is tomorrow's industry and it's got a whole bunch of things connected to the grid. And there has to be a whole bunch of rules on how these things get connected to the grid and make sure nobody cross subsidizes everybody else and there's a way to make them all go. And then we're gonna reach something if we do this in a rational way where it's affordable and it's reliable. And that can be fatter than you think of and it can be super skinny just wires company. Those sides of those can get to that solution. And if you look at what's going on particularly on the coast, the blue areas are the ones, but particularly why leading this charge is California, Hawaii and New York on the two coasts. And these are, they generally fall into these big proceedings called smart grid. And what they really are doing is they're figuring out if there are two way flows in the grid, how is this really gonna work? So is there a separate distribution company that works on all those two way flows? And what they did in New York is they said if you're gonna have a separate distribution company, you might as well have a distribution operator. And then you peel apart the operator from the owner. We saw that in the bulk power system. We had transmission system operators who gave access to the common carrier and then all kinds of producers could sell into it. And so in New York they're working on a concept called a DSP, a DSP distribution service provider is nothing more than a utility who owns. And then they have, I'll show you a picture of this. They have an operator too underneath them that would operate the grid and allow third party access to the distribution system too. And then these are just the utilities that are kind of leading in these types of activities. And they have all kinds of things going on over here that support the full integration of small scale stuff interconnected to the grid that can provide benefits to the grid. And you see in the literature a big fight between these things, a distribution operator, system operator, an owner and a distribution service provider. It was funny, I know Audrey Zimmerman fairly well from previous work and when she went to run the New York commission, she created this concept of a distribution service provider. And right after she left, I got the job to sit down with the utilities in New York and say, okay, Audrey's written for about two years about a distribution service provider and you guys are right on the front lines of what that is. Do any of you know what she was talking about? Nobody, I mean nobody would get up and say I know what it is and here it is. So we spent about three months working with them on what it really is. And it was different things in upstate New York, it's totally different than in New York City. If there is a distribution operator, it is New York City because it's doing all that stuff already, it's a networked grid, it's super fancy already. Central Hudson, Niagara Mohawk, which is now a national grid, it's pretty far away from a distribution, a DSP and doesn't really see huge amounts of value in doing all that. So you might see ConEd go a little bit faster than the other utilities on this, but you're gonna see them probably leading on the front of peeling apart, what this really is, is remember when we deregulated the bulk power system, the functions in the distribution system, there are many of them, the distribution utilities are doing. Some of them are commercial, some of them are natural monopoly and we're gonna separate them and try to get the distinction clearly out there so you can actually run markets around them. So a big cautionary note for me and why I wrote this paper about fat or skinny is if you are basically an electric utility and you have bundled service rates, so those are half the electric utilities in North America still have bundled service rates. They're not in restructured industries where they pulled apart transmission. And various parts of your market become contestable and you don't unbundle them. You're gonna get all kinds of uneconomic bypass and the classic case where it worked really nicely where we got this right is natural gas. We peeled apart and did natural gas, we have integrated wholesale markets, we have pipelines all over the place and it really worked nicely so there wasn't any capital that was put in the wrong place. Our worst example of all this is railroads. Our railroads had highly regulated bundled rates and then they got airline and trucking competition who picked them apart on various things and it almost became totally unsustainable before those were fixed. So we know that these utilities, regardless of whether they are fat or skinny, are gonna have to peel apart their rate structures. And the hard thing about them is you ask, what was that plant built for? What was that wire built for? And you ask an engineer and it was because there was a customer there. Well, was it energy or was it capacity or was it just that customer? Was it the other one? And they say, you know, all of those things. So they're really, they're joint costs. This is a joint cost allocation problem. And unless there are markets out there that tell you the value, the classic case is, you know, what's the cost of milk and cream, you know, from a cow, you know, they come together. So unless you have a value for milk or a value for cream, you can't price those things effectively. And it's the same thing here. It's really hard to do this. So what we've thought about is ways electric utilities, fat or skinny, can begin to take all the different fundamental things, you know, the things they do at the second level and the things they do at the yearly level and how they can unpeel them into their rates so that they get the right stuff at the right location, at the right size, at the right time. It doesn't run them over, but it helps them. And the way we've thought about this is not in super complex real-time pricing, you know, forms or locational marginal pricing, but really in rates that have what we call multi-part rate. So there's just like telecom, there's an access fee, it's a dollar per, you know, per month for that class. And it's size specific. So you don't have to have all residential customers at the same, you know, 30, 40, $50 a month that can vary size specific. There's another part that's still historical embedded costs and this is the grid access charge. This can be access charge of the transmission system or distribution system. It's also typically size specific, although you can have it like average KWH, which is what they're gonna probably start with in New York for size, which is kind of size specific, but it doesn't require kilowatt, you know, detailed metering potentially. And then this is the fancier piece is once the utility collects its fixed charges, you know, it can pay distribution resources, this full spectrum of value to the generation system, the transmission system and the distribution system. And it can begin to put these out on a transactive platform that people can begin to trade. But it's gotta really, you know, get these in place first. And this was what I thought was so special about the New York deal, which was, okay, we're going to the multi-part tariff, but we're gonna do it in a transitional way, so we're not gonna destroy your market right away. And then, you know, when you begin to think, what's sexy about this? Cause everything, you know, everything's storage is sexy. So the storage guys, particularly in New York or in Hawaii are gonna want to have a market for something. You know, you can begin to think, and these are the kind of fixed costs of the utility system. These are more of the variable costs. Remember those time frames I was looking at. And then these things up here are really, you know, the locational benefits of potential storage. You know, storage is really costly per kilowatt hour, but it's really cost effective deployed in the right way. And as basically we get more and more and more over Gen, it's gonna be able to be used in the bulk system and in the local system to combine. So you can begin to what we call do stacked benefits, which give you a stacked benefit to the bulk system and then a locational marginal price at the top two that's based on deferral rather than congestion. And you can get a really high value that you can deploy a storage device in as well. So back to fat or skinny. And I got the unenviable job of basically in the retail access on bank that was a month and a half ago. I had the three investor owned utilities as, and I was the panel supposed to explain to the legislature what their issues were and the PUC commissioners. And I had four different talks with them and initially they were just basically didn't know what to say about how do we as grid operators really project a value to the state going forward? What is our value to the system? You know, and my recommendation was start with, you know, state energy policy. You know, what is the state energy policy? If you're talking to legislators, talk about what the state energy policy. It's got democratization in it. It's got distributed generation in it. It's got a massive huge carbon lift and they want to have rates that are affordable. So what can you do as the grid operator to make that happen? What was so interesting in Audrey's vision of this is the utility could kind of move their self out of harms away from market forces and all those things and become distribution system operators just like they are transmission system operators and let the market work if it does work. And what we did in New York is we sat down with all the utilities and we said, okay, in this fat version of a distribution service provider if we take all your things that you do today and we make them from existing functions there were not huge amount of blue but evolving functions you see this stuff here is starting to change rapidly as the market is moving and all those forces are coming and new technology is coming. Where do you put it? Do you put it, do you ring fence it and put it in a distribution operator or do you put it with an owner? And went through an exercise of where the utilities were in all these functions. They don't all come out at the same place but they're all thinking about which functions would I ring fence around to be operators versus which do I keep with the fundamental regulated utility. And this is the guts, this is the back in the kitchen of what happens in fat or skinny and there's going to be all kinds of models that evolve here. You can begin to see right away where I went right away with them is how does this look to you? What if we take all those things that are evolving and I even had some more over here and make them into an operator. Is this good or bad for you? And it depends on whether you think you're going to compete in this market or not. My starting point with them is if you're going to compete if you're going to be a battery owner or a DGPB owner this thing actually protects you because you've got now bids and calls and you can win your own bids and calls but these guys are ring fence and they're independent over here so you can actually play in that market. If you're not going to bid and own all of that distributed stuff then you could it's easier to keep it bundled up with your wires over here. And certainly all the data that goes into bid evaluation everything has to go over there. And then just as I'm closing this out think about what I said about kind of moving up the mountain and whether California is ready for this. If you go to this thing right here we're just starting to get the motor warmed up over here on renewables. But utilities are forecasting very rapidly within the next several years they're not going to be serving very much loads. This is an existential problem for the legislature for all the regulators and potentially even the utility if it's still got the big giant lift to do all this stuff and the electrification and the cars but it doesn't have any loads. Who's doing them? The other thing is the Public Utilities Commission says it does not regulate all these entities. The legislature created these entities these cities community choice aggregators who aren't really regulated by the PUC. I mean on purpose the legislature has always been really frustrated that the entities that report directly to the governor's office are not regulated by them. So it was always their frustration that those entities are a little bit out of control because they didn't report to them. The real answer to that is they're reporting to the governor there was that design is on purpose. But what we're gonna need is what we call one of three these three corrections. Either we're gonna need to reinvigorate what we call the state policy path. That is stand up the regulators and say I don't care if your peninsula or your Alameda or your Sonoma or your Marine Clean Energy you're gonna be regulated just like all utilities, right? You gotta do your share of the buildings, cars, all the renewables, efficiency, everything. So imagine going to the legislature with that which is basically I'm gonna take this entity that you don't like after anyway and I'm gonna give them these big giant powers to regulate all these cities that you created this special legislation to get around them in the first place. So it's kind of interesting because I think the PUC default position is this we're gonna try to get back, we're gonna try to basically get this road back on track because it's something we already know. Down here, so people say we have cap and trade, right? So why not just let it rip, right? We got cap and trade, let cap and trade go until the dirty little secret about cap and trade is nobody ever thought cap and trade prices could get really much above 60, 80, $90 a ton. I mean, John, you were on those committees until they would blow it up, right? So we know when we run our pathways cases, those costs per ton are all those marginal cases when we start doing, they're all over 200 bucks. So remember, we don't have coal to gas. We're now renewables, hydro, everything else is clean on clean on clean so that incremental cost of carbon reduction is costly. It's buildings and stuff and it's not the AMERI super cheap stuff. It's pretty expensive now as we're going through there. So nobody thinks this really has legs although we are gonna lean on it more and more. So we're kind of in our office betting on this middle path. We're betting that some deal comes, the utility spent about 120 billion over the last 15 years, you know, six billion or so a year, seven billion a year. They wanna get their money back. The community choice aggregation folks say, okay, if we give you your money back and you give us the bill for that, how do we know you're not gonna be doing a bunch of stupid stuff 10 years from now and sending us another bill and another bill and another bill, right? So even though they probably won't like the idea that there's some state entity like NYSERDA or in Illinois that backs you up, it might be a middle path to get through all this by saying, let's have a state entity. If you don't buy your share of all the things you need to do, that state entity buys it for you and then sends you the bill. And then you get a low cost financing way to do it. Either you develop your own low cost financing way or the state does it based on 100% debt case in off of their balance sheet. Yep, I am done, John, with this. So the wrap up is I've gone through a lot and any questions about any of this? Let's talk about 10 minutes. We should usually start with students. Any student questions? So we'll come back to you. Okay, you got it. So maybe I represent the enemy. I helped found Silicon Valley Clean Energy and sit on the floor. I was the president of the chair. We were made frankly impatient with high rates. We looked at Santa Clara and other municipal utilities charging 30% less than the IOUs. We looked at getting greener faster. Our electricity now is 1% under PG&E across the board and 100% carbon free. So from my perspective, the CPUC regulating monopolies hasn't done as good a job as municipalities. So I don't need the legislature. I don't need the governor and I don't need the CPUC to get carbon free electricity for less. What's wrong with that model? I don't think there's anything wrong with it. I think it's a really good model. I think it meets the three things we said are happening, right? And it makes them happy. So that you guys need to then as a whole group. And what I think is happening is the real people who really want to do this will step forward and carry that. And there'll be some people who put it back in the box. I think there's a whole group of people now and it might be broader than everybody who wants to really move forward with all of that. So if we want to have a meaningful part in the discussion, we're now generating, it looks like our excess over revenue, excess over our cost is about 20%. PG&E would call that profit. We would call that return to shareholders or it could be for rebates to customers or it could be for programs to help with fuel switching, transportation. What do you think we ought to be considering? I think all of those, all the electrification, all the building stuff, you know, the utilities and the, and carb have not made big grounds on. And we think there are big opportunities for folks like you to basically be more connected with your businesses and your customers and really advance the ball on those. And I think you could work both with the utilities and with the PUC and getting funding also for programs like that. Cause quite frankly, they're behind in those areas. Yeah, I think they're behind in most areas. Thank you. Very interesting, this whole thing. Being involved with the PUC, legal proceedings and so forth. This has, has missed some fundamental realities. And it's not your fault, it's gone. There's no such thing as renewable energy. If you remember your high school science class. And solar is not getting cheaper. If you go to Puerto Rico, they have to replace almost all their solar panels. If you go there, they have to replace almost all their wind generators. If you watch the video of a helicopter flying over Puerto Rico and filling the destruction. That makes solar extremely expensive because not only have to replace it because of one storm, which happens a year or a few years, but you have to do something while the people are out, while hospitals are out now. Like your cars do no good on Puerto Rico, under blood circumstances. They'll do no good in Hawaii under certain circumstances. So this needs some common sense. And unfortunately, the hoopla of our renewals is misleading so many people. Our peninsula of clean energy, for instance, could not figure out how to audit their sources to be sure they're actually carbon tree. They're not, they don't know. And in fact, the recent bill that was unfortunately not passed by the legislature before they were out, which was trying to break up the iso-structuring California, you probably know, which can allow coal to convert your house away energy in via Pacific Corp through the North. California birds have a lot of coal. LA has a 1.9 gigawatt coal plant in Delta, Utah with a line directly down. So the legislature made a big mistake for the CCAs where they did. You brought up the fact they're not regulated. Yes, I was at the board meeting of Peninsula Clean Energy where the chairman of board had attended a CPC meeting and was explaining how careful he had to be not to say certain things so that the CPC wouldn't get the idea that they should be regulated. California is absolutely crazy on energy. It is totally in the wrong direction. If you wanna actually double your clean energy in the California, it's very simple. You keep the elbow hanging running and you fix the steam generators at 703 and all of a sudden, that's 40% of California's clean energy. I think this whole thing, as we looked at it, with a much more adult, much more scientific, much more engineering and honesty position than with all this renewables through fraud which is gonna cost a lot of money and which people do not realize the pollution created. When those things are built, deployed, redeployed, redeployed, redeployed. I think we have a response. Not a response. I've just had a question. Sorry. I'm serious. I wasn't hearing one. But you mentioned that the ancillary services markets will go into very low prices. Yeah. And what causes that when the duct curve looks like it would be getting very significant? Yeah, I mean, basically, there's an energy shortage, right? So we always think about shortages in terms of capacity and so we need to pay people for capacity. But what we really have is we're managing energy imbalances, right? And when you get a whole bunch of renewable energy on the system, you're managing imbalanced energy. And when you look at the Hawaii cases, this becomes really clear. Is what you're really worried about in Hawaii, solar is pretty easy to manage because the overgen pattern is fairly consistent. What you're really worried about is the week or two week long period where you don't have any wind. And the way we solve that is we said, look, let's just basically keep all the old plants around. We need them, right? So don't mothball them. Don't shut them down. You can convert them into biofuels. They can run. Even if biofuels are really expensive, it doesn't really matter. Running them for one week or two weeks a year, you can integrate all the wind and the solar. You're going to put some shorter duration storage in there. But you can keep all the plants and the existing system in there as well. Same answer applies to the California system. Bird runs in Kineville. We're building a startup around the stupid generation I really like the key nuggets you offered about pricing and policy for those slow-moving elephants. I'm pretty sure that most of us know those later questions. And can we tie in the later question since disruption theory together with the challenge that we have to get more carbon-free electrons into the ground? Yeah, my view is the renewable things, not the problem. It's the buildings, really, and it's the cars. If you look at what California has done, it's spent a bunch of monies on renewables that got cheap. And yes, we helped drive them down. The Germans helped drive them down, et cetera. But we really haven't done anything on buildings. And yes, Amory helped us. Yes, Title 24 is better than everybody else has. We don't have that whole massive ESCO market guild that we all talked about 30 years ago. It's gone nowhere. And all the AMI data and everything else Rom works on to try to free all that and provide signals. It hasn't stood up anybody on the side to really do deep energy efficiency. And the car issue is still a question for me. So I don't know who's going to build the infrastructure for the cars. And we're doing a bunch of cases where we're trying to actually make the utility step forward and do the make-readies for all the high voltage charging downtown, and electrification of transportation downtown, et cetera. When you look at Germany, 2012 was in Berlin. Better places were still around. Germany, as the leading country, was poo-pooing on electric vehicles in 2012. What has happened now? Really, today is a conference on electric vehicle infrastructure in Germany today. Five years of big change. Now, what triggered that change? But how do you get the mass behind it? All this disruption is making something that's a commodity low price available to the masses in a way that the big incumbents say, oh, this is too small. We're not going to care, so we can build the stamina behind it on a very large scale. What blockchain does now, what becomes a very big deal? How can we translate that to energy? I'm really sick and tired of the US. I'm actually emptying the market in India. That's why I forget all this. Gee, go there with a little bit of history. I'm sure you want the last word. Thank you. Sure, thanks. I just wanted to make a note about how the cap and trade market is expected to get to prices that the public probably will not support. And I'm wondering what your take is on what the state should do given that assumption that hopefully avoids totally undermining the industry's faith in the policy support by the legislature. Yeah, that's a really good question. So I don't know if you guys were following the legislative session this last time. I guess the message from me is don't ever bet against Jerry Brown. Do you remember two years ago when he got smoked by the oil companies and they were advertising that Jerry Brown's going to take away your van and all that other stuff? And he said, this is only round one. And I don't know if you saw what happened, the sleeper bill that went through that he was going to push through basically allows carb of all places to do all the point source regulation plans for basically all the industry that's left in California and what's left, refineries. So yes, refineries are going to be regulated with carbon. The deal he made is carbon is global at the state level. We're going to track all that. But all your points are submissions. And we've been tracking all those. They're all the refineries. So basically, that's the trend down on the refinery thing is going to be real now. And if they don't invest in the alternative future, they're not going to be in California anymore. Great, with that, we're kind of over time with a done a lot of discussion. Thanks. Thanks again. Thank you.