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Energy Gang
Is the competitive power market model broken? Why changing the rules around generation could be an answer to rising electricity prices.
01:08:40
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- [00:00]
A
Why would you ever want to take any tool out of your toolbox when you're facing a Crisis?
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B
Somewhere between 3 to 6 million Americans have their electricity shut off a year because they can't afford their bill.
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A
We need to let the utilities once again own generation.
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C
Welcome to today's show brought to you by Engie. Your business has enough challenges. Energy shouldn't be one of them. That's why Engie builds tailored energy solutions around real business needs to support growth, strengthen predictability, and move businesses. Because real power comes from shared expertise and relationships that outlast the paperwork. Learn more@ngresources.com. Hello and welcome to the Energy Gang, a discussion show from Wood Mackenzie about the fast changing world of energy. I'm Ed Crookes, and on this show we're going to be talking about US Electricity markets, why they've gone wrong and what perhaps could be done to fix them. To do that, I'm joined by Amy Myers Jaffe. Amy is the director of the Global Global Energy Climate and Sustainability Lab at New York University. Hi, Amy. How are you?
- [01:08]
B
I'm good, Ed. The heat wave is behind us, so I'm relaxed and, you know, cool.
- [01:14]
C
Yeah, great relief, isn't it? It's certainly much better now. And to talk about this subject then, of power markets in the US it's also a great pleasure to welcome to the show for the first time Karim Kazami. Karim is the executive vice president for transmission at Development at the Exelon Corporation, which is one of the largest US Utility groups. Hello, Karim. Welcome to the show.
- [01:35]
A
Well, good morning, Ed. Thank you. Thank you, Amy, for having me on this show. Great to be here.
- [01:40]
C
Thanks very much for joining us. Looking forward to our conversation. Very much so. As I say, we don't want to talk about power markets on the show. We'll come on to that subject in just a moment. First of all, though, whenever we have someone new on the show, we always like to talk to them a bit about their careers in energy, how they got to the roles they now hold, and what was that really got them first interested in the industry. So what's your story, Karim? What got you into energy and how did you get to that job you now have at Exelon?
- [02:08]
A
Sure. Well, thank you, Ed. So I have been in the energy industry for just over 20 years now, entirely with the Exelon fleet of companies. Prior to that, I was an investment banker in New York City covering a different sector in terms of what got me into the energy sector, really relocating back home to Baltimore, Maryland, where I joined what was Constellation Energy at that time before they were acquired by Exxon Corporation? Throughout my career I've held a host of a number of different roles from corporate strategy to financial, strategic, operational. I've had the ability to prior to this role, most recently was the CEO of one of our local utilities in the Baltimore area, BG&E. And I did held that position for about six years. So have really had a fortunate career where I've been able to span a lot of different areas and really see the energy markets evolve and change over those 20 years. And we see that change just continuing going forward as we look forward to the future.
- [03:10]
C
Yeah, absolutely. And some of those changes we're going to be discussing on this show. Quite interesting though to hear your story. So that was a mid career shift for you into energy. What was that like?
- [03:21]
A
Yeah, it was a little bit of an adjustment, but I have been covering insurance companies and banks. So I went from one regulated market to another regulated market. So in some ways similar. For me though, it was great because again, it's exciting to work in the energy sector because this is a sector where literally everyone depends on the product that you deliver. And so when you think about what we are powering, you know, we are empowering every business, we are empowering every life, you know, in terms of what they do each and every day. And so when you think about that and the tremendous responsibility that we take on to make sure that our customers, our communities, our states that have the power that they need each and every day, it is really something to be very proud of and very exciting as well.
- [04:08]
B
So Karim, it's become a much more political field in the last couple of months or a year or two. Has that changed how you have to analyze the business? How does that feel? As an energy expert, I would say
- [04:23]
A
it doesn't change how we interact because I think from our, for our standpoint, always, it's always putting the customer first and leading with transparency. What I would say maybe has changed is the number of people that we are now reaching out to to try to have, you know, detailed conversations to really help, to educate. So, you know, there's a lot of issues facing our industry today and these are very complex issues. And when you think about the stakeholders, whether it's community leaders, whether it's residential customers, commercial customers, elected officials, these are people who aren't living and breathing the energy sector each and every day. So making sure we can try to help explain to them what is happening, what needs to happen and what the ramifications are. If we don't take action and is just increasingly important. And doing that day in, day out is something that we have done and will continue to do.
- [05:15]
C
Yeah, I think that's a really important point. That sheer complexity and diversity of the stakeholders that you have to deal with, all those different interests and responsibilities that people have. I think it's a really important part of the story and a big part of the explanation for why fixing some of these problems in these markets is so difficult. But as I say, come on. And we'll discuss that more in a moment.
- [05:40]
A
As I say, another thing, Ed also is just the forums where you can discuss this. So, you know, this podcast is an excellent example where we have an opportunity to reach a number of people who listen to podcasts. You know, when you think about social media and the way people get their news and information, it is so much different than it was, say, 20 years ago where you had a few local news stations on TV and radio and maybe print ads, print media. Now you have so many different ways to reach customers, and it's important to use all of them because everyone gets their news different in different ways.
- [06:12]
C
Yeah, great point. And actually, I mean, I think there can be definite benefits to that. On a show like this one, we can actually get into the issues and discuss them a bit and look at a whole range of different perspectives. I always think I had a colleague who used to say, he was an energy expert colleague of mine, used to work at Wood Mackenzie, would say, if I appear on the TV news, you know, something's gone wrong. You know that. So some of that traditional media coverage, which only focuses on the crisis and the problem and the times when people are angry, actually, that very much has its limitations. And so hopefully conversation like this, what we're having now, can do a bit more to kind of shed light on the. The breadth of an issue and to explore some of those complexities and nuances that I say, I think are so important.
- [07:02]
A
Yeah. And I would say it's also nice that we have time. So these are complex issues that it's hard to address in a 30, 60 second blurb. We can have time to kind of dive a little deeper and have a real discussion. So I'm looking forward to it.
- [07:14]
C
Yeah.
- [07:15]
B
So, Karim, you know, one of the issues is, you know, where's your op? Where does Exelon operate as opposed to other parts of the country? Because one of the complexities is every part of the country has these sort of different opportunities and barriers.
- [07:29]
A
So Exelon operates in a number of different States all within the PJM region. So we operate in illinois. We operate D.C. maryland, Delaware, New Jersey and Pennsylvania. So when you think about what is facing our industry, when you think about the load growth, when you think about some of the financial and affordability pressures, the states that we operate in are center in all of those. So we really have a front row seat and a responsibility to try to address those issues and work with our customers and communities to really try to find ways that our customers can pay their bills every month and still receive the important service that we deliver each and every day.
- [08:09]
C
Yeah, absolutely. Because I started off at the beginning of the show talking about power markets in general. As you say, what we're really going to be focusing on here is pjm. Pgm, for people who aren't familiar, is largest power market in the United States. It covers states in the north and east of the US Stretches from Illinois to North Carolina, from New Jersey to Tennessee. Very interesting for a lot of reasons and we've covered it quite a bit on this show in the past few months. As I say, one reason is just so big. It is the largest power market in the US it also includes some of the hottest locations for new data center construction. So it's very relevant to that whole debate, debate about load growth. Virginia's in pgm, which is the absolute heart of the data center industry, data center alley and so on in Northern Virginia. Also big emerging markets for data centers like Pennsylvania and Illinois. And also PGM I think is very interesting because it's been one of the flagships for competitive markets and it's been a market that since the 1990s has divided up ownership of generation from ownership of the grid, the wireless transmission and distribution. And I know, Karim, that's an issue that you are keenly interested in and certainly one of the things we're going to be talking about, maybe just a kind of level set for that discussion about pgm. Careem, could you tell us a little bit about how Exelon relates to the broader PGM market? As you say, then you operate a number of these different utilities working in the PJM market. What is the actual relationship in business terms between those utilities and the market and the overall grid?
- [10:01]
A
So when we talk about energy and when customers receive their energy, there's really three phases of the energy sector. There's the generation, there's the transmission, and then there's the distribution. So think about the generation portion is where the power is created. The electrons are created from power plants. Then there are transmission lines that take those Electrons and move them to local regions and then the distribution centers where basically they are then taken to the homes or the businesses. PJM operates and oversees the transmission sector for 13 states, as you mentioned earlier, Ed. So basically they are overseeing to ensure that this grid, which is one connected grid, all operates and is ensuring that that there is reliability there. Exelon, we will own the transmission lines in our regions and then we own the distribution portion to get the power to the home. So if you think about it, Exelon is responsible from the generation all the way to the home or the business of delivering the power. We don't produce the power, but we will deliver the power PJM oversees to ensure that this grid, which is really connected within 13 states, all operates in a safe, efficient and reliable manner.
- [11:14]
B
So Karim, just again, for the listeners who aren't deep into the weeds of electricity in your service areas, who's owning the generation and is that a structural problem or is that something that's part of what's not going smoothly? Give us kind of your view.
- [11:33]
A
Yeah. So in 2000, a number of states decided to deregulate. The idea was prior to that the utilities owned the generation, but they decided to deregulate to introduce competition. The thinking there was if we have more people generating these commodity type products like electrons, then the price should come down. So you have a host of different companies, whether it's a Constellation, a Vistra, an nrg, a number of companies that own generation plants. What they will do is every year or so they will bid into an auction where the utilities say, I need this much power for my customers. They will bid into an auction with the price that they will sell it at and then the utilities will select enough. So basically they will rank them by price and take the cheapest first and they'll move their way up until they have enough power secured to be able to serve their customers. So to date, basically those are the companies that own generation and the utilities deliver it. Think of the utilities as doordash. We don't create the burrito or whatever you're having delivered, but we will deliver it to you and some other company. Chipotle is making the burrito today and
- [12:40]
C
there seems to be a lot of concern, doesn't there, about how PJM is functioning Again to that point about when the electricity company gets on the morning news, that's not a great sign. When you have the Governors of all 13 states in PGM going to the White House for a crisis meeting about the market and looking for solutions for how to fix it that doesn't seem like a great sign either. And that was what happened with PJM in January. So it seems there are some very real concerns. There was some strong criticism also from Laura Sweat, the chairman of ferc, the Federal Energy Regulatory Commission, who talked about PJM being too big to function or raise the question of whether it was possibly too big to function. So, I mean, what's your sense of it then, as you see it? Karim, what are the problems with PJM right now?
- [13:34]
A
Sure. So I think, Ed, that's a good question. It's one that we get asked a lot. And we get asked another way, which is, is PJM working? And the answer is PJM provides a critical service, which is to maintain oversight of this Interstate 13 state regional grid. So there has to be someone overseeing to ensure that this grid is functioning in a safe, efficient and reliable manner. That's the function. That is the primary function of pjm. What has not happened until recently is we have never seen this level of load growth in our territories. So when you think about the load growth, and oftentimes people will talk instantly about data centers, but there's a lot of other things that are happening where things are more electrifying and more electricity is being needed to run different things that we use each and every day. The amount of demand is going up at a pace that we have never seen in the history of our industry. And so what that is causing is a serious demand and supply imbalance. In other words, the demand is far outpacing the amount of supply of energy that we have. And then it really becomes an issue of simple economics. And that's what's driving the primary driver of this affordability crisis that we have, which is that demand is far outpacing supply, and because of that, prices are going up. So when you talk about PJM, the primary function of PJM, to operate and oversee this 13 state regional grid, they are doing that. They are functioning there. Amy, you mentioned the hot days that we had last week. The grid held up. That's the function that they do. The bigger issue that we're facing in our states and really across the country is this affordability crisis that's being driven by a lack of supply.
- [15:23]
B
And Karim, how does that sort of manifest itself in terms of, you know, we're looking for a market signal that companies should be generation, companies should be expanding capacity, and then we're looking for how to fairly allocate the cost of the extra transmission that's going to require. How is that shaking down in pjm and why is that different, say, from other parts of the country?
- [15:46]
A
Sure. So one of the things that in the PJM states, they have what's called a capacity market. And what that is is it's an annual auction where basically there's a price signal that is set. So basically, generation companies get paid a certain price to ensure that their power plants are available and will be able to function when necessary. That price moves from year to year. And the reason for putting that in is it's supposed to move with demand and supply. In other words, if we need more supply, the price goes up. If we have too much supply, then the price goes down. And since deregulation over the last 25 years or so, that has functioned okay, that has worked well. But that's again, because we've never seen this level of demand increase. We are now getting to a point where the amount of demand that we are looking at, and just to give you a sense, we are seeing and expecting demand to increase by 25% over the next four years. So think about that 25% more demand in just four years, where typically our industry has seen either zero, maybe half a percent growth over year over year, a lot of times decreasing because of energy efficiency programs. So now we're seeing this massive amount of load growth and this capacity auction. The prices that are coming in are incredibly high. So in the last auction last week, what happened is, and say, let's say in our ComEd, in our Chicago area utility, the prices, had there been no caps, would have been $775amegawatt day. Back to what Amy just said earlier, basically a few years ago, it was $28amegawatt day. So you can see this incredible increase. Now, what our 13 states, the governors of each of those states did was they went to PJM and said, our customers cannot afford this level of increases, and this is a price shock. So they actually capped it. And so it's capped at $325amegawatt day, still a very significant increase from what we saw even two or three years ago, but not at the same level. So what does that mean? So now basically we have a scenario where the price signal to try to incent new generation isn't being made. Customers are paying a very large rate, not getting what they need, and we still are faced with this affordability crisis. You know, when you think about the past two years alone, in the past two years in PJM, customers have paid $32 billion for this capacity pricing, and they've gotten 1.2 gigawatts of less power total. So think about that. Dynamic customers are paying more and they're getting less. That is not a recipe for success. And so we need to look at this and say, how do, how do we get more generation to be built in our region? Because that's ultimately going to be what solves this affordability crisis that we are in.
- [18:44]
B
Well, and also getting less means there's. It's great that, you know, everybody worked well during the heat wave, but less means more chances of disruption. And so you're gonna have worse service and a higher price.
- [18:58]
A
Absolutely. I will tell you, you have the heat wave. But I'll go back to in January when we had that really cold snap, when we had Fern when it was going through, it was really, really cold. In Maryland, for example, at the Exelon utilities, we were one line going down away from having to cut off 400,000 customers because of the load on the system. So you're finding yourselves even when you can get through a heat wave like we did last week. That's great from an operational standpoint and a lot of people working really, really hard to make sure that happens. But that level of cushion, that level of one more thing going wrong, could all of a sudden lead to a lot of customers losing power. And that's ultimately what us as the utilities and pjm, that is what we're trying to avoid, which is why we are very adamant on we need more supply to be able to not really be at that razor's edge of making sure that we can provide the reliability and the service to our customers.
- [19:57]
C
Right, exactly. Because we were talking earlier about the problem as mainly being one of affordability, but actually it's both. Right. It's affordability and reliability. The two are closely connected. I mean, the way I always think about it in very basic economics terms, is that if you put a cap on a price in a market, then you don't get enough supply into that market. That's a basic economic result.
- [20:22]
A
You're absolutely right. Eds take the free markets, you put caps on it, it doesn't work anymore. But let me take another step back because again, I think the governors did what they had to do to ensure from an affordability standpoint. Here's the other issue. Even if it was uncapped, I'm not sure it would have sent the right price signal to generators to build new generation. And here's why. This price Signal is for one year, you're talking about building a 20 or 30 year or longer asset. And so they would say, hey, I need more certainty of what I'm going to get paid. I don't know what the next year is going to provide. So how do I get comfortable that I can make this capital outlay and build these assets that are very, very expensive? You're talking billions of dollars and I don't know what I'm going to get paid. So even if it was uncapped, even if that 775 had cleared, that still would not been, in my opinion, enough to see generators build any meaningful generation
- [21:19]
B
in our region, which is why people are talking about the whole system needing to be redesigned. I don't know where, Karim, your opinion falls on that.
- [21:29]
A
I do. I agree, Amy. So, I mean, again, I think the, the capacity market was set up back in a day where we didn't see what we're seeing today. And so taking a new look, a fresh look at this and saying, what is this designed to do? And it's designed to ensure that the generation that exists today stays online and that new generation gets built when it needs to be built. Clearly it's not sending that right signal because nothing's getting built. And so we need to take a hard look about what has to change to be able to ensure that this construct does what it's supposed to do and does do what it did years ago in lower load growth scenarios. We're just in a new environment and no different than any other sector or anything else. The industry changes. We need to change with it and to make sure that we continue to deliver what we need to deliver to our customers and our communities.
- [22:20]
C
Yeah, absolutely. And this really goes to the heart of what we were talking about earlier in terms of the complexity of the issue, in terms of the number of different stakeholders involved and so on. This is absolutely classic example of that. So, I mean, I know there are solutions that have been proposed though, right. As I was saying, those governors went to the White House back in January and there was a plan that came out from that and that seemed to be in particular focused on this, around this idea of getting the data center developers and operators to pay for the cost of new capacity that was going to be built to support those new data centers. Interested in your thoughts about that idea and whether that really has legs and can be sort of operationalized? It always seems to me to be one of those things that is good to talk about in principle, and everyone agrees on it in principle, but it's actually pretty difficult to make it work in practice. And people, I think, have made it work Some places, at some times. But it's not as easy as that simple slogan might make it sound. So that's one thing that's going on. And then there's also this, the reliability backstop auction, which I know is being much talked about in pgm. There's been decisions taken on it recently to move that plan forward. And that's going to be held in September. And that's meant to be a whole new process for bringing new capacity onto the system. And the idea is that this capacity will be a backstop. It will protect consumers, make sure the lights stay on when the grid is under strain. And that seems to be at the moment the sort of the key idea that is making progress in terms of tackling some of these issues on pjm. What do you think about those two ideas? Sorry, that was a very long winded question. But as I say, two thoughts there. Making the data centers pay and then also the backstop auction.
- [24:30]
B
Before you answer that, I'm going to make it a little more complicated because there's the issue of the data centers, which is, you know, can we like make them pay for what they use, the new stuff they're going to use? But then there's this problem, you know, not necessarily Exelon, but across PJM and some other domains where utilities weren't under pressure to upgrade equipment or to even repair some older equipment because load wasn't growing. And so people deferred sort of routine upgrades. And now of course to make those upgrades would require a rate increase to cover it. And that's very politically unpopular. So I think whatever we do in either rate design or market design has to reflect not only just the fact that there's a bunch of data centers that want to be connected, but also this problem. I mean, in some places the underground switchgear was built in like 1910, right? So how do we deal with that part too? I'd like you kind of to make it more difficult for you.
- [25:39]
A
No, no, no. The good news is there's so much there I could probably say anything and I probably address some of it at least. So a lot of questions there, which is great. But let me just start by just taking the highest level and just state the obvious. It is clear that AI and these data centers are going to change the world. Our responsibility is to make sure that, that it doesn't unnecessarily change our customers cost or the level of reliability that they need and require and expect. And so when we look at that, you know, you both bring up a lot of good points. These data centers are coming on. And, you know, it's interesting. Five years ago, 20 megawatts was large load. Now we're talking about one customer being a gigawatt, which is like a small city, and they're kind of asking to be interconnected within five, six years. So we are seeing tremendous growth, as I mentioned earlier. To your point, Amy? Yes, the system, the grid needs to be upgraded to be able to handle this level of growth. Sometimes it's because we haven't needed to upgrade it in the past. We didn't see the low growth, and in some cases, just the amount of capacity needs to be increased. Our goal is to make sure, and we 100% agree with the concept of the data centers should be paying their fair share and be paying for their costs. And so one of the things that we've done at Exelon is we've put in place what's called a transmission security agreement. And so the idea behind this is if you are a data center, a large load customer, and you come to us and say, I want to add a gigawatt of load to your system. I have a customer. I want to move forward. We will study that in a cluster. So we take a group of them and study them together and we'll say, okay, here's how much your upgrades are going to cost you now on the hook. And what that means is, and they have 30 days to agree and they sign or they decide not to. What that means is that for the next 10 years, that amount of cost that we put into the grid that we would normally be charging customers, they are on the hook for it. Now, ideally, their customer comes in and it's all good. The customer pays it like they normally would. But if that customer doesn't come to fruition and. Or if, let's say they said they need a gigawatt and they only use 600 megawatts, what we don't want to have happen is those costs get socialized and spread to other customers. In other words, we want to make sure that other customers are not paying their bill for them. So this transmission security agreement ensures that they are going to commit that they will be paying this and making sure that other customers do not have have to pay this in the future if something changes. To date, we've had 15 approved transmission security agreements. So in other words, this is where we've given them and they've signed it and agreed. This has put over $1 billion worth of customer protections in place. Had we not had these, if Something had changed, that could be an additional billion dollars of cost that customers would have had to otherwise pay. So we think this is an incredibly important structure that's necessary to make sure that our customers stay protected. And then add to your comment about this, the backstop provision or other provisions. We are very much in favor of data centers bringing their own generation as they connect. That doesn't solve the affordability crisis that we're in today. It helps us tread water. So basically, you're going to add load, you're going to add generation. We're still in the same spot. That's important. But we're saying need to take a step even further. We need more generation to be built. So yes, let's not make sure. Let's make sure that we have at least enough generation to match the new load coming in. But we need more generation to drive these prices down, to help deal with this affordability crisis that's facing our customers today.
- [29:24]
C
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- [30:07]
B
so Kareem, I have a question about that because you raise a really interesting point in the way you describe it. If I'm going to put my own natural gas plant near my facility off grid, or I'm going to add batteries or whatever it is in solar, whatever it is that a center might do, do you get a commitment from them that they're going to pay the upgrading costs for when they connect someday to the grid?
- [30:30]
A
Yes.
- [30:31]
B
Is that how this how the agreements work?
- [30:33]
A
It does. And so basically we will tell them when we can upgrade, when we can interconnect them to the grid. I will tell you, having talked to a number of these customers, they all want to be grid customers. So one of the challenges for them is if you were to go off grid, if you were to have just one source of power, what happens when that equipment fails? What happens when you have to. If you're a nuclear plant, there's A big push about two years ago that every nuclear plant was going to get paired with a data center and be off grid. Well, these Nuclear plants every 18 months go down for 20 or 30 days for refueling. Where are they getting their power from? So they have to be a grid customer. And because they're going to interconnect to the grid, they are going to pay their fair share for these upgrades. And data centers, when you talk to them, they're for this, that their primary goal is to ensure they have the reliability and interconnect as quickly as possible. So I have not, at least to the ones I've talked to, I've not heard anyone arguing that they don't want to pay their fair share. They're willing to do that, which is why these transmission security agreements, some of these larger hyperscalers, they've actually taken this to other states and said this is a good model. Because the other thing this does is it weeds out the purely speculative developers. So we have in some cases customers that were developers that were building warehouses five years ago. Now they want to build a data center because they're similar. Well, these are very speculative. These are the ones that may come to fruition, may not. When you have them sign this 10 year agreement that they're going to be responsible for delivering, for paying for the upgrades, that gets real very quickly for them. And if they're not going to move forward, they don't.
- [32:09]
B
Are you taking a deposit? I'm hoping you're taking some giant deposits.
- [32:13]
A
We do take the deposit. That what I mentioned is we study this to understand what the cost costs are. Their deposit covers all the study costs. So again, none of our customers are paying for that. So we have study costs covered and then they have 30 days to sign this and then they're on the hook for 10 years. Or if they choose, you know, I don't have a customer or I'm not moving forward, they can choose to drop out. But either way that gives us a real good indication of what load is truly coming and to make sure we can plan our grid for that.
- [32:40]
B
Now, now with the actual, you know, you're talking about when there's like a developer building a data center for multiple customers. I mean, what about when it's just, you know, Microsoft or Google or Amazon, do they also sign these transmission security arrangements?
- [32:55]
A
So anyone. So the developers might be working for them. So ultimately yes, the customer, whoever ends up saying they're going to take the service, they are signing these agreements.
- [33:04]
B
Okay, so now I have the mean question which is, okay, that sounds like that's going to take care of this main transmission line and the little distribution line to the data center. But what about all the distribution costs that need to be upgraded in general? And then I have like a technical question that shows my lack of knowledge. So if I'm just doing this data center and I'm connecting it to the transmission line, that doesn't affect the distribution costs for all the different residences and other businesses in the region that has to be met some other way. Can you help explain, explain that to us a little bit?
- [33:41]
A
Sure. So when we look at our cost, obviously we look at the grid as a whole. And so what I would tell you is we are looking at ways to ensure that our grid can serve our customers. So if you're a data center and you're interconnecting, they're obviously connecting to the transmission system. So really the transmission system is what needs to be upgraded. So that is covered there by that transmission security agreement. On the distribution side, we have another process where we'll go to our local regulators and we will talk about what are the needs to ensure that we provide a safe, reliable and resilient system. And so basically that's what we go through and we talk about each and every day. What's interesting is our customers get a bill and they get a bill from the local utility company. So let's say in Maryland they'll get a bill from Baltimore Gas and Electricity. That bill, they'll see it and they'll see the reflection of those costs that we've had to say we need to incur to be able to provide safe service, safe and reliable service. But 25%, roughly of that bill is our services. The other 75% is the generation supply portion. So this is entirely a pass through. So this is one of those generation companies, they sell us power at X, we charge customers X for that power. That's 75% of that bill. As we go back to this idea of this demand supply imbalance and it's getting worse and worse by the year, that portion of the bill is going up further and further. And so that's really when I think about the affordability crisis. Obviously the utilities should be doing everything they can to control their own costs. And we do do that. And when you look at our cost, we are, we have and we continue to be below the rate of inflation. We're trying to manage costs, trying to get them as low as possible at all times. And really our part of the process, we go through a 10 month or so rate case proceeding. So whenever we want to propose new rates, we go through 10 months where the commissioners and other stakeholders can intervene and ask questions and challenge and then at the end the commission will deem what's prudent and not. So there's a lot of review over our cost. This other portion of the bill, the 75%, doesn't get regulated by that because it's purely a competitive market. And so they charge us what they need to charge to meet their internal hurdle rates and to meet whatever returns they need to meet. And that's what goes through to our customers. That's the piece that we need to address. And that doesn't get addressed unless we build significantly more generation and increase that supply portion supply because the demand is going up as well.
- [36:20]
C
Right. And so to be clear about that, then your point would be that none of these solutions that have been proposed so far, not getting the hyperscalers and other data center operators to pay for it, not the old system of capacity auctions, not this new reliability backstop auction, none of these things are actually going to bring enough generation capacity that's new to the PGM grid, is that right?
- [36:50]
A
Yeah. So I would say everything that's been proposed, important, we need that. But that's the way we kind of make sure the problem doesn't get significantly worse. Really quick. What we need is more generation. And Ed, I'm going to anticipate your next question. I'm going to tell you what I think we need to do. We need to obviously have reforms on the capacity market to try to drive the right signals. But that's going to take time and we don't have time. We need to act now. What we are proposing at Exelon and what we've been proposing is we need to let the utilities once again own generation. Now let me be very clear. I am not saying we need to re regulate the markets. I still want to see the competitive markets and I would love to see the competitive markets building more generation in our regions. But they're not doing that right now. The economics don't, you know, suggest that they ever will be doing that unless there's some kind of change. What we need to do is have the utilities have the ability, have the right to propose solutions where they can own generation again. And these solutions would sit there aside any competitive solutions that would be proposed and then let our regulators pick what makes sense. Right now the utilities could be out there working with developers that we work with on other areas. So we know these developers we work with them on transmission and distribution. They're the same ones that can build generation, work with these developers to build generation, to start to add more supply to our mix.
- [38:16]
B
So, you know, you have these examples like AES with Amazon where they're a regulated utility that's vertically integrated and they were able to like go before the state regulatory commission and, you know, build the capacity with what they need and they, you know, at some rate that everybody seemed happy with, but I'm not sure how that would work in a market where you have some independent power producers and an integrated utility. Can you elaborate on that a little bit, Kareem?
- [38:46]
A
So what the state could do is they could put out a proposal saying we need 3 gigawatts of generation. People put in your proposals. The competitive IPPS can put in their proposals. Let the utilities put in proposals too, and then all of a sudden they can look at these proposals. The utility has a different cost structure than a competitive market. Compare the prices and then let the regulators pick what is the best solution for our customers, really. Simply put, why would you ever want to take any tool out of your toolbox when you're facing a crisis, which I think we truly are in right now, an affordability crisis. So I'm not saying that all new generation gets built by the utilities. If the ipps can build a cost effective solution and really if they're willing to build in our region, fantastic, let them build. The commission will ultimately decide that. But let the utilities come out effectively. Let the utilities be the price to beat because the utilities are something since we're fully regulated, that the commission can order to build. One of the things we see in our states in PJM, there's 13 states, about half six of them are vertically integrated. And so vertically integrated means the utilities still control the generation. So not every state deregulated. All six of Exelon states deregulated. So we're not in any of those states. And so when you think about, just take Virginia, vertically integrated, they are building generation. Maryland, right across the Potomac river. We are building nothing. There is no new generation being built. How that shows up in last year's auction, the capacity prices for Virginia went up $2. In Maryland, $18 on the average bill. That's the differential. Because again, Virginia can look, their commission can say, hey, I see this much load. I see I need more generation. I see who's building, who's not building. Dominion regulated utility. I need you to go build this much more generation. Now what will happen usually is the utility will say, Hey, I think we need more. They'll study it and then it goes back and forth to your point, Amy. And then it gets to a good place where the rate cost and all that. This is what we need in other states. So you can have a structure where there's an RFP. And there have been RFPs in many of our states. But to date the RFPs have excluded the utilities and back to the IPPs. The economics aren't there to justify them making their investments and so they won't, they'll go build elsewhere. There is generation being built in this country, just not in pjm.
- [41:22]
B
So let me ask again. So the economics of a, of a vertically, vertically integrated utility versus an ipp, is it because you have income being generated from other parts of the business that you can afford? Is it the cost of capital? Like how does that shake out?
- [41:38]
A
So it's, it's a mix of a number of things. One, it's our cost of capital. We're typically higher credit ratings than these ipp, so we have a lower cost of capital. The other piece is the way the utility model works is you put an asset in what's called rate base and then you earn your financing costs or your return on that rate base. That return is part of that overall case that goes 10 months, it gets negotiated and it's whatever is a fair return to be able to cover our financing costs. So in a utility we can propose an asset and we do, and our assets, we can say for the next 20 years, here's what I'm going to charge you because it's going to be what I paid, plus this return that I need to be able to pay for my financing costs and that's what I charge. In a competitive market, the prices move with the market up and down. So in this model, and typically when prices are very high, the regulated model can yield a lower result because the hurdle rates, our return is lower than what the competitive market needs. So in this scenario we can say, let us build generation, give us our financing costs so we can cover the financing of that asset. So that's that ROE that you hear about sometimes. And then the differential between that and the market, we can return to customers and allow them to have that benefit. So therefore they don't pay as much for their power. And we can give you what the power is going to cost for the next 20 or 30 years because it's just going to be that return times the rate base.
- [43:10]
B
So what about when the governors step in and say, hey, I'm going To simulate that by saying any entity can only make the following rate of return. I think that happened in Pennsylvania. Correct?
- [43:21]
A
Well, they proposed it. It did not pass because again, I think what needs to happen is you need to have a financially sound utility. So the danger of saying, hey, you can't earn more than this. Well, night. So I'll take, I'll go back. I always go back to Maryland because that's the utility used to run. So I know the numbers best. About 97% of the utility profits get reinvested in the business. So again, we are putting all the profits back in making new investments. A lot of our investments, our investments are far larger than the money that we bring in from customer rates. We have to finance them. So we go out and we get debt and we get equity from investors. When you start to limit the ability for us to pay them back, we have access to less and we can make less investments. So I wouldn't suggest you do that. But again, I think, and what I would say is, again, it goes back to, you know, yes, we have to look at the whole bill, but back to the 75% of the bill is the fact that we don't have enough generation. You know, people are focusing on the wrong part, if you will, entirely. They need to be focusing on the whole bill and solving that 75%. And the answer in my mind is get every player to the table that's willing to build, including the utilities, and let's see them see the proposals and let the commission have their processes to review and ensure it's best for customers. And from my perspective, I don't know why you would take that tool out of the toolkit of letting utilities participate.
- [44:49]
C
Well, I guess I can think of one answer which is that if you are an ipp, an independent power producer, which is a non regulated generator, you're not going to like the sound of this at all. Right. Because this is saying, hey, there's going to be a lot of additional competition to you, which is going to come from companies that are regulated utilities that have guaranteed returns and a lower cost of capital. That's inevitably going to be bad news for these companies. Surely we'll end up squeezing some of them out of the market and you might actually not get a net addition of generation capacity at all. I mean, is that something. I mean, I can see why this makes sense from Exelon's point of view. Why does it make sense from the market's point of view?
- [45:36]
A
Absolutely. And I'm going to take it back, Ed. I'M going to tell you why it makes sense from the customer's point of view, because that's what really matters here. So for three or four years we've been saying this and there's been the Let the competitive markets work. Let the competitive markets work. The last three or four years, nothing has been built. That's just a fact. Nothing material has been built. We have seen the retirement of other assets. And if there is any replacement, you're replacing coal and gas, which is baseload power, which basically means it runs all the time with some wind and solar, which is intermittent. That isn't apples to apples. And what's being replaced is far less than what's being retired. So what I would tell you is, okay, for three or four years they've had the chance to build and they haven't. We are facing a scenario where PJM is warning that in the central Maryland area as early as next summer, we're going to have rolling brownouts because we do not have enough electricity being produced. That is a reality. And so for the utilities, our number one priority is to safely, reliably and resiliently provide our power to our customers in the most affordable manner possible. And so we take that responsibility very great, very seriously. And so we look at this and say, we don't have any more time. They haven't built. And by the way, I'm not saying they shouldn't build. They are still part of the process. But if you're a customer, why wouldn't you want the utility proposed to propose a price? And if that price can be beat by the ipps, fantastic, let them build. If it can't be beat, I'm getting the lowest possible price for my generation. That is the ultimate goal. How do we get the lowest, lowest, lowest price generation to the grid as quickly as possible? And again, like I said, we've been waiting for three or four years, haven't seen the build. We've seen builds elsewhere in the country. It's just not happening here. And the only states in PGM that have seen any build are those vertically integrated where the utilities are doing it. So again, I would love to see a scenario where the utilities propose a price and every IPP comes in and offers a lower price. That's great for our customers and we would be 100% for that. But, you know, just waiting isn't going to work anymore. And I think we're already a year or two behind where we should be.
- [47:56]
B
Hey, Karim, explain something to me about like, you know, the electrons flow where they want to flow and you can't direct them. So if you have some vertically integrated utilities within the 13 states, why aren't they just expanding capacity like gangbusters and having the electrons flow to Maryland or some other state? Like is there some barrier there that people like me who are just still learners are not understanding?
- [48:23]
A
I would say so. Let's say, let's take Virginia. So if Virginia were to build excess capacity and then, you know, sell it to Maryland or another state, they could do that. But for them, that means they're asking their utility to build generation in their neighborhoods, in their communities that don't benefit their neighborhoods and communities. It can happen. And again, right now, Maryland, maybe it's a NIMBY problem. It's a nimby and I've even heard nope problem, which is not on planet Earth. So there's another one. But you know, basically I would tell you it's, it's an issue that, you know, the utility is also trying to balance their communities and their stakeholders as well. You know, right now, Maryland, for example, we buy 40% of our power mainly from Pennsylvania. We import 40% of our power today. And that's before there's two more coal, coal plants that exist that are being retired here in the next few years. It's just going to go up. That is not sustainable. We need each of our states to be generating enough power to be able to support themselves. But folks in Pennsylvania are saying, why am I building power plants and selling power to Maryland? You know, for them, they're saying, great, I'm going to use that power to supply the data centers that are coming in. I don't have to build anything else. Maryland, effectively, good luck. And so that is the issue that we're facing. That's why we need more generation built in all of our states.
- [49:46]
C
Yeah. Isn't it possible that you could make the case to the ratepayers of Pennsylvania that they could actually benefit from having a larger market if their existing infrastructure gets used more, if they're selling more power not only to the data centers, but also to Maryland, then that might actually lead to the assets being used more efficiently and therefore the cost per rate payer could actually come down? That's an argument you hear made quite often about data centers and how data centers can actually benefit ratepayers in communities where they're being built. Is there something in there?
- [50:22]
A
So let me answer that question in two parts. The first part is what you just said. If you're saying, can't we build more generation in Pennsylvania and let that flow down to Maryland and then the ratepayers can benefit. The answer is today no, because the utilities don't own the generation. All those profits go to the generators. So they don't share that with the customers. They don't have to. The second piece is, is there a way to look at our grid and say, hey, can I squeeze more capacity out of this grid that we have already in existence today? And the answer is we do that every single day. We are trying to optimize the grid. And that's what I think is the reason why over the last three or four years, as we've seen no build, we've seen demand start to increase that we haven't seen rolling brownouts yet because we've been squeezing every megawatt we possibly can out of the grid. You know, at Exelon, for example, we're looking at gets, which is grid enhancing technologies. Every single day we are testing them out. Some are very effective, some less so. But that is something that we take whenever we do a project. We say, what is the way that we can get a effectively the most bang for our customer's dollar? So again, ultimately, the customers are paying for this grid. We want to make sure they get as much value as they possibly can out of it. But being more efficient, having more optionality, being able to route the power, that's great. But ultimately, if demand is going up, at some point I need more electrons. I'm going to run out of electrons. I can move them around for a while, but at some point I just truly need more generation being built.
- [51:55]
B
So, Karim, I have this thing I like to say, because I lived for many years in Houston and I used to have to spend a lot of time either visiting with Enron or trying to go a deep dive on what Enron was doing wrong that wasn't transparent. Okay. And one of the things that happened with Enron not making any analogies to any particular utility or region is that they would have these incredible projections of where electricity prices were going or where the load was going. And so one of the things that I hear in utility world is I can't put in batteries right now to shift the time of day and to make the load more efficient because that's going to be burdening my ratepayers with this higher cost of batteries. But if I just wait and plan a plant to be built in 10 years, then I can solve the problem in 10 years and I won't be double charging people. But you know, you could put the batteries in now for three years. And then, you know, pre Enron, post Enron, we figure out whether that 10 year forecast is really accurate as we move forward. Because you're telling me you're not going to do this thing you can do right away because there's something that's going to happen in 10 years which none of us can really forecast properly. But I have a solution I could do right now, but I'm not going to do it because if it turned out that I need to build a plant in 10 years, that solution that would tide me through the next two years would wind up being a waste of money. I mean, I find that hard to deal with because there is a solution you could do right now.
- [53:29]
A
Yeah. So I would say so. Amy, let me, let me answer it this way. So understand one thing that we have to realize is plants, even batteries, anything, these take multiple years to build. So you have to kind of have a view going forward.
- [53:44]
B
So my opinion is that the batteries do not take multiple years. If you have a supply chain, okay, it can be installed. I mean, I know people who work with Tesla and Sunrun, they can be installed pretty damn fast as we've seen in California and Texas and Florida where people had a lot of outages.
- [54:01]
A
Yeah. And when I say for batteries, I'm thinking, you know, a year to two years. Because again, I think on the utility scale, on a generation plant, you're talking seven plus years to do. What I would say is, you know, one of the things is that load forecast is incredibly important. So I'm going to jump back to when you think about what's driving the load increase that we're experiencing right now, it's largely, not entirely, but largely these large hyperscale data centers. And that's why that transmission security agreement is so important, because it weeds out those that aren't call it real. So it kind of starts to really formalize that. But then to your question, which is saying, hey, you know, why should I build a battery today when I can wait seven years? And that if I build, if I build both, then aren't I double counting and aren't I building too much? What I would say to that is one, we have an immediate crisis. I mentioned what PJM is warning about in Maryland, but you're going to see that more and more you have an immediate crisis about reliability. So we need today's solutions. Two, if you get to a point, let's say in the future, seven, 10 years and the load is somewhat less than what you expect, experience what have we done? If we build both, we have increased supply and demand hasn't gone up by as much. So what happens? Our prices come down for our customers. We are in an affordability crisis right now. I don't see a realistic scenario where we can overbuild because the downside is basically, hey, everyone's prices just came down. So that's a good thing for our customers. Again, may not be good for certain companies profits, but that's a good thing for our customers and that's what ultimately matters the most. So from my perspective, what we've been advocating for at Exelon is we need an all of the above approach. The all of the above is we need batteries, we need solar, we need wind, we need gas, we need new nuclear, we need all of these things and each of them come with their own timeline. But again, this is where it's so important to have the commissions involved to really develop what's called an integrated resource plan, a real 10 to 15 year plan that takes the low that's forecasted and what we have today. What are the gaps and what is the real plan to build this? But you can't do that if you don't let the utilities own generation because ultimately they can't control the competitive market.
- [56:19]
C
So hold on, Karim, you said something that I, I found a bit counterintuitive, which was you said if there's more generation, prices will be lower. I mean, isn't it the case that when we talk about this issue, the very standard argument that people make is if you invest in more capacity of any kind, grid transmission, distribution or generation, you have to get a return on that investment. Somehow that investment has to be paid for and that ultimately means it's got to be passed on to customers bills, and maybe some of it can be managed through the tax credits or whatever. But essentially, if investment is going to earn a return, that means customers paying for it. And again, you can think about which kinds of customer pay and is it going to be regular households, is it going to be data center operators specifically or other large loads, whatever it might be, but doesn't alter that fundamental fact. But you seem to be talking about, oh well, if you get more generation, then prices can be lower and this can actually help the affordability issue.
- [57:34]
A
Sure.
- [57:35]
C
I don't really see how that works.
- [57:36]
A
Yep, let me explain. So when you think about the utility, let's go back to the bill. The utility portion of the bill, what we control, 25%, the supply portion, 75%. If I am able to Whether it's the utility or the competitive markets, if we build more generation, that supply of generation goes up. Demand and supply, just the simple economics that will drive prices down. So what I'm saying is, yes, you may see a small increase in the 25% portion of the bill because of the, of the return, the financing costs that the utility needs to achieve to be able to build these assets. But in return, you're going to see that 75% portion of the bill come down because we have more, more supply driving those costs down. Even better is if the competitive market will build it at a, at a good cost, that is a lower cost. But again, that's not what we're seeing today. So ultimately our number one priority is to see more generation, supply being built. And what we're saying is we've been waiting three or four years, we can wait no longer. Let the utilities start to build again. Keep encouraging the ipps. And you see a lot of our states are doing a lot of things. They're passing permit reform, they're trying to make it as easy as possible to build these generation assets in our states, but we're still not seeing any build.
- [59:00]
C
Right. So if people are listening to you on this podcast or in listening to you in other forums and policymakers and regulators find your arguments convincing, what needs to change? As you were saying, there's no inherent contradiction between being part of the PJM market and having vertically integrated utilities. Several states do that.
- [59:20]
B
So does that mean, Is it a state level? Is it a state level?
- [59:23]
C
Yeah. So does it have to be state level reforms?
- [59:27]
A
Right. It's not a PJM issue, it's at the state level. And what I would say is in all states, it could be making a legislative change where utilities are now allowed to own generation, which then allows them to, to go to their commissions and put in proposals and be part of RFPs. But in some states, the commission already has the ability to order a utility to participate. And we would encourage, in those states, do that have your utilities sitting there in the RFP process, being part of the process, or even outside, ask them to give you a proposal of if I asked you to build generation, battery, gas, whatever it is, if I asked you to build generation, what would that look like and what impact would that have on the customer bill? We can do that. We can work with the right people to ensure that we have that in place. And then if nothing else, that becomes the price to beat. You know, right now, you know, there's two pieces as the affordability piece, but I also don't want to lose sight of the reliability piece. We are about to get to a point where in some of our states, we are going to face rolling brownouts. This is not what our communities and our customers are used to and nor should they have. We have to do. And that's what our number one priority is, safe, reliable and affordable power. We have to ensure that's delivered to our customers each and every day.
- [60:40]
C
So when you go to state houses, when you go to state legislatures and make these arguments, how much progress do you think you're making? Do you think we are going to see widespread reforms in quite a few states on this?
- [60:53]
A
So what I would tell you is because, again, we've been doing this for a number of years, I think we're finding more and more progress. And the reason is just the history has played out what we said was going to happen, which is no one's building is coming true. And the reason is the economics aren't there. The certainty of pricing for a competitive developer isn't there. In pjm, there's too much uncertainty. So I understand why they're not building, but the answer is, and again, our customers, they don't care the why. They just need someone to build generation. And so I am starting to. I believe that you will start to see some of these states embracing the idea of the utilities participating in the generation process. And again, maybe the competitive suppliers will come out with better solutions. And that's fantastic. In the end, I always take everything back to the customer. What do our customers need? They need more generation. If they need more generation, if you're a state or a commission, why would you ever not want Every single option at your disposal? Doesn't guarantee anything. But why wouldn't you want the utilities to put in a proposal and see what it looks like?
- [61:57]
C
And taking a step back then and looking at that broader sweep of regulation and the structure of the electricity industry in the United States over a period of decades, we kind of had that movement towards more competitive markets, which was particularly strong, as you say, around 2000, sort of late 1990s, early 2000s. And then there's been much less progress towards deregulated markets since then. Do you think we're now at the point where the pendulum is actually swinging back again and we're going to see more regulation and markets becoming increasingly regulated and increasingly assets moving into the hands of regulated utilities.
- [62:47]
A
So what I would say add to that is I do think the competitive markets play a role and they should play a role. What I would Say is I think what we're going to see is the utilities being permitted to put in proposals and that'll effectively be the cost to beat. So again, if I'm a state utility, tell me what you can do this for and then if a competitive supplier can do it for less, great, I'm going with that solution. If not, I'm going to go with the utility solution. So I think there'll be a mix and I think depending on what you're talking about, what you need, what state, what region, you may see a different, you know, some solutions will be more utility.
- [63:25]
B
So to Ed's point about, you know, how does that affect the competitive landscape? I mean, one of the interesting things when you're an academic is the academic literature that said D reg was going to lower cost to everyone was sort of a systems wide cost structure. What it didn't capture was that somewhere between 3 to 6 million Americans have their electricity shut off a year because they can't afford their bill. Right. And so I guess, last question, just to sort of understand this a little bit. If it turns out that the utilities have this ability to really beat everybody else out of the market and we wind up with, you know, integrated utilities and they're more competitive, and so we're rolling back, as Ed's sort of suggesting, we're rolling back D reg and we accidentally wind up back in a vertically integrated market. How do we take that formula that a utility uses on how they charge customers and make it fairer? Because there are all kinds of explanations that people give me about how we have to put these costs over everyone, including people who can't pay their bill at all. And then we're going to send them to LIHEAP or some other program to get a discount. I mean, don't we also have to change the way rates are set?
- [64:47]
A
So Amy, let me answer your question this way. So first, I'm not sure the utility rate will always beat out the competitive solution. I'm hopeful the competitive market will find a way to do it even cheaper than the utilities because again, that's good for customers. The second is one of the beauties about being able to do this in the utility is you have that 10 month process where you can challenge costs, where you can review the rate structures, where you can talk about who's being charged who, different rate classes. So say in Maryland we have a low income rate. So basically any of these costs that we that come from us go through different are charged differently for low income customers to others. So these are the things we can kind of put in place. And with the regulated model, that's where the commission has full purview over being able to see, see what makes the most sense for each customer class, each customer throughout its region. So I would say again, I just keep going back to the it's another tool in the toolkit. Why would you not want them to. Why would you not want the utilities to be part of this solution potentially and allow the commission ultimately, who will have the final say over what gets built and who builds it? Have them have all of their options in front of them and say, all right, now you commission, pick what's best for our customers from a reliability and affordability and whatever other aspect they're looking at, pick what's best for our customers and let's move forward with that. But what we can't do is we can't keep arguing and discussing and theorizing over this. We have to see action taking place because again, I'm increasingly concerned about the warnings that PJM has already issued. And next summer it's for Central Maryland, but it's going to start spreading to other areas if we don't watch it and we don't start building generation here as soon as possible.
- [66:32]
C
Yeah, absolutely. Two quotes, actually, which I wanted to use during our discussion, but didn't have a chance to get them in. But just to underline your point, Karim, about concerns about future reliability, when PGM held that capacity auction last month, they said that they had capacity which was 6.8 gigawatts below what they would consider a safe level to be able to meet expected demand with a 20% reserve margin. And the quote here from PJM, such a shortage does not necessarily mean that the PJM system will be unable to serve load reliably in the delivery year. It means that PJM would have to operate with slimmer reserves and a greater level of risk. So that seems like pretty strong language coming from the market itself.
- [67:20]
A
Ed, I was just going to say, I think that highlights the exact point that I made earlier about that the storm fern from earlier this year is they're saying, hey, we're not having the capacity that we need, that we expect the amount of reserve capacity that we typically want to maintain doesn't mean there's definitely going to be brownouts. But your margin for error is very, very thin. In the end, this is equipment. One line fails, one thing goes wrong. You no longer have that extra cushion, that extra capacity to ensure that customers will not be interrupted. And so, you know, you can choose to operate on that razor's edge. That's not where we've ever operated before. And again, I don't think that's what our customers are expecting from their grid.
- [68:01]
C
And then even stronger language I had here from Laura Sweat, chair of ferc. These numbers compound the alarm bells for a call to action in pjm, she said. And that was something.
- [68:13]
A
Maybe I'll just make a comment of what our CEO at Exelon says, Calvin Butler. And I think it's a great analogy. We are driving a car with the check engine light on right now. And you can choose to address the issue now and fix it, or you can wait till the car breaks down, which will be much more disruptive and much costlier to be able to repair. So that's where we are today. And that's probably the best summary of, you know, the state of the state that we're in.
- [68:38]
C
Yeah, certainly it's going to be a hugely important situation to cover over the months to come and also one with enormous implications for other power markets across the United States and indeed around the world. Unfortunately, though, we do have to leave it there for now. But it's been fantastic talking to you. Karim, many thanks for coming on.
- [68:58]
A
Well, thank you, Ed. Thank you, Amy. Really appreciate being on and and look forward to talking again.
- [69:03]
C
Many thanks, Amy, for joining us. Look forward to talking again very soon.
- [69:06]
B
Yeah, thanks for including me. Just a really riveting conversation. Kareem, I think you did a real fantastic job just breaking it down for people who are not in the weeds of electricity every day.
- [69:17]
A
Well, thank you both.
- [69:18]
C
Yeah, it has been fascinating. Really great talking to you both. Many thanks to our producer, Molly Merwin. And above all, as ever, many thanks to all of you for listening. Please do leave us your feedback. Leave a comment, leave a review, get in touch on social media. We really value your feedback. Please do keep that coming and we'll be back very soon with all the latest news and views on the future of energy. Until then, goodbye.