Nancy Ryan | Energy Seminar - May 11, 2020
What I'm going to do today is, I. Think, perhaps a change of pace for you all I, understand, and that this. Is really going to be pure, policy, the. Talk I'm going to give you today and. Although. I'm not a partner, at energy and environmental economics, anymore, I'm still affiliated with the firm and I. Continue. To work with them but I've launched. A new firm with. Professional. Colleague a mobility advisors. Which, is really the our goal is to work full time on, policy. To promote transportation. Electrification across, the board so. Hence. The e3. PowerPoint. Floor mat but, the. New title and I, think the other reason this is in the e3 PowerPoint, format I'll miss you there's just a lot of what I'm going to present to you today is distilled. From recent. Reports, that I've. Worked on with you free to share with utility, clients. Who are always eager to understand. What's going on in other parts of the country so. What. I wanted to do in, the, 30. To 40 minutes that I'm going to aim to talk to you is to. After. This quick introduction, then, give, a little background on. The. Electric, electric, utility. Industry put. Primer on market and regulatory context. Then I want to talk about some of the major themes. Across. States and utilities, some of the things that really the biggest questions, that they're all thinking about and then I want to go into free, pardon, me on five specific areas. Which. Are. Very. Salient and, then talk a little bit about where. States, are coming, together and, where they're converging, on, those things. Now. The next question, okay. So. Electricity, electric. Utilities, and automakers, you, know have historically, existed in, completely. Different. Worlds. So, but. But the electrification of Transportation is. Really bringing them together and, I think that there's something of an odd couple so, let. Me lay some groundwork to. Get. To the point where you can I think see that, first. Thing to understand about electric, utilities in the United states that there are a lot of them there are something, like. Close. To 3,000, of them in fact on other things I think I've even seen numbers as big as 4000 they, fall into three categories.
Investor, Owns so their stock their traded on the publicly, traded companies. Publicly. Owned which are typically owned. And run by a city or, a county so like Austin, Texas Seattle, LA, Sacramento. Are examples, of, big publicly. Owned utilities that there's a lot of little ones and, then there's also a lot of, cooperatives. However, a. Relatively, small number, of investor, owned utilities. 168. Vs.. Nearly. Three thousand public ones, that. Small part of small, portion that's investor owned really accounts, for most, of the customers serve, you can see that in the two. Charts in, the bottom left-hand corner. The. Other thing is just to give you a sense of the size of them and where our utilities, fit in. The. Top the bottom right corner gives. You some, of the major utility, companies, in the US and this. Is kind of old, I see it's from 2012, and there's been some more mergers since then but the main thing to notice that, two. Of the California, utilities, Pacific, Gas and Electric PG&E, and Edison, International which, is the holding, company, for Southern California Edison. They're. Among the top two utilities in the country and if you actually look at you know sort, of separate, away the holding companies, or. Some. Of the other enterprises. That are sometimes wrapped, up and then PG&E, in Edison are probably, still the largest utilities. In the u.s. so that's, important, to think about when, we think about California so. Very balkanized, industry. But. A lot of the money is. In, the big io. U--'s, they. Mainly serve the big populous, areas. So. Automakers. Really, different kind of industry. Highly, competitive consumer. Product. Enormous. These are all you know the big automakers are all you know global enterprises. 2019, total revenue for the industry was over a trillion dollars. If you look at the market cap for the top ten companies led, by Toyota.
And VW. It's, huge 200 billion for Toyota. 80, billion for B VW, and, if you look at a utility, their, market cap is typically, you. Know quite a bit smaller particularly, a lot of the ones on this chart on the right are, again. They're holding companies so they're multiple, utilities, in there but. If you go like, I think the first one that's actually just a single, utility, as Consolidated. Edison would serve the New York City area and. Then PG&E. As, of, April last year about a year ago this their market cap was 27. Million for, Con. Ed 22, million for PG&E if you follow the news you, know that lots of things have happened that have caused PG knees stock. Value, to. Go, down so. I note below that their highest market cap since 2006. Was 35 million so you know one utility one. Big utility, has about the same market, cap as a you know as a, good. Sized automaker. And is dwarfed by the you, know the biggest one, and. The, revenue is also if you look at like Toyota's, 2019, veneers of hundred. Seventy two billion, dollars, compared that to PG knees of about. 17, billion dollars again, or a magnitude, different so you, know just to put them in perspective. So. The, other thing that's in and I'll come back to what the significance of some of those things so just. Bear that in mind, so, I owe you as investor, owned utilities, are, regulated. At the state level. That. Is like the nature the federalism for the energy industry is there really most of the regulation, on all the important, things occurs at the state level the principle exception, is. Interstate. Commerce. Which. Primarily, means. Regional. Electricity, markets, like PJM, in. The mid-atlantic region. And. Interstate. Transmission but, really most other, aspects. Of io. U--'s operation. Pricing. Etc are, regulated. At, the state level, by enemies, with various names but commonly called public utility Commission's or public service Commission's, in. Most, states but not all of them PUC, commissioners, are, nominated. By the. By. The governor and typically, have some sort of legislative, confirmation, process, that's how it works in California. There. Are a number of states for example our, next-door neighbor Arizona where they're elected. And that can lead to some very, bizarre. Things. Happening, and if anybody, remembers I'll tell you about one in the Q&A. After, the seminar and the student, discussion. So. EPA, regulates. Smokestacks. But, PUC. Is regulated pretty much everything, else so it's really these duster, owned utilities, are, local. Monopolies. What, they have a monopoly over depends. On whether or not they're and what's known as a restructured, state. Where. They're still fully, vertically integrated, and they handle all aspects, of generation, transmission and, distribution of electricity. But, in any event they're local monopolies, and they're regulated, by these, state, authorities. Okay. Om, auto, makers original, equipment manufacturers. Or OEMs, are. Regulated, mainly at the federal level with some delegation. To the states now that can seem confusing in California. And. And. I'll explain, why so. The federal Clean Air Act is the main authority. For. Tailpipe. Emissions, from, vehicles and. Traditionally. That's been the mileage, standards set. By the US. EPA and. The National. Highway Safety. Traffic, administration. And then I think the enforcement is largely up to the States however. The. Clean Air Act granted California, the unique power to set its own stricter, pale. Stricter, tailpipe standards, when it was passed back in the early 70s, and the reason for that is that. Due. To. Decades. Of, air. Quality issues in Southern California, our. State was already regulating. Emissions. From vehicles and. Generally. Trying to address pollution, problems, and so. California. Had an exemption carved, out for it allowed it to continue. To have its own stricter, standards, in order to try to meet. Stricter. Standards for vehicles and, and other things in order to meet the, federal standards, for various. Pollutants like docs and particulate, matter and so on and so forth the, other interesting thing about the Clean Air Act is that I think it's section, 177, blouse, other. States, to, adopt. California's. Regulations, and, that. Has happened for a long time with, its just conventional tailpipe. Emissions standards. For again things like NOx, and. But. Since. California started up with its zero emission vehicle program. 20-plus. Years ago and. Has really been pushing for. Automakers. To make and sell. Both. Battery, electric and fuel cell vehicles, to, date actually, think this is incorrect I think ten other states have adopted the zero emission vehicle program because Colorado, just joined last year and, both.
Minnesota And New Mexico are on the way so the Zev State's amount, to something, like a third, of the US. Market for automakers, and I think it's safe to say that they. Well. They really don't like that they, don't like the idea that they're selling cars here they are they're global corporations. And they're selling cars in the u.s. one, of their biggest markets, not their biggest market anymore for. Most of them it's China but, they're selling cars in the US and there's two standards, one at the state level and one at the federal level, and when the Trump administration came, in and. California, and the feds had achieved had. Converged at the time that. During. When President, Obama was. In, office but. They. Had. Converged on some pretty stringent. Mileage. Slash. Co2. Standards, tailpipe standards, and when President Trump was elected. Some. Of the automakers, went to him and said you know we really wish that you would not you, know that you could sort of slow this whole thing down and, he. Basically said, oh boy. Will I ever and he. Has. You. Know really tried to completely, reverse what happened under Obama, administration. And. That's tried to revoke. California's, authority, to set. Its own standards, all together so, they're. All off to the courts, now this will grind on for years and I think that, the automaker's some of them are probably really sorry that they ever had that conversation I wrote, that letter to President Trump because. Now. They have two standards, and they have a lot of litigation before it gets sorted out, so, two, different industries. One. Local, monopoly is under, state. Supervision. Primarily. Kind, of economic, regulation. The, other federally. Regulated. With. This interesting carve out for California. And. In. Global enterprises, so, now, they're coming together. So. The. California. Zero emissions vehicle program, which is to. Date mainly, been enforced in California, and is now. Really. Being picked up in other, states and, enforced, actively, in other states again that's something, if you want to know about it I can tell you later. But. Now. We have this convergence, of these two historically, different, and very distinct, industries, and so we have guys, and women who work for automakers, sitting, in rooms like the one in the top left which is the Assembly of the auditorium. At the CPUC because, suddenly the, sea you see another. Public service Commission's, s, plea in the SAP states are really important venues for them because, those. The. Utilities, at a minimum, have, to, reinforce.
Their, Distribution systems. In. Order to serve, what will over time be a pretty substantial load. And. Many. Utilities and. A, lot of environmental advocates are. You. Know eagerly. You know banging on the door saying you know we would like to the builds not just the infrastructure, the distribution, infrastructure, but we would also like to in. Many instances, we would like to own and operate charging, stations. Because. Utilities, the other thing that's important about them as, while. Automakers, make money by selling cars, and even more importantly lending, money people to buy cars lending. Money to people to buy cars utilities. Make money by deploying. And structure and then they get paid a, return, on. Their infrastructure, so they like building, more infrastructure, and. Moreover. What they also like is to be close, to their customers. And to. Be, seen, as doing things that are green particularly. In states like the Zev States and so for all, of those reasons we've had a number of utilities come forward to their Commission's and say you, know we would like to own and operate charging, stations or we want to be involved in this in some way and. I don't mean to make the sound nefarious, I mean these are just what their incentives, are and you know there's a lot of good people who work on this and you know and plenty of people who just appreciate, you, know this, is a new electric load and our it's our job to serve it and we need to work out how we're gonna do it. So now, this is being worked out and all you know to some extent in almost every state now with, you. Know three states I'm going to talk about gonna, zero in on you know really being in the vanguard. And this is just a colossal, headache for, where OMS. Because again here they are they're huge global enterprises. And, you. Know it was bad enough that they had to deal with like you know good. Feds versus, the sab states. In. The US and now they've got 50 states that. Are each sort of deciding well we're gonna decide for ourselves how. We should, use. Our electric utilities, to. Support. Transportation electrification. So. That is that so that's the stage the stage is set so. Let. Me so this states, I'm going to talk about I'm gonna zero in on our our, home state of California.
And, Then. New York State which is historically, also real bellwether, state for. Regulation. And then Hawaii which has really emerged in the last several years is a very interesting. Laboratory. For. Energy. Policy, and, has, kind of been a leader in some regards, so. Just. Very quickly the approach you, know we got started on this in like. 2009, in California, when the first Leafs and volts and Tesla, Model S's were heading, our way and, you. Know the Commission and the utilities understood, that we had to start doing something, things to, accommodate. That load and, the. Sort. Of the prevailing, view that, really kind of I would say governed, what happened at the CPUC, to the extent that you could even say it was you, know sort, of a philosophy. Was essentially, let a thousand flowers bloom, you know utility. Is gonna come to us with ideas we. Should let them try stuff out we had pilots, that you know so I call them pilots, because some of them were like a hundred million dollars, which is, not a pilot and really I think anybody's. And. As. A result we had San Diego Gas and Electric, wanting to own and operate charging. Infrastructure, you know the whole nine yards, we had different, model. From CN, Southern. California Edison and the Los, Angeles area, was, a lot of litigation and. Now. Ten years on the Commission has launched, a big docket, that they're calling the, drive, Oh IR where. They're trying to work out kind of a comprehensive, framework that, they're calling the transportation, electrification. Framework. And that, would culminate and, then direction, into the utilities, to bring them plans I'll. Just say briefly there, was a stakeholder. Mutiny, when this 200, page draft, death, as it's called came out and. They said this is way too Mint's work by the time this all gets done and litigate and it's going to be out of date so they're kind. Of back to the drawing board on how to do that, New, York that. Building that looks like it should be in Moscow. Or maybe Stalingrad. Is actually the headquarters, the New York public utilities. Are. It's, on the Capitol Mall and, Albany. It's really a scary, looking place and, they've. Only come at it from a much more top-down, view. Where it's like maybe. Sort of told the utility is to try some stuff but then they said like you know we're gonna tell you what we want you to do you know we're, gonna tell you what role we're gonna have so they had a very very, kind. Of what I would call a lean stakeholder. Process, and a few workshops they, got some written papers, they, had III work, on a. Study. For, their. Companion. Research agency NYSERDA, on cost of benefits and, then, they put out a white, paper in which they said okay this is how we think it should be here's. Our model, and then, the third one is, Hawaii. Where for several years now the, Hawaiian, Commission. Really been saying to the utility. Hiko. You. Know like. Basically, they put out a decision maybe, like seven. Ten years ago when. Solar was first becoming a big thing and you, know and just said like listen you guys you are just from the last century things, are gonna be different now, you. Know this, is how we're gonna do stuff you're gonna be more customer oriented you're going to be more, receptive.
To Distributive, energy distributed energy resources including. Solar and then you know they hammered on them several more times and they'd. Let HECO do a little bit around, evey charging stations, they actually did a really cool, pilot, with Nissan. At one point. But. When they came back for more and, this was what I would call a real pilot very small when they came back for more the Commission said no, that's enough we, want to see your plan we want you to go to stakeholder. Outreach and, we want you to come back with a comprehensive, electrification. Strategic. Roadmap that lays, out your priorities for the near term the mid term and the long term been, out to ten years you, know across all the potentially, electrifying, technologies. And so I, had, the privilege to work, on that when I was at e3 and the, document. Is available if you go to HP's website or, he goes and I think it still really sort of set the standard, for what one of these plans look like. So. Anyway, so three of the states and then so we'll just sort of follow them through. So. -. As. You. Think about an energy regulator, really fundamentally. They're they're, mainly about the money I mean a lot of other things have come in the picture but the. PUC again, like it sets the rage that it allows the utility, to collect money from its customers to. Give a return to its shareholders. And, to. You know make certain investments, that's at its core that's really what they do, but. In places like California, and a lot of the other sub states you. Know. Regulators. And utilities, have been. Pressed. Into service to, support, social, and environmental goals. And. And. None, more and many of these sort of come under the heading of what we call market transformation, so the idea of taking you. Know a relatively, new, and not yet commercial, technology. Like. In the, last decade. You know renewable energy and in the current, and coming, decade. Electric. Vehicles you know transforming. The market, for those to, make them fully commercial, and you know and pump priming so that's you know become a core part of the mission certainly. Of the California, Commission and I think, it's fair to say that you, know the Hawaii Commission, and to large extent the New York Commission understand, you know see themselves the same way so, they want market transformation, they want to support their states, you know EB.
Adoption. And greenhouse gas mitigation, goals. For. Sure they care about rates but. The other thing you really care about when they're kind of setting the rules for like who gets to do what and. How much the rate payers pay for is they. Also want competition in. Innovation. And you. Know they're mindful, that the utility, is regulated. Monopoly that it has essentially, you, know guaranteed, capital, recovery, and they. Have to somehow play this like, do this delicate, balancing, act to create a playing field in, which, you know new entrants. Providing. For, example charging services, can, come in and carve out business models in in, an industry that really has no natural monopoly characteristics, you, can't really say that you. Know easy charging, is a natural monopoly like, the way that you know the wires. Portion. Of your utility is so what. They're trying to balance it's like well if we have the utility to it you know they can probably fast and we. Can really deploy a lot of charging infrastructure and that helps sell a lot of cars but then, maybe we would like snuff out these, new entrants, who are probably more innovative, and the, than. The utilities, really a lot of my work and just, sort of thought that I've done over the last ten years has really been around this core, question, and, so we're gonna see how that's played out in in, various states. So. The, last thing I want to say is if you sort of think about the. Market transformation, challenge, of EVs. From, the person, effective of the. Auto, industry. Of. The, you know the environmental advocates. You, know generally, you know the broader community who want to see EVs adopted. We. Kind of came to the conclusion again, and the work that we did with, utilities. And regulators at e3, is that it really makes sense to frame, that conversation, around you, know what are the adoption, barriers, to EVs and there have been study. After, study a lot of good work out of, ICC, T in San Francisco, but. Certainly not limited to them so surveys, and studies on, factors, that, you. Know stand in the way of people buying cars and typically. You, know they zero in on you, know people just don't know that much about v's and, they're worried that they can't charge there's, not enough charging infrastructure, so. Range. Anxiety. And. And, today they still cost more than other vehicles and there are some other things and then, from the utility perspective. You. Know there's also this question of you, know how do we had a great this big new load, and into. Our grid, in particular, our just distribution, grid, where a charging, Evy can use as much electricity. Under, certain, circumstances. As a house does, today and. So. There's that question for them and then there's the other question, you. Know most, cars aren't, driving most of the time so, can, we somehow, incentivize, people to drive.
And Charge their cars in a way that's advantageous, to, the grid and particularly helps, us absorb. Solar energy we did a lot of work. Okay. So when you think about what. The utilities, role, will, be, they're. Really they're, really free models although therefore shown, here, so. Model. Number one is just basically this is a load like any other load it's just like a new subdivision you know the utilities, job is to just provide the service connection so, all, the stuff on its own system you, know the wires the, service, drop the transformer, up to the meter you know that's their job and that gets you know recovered through rates and everything, else that's up to the customer, the. So. That's like I said that's that's business, as usual. The. Opposite. End of the spectrum is, what. Some utilities, have asked their commissioners to let them do which is full ownership so they basically want to be they. Want to both, do the upgrade, and then they want to offer some sort of uh turnkey. Or concierge, service, and do everything, on the customer, side of the meter - including, owning and operating the charging infrastructure, and then. Case. Number two it's. Really the in-between case which, is what's referred to as a make ready where the utility does the upgrade on its side of the meter and then. It takes care of kind of the wiring, and, everything, else on the customer side of the meter up. To the charging station, then. The customer owns the charging station and has you know a separate, relationship, with some kind of third party company, like charge point, or evey go so. Those, are the models and a lot of the fight about what the utilities, role should be and what how, much rate payer money should be spent on, e be charging. Really. Kind. Of circles around, this, question of which. Of these roles does the utility play. So. How's, it worked out in our, free, States so again, in California. We've let a thousand. Flowers blooms, we've, tried all the models so Southern. California, which is pictured on. The right that's, a San, Diego Gas and Electric facility, they, persuaded the Commission to let them do this to, own and operate a, lot of charging infrastructure, primarily. At workplaces, and multi-family, housing. In.
Exchange. For. Piloting. A very interesting. Time. Dependent, tariff design which, is actually designed to. Give. Ease to. To. Integrate solar power because they have more solar on their system than any of the other utilities, so. At. The other end of the spectrum sandy. Southern, California Edison came, into the commission right from the beginning and said you know we just really mainly wanted to make Rarity's, and. You, know we think that well we think that will work. PG&E. Came, to the Commission and said you know we. Want, to do everything and, the Commission said no you. Can't and in, the end they ended up, getting. A, prime, early May creddies approved, with some exceptions, for disadvantaged, communities, that's a DAC, and. Multi-unit. Dwellings which have proved to be very difficult to serve and. Then there and, there's some pilots. And there, has not been a lot of utility, money yet, I think PG&E is the exception, but, it's really primarily a make ready that has gone into DC fast charging because. There's. There's. Kappa trade revenue and V W under. The settlement agreement. So. Kind, of a mishmash in, California, but I think in this you know this docket I mentioned before the policy docket, that's happening now they're really kind of realizing, you, know that nobody nobody thinks that it's wrong to do make Reddy's you know or everybody thinks it's fine did you make ready so then it's really more about what, are the circumstances in, which it's you, know acceptable, for utilities, to do more. New, York you know very different kettle of fish than California, you know fully restructured, state. So. The, utilities, are really principally, distribution, companies. They. You. Know New York it's the home of the stock orchid it's just you know it's a very market oriented state. And. The. Commission. Staff under. The supervision of the chair, of the New York Public Service Commission, wrote. This white paper I mentioned, and issued. It in January, and they. Basically, say look you know there's, no reason for utilities, to be in the charging, infrastructure, business or charging service business, at all and we. Don't want them in it and we think the make ready model, is fine and, we understand, that in rural upstate areas. Of New York it's, going to be difficult to deploy. The network of DCPS, chargers that's needed to you, know give people the range confidence, to say drive to Montreal. But. We think there should be some sort of franchise, arrangement. For that it's. Also the case that New York has this other pot of money the New York Power Authority gets, a lot of revenue from the big hydro plants, like, at Niagara Falls, and they've. Been spending some money on DC, fast charging too, so. So. That's kind of another reason that the utilities, don't necessarily, need to be tapped for that. Hawaii. When, we wrote our plan for. When. We helped Kiko. Write their. Transportation. And strategic plan they. Really, wanted, to include and, so you know it did I minced their plan what, they called a critical backbone.
Of Chargers that they would own and, the. Way, we described, it as we want to have all this creative destruction in. The charging, industry, and you. Know lots of innovation, and competition but. We don't want people to ever feel like they're gonna be stranded so, hiko should own a critical, backbone. So. When, the, Commission looked at this they said well we mean we don't really know what that means so they, told hiko to go hire a consultant, to come up with a model of what it is a Navigant, wrote a report and you can read it I, did. Not find it all that compelling, and I'm not. Sure the Commission did either because, they then issued yet another decision and they said let's. Just not talk about that critical, backbone thing for now just go just to make readies and then and. Work, on the buses because the, major cities, particularly oahu want. To start electrifying, buses so, that's. The that's, kind of what's going on in Hawaii so I would say in general the trend is towards, you. Know that the make ready is becoming, the principal model. It. Really gets the utility, largely out of the. Business of being a charging service provider, and. The. Exceptions, are going to be around. Inclusiveness. For disadvantaged, communities, and getting. Into places like multi-family, housing. Where. It's just a lot harder to Jack our hat you know jackhammer, things up and so on and so forth where. We do see different outcomes is for, those publicly owned utilities where they don't have a commission to answer to and they, are more kind, of a tool. And. I mean that in the best sense of the word of. Typically. The, local, city government so, you see Los Angeles Department of Water and Power or being, a lot more proactive. And. Also. See this to, some extent the southeast where Commission's tend to be more indulgent, of what utilities want to do. Okay. So. Let. Me talk about kind, of quickly go through a few of the other key. Considerations. For commissioners, so. California. Politics. Are such that. You. Know it's really, really important, to. Decision-makers, in Sacramento. To the legislature, in particular. And. Very much the you know on carbs radar, the air quality board, that. The, rollout of electric vehicles cannot, just benefit, the wealthy people who actually buy, new cars and, that. So. We see particularly, in California and. These, big you, know hundred. Plus you know many hundred multi hundred million, dollar decisions, authorizing. The. Investment and charging infrastructure, you know they're, gonna be percentages, in there that you have to put this much in disadvantaged, communities and that much and you know like at least this much and you know in multifamily, housing. And. PG a you know has a program, that they're a new, program where they're gonna actually do sort of like a turnkey, service, for low and moderate income customers. Now. There's a different point of view that we see more. On. The East Coast which is you. Know it's like look. The number, of EDS, that's gonna find its way into low and moderate-income communities it's, gonna be really small for a while because you know it's really a very small segment of the US population that, even buys new cars and, you. Know many people in low and moderate-income communities, particularly, in disadvantaged, communities are, buying you know maybe not even a second-hand, car but a third or a fourth hand car and, so. It's, really not a wise use of the ratepayers money to. Be. Building, charging infrastructure, in these communities, to, serve. What you know. Even if the charges were there but probably still be a relatively, small, number of cars so. The, other point of view is like. Look let's just focus on, cleaning. Up the emissions. Of the vehicles, that go through those communities, and are located close to them so, the. Port's. Big. Commercial, fleets. Freeway. And so that's you know the New York white paper says that explicitly, like we're you know we're not going to designate you know we're not going to tell them to go get these things built in low-income communities we're going to focus on cleaning up. Trucking. Trucking. And transit, and I. Mean I will say California is doing both I mean we lead the country in terms of what. We do with ports and transit, so you. Know we have a kind. Of I'm gonna have one of everything on the menu or. Maybe even several. And everything on the menu approach, but I. Think the key thing is that you. Know some of these more market oriented states again don't see it as you, know making that much sense to put. Infrastructure. In low-income, communities, I'm.
Going To skip. Past this because I've mainly covered it already but I think the key thing to notice that most of the discussion about transportation, electrification, to date is really mainly been about like duty, vehicles. I mean when you look at like the carbon. Emissions they, are where almost all the action is but, if you look at the local air quality impacts, then that's all, transit. And goods, movement and. So. You you, know you get a double whammy and that's why carb has actually moved. Away for example from zero emission, bus. Program and they now call it the advanced clean transit, rule and everything else is, an advanced clean car advanced, clean truck rule so. We. Will see a lot more action on that and in all the states and the thinking is by far the most advanced, in California. So. I, want, to talk about two final. Things really quickly. In. The last five, minutes because I want to have some room for Q&A, so. Cost-benefit, analysis, this is something that has been you know honed, to a very, fine, point. Over. Decades, at Commission's, like, the ones in California and New York and. You. Know new investments, for example in energy efficiency, or. The. Decision, about should we build this power plant or do the storage thing they go through the cost-benefit, analysis, ringer, there's. Been a big discussion about, you know should we be you, know applying cost-benefit, analysis, to transportation. Vacation. Investments, that utilities are making with their customers, money and. San. Diego Gas and Electric commissioned III to do a cost-benefit, analysis, for them of the, program that I told you about a few minutes ago and that I don't, think threw it in the circular file but nobody looked at the Commission they just sort of steamed ahead they haven't really worried about cost effectiveness at all because their viewers look this is market transformation where at the early stage of this market, why would we expect these investments, to be cost effective. You, know we're trying to we're. Trying to accomplish something that's you know is not really readily. Priced. On. The other hand you know with John, Rhodes the chair of the New York Commission when I met with them to discuss, some cost-benefit, analysis, that we did for NYSERDA, you, know he expressed a concern that he wants to use the rate payer dollars ratepayers. Dollars wisely, and, I mean I do think most commissioners, including all the ones in California feel that way as well but. They Levin that wisdom with their concern about market, transformation and you, know so he wants to be discriminating. About which programs. You know yield more benefits. The. Hawaii plan includes, some cost benefit analysis, but again it wasn't really something that was determinative for, their commission. So. But. Again like the dollars have not really been big in any state yet except for California, and some states have started to say okay when you come back to us utility, with a you know a hundred, thousand, sorry, a hundred million dollar program or something like that then you're really going to have to prove that it's going to generate benefits. Not just for people who own v's but. For the, general body of ratepayers, as well and the, reason that it would generate benefits for, the general body of ratepayers as well is, that if. The. Charging. V's doesn't require much, or any new distribution infrastructure, then you're basically recovering. Those fixed costs over more kilowatt hours of sales, and, if you do some sort of smart charging, to shift the charging, you know for example to overnight. The, wee hours then, you're gonna use it even you're going to use your fixed infrastructure. Even more efficiently and you. Can look at these later these are two charts they've pulled out of the Hawaiian. Electric plan. But. What they show is that, from. Kind of a regional, perspective, if you compare the costs of serving. The. IDI. Load to. All. The benefits that are reaped -. The environmental, benefits the, big dominant, thing is this light lavender bar, which is the gasoline savings. And, when. You compare those to the cost of making electricity it's, cheaper. I'm. Sorry the the, lavender yeah the lavenders the avoided. Gasoline, consumption. So, oh it's cheaper, but who's getting those benefits will the people who own the cars the, EBS so the other question is if we compare the cost of serving the, load to the revenue, paid, in the rates paid in by the people who own the cars does.
The Cost of serving them is the cost of serving them more or less than what they pay in and what. We found in, Hawaii was that it was more than what they pay in especially. Again if they're primarily charging off-peak so. This. Is the kind of thing that Commissioners care about but this is the level at which this has been done so far as purely like you. Know what are the effects of EB adoption, per se the question that's not being asked is although. We did a little bit of your questions. Not really being asked so much it's like but how does that compare to how much the utility wants to spend to. Help make this happen, okay, last thing I'm going to talk about is, so. Just talk about how the benefits to the, general body of ratepayers, are greater. When. We have smart charging so we shift charging, to off-peak, hours or, we put. It push it in two hours when there's a surplus of solar power, there's, a lot of different ways that you can do that with rates, there. Been a lot of creative rates. Experimented. With around, the u.s. I. Mentioned. The one that San Diego. Tried. That's a time-varying, rate. That. Specifically. Encourages charging, at, times a day when their surplus solar. New. York had. A pilot with a really interesting company, called fleet Karma, teamed up with Con Ed and they did a. They. Piloted an approach that basically, just paid people overboard, if they went the whole month without ever charging, during the on peak hours. Hawaii, is, again. At the direction of their Commission. Even. As we speak, developing. IDI. Rates that are gonna have, the same I think same goal it's the particularly, the SDG any rates to use their surplus solar, energy. When. Asked, by clients, when, we at. E3, you know what rate did we like the best, we always pointed, them to this San, Diego Gas and Electric rate, and. The thing that we liked about it was that it's. A three part rate so. There's. A customer, charge to just like basically what you charge you know pay every month to be connected and you know have a bill printed and sent to you you know then there's kind of a charge that's associated with kind of the total, size of your footprint, on the, grid and that can go down. If, you. Use. If, you you know spread your load app even it out some and, then the really interesting thing on there was the marginal cost value based charge. Which varies, by. Hours so they took the California, ISO day, had prices, and they said okay tomorrow it's gonna be a high solar day so the price is gonna be really low in the afternoon, and, we're. Gonna show that to the customer, in the hopes that they will choose to charge then so. Really. Interesting example. Again. Happy to provide and phone all of these so. I. Will. Just, say the mean, punch line from this this slide is that when we actually looked at dynamic rates, like, the one I just described, versus, standard. Time of use rates the. Dynamic rates really provide a lot more value, and, that's because, they, pick out the days, where. It's most useful to have somebody moved that they're charging around so they provide a lot more value, to the grid and so that's that's why we. Always. Supported those rates so. That is. All. I have to say that I have time to say and I'm. Happy to take your questions, right. Thanks. Very much Nancy that was a terrific, tour de force covering a. Huge. Amount, of territory. So. I'm gonna try to summarize. A long list of questions. There. Are several. Questions that kind of get. Just. Probably viewing, you as one of the world's expert, on all this. Of. The, state you've looked at which, which. Ones. Do you think are doing the best job managing. This transition, and are, any of them moving as fast as you think they. Ought to to, achieve the objectives. That we all have. In mind you can define whose, objectives, you you. Would like to use as a reference point for that, yeah. I mean that's a great question it's a really hard question to, answer because. Again, you you. Have to think about. Why. Dopey, UCS have the process, that they have I mean it's all about. Collecting. Money from the mini. To. Pay, for services that everybody uses in various ways to varying degrees, I, think, to me a couple of things stand, out is I mean I like how they did it in New York because and. Hawaii, because both of them were you know the Commission I think, provide, it in some direction, to begin with. And. You know, some you, know in Hawaii kind of like this is what you want these are the questions we want you to answer and how we want you to do it and it was a pretty compact, assignment, Hawaii's, a relatively, small, and uncomplicated, place you. Know in New York, they. Really had a pretty lean stakeholder, process and. You. Know came out with a paper instead okay just file this stuff in your rate cases you know and. It. Took them I think a year and a half to write the paper because. They were busy with other stuff so, you.
Know And this is a problem you know with regulation, is that you, know legislators. And. Regulators ambitions. Often exceed their means. Even. When I worked at the California Commission I was just blown, away by the amount of paperwork. And process, it takes to do anything there and I continue, to believe that that's, it, it, doesn't, like people, can get due process, without that much process, and. So. I guess, I would looked at those you, know I like how it's worked out in those other states. So. One more but. It's, kind of a collection of many issues it seems like a lot of the action here has to and, you could it up this way, with. A charging, capacity. So. Who. Should own what types, of charging, capacity. And who. Should have, access to that you've. Already talked a little bit about who, benefits and who pays. But, is there a general. You you see different. Business, models coming out where in. Some places you - and, you actually, gave one example of utilities. Either could do it or not do it OMS, could do it or not do it municipalities. Could. Do it third, parties, could could. Own it any, general, wisdom. From. Your perspective. On that if, you'd say you were. And. You you may be doing this for all I know suppose, you were a VC, and you were getting a bunch of. New. Business proposals, from different, people who were gonna buy and sell. Essentially. Electricity. From charging. Capacity, and so the. Investment. Would be in charging, capacity, which, ones do you think would make the most sense or do you just need, a wide, range of possibilities. To fit they're just different. Circumstances. One. Finds in, the different states. And sectors, oh. There's. A lot of questions wrapped up in that question, I, mean, I have a big fan of creative. Destruction so. You know and that's why I really you, know pushed hard in every jurisdiction where, I got to talk to a regulator have always pushed hard for the make ready model because I think essentially. That provides, and sufficient. Financial. Foundation. To, enable. Various, charging. Companies to try out different kinds, of models for interfacing. With customers, and you know for pricing charging services.
Or. Packaging. Up subscriptions, and. I. Think. That. It. You know and they've all I mean I guess the other thing I'll say is that I. Also. Think. That that free money from, a you know from the EBS Pease point of view from the charging company's point of view that free money has to be conditioned, some extent, you. Know and that is part of what results in so much litigation is. How. Much it's going to be conditioned, but one of the things that I think California has done and some other Commission's are thinking about is that there. Has to be some, kind of interoperability. If. Like if the ratepayers the, you know the general body of ratepayers are gonna subsidize. Your EB charging business then. Everybody. Has to be able to use your station it doesn't have to be free but they have to have a way that they can that, they can use it and. So. And they don't have to have a you know a, keychain, with 27, different RFID cards on it they should be able to call a number or swipe a credit card or or whatever. And. I think that's you know that's that's important. If. There's a part of that question I didn't answer that you would like me to answer in people. Parse. Things a. Little, bit are, there a whole host. Of questions on. What I would call grid and a great related. Grid integration issues. And. I know you touched on a little, bit but you, know everything everything from, is this system going to be able to take the. Increment. In total load is it going to be able to manage the various loads you, know between you. Know having more renewables, on having. Charging, perhaps doing vo vehicle-to-grid. Trades. And so on how how do you see that work you know I see people who either. Say it's totally impossible to go very fast or we'll. Work it out the whole thing will work we don't have to worry about those, are just details if we get everything set, up if we build it they will come. Actively. How do you see that set of issues yeah. I mean this is something we really looked at a lot from a lot of different angles at, e3, you, know at some point some of you probably seeing someone, from e3 present, on the pathways, model. Which is a energy, systems model, of the entire economy and I. Like to start there you know in some forums when I talk and you know what that shows is that really, the. New even, with super, aggressive, adoption, of EVs in California, and this would be true anywhere. Super. Aggressive, adoption of EVs and. Sort, of meeting the kind of energy efficiency targets we have that we pretty much have flat load at the system level all through, the 2020s, you know and that was before the co bed you, can on a crisis, head and.
Then It ramps up kind of gradually, after 2030, because at that point. The. New cars are very very. Efficient. You know the light, weighting has been very successful, and, and. So on so we, have never regarded, it as a. Problem for, the. You know generation. So, the issue is really primarily at the distribution level, and you, know if, you have a lot of cars really concentrated. In. A relatively small you. Know distribution. Area. You. Know how do you. How. Do you serve them and I think that's the most immediate question, it's, you. Know the utilities were all wringing their hands ten years ago that they were gonna have exploding, transformers, and you, know no such thing has happened since, then and what they've spent to accommodate, the cars that have been sold today it is pretty modest. But. That will become an issue going forward but, it's something that they should be able to plan. For, or. It I think there's some you know there's a lot of different, technologies. To solve that problem to, more quick ones if you were advising. The utility, which I it sounds like you do a lot, how. Would you. Advise. Them to prioritize, you. Actually did touch on this explicitly, but didn't say too much about it would you go for the light, duty vehicles, for, the, commercial. Market for. Municipal. Evie fleets is. There anything anything, any general guidance in that area I think. It really depends on where you are I mean if you're I. Mean, first of all everybody, it's foundational to do something for light duty vehicles, I think unless you're you know exclusively. Serve you, know an. Area where people just don't have you know if you're like a rural co-op, in Montana that should probably not be your priority but if there's like a meatpacking plant that you know trucks. Go in and out of all the time of school. Old and maybe you should thinking about the trucks. But. If you're you. Know the way they've looked at it for clients is you, know beyond, like you know like duty. Then what, are the major. You. Know commercial, and industrial transportation. Related, loads, in your community, you know has your transit, agency decided, that they want to electrify their fleet. Or. You. Know do you have big you, know multimodal, depots or a port or you know so. I think there it's all very you know very location, specific and you really need a custom, assessment, one. Last question that's come up in many of the seminars this quarter from totally different angles. Is, once. You start down, the Evy Road, how. Long before. Surprise. Surprise it turns out that fuel cell electric vehicles. Are actually an even better idea. Right I guess for you do, you feel the system has been set up a way in. A way that kind, of compromises. It's kind of like a, lock. In pathway, problem. Do.
You Think the current, initiatives. Could. Kind. Of fit. Hydrogen. Fuel cell vehicles or would be something else or are we making, you know investments. That will regret because we, should have known that the hydrogen, fuel cell vehicles would, ultimately, beat. Out the EVs. And how, do you come out on that issue, yeah it's it's a really interesting question, I mean. You. Know the. Air. Board has. Really gone out of their way for years you know to, call. You know call it a severe emission vehicle program to, have a fuel cell path to compliance, you. Know they really wanted, to figure out a way to finance, the, you know charging, or the hydrogen. Refueling, network. For. Cars, they. Thought they were going to use the low carbon fuel standard to, get the refiners. To pay for it but that didn't happen and you. Know there's a modest. Number of stations in California, and really no place else and, that. I think has led all. Of the major OEMs. To just think, well we got to have an electric, player in the game my understanding though is that the bigger factor, is actually in China where. They've really gone heavily, you know electric and. That. You know that's really the tale let's wagon that earns the dog that's we're the tail you're the dog, great. Well. Thanks. For a terrific seminar, and for answering all these questions so. Skillfully. I think you just proved my. My. Hypothesis. That you're one of the few people alive who actually, can, play, three-dimensional. Chess while, rollerskating. Thanks. Thanks, again. Well. We'll, look for you on campus, here with particularly, with the bits and frost watts, program, down, the road as soon as we're all cleared to travel, great. Thank you great thanks, a lot. You.