Strategic Development Oct 07 2025

Unknown: astered.

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

SPEAKER_01: meeting of October 7th. This room is equipped with a safety alarm. If the alarm sounds,

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SPEAKER_01: legal officer, please conduct the roll call. Director Sanborn. Director Herber. Chair Buie

SPEAKER_02: Thompson. Present. All committee members are present. Also present are director Tamayo and

SPEAKER_02: president Fishman. Okay. Item number one on tonight's agenda is to provide the board with

SPEAKER_01: an informational item briefing on federal legislative activities. The presenter today

SPEAKER_01: is Elizabeth Whitney. She's the managing principal at McGuire Whitney.

SPEAKER_01: Do you need anything else? We need you to rest a minute.

SPEAKER_00: Well, hello. Thanks for having me. I've had a wonderful day talking to teams here at Smed,

SPEAKER_00: number of different business units. And every time I come here, I'm really overwhelmed at what

SPEAKER_00: a fantastic world class team of staff you have here. Very lucky to represent you guys in Washington,

SPEAKER_00: D.C. Regardless of whatever the environment may entail. So we have had a lot occur in the last

SPEAKER_00: nine and a half months. Quite a bit has happened in the last week. So since I prepared my slides,

SPEAKER_00: we've had a number of developments. So maybe a little bit out of date. I'll try and share

SPEAKER_00: some of those updates. But I really wanted to talk with this committee in particular about

SPEAKER_00: how we are strategizing in the second Trump term. This is very different from the first term that

SPEAKER_00: the president had, his non sequential term. But we are starting to see patterns in what I think a

SPEAKER_00: lot of people talk about as chaos in Washington. I think that's really a kind of cheap way out of

SPEAKER_00: really assessing what is happening in Washington, D.C., really trying to understand the goals and

SPEAKER_00: objectives and strategies of this administration, the president in particular. So I wanted to kind

SPEAKER_00: of try and put some frameworks around that that I think are I hope are helpful for Smed to develop

SPEAKER_00: strategies for how to survive and thrive in the second Trump administration. So the first one I

SPEAKER_00: want you to think about is how the first hundred days led and fed into the second hundred days.

SPEAKER_00: So you see a number of things initiated in the first hundred days that seem very strange and

SPEAKER_00: different and then followed through in the second hundred days. And so some of those are

SPEAKER_00: continuations or making good on promises or threats, however you may want to want to look at it.

SPEAKER_00: And then there are some other pivots to a different chapter that I think are worth looking at.

Unknown: So in the first hundred days we saw the president on day one announce a national energy emergency.

Unknown: And as that sort of was pending, we see a lot of policy developing around this idea that we are in

SPEAKER_00: an energy emergency. So you see quite a bit of use of section 202c of the Federal Power Act

SPEAKER_00: emergency reliability orders directing specific power plants to continue running.

Unknown: We started off with a federal funding freeze that has turned into delay but even more recently

SPEAKER_00: turned into the cancellation of one of Smed's flagship grants, which we spent a lot of time

SPEAKER_00: talking about today and we continue strategizing about what that means and how Smed might want to

SPEAKER_00: respond. We saw the announcement of deregulation of a number of environmental regulations leading up

SPEAKER_00: to and including the withdrawal of the endangerment finding, something that we thought was sort of

SPEAKER_00: beyond what an administration would reach into. We saw the announcement of broad-ranging tariffs,

SPEAKER_00: some of which have been walked back, some of which have continued, but a lot of

Unknown: confusion and uncertainty around the price of everyday goods. And we saw a call to end the

SPEAKER_00: green new scam and basically to reverse a lot of Biden administration energy policies. And of course

SPEAKER_00: that led to the loss of tax credits for wind and solar and home energy and individual tax credits,

SPEAKER_00: as well as further hostility to wind and solar specifically. And I'll get a little bit more into

SPEAKER_00: that in future slides. But I wanted to kind of put a little bit of framework around what this type of

SPEAKER_00: leadership means and how we can anticipate how the president governs as a strong individual leader

SPEAKER_00: who very much likes to concentrate power. I recommend that you take a look at a couple of

SPEAKER_00: books that I think provide really insightful thinking into how this president likes to govern.

SPEAKER_00: One is The Art of the Deal, which is not certainly not written by President Trump,

SPEAKER_00: but is attributed to him and really does, I think, encapsulate how he likes to approach

SPEAKER_00: shaping reality to his liking. And we see a lot of deal-making, regulation by deal-making,

SPEAKER_00: incentivizing by deal-making. So I would say an example of this is the federal government through

SPEAKER_00: negotiation has taken a stake in a number of American companies. This can often start with

Unknown: some kind of political or government pressure, like an inquiry or a lawsuit that puts pressure

SPEAKER_00: on an organization. They might be seeking federal funding or some kind of loan. Then there's a

SPEAKER_00: negotiation and the deal emerges that includes a stake for the federal government in that U.S.

SPEAKER_00: company, some kind of arrangement for either policy changes or a loan guarantee or some other

SPEAKER_00: kind of benefit for the company. We don't always get a lot of public information about what that

SPEAKER_00: deal actually entails. So this is very, very different from the way government has ever really

SPEAKER_00: been conducted. But if you think about it in terms of making a deal, that can help understand

SPEAKER_00: how the president likes to conduct business. The other is The 48 Laws of Power.

SPEAKER_00: If you're not familiar with this book, it's a number of ways that individuals can exert power

SPEAKER_00: in negotiations and discussions with others. The one that I particularly want to draw your attention

SPEAKER_00: to is one that suggests that a way to exert power is to keep your counterparty guessing about what

SPEAKER_00: you're going to do next. And so we really see the president often employing this tactic. So an

SPEAKER_00: example of this would be, you know, announcing that he's going to meet with Senate Democrats to discuss

SPEAKER_00: ending the government shutdown and then canceling that meeting right before it's about to take place.

SPEAKER_00: What you gain from this is you say that you're going to do something. Your counterparty then

SPEAKER_00: spends the next 24 hours preparing for the meeting. Then you quick take it away. They've

SPEAKER_00: lost 24 hours. They could have been in the news media or formulating a different strategy. And

Unknown: now they've basically wasted 24 hours. So you might have known that you were not going to meet

SPEAKER_00: with them from the beginning. But that sort of change in expectations is a way to exert power.

SPEAKER_00: There are several others. Some of them have ethical implications, but these are ways that

SPEAKER_00: the president does like to govern that are unfamiliar to us. But once we sort of see that

SPEAKER_00: framework, we can say, all right. So the uncertainty that, you know, sort of question

SPEAKER_00: about like, can we trust what is going to happen? That's a feature, not a bug. Okay. So let's go to

SPEAKER_00: the next slide. So obviously there's been a lot of discussion about the legislative developments

SPEAKER_00: and the One Big Beautiful Bill Act. I'm not going to talk as much about those because we've really

SPEAKER_00: talked quite a bit about those legislative changes, the changes to the tax credits. So I

SPEAKER_00: kind of wanted to draw your attention to a different set of developments that's been continuing with

SPEAKER_00: a little bit less sort of media emphasis, but it's still nevertheless working its way through

SPEAKER_00: and has some pretty significant implications for SMUD. So back in 2023, Congress passed on a

SPEAKER_00: bipartisan basis the Fiscal Responsibility Act. This was part of the debt limit deal, you may recall,

SPEAKER_00: included a number of changes to NEPA. One was the time limits for how long it should take to do an

SPEAKER_00: environmental assessment or an EIS, page limits on how long these documents should be, as well as a

SPEAKER_00: narrowing of the scope of what constitutes a major agency action that triggers NEPA review. This was

SPEAKER_00: never fully implemented by the Biden administration, but it has in the Trump administration supported

SPEAKER_00: by a couple of Supreme Court cases that you see up here, seven county infrastructure versus Eagle

SPEAKER_00: County and Marin Audubon Society versus FAA. These were a twin pair of corollary decisions by the

SPEAKER_00: Supreme Court that both established that NEPA is a procedural statute that should not have

SPEAKER_00: substantive outcomes, should not dictate whether or not the permit gets awarded, as well as declaring

SPEAKER_00: that agencies don't need to consider upstream and downstream impacts of their project or things

SPEAKER_00: that the agency itself can't control with this specific decision, so a dramatic reining in of

SPEAKER_00: NEPA, as well as the idea that the Council on Environmental Quality, which is administered NEPA,

SPEAKER_00: basically since its inception, doesn't have the ability to dictate to other agencies how they do

SPEAKER_00: their NEPA procedures. So those three things have really started shaping and being implemented fully

SPEAKER_00: through new NEPA guidance from both CEQ and individual agencies that now have their own NEPA

SPEAKER_00: regulations, so dramatically reining in what that process looks like. We've also seen an effort to

SPEAKER_00: have project developers, project sponsors, play a much larger role in the preparation of environmental

SPEAKER_00: review documents. So for example, the One Big Beautiful Bill Act included a provision. I'm still

SPEAKER_00: not totally sure how they got this in there, but it allows a project sponsor to basically prepare

SPEAKER_00: their own environmental impact statement or other environmental documents and basically pay a fee

SPEAKER_00: equal to 125 percent of what it would cost the agency just to review that. So if they go through

SPEAKER_00: that process, then they're guaranteed to a much faster timeline for getting that approval. Hasn't

SPEAKER_00: been used yet. I think there are some questions about how that would interplay with the Administrative

SPEAKER_00: Procedures Act, whether it absolves any litigation on what the agency needs to consider, but that

SPEAKER_00: is, you know, contributes to this sort of sea change that we're seeing in permitting reform.

Unknown: We also have Congress continuing to consider permitting reform. There are a number of permitting

SPEAKER_00: reform bills. I would note the Speed Act. There's also been a bipartisan framework put forward by

SPEAKER_00: the Problem Solvers Caucus. So you definitely see Congress still interested in talking about

SPEAKER_00: permitting reform. This was very much disrupted by the government shutdown, but already a number

SPEAKER_00: of Democrats were saying, hey, you know, we're all for permitting reform, but we're not going to talk

SPEAKER_00: about permitting reform for, you know, projects in general when there's so much hostility specifically

SPEAKER_00: to wind and solar. So we'll go to the next slide to talk about that. So we don't have an all of the

SPEAKER_00: above energy strategy. There was certainly an expectation that a Republican administration

SPEAKER_00: would shift from hostility to fossil resources to more of an all of the above policy. That's not

SPEAKER_00: what we have. Energy abundance is about prioritizing reliability pretty much above all else, and I'll

SPEAKER_00: go into that in a bit. But part of the way the administration is doing that is not just with

SPEAKER_00: phasing out the tax credits, but at every turn looking for ways to disadvantage wind and solar

SPEAKER_00: projects, to not permit them, to make it harder for them to compete and get built.

Unknown: So there's a number of examples here of different agencies that have put forward new policies,

SPEAKER_00: specifically targeting wind and solar. I'm not going to go through each of them. But this does

SPEAKER_00: have implications for the project that SMUD is trying to permit. So just because we may be

SPEAKER_00: dodging the raindrops so far does not mean that it's not raining. So they are coming for us. They

SPEAKER_00: certainly do not want to see these wind and solar projects move forward. So do not be surprised if

SPEAKER_00: there is any kind of delay or pretext for why permits don't get issued in a timely manner

SPEAKER_00: if they're for wind and solar projects. Let's go to the next slide.

Unknown: So the next framework I want to present to you is a shift that I hope is sort of a helpful way to

SPEAKER_00: think about what energy policy looks like from the administration's perspective.

Unknown: We think of ourselves as one of 12 critical infrastructure sectors, as a sort of industry

SPEAKER_00: that has its own challenges or moving forward or part of an energy transition.

Unknown: But we aren't seen as sort of a co-equal sector by the administration. For the Trump administration,

SPEAKER_00: a lot of policy comes down to winning the AI race against China. That is dominating the economy.

SPEAKER_00: It's dominating policy. It's obviously dominating news media. And every conference any of us have

SPEAKER_00: been to all year is all about AI and how it's shaking up the industry. Yes. Elizabeth, have

SPEAKER_08: they been able to articulate what winning the AI race against China means? I mean, we're going to

SPEAKER_08: have it and they're not? No, they're still going to have it too. No. Winning the AI race means a

SPEAKER_00: couple of things. One, it means that the technology exports, the physical stuff that makes up data

SPEAKER_00: centers and AI, the whole stack, what's called the AI technology stack, is American made. So we

SPEAKER_00: have the Nvidia chips that are used globally in almost every data center with very few real

SPEAKER_00: competitors. You know, American made, steel and concrete, the technology, the applications,

SPEAKER_00: the algorithms, et cetera, all, you know, U.S. dominated. It also means that we are

SPEAKER_00: dictating how AI develops. So we're not putting guardrails around it that might censor or favor

SPEAKER_00: Chinese Communist Party views. It also means that we have that dominating relationship with

SPEAKER_00: other nations globally where they need AI solutions and we have them. And so we can sort of

SPEAKER_00: exert that influence and control globally. So that's what we kind of mean by AI dominance

SPEAKER_00: as opposed to, you know, a Chinese technology that may contain surveillance or espionage

SPEAKER_00: or any other kind of military strategy is being imported into the United States. So you see a lot

SPEAKER_00: of hostility towards China because we know they do that. They do embed, you know, surveillance

SPEAKER_00: technologies into a lot of physical tools. So we have to win this race for not only economic

SPEAKER_00: dominance but military dominance as well. The stakes are quite high to fail at this task,

SPEAKER_00: would have pretty disastrous economic consequences. And you see our whole economy really leveraged

SPEAKER_00: around AI right now and our federal policy environment is too. So a lot of what the emphasis

SPEAKER_00: is and why the president and the administration care so much about energy is not because

Unknown: energy is great and it's going to win elections and, you know, we love energy. It's because

Unknown: AI needs energy to function. Now, we in the industry know that could be a very transient need

SPEAKER_00: and so we're rather risk averse to just willy-nilly building, you know, whatever may be needed to serve

SPEAKER_00: this load if we even could all at once. So some of the projections are quite massive.

SPEAKER_00: But it's also driving a number of these deals where we have very unusual

SPEAKER_00: arrangements where the U.S. government has a stake in companies in exchange for

SPEAKER_00: a change in export control policy or a loan guarantee. So very strange, very unusual deal

SPEAKER_00: making around this. And I think that it has some pretty serious implications for energy policy,

SPEAKER_00: of course. But when you start looking at what is the administration doing on AI and how does

SPEAKER_00: energy fit into that larger discussion, then some of these policy changes start looking less like,

SPEAKER_00: let's just reverse whatever the Biden administration did just to own the libs,

SPEAKER_00: you know, and it starts looking like our policy is reliability at pretty much any cost. So we could

SPEAKER_00: anticipate that the Trump administration was going to be hostile to decarbonization. We knew that they

SPEAKER_00: didn't really care about that. Probably didn't realize that they would walk so far, so fast away

SPEAKER_00: from that. We seemed to have pretty much industry-wide fragile consensus that decarbonization was a goal

SPEAKER_00: worth, you know, achieving or pursuing. That has all but been abandoned under this administration.

SPEAKER_00: So we're going to end up with coal-powered artificial intelligence. Certainly that is

SPEAKER_00: acceptable to the Trump administration. In fact, they just committed over $600 million to coal

SPEAKER_00: facing projects, which is one of the sort of shifts that we're seeing from the first hundred

SPEAKER_00: days being about clawing funds back. And now we're seeing some strategic investments. And that's one

SPEAKER_00: place where we're strategizing about how can we take advantage of where money is flowing now.

Unknown: So not that we're going to build to coal plants, but are there some places where

SPEAKER_00: the administration is going to invest, where are these hyperscalers are going to invest

SPEAKER_00: that can benefit SMUD's customers? So what we didn't expect was that, especially in an environment

SPEAKER_00: where there is so much political emphasis on the affordability, that that leg of the stool would

SPEAKER_00: also fall when we think about energy policy. So when we look at reliability as the only leg of

SPEAKER_00: the stool that matters, that's why we have this emphasis on coal and natural gas on these

SPEAKER_00: emergency must-run orders that are not economical at all, that do raise costs. And so the administration,

SPEAKER_00: I think, is politically vulnerable around the affordability of energy. And that could actually

SPEAKER_00: lead to some pretty significant interventions in the electric sector at some point. And I'll talk

SPEAKER_00: about that in a moment. But I want to mention two documents, one that's up here and one that's more

SPEAKER_00: recent. The first is the AI action plan that came out in July. Energy is one section of one of three

SPEAKER_00: pillars of the AI action plan. So that's kind of where we fit in the global landscape.

SPEAKER_00: So the number one goal is to prevent premature retirements. So what we want to, the sort of

Unknown: term I want to introduce into the lexicon from this document is grid stabilization. So we've

SPEAKER_00: heard of reliability, then we had grid resilience, now we want grid stabilization. And the way we

SPEAKER_00: stabilize the grid is to prevent premature retirements. That's why you see these emergency

SPEAKER_00: orders. You're probably going to see an expansion of that authority and additional efforts to prevent

Unknown: resources from retiring even when it's uneconomical. This document also talks about

SPEAKER_00: ensuring compliance with nationwide standards for resource adequacy, which is news to me. If we have

SPEAKER_00: nationwide standards for resource adequacy, I've been working in energy policy for about 15, 20

SPEAKER_00: years. Didn't realize we had those, but we might in the future. So we're talking about nationwide

SPEAKER_00: standards for resource adequacy. We're talking a little bit about grid management and transmission

SPEAKER_00: upgrades. Can we get on board with that? Maybe so. But of course we see this prioritization of

SPEAKER_00: base load because we don't want to mess around with these intermittent resources. We're just

SPEAKER_00: going to focus on base load because that's the reliability standard that we want to have for AI.

SPEAKER_00: We also see in this document talking about reforming power markets. That is very likely to

SPEAKER_00: be the next phase of energy policy. I don't know what form it's going to take. Right now, the power

SPEAKER_00: markets are talking about mostly governance and co-location. Should we have different customer

SPEAKER_00: classes? What should tariffs look like? We could see the president take a much larger role in those

SPEAKER_00: discussions going forward. The other document, yeah, go ahead. I'm sorry, one more quick question.

SPEAKER_08: Have they talked at all about which it comes up every six, eight, ten years, selling off the

SPEAKER_08: federal power marketing organizations like WAPA? I've not heard anything about that except from

Unknown: power marking customers who are concerned about that. There's a lot of concern, particularly in

SPEAKER_00: the Tennessee Valley Authority where the president has fired a couple of board members.

SPEAKER_00: As I mentioned, we'll talk a little bit more about this or maybe I'll just talk about it now.

SPEAKER_00: We could see the federal government start to look at specific utilities and some kind of deal-making

SPEAKER_00: to more than encourage those companies to take specific actions. I think the most likely

SPEAKER_00: candidates for that kind of activity are Dominion Energy in Virginia and Data Center

SPEAKER_00: Alley and the Tennessee Valley Authority where the federal government already has a stake in a role.

Unknown: There could certainly be others. The larger the utility, the more likely that they maybe need

Unknown: policy changes from the federal government. What form that will take exactly, I don't know.

Unknown: Can I ask a question on that? You're saying the president

SPEAKER_03: got rid of board members on the Tennessee Valley? Yes. The president has fired three board members,

SPEAKER_00: three sitting board members on the Tennessee Valley Authority this year. What gives him that

SPEAKER_03: authority? Well, I don't have a good answer for that. It's more that there's no statutory

SPEAKER_00: provision preventing that. So the president has fired FERC commissioners, the president has fired

SPEAKER_00: nuclear regulatory commissioners, federal reserve members. So a dramatic expansion. I'm sorry,

SPEAKER_00: is Tennessee Valley like a FERC? It is ostensibly an independent

Unknown: board, but the president has the authority to name board members. In his first term,

SPEAKER_00: he fired a couple of board members as a result of a decision they made on offshoring some jobs to

SPEAKER_00: India. So there's precedent for it in his first term. Nobody really challenged it at the time,

Unknown: but we're well past that. So some fired board members and commissioners, not at TVA, but

SPEAKER_00: have challenged that authority. And they've only been successful if there's a specific statutory

SPEAKER_00: reference to when an independent commissioner or board member may be removed. If the statute is

SPEAKER_00: silent on that, then the president's ability to fire those board members has been upheld

SPEAKER_00: already this year in court. Okay. Thank you. The other document I want to call your attention

SPEAKER_00: to that gives us some insight into where the administration is going on energy and power

SPEAKER_00: for AI is a more recently released request for information announcing the speed to power

SPEAKER_00: initiative. This is interesting. We've had a lot of conversations about that in the past week and

SPEAKER_00: even today about how SMUD rates might respond to that, but it requests information about specific

SPEAKER_00: projects that enable AI data centers and information and feedback on how the Department of Energy can

SPEAKER_00: use its existing authorities to enable faster interconnection and building of generation to

SPEAKER_00: power AI. This includes using existing authorities, including the grit program. So we do have an

SPEAKER_00: indication that they intend to remake that program and reissue opportunities. Will it look anything

SPEAKER_00: like the Biden administration grit program? Probably not, but they'll be using the same

SPEAKER_00: statute. So we do know today what activities and what specific types of projects will be eligible.

Unknown: We think it's likely that they will prioritize certain types of those projects that have to do

SPEAKER_00: with enabling more generations. So much more likely that you'll see projects awarded for

SPEAKER_00: re-conductor-ing than vegetation management, for example, or undergrounding. So we can start to

SPEAKER_00: anticipate where my dollars flow in the future and strategize about how we might orient ourselves

SPEAKER_00: to capture any of that. But that's a relatively recently released document and it's the first

SPEAKER_00: step in a larger initiative called speed to power, which I'm sure you'll hear more about.

Unknown: So next slide. So what comes next? The hardest question of all. What can we anticipate

SPEAKER_00: using these frameworks? Continued hostility to intermittent power. I think this is fairly

SPEAKER_00: obvious. You know, would not expect the administration to reverse course and suddenly say,

SPEAKER_00: oh, yeah, you know, it turns out we do need wind and solar. You were right. These are, you know,

SPEAKER_00: the cheapest, fastest to power. We don't care about intermittency anymore. Probably not. I would

SPEAKER_00: expect to see continued hostility to these resources. Continued deregulation. So they're

SPEAKER_00: always on the hunt for regulations that burden AI. In fact, there's an effort or there was an effort

SPEAKER_00: in the budget reconciliation bill to just blanket moratorium on any state laws having to do with AI

SPEAKER_00: whatsoever. They weren't able to get that in the bill. But there is still a very significant

SPEAKER_00: interest among the tech industry preempting state laws. So the way they do that is by occupying the

SPEAKER_00: field at the federal level. So the only real legislative effort that's been introduced to

SPEAKER_00: really occupy the field is Senator Ted Cruz's sandbox act, which would create a regulatory

SPEAKER_00: sandbox, which is essentially a space where if you're developing an AI, you can petition to

SPEAKER_00: not have to follow a certain regulation. So you can just kind of nominate a regulation to not have

SPEAKER_00: to follow it. That's not really what a regulatory sandbox is in any other context. But that's what's

SPEAKER_00: being proposed for AI today. He has about 12 policy ideas that are going to be coming out

SPEAKER_00: around AI. But certainly deregulation and preemption of state laws is sort of the prize around that.

SPEAKER_00: Continued uneven permitting reform gains. So talk about permitting reform, but it doesn't actually

SPEAKER_00: apply to the projects that we want to do. It only applies to the projects that the administration

SPEAKER_00: thinks should be prioritized for reliability. Continued emphasis on data centers and sort

Unknown: of putting concerns aside in favor of getting these built as quickly as possible, getting them

SPEAKER_00: powered one way or another. Our concerns about long term and customer costs, these are not

SPEAKER_00: particularly relevant to the administration. We need to win against China. That's the only thing

SPEAKER_00: that really truly matters. I think there is significant potential for additional intervention

SPEAKER_00: in energy markets, particularly deregulated markets. But certainly you could see an effort

SPEAKER_00: to get involved in specific companies or in energy policy generally, likely using emergency

SPEAKER_00: authorities, likely trying to bypass Congress. And if Congress is able to reopen the federal

SPEAKER_00: government, likely that we'll continue to see a push on permitting reform in the longer term.

SPEAKER_00: Some of these legislative initiatives on AI likely could include energy titles focused on

SPEAKER_00: reliability, speed to power, and getting more megawatts out of the existing system,

SPEAKER_00: but primarily building generation. So let's go to the next slide.

Unknown: What questions do you have?

SPEAKER_00: Assuming the government reopens at some point, what opportunities do we have? What level of

SPEAKER_08: influence do we have? I mean, ordinarily we talk to our local reps, they go to the people at the

SPEAKER_08: DOE, we have some influence over either legislation or regulation or whatever. And this time it feels

SPEAKER_08: like it's all top down and there is no deal to be made. It just feels like it's coming.

Unknown: Yeah, we've had a lot of conversations about that today. What I'll say for now is that

SPEAKER_00: SMUD has always found strength in, you know, A, your North Star guiding principles, the DNA of,

SPEAKER_00: you know, a community owned, community focused utility that's going to do what's right for your

SPEAKER_00: customers. Nothing should change about that. Nothing about the next, you know, three plus years

SPEAKER_00: should change that at all. But a big part of SMUD's strategy has been about partnerships and figuring

SPEAKER_00: out who are the partners that make sense for us right now, who are we aligned with that maybe

SPEAKER_00: is also aligned with the administration. Maybe we find new partners, maybe we join new coalitions,

SPEAKER_00: maybe we try and anticipate what, you know, where these trends are going and we identify

Unknown: partners who can either speak on our behalf or are, you know, doing projects that we could be part of

SPEAKER_00: to our benefit. But I think that continues to be a really strong strategy for SMUD. And maybe,

Unknown: you know, we say, you know, there's no, you know, individual strategy that we could employ that

SPEAKER_00: stops us from being situated in the capital of California. We knew that there was going to be

SPEAKER_00: California specific hostility with this administration. There is. But are there

SPEAKER_00: ways that we can be not quite as out front, still try and develop and continue relationships with

Unknown: the administration, find individuals that we can work with, find areas of alignment,

Unknown: but also chart our own path and forge new partnerships and relationships that allow us to

SPEAKER_00: navigate in a slightly different way. We have always done a lot of that, like selected

Unknown: situations where, hey, maybe it makes sense for us to advocate through the business council for

SPEAKER_00: sustainable energy or APPA on this particular point. We're still, you know, heavily invested

SPEAKER_00: in those strategies. And I think they're still, you know, our best bet in a lot of these cases.

SPEAKER_00: Yes.

Unknown: Thanks, Elizabeth. So on one of the sides, it says that the Corps of Engineers is doing an,

SPEAKER_03: or sorry, the Commerce Department is doing a national security probe of wind turbines.

SPEAKER_03: Yes.

SPEAKER_03: What are they probing for? What are they looking for?

SPEAKER_03: Just in case there are imported wind turbines that pose a national security risk, could be

SPEAKER_00: the type of surveillance technology that I mentioned before, that China tends to embed in

SPEAKER_00: especially grid connected technologies. I don't know what they'll find. I don't know what they're

SPEAKER_00: looking for.

SPEAKER_00: I think we're getting mostly vestus wind turbines these days. I didn't know Denmark was an enemy.

SPEAKER_08: I mentioned that China, I mean, I worry about importing stuff from China sometimes because of

SPEAKER_03: that very thing. But I'm just wondering if you knew what it was. But if you don't, that's, it'll be

SPEAKER_03: interesting to see if they find anything.

SPEAKER_03: Yes.

SPEAKER_03: Yeah.

Unknown: And how long it takes them?

Unknown: I just wanted to say thank you, Elizabeth, for the update.

SPEAKER_05: It's not great news, but we won't shoot the mess in the...

SPEAKER_05: Thanks.

SPEAKER_05: I, you know, it is frustrating because it's hard to know what to do, just like Director Sanborn and

SPEAKER_05: President Fishman say. I don't know either, but I'm glad you're there. I'm glad you're working for us.

SPEAKER_05: And we stand ready to do whatever is needed when you need us.

Unknown: I appreciate that. And like I said, I've had, even though it's not great news to deliver, I hope that

SPEAKER_00: these are useful frameworks to kind of understand and predict a little bit of what's happening and

SPEAKER_00: why. You know, I don't think it's fair to just say, oh, it's chaos in Washington. That doesn't

SPEAKER_00: really help us figure out what we need to do next and plan for the future. But I'm happy to live in

SPEAKER_00: Washington, so you don't have to.

Unknown: Dave?

Unknown: If you'd like to say something.

SPEAKER_01: You calling me?

Unknown: Yes.

Unknown: Yeah, thank you. Thank you very much, Elizabeth. That was very well done, even though the

SPEAKER_09: message is pretty depressing. But I do thank you for your sort of insights on,

SPEAKER_09: okay, so what do we do? What's sort of the strategy, even though it's not fully formed?

SPEAKER_09: It's at least it gives us something to think about. What can we do rather than just sit around

SPEAKER_09: and complain and wring our hands and be victims? So appreciate your professionalism and your insight

SPEAKER_09: and as depressing as the message is.

SPEAKER_09: Well, there are some years when we thrive and some years when we survive. And, you know,

Unknown: we wouldn't really be able to appreciate the good years without experiencing a few of the bad. So

SPEAKER_00: just because we're not aligned, you know, sort of ideologically with this administration doesn't

SPEAKER_00: mean that there aren't areas where we can work together. And I think emphasizing some of those

Unknown: while also recognizing that we're not going to have the same level of partnership that we had

SPEAKER_00: under the previous administration, we spent a lot of time trying to make SMUD the partner of choice

SPEAKER_00: for, you know, federal grants and awards. Didn't really anticipate that the federal government

SPEAKER_00: wouldn't be the partner of choice for us. But it's just a shift. It is a, you know,

SPEAKER_00: retraction and a shift of emphasis. And now that we can kind of see it, I think we can

SPEAKER_00: figure out how we want to behave and get back to a place where we're thriving.

SPEAKER_09: So I would want to, I kind of want your thoughts on this. Some of the stuff that they're doing is

SPEAKER_09: America first, you know, and bringing back manufacturing. And I know that we've had

SPEAKER_09: concerns about that with regards to our supply chain. Do you think there are some opportunities

SPEAKER_09: for us to partner with some of the manufacturers who, and I'm thinking like manufacturers of

SPEAKER_09: transformers and switch gears, things like that. Do you think that that kind of partnership is

Unknown: worth looking into as far as, okay, we'll at least make progress in that?

Unknown: Absolutely. You know, I think a company that wants to bring manufacturing back to the United States

SPEAKER_00: is probably good for all of us. If SMUD can enable that and sort of make way and make arrangements

SPEAKER_00: for that to happen here in this region, I think that can be a huge benefit. And it's a great use

SPEAKER_00: of time, not just because that's what the administration wants to see, but because

SPEAKER_00: that's good for the economic development of the region and the country.

SPEAKER_03: Thanks. That made me think about solar panels. Most of them are made in China. And recycling

SPEAKER_03: of these materials that have critical minerals in them is important to this administration.

SPEAKER_03: And we're going to need those to make the next generation of products, batteries, all the stuff.

Unknown: Is that an opportunity we can latch onto? And the other one was, I think I raised this last year,

SPEAKER_03: was Lee Zeldin came from the geothermal industry. And we have a lot of untapped geothermal in

SPEAKER_03: California. And there's new technologies now to get at it that are less harmful than they used to be.

Unknown: Is that an opportunity? It is. Even though we have hostility to wind and solar, which is a huge

SPEAKER_00: pivot from where that was not only advantaged by tax credits, but also commercially viable

SPEAKER_00: and accessible and quick to market. But there are a whole host of other clean technologies

SPEAKER_00: that retain those tax credits as well as are not necessarily specifically being targeted. So

SPEAKER_00: geothermal, batteries, hydro power, these are all still eligible for tax credits, aren't necessarily

SPEAKER_00: seeing the same kind of headwinds as wind and solar, and are great places to take a fresh look

SPEAKER_00: and see, is there something to be gained from exploring something in those fields in the near term?

SPEAKER_03: Yeah. Because they aren't intermittent. And we do have them in counties like Modoc. We haven't

Unknown: tapped into it yet. Thank you. Thank you.

SPEAKER_03: Thank you. Okay. Do we have any cards? We don't have any cards. It looks like we do have a hand

SPEAKER_02: raised, two hands raised. So the first person is John, virtual commenter. Yes, this is John Weber.

SPEAKER_06: Can you hear me? Yes. First off, I would like to thank Miss Whitney for the excellent presentation.

SPEAKER_06: And I appreciated the book suggestions as well. And then I'd also like to ask the committee and

SPEAKER_06: the board to please consider a new rate class for data centers. I think this will be important to

SPEAKER_06: keep rates low for the rest of the customers for SMUD. And then also I have a book recommendation.

Unknown: And that would be Empire of AI by Karen Howe. It's an excellent book. If you want to get it from the

SPEAKER_06: library, you're going to have to wait a while. Otherwise, you can find it another way. Because

SPEAKER_06: it looks like there's good possibility that we could be an AI bubble right now when some people

SPEAKER_06: are predicting it could end up popping like the dot com bubble did. So we need to keep that in

SPEAKER_06: mind as well. And then lastly, I want to say that I like the idea from the board member about

SPEAKER_06: pursuing geothermal. So that might be a good strategy for us with the current administration.

SPEAKER_06: Thank you very much and have a good evening.

SPEAKER_06: The next day is the Sacramento EV Association.

Unknown: Yeah, this is Peter Macan. Can you hear me okay?

SPEAKER_07: Yeah, I guess these are my own comments, not SAC EVs. First off, well, first off, I do want to

SPEAKER_07: thank the presenter for the excellent presentation. It was great. I guess, you know, one of the

SPEAKER_07: takeaways from this presentation is that when people who know nothing about power systems try

SPEAKER_07: to regulate power systems, they're going to make a mess of it. You know, trying to bring back coal,

SPEAKER_07: when coal is actually more expensive, it's less reliable, because all the plants they're trying

SPEAKER_07: to bring back are ancient. And so their forced outages rates are going to be incredibly high.

SPEAKER_07: You know, it's just stupidity. But anyway, I guess we don't have to worry about that here,

SPEAKER_07: because in California, we don't have any coal. And the other thing I wanted to mention,

SPEAKER_07: and this is also more of a power system engineer or technical thing, you know,

SPEAKER_07: this concept of baseload is really it's BS. Baseload came about way back in the 60s and 70s

SPEAKER_07: when the system was basically all thermal based. And but now these days with intermittent resources,

SPEAKER_07: battery storage, hydro, pumped hydro, you don't need baseload. All you need is to make sure that

SPEAKER_07: you have enough generation to match the load every minute of every hour of every day,

SPEAKER_07: and then you're going to be fine. So anyway, that's that's those are my comments. Thank you.

SPEAKER_07: Those are all the comments.

SPEAKER_02: Great. Thank you. Any comments on the agenda?

SPEAKER_01: I don't see any hands now. Okay. Written comments received on items not agenda will be included in

SPEAKER_01: the record if received within two hours. That would be was there any summary committee direction?

SPEAKER_01: I didn't hear anything. Great. Thank you. Good evening.