Strategic Development Jun 09 2026

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Unknown: Okay, everybody about ready?

Unknown: You're ready.

Unknown: Good evening and welcome to the Strategic Development Committee and Special Board Meeting

SPEAKER_09: of June 9, 2026.

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SPEAKER_09: ends.

SPEAKER_09: Chief legal officer, please conduct the roll call.

SPEAKER_09: Director Fishman?

Unknown: Here.

Unknown: Dr. Herber?

SPEAKER_07: Here.

SPEAKER_07: Chair Samborn?

SPEAKER_07: Here.

SPEAKER_07: All committee members are present.

SPEAKER_07: Also present are directors Rose, Kurth and present Tamayo.

SPEAKER_09: Fantastic.

SPEAKER_09: Thank you.

SPEAKER_09: Item number one on tonight's agenda is to provide the board presentations by external

SPEAKER_09: and internal experts regarding the resource adequacy and 2026 summer readiness followed

SPEAKER_09: by a discussion on the topic.

SPEAKER_09: This is an important presentation.

SPEAKER_09: We go into every summer hoping that we have all the resources we need to keep the power

SPEAKER_09: on during hot summers.

SPEAKER_09: So we're excited tonight to welcome Elliott Mainzer, president and chief executive officer

SPEAKER_09: at the California independent system operator.

SPEAKER_09: Arne Wilson, senior partner at energy and environmental economics or E3.

SPEAKER_09: And John Olson, the director of energy trading and contracts here at SMUD.

SPEAKER_09: So I will turn it over to you.

Unknown: What's that?

Unknown: Yep.

Unknown: Thank you very much for the opportunity to be here.

SPEAKER_11: It's nice to see all of you.

SPEAKER_11: Before we jump in, I had just a couple of things I had mentioned to a few of my friends

SPEAKER_11: here tonight that I'm a very happy SMUD customer.

SPEAKER_11: So thank you very much.

SPEAKER_11: As is the ISO, as you know, we are squarely.

SPEAKER_11: When I selected my home in Folsom five and a half years ago, I consciously selected for

SPEAKER_11: SMUD.

SPEAKER_11: It has paid off dearly.

SPEAKER_11: I love my thermostat program.

SPEAKER_11: I like my customer service.

SPEAKER_11: And actually just today, I'm moving from a home into a new place in Folsom and swapped

SPEAKER_11: service and it was seamless.

SPEAKER_11: So thank you for that.

SPEAKER_11: That was great.

SPEAKER_11: Yeah.

SPEAKER_11: And I also wanted just a quick nod out to John.

SPEAKER_11: John has just been an incredible partner for us at the ISO as Paul and others as well.

SPEAKER_11: But just particularly this last couple of years, the work that we've done together,

SPEAKER_11: particularly on the development of the extended day head market and just generally staying

SPEAKER_11: tied out on resource adequacy and everything that we're doing here in California.

SPEAKER_11: The partnership with SMUD is very important to us.

SPEAKER_11: And I just really appreciate that.

SPEAKER_11: And just thanks a lot for including me tonight.

SPEAKER_11: As some of you note, typically for this presentation, I'm going to see if I can get this right.

SPEAKER_11: There we go.

SPEAKER_11: Typically for this presentation, you have had the last several years, my chief operating

SPEAKER_11: officer Mark Rothleader, who can typically run circles around me on the technical issues.

SPEAKER_11: And so I'm going to try to keep up here.

SPEAKER_11: I'm going to try to avoid any acronyms, but I'm going to really touch just on three key

SPEAKER_11: topics that are major preoccupations for us at the CAISO.

SPEAKER_11: Obviously summer outlook, how are we looking for this year?

SPEAKER_11: Talk a little bit more about the regional market development.

SPEAKER_11: It's been an extremely exciting time here in the last few weeks with the commencement

SPEAKER_11: of the extended day head market, which we're going to talk about how that's going.

SPEAKER_11: And then just talk a little bit about some of the work that we're doing on transmission

SPEAKER_11: planning, both within California and outside of the state.

SPEAKER_11: Obviously infrastructure development, the onboarding of new resources.

SPEAKER_11: I started at the CAISO about six weeks after the rotating outages of 2020.

SPEAKER_11: And as you can imagine, there was a lot of things flying around at that time and getting

SPEAKER_11: ourselves back to a situation where the working relationships with all of the different entities

SPEAKER_11: in the reliability patch and making sure that the state is sitting on a solid foundation

SPEAKER_11: of resource adequacy really has been job number one.

SPEAKER_11: And I'm guardedly optimistic that we're in better shape.

SPEAKER_11: So we're going to start out with on the weather.

SPEAKER_11: I think we all know, and I'm sure some of you have looked at these maps, that we're

SPEAKER_11: gearing up for a hot summer, right?

SPEAKER_11: There is definitely the meteorologists are all telling us that we've got increased chances

SPEAKER_11: of above normal temperatures compared to recent summers, particularly along coastal California

SPEAKER_11: and the Pacific Northwest.

SPEAKER_11: And actually the forecasts have called for the hot start to summer.

SPEAKER_11: And we're already seeing that.

SPEAKER_11: I know it's going to be 90 and above up in the Northwest this weekend.

SPEAKER_11: And it's already warm.

SPEAKER_11: May was, I think, the highest recorded load in the WEC all time with the Northwest and

SPEAKER_11: the desert Southwest already recording records.

SPEAKER_11: And temperatures are indicating it's going to be a hot summer, particularly because of

SPEAKER_11: the sea surface temperatures are much warmer this year than they were in recent years.

SPEAKER_11: So you can see where some of the heat is concentrated.

SPEAKER_11: This is the kind of year where we just have higher likelihood of things getting hot at

SPEAKER_11: the same time, which we know is the kind of situation where notwithstanding our best planning,

SPEAKER_11: we can run into some issues.

SPEAKER_11: It's also been a really odd year.

SPEAKER_11: Starting in California, I'm sure you all know this, it's been, we had a, actually a fairly

SPEAKER_11: big water year in some ways, right?

SPEAKER_11: The reservoirs in many places in California are at close to record levels, but we also

SPEAKER_11: have record low snowpack in many parts of the Sierra.

SPEAKER_11: So we're in a situation this year where the reservoirs are high, but we're going to have

SPEAKER_11: to really sip from them across the course of the summer because by the time we get to

SPEAKER_11: August and September, we're not going to have any more refill.

SPEAKER_11: And this is actually a condition, as you can see from on the left side, just the tremendous

SPEAKER_11: limited snowpack in many parts of the Pacific Northwest.

SPEAKER_11: It's really only the upper Columbia, you know, up into British Columbia, that's got

SPEAKER_11: a decent snowpack and still building precip.

SPEAKER_11: But you can see across the west, some very, very low reservoir capacity conditions, particularly

SPEAKER_11: in the desert southwest, scattered across the intermountain west and into the desert

SPEAKER_11: southwest.

SPEAKER_11: So this is a year where we're going to have to be very carefully manage our water situation

SPEAKER_11: across the course of the summer.

SPEAKER_11: And generally, as I said, you know, looking at fire season as well, this is the kind of

SPEAKER_11: year we've already in California had a lot of grass fires, particularly in Southern California.

SPEAKER_11: We're going to have to watch that very carefully.

SPEAKER_11: But you can see the fire map looks quite risky, particularly in the Great Basin and up in

SPEAKER_11: the Pacific Northwest.

SPEAKER_11: And it sort of worsens as you get across the course of the season.

SPEAKER_11: So, yes.

SPEAKER_09: Can I ask you a question?

SPEAKER_11: Yeah.

SPEAKER_09: This goes through August, but if I recall, some of the worst months have been September

SPEAKER_09: and October, if we don't have rain.

SPEAKER_11: Exactly.

SPEAKER_11: So it extends well.

SPEAKER_11: But that's a great question.

SPEAKER_11: It certainly extends into the fall.

SPEAKER_11: And then, of course, you get the winds, you can really whip things up.

SPEAKER_11: So you have very dangerous fire conditions.

SPEAKER_11: We could see a little bit of relief down in the desert southwest, maybe a little bit of

SPEAKER_11: a higher monsoon season.

SPEAKER_11: But it's going to be a lot of vegetation buildup, some very, very dry and hot conditions, limited

SPEAKER_11: stream flow.

SPEAKER_11: And I think we all just generally know that climatically you're hearing our meteorologist

SPEAKER_11: talking about moving into kind of one of these super El Nino's.

SPEAKER_11: And we're sort of transitioning into that, right?

SPEAKER_11: So hot, fire risk, these are the kind of things we're going to have to be watching out for.

SPEAKER_11: Now fortunately, against these conditions, we really, certainly speaking for the California

SPEAKER_11: independent system operators, Balancing Area, we're fortunate to be in much, much, much

SPEAKER_11: better condition than we were just several years ago.

SPEAKER_11: Just as a backdrop to these numbers, over the last five years, we've brought on over

SPEAKER_11: 30,000 megawatts of new generation within our system.

SPEAKER_11: So a huge amount of procurement through the investor and utilities and some of the embeddings.

SPEAKER_11: We've also, as you know, we now have close to 17,000 megawatts of four-hour lithium

SPEAKER_11: ion batteries on our grid, which have just truly been transformational in terms of helping

SPEAKER_11: us to manage the net peak, which you're well familiar with after sunset.

SPEAKER_11: So that has been a truly remarkable transformation in the system.

SPEAKER_11: We've been building up the planning reserve margin and generally strengthening things

SPEAKER_11: to the point that just even in the last several months, just from last year, from September

SPEAKER_11: 1st through April, we added another 2,127 megawatts.

SPEAKER_11: Then just in the last few months, another 6,000 megawatts of generation, including,

SPEAKER_11: it's still a little bit of a kind of a worst secret, the Sunzia Wind Energy Project, which

SPEAKER_11: is just about to be formally announced, is now operating in New Mexico, delivering energy

SPEAKER_11: to California.

SPEAKER_11: We're actually operating that wind plant as part of our balancing authority.

SPEAKER_11: So it's part of the system.

SPEAKER_11: It's contributing to the generation capability in the system.

SPEAKER_02: It was very well publicized in the energy blogs, your notice of the FETs.

SPEAKER_02: Yeah, it's been interesting.

SPEAKER_11: Pattern has been a little bit hesitant to talk about it.

SPEAKER_11: They just don't want to get too much in the headlines, developing big wind projects in

SPEAKER_11: today's world.

SPEAKER_11: But it's coming out.

SPEAKER_11: We're actually going to New Mexico next week for the formal commercial ceremony on it.

SPEAKER_11: So we'll be reading more about it.

SPEAKER_11: The load forecast for September peaks at a bit higher than last year, 46,844 megawatts,

SPEAKER_11: our ending 18, around 6 p.m., based on the California Energy Commission's integrated

SPEAKER_11: policy report.

SPEAKER_11: And our probabilistic assessment, when we look at the amount of installed generating

SPEAKER_11: capacity in the system and adjust for the type of resources, characteristics, and outages,

SPEAKER_11: shows us with a reasonable surplus of about 2,550 megawatts at the 1 in 10.

SPEAKER_11: So that 1 in 10 loss of load expectation, that's the metric that we've been using.

SPEAKER_11: That's when we go to the Public Utilities Commission, other forums that we advocate,

SPEAKER_11: we think that's the right basic target for resource adequacy sufficiency within the system.

SPEAKER_11: And we're fortunate today that we are meeting that.

SPEAKER_11: Now this graphic, I'm not going to spend a ton of time looking at this, but you can

SPEAKER_11: basically see the firm line, the bottom line, the black line, is the 2025 forecast out of

SPEAKER_11: the integrated policy report from the California Energy Commission.

SPEAKER_11: You can see that we're fairly comfortably meeting that.

SPEAKER_11: And then the dotted line above that is that forecast plus the 17.5 percent planning reserve

SPEAKER_11: margin.

SPEAKER_11: And right above that is that hyper forecast plus a 25 percent planning reserve margin.

SPEAKER_11: Right now, especially with the battery capacity, we're meeting all of those goals with that

SPEAKER_11: 2,500 megawatt surplus in September.

SPEAKER_11: But not all of that capacity is actually under contract with must offer obligations to California

SPEAKER_11: utilities.

SPEAKER_11: A significant amount of it is in the ground.

SPEAKER_11: But one of the things that we're watching is we're watching resource adequacy prices,

SPEAKER_11: we're watching some of that generation which is not under contract, could conceivably get

SPEAKER_11: exported outside of California.

SPEAKER_11: We've seen that before.

SPEAKER_11: So that's one of the variables that we're watching.

SPEAKER_11: And we're encouraging the PEC to keep a pretty careful watch on what the gas plant capacity

SPEAKER_11: is doing.

SPEAKER_11: Because if it starts exporting out of the state, it's not available for in-state needs.

SPEAKER_11: But generally, all things considered, we've made enormous progress in the recent years.

SPEAKER_11: When we are entering the summer, I would say cautiously optimistic, which you've heard

SPEAKER_11: of, the scenario that really gets us, as I mentioned, is that scenario where it's just

SPEAKER_11: big time high pressure system, that trough that settles over a big portion of the west,

SPEAKER_11: like we saw back in 2020, where the ability for folks to be importing and exporting power

SPEAKER_11: amongst each other gets really limited.

SPEAKER_11: And that's the situation where we're likely deep, deep into our strategic reserve of gas

SPEAKER_11: plants and other demand response resources.

SPEAKER_11: And honestly, hoping for the best, which is never a great strategy when it comes to

SPEAKER_11: unreliability.

SPEAKER_11: But basically, the bottom line, much better conditions, still exposed in that worst case

SPEAKER_11: to the super heater, west wide heat wave.

SPEAKER_11: And I think probably mirrors your perspective as well, John.

Unknown: Elliot?

SPEAKER_02: Yes.

SPEAKER_02: Can I ask you a question?

SPEAKER_02: Yeah.

SPEAKER_02: When I read the summer forecast, I don't know, probably like seven years ago, and it was still

SPEAKER_02: that one in 10 loss of load expectation.

SPEAKER_02: So it hasn't changed despite bringing on all these resources.

SPEAKER_02: Would you have any perspective more like what's under the hood of the car, right?

SPEAKER_02: Why are we having the same risk analysis despite so much more being done?

SPEAKER_02: Well, that's a good question.

SPEAKER_11: I want to, probably not the person's going to give you the definitive analysis, but at

SPEAKER_11: the end of the day, I mean, seven, eight years ago, we were still retiring generation,

SPEAKER_11: and we were bringing a lot of solar energy on the system.

SPEAKER_11: And I don't think we had a great, super great, fine-tuned understanding of how it was going

SPEAKER_11: to perform.

SPEAKER_11: We didn't have the batteries or the other dispatchable capacity on the system.

SPEAKER_11: I think our resource adequacy analytics were probably a little bit less mature, and Arne

SPEAKER_11: may have a perspective on that.

SPEAKER_11: But I think today, given a much sharper understanding of load, a much sharper understanding of how

SPEAKER_11: the different resources perform and what their net qualifying capacity actually is,

SPEAKER_11: all the behind the meter generation that's come onto the grid and displaced load, I think

SPEAKER_11: the latest fresh tells us we're just in much better shape.

SPEAKER_11: And Arne, you may have a point on that.

SPEAKER_11: You've been watching it for years.

Unknown: Yeah, I mean, I think what I heard you ask, when it comes to the one day in 10, that's

SPEAKER_06: just the standard that we plan to.

SPEAKER_06: And that's always been the standard that we plan to.

SPEAKER_06: Now six years ago, we were a little bit short of that.

SPEAKER_06: But I think your last slide showed that we actually have 2500 megawatts of surplus capacity.

SPEAKER_06: So we're performing above one day in 10.

SPEAKER_06: We're more like one day in 15 now, given how much capacity we have online.

SPEAKER_06: But one day in 10 still is the standard that we plan to.

SPEAKER_06: Yeah, that's a great.

SPEAKER_11: So the standard hasn't changed that much.

SPEAKER_11: But the net load resource balance relative to that standard has gotten much, much better.

SPEAKER_11: We might be meeting the standard.

SPEAKER_11: Okay.

SPEAKER_11: Thank you.

SPEAKER_11: We're getting close to meeting it.

SPEAKER_09: Arne, you have a question.

SPEAKER_09: So most of what you presented, I think, was all utility scale.

SPEAKER_09: So with people adopting more behind the meter generation and storage, is that at all factored

SPEAKER_09: into this?

SPEAKER_11: Absolutely.

SPEAKER_11: I mean, we work quite hard with the California Energy Commission and the utilities to be

SPEAKER_11: able to sort of forecast what all that behind the meter generation is and how it sort of

SPEAKER_11: nets against the aggregate load in the system.

SPEAKER_11: As a matter of fact, we really manage the system to the net load of the system, the

SPEAKER_11: gross demand minus the front of the meter and the behind the meter renewables, particularly

SPEAKER_11: the solar.

SPEAKER_11: So it's really that net demand on the system that we have to manage that puts the most

SPEAKER_11: strain on the grid in August and September.

SPEAKER_09: So it is accounted for and all that?

SPEAKER_09: It is definitely accounted for.

SPEAKER_09: Because another reason to love SMUD, we doubled our incentives for battery storage.

SPEAKER_09: In case anybody's interested out there.

SPEAKER_09: Good.

SPEAKER_09: It shows up in your peak forecast, right, which is 46 or 47,000.

SPEAKER_05: And I mean, years ago, it was over 50 often, or at least getting there.

SPEAKER_05: Exactly.

SPEAKER_05: And so that's reflecting that behind the meter that just shows up like less load.

Unknown: Yeah.

SPEAKER_11: I mean, I think it's really a big contributing factor to why the load forecast in California

SPEAKER_11: are growing much more slowly than they are in other places, right?

SPEAKER_11: We keep putting on more and more of that distributed resource.

SPEAKER_11: I mean, in 2022, and we hit a 52,000 megawatt net peak, imagine how much higher that would

SPEAKER_11: have been without the behind the meter generation.

SPEAKER_06: We actually did some analysis of that.

SPEAKER_06: And our estimate was about 58 gigawatts is what that would have been.

SPEAKER_11: Yeah.

SPEAKER_11: So there was another 6,000 megawatts right there.

SPEAKER_11: Yeah.

SPEAKER_01: I'm just curious.

SPEAKER_01: You know, obviously, there's some value with rooftop solar.

SPEAKER_01: But with the increasing demand and it coming from all over, is there added value in having

SPEAKER_01: rooftop solar on homes where you can cut down a little bit of the energy that's needed?

Unknown: Yeah.

SPEAKER_11: I mean, look, there's no simple answer to that.

SPEAKER_11: From our perspective at the ISO, we don't get involved with the utility programs and

SPEAKER_11: designing the incentives or doing a fixed and variable cost recovery.

SPEAKER_11: Certainly from a grid operations perspective, given the kind of extreme weather that we're

SPEAKER_11: having and the costs of serving that load, and then just the onset of all the new technology

SPEAKER_11: that's coming on the system to the extent to which folks are investing comfortably and

SPEAKER_11: economically in rooftop solar and that works for them, it helps, right?

SPEAKER_11: There's no doubt about it.

SPEAKER_11: Whether it is the per megawatt hour unit cost cheapest way to do it, that's a bigger

SPEAKER_11: debate and honestly at the ISO, that's not really our business.

SPEAKER_11: Our business is just making sure it's factored in.

SPEAKER_11: And I can tell you on a day when it's 52,000 megawatts, we'll take every last megawatt

SPEAKER_11: a generation we can get from a reliability perspective.

SPEAKER_11: Yeah.

SPEAKER_11: I want to just make sure, checking on time, should I keep going?

SPEAKER_11: Are we okay?

SPEAKER_11: And we're okay?

SPEAKER_11: I want to just make sure our other two presenters get their material in.

SPEAKER_11: But those are great questions.

SPEAKER_11: Thanks.

SPEAKER_09: I'm never sure, John.

SPEAKER_11: So, in the next six years, and we're going to have plenty of time for other questions

SPEAKER_11: too, but I want to switch to the markets for a couple minutes because certainly when you

SPEAKER_11: think about the evolution of the Western United States and California's relationship in the

SPEAKER_11: last 10, 12 years, the development of the Western energy imbalance market, which started

SPEAKER_11: back in 2013, 2014, where the KaISO sort of said to the rest of the West, look, we've

SPEAKER_11: built a real-time energy market here.

SPEAKER_11: We see you all starting to experience some of the same issues, you know, more renewables,

SPEAKER_11: more volatility, bigger transmission constraints.

SPEAKER_11: We can extend our market out to your system at relatively low cost on a voluntary basis.

SPEAKER_11: Pacific Corps was the first entity to take us up on that.

SPEAKER_11: They went live in 2014.

SPEAKER_11: And 12 years later, we now have a total of 24 participants in the Western energy imbalance

SPEAKER_11: market, including about 80 percent, representing about 80 percent of the load service in the

SPEAKER_11: Western interconnection.

SPEAKER_11: And this market has just been an incredibly important piece of not only bending the cost

SPEAKER_11: curve in terms of production cost savings, we'll come back to that.

SPEAKER_11: I think we're now over $8.6 billion of production cost savings, economic savings, but the reliability

SPEAKER_11: benefits of this market, it just takes advantage of the physical transmission connectivity

SPEAKER_11: that exists between California and the Northwest and California in the desert southwest and

SPEAKER_11: right across Nevada into the intermountain west.

SPEAKER_11: We just are blessed.

Unknown: Even though we've got work to do on our grid, we have a very well-connected system.

SPEAKER_11: We have a lot of resource diversity, the hydro in the northwest, California's renewables,

SPEAKER_11: the gas in the desert southwest, the solar, the batteries.

SPEAKER_11: This market leverages that connectivity and diversity and produces huge reliability and

SPEAKER_11: economic value.

SPEAKER_11: And as you can see, since 2019, when the Balancing Authority of Northern California and SMUD

SPEAKER_11: went live in WEIM, it's also been a significant source of value.

SPEAKER_11: I think talking to John, I think that if you make a few adjustments for some of the prices

SPEAKER_11: and some extreme conditions, I think it's probably at least about $900 million of collective

SPEAKER_11: value for Bank as a Whole and I think roughly $600 million, I think, for SMUD.

SPEAKER_11: That's real value when affordability is paramount.

SPEAKER_11: Also more broadly for all of the participants, it's been a tremendous...

SPEAKER_11: Just Q1, 2026, we saw almost $400 million of economic benefits for participants.

SPEAKER_11: Also this has become a tool for helping to displace higher costs, more polluting thermal

SPEAKER_11: generation and to reduce the amount of curtailments of renewables.

SPEAKER_11: So the clean energy and environmental greenhouse gas savings have been very significant in

SPEAKER_11: this market.

SPEAKER_11: And also across the footprint, it's allowed the participants over time as they become

SPEAKER_11: more comfortable with the operation to reduce the amount of flexible reserves that they

SPEAKER_11: need to carry on their systems to follow their load.

SPEAKER_11: So it's just honestly been a real winner in many ways.

SPEAKER_11: And of course, this is the market footprint.

SPEAKER_11: I love this slide.

SPEAKER_11: This slide is...

SPEAKER_11: This is the one that scared me.

SPEAKER_09: We call this the money slide because this is a map of the transmission connections that

SPEAKER_11: exist between all of the different EIM participants.

SPEAKER_11: These are known as the energy transfer path, the ETSRs.

SPEAKER_11: It just shows you how much connectivity exists within this existing market.

SPEAKER_11: You can see where bank fits into that.

SPEAKER_11: It's really been the reason that we've seen both the economic and reliability benefits

SPEAKER_11: of this market for so many years.

SPEAKER_11: And that is the footprint.

SPEAKER_11: That is the grid.

SPEAKER_11: That's the connectivity on which we are building now our extended day ahead market.

SPEAKER_11: The EIM showed the power of optimizing the next 5, 10, 15 minutes.

SPEAKER_11: But we know that the majority of energy transactions are consummated in the day ahead time frame.

SPEAKER_11: And so the ability now to move from real time to day ahead is a big part of the optimization

SPEAKER_11: now.

Unknown: Elliot, obviously some of the cost savings comes in not using thermal plants, not having

SPEAKER_05: to pay for that gas.

SPEAKER_11: Absolutely.

Unknown: Have you done any studies on how much impact that's having on reducing the gas prices for

SPEAKER_05: the gas we do have to use?

Unknown: Yeah, it's a good question.

SPEAKER_11: I don't know if I've seen an assessment that's specific to the EIM, but certainly in California

SPEAKER_11: and in other parts of the state, the amount of gas consumption in California is way down

SPEAKER_11: year on year, just the last two or three years.

SPEAKER_11: Significantly, 30, 40 percent as we bring on all the solar.

SPEAKER_11: Yeah, it's a huge amount.

SPEAKER_11: And certainly that's contributing to lower gas, higher gas storage, lower gas prices,

SPEAKER_11: lower volatility.

SPEAKER_11: Just go straight to the customer bottom line.

SPEAKER_11: And so the physics and economics of this market have been remarkable.

SPEAKER_11: I will say, obviously, having been a Bonneville Power Administrator for seven years and having

SPEAKER_11: brought BPA into this market, one of the things we're watching right now is whether Bonneville

SPEAKER_11: is going to stay in this market or they're going to part for the alternative markets

SPEAKER_11: plus market, which is being developed to the east of us in the Southwest Power Pool.

SPEAKER_11: That's a whole other story.

SPEAKER_11: But for me, I'm just on record having managed these grids for the last 25 years that breaking

SPEAKER_11: this apart, especially with the passage last year of Assembly Bill 825, which is going

SPEAKER_11: to allow us to manage these, both this market and the extended market under fully independent

SPEAKER_11: governance is something that the West will regret for generations.

SPEAKER_11: It will degrade economics and it will degrade reliability.

SPEAKER_11: So we're going to watch how that plays out here in the next couple of years.

SPEAKER_11: So I'm going to take about five more minutes.

SPEAKER_11: And then I want to make sure we get Arnie and John on.

SPEAKER_11: And we'll come back for some additional questions.

SPEAKER_11: But if we take one.

SPEAKER_11: No, I'll take that question now.

SPEAKER_11: I just want to make sure.

SPEAKER_01: I hear over and over and over about how our grid is unstable, statewide, that we really

SPEAKER_01: have to put a lot of money into it.

SPEAKER_01: And yet what you seem to be saying is that we're pretty well connected and we're pretty

SPEAKER_01: strong.

Unknown: Is that fair or is that too political of a question?

SPEAKER_11: We unequivocally have challenges.

SPEAKER_11: And there's a lot of infrastructure developed still.

SPEAKER_11: If California wants to stay on track with its greenhouse gas goals and its decarbonization

SPEAKER_11: goals and has no smud within your own service territory, very ambitious in that area.

SPEAKER_11: It's not going to be easy.

SPEAKER_11: It's going to require a ton of investment, a lot of new technology, a lot of new infrastructure.

SPEAKER_11: We know it's California.

SPEAKER_11: It's not easy to put anything in the ground in California.

SPEAKER_11: But we are, in the grand scheme of things, sitting in a pretty good situation.

SPEAKER_11: We have a diverse portfolio.

SPEAKER_11: We've got natural gas, hydro, geothermal, batteries, solar, wind, we have fabulous transmission

SPEAKER_11: connectivity.

SPEAKER_11: We've got these markets.

SPEAKER_11: And we know with clear and present purpose that we need to keep strengthening these things

SPEAKER_11: and building.

SPEAKER_11: So there are huge challenges.

SPEAKER_11: But I think the state has come a long way.

SPEAKER_11: And I know you guys have done the same thing within the smud service territory.

SPEAKER_11: This graphic just shows it's very important.

SPEAKER_11: Obviously I talk about the energy markets in three buckets.

SPEAKER_11: There's the physics and the economics, which I described through the graphics, and how

SPEAKER_11: powerful the EIM has been.

SPEAKER_11: And then there's the politics or the governance.

SPEAKER_11: And for many years, and I'm sure you've heard this, there have been concerns about the KISO's

SPEAKER_11: markets, including at smud and at bank, about whether or not you're going to get a fair

SPEAKER_11: shake participating in these markets if our board is appointed by the governor.

SPEAKER_11: And that has been something that folks have been wanting to change for years.

SPEAKER_11: We have been slowly but surely over the last 10 years providing greater and greater decision-making

SPEAKER_11: authority to what's known as our Western Energy Markets governing body, which is another group

SPEAKER_11: of five people that oversee the EIM and now the EDAM, to the point that that board today

SPEAKER_11: has primary authority over filings with FERC.

SPEAKER_11: This bill that was passed last year, AB825, now creates a new organization that is going

SPEAKER_11: to be able to operate the energy markets under fully independent governance.

SPEAKER_11: It will be the best structured governance model in the Western interconnection, if not

SPEAKER_11: the country.

SPEAKER_11: Participatory, fully independent, public purposed, great access to great participation by the

SPEAKER_11: states, et cetera.

SPEAKER_11: And I think we're moving in great shape.

SPEAKER_11: And so we can talk about this a little bit more in the Q&A section.

SPEAKER_11: But this evolutionary path to governance positions us with the physics and economics of this

SPEAKER_11: wide area market and that governance.

SPEAKER_11: And it's very important.

SPEAKER_11: On May 1st, we launched the extended day ahead market.

SPEAKER_11: It was a huge deal.

SPEAKER_11: And I know, John, we share pride of getting to that point.

SPEAKER_11: Arne, of course, too, has been a big protagonist for years of interconnected markets.

SPEAKER_11: It was an amazing thing to be there at midnight.

SPEAKER_11: I'm sure you guys have participated in that just to watch the cutover, absolutely seamless

SPEAKER_11: cutover by the technology folks.

SPEAKER_11: The next few days, fine-tuning connectivity and the way that the systems were modeled.

SPEAKER_11: Now we're fine-tuning the settlements.

SPEAKER_11: But this market has been kicked off.

SPEAKER_11: First participant was Pacific Corps.

SPEAKER_11: You guys go next year.

SPEAKER_11: Really excited.

SPEAKER_11: Thank you.

Unknown: Along with LA, actually, and Turlock.

SPEAKER_11: That's pretty amazing.

SPEAKER_11: For the first time, we're going to have all the California utilities in our markets with

SPEAKER_11: IAD coming in in 2020.

SPEAKER_11: We're very proud of that and really appreciative.

SPEAKER_11: And this market is just going to take what we've done with EIM and bring even greater

SPEAKER_11: visibility and transactional physical connectivity.

SPEAKER_11: And I think it's going to be really successful.

SPEAKER_11: I'm excited to watch it evolve.

SPEAKER_11: The last couple things I just wanted to mention, I'll give a couple highlights of these slides.

SPEAKER_11: But obviously, for us, transmission planning and transmission development in California

SPEAKER_11: are a key piece of our responsibilities at the ISO.

SPEAKER_11: And we've all seen the load forecasts continue to grow in our service territory.

SPEAKER_11: We're watching, especially when we start factoring in electrification and we start factoring

SPEAKER_11: in the data center growth.

SPEAKER_11: We're not Texas.

SPEAKER_11: We're not Virginia.

SPEAKER_11: We're not seeing crazy.

SPEAKER_11: But it's coming.

SPEAKER_11: So, 3, 5, 7, 9 gigawatts over the next 10, 15 years, it's coming.

SPEAKER_11: And it's something we're having to watch.

SPEAKER_11: The other thing that's happening is that we're going to start seeing our winter peak starting

SPEAKER_11: to approximate our summer peak.

SPEAKER_11: We're seeing a fundamental shift.

SPEAKER_11: And that raises some huge questions for our resource portfolio.

SPEAKER_11: And I'll be honest, I think this is going to be something we're going to have to have

SPEAKER_11: some hard conversations about.

SPEAKER_11: If you look at the way we're meeting demand, these are the base cases we've modeled in

SPEAKER_11: our most recent transmission plan for both 2035 and 2040.

SPEAKER_11: You can see this is still very much a solar and battery portfolio.

SPEAKER_11: We've got a few other things in there.

SPEAKER_11: A little bit of geothermal.

SPEAKER_11: There's a little bit more.

SPEAKER_11: There's a modest amount of in-state wind.

SPEAKER_11: And there will be a little bit of out-of-state wind.

SPEAKER_11: But it's still very much a solar and battery strategy, which has been very, very helpful

SPEAKER_11: for the summer peak.

SPEAKER_11: But it is not going to be sufficient in the wintertime.

SPEAKER_11: And I think the next few years there's going to be a lot of conversation in California,

SPEAKER_11: particularly at the PUC and at this energy commission, figuring out how are we going

SPEAKER_11: to supplement this portfolio on both the supply side and the demand side to be able to meet

SPEAKER_11: the winter peaks.

SPEAKER_09: Question on that one.

SPEAKER_09: And by the way, we're not in a rush.

SPEAKER_09: Okay.

SPEAKER_09: I just want to make sure that we're interested.

SPEAKER_09: I know.

SPEAKER_09: But the last slide, geothermal, it looked like it was staying steady.

SPEAKER_09: And I just went and saw the Calpine facility in Napa.

SPEAKER_09: I was super impressed.

SPEAKER_09: And I looked at the map of California that's got a ton of geothermal potential that we

SPEAKER_09: have not tapped into, which is baseload.

SPEAKER_09: And I have a house in South Lake.

SPEAKER_09: I know that they are winter peaking as well.

SPEAKER_09: And we need more renewable baseload.

SPEAKER_09: So is anybody looking at investing in geothermal across the state?

SPEAKER_11: Yes, they are.

SPEAKER_11: And it's gaining a lot of attention in the legislature.

SPEAKER_11: There's a whole sort of advocacy group right now around geothermal.

SPEAKER_11: The Fervo organization selling in Nevada, you're going to see the profile that had jump

SPEAKER_11: quickly and they're going to have to take a look at the economics, the resource base,

SPEAKER_11: the transmission.

SPEAKER_11: But I think these questions are questions that have to start being addressed yesterday.

SPEAKER_11: Because we can't afford to get to 2035 or 2040 and then suddenly start scrambling to

SPEAKER_11: deal with this issue.

SPEAKER_11: We have to do it 10 years in advance, just like the transmission.

SPEAKER_11: So you'll hear us particularly as we get into the gubernatorial transition, Gavin Newsom

SPEAKER_11: has really carried the flag for decarbonization.

SPEAKER_11: Pretty pure.

SPEAKER_11: In many ways the world has needed that probably.

SPEAKER_11: I think as we move into the next phase we're going to have to have some hard conversations

SPEAKER_11: around firm capacity and affordability and are we really building the right transmission

SPEAKER_11: portfolio for the right resource base?

SPEAKER_11: Is this going to keep the lights on in February?

SPEAKER_11: I'm not convinced it is yet.

SPEAKER_11: So we're going to be working very collaboratively with folks in California to try to make sure

SPEAKER_11: those questions are getting raised, provide analytics and intellectual honesty.

SPEAKER_11: We're obviously very proud to be in California and everything that's going on here.

SPEAKER_11: But at the end of the day we're going to have to keep the lights on and we're going to have

SPEAKER_11: to be very hard headed.

SPEAKER_11: I'm sure Arne you'll have a few things to say about, I know you do, I've seen these

SPEAKER_11: slides, the super saturation of batteries and solar.

SPEAKER_11: Because it's not just happening in California, it's happening in other parts of the west.

SPEAKER_11: We don't want to just get into a situation where we're all just sort of feeding over

SPEAKER_11: supplied solar energy into the grid.

SPEAKER_11: That's not going to be a great outcome.

SPEAKER_11: So these questions need to be answered.

SPEAKER_11: And so I just had a couple last slides just to show you.

SPEAKER_11: It really has been a remarkable amount of transmission.

SPEAKER_11: It's a lot of money too.

SPEAKER_11: I mean the last five cycles our board has approved $27 billion worth of transmission

SPEAKER_11: and we've identified many of what we think are going to be the major builds to keep the

SPEAKER_11: state on track with SB100.

SPEAKER_11: The projects on the right are ones that we've actually selected through our competitive

SPEAKER_11: solicitation processes with independent transmission developers and sometimes in partnership with

SPEAKER_11: the utilities.

SPEAKER_11: And then that dotted red line is a line that we're studying a little bit further in our

SPEAKER_11: study because we're now having to start dealing with south to north congestion on the system.

SPEAKER_11: We've put a ton of solar energy.

SPEAKER_11: That's SP to NP path that goes right through the middle of California is going to require

SPEAKER_11: some reinforcements and that's something we're paying attention to.

SPEAKER_09: Before you go off that slide real quick, having housed in South Lake Tahoe with what just

SPEAKER_09: happened with Nevada energy pulling out, I mean there's a lot of questions about why

SPEAKER_09: there was never transmission over the mountain to connect to the California grid because

SPEAKER_09: now they're going to have to go through maybe Utah through Nevada.

SPEAKER_09: But Californians aren't maybe going to get served or they're going to have to pay outrageous

SPEAKER_09: amounts and rates which is not popular right now.

SPEAKER_09: So it never is.

SPEAKER_09: So I notice there's nothing going over that side but the Trout Canyon which is new is

SPEAKER_09: in the south area.

SPEAKER_09: Is there a way to get the power from the south over the mountain and up?

SPEAKER_11: For physics there is.

SPEAKER_11: Politically hard to say.

SPEAKER_11: And you know I appreciate you raising that issue.

SPEAKER_11: I have not spent a lot of time looking at it.

SPEAKER_11: It's been a little bit out of our jurisdiction but I'm certainly going to check in with

SPEAKER_11: NV energy and kind of see what's happening there and kind of understand if it does have

SPEAKER_11: implications for us because to your point if you're going to do anything and it's even

SPEAKER_11: feasible you got to start yesterday.

SPEAKER_11: Yeah.

SPEAKER_11: So understood.

SPEAKER_02: The last thing, the last map I'll leave you with.

SPEAKER_02: I would echo that as having family with a cabin also impacted by saying you'll have

SPEAKER_02: no power next year.

SPEAKER_02: Yeah.

SPEAKER_11: I don't know how that situation materialized.

SPEAKER_11: It's not something I'm glad it's not a problem.

SPEAKER_11: We'll see what happens.

SPEAKER_11: We'll be buying a generator again.

SPEAKER_11: The City Council, South Lake Tahoe, there's nothing that all the public comment is since

SPEAKER_09: March.

SPEAKER_09: Yeah.

SPEAKER_02: I mentioned that.

SPEAKER_02: There's by 30,000 generators and you know.

SPEAKER_02: That's a mess.

SPEAKER_02: One question on the previous slide.

SPEAKER_02: The red dotted line, I'm assuming I'm not a transmission in the weeds like some things

SPEAKER_02: like I'd like to be.

SPEAKER_02: But when you look at like the node pricing you can always see the big price difference

SPEAKER_02: between the north and the south.

SPEAKER_02: Is that, would that potentially help solve some of those issues?

SPEAKER_02: Absolutely.

SPEAKER_11: Yeah.

SPEAKER_11: The reason you're seeing that is because generation's getting clustered up in the south side and

SPEAKER_11: prices are going down, down, down and it can't get up north to serve.

SPEAKER_11: So you have to use higher cost generation up north and that price separation is basically

SPEAKER_11: the cost of congestion.

SPEAKER_11: And for a long time we've been looking at this.

SPEAKER_11: There hasn't really been enough economic justification.

SPEAKER_11: I've encouraged my team to think longer term about this because it's a problem.

SPEAKER_11: It's going to take a number of years to solve and it's clearly manifesting itself.

SPEAKER_02: Where in that transmission planning process is something like that, is it years away?

SPEAKER_02: Is it years away?

SPEAKER_11: Oh no.

SPEAKER_11: Well, the line itself?

SPEAKER_11: No, but for approval.

SPEAKER_11: Next year.

SPEAKER_11: What we did in this case, the board just approved the 2025-2026 plan and we sketched this Wind

SPEAKER_11: Hub to Tesla construct out but said it requires more engineering and costing analysis in the

SPEAKER_11: next 12 months.

SPEAKER_11: So next year we'll take it back.

SPEAKER_11: Probably next year.

SPEAKER_11: We'll have a solution for it.

SPEAKER_11: Yeah.

SPEAKER_11: And in the interim, you know, we're not going to, you know, it's going to take time to build

SPEAKER_11: that.

SPEAKER_11: We're going to have to look at other methodologies to manage congestion and you'll look at some

SPEAKER_11: other technologies, et cetera.

SPEAKER_11: This last map that I have, I just put it out here.

SPEAKER_11: We're not going to, I'm not going to spend much time on it, but for those of you that

SPEAKER_11: track the dialogue that's happened, there's a lot, there's still a lot of focus in the

SPEAKER_11: West on transmission planning.

SPEAKER_11: And look, none of us can argue with the benefits of transmission planning.

SPEAKER_11: Transmission planning is important.

SPEAKER_11: I like that, but I, I maybe a little bit cheekily quote an old friend of mine from the Northwest

SPEAKER_11: that says, you know, planning is good, but doing is better.

Unknown: Right?

SPEAKER_11: And the region has been planning this transmission system almost incessantly for the last 30

SPEAKER_11: years, right?

SPEAKER_11: To the point of absurdity.

SPEAKER_11: And the thing I'd like to point out is we're actually building a lot of transmission right

SPEAKER_11: now and we are connecting the regions.

SPEAKER_11: And in particular, we're connecting EDAM regions to each other, right?

SPEAKER_11: We're building out transmission from New Mexico through Arizona into California.

SPEAKER_11: We're building a line known as the Swift North line that's going to go all the way from El

SPEAKER_11: Dorado across Nevada up into Idaho.

SPEAKER_11: There's transmission coming across known as the Board of the Hemingway line that'll connect

SPEAKER_11: the Bonneville system or the Idaho power system, Pacific, or is building out the gateway.

SPEAKER_11: These are the transmission lines that are in production, that are in construction, that

SPEAKER_11: are stitching the West together.

SPEAKER_11: And any planning effort that comes in over the top of that shouldn't be asking questions

SPEAKER_11: like gee, how should we build around California or gee, how should we connect Northwest and

SPEAKER_11: Arizona when they're already massively connected and we should be using the energy imbalance

SPEAKER_11: mark in an EDAM to optimize them.

SPEAKER_11: So a little bit of editorial there, but this is a very important map for people to understand

SPEAKER_11: because this is the grid we're building out and we should be building on top of that,

SPEAKER_11: not around it.

SPEAKER_11: So okay.

SPEAKER_11: Thank you.

SPEAKER_11: Real quick, is the North Plains connector the first one there?

SPEAKER_05: Is that a connection between the Eastern and Western interconnection?

SPEAKER_05: It is.

SPEAKER_11: It is.

SPEAKER_11: It's a SPP into WEC.

SPEAKER_11: It's actually got quite a bit of interest.

SPEAKER_11: We'll see.

SPEAKER_11: The proof will be in the pudding on that one.

SPEAKER_11: The solid lines are facilities that have already been built and many of these are in active

SPEAKER_11: construction.

SPEAKER_11: The Sunsea line is being energized officially next week.

SPEAKER_11: The Boardman Hemingway, Swift North will be in production in 2027.

SPEAKER_11: These are lines that are actively in construction.

SPEAKER_11: The segments of Gateway have been built.

SPEAKER_11: I look forward to some additional questions.

SPEAKER_11: I want to make sure we get Arnie and John up here.

SPEAKER_11: They've got important material.

SPEAKER_11: Thank you so much and we'll look forward to the dialogue.

Unknown: Good evening, everyone.

Unknown: My name is Arnie Olson.

SPEAKER_06: I'm a senior partner with E3.

SPEAKER_06: If you're not familiar with E3, we're a consultancy that's almost entirely focused on the energy

SPEAKER_06: transition.

SPEAKER_06: We're headquartered in San Francisco, but we do a lot of work across California, across

SPEAKER_06: the West, and really across the country.

SPEAKER_06: I lead our integrated system planning practice, so I work on a lot of IRPs.

SPEAKER_06: I'm often asked to just provide some, what's the state of the market today?

SPEAKER_06: It's based on all the stuff that you're seeing here in California and all over the place.

SPEAKER_06: What's the current state of play?

SPEAKER_06: I have some slides that are intended to help you through some of the issues that we're

SPEAKER_06: seeing as the major issues out there in the industry today.

SPEAKER_06: One of them is just resource cost and affordability.

SPEAKER_06: I'm going to hit that one first.

SPEAKER_06: The second one, as Elliot teed up, is resource adequacy.

SPEAKER_06: We talked about resource adequacy in California already, but we've done a couple of studies

SPEAKER_06: just coming out this year that summarized the resource adequacy situation in our neighboring

SPEAKER_06: jurisdictions, so in the desert southwest and then the Pacific Northwest.

SPEAKER_06: I'm going to give you some of the highlights from those studies.

SPEAKER_06: The last one that's hot right now is that I'm going to talk about is clean energy accounting.

SPEAKER_06: That may be a bit of an obscure one, but if you're familiar, if you've been tracking at

SPEAKER_06: all the greenhouse gas protocol, this is the protocol that's developed by a group that

SPEAKER_06: all corporations use to report out their climate impacts.

SPEAKER_06: There's a change that's been proposed to the way that they do accounting that's interesting

SPEAKER_06: and potentially really meaningful.

SPEAKER_06: Most utilities haven't really been paying attention to that debate.

Unknown: Part of the reason why I focused on all these three topics is we're now in the process of

SPEAKER_06: working through SMUD's next IRP.

SPEAKER_06: All these are going to be live topics in that IRP and issues that we'll be exploring over

SPEAKER_06: the next several months as we do the modeling for your system.

SPEAKER_06: I don't have any SMUD specific results to talk about here, but I thought I would talk

SPEAKER_06: about some of the debates that we're seeing elsewhere, just sort of tee up the issues

SPEAKER_06: in your mind and maybe whet your appetite for what we'll come back and talk about later

SPEAKER_06: in the summer and the fall.

SPEAKER_06: Just with respect to resource costs, I'm going to start with where we were a few years ago.

SPEAKER_06: I think last year when I came up here, I had a backward-looking picture of SMUD's seas

SPEAKER_06: with a sailboat and how beautiful it was a few years ago.

SPEAKER_06: Now, it didn't feel like that at the time.

SPEAKER_06: I remember it always feels like we're in the midst of a storm.

SPEAKER_06: It's only in retrospect that you see it's a way stormier now, so it must mean that things

SPEAKER_06: were smooth sailing then.

SPEAKER_06: There were some advantages that we had, and this is one of them.

SPEAKER_06: The whole decade between 2010 and 2020, we're at a time of declining resource costs.

SPEAKER_06: That's solar on the top left, it's wind on the top right.

SPEAKER_06: That hump in the middle is right after 2008, so the decline is 2008 to 2020 is on the right

SPEAKER_06: side there, and then batteries.

SPEAKER_06: All of these resources coming down in costs, that's just made our jobs easier.

SPEAKER_06: It's made it easier for us to have higher standards for clean energy, to go out and

SPEAKER_06: procure more clean energy, so things are cheaper than they obviously they would otherwise be.

SPEAKER_06: But it's also really important for project success.

SPEAKER_06: I think this is maybe not as widely understood as it should be.

SPEAKER_06: When you're in an area of declining costs, the developer can bid aggressively, and then

SPEAKER_06: their panels come in, all their materials come in below their cost expectations.

SPEAKER_06: They've got a really successful and profitable project, and they're going to turn somersaults

SPEAKER_06: to make sure that project goes through so they can make that profit.

SPEAKER_06: If we're in an area of increasing costs, which we are now, which we'll get to in a minute,

SPEAKER_06: it's kind of the opposite.

SPEAKER_06: They're having to figure out, gosh, how do I bid to win the bid, but I don't want to

SPEAKER_06: regret that I win the bid, and sometimes they win the bid, and their prices come in higher

SPEAKER_06: than they thought they would, and they can't meet them.

SPEAKER_06: They don't have a profitable project, and they'll often, it will just drop out.

SPEAKER_06: We're seeing a lot of project failures now because of what's happening with prices.

SPEAKER_06: That's just something to be aware of and why it's much more difficult now than it was several

SPEAKER_06: years ago.

SPEAKER_06: I call it the roaring 20s now for power prices.

SPEAKER_06: That was the area that we were in.

SPEAKER_06: This is what's happened since 2020.

SPEAKER_06: It really started with COVID and all the supply chain disruptions, the international trade

SPEAKER_06: conditions, but it's continued through a lot of the political issues.

SPEAKER_06: Some of the international trade issues started during the Biden administration with the foreign

SPEAKER_06: entities of concern and some of the tariffs on China, but obviously since the Trump administration,

SPEAKER_06: that's become much, much worse.

SPEAKER_06: These prices don't reflect in yet all of the impacts from the federal policy changes.

SPEAKER_06: Just to give you that caveat, but what we've seen since 2020, now these are national numbers,

SPEAKER_06: California numbers will be a little bit better than this, but nationally we're seeing wind

SPEAKER_06: PPAs have come up from $25 a megawatt hour in 2020 up to $71 a megawatt hour on average

SPEAKER_06: nationally.

SPEAKER_06: So, 160% increase.

SPEAKER_06: Solar, from about 30, and then it declined a little bit still, but then up to $57 a megawatt

SPEAKER_06: hour today.

SPEAKER_06: So, 109% increase since Q2 of 2020.

SPEAKER_06: And again, this doesn't reflect in all of the impacts of current federal policy.

SPEAKER_06: So this next slide looks at what happens when we now start to bring in the passage of the

SPEAKER_06: ABBA, I'm not going to call it beautiful, act, and the tariffs that are, you know, maybe

SPEAKER_06: we won't have them now, but maybe we will, or maybe they'll find another way to implement

SPEAKER_06: the tariffs.

SPEAKER_06: So our estimates are that PPA prices could go up by another 36 to 124% in California

SPEAKER_06: for solar.

SPEAKER_06: And for batteries, the cost could go up by another 18 to 88%, depending on the outcome

SPEAKER_06: of all of the stuff that's happening at the federal government.

SPEAKER_06: Now there's still a lot of uncertainty about how all these policies will be implemented,

SPEAKER_06: what stuff will be able to get through, what stuff won't, and what it will do to supply

SPEAKER_06: chains and costs.

SPEAKER_06: So just to give you a sense of both the magnitude of the cost increases, but also the sense

SPEAKER_06: of uncertainty that's out there in the industry about what they can really bid and what stuff

SPEAKER_06: really costs.

SPEAKER_06: So it just makes bid evaluation really, really difficult right now.

SPEAKER_06: And you know, of course, this plays right into affordability, right?

SPEAKER_06: And we've seen this, you know, in California on was on the front lines of this, we haven't

SPEAKER_06: seen the big increases from the IOUs recently, but within the last several years, PG&E rates

SPEAKER_06: went up by 87%.

SPEAKER_06: And since what rates went up by 79%, and San Diego is we're already high, they only went

SPEAKER_06: up by 41%.

SPEAKER_06: So this is just what's happening, you know, not very little of this we're seeing for the

SPEAKER_06: for the municipal and for the public power entities in California.

SPEAKER_06: This is mostly driven by distribution costs on the IOU systems, wildfire costs, both direct

SPEAKER_06: payments to the wildfire fund, but also hardening of their systems through to avoid future sparks.

SPEAKER_06: And it's also driven by net energy metering, which is a very significant cost shift on

SPEAKER_06: the IOU systems that the ratepayer advocate estimated that is $8 billion per year.

SPEAKER_06: So that would be something like 30 to 40% of this, it would be just due to net energy

SPEAKER_06: metering on the IOU systems.

SPEAKER_06: And you know, we do a lot of work in back east, as I mentioned, and this is a hot issue

SPEAKER_06: back east as well.

SPEAKER_06: So we do in New York, where we work, New Jersey, Massachusetts, the governors are under a lot

SPEAKER_06: of pressure, because rates are going up, and their customers are really feeling the

SPEAKER_06: pinch and it's not just power rates, they're feeling the pinch for a whole bunch of reasons,

SPEAKER_06: right?

SPEAKER_06: If you look at the, what is it, the University of Michigan consumer confidence index, people

SPEAKER_06: are feeling really, really unconfident about the economy, like way below the how the economy

SPEAKER_06: is actually performing.

SPEAKER_06: And the literature that I read about that suggests that a lot of that is because of

SPEAKER_06: people's perceptions of inflation, and just that things have things are much more expensive

SPEAKER_06: now than they were a few years ago.

SPEAKER_06: And that's just contributing to their sense of just economic unease, and it just makes

SPEAKER_06: it really difficult.

SPEAKER_06: Now, very little of this is because of clean energy and energy supply.

SPEAKER_06: So this is mostly by wires and the other things that I mentioned distribution.

SPEAKER_06: But that doesn't mean that this still means that they're feeling the pinch and are less

SPEAKER_06: likely and less willing to pay extra costs for higher cost electricity supply.

SPEAKER_05: Your bottom point there, net energy metering cost shift, I thought the IOUs have significantly

SPEAKER_05: lowered what they're paying in an M rate, and specifically to deal with that.

SPEAKER_05: Is there still, it's still out of balance?

Unknown: Yeah, so the action that the Commission took with the net billing tariff was to eliminate

SPEAKER_06: the export credit at the retail rate.

SPEAKER_06: So retail rates are, let's say, 40 to 50 cents a kilowatt hour in the IOU service areas.

SPEAKER_06: So as a solar customer, you're able to avoid paying those costs for the energy that you

SPEAKER_06: consume on site.

SPEAKER_06: But you're also able to receive that cost and just a credit against your bill if you

SPEAKER_06: export your solar power to the grid.

SPEAKER_06: So the action that they took was to reduce that credit from the full retail rate of 50

SPEAKER_06: cents to something like the avoided cost of energy, which is much more like 12 cents.

SPEAKER_06: But it's just for the exported portion, and it's just for new systems.

SPEAKER_06: All of the existing systems are grandfathered.

SPEAKER_06: So the $8 billion that the consumer advocate estimates, that's still there for all of the

SPEAKER_06: existing customers.

SPEAKER_06: Even the change to the export credit doesn't eliminate the growth of the cost shift.

SPEAKER_06: So the cost shift is still growing as customers are continuing to add solar and continuing

SPEAKER_06: to avoid paying the cost of the grid for all of the energy that they consume on site.

Unknown: So what the commission did then didn't really solve anything and some of these made things

SPEAKER_06: worse?

SPEAKER_06: Well, no, it definitely made things better.

SPEAKER_06: So it slowed the rate of bleeding, if you want to put it that way.

SPEAKER_06: But it didn't stop the bleeding.

SPEAKER_06: So just a couple of points on the state of the California market.

SPEAKER_06: So it's going to be trickier to navigate in the future.

SPEAKER_06: We've talked a little bit about the solar and battery saturation already.

SPEAKER_06: But just to give you some sense of that, so we have so much solar online now that in 2024,

SPEAKER_06: we had 1000 hours of negative prices in the Kaizo market in the SP15 zone.

SPEAKER_06: So this gets a little bit to what Elia talked about.

SPEAKER_06: The rationale for building south to north transmission is to bring some of this energy

SPEAKER_06: that would otherwise have been curtailed to the north where it can be utilized.

SPEAKER_06: But that's 1000 hours of negative prices.

SPEAKER_06: Now solar can only ever produce during 4300 hours, half the hours of the year when the

SPEAKER_06: sun is shining.

SPEAKER_06: And most of its production is concentrated into half of those hours.

SPEAKER_06: So most of it is concentrated into 2000 hours to maybe 2500 hours per year.

SPEAKER_06: So this is negative prices during a significant portion of the times in which Southern California

SPEAKER_06: solar was producing.

SPEAKER_06: So this is a big economic hit for any owner of solar in the SP15 area.

SPEAKER_06: On the top, the graphic on the right is a heat map of prices in 2023 and 2035.

SPEAKER_06: So we project this to grow.

SPEAKER_06: We project negative pricing to become more prevalent in the future.

SPEAKER_06: That blue area in the middle is the middle of the day.

SPEAKER_06: The blue means prices are negative.

SPEAKER_06: And evening, we still see they're red.

SPEAKER_06: So they're high in the evening, especially in the summer as you're having to ramp up

SPEAKER_06: the gas plants.

SPEAKER_06: But you can see that area of blue just grows over between now and 2035 as we continue to

SPEAKER_06: add more and more solar in California.

SPEAKER_02: We had a bunch of these charts in our solar valuation work a number of years ago.

SPEAKER_02: How has that analysis, some of that core analysis, held up over the last five years or so?

Unknown: I mean it's very much, you know, what we're seeing in the market today is very much what

SPEAKER_06: we expected to see five years ago.

Unknown: I mean it's really, it's actually kind of a simple phenomenon, right?

SPEAKER_06: The sun comes up every day.

SPEAKER_06: And so you know when the solar is going to produce.

SPEAKER_06: And you know how much load you have during that period.

SPEAKER_06: And you can just do the math.

SPEAKER_06: You can really do it in a spreadsheet, honestly.

SPEAKER_06: We do it in sophisticated models, but it's not that hard to just see and understand what's

SPEAKER_06: happening.

SPEAKER_06: We just have more solar than we can use.

SPEAKER_06: Now we're building batteries, and that's helping.

SPEAKER_06: So that's helping us to spread some of that solar out into the evening, which is a good

SPEAKER_06: thing.

SPEAKER_06: So what's, the prevalence of negative prices in the future is going to be, it's going to

SPEAKER_06: be a bit of a race, kind of a push-pull between solar and batteries.

SPEAKER_06: The more batteries we build, the more it alleviates this.

SPEAKER_06: But that then allows you to build more solar.

SPEAKER_06: And then more solar makes you want to build more batteries.

SPEAKER_06: So that's, you know, the negative prices are what creates the economic opportunity for

SPEAKER_06: batteries to make money because they charge up a night, or they get paid to charge at

SPEAKER_06: night and then they discharge and get paid to discharge during the evening.

SPEAKER_06: And also, needing longer duration storage as well, right?

SPEAKER_06: Yeah, we, yeah.

Unknown: No, that's right.

SPEAKER_06: So this is all, yeah, what we're mostly seeing now is four-hour batteries.

SPEAKER_06: And I'll get to that in a minute, that we're starting to get to the saturation point on

SPEAKER_06: four-hour batteries in the KAISL system as well.

SPEAKER_06: Now, these dynamics are different for every system.

SPEAKER_06: So the SMUD system isn't quite as saturated with solar and batteries yet as the KAISL

SPEAKER_06: system is, but these dynamics will happen to every system as they continue to build

SPEAKER_06: out solar and storage.

SPEAKER_06: So the saturation is also leading to future lower capacity values for batteries.

SPEAKER_06: So we're getting to the point now where batteries are starting to become saturated with respect

SPEAKER_06: to capacity.

SPEAKER_06: And this was a little bit hard to read, but these are the most recent, what we call ELCCs

SPEAKER_06: for storage in the states, the PUCs, IRP process where we do the modeling.

SPEAKER_06: And just to zero in on the numbers that are the most interesting, which is in 2035, we're

SPEAKER_06: seeing capacity values for our battery storage of 10 to 20% of nameplate.

SPEAKER_06: That means you build 100 megawatts of batteries and you only get 10 megawatts of credit toward

SPEAKER_06: meeting all the resource adequacy needs of the system.

SPEAKER_06: And the reason for that is because as we just build more and more four-hour batteries, we're

SPEAKER_06: taking care of the short events and what we have left to take care of are longer events.

SPEAKER_06: So we end up with more extended energy shortages where you just need more duration to be able

SPEAKER_06: to deal with those.

SPEAKER_06: So I'm going to shift gears a little bit and talk about what's happening in the Southwest.

SPEAKER_06: And again, these are a couple of studies that we just came out with.

SPEAKER_06: Yeah.

Unknown: Sorry.

SPEAKER_02: Sorry.

SPEAKER_02: Before we move on, on this last graph, it's really interesting.

SPEAKER_02: I glanced at this earlier, right?

SPEAKER_02: But when we look at that 100-hour, even the 100-hour, the orange bar, as it goes out into

SPEAKER_02: that 2035 and 45 range, it's interesting that it's still, even 100 hours, is only running

SPEAKER_02: at 50% capacity.

SPEAKER_02: Is that just like what we just saw with the fog last year is 100 hours isn't going to

SPEAKER_02: cover three weeks of new renewable generation?

SPEAKER_02: I mean, yeah, it could be some of that.

SPEAKER_06: I think what's happening is that we're starting to see some wintertime events come into our

SPEAKER_06: loss of load modeling.

SPEAKER_06: Mostly we've been a summer peaking system and a summer constrained system.

SPEAKER_06: We're now starting to see, because we have a lot of solar in the summertime and we have

SPEAKER_06: growing loads in the wintertime because of electric vehicles and building electrification,

SPEAKER_06: that we're starting to see more wintertime events.

SPEAKER_06: And those wintertime events are energy constrained.

SPEAKER_06: So there just might not be enough energy to charge that 100-hour battery so that it can

SPEAKER_06: perform at a high level during that extended.

SPEAKER_02: How old is this analysis and what was it done for?

SPEAKER_06: This was done for the PUC's IRP process and this is, I think, just within the last few

SPEAKER_06: months.

SPEAKER_06: Okay, so this is latest.

SPEAKER_06: I've grabbed the most recent one.

SPEAKER_02: I know you guys are up to some sophisticated work.

SPEAKER_02: Thank you.

Unknown: So it just gives you a sense, and I think, Ellie, I alluded to this earlier, that we're

SPEAKER_06: now going to need another resource.

SPEAKER_06: So we've had a long runway where building solar and batteries has helped us both from

SPEAKER_06: a sustainability perspective but also from a reliability perspective.

SPEAKER_06: So that's been a good place to be.

Unknown: It's been a nice little run, but we're kind of getting to the end of that runway now and

SPEAKER_06: we're going to need another resource.

SPEAKER_06: And whether that's geothermal, maybe it's long duration.

SPEAKER_06: And yeah, I mean, I'm really excited about all the developments that we're seeing in

SPEAKER_06: the geothermal space.

SPEAKER_06: I'm sure you saw the FERVO IPO, which came back with a much larger number than they were

SPEAKER_06: hoping for.

SPEAKER_06: So that's really, really exciting.

SPEAKER_06: They now have a bunch of capital to go off and develop that technology, which looks really

SPEAKER_06: promising.

SPEAKER_06: I'm really hopeful that we'll get gigawatts of geothermal online in the West over the

SPEAKER_06: next 10 to 15 years.

SPEAKER_06: Now we need tens of gigawatts of capacity, so that's going to help.

SPEAKER_06: It's not going to solve the whole problem for us.

SPEAKER_02: Is the sort of joint here in this analysis between 2028 and the data in 2030, you see

SPEAKER_02: those big reductions.

SPEAKER_02: Is there a saturation point?

SPEAKER_02: It's very small.

SPEAKER_02: Is there a saturation point as we're up to, what, 17,000-ish megawatts of batteries?

SPEAKER_02: Is there a saturation point in that analysis where you see that degradation?

SPEAKER_02: Yeah, you start to see the curve, if I could just draw it with my hand for battery.

SPEAKER_06: It kind of looks like this, and then it drops pretty rapidly, and then it kind of starts

SPEAKER_06: to level out.

SPEAKER_02: Do you go offhand just around what that number is?

SPEAKER_02: No, you think you're about right.

SPEAKER_06: Let's say 17,000 megawatts, and the Kaisel system is, let's say, 50-something, 50,000

SPEAKER_06: megawatts, let's say.

SPEAKER_06: So let's say about a third of peak capacity is about where that starts to drop off.

SPEAKER_06: So we're coming up on it.

SPEAKER_06: Yeah.

SPEAKER_06: Interesting.

SPEAKER_06: Thank you.

SPEAKER_06: That will depend.

Unknown: Every system's a little bit different, as I'll talk about.

SPEAKER_06: So just briefly to give you a sense of what's happening.

SPEAKER_06: So again, this was a study that was sponsored by the six large utilities in the southwest,

SPEAKER_06: looking at resource adequacy in their jurisdiction.

SPEAKER_06: I'm going to next show you a Northwest resource adequacy study after this.

SPEAKER_06: The common theme from these is we have these aggressive clean energy goals, and everyone

SPEAKER_06: does, but we also have a near-term resource adequacy need.

SPEAKER_06: So what tools do we have available to us near-term to meet our resource adequacy needs, and

SPEAKER_06: what does that do to us long-term?

SPEAKER_06: Do those help us or hinder us from meeting our long-term clean energy goals?

SPEAKER_06: And the other theme that we see in both regions and really everywhere is now much more rapidly

SPEAKER_06: growing load.

Unknown: So we talked a little bit about data center loads in California.

SPEAKER_06: We're seeing still a surprising amount of that.

SPEAKER_06: In the southwest, we're seeing a lot more.

SPEAKER_06: So the Phoenix area is where a lot of entities want to be.

SPEAKER_06: There's a lot of data center load moving into there.

SPEAKER_06: There's a lot of manufacturing moving in as well.

SPEAKER_06: Intel's building a huge new facility there.

Unknown: So this one just kind of compares our most recent load forecast for the southwest to

SPEAKER_06: that dash line, which was the one that we produced in 2021.

SPEAKER_06: And you can see how much that line has come up.

SPEAKER_06: It's several thousand megawatts more load that they're expecting than they were just

SPEAKER_06: four years ago.

SPEAKER_06: And between now and about 26 gigawatts, in 10 years, they'll be at about 36 gigawatts

SPEAKER_06: of peak load.

SPEAKER_06: So 10,000 megawatts of new load that they'll have to serve over the next 10 years.

SPEAKER_06: What they're finding is that they're looking at a diverse portfolio of resources to meet

SPEAKER_06: these loads.

SPEAKER_06: So in our graphs, the blue is wind, the yellow is solar, and the purple is battery storage.

SPEAKER_06: And the gray is natural gas.

SPEAKER_06: And they are looking at building new natural gas in the southwest region.

SPEAKER_06: In fact, the utilities are investing in a new pipeline capacity to ensure that they

SPEAKER_06: have fuel to burn in their new natural gas plants as they see that as a critical resource

SPEAKER_06: to help them meet their resource adequacy needs.

SPEAKER_06: But you can also see all of the solar and wind and batteries that they're planning to

SPEAKER_06: build.

SPEAKER_06: And how far you go with the carbon, with clean energy, you can see that they might

SPEAKER_06: end up with tens of gigawatts of new solar, wind, and batteries in the southwest as well.

Unknown: In that graph, geothermal is almost negligible.

SPEAKER_08: There's a little bit.

SPEAKER_06: Right above the gas.

SPEAKER_06: There's a small red line that's hard to see.

SPEAKER_06: That's right.

Unknown: Yeah.

SPEAKER_06: And the reason for that is it's just not really a resource that you can look at today and

SPEAKER_06: say that's a commercially available resource that I know I can go out and sign a contract

SPEAKER_06: with tomorrow and have that be a viable resource that I can count on for reliability.

SPEAKER_06: I think we're getting closer to being at that point, but we're really not quite there yet

SPEAKER_06: as an industry.

SPEAKER_06: I'm hopeful this would look different in five years.

SPEAKER_06: And there's a lot of interesting technologies that are out there just around the horizon,

SPEAKER_06: but you can't count on those until you have a track record of performance.

SPEAKER_08: But we have.

SPEAKER_08: We buy it.

SPEAKER_08: I mean, NAPA's been working for 40 years.

Unknown: Yeah.

SPEAKER_06: And so that older technology we know works.

SPEAKER_06: That's also very expensive and it doesn't work in every location.

SPEAKER_06: So what's really exciting about the geothermal industry is that there are several new technologies

SPEAKER_06: now.

SPEAKER_06: Fervo is using fracking techniques to sort of access heat where they couldn't access

SPEAKER_06: it before.

Unknown: Right.

SPEAKER_06: Part of the problem has been I can build 10 megawatts here in the middle of Nevada and

SPEAKER_06: 20 megawatts here in the middle of Utah, but I can't build a thousand mile transmission

SPEAKER_06: line to bring that.

SPEAKER_06: It just doesn't pencil.

SPEAKER_06: So yeah, I think some of what we're saying is maybe the ability to build more at scale.

Unknown: Part of this graph that was really sort of having me study, it's basically showing the

SPEAKER_02: same pattern that we modeled out for California's 2045, right?

SPEAKER_02: Big growth in solar and just general renewables and batteries.

SPEAKER_02: It sounds like that's sort of the, this is the same basic.

Unknown: Yeah, that's very similar.

SPEAKER_06: You know, the load patterns are very similar, more extreme than in California, right?

SPEAKER_06: More heat in the summertime, you know, less need in the winter really.

SPEAKER_06: But yes, and similar resource quality.

SPEAKER_06: So solar resources are very good.

SPEAKER_06: They're very easy to build.

SPEAKER_06: The solar and batteries pair really well together.

SPEAKER_06: They like California.

SPEAKER_06: Our modeling is showing there's value to diversity.

SPEAKER_06: So our models always like to build more wind than probably you can ever really get.

SPEAKER_06: Not sure that they'll be able to get this amount of wind, but the model would like it

SPEAKER_06: if they can.

SPEAKER_06: But they are building some natural gas.

SPEAKER_06: I'm going to show you the reason why they are.

SPEAKER_06: With that amount of growing load, this is just an example of a seven-day period in December

SPEAKER_06: from our model showing kind of why that resource is needed.

SPEAKER_06: So this is a system that has a lot of wind and solar in it.

SPEAKER_06: You can see in the first day, in the middle of that day, there's 80 gigawatts of generation

SPEAKER_06: total from the wind and solar.

SPEAKER_06: That drops off very quickly.

SPEAKER_06: And by the time you get to nighttime, now you're having to ramp up that gray, which

SPEAKER_06: is natural gas.

SPEAKER_06: When you get into the third day, now you've had an event that's a cold weather event,

SPEAKER_06: so loads are a little bit higher, but it's cloudy and it's still.

SPEAKER_06: And so you just don't have the wind and solar generation available to you.

SPEAKER_06: The purple is some battery discharge, but really you're relying on 20 gigawatts of

SPEAKER_06: thermal to keep the lights on during that time period.

SPEAKER_06: And if you're in California, we have about that amount of natural gas, which we do rely

SPEAKER_06: on during those two-leaf fog type of events.

SPEAKER_06: But if you're seeing a huge amount of growth in the Southwest, they're seeing that they're

SPEAKER_06: just not going to be able to serve all that growth with wind and solar.

SPEAKER_06: As much as good as those resources are and as helpful as they are, and batteries, they're

SPEAKER_06: going to need some new gas to meet load during these events in the Southwest.

SPEAKER_06: And this is a wintertime event that also becomes binding in that system.

SPEAKER_05: In a year and a half or so, we'll be in EDAM and we won't have to worry about it anymore,

SPEAKER_05: because the sun will be shining somewhere in the West.

SPEAKER_06: It does help.

Unknown: Cool.

SPEAKER_03: We're really going to slide on that.

Unknown: All right.

SPEAKER_06: I'm going to have to speed up here a little bit, I think.

SPEAKER_06: So just some quickly some results from our Northwest study.

SPEAKER_06: So this again was sponsored by a group of 23 utilities and the IPPs in the Northwest

SPEAKER_06: got together to sponsor this study as well.

SPEAKER_06: So the Southwest is, you know, they're mostly resource adequate today and they're in good

SPEAKER_06: shape as they look forward, because utilities have lots and lots of projects in the pipeline.

SPEAKER_06: The Northwest is in a bit of a different position.

SPEAKER_06: They're kind of in a hole right now with much less prospect for getting out of it,

SPEAKER_06: because it's just much harder to build stuff in the Northwest than it is in the Southwest.

SPEAKER_06: The solar battery combination just doesn't work as well on a system and that's winter

SPEAKER_06: peaking and dominated by hydropower like the Northwest system is.

SPEAKER_06: So we're seeing in the Northwest a 9,000 megawatt gap by 2030 and they're just not on track

SPEAKER_06: to meet that.

SPEAKER_06: Now that's about the size of the state of Oregon.

SPEAKER_06: And that's a system that has about 50,000 megawatts of load.

SPEAKER_06: So that's a big gap that they're facing and that's because of load growth, it's because

SPEAKER_06: of resource retirements.

SPEAKER_06: And we see about 3,000 megawatts of resources that are in the pipeline.

SPEAKER_06: So that leaves about a 6,000 megawatt gap by 2030 and that grows to 14 to 18,000 megawatts

SPEAKER_06: by 2035.

SPEAKER_06: So that's they have a terrible challenge ahead of them.

SPEAKER_06: They also have very aggressive carbon reduction goals.

SPEAKER_06: And so, but they're just like elsewhere.

SPEAKER_06: This is a winter peaking system.

SPEAKER_06: The events that they see are low energy events.

SPEAKER_06: So energy constrained.

SPEAKER_06: It's a low hydropower year.

SPEAKER_06: It's a multi-day cold snap.

SPEAKER_06: It's typical that wind doesn't blow during a cold snap because it's a high pressure system

SPEAKER_06: that sits over a large area and it's winter.

SPEAKER_06: So there's not a lot of solar energy.

SPEAKER_06: Even if it's sunny, it's a short day and it's at a low angle.

SPEAKER_06: So they really just don't have a way to solve this without building gas in the near term.

SPEAKER_06: It's the challenge that we're seeing from our modeling.

SPEAKER_06: So then the question becomes if they do build gas in the near term, does that set Washington

SPEAKER_06: and Oregon back on their long-term carbon goals?

SPEAKER_06: I think here the answer is I think there's good news here.

SPEAKER_06: So on the bottom you can see they're building all this wind, solar and batteries.

SPEAKER_06: They're also building over 10 gigawatts of natural gas by 2045 to keep the lights on.

SPEAKER_06: But you can see on the right-hand chart that gray area declines between now and 2045.

SPEAKER_06: So as they add more wind, solar, and geothermal and other clean resources, the gas dispatch

SPEAKER_06: declines.

SPEAKER_06: So you have it there when you need it, but it's utilization and the emissions decline

SPEAKER_06: over time because it's always the last resource that you call on.

SPEAKER_06: So when you have wind and solar, you want to run that.

SPEAKER_06: Then you do, but you have the gas there for those cold winter, multi-day events that happen,

SPEAKER_06: especially during a low hydro year in the Northwest.

SPEAKER_06: We did explore different carbon targets just to see what this does to price in the Northwest.

SPEAKER_06: The good news here is this curve is very flat.

SPEAKER_06: That means that you can reduce carbon emissions by a lot in the Northwest at a relatively

SPEAKER_06: low cost.

SPEAKER_06: But at some point it starts to tip up, and that's in the 90% range is when the cost curve

SPEAKER_06: starts to really get steep.

SPEAKER_06: So going from 90% to 100% is incredibly expensive, even though going to 90% is actually pretty

SPEAKER_06: cheap.

SPEAKER_06: And we see this actually repeated across a lot of the studies that we do.

SPEAKER_06: These last few tons are the hardest ones to get out.

Unknown: You can imagine.

SPEAKER_06: Which brings me to this greenhouse gas protocol and the carbon accounting.

SPEAKER_06: I won't spend too much time here.

SPEAKER_06: I have more slides in it than I probably need.

SPEAKER_06: At some point, why is carbon accounting important?

Unknown: Well, at some point if we're trying to go to 100% clean energy, and you're trying to

SPEAKER_06: do that with hourly matched 24-7 accounting, that becomes the same problem as the resource

SPEAKER_06: adequacy problem.

Unknown: Because now you have to build enough resources to serve all your load 24-7, but they all

SPEAKER_06: have to be clean.

Unknown: And if you're trying to do all that with wind and solar, then you have that hockey stick

SPEAKER_06: curve that we showed you before.

SPEAKER_06: So it's the same argument in a way.

SPEAKER_06: It's the same problem.

SPEAKER_06: So why are we seeing the push for 24-7 accounting?

SPEAKER_06: Really it's some academic advocates and some of the hyperscalers sort of see this as a

SPEAKER_06: way to achieve what they call consequential carbon reductions.

SPEAKER_06: They think the carbon reductions might not be real if you're not serving your own load

SPEAKER_06: on a 24-7 basis.

SPEAKER_06: And they want this to maybe help transform the market for some of these clean firm technologies

SPEAKER_06: like geothermal.

SPEAKER_06: And maybe we can leverage the deep pocketbooks of the Google and the other hyperscalers to

SPEAKER_06: help transform that market.

SPEAKER_06: But what works for Google doesn't necessarily work for everybody.

SPEAKER_06: And it's worth noting that even Google has 2030 as a goal for achieving their 24-7 matching.

SPEAKER_06: And just given how much data centers they're building out, they're actually going backwards

SPEAKER_06: on achieving that.

SPEAKER_06: I just want to maybe take a minute to level set on clean energy accounting and what it

SPEAKER_06: means.

SPEAKER_06: First thing I understand, your clean energy isn't actually serving your load.

SPEAKER_06: Your load is being served by the grid.

SPEAKER_06: A whole combination of resources from all across the grid.

SPEAKER_06: And when you generate power, it goes out into the grid and it displaces resources all across

SPEAKER_06: the grid.

SPEAKER_06: So no matter how much these contracts make money flow, not power flow.

SPEAKER_06: Power flows where it flows.

SPEAKER_06: So the idea that you're actually serving your load with your own resources is just not factual.

SPEAKER_06: It's kind of a nonsensical idea in the first place.

SPEAKER_06: So that's why I say that specified purchases are fiction.

SPEAKER_06: But they're really important fiction.

SPEAKER_06: Billions of dollars have been invested just based on the notion that that financial support

SPEAKER_06: means that I can claim the environmental attributes of the resources that I'm supporting.

SPEAKER_06: I can say that my load is being served by this clean generator that I'm paying for the

SPEAKER_06: output from.

SPEAKER_06: So this is a system that has facilitated hundreds of billions of dollars worth of clean energy

SPEAKER_06: investment over the last couple of decades.

SPEAKER_06: And what makes this all work is a wreck.

SPEAKER_06: So when you support clean energy, the generator makes and delivers energy to the grid, they

SPEAKER_06: get to mint a wreck.

SPEAKER_06: This wreck is tracked and certified by tracking agencies.

SPEAKER_06: And the wreck is the only thing that actually has any meaning with respect to clean energy.

SPEAKER_06: The energy doesn't matter.

SPEAKER_06: Actually, the wreck is the thing that is the clean energy attribute and the only thing

SPEAKER_06: that demonstrates your claim.

SPEAKER_06: And you can separate that from the energy and trade it.

SPEAKER_06: So if you bought a wreck, you bought clean energy, even if you didn't buy the energy

SPEAKER_06: with it, because that means someone generated that energy and it was certified.

SPEAKER_06: It's also worth noting all state clean energy programs have either annual or maybe even

SPEAKER_06: multi-year compliance programs, periods.

SPEAKER_06: These are California's periods.

SPEAKER_06: They're two and three year periods in the state RPS program.

SPEAKER_06: Why is that?

SPEAKER_06: Well, because they will always recognize it's really hard to balance on a smaller time period.

SPEAKER_06: Load is variable year to year.

SPEAKER_06: Reusable energy is variable year to year.

SPEAKER_06: Hydro is variable.

SPEAKER_06: Even wind can vary by 20, 30% at the same site year over year.

SPEAKER_06: So it's really hard to balance over smaller time periods.

SPEAKER_06: So all state RPS programs, every single one of them has at least annual balancing.

SPEAKER_06: None of them has one hour or even monthly balancing.

Unknown: 24-7 matching negates the benefits of the organized wholesale market.

SPEAKER_06: So if you're in a place now where you have to go and sign a contract with all of your

SPEAKER_06: own resources and serve your own resources every hour of the year, why do you need a

SPEAKER_06: wholesale market?

Unknown: You might as well just become an electrical island, right?

SPEAKER_06: So it really just kind of ignores the benefits that you get from the scale and the law of

SPEAKER_06: large numbers that you get from the organized wholesale market.

SPEAKER_06: Again it ignores what happens when you export.

SPEAKER_06: So when you're exporting power to the rest of the grid, some other resource is not operating.

SPEAKER_06: And usually that other resource is a thermal resource.

SPEAKER_06: So usually when you're exporting, that's saving carbon somewhere else.

SPEAKER_06: And if you're only looking like this at your carbon accounting, you're missing all of these

SPEAKER_06: dynamics about what happens across the whole grid.

SPEAKER_06: So to me, this is why this 24-7, you know, it's an interesting idea.

SPEAKER_06: And it sounds like a lot of fun.

SPEAKER_06: We should try to be 24-7, you know, but when you get into how much, how hard it is to actually

SPEAKER_06: do, you start to see that maybe this is really, you know, not the right thing to be doing.

SPEAKER_06: And we just have a couple of last slides on studies that we've done.

SPEAKER_06: This is one that we did for Silicon Valley Clean Energy.

SPEAKER_06: And we found that they have to over procure by 181% to match every hour with clean energy.

SPEAKER_06: That's because they have to buy enough clean energy to match the worst hour.

SPEAKER_06: There's only one hour that they're actually fully hourly matching.

SPEAKER_06: That's the worst hour.

SPEAKER_06: Every other hour they have a little bit too much.

SPEAKER_06: And some hours they have a lot too much.

SPEAKER_06: It's because of the way that, you know, clean energy, you know, only comes during certain

SPEAKER_06: hours of the year, but you have to try to match every hour of the year.

SPEAKER_06: And then we did a similar exercise for Pasadena Water and Power and found very similar percentages.

SPEAKER_06: So depending on the case, we had 167 to 183% over procured.

SPEAKER_06: And that increases, that would increase their electric rates by 30 to 60%.

SPEAKER_06: And just to compare that to a case on the right-hand side where you're buying just enough power

SPEAKER_06: to match your load on an annual basis, and now you're displacing emissions elsewhere

SPEAKER_06: in the system, and that's, you can do that much more affordably with a similar sort of

SPEAKER_06: global carbon impact.

Unknown: It's just like carbon, getting to a carbon neutral is a lot easier than getting to a

SPEAKER_02: zero carbon.

Unknown: Yeah, getting to absolute zero carbon is very, very difficult, that's right.

SPEAKER_06: But getting to carbon neutral, recognizing what happens out there on the grid, right?

SPEAKER_06: Because this is, you know, these impacts that happen out in the western grid, those are

SPEAKER_06: real.

SPEAKER_06: And we can measure them.

SPEAKER_06: You know, we have metered data for every hour all the load, all the generation, all across

SPEAKER_06: the west.

SPEAKER_11: If I could, Arnie, would you be willing, I just declared this with John, would you be

SPEAKER_11: willing to go back to your slide that showed the gas capacity declining over, gas generation

SPEAKER_11: declining over time?

SPEAKER_11: I wanted just to emphasize this point because I think this slide is incredibly important

SPEAKER_11: and really resonates with what I was trying to say, which is that, you know, as we, over

SPEAKER_11: the next several years, particularly as load patterns change and load growth, we, and we

SPEAKER_11: look at the declining capacity value of the four hour lithium ion batteries and other

SPEAKER_11: storage technologies, having that other form of base load generation that's reasonably

SPEAKER_11: affordable coming into the system and picking up some of that slack in the form of gas,

SPEAKER_11: has this dynamic, right?

SPEAKER_11: And for me, the key thing, and even for California, which is still, and certainly for SMUD, focusing

SPEAKER_11: on decarbonization, what you're seeing here is the gas capacity is coming into the system.

SPEAKER_11: It's providing a very important source of dispatchable capacity when the wind and solar

SPEAKER_11: aren't generating.

SPEAKER_11: It's actually generating capacity decreases over time so it becomes more of a capacity

SPEAKER_11: resource rather than an energy resource.

SPEAKER_11: And it's been very fascinating to watch the states.

SPEAKER_11: It's worth watching because it's very difficult in California, but it's worth watching how

SPEAKER_11: the Salt River Project and Arizona Public Service have been messaging this, this sort

SPEAKER_11: of like building your hybrid car, right?

SPEAKER_11: Where you're saying we're all, we all want to have a, have electrification, but we know

SPEAKER_11: we have range limitations basically.

SPEAKER_11: And so it's sort of, you're building this kind of hybrid system where you've got the

SPEAKER_11: capacity in the system when the other energy resources aren't producing, but over time

Unknown: as the others become more cost effective and you're able to bring them in the system, you're,

SPEAKER_11: you're not burning a ton of gas molecules, but you have it for dispatchability.

SPEAKER_11: I think that's the conversation that a lot of us are going to have to have inside California

SPEAKER_11: if you want to keep the lights on.

SPEAKER_11: Yeah.

SPEAKER_11: I just want to emphasize the very important conversation.

SPEAKER_11: We're having that conversation everywhere and it's, it's challenging.

SPEAKER_05: In my layman's kind of understanding of this, I mean, essentially a, I mean, maintaining

SPEAKER_05: a certain level of thermal units, we get gas, fire power, just dispatchable, a base load

SPEAKER_05: or that, that you can control allows you to walk a little bit closer to the edge with

SPEAKER_05: wind and solar.

SPEAKER_05: It gives you that insurance policy that says, okay, we can, we can get that.

SPEAKER_05: We can go a little bit further with wind, solar, battery, non-grid forming resources

SPEAKER_05: because we know that we've got this backup if we need it.

SPEAKER_05: That's a really good way to put it.

Unknown: Okay.

SPEAKER_06: Any other questions?

SPEAKER_06: I'm happy to stay up here, but I think, yeah.

Unknown: John, have you, have we seen a holistic analysis looking at the weather data across the potential

SPEAKER_02: entire EDM market that would say we see Sacramento has three weeks or the Valley has three weeks

SPEAKER_02: of no wind and no sun, but that doesn't align with the North or the South, Southwest, right?

SPEAKER_02: I'd be curious, which seems sort of overwhelming, but I'd great use of AI.

SPEAKER_02: Yeah.

Unknown: I mean, certainly diversity is your friend for, it's your friend for operations.

SPEAKER_06: It's also your friend for resource adequacy.

SPEAKER_06: So if it's cold in one part of the West, but it's not cold in another part and they've

SPEAKER_06: got some surplus generation, they can send your way.

SPEAKER_06: That's definitely helpful.

SPEAKER_06: The RAP footprint covers a large area.

SPEAKER_06: The EDM has a new resource adequacy program that I know some of the SMUD folks have been

SPEAKER_06: instrumental in helping to get off the ground.

SPEAKER_06: So that's going to have the diversity that exists within the EDM footprint, which is diversity

SPEAKER_06: to some extent.

SPEAKER_06: The more diversity you can get, the better off you'll be for resource adequacy.

SPEAKER_11: I think that question is going to get, as a matter of fact, I hate to say it, but I

SPEAKER_11: think that's a study in Arnie's future.

SPEAKER_11: Because as we build out these markets, we really don't, I mean, the reason they're

SPEAKER_11: so valuable right now is because they're diverse.

SPEAKER_11: If we all build the same portfolio, we're just going to basically be competing to curtailment.

SPEAKER_11: So I think there's some opportunities, even for some inter-regional resource planning.

SPEAKER_11: Great.

Unknown: We have the meteorologists here a month ago, but at the largest perspective, you know there's

SPEAKER_02: a high pressure somewhere, a low pressure somewhere else, and it's going to be windy.

SPEAKER_02: And so when you look at the Western continent, you know it's going to be there somewhere.

SPEAKER_02: It's going to be interesting.

Unknown: Yeah, someone said the grid needs to be bigger than the weather.

Unknown: All right, well thank you.

SPEAKER_03: Good evening, everybody.

SPEAKER_03: It's always difficult following these two gentlemen in presentations, but I'll try to

SPEAKER_03: bring the conversation back home to SMUD, but hopefully you'll be able to see the threads

SPEAKER_03: that have gone through all of these conversations, and excellent slate of questions.

SPEAKER_03: And that last one I really enjoyed because the e-MRA program is something that's looking

SPEAKER_03: in.

SPEAKER_03: So you're looking at a regional resource adequacy program, and the question would be,

SPEAKER_03: well why would we join a regional RA program?

SPEAKER_03: And the answer lies in the idea that as you are building out the grid to both decarbonize

SPEAKER_03: and keep reliability and do it affordably, you're unleashing that diversity across the

SPEAKER_03: West and getting that reliability at the most affordable context that you can.

SPEAKER_03: Now this is probably multiple years out from coming into fruition, but it's just a super

SPEAKER_03: exciting time to be talking about the idea of unleashing that diversity.

SPEAKER_03: And diversity is that key, and it is your friend, and it's the thing we seek.

SPEAKER_03: And I think one of the slides you'll see tonight, you kind of show how diverse SMUD's portfolio

SPEAKER_03: is and how resilient it is because of that.

Unknown: Okay, there we go.

SPEAKER_03: So four broad topics, or three broad topics, it's always fun to look backwards and see,

SPEAKER_03: okay, kind of what happened last year, and level set on what that means.

SPEAKER_03: And then we're going to look a little bit at how we're set up for the remainder of this

SPEAKER_03: year and what does the market kind of look like.

SPEAKER_03: Any questions along the way, by all means, bring them up as they see fit or we'll do

SPEAKER_03: it as a Q&A at the end.

SPEAKER_03: I always level set or try to level set with this footprint, and this is more than anything

SPEAKER_03: focused on the, not on the words, but on the graph.

SPEAKER_03: And so as Elliot pointed out at the beginning, the EIM market has become 80% of the West

SPEAKER_03: and Interconnect, and there is so much value in being able to do that.

SPEAKER_03: That is really SMUD's addressable market from a wholesale bulk energy supply.

SPEAKER_03: So everything from all the way up into BC, all the way to the Texas border and the Mexico

SPEAKER_03: border.

SPEAKER_03: So it's a very broad footprint.

SPEAKER_03: And in there is that diversity.

SPEAKER_03: So it is the California solar and the California wind, along with the Desert Southwest solar

SPEAKER_03: and their gas fleet in the Northwest.

SPEAKER_03: And a precursor to the thing that does keep everybody up at night or the one thing that

SPEAKER_03: Elliot talked about is when that whole footprint kind of in the summer gets hot, that is the

SPEAKER_03: trip line.

SPEAKER_03: But we are in a radically different position, both SMUD as well as California, as well as

SPEAKER_03: the West, than when we were in 2020 and 2022 when we had those last really difficult days.

SPEAKER_03: So again, that diversity, both from a fleet perspective or from a fuel type perspective,

SPEAKER_03: as well as from a regional perspective, is absolutely critical.

SPEAKER_03: We do participate in bilateral markets.

SPEAKER_03: That's where we just go with other counterparties and have a discussion back and forth, and

SPEAKER_03: we agree to terms on how to trade power.

SPEAKER_03: We also participate, obviously, heavily in the EIM market since 2019 when we went live.

SPEAKER_03: And then, yeah, EDAM went live, as Elliot said, this last month, and we plan to be going

SPEAKER_03: live in October of 2017.

SPEAKER_03: And that really just allows for that deeper dive into your portfolio and additional benefits

SPEAKER_03: that build on top of the EIM market.

SPEAKER_03: So let's talk a little bit about 2025.

SPEAKER_03: And so it's not an accident.

SPEAKER_03: Yes, we had relatively moderate temperatures in the big picture, but we had few extreme

SPEAKER_03: operating days compared to recent years.

Unknown: And if you remember last year, I think last year was the first year I kind of used the

SPEAKER_03: word cautiously optimistic.

SPEAKER_03: And by the way, it was interesting to see Elliot use that this year.

SPEAKER_03: And that's about as good as you're going to get, and outlook is you're going to get from

SPEAKER_03: an operations-oriented person because I'm cautiously optimistic, but there could be

SPEAKER_03: some bad things that happen, right?

SPEAKER_03: So it's funny that we're aligned on our context.

SPEAKER_03: But that's also the kind of how I view our SMUD setup for this year.

SPEAKER_03: I'm also cautiously optimistic.

SPEAKER_03: If anything, I'm maybe even a little bit more cautiously optimistic than last year, just

SPEAKER_03: on how we're set up from a geographic standpoint that will come back out.

SPEAKER_03: Our peak last year was July 11th.

SPEAKER_03: So just a month and a half away from right now was when we peaked.

SPEAKER_03: And we peaked at 2797.

SPEAKER_03: So the important part about that is we had not – that's the lowest peak in 15 or 16

SPEAKER_03: years.

SPEAKER_03: So the timing is right.

SPEAKER_03: July 11th is a very typical time that we might see a peak.

SPEAKER_03: But to be 2797 is pretty short.

SPEAKER_03: Our planning peak is about 3,600 megawatts.

SPEAKER_03: So it's well underneath our planning peak from what we saw.

SPEAKER_03: And so that kind of takes that, again, that few operating peak.

SPEAKER_03: And interesting, 2024, we also peaked in July 11th as well, which happens to be my daughter's

SPEAKER_03: birthday.

SPEAKER_03: The generation fleet and transmission fleet system were healthy.

SPEAKER_03: That is such a big difference in how we perform on any given year because if you've done

SPEAKER_03: your outages and you've spent your money in making your system capable and resilient,

SPEAKER_03: those things come forth when you are in an operating year.

SPEAKER_03: And even though I kind of deflect a little bit that last year wasn't an extreme operating

SPEAKER_03: condition, you still have those moments.

SPEAKER_03: And our transmission was available and our resource fleet was available.

SPEAKER_03: So PowerGen, GridOps folks did a great job to get us to the point where we could survive

SPEAKER_03: or meet the challenges for the summer.

SPEAKER_03: The interesting thing was the Tule Flog challenge was met and it's really met with our portfolio

SPEAKER_03: as well as this market footprint.

SPEAKER_03: And there's a slide coming up on that that's very interesting that speaks a lot to that

SPEAKER_03: regional diversity and resource mix as well.

Unknown: Okay.

SPEAKER_03: So how did we serve load on our peak day last year?

SPEAKER_03: Again, remember in July 11th, remember I said it wasn't an extreme peak?

SPEAKER_03: So this is not an operational view.

SPEAKER_03: This is really kind of like what Arne was talking about when you start looking at a

SPEAKER_03: PCL or Power Content label.

SPEAKER_03: So it really kind of says what were all our resources regardless of where they were.

SPEAKER_03: And on this mix, there's some that are in bank, there are some that are in New Mexico

SPEAKER_03: for that matter, or in the Kaiso BA and then we had some stuff coming in from the Pacific

SPEAKER_03: Northwest.

SPEAKER_03: So this is looking at like when our load, which is the dotted line, what was going on

SPEAKER_03: in our system.

SPEAKER_03: And so there's a couple things to highlight on here is, and I heard, I think it was Arne

SPEAKER_03: that talked about the solar kind of does what it does in the middle of the day.

SPEAKER_03: But if you look at our peak is coming right after that lump in the middle of the day.

SPEAKER_03: So now what you see is that dark blue line, and this is a good takeaway slide, but that

SPEAKER_03: dark blue that's on top of the yellow, that's our hydro system.

SPEAKER_03: So you saw us and it wasn't, it was an okay hydro year last year, it wasn't a great year.

SPEAKER_03: And that's where we reserve the use of our hydro is really for that time period to bridge

SPEAKER_03: us over after the sun is going away, but we were still kind of in that middle peak.

SPEAKER_03: The other thing that I'd like to point out is the, I'm terrible with colors, salmon color,

SPEAKER_03: I guess, in the middle.

SPEAKER_03: And this is EIM transfers.

SPEAKER_03: For the most part, you can see outside of a few hours, we were mostly importing that

SPEAKER_03: day, which if when in the low hydro year, that doesn't surprise me because it will put

SPEAKER_03: an offer in at hydro and say you can have it at this level.

SPEAKER_03: And the market says, hey, we're okay.

SPEAKER_03: We don't, you don't need to spend that money.

SPEAKER_03: We'll bring it in at a lower cost.

SPEAKER_03: And so during the middle part of the day, in the solar part of the day, we were actually

SPEAKER_03: taking a lot of resources in from the market from EIM at that point in time, which then

SPEAKER_03: allowed us to keep that hydro for that later part of the day.

SPEAKER_03: And the other thing is it's sunny in Sacramento, but it was also sunny in Fresno, it was sunny

SPEAKER_03: in LA, it was sunny quite a bit of the place around the area.

SPEAKER_03: So that was probably very low carbon intensity that we were able to bring into the market.

SPEAKER_03: Having said all those good news, you can see on the gray that there's still a fair amount

SPEAKER_03: of thermal that was running during those days.

SPEAKER_03: And so you can, from a PCL perspective or from a power content label, everything above

SPEAKER_03: the dotted line would be a market sale, if you would.

SPEAKER_03: So that's what we made available to the market.

SPEAKER_03: Everything underneath there is kind of the concept of serving your own load, even though

SPEAKER_03: I absolutely agree with Arne said, you're really not serving your own load at this point.

SPEAKER_03: But that's what we had to run locally.

SPEAKER_03: So in summary, a relatively low peak, still a dependency on thermals, made most of our

SPEAKER_03: hydro based on EIM transfers into our market, and the solar did what it did.

SPEAKER_03: As we build our batteries, we'll be able to push some of that yellow bulge, it'll come

SPEAKER_03: down a little bit at the top, it'll push out to the right side, as we've talked about.

Unknown: I want to contrast that, though, with a day, this isn't last year, but it was a really

SPEAKER_03: good slide to demonstrate it with, and this is March 12th of 2026.

SPEAKER_03: I think a few years ago, I presented some slides like I called a bluebird day in spring.

SPEAKER_03: So this is kind of a bluebird day in the spring.

SPEAKER_03: So relatively low loads, really good production from renewables, so you see a nice good solar

SPEAKER_03: day down there.

SPEAKER_03: And then also from a hydro perspective, it was an early runoff season, or early a runoff,

SPEAKER_03: so we had to run some hydro.

SPEAKER_03: But we managed it, and we managed it outside of the solar day.

SPEAKER_03: So you can see how the hydro really ran within that.

SPEAKER_03: And if you stack in all of our renewables, whether they were within the bank BA or within

SPEAKER_03: the KISO or EIM footprint, we got to the spot where we're serving load with clean

SPEAKER_03: resources about three different points during the day, some for an extended period of time.

SPEAKER_03: And so what I'm most excited about this would be when we're kind of doing this in EIM, let

Unknown: me back up a half step.

SPEAKER_03: So I'm going to use an example of a consummated power plant.

SPEAKER_03: So right now, when we look on a day ahead basis, it's what we would call a long lead

SPEAKER_03: time unit.

SPEAKER_03: And so it might take you five, six, eight hours of notice to either bring online or

SPEAKER_03: to take offline.

SPEAKER_03: And so what a lot of times we'll have to do, and this is one of those days, even with the

SPEAKER_03: turn down, we needed it in the morning and we needed it in the afternoon.

SPEAKER_03: In the middle of the day, you didn't really need it.

SPEAKER_03: But if you look at how we serve load that day, in EIM looks maybe zero to four hours

SPEAKER_03: out, EIM will look at the entire day.

SPEAKER_03: In this case, if there's enough transfer capability and resources available, this would

SPEAKER_03: be a likely day that's consummated would have been turned off by the market, combined cycle

SPEAKER_03: unit, and brought in the clean renewable energy that we would have been able to use during

SPEAKER_03: the entire day.

SPEAKER_03: So this is a really good example of what I think can happen when we get to E-DAM.

SPEAKER_03: And that's why those thermal graphs that you showed over time, even though capacity was

SPEAKER_03: steady, the actual output is declining dramatically.

SPEAKER_03: And this is exactly the way we can be set up to be able to enjoy that same thing.

SPEAKER_03: Thermal capacity does not equal emissions in that case.

SPEAKER_03: Go ahead.

Unknown: I understand.

SPEAKER_09: So the black line is what we're actually using.

SPEAKER_03: The black line is load.

SPEAKER_03: The dotted line is what we're using.

SPEAKER_09: So that's what we have to provide power for.

SPEAKER_09: And we went way over on gas.

SPEAKER_09: And then we sold it.

SPEAKER_03: So take a swing at it.

Unknown: Your microphone.

Unknown: The gray over the load line is capacity.

SPEAKER_05: It's not actually producing necessarily.

SPEAKER_05: Is that correct?

SPEAKER_03: Well, in this case, it was producing.

SPEAKER_03: It was.

SPEAKER_05: Okay.

SPEAKER_03: Sorry.

SPEAKER_03: I'm wrong.

SPEAKER_03: I'll shut up.

SPEAKER_03: What this is pointing out is, again, I said this is not an operational view.

SPEAKER_03: This is like what all of our resources everywhere we're doing.

SPEAKER_03: So some of these resources are in the Kaiso BA and some of those resources are here.

SPEAKER_03: We have local constraints that we need to run a thermal for.

SPEAKER_03: And so this is really taking that energy accounting view that Arne was kind of talking about,

SPEAKER_03: of showing what we'd be selling to the market.

SPEAKER_09: Let me.

SPEAKER_09: Okay.

SPEAKER_09: So that says SMUD thermal.

SPEAKER_09: Jen.

SPEAKER_03: Yep.

SPEAKER_09: And that's gray SMUD thermal, Jen, above the line.

Unknown: Yep.

SPEAKER_09: So we produced power that we didn't use and we sold it.

Unknown: Yep.

SPEAKER_09: But now we can dial it back because we bought the new equipment.

SPEAKER_09: Is that right?

SPEAKER_09: So in the future we could stay closer to the line.

SPEAKER_03: Yep.

SPEAKER_03: And this one actually has that in there.

SPEAKER_03: If you look at part of the drop, it's not completely evident.

SPEAKER_03: But during that middle part of the day, that was at minimum.

SPEAKER_03: So it reduces the amount it had to run.

SPEAKER_03: What I'm talking about in the future is you might be able to take CPP completely offline

SPEAKER_03: from a unit commit.

SPEAKER_03: The problem with like, or the conundrum with a combined cycle unit is very efficient and

SPEAKER_03: it's good base load.

SPEAKER_03: But the problem is it's not very responsive.

SPEAKER_03: And in this case, if there's enough other clean energy available in the market, instead

SPEAKER_03: of having this eight hour period in between where it's not long enough to shut the unit

SPEAKER_03: off and come back online again, the unit can just can decommit that in a day ahead

SPEAKER_03: market and then we can be able to say we don't even have to have it online.

Unknown: Oh, wow.

SPEAKER_08: Okay.

SPEAKER_03: So that's the big one.

SPEAKER_02: Does that mean we have the fleet of four power plants, right?

SPEAKER_02: Does that mean we would essentially pick and choose which power plant is best suited to

SPEAKER_02: the conditions that day?

SPEAKER_02: That's okay.

SPEAKER_02: I guess the market would dispatch it though, right?

SPEAKER_03: Well I'm going to answer it in two ways and then maybe Elliot will want to chime in too.

SPEAKER_03: How I would say it is you have your portfolio that you bring to the market and being part

SPEAKER_03: of by having a structured EIM and structured EDAM market, you bring the portfolio to the

SPEAKER_03: market.

SPEAKER_03: As Arne said, we're not serving our load.

SPEAKER_03: What you're doing is you're buying the load from the system operator and the system operator

SPEAKER_03: is going through the methodology to be able to say, what is the reliability is this constant?

SPEAKER_03: It doesn't move.

SPEAKER_03: To be able to hit that reliability, what's the most sustainable and affordable solution

SPEAKER_03: that we can present?

SPEAKER_03: By presenting your fleet to the market, the system operator, no pressure, it gives them

SPEAKER_03: the opportunity to mix this thing out and say here's where we're doing.

SPEAKER_03: We're bringing solar from here.

SPEAKER_03: We're bringing wind from over there.

SPEAKER_03: We're doing all these things together and this is that result.

SPEAKER_03: That's where you actually get to enjoy that diversity.

SPEAKER_03: To your point, what you might see in this, let's just say, for example, let's say there

SPEAKER_03: was a peak year, evening peak for whatever reason there is here.

SPEAKER_03: Right now, consummists can come in and kind of thump it all down on both sides.

SPEAKER_03: You might see consummists get de-committed, but you might see Proctor Peaker, for example,

SPEAKER_03: get committed for a very small period of time to be highly reactive and then go away.

SPEAKER_03: Less carbon.

SPEAKER_03: Yes, it's not as efficient plant, but it's less carbon and it's less total money to be

SPEAKER_03: able to get to that solution.

SPEAKER_03: That's right sizing the use of your thermal fleet to be able to meet the overall needs.

SPEAKER_09: CalISO actually directs us and says I've got more efficient, more affordable resources

SPEAKER_09: over here.

SPEAKER_09: I'm suggesting Campbell be turned up.

SPEAKER_09: Or off.

SPEAKER_09: Or off.

SPEAKER_11: I mean, the agreement is that SMUD comes to the table demonstrating that they have enough

SPEAKER_11: generating capacity to meet their own load if necessary.

SPEAKER_11: But the market, the economic optimization looks at the cost of that generation and if

SPEAKER_11: there's some additional generation that's available that's surplus to somebody else's

SPEAKER_11: needs but is cheaper and it can be moved across the transmission system, it will be delivered

SPEAKER_11: effectively to offset SMUD's generation resources and it will apportion that across the footprint

SPEAKER_11: based off the transmission topology and the cost of delivering it.

SPEAKER_11: So it's a wide area optimization, but that is the basic philosophy is trying to solve

SPEAKER_11: the net load needs of that footprint at the lowest possible cost without anybody leaning

SPEAKER_11: on the system.

SPEAKER_06: Or vice versa.

SPEAKER_06: It may decide that SMUD's generation is more economic than generation elsewhere in the

SPEAKER_06: system and it will run SMUD's generation more and turn the generation somewhere else

SPEAKER_06: down and I think that's what you see here.

SPEAKER_06: SMUD had more generation than it needed because its resources were more economic than the

SPEAKER_06: other resources that were available to the market.

SPEAKER_06: Which is again why I kind of said if you're just looking at this picture for your carbon

SPEAKER_06: accounting, you're missing those market interactions that happen every hour of the year.

SPEAKER_09: So this is better for the environment and for affordability, both.

SPEAKER_09: Yes, absolutely.

SPEAKER_09: Huge.

SPEAKER_11: And it's a reason why in an environment where we're building a lot of solar energy, we're

SPEAKER_11: more likely to be able to use natural gas as truly a capacity resource that's available

SPEAKER_11: when the solar is in general, but you're not going to necessarily be producing a lot of

SPEAKER_11: molecules, a lot of burning a lot of molecules.

SPEAKER_11: So it's really the different, a clean energy system that displays a lot of capacity.

SPEAKER_02: So John, I guess I'm going to go.

SPEAKER_01: Rosanna would like to go.

SPEAKER_01: Yeah, sorry.

SPEAKER_01: I want to make sure I understand this because, you know, as part of our zero carbon plan,

SPEAKER_01: we have made a commitment to take McClellan and one of the other plants out of operation.

SPEAKER_01: But what you're saying here is that we should hang on to those plants because at different

SPEAKER_01: times we can send thermal generation to the market when it's needed.

SPEAKER_01: Is that right?

SPEAKER_01: Because that seems to be, you know, counterintuitive to what our goals are with zero carbon.

Unknown: Yeah, how I'll answer that is your decision to retire a plant or not retire a plant isn't

SPEAKER_03: necessarily because of the plant itself.

SPEAKER_03: It's the grid services that that plant provides to the grid.

SPEAKER_03: And so from a condition-based perspective, whether you retire a plant or don't retire

SPEAKER_03: a plant should be immaterial to Elliot in as far as like what we do.

SPEAKER_03: We bring our resource fleet that we have.

SPEAKER_03: So you carry that in the resource fleet that you bring forward and then it gets optimized

SPEAKER_03: in that last window.

SPEAKER_03: So I don't want to say that you should retire a plant or not a plant because of a certain

SPEAKER_03: thing.

SPEAKER_03: I do think that, you know, as you start thinking about reliability, there's conditions in

SPEAKER_03: which you want to think through all of that stuff.

SPEAKER_03: But this should by no means mean that you will be, you know, married to a portfolio

SPEAKER_03: for some period of time and that you need to do these things.

SPEAKER_03: The question is your portfolio you bring to the market gets re-optimized in that window.

SPEAKER_03: Is that helpful?

Unknown: Yeah, I think you're right.

SPEAKER_01: But I think the real question is, you know, what do you want to bring to the market in

SPEAKER_01: terms of, you know, thermal is not zero carbon.

SPEAKER_01: So you know, these kind of decisions we the board has said we're going to eventually

SPEAKER_01: have to make during the summer when, you know, we intend to be zero carbon.

SPEAKER_01: And so it just seems to me that we were not thinking about zero carbon when we're thinking

SPEAKER_01: about what we're sending to the grid.

Unknown: Yeah, let me try to untangle that.

SPEAKER_03: What you, SMUD controls their own destiny of whatever portfolio they want to have forward.

SPEAKER_03: So that I want to say that upfront first.

SPEAKER_03: After the portfolio that you that we plan for and deliver, that's what we bring to the

SPEAKER_03: market for the re-dispatch or for the in that in that in that small period.

SPEAKER_03: I think there's some interesting slides that showed up as far as like the carbon, though,

SPEAKER_03: the thermal capacity versus thermal emissions.

SPEAKER_03: You know, thermal capacity was fairly steady, but thermal emissions went like this.

SPEAKER_03: And so that it doesn't I think if there was one thing to think about maybe from this would

SPEAKER_03: be thermal or thermal emitter capacity doesn't necessarily mean emissions.

SPEAKER_03: But SMUD controls its own destiny completely on what portfolio mix they want to have.

SPEAKER_03: Or we want to have.

Unknown: Thank you.

SPEAKER_03: We've got about nine sides or 12 sides left.

SPEAKER_09: So go ahead.

SPEAKER_05: Paul and Laura and I had the opportunity to go to Portugal last year and meet with a bunch

SPEAKER_05: of different people about the Iberian Peninsula outage, the cascading outage that took down

SPEAKER_05: Portugal and most of Spain and threatened France.

SPEAKER_05: The French said, no, we're not going to take it.

Unknown: John, what you're telling me is we're getting market signals that might tell us to turn

SPEAKER_05: off consumers for the day.

SPEAKER_05: And that's great.

SPEAKER_05: The market signal is telling us we can get cheaper wind solar from the market for you

SPEAKER_05: and for Elliott.

SPEAKER_05: What are the reliability constraints that say, wait a minute, we're getting a little

SPEAKER_05: too much or we're not getting enough reactive power, enough grid forming power, choose your

SPEAKER_05: ‑‑ I still don't completely understand the difference in those terms, but I understand

SPEAKER_05: that they're important.

SPEAKER_05: Where are the safeguards that tell us to keep enough spinning mass on the grid?

SPEAKER_03: So I'll take the first part and then I'll give it back to Elliott on this.

SPEAKER_03: So remember the first thing I said is reliability is the one constant.

SPEAKER_03: So no solution is going to violate a constraint from a reliability perspective.

SPEAKER_03: So in memory I talked about grid services.

SPEAKER_03: So that it's really ‑‑ the grid is really just a sum of services.

SPEAKER_03: And those services, sometimes they're energy, sometimes they're ancillary services, ramping

SPEAKER_03: capabilities, sometimes there's, you know, capacity.

SPEAKER_03: There's all kinds of things that black start that kind of go into those grid services.

SPEAKER_03: And that's, you know, a solution from the kaiso is not going to violate any of those

SPEAKER_03: constraints.

SPEAKER_03: Anything else to add to that?

Unknown: I would just say that we keep a close eye on the inertia of the system.

SPEAKER_11: We also really hold our inverter‑based resources accountable for meeting their reliability

SPEAKER_11: standards and making sure that the voltage settings across the interchange between the

SPEAKER_11: systems are set to deal with the type of circumstances they ran into over in the Iberian Peninsula.

SPEAKER_11: And there were big learnings for Spain and for Portugal on how to just make sure those

SPEAKER_11: standards are enforced and put in place.

SPEAKER_11: So there are years behind us in terms of catching up.

SPEAKER_11: We are not anywhere near as exposed to the kind of thing that went down in Iberian Peninsula.

Unknown: All right.

Unknown: The area under the black dot is gray.

SPEAKER_02: The area under the black dot is gray.

SPEAKER_02: Is that the 14 percent, the thermal generation serving load?

SPEAKER_02: Yeah.

SPEAKER_02: So this is taking ‑‑ I'm sorry, we'll finish.

SPEAKER_02: Does that mean we were 86 percent carbon free that day?

SPEAKER_03: You can interpret it that way.

SPEAKER_03: If you were looking at it from a PCL perspective, that is what the answer would be.

SPEAKER_03: Yes.

SPEAKER_03: The only question would be is all that salmon completely zero carbon or is there some of

SPEAKER_03: the imports that we had coming?

SPEAKER_03: So there will be some fringy kind of answers to that.

SPEAKER_03: But I know that that's ‑‑ You're on point of exactly what the point is.

Unknown: Awesome.

Unknown: And so the big success here, too, if you really think about it, there's a lot to celebrate

SPEAKER_03: on this slide on what we've done with our portfolio and our resources.

SPEAKER_03: And eDAM and EIM release that ability to be able to claim that value a lot easier, whether

SPEAKER_03: it's the SunZIA project that's coming up and will be operational next week or Grady or

SPEAKER_03: any of those other projects we have within the KISO, even geothermal.

SPEAKER_03: Geothermal is in this stack as well.

SPEAKER_03: So it's a lot to celebrate.

SPEAKER_03: So then let's talk about the one real edge operating condition we had was the Tully Frog.

SPEAKER_03: And you've seen this slide.

SPEAKER_03: It's actually director ‑‑ Josh Langdon, director of PowerGen.

SPEAKER_03: It's his slide, but I love it so much because it tells a great story.

Unknown: Well, it tells an interesting story.

SPEAKER_03: I don't want to hear a great story.

SPEAKER_03: So there's two things to look at.

SPEAKER_03: The first one is the graph at the very top.

SPEAKER_03: And the blue line is wind production and the yellow line is solar production.

SPEAKER_03: And so you can see the day before Tully Frog came in, wind was really robust and so was

SPEAKER_03: solar.

SPEAKER_03: And then the Tully Frog set in and actually wind crapped out worse than solar did.

SPEAKER_03: And so you really struggled if those were the two things in your portfolio that you

SPEAKER_03: would ‑‑ you know, that you were depending on, you would have a very difficult week or

SPEAKER_03: ten days that's represented in here to be able to be reliable for your footprint.

SPEAKER_03: The really interesting thing is I wish I had a broader picture of the west on this picture,

SPEAKER_03: but you can see that the Tully Frog really set in the Central Valley.

SPEAKER_03: And so, yes, it hit a lot of our resources.

SPEAKER_03: Now, we have some resources outside of that area that did very well that day, but they

SPEAKER_03: were more towards the desert or southwest.

SPEAKER_03: But it wasn't a ‑‑ it was a fairly localized problem.

SPEAKER_03: If you want to talk about the Central Valley being local, it was a localized problem to

SPEAKER_03: the Central Valley.

SPEAKER_03: So this is that day where the market really ‑‑ we barely saw a blip on prices because

SPEAKER_03: it was getting resupplied from somewhere else.

SPEAKER_03: And so this is truly part of that diversity.

SPEAKER_03: You can kind of see what concentration risk does to your portfolio when those events show

SPEAKER_03: up.

SPEAKER_03: And so this Tully Frog thing is a really important component and really learned a lot about the

SPEAKER_03: mix between solar and wind on that day.

Unknown: Did you have something to add?

Unknown: This graph is so illustrative of the dynamic I was describing as well.

SPEAKER_11: You look at the difference between the winter percent of back solar and the summer.

SPEAKER_11: It's just two very different resources.

SPEAKER_11: So trying to use that summer geared portfolio to solve your winter peaking problems, you're

SPEAKER_11: going to just have a significant deficit.

SPEAKER_11: Yeah.

SPEAKER_03: And we didn't cover that on the bottom, but that's exactly what it's talking about, that

SPEAKER_03: seasonality of your resource for what problem you're trying to solve and when are you trying

SPEAKER_03: to solve it.

Unknown: All right.

SPEAKER_03: And so the next few slides should go relatively simple.

SPEAKER_03: This is really how we're set up this year and really compares to last year as a setup.

SPEAKER_03: And there's only two numbers that I really want to call out for your attention on this

SPEAKER_03: is four numbers.

SPEAKER_03: The first two are the load and the obligation.

SPEAKER_03: So our load is a little bit higher than last year forecasted as well as then that rises

SPEAKER_03: your RA obligation as well.

SPEAKER_03: So a little bit higher.

SPEAKER_03: But how did we meet that?

SPEAKER_03: We have the 41 megawatts is largely the slough house solar project that's inside bank that

SPEAKER_03: we added in.

SPEAKER_03: And then we added a fair amount of Kaiso resources.

SPEAKER_03: And I'm going to call them for the most part Kaiso and non-RA, which means you get the capacity

SPEAKER_03: but you don't take the energy.

SPEAKER_03: And we've heard a lot of things we've talked about today have energy coming at you all

SPEAKER_03: the time.

SPEAKER_03: Most of the time we have too much energy.

SPEAKER_03: And this allows us to not take that energy so we get the capacity.

SPEAKER_03: And then how we where we carved room in the portfolio was we're less reliant on Pacific

SPEAKER_03: Northwest power from a forward sale perspective or purchase because guess what?

SPEAKER_03: That's bundled capacity and energy.

SPEAKER_03: So it comes at you in a 16 hour block.

SPEAKER_03: So we're swimming in more power on those days that we're not at peak.

SPEAKER_03: We're trying to figure out how do we get group rid of this.

SPEAKER_03: It's a pretty difficult economic decision to make sometimes because it's you paid $70

SPEAKER_03: for it and you're selling it for $25 sometimes on those occasions.

SPEAKER_03: So it gets to be not a fun way to be able to manage the system.

SPEAKER_03: So I think I'm very excited about the additional resources that we have inside the Kaiso coming

SPEAKER_03: up for the summer.

SPEAKER_03: And then the other thing on the Pacific Northwest, you know, this is a little good drawback to

SPEAKER_03: some stuff you saw earlier from our slides.

SPEAKER_03: They're going to be a resource deficit area probably in the next decade.

SPEAKER_03: That's going to be harder and harder to get RA out of there.

SPEAKER_03: So having those relationships elsewhere, it's always good to have access to the Pacific

SPEAKER_03: Northwest.

SPEAKER_03: That's not what I'm saying.

SPEAKER_03: But from a RA and capacity perspective, it's probably a good space to go and it's been

SPEAKER_03: more expensive actually lately.

SPEAKER_03: And then this slide is really just the next through the balance of the year from an RA

SPEAKER_03: perspective.

SPEAKER_03: There's nothing here other than all the bottom line, all the bottom numbers are green, which

SPEAKER_03: means we're fully sufficient for resource adequacy program for the balance of the year.

SPEAKER_03: Now, you know, as long as units stay online and things like that, that can always change

SPEAKER_03: it.

Unknown: That's what I have to knock on wood.

SPEAKER_03: But right now we're well set up for the summer.

SPEAKER_03: And how that looks at from a geographic perspective, and this is allowing us to get some diversity,

SPEAKER_03: the big changes from last year in our setup is that we are about 7% or about 8% lower

SPEAKER_03: in the Northwest and about 9% higher in Kaiso.

SPEAKER_03: So we've taken our RA and moved it or RA service from the Northwest and put it inside the Kaiso.

SPEAKER_03: And so these would be some short term contracts, but they're non-RA.

SPEAKER_03: So they're not energy based.

SPEAKER_03: And about half of our supply continues to be local in that.

Unknown: Just real quick, when you say to ISO is that tapping their battery resources?

SPEAKER_02: So it's capacity only.

SPEAKER_03: So in theory, it's a resource somewhere in the Kaiso.

SPEAKER_03: And those resources tend to be thermal plants, but it doesn't mean they're going to run.

SPEAKER_03: That's kind of what the marginal export is.

SPEAKER_03: It's not driving emissions.

SPEAKER_03: We're in the planning construct in the RA thinking, and it's just what is capacity available.

SPEAKER_03: The capacity that we buy out of the Kaiso, it's tagged as such.

SPEAKER_03: The reason that we use Kaiso RA is because it's not Kaiso's RA, it's our RA.

SPEAKER_03: And so in theory, that gets exported to us when we need the capacity.

SPEAKER_03: And there's no double counting.

SPEAKER_03: There's all kinds of rules around that.

SPEAKER_03: It's all really good.

SPEAKER_09: John, real quick, diversity benefit going from 2% to 1%, what is that?

SPEAKER_03: So the diversity benefit is as you build out your especially local resources, so clean energy,

SPEAKER_03: how your load interacts with those resources, both from a forecast, this is on a forecasting basis,

SPEAKER_03: yields you how that solar and solar and or battery would build.

SPEAKER_03: We get a lot of diversity benefit when we start adding batteries.

SPEAKER_03: We haven't got a lot of batteries.

SPEAKER_03: So diversity benefit is relatively low, but it's how your variable resources interact with your load.

SPEAKER_03: And so when to the extent that there's a 1% or 2% diversity benefit, that just means our renewable resources

SPEAKER_03: are doing more benefit than just the name, than if we were treating it with a perfect capacity from somewhere else.

SPEAKER_03: So there's like 1% less RA we need to buy, essentially, because our system between our load,

SPEAKER_03: if this was negative 10%, that would be problematic and I'd be wondering what the heck are we doing?

SPEAKER_03: As we build into the batteries, that number is going to go really, that's where you're going to see that number grow significantly.

SPEAKER_03: Because we're able to use it from a, we don't use the name plate of our solar, like if we have a 100 megawatt solar farm,

SPEAKER_03: we don't call it 100 megawatts, it's something less than that.

SPEAKER_03: And how its shape interplays with our load shape gives you a diversity benefit.

SPEAKER_03: And when you add a battery, that diversity benefit goes up dramatically.

SPEAKER_03: And all of a sudden you can claim more of that solar from a capacity perspective.

SPEAKER_09: Then why did it drop 1% if we're trying to increase it?

SPEAKER_03: This is really probably a redo from a resource planning.

SPEAKER_03: They'll always tweak numbers.

SPEAKER_03: Our load might have shifted a little bit.

SPEAKER_03: Our ELCCs might have shifted a little bit.

SPEAKER_03: If this moved 4% or 5%, it's more of a thing to be worried about, a 1%.

SPEAKER_03: Probably not worth worrying about.

SPEAKER_03: Thank you.

Unknown: So the good news here, diverse portfolio spread across a pretty broad region.

Unknown: So this, Elliot spoke to this a little bit earlier.

SPEAKER_03: And if you remember those slides, I simplified it a little bit this year.

SPEAKER_03: But this is basically the RA, the value of RA in the spot market over time.

SPEAKER_03: The green line is the spot market.

SPEAKER_03: The blue line is kind of like the term market or the periods of time where we've been able to get ahead of this on a forward basis.

SPEAKER_03: So what has happened, from left to right, it's June, July, August, September.

SPEAKER_03: And then from the, and each one of those has June of, I think the first one is June of 2015, June of 2016, so on and so forth.

SPEAKER_03: So we saw this spike started happening around 2017.

SPEAKER_03: And that's really, it was a strong hint towards the market to say, hey, the market is probably not have enough capacity.

SPEAKER_03: And then we kind of chased this thing for a long time.

SPEAKER_03: Now it kind of peaked in that 2024, 23, 24 timeframe, came down a little bit last year.

SPEAKER_03: It came down a lot this year.

SPEAKER_03: Now September's still a little bit of an outlier.

SPEAKER_03: Maybe I'd still call September elevated.

SPEAKER_03: But as Elliot talked about earlier on, when you're having this conversation around resource adequacy prices,

SPEAKER_03: we're back to what I would probably consider more normal prices.

SPEAKER_03: And that's good for our ratepayers.

SPEAKER_03: But if you're building a project though, you're trying to put money against the capacity you're building, there's some missing money here.

SPEAKER_03: And so that still is a struggle for developers to be able to find, two or

SPEAKER_03: three years ago if they were extending those prices out, yes, you could probably say there's more than enough money.

SPEAKER_03: But when that price comes down, they've got to make that up in the energy markets.

SPEAKER_03: And the energy markets, I'll show it in a second, have been, prices have gone down as well.

SPEAKER_03: So takeaway here is RA prices for the little bit that we do participate in the market with,

SPEAKER_03: they come down dramatically than three years ago, rather dramatically.

SPEAKER_03: And then this is kind of a balance of decade.

SPEAKER_03: This is more of a takeaway side, I don't want to have to spend too much on time on it.

SPEAKER_03: But again, SMUD does a really good job, in my opinion, of forward looking planning and looking at different scenarios.

SPEAKER_03: Now, this has some assumptions in it.

SPEAKER_03: What is your resource fleet?

SPEAKER_03: But given what our current fleet is and what we expect to build out by the end of the decade,

SPEAKER_03: we don't have any glaring holes that we will need to be out in the RA market for.

SPEAKER_03: So from that perspective, now, if a new project comes in, it bumps something else out.

SPEAKER_03: That either raises the line up, or we could look to have a conversation about moving something out of the portfolio, so on and so forth.

SPEAKER_02: That looks a lot better than it did.

SPEAKER_03: Yeah.

SPEAKER_03: Yeah, considerably better than a couple years ago.

SPEAKER_01: It looks like a 4th of July slide.

SPEAKER_03: We'll celebrate.

Unknown: Yes.

SPEAKER_03: No, you're right.

SPEAKER_03: Thank you, Director Rose.

SPEAKER_03: There were holes in a year ago.

SPEAKER_03: Yeah, Director Rose, we had a number of holes over the last few years.

SPEAKER_03: So a lot of progress.

SPEAKER_03: All right, so then in summary, again, I'll say I'm cautiously optimistic about the balance of the year.

SPEAKER_03: RA prices continue to ease.

SPEAKER_03: September is still a little bit hot, but still it dramatically came into effect,

SPEAKER_03: or came back to some normal prices.

SPEAKER_03: Interesting thing, energy prices have continued to ease year over year as well.

SPEAKER_03: And so looking at the on-peak prices for the Northwest, we're at about $60.

SPEAKER_03: Last year, about $80, $88.

SPEAKER_03: So prices are down even in the Northwest.

SPEAKER_03: And then for August, it's a similar kind of thing.

SPEAKER_03: That's kind of the peak dollar month.

SPEAKER_03: We're about $75 this year, and last year we were about right around $120.

SPEAKER_03: So energy prices are down as well.

SPEAKER_03: That's good if you're buying energy, but remember, the more we have variable resources,

SPEAKER_03: the more times we're selling.

SPEAKER_03: So this can get to be a little bit of a struggle once in a while too.

SPEAKER_03: Not so much for your peak day, but a lot of times, high energy markets can actually provide a lot of value to some of the rate payers,

SPEAKER_03: because there's a lot of times we have excess energy with variable resources.

SPEAKER_03: So there's a little bit of a tug and pull on that one.

SPEAKER_03: The weather season, Elliott covered it really good.

SPEAKER_03: The seasonal outlook suggests above average temperatures in Sacramento and the broader West

SPEAKER_03: with developing El Nino or Super El Nino that is on its end.

SPEAKER_03: So that's where you have to give pause, because even if I'm cautiously optimistic

SPEAKER_03: and your resources are healthy, a West-wide event is still a problem.

SPEAKER_03: And then from a required actions basis, we really don't have anything to look forward

SPEAKER_03: into other than managing those imbalances that we have to sell or buy at any point in time.

SPEAKER_03: All right, and then this is back to the big takeaway on this slide is really about the

SPEAKER_03: snowpack too, and this is, I think, we had a presentation on this earlier, but the big

SPEAKER_03: difference here is our snowpack is basically at zero of normal, and usually you're still

SPEAKER_03: in a runoff season at this time, and we're done with that.

SPEAKER_03: So even though the reservoir is in pretty good condition, there's no more water to add

SPEAKER_03: to them, and so we're kind of stuck with the number that we got.

SPEAKER_03: And kind of all that, the same thing across all of California.

SPEAKER_03: The Pacific Northwest has a little bit of snowpack left, but still only 36% of normal,

SPEAKER_03: so very low year, even though they have more than zero.

SPEAKER_03: And then just energy prices, again, more detail than you probably need, but if you look at

SPEAKER_03: the trend for the California-Oregon border, that's the Cobb heavy load, that is a point

SPEAKER_03: of the interconnect between the Pacific Northwest and California.

SPEAKER_03: And then NP is a California-specific node inside the California ISO, and you can see

SPEAKER_03: overall prices are moderating over the next couple years, comparatively to where they

SPEAKER_03: were for the last year.

Unknown: Now, that's in California, John, so I think it's worth noting that that Cobb price is

SPEAKER_06: reflective of that Northwest shortfall that we talked about earlier.

SPEAKER_06: That's why it's so much higher.

SPEAKER_03: And look at this is what's happening.

SPEAKER_03: I brought this to your attention last year.

SPEAKER_03: And again, we still had a fair amount.

SPEAKER_03: Sometimes you have to go to the Northwest because for a while there was a resource crunch

SPEAKER_03: kind of in the ISO area, so to be your RA you had to go by from the Northwest.

SPEAKER_03: Well if you look at, like we've been talking a lot about 2020 and 2022, look what happened

SPEAKER_03: in 2020 and 2022.

SPEAKER_03: Yes, both numbers moved up in that timeframe, but the Northwest really moved up a lot.

SPEAKER_03: And this was the first year that they kind of come back into line a little bit, but there's

SPEAKER_03: still a premium, what I would call a premium market.

SPEAKER_03: So if you're buying energy, you don't want to be buying from the Northwest.

SPEAKER_03: And if you look back at how we set up the portfolio this year, we don't have as much

SPEAKER_03: reliance on that Northwest market.

SPEAKER_03: We have more reliance inside the ISO, and these prices have been much more moderated.

SPEAKER_03: And so this is a really good look at where is that, where is the resource crunch coming?

SPEAKER_03: It's probably coming in the Northwest.

SPEAKER_03: So key takeaways, again, cost, cost, missed, generation, transmission, assets are healthy,

SPEAKER_03: another good year of taking care of our system.

SPEAKER_03: And then from energy and resource adequacy and natural gas, prices are relatively stable.

SPEAKER_03: We have a highly, highly hedged portfolio at this point.

SPEAKER_03: Now there's always going to be days where it's a little bit above what you plan to and

SPEAKER_03: days that are below.

SPEAKER_03: Those are what I call shape risk, but those are things that you just, in the business

SPEAKER_03: we're in, you have to kind of take that on.

SPEAKER_03: But to the extent of like really getting a portfolio that's highly hedged, we are very

SPEAKER_03: much there.

SPEAKER_03: Things to keep an eye on, obviously, wildfire is, you've heard that from all three of us

SPEAKER_03: tonight and particularly in the Western transmission system.

SPEAKER_03: And something that I think I brought to attention last year.

SPEAKER_03: So the PSPSs that PG&E and the KISO's, some of the entities have been using, they're being

SPEAKER_03: used by Pacific Core now, Portland Gen, by basically everybody in the Western Interconnect.

SPEAKER_03: And there's been enough of this that like, I think Pacific Core's stated goal is if there

SPEAKER_03: is a fire that's within five, regardless of which direction it's moving, if it's within

SPEAKER_03: five miles of a high voltage line, they're de-energizing.

SPEAKER_03: So I think you're going to see these occasional things happen more often.

SPEAKER_03: So even though there's a, it might be a small fire, there's going to be de-energization

SPEAKER_03: and then all of a sudden everybody has to re-rack it.

SPEAKER_03: Another good reason to be involved in a structured regional market, you can find it, go ahead.

SPEAKER_03: Can you tell me what Westside, what is Westside?

SPEAKER_03: Westwide.

Unknown: Westwide, so the whole like states.

SPEAKER_03: That earlier map that Elliot had on there about like all of the interconnection across

SPEAKER_03: there, it's a Westwide transmission system.

SPEAKER_03: And you know, it didn't see it quite as much, but there's the intermountain west is very

SPEAKER_03: dry and they are high risk for wildfire.

SPEAKER_03: So even though it's not directly in our addressable market, it affects the Western Interconnects

SPEAKER_03: because it is all connected.

SPEAKER_03: And then some heat wave that sets up, especially the coastal heat wave, that's the stuff that

SPEAKER_03: would keep me up at night.

Unknown: All right.

SPEAKER_03: Thank you for bearing with us.

SPEAKER_03: There's a lot of information, but questions for me or the panel?

SPEAKER_02: One is late.

SPEAKER_02: So in terms of drivers for that change in the RA market, right, which is great to see

SPEAKER_02: it's coming back into a normal way because we've been having these discussions the last

SPEAKER_02: two or three years about how much it was costing us.

SPEAKER_02: Is that because there's better conditions, like it's wetter in the Pacific Northwest?

SPEAKER_02: Would you have a sort of commentary on why do you think that market has become more normalized?

SPEAKER_03: So from the RA within California, you mean?

SPEAKER_02: Yeah.

SPEAKER_02: Well, just what we're buying.

SPEAKER_02: So I think it has...

SPEAKER_02: The line with the green lines?

SPEAKER_02: Yep.

Unknown: That one.

SPEAKER_03: So it has to do with a lot of people, especially within California, rowing in the same direction

SPEAKER_03: and building out the portfolio.

SPEAKER_03: But not only what they're building out with their portfolio, it's a lot about the batteries

SPEAKER_03: that got installed in California.

SPEAKER_03: So now it's a uniquely different problem.

SPEAKER_03: And so before, everybody was scrambling for something that was thermal and something was

SPEAKER_03: dispatchable.

SPEAKER_03: We now have those grid services inside the West and specifically inside California.

SPEAKER_03: Anything to add to that, Elliot or Arne?

SPEAKER_11: We have 96,000 megawatts of resources with signed interconnection agreements.

SPEAKER_11: And we've awarded a lot of transmission deliverability out of our interconnection queuing process.

SPEAKER_11: And so there's a very deep supply curve of resources inside California as well that are

SPEAKER_11: ready to go.

SPEAKER_11: And I think that contributes to some of the dynamics.

Unknown: I would just add that I think a lot of this is due to the, let's say, more conservative

SPEAKER_06: planning posture that we're seeing from the state agencies in California, and particularly

SPEAKER_06: in the IRP.

SPEAKER_06: So the state has ordered, you know, most of the 17 gigawatts of batteries that have been

SPEAKER_06: built have been because of the midterm reliability orders that were issued by the commission.

SPEAKER_06: I'll just say that there's some conservative assumptions embedded within the analysis that

SPEAKER_06: where people wanted to be long.

SPEAKER_06: So after the August of 2020 rotating blackout events and September of 2022 near-miss events,

SPEAKER_06: people just didn't really want to go through that again.

SPEAKER_06: So things like the state's not counting on Diablo Canyon capacity.

SPEAKER_06: That's 2,000 megawatts of capacity that by law can't be counted in the IRP proceeding,

SPEAKER_06: but it can be counted in the RA proceeding.

SPEAKER_06: So that's one example.

SPEAKER_06: There's a strategic reserve of the gas plants on the beach in Los Angeles that aren't also

SPEAKER_06: being counted but are available.

SPEAKER_06: And there are a few other things like that where they've just made conservative assumptions

SPEAKER_06: that together add up to, you know, probably, you know, a few thousand megawatts of additional

SPEAKER_06: capacity.

SPEAKER_06: So that to me is a big part of this, is that we just went from a place where we were kind

SPEAKER_06: of on the edge and that's when you saw the prices going up to where we now just have,

SPEAKER_06: you know, we have a surplus of capacity.

Unknown: I do want to connect the dots to this one more time though because this is going to

SPEAKER_11: become an increasingly important issue.

SPEAKER_11: And that is that, you know, that we're in an environment where these lower resource

SPEAKER_11: adequacy prices, not only for the renewable resources but the gas which sometimes trades

SPEAKER_11: at even a discount to those because they're existing resources and not really preferred

SPEAKER_11: to the state is getting the attention of a lot of the owners of gas.

SPEAKER_11: And they're saying, California for the reasons that Arne just described is really not paying

SPEAKER_11: as much and then you've got Arizona and these adjacent states who are just on fire with

SPEAKER_11: load growth and hyperscaling and data centers and they're on the market looking.

SPEAKER_11: And I think for California, for the state agencies, they have a real question of, you

SPEAKER_11: know, what point does that stuff start fleeing, you know, three, five, seven year term contracts

SPEAKER_11: while they're waiting for gas plants to get built in Arizona?

SPEAKER_11: And if we're not careful, the state's going to find itself, when I say the state, the

SPEAKER_11: state, the PUC and the investor utilities are going to find themselves right back in

SPEAKER_11: where they were in 2023 where suddenly that demand from out of state is going to jack

SPEAKER_11: the price up again and they're going to be short in an elevated market.

SPEAKER_11: So the best time to hedge is when prices are low, right?

SPEAKER_11: So we're starting to have a conversation and again, it's nice that we're, that we can support

SPEAKER_11: each other to have that adjacency and you guys can buy 610 megawatts of gas capacity

SPEAKER_11: out of the KISO footprint because they're surplus right now.

SPEAKER_11: But as that dries up for other people to export it, it may not be available or it could be

SPEAKER_11: much higher priced.

SPEAKER_11: All right.

SPEAKER_11: So we need to say state, all of us need to have a firm capacity strategy here going forward.

SPEAKER_09: Well, I don't see any more questions.

SPEAKER_09: I would say just one thing that we spoke earlier about, that CO2, you know, where was my comment

SPEAKER_09: here?

SPEAKER_09: We talked about the other, I'll promote.

SPEAKER_09: Oh, this whole, what you're doing is reducing carbon emissions.

SPEAKER_09: I don't think the public understands that and that it's helping affordability because

SPEAKER_09: we could just hear in the media constantly, oh, California is, you know, it's because

SPEAKER_09: of the environmental stuff that it's causing the prices to go up.

SPEAKER_09: And it seems like we can do both.

SPEAKER_09: I know at SMUD we're doing both, but it'd be nice to have somebody at the state level

SPEAKER_09: saying that into the media because it affects all of us when we're constantly countering

SPEAKER_09: this misinformation.

SPEAKER_09: So I just wanted to say that.

SPEAKER_09: And then your comments about AB825, I thought at one point you said, Elliot, it's going

SPEAKER_09: to degrade reliability, but then you said it's going to improve through better governance.

SPEAKER_09: Did I misunderstand something?

Unknown: Oh, yeah, I'm going to just, you know, I want to make sure I'm crystal clear on that.

SPEAKER_11: The point I make, I was offering you a little unsolicited editorial there, which is that

SPEAKER_11: the, you know, the energy imbalance market, that connectivity, that map I showed you has

SPEAKER_11: been so effective.

SPEAKER_11: And actually, John, I really appreciate your slides showing specifically how SMUD's using

SPEAKER_11: the EIM not only just for direct imports, but as a way to save water and be able to

SPEAKER_11: optimize your hydro into the net peak, right?

SPEAKER_11: That is exactly what we're trying to accomplish with this EIM.

SPEAKER_11: And so the energy imbalance market with all that connectivity and that diversity has been

SPEAKER_11: incredibly economically valuable.

SPEAKER_11: But for years, particularly in my old habitat up north, remember I worked in the Pacific

SPEAKER_11: and Northwest for 18 years.

SPEAKER_11: I was Bonneville administrator for seven years.

SPEAKER_11: There was always this outstanding concern that, well, we're not going to get too close

SPEAKER_11: to the California market because its governance is dictated by Gavin Newsom.

SPEAKER_11: I think public power in California has similar concerns, right?

SPEAKER_11: Are we going to get fair shakes here?

SPEAKER_11: And so even with the passage of Assembly Bill 825 last year, we've seen the Northwest public

SPEAKER_11: power utility still not get themselves comfortable with that governance.

SPEAKER_11: And they're talking about joining this other market run by the Southwest Power Bowl.

SPEAKER_11: But in the process of doing that, if they join that, they have to take themselves out

SPEAKER_11: of the energy imbalance market along with others, which is going to fragment that really

SPEAKER_11: valuable connectivity and economic and reliability value.

SPEAKER_11: So what I'm saying to folks is the guy that brought Bonneville into the EIM in 2019 is

SPEAKER_11: to say that for them to go backwards and start breaking that up and deoptimizing the

SPEAKER_11: inner ties between the Northwest and California and creating these really tricky interfaces

SPEAKER_11: known as seams between these markets, that is going to be exactly the wrong thing to

SPEAKER_11: be doing for the Western grid at a time when we need more interconnection and more connectivity.

SPEAKER_11: And especially now that the state stepped up and passed that bill, it's just inexcusable.

SPEAKER_11: So we're going to get a new Bonneville administrator.

SPEAKER_11: We'll see this new Bonneville administrator who wants to take a different look at it.

SPEAKER_11: I encourage you guys to stay close to your brethren up north because it will be a significant

SPEAKER_11: consequence to SMUD and WAPA in California if we deoptimize the EIM.

SPEAKER_06: And just to underline that very quickly, so E3 has done some studies of the benefits of

SPEAKER_06: these markets for most of the entities that are in the EIM now and a number of them that

SPEAKER_06: have looked at the EDAM and the Markets Plus.

SPEAKER_06: Our studies are saying that the West is better off with a large EIM than it is with two

SPEAKER_06: separate day ahead markets.

SPEAKER_06: In other words, if we lose the geographic diversity that we have in the EIM, total costs

SPEAKER_06: in the West will go up.

SPEAKER_06: That geographic diversity is more valuable than that earlier optimization.

SPEAKER_06: So who do we have to take out to dinner?

SPEAKER_06: It's basically what we're doing.

SPEAKER_08: Okay.

SPEAKER_08: That is one of the most important points in Western energy policy right there.

SPEAKER_11: On your mic.

SPEAKER_11: Oh, I'm sorry.

SPEAKER_11: That is just, I just say as a long time Western grid operator, infrastructure manager, that

SPEAKER_11: is one of the most consequential things that can be stated to folks in the Western interconnection,

SPEAKER_11: right?

SPEAKER_11: Because you know, in the grand scheme of things, sometimes people look at the dollars, but

SPEAKER_11: what is it worth to you to keep the lights on on September 6th, right?

Unknown: Thank you.

Unknown: And Paul, I know you've been there with me.

SPEAKER_11: I remember we were on the phone together on September 6th.

SPEAKER_11: Well, I don't have a question.

SPEAKER_00: I just have a couple of comments.

SPEAKER_00: I really want to say thank you, Elliot, to you and Kaizo.

SPEAKER_00: I also remember that she said when you came in California, the grid was not in good shape.

SPEAKER_00: We had rolling blackouts and it's amazing the last five years what you've done in terms

SPEAKER_00: of adding 15 gigs of no batteries.

SPEAKER_00: You built transmission.

SPEAKER_00: And then what's really, really, we all should be very grateful to you in terms of getting

SPEAKER_00: the team together to get California to now go moving toward the pathway and getting 825

SPEAKER_00: done, so creating this Westside regional market.

SPEAKER_00: And I think, you know, Chair Stamborn is absolutely right.

SPEAKER_00: I don't think people actually understand when you create a Westside market.

SPEAKER_00: I know a study have shown that it's going to save California at least a billion dollars

SPEAKER_00: or more per year and sharply reduces greenhouse gas emission.

SPEAKER_00: And so and that's because of the fact that your team has done a fabulous job in terms

SPEAKER_00: of getting the EIM market out.

SPEAKER_00: You know, just for us, it saves a small $350 million in the five years that we've done,

SPEAKER_00: which is like 10 times what the initial estimate was.

SPEAKER_00: So I just want to say thank you.

SPEAKER_00: I know usually, you know, you don't like the spotlight.

SPEAKER_00: I just want to take this opportunity to say thank you in public because all the great

SPEAKER_00: work that you've done and really all the progress that you've made, you know, putting California

SPEAKER_00: in much better shape.

SPEAKER_00: And then, I mean, we've been working together a long time.

SPEAKER_00: I mean, all the work E3 has really helped shape the California energy portfolio market

SPEAKER_00: and the strategy, but not only just California, but really the whole nation in terms of what

SPEAKER_00: is the best way to look at energy portfolio, our RPs, and how do you best optimize right

SPEAKER_00: between what you want to do for affordability, reliability, and then all the environmental

SPEAKER_00: attributions and then really shedding some light on the very complex issues.

SPEAKER_00: And then, John, can I say enough?

SPEAKER_00: I mean, you team do day in and day out, really optimize our resources and working with CAISO,

SPEAKER_00: looking at EIM market, look at the EDAM, I really want to set the market right.

SPEAKER_00: So, I just want to say thank you.

SPEAKER_00: I don't – a lot of times, I don't have a chance to say that, but I want to make an

SPEAKER_00: opportunity to say that today.

SPEAKER_00: Thank you for all the work that you do.

SPEAKER_00: Moving California forward.

SPEAKER_00: Paul, you're very kind.

Unknown: And I will say that one of the joys I get in the industry is getting to work with fellows

SPEAKER_11: like these, you know, it's a great partnership.

SPEAKER_11: And, of course, to you, I mean, we know we're coming up on a big milestone for you, and

SPEAKER_11: you've just been an amazing leader in so many different ways and a great partner, and

SPEAKER_11: definitely one of the people who are picking up the phone on those tough moments.

SPEAKER_11: So thanks for all the work together.

SPEAKER_11: You guys have made a big difference as well.

SPEAKER_11: I never guess September 6th, so I'd be all right.

SPEAKER_00: I remember that, right?

SPEAKER_00: We had the first bill in rolling black outfits.

SPEAKER_00: We had two phones on either side of our head.

SPEAKER_11: That's right.

SPEAKER_11: I didn't remember cutting out.

SPEAKER_11: We worked together.

SPEAKER_11: Yeah, no, and congratulations again on just an unbelievable career.

Unknown: Well, I just love to see this collaboration.

SPEAKER_09: And, Elliot, I guess your homework is to tell the whole world about what you did with the

SPEAKER_09: bill and how we're all benefiting from it.

SPEAKER_09: Because honestly, I think the public needs to know.

SPEAKER_09: We're in a time of scarcity, and people are afraid of things that are unaffordable.

SPEAKER_09: And to see the government's working for them, I think they need to hear it right now.

Unknown: Madam Chair, I have a question.

SPEAKER_04: So first I wanted to say I really like the phrase, we'll always have September 6th.

SPEAKER_04: It sounds like a movie.

SPEAKER_04: But I just wanted to make sure I understand.

SPEAKER_04: I wasn't quite clear what the situation is regarding the splitting of the EIM markets.

SPEAKER_04: So is that something that was a danger in the past and that's been prevented?

SPEAKER_04: Is it something that is possibly moving towards?

SPEAKER_04: Yeah, no, it is something we're definitely moving towards.

SPEAKER_11: The EIM was built over the course of the last 12 years.

SPEAKER_11: As a matter of fact, five days after we started EDAM, we brought on two additional members of EIM.

SPEAKER_11: We brought on the Black Hills Energy in South Dakota is now part of EIM,

SPEAKER_11: as well as an affiliated balancing authority of Northwestern Energy,

SPEAKER_11: of Berkshire, excuse me, of Berkshire Hathaway Energy, known as Power Watch, up in Montana.

SPEAKER_11: Which is fabulous.

SPEAKER_11: At the same time, there are a handful of utilities led by BC Hydro,

SPEAKER_11: the Power Action of the Energy Trading Arm of BC Hydro and Bonneville Power Administration.

SPEAKER_11: And I have to put Arizona Public Service and Salt River Project in there as well,

SPEAKER_11: who have just never gotten themselves comfortable with being part of the broader California originated market.

SPEAKER_11: Even after the passage of AB 825, they're still looking at joining an alternative data head market

SPEAKER_11: that would be administered by the Southwest Power Bowl.

SPEAKER_11: It's a much smaller footprint market.

SPEAKER_11: It doesn't have the electrical connectivity.

SPEAKER_11: It's fragmented as a different governance structure, but there's such anti-California angst,

SPEAKER_11: they just can't get over that.

SPEAKER_11: And so what it means is that if they're going to join this alternative data head market,

SPEAKER_11: they have to leave the EIM and they have to get technologically connected to this other market.

SPEAKER_11: Which just breaks that beautifully integrated footprint into a set of islands.

SPEAKER_11: And it creates really complicated commercial and operational issues at the seams between those markets.

SPEAKER_11: How do you manage congestion?

SPEAKER_11: How do you manage interchange?

SPEAKER_11: Who gets rights to the transmission capacity?

SPEAKER_11: What happens under extreme events?

SPEAKER_11: Right now we have one big reliability coordinator that looks over the footprint and suddenly you've got two markets dispatching resources and

SPEAKER_11: two reliability coordinators tripping over the top of each other in the middle of extreme winter or summer of great events.

SPEAKER_04: So I get what the problem is.

SPEAKER_04: So what needs to happen to get them to over their angst about being in that?

Unknown: You know, it's really difficult to say.

SPEAKER_11: I mean, unfortunately, it's very deep-seated.

SPEAKER_11: These things have been going on for years and years.

SPEAKER_11: You guys have known your peers up north.

SPEAKER_11: There's just been – it goes back, honestly, to the California power crisis.

SPEAKER_11: I think my hope is that certainly for – I don't feel like I have a lot of insider influence in Arizona and New Mexico.

SPEAKER_11: They're kind of doing their thing.

SPEAKER_11: But up in the north where there's so much connectivity and so much kindred interest between California and the northwest, we've built those inner ties to optimize and so much really relationship between the public power utilities down here in the northwest.

SPEAKER_11: My hope is that with the new transition that there's an opportunity to support the new administrator and, you know, for the DOE to take a look at this and see if –

SPEAKER_11: you can look at the whole package of governance, physics, and economics and maybe rethink it.

SPEAKER_11: I think that having Bonneville in, staying in EIM, will have a really important impact on integrating the northwest.

SPEAKER_11: And that'll make the seams challenge much less difficult.

SPEAKER_03: Two things.

SPEAKER_03: First off, I want to applaud Elliot for kind of taking the high road in all these conversations because this is a big regional issue and has been –

SPEAKER_03: you know, he and his staff have been really level and consistent in all the conversations.

SPEAKER_03: But also, you know, you asked about like Director Tamayo what kind of has to happen.

SPEAKER_03: I would argue that SMUD took a big step in that action through leadership from both Jim Shetler, Bank and Paul from – and the exec staff here locally around supporting AB – you know, getting the bill passed that we'd be able to get the governance in the situation we have.

SPEAKER_03: But most importantly, the most important thing to happen for – you know, to compete with that market is to get EDAM live and get EDAM robust and performing.

SPEAKER_03: And that's where this – you know, you all approved the – to be able to participate in the market coming up.

SPEAKER_03: That's the best thing you can do to be able to get this off the ground and win that battle.

SPEAKER_04: Senator, I was curious that – so we're not actually going to be part of it until the fall of next year.

SPEAKER_04: What is it that needs to happen in our shop that takes that long?

Unknown: I'm not saying that it's too long. I'm just wondering what it is.

Unknown: Well, so there's always a beta project, right?

SPEAKER_03: And so Pacific Corps was the beta project.

SPEAKER_03: And sometimes it's good to be that, sometimes it's not.

SPEAKER_03: But, you know, we're going to benefit from Pacific Corps going live and getting it up and running.

SPEAKER_03: There's a number of reasons why it's not spring of next year.

SPEAKER_03: And it's a collective class.

SPEAKER_03: Kaisou kind of – and Elia can speak to this better, but generally we'd like to have one onboarding session per year.

SPEAKER_03: And then the other part of the year, they do upgrades to their systems.

SPEAKER_03: So they swapped them for 2027, upgrading their systems in early 27, because there was other – there's a number of other entities.

SPEAKER_03: Public service New Mexico, LA, a bank, and within bank we've got WAPA.

SPEAKER_03: There's a lot of things to herd, and there's a lot of system upgrades.

SPEAKER_03: It's a key project, both for this year, mostly in the planning period.

SPEAKER_03: But next year from an execution period, it's going to take that much time.

Unknown: Good. Thank you.

SPEAKER_04: Yep.

Unknown: Any other questions?

Unknown: Okay. Well, gentlemen, really do want to say thank you.

SPEAKER_01: Quite insightful.

SPEAKER_01: I appreciate your patience with all of us who are not as, you know, seeped in this information, but very insightful.

SPEAKER_01: Let me ask the Chief Legal Officer if we have any requests to speak.

Unknown: No, we do not.

Unknown: Okay.

SPEAKER_01: The next item on the agenda is public comment for items not on the agenda.

SPEAKER_01: Do we have any?

Unknown: No, we do not.

Unknown: Okay.

Unknown: How about – okay.

SPEAKER_01: So the last thing here is that we do want everyone to know who's listening in, that written comments received on items not on the agenda will be included in the record if they're received within two hours of the end of the meeting.

SPEAKER_01: The last item on the agenda is to provide a summary of committee direction.

SPEAKER_01: I do not have anything.

Unknown: Okay.

SPEAKER_01: So with that, our meeting is ended.

Unknown: Thank you.