In this episode of Political Climate, California Public Utilities Commission President Michael Picker discusses wildfire maps, decarbonizing transportation, distributed energy, a regional Western grid, the evolving utility business model and more.
Julia Pyper: It's the Woodstock of global warming. The world's fair of decarbonization. It's the Global Climate Action Summit hosted by California Governor Jerry Brown, and we are here to talk to a man at the center of the action. Hello and welcome to Political Climate, a bipartisan podcast on energy and environmental politics in America.
I'm Julia Pyper, senior editor at Greentech Media, and I'm joined by Shane Skelton, our Republican, partner at S2C Pacific and a former energy advisor to House Speaker Paul Ryan. And we have Brandon Hurlbut, our Democrat, partner at Boundary Stone Partners and a former chief of staff at the Department of Energy. This week the LA-based team journeyed up the coast this week to join thousands of scientists, business leaders, activists and politicians from more than 100 countries at the three-day Global Climate Action Summit.
Combating climate change is a global issue, but the spotlight is really on California this week where Governor Jerry Brown just signed a historic bill into law that requires the state to power its electric grid with 60 percent renewables by 2030 and 100 percent carbon-free resources by 2045. But that's not all. Governor Brown kicked off this week of climate action with a bang by also signing an executive order that commits California to complete carbon neutrality by 2045. That means tackling emissions from transportation, industry, heating and various other energy services that rely on fossil fuels. The executive order came as a surprise to many, transitioning the world's fifth largest economy to 100 percent clean electricity will be difficult; transitioning that economy to zero net carbon, that's kind of hard to imagine.
So we are going to speak to someone who can help us figure out the how to piece the more pragmatic aspects of making these aspirational policies a reality. Michael Picker is President of the California Public Utilities Commission, which is responsible for regulating the state's electricity sector. It will also be responsible for overseeing the implementation of SB 100, California's 100 percent clean electricity bill. It will also oversee many parts of the state's broader decarbonization efforts — and we're going to get into all of that. Commissioner Picker, thank you so much for coming on Political Climate.
Michael Picker: Thank you.
Julia Pyper: Let's get down to that implementation piece. It took a lot of political muscle to get SB100 passed, but now that it's signed, that almost, I think, seems like the easy part and you're tasked with making this a reality. What is the first step in implementing SB 100?
Michael Picker: Well, there's not a lot of immediate action to take place. It's not top on our list of things to do.
Julia Pyper: It's not top of your list?
Michael Picker: It's not even in the top five I got to say.
Brandon Hurlbut: What's in the top five?
Michael Picker: We are becoming a major vehicle for financing vegetation management, we are developing a whole range of new tools for reducing fire risk related to electric utilities, we are deeply involved in efforts to supply water to a couple of coastal communities who have no access to the Sierra supplies, probably a couple other things. But there's not a lot that we are going to do in any quick order on SB100.
First and foremost is SB 350, signed in 2016, actually has moved us more to a carbon reduction goal. And so we know that to get to front load our carbon reductions by 2030, we will probably be at 30 million metric tons per year from the electricity sector. That's because we were very successful in terms of building large-scale renewables early on during the ARRA (American Recovery and Reinvestment Act) period. And as a result we actually are way ahead of our 2020 goal, and most of the utilities are already at 33 percent two years before the 2020 goal. Most of them have contracts, that means they'll be at 40 percent sometime between 2020 and 2022, probably at 50 percent sometime around 2025, 2026. So the carbon goal would require us to actually get to about 57 percent renewables right about the same time we'd hit the 60 percent [under SB 100]. I think we're on track. I think the tools are in place. I think we just need to continue to manage the process.
There are other issues that we have to deal with that will actually make it a little more difficult for us, and some of them are the results of innovation in other parts of the electricity sector. But we're so far ahead of our original expectations because everybody thought it would be really hard to get renewables in California, that I don't see any immediate need to do anything.
Shane Skelton: Considering everything that's on your plate you just articulated, and then also the progress that's been made with past goals, when you look at the process behind SB100 and getting to where we are today, do you think that is honest aspirational policymaking? Or do you think that's political grandstanding that might have put something on CPUC's desk that maybe you don't need on your desk right now?
Michael Picker: Well, I think that from my perspective, as a practitioner, and I'm not going to discount the value of an aspirational goal because all of you are talking about it, but I will say that probably the most important feature in this bill is one which allows us to count large hydro as a non-carbon resource. That's absolutely essential. And just to give you a simple way to think of it, if we got to 80 percent and we had to buy that last 20 percent of renewables, first we would have to quit using hydro as a portion of our electricity supply, which doesn't make sense. It's a non-carbon resource and something that can ramp up and down really quickly to help us with those hot summer peaks or where we can shut it off to be able to deal with the over-generation of solar between 10:00AM and 2:00PM. It has a lot of value to us.
But it also becomes real clear that last 20 percent of the RPS is going to be expensive. And so if you can count hydro then you bring the cost down, you create a variable resource that matches the characteristics of the rest of the renewable portfolio we'll be building. And it allows those of us who are whitewater kayakers to be able to time those big flows and catch the big waves.
Shane Skelton: And that's the important stuff.
Michael Picker: You learn how to work the system.
But everybody's going to learn how to dance with the grid. Everybody is going to become more attuned to these things because the cost of electricity will vary by time of day and time of year and it's going to be in everybody's interest to start to figure out how to do that.
Brandon Hurlbut: That's a good point. So, California is the largest economy to go 100 percent in the world, and so it will be a model-
Michael Picker: Wait, just remember 2045, anything after 2030 is fantasy baseball.
Shane Skelton: Man after my own heart over here.
Michael Picker: I'll be retired by then.
Brandon Hurlbut: Does California have the right regulatory framework to do this and what is the ideal regulatory framework in your opinion? If you could start from scratch, how would you design it?
Michael Picker: I think we've made some of the important steps years ago. So, first the electric industry does not own generation. The utilities don't own generation, they haven't since about 1998. So they're really indifferent to what the technology is. Once they started to understand how they were going to deal with a high penetration of renewables in their portfolio then it got easy for them and it was well timed for the retirement of a lot of those old coastal gas plants that used water and caused hot water massing in those shallow coastal waters and interfered with fish species and depressed fishing and caused problems for the fishing industry. So it's good timing for them to replace those Korean War-era gas plants with clean renewables.
The pricing, after we got through the first wave of expensive contracts and the renewable developers learned how to work within the California market and quickly were able to bring the price down, has made it incredibly competitive. I think that that's probably the most important thing is that we made them indifferent to the source of generation. We timed it well for meeting an important electrical need, which is replacing the retirement of those old gas plants, and it was also fairly well timed with the federal ARRA spending dollars. So all those things together and some real hard work to actually help get projects through the permitting and interconnecting process made it much simpler than people went to.
I used to go to big events, like the one that we're having here, where everybody talked about how it was impossible to get any projects built in California, we'd never make 33 percent by 2020. Well, now the challenge is how do we decarbonize the California economy? How do we use this clean electricity to actually begin to electrify transportation? Which means that we now have created strong electric utilities who have an interest in taking market share away from the petroleum industry.
Brandon Hurlbut: That's going to set up a huge fight. How is that going to shake out? Because the big oil guys aren't going to go quietly. How do you see that playing out?
Michael Picker: It's a hell of a lot better to have very strong and motivated electric utilities working with you to do that than to try to do that through a bunch of marches in the street.
Julia Pyper: Wait, reiterate that thought. So you think because there's aligned incentives right now so this is going to be an easier battle? What's the point about the marches?
Michael Picker: To be honest with you, none of it was easy. It was easier than people predicted. I don't predict that any of this is going to be easy. I think it will be a hard struggle. We'll have to learn things that we've never done before. So here, for example, how do you electrify transportation in California? Where do you start? What's the right kinds of choices to make? And I'll give you some of the examples of the kinds of challenges that we all are reckoning with.
First is is that the electric utilities don't do transportation planning. Neither does the California Public Utilities Commission. We don't know where people live, we don't know where they go to work, we don't know how they get there. So for us to step in to actually do this without actually having transportation planners at the table.
Second is the whole pattern of land use here in California, and San Francisco is a spectacular example of the failure, is that we're forcing people to drive further and further and further to get to work. It's vehicle mile travel. There has not been much affordable housing available here in San Francisco for a long time, so many of the people who work in the city come from further and further and further away. That means that building the transportation infrastructure becomes even more of a challenge.
Julia Pyper: Is that something that will be under your purview?
Michael Picker: I hope to God not.
Julia Pyper: Right, so this is a question for the Department of Transportation?
Michael Picker: No, I think this requires a different kind of a model, and probably around the regulatory construct where, as the electricity regulators, the people who work the utilities to help them frame their investments — then they go out and borrow a lot of money because everybody knows they're going to get paid back through rates — that as we do that we have to have a closer relationship with local governments so that they understand that they have a responsibility to actually do transportation and land use planning. We have to work with Caltrans, the state transportation agency. That's hard because the [utility] regulators usually were designed to stand off from other policy decision making and to focus on rates, reliability and safety.
And the model that we use was conceived in the 1890s, and because Hiram Johnson did not trust politics he made us a technical court. We actually behave as if we are the admiralty courts or the tax courts or the patent courts, where everything is based on a litigated record that's published and that's what we use as decision makers to make choices. But here, in a very fast-paced innovative area, can we actually continue to do that and bring in information from these other state agencies who don't visit us as litigators and parties in our proceedings.
Brandon Hurlbut: So what would you change?
Michael Picker: Well, so we're making our first experiments in trying to do that. For example, several years ago we recognized the challenge of years of drought, increasing populations moving further out into high fire hazard areas […] But we have an obligation to provide those people with electricity, even if they live in one of the most tinder dry portions of the state of California and hardest to reach, they get electricity. We have a duty to serve.
We knew we were going to see the kinds of problems we've been seeing. What we didn't know is that they were going to be as disastrous and that, for example, the winds were going to be so intense in Northern California. No meteorological record to predict the kinds of winds. But we knew there was going to be a problem so we've been working with Caltrans, the state's fire and forestry agency, to develop a fire map. And we had that map last year and it told us that more and more people are moving into very dangerous places and that more and more people are demanding electricity and the infrastructure that carries them electricity.
So we worked with Caltrans, their fire scientists, their fire engineers, their foresters, was to develop the map and the new set of vegetation management standards. Could we have done it faster? I don't think anybody thought that the pace of climate change would advance this quickly or this forcefully in the state of California.
Brandon Hurlbut: Scientists did.
Michael Picker: They did but they didn't predict the windstorms in northern California. That tells you that we have a long ways to go in terms of modeling and attribution and that as fast as we're trying to adapt we're still moving slower than we need to move.
So how do you give up power to another state agency when you've actually been an agency that's been isolated and stands apart from other state government? We're all the way here in San Francisco, we actually built a moat between us and Sacramento. Which is what Hiram Johnson intended, is that we wouldn't be affected by the politics of other state agencies and other issues. That is the biggest challenge I face.
Shane Skelton: You guys are right in the middle of it now, right? You're the ones that are going to implement what, I would argue, is a political piece of legislation. But you hit on a few key points, all of which I wanted to ask you about, so now I'd like to bundle them all into one. If the electric utilities are basically procurement bodies, as you mentioned, procurement and distribution [...] they're going to be in a position where they need to procure a higher amount and eventually 100 percent of energy from clean or renewable resources. They have to build a more advanced distribution grid to be able to better balance load. And we're all hoping […] at least I'm hoping, and I think you are based on what you said, is that we can electrify further, especially in the transportation fleet.
And the question then to me is, it looks like there's a lot of competing stress coming down on the utilities and there is going to be huge capital investments that need to be made. What tools does PUC have in the toolbox and how willing is PUC to unshackle these utilities a little bit and say, "You know what? Go spend your hearts out, get this done?"
Michael Picker: Well, I think they actually have been working pretty hard on some of those things. So they have been procuring renewables, that hasn't been a terribly difficult issue. As a matter of fact they procured ahead simply because they were getting really cheap prices. So I think that that hasn't been a strain for them.
Curiously we've been working, and I started this process when it was in the governor's office, to actually rebuild the distribution system to be more flexible and nimble and dynamic and a little bit more resilient. So we're somewhat advanced in that and that was actually one of the topics of one our conversations today, at this wonky people who actually work to get stuff done meeting we had at the CPUC, where we talked with New York a little bit about their approach to actually rebuilding the distribution system to accommodate a lot of distributed energy resources and how we've been doing. We have had, for almost 10 years now, a fairly effective advanced metering infrastructure. They still don't have that. We can actually detect energy efficiency at the meter, they can't. So I think we're making progress. I think that their model may be useful at some point, but it hasn't stopped us from our incremental approach.
We have a lot more intelligence at the substation level, we are trying to actually develop maps that tell us which circuits at the distribution level can accommodate more distributed energy resources and whether there's a locational value that would actually say it's probably better to site here, because it helps to deal with a weak spot in the grid or it helps to localize some generation or some storage to deal with some other kind of electrical value. And then we can begin to get tariffs that allow these DER developers and customers behind the meter to develop a whole series of different value streams that can help them to sell power or sell services back to the grid.
Shane Skelton: How far are you on the road to doing that?
Michael Picker: Yeah, if you look at this as a journey of 1,000 miles we got maybe 300 miles on it behind us, maybe 400.
Julia Pyper: Can I clarify one thing?
Michael Picker: Clarify? In electricity? In this fast-paced industry?
Julia Pyper: Shocking, I know. I want a little more detail here. Because I'm the journalist in the room, you see the headlines with "100 percent clean electricity," and that is still a remarkable thing for a lot of people to grasp. So what you're saying, though, for California, given the history and setup of this state, it's going to be a challenge but it sounds like it's not that much of a challenge. What's the takeaway for people hearing this?
Michael Picker: We have a pathway to get to 60 percent renewables by 2030, that's about as far as I can look. But if you figure that on the average year, 19 percent of our electricity supply is hydro, and that now counts towards this non-carbon goal, that's 80 percent. So I figure by 2030 somebody will figure it out, and that's why I just say after 2030 is fantasy baseball. You want me to tell you what kind of style shoes you should be buying now for 2040? Come on. Get real.
They will be Clark desert boots, by the way.
Shane Skelton: You mentioned behind the meter technologies and a more sophisticated distribution grid, and maybe I'm old school in this regard, but when I look at behind the meter resources selling back to the grid, eventually the entire rate base is going to absorb that cost. [...] At least from my perspective it always made sense to look at these massive entities that have the knowhow and say, "Just knock yourself out. Deploy everything you want." The cost is going to be passed through to the rate base, but that's going to be the case no matter what. In my scenario it seems to me that people investing in behind-the-meter technology are going to be wealthier people and those costs are going to be pushed the other way. Whereas if the utility does it the costs are going to be spread equitably.
Michael Picker: So you definitely do not have a Jeffersonian vision of the electricity system.
Shane Skelton: No, we were actually just talking about that. Brandon was making fun of me on the way in.
Michael Picker: Are you the Hamiltonian, you're the Jeffersonian?
Brandon Hurlbut: Shane was just talking about socializing costs and I was so happy!
Shane Skelton: It's not a conservative point of view but I feel like we have to live in the world that we have, and what we have is a legislature that said, "You need 100 percent renewables."
Julia Pyper: Shane's turning blue.
Shane Skelton: There's only so many ways to do that. I don't know if there are any but if there are we need the massive entities that have the knowhow (utilities) and the access to capital to do it.
Michael Picker: It's absolutely true, for example, that rooftop solar costs as much as seven times as much as large scale, utility scale solar [...] Now some of that probably could be beaten down because-
Shane Skelton: Soft costs.
Michael Picker: Yeah, because of soft costs. And-
Brandon Hurlbut: Cost of the capital.
Michael Picker: Yeah, there's a variety of ways you can batter that down some, but it's still going to be hard to beat with large-scale solar [project] with good insulation and transmission. On the other hand it does have some additional values that may be worth paying for. Above and beyond that there is this thing where people do want to have some control over their electricity supply.
Above and beyond that though, we're still experimenting. We did a very ambitious front loaded RPS and pursued it aggressively because we didn't know how we were going to get prices down. We knew that we needed to create a cadre of effective and competitive developers. We knew we needed to have some kind of a bake off where they all actually had to compete on price. It's not a truly open market because you don't get to see the prices right away, but it's still actually been pretty effective in terms of getting them to compete to bring down the prices of wind and solar.
Brandon Hurlbut: The same thing on storage you think?
Michael Picker: I think we're trying that. I think we're trying to figure out what are all the value streams? What are the ways in which we can use storage? And I can just list a few of the opportunities. But we're also seeing a whole range of different issues that come up in the electricity supply that you wouldn't have anticipated. So, for example, there are people actually willing to pay more for additional reliability? That's one of the ways that people are using batteries. Because our electricity generation portfolio is increasingly variable, you're finding there are people who are able to use […] Some of them are at utilities and some of them are consumers who can actually figure out how to use their batteries to arbitrage.
And then you have people who do weird things, like do several of those things at once, and a good example is the Advanced Microgrid [Solutions] model where they use it to store electricity, cheap prices, time-of-use in the consumer and industrial space, where we've had time-of-use for probably seven years now. And they soak up that cheap solar, so we don't have to curtail it, we don't have to sell it at a loss out of state. And then late afternoon when demand charges start to go up and when their electricity costs start to go up, then they just actually shut down some of their demand from the grid and supply their air conditioning with batteries.
On some days of the year they have a contract to sell that electricity back, they precool their building, they run it a little bit warmer, but they sell it back to the grid. They're actually providing grid storage. And so those are examples. And I wouldn't disagree with you that, for example, NEM, net energy metered rooftop solar, is probably heavily subsidized across the board. But we're also now starting to see some of the larger providers come back and use their smart inverters to be able to provide additional electricity services other than energy. So they can actually do some load following, they can actually do a little bit of ramping by stepping it back.
Brandon Hurlbut: They can aggregate all of those [...] and serve as a virtual power plant.
Julia Pyper: Distributed energy resources don't count toward something like SB 100, though?
Michael Picker: So we have 5 gigawatts of rooftop solar, that counts. It just doesn't count as a utility purchase [...] the way in which it counts is it reduces the demand for electricity just as energy efficiency did. Now, energy efficiency is probably the most important energy resource the state of California has had and it doesn't count as a renewable either, which is why I just don't really get that excited about SB 100. I think that there's too many other good tools out there that people don't see and don't get excited about. It's very hard to see energy efficiency because it doesn't get on TV. What are you going to show? Somebody's house that just isn't using as much energy.
Julia Pyper: But it's clearly a critical part to getting to that SB 100 goal, because you're talking about how much energy you're addressing.
Michael Picker: Yeah, it is. But it also improves the quality of life inside the house. How do you quantify that? Does that get counted by SB 100? Probably not.
I'm just going to hammer on this because across the last 40 years energy use per capita in the U.S. has doubled. Energy use in California per capita has stayed flat. All the growth has been from growth in population or growth in different kinds of industrial demand. If you think about it, it's one of the important reasons why our rates are higher, to go to your concern. We paid a lot for various forms of energy efficiency, but our bills are in the lowest quadrant in the U.S. because people use less electricity. That is not something that gets counted in an RPS statute.
RPS is a great industrial policy. It causes you to go out and buy technologies that weren't prevalent in the marketplace earlier. It helps to build that cadre of developers who can produce cheap clean electricity that we can use to decarbonize other sectors in the California economy. That's what I get excited about. SB 100 — great. But SB 100 is only addressing current demand in the electricity sector. It's probably likely that to decarbonize transportation and to drive the use of gas out of buildings and some industries we will see higher electric demand in California. That's exciting to me because it's clean and it's going to decarbonize other industries and it's the only way we're going to meet our 2030 goal.
Brandon Hurlbut: What's the best policy to make that happen? What do you think?
Michael Picker: A carbon goal and a carbon price. We have a carbon price, it's pretty low, but we have a carbon goal and we're driving to that. SB 100 is okay, probably not harmful, but it's not going to be the driver that gets us to a carbon clean economy.
Shane Skelton: That goes back to the initial question I asked you. I'm in 100 percent agreement with you by the way, on and off the record with them, I always say, why yell about 100 percent [renewables] and pat yourself on the back? Why not start looking at actual technical changes we can make, investments that can be made deploying EV charging? I'm a huge fan of electrification.
Brandon Hurlbut: Shane is turning blue.
Shane Skelton: I want to accomplish goals. There's a huge difference.
Julia Pyper: Goals get met though because there's momentum around them.
Shane Skelton: People were excited about the Clean Power Plan and now it's dead somewhere, right? So if someone would have taken the time to pass a law that could have actually been implemented we would have made progress, but we didn't [...] You guys were all excited about it but it didn't go anywhere.
Michael Picker: Look, a lot of people's pathways are going to be different from mine. I get excited about decarbonization. I get excited about innovation. I think that the RPS was useful, I don't see that 100 percent is an obstacle to doing the things that we need to do. If other people are excited about it, great. I don't worry about it. You guys have talked more about SB 100 than anybody else I've talked to today. So clearly it got your attention.
Brandon Hurlbut: Because California can serve as a model. California can lead on this, other states are now going to follow.
Shane Skelton: Or it can be a death knell if it doesn't work out.
Michael Picker: By the time they get to 2030, maybe this will all be easy that they will be focusing on their carbon goals too. I'm more excited about continuing to go down the path that's going to be effective, and cost effective, in terms of meeting our carbon goals to be able to reduce the droughts, the ferocious winds, the tinder dry forests that are riddled with bark beetle that are probably the real issue that we have to address.
There are people marching down the streets with banners saying "regionalization," and so this clearly means that the tide has turned and instead of talking about renewables people want to talk about how we use our excess clean electricity to drive down electricity prices in other states and to undercut their aging fleet of coal plants and drive them towards more renewables. So it's just amazing to me how quickly people moved on.
Julia Pyper: To regionalization?
Michael Picker: Yeah.
Shane Skelton: I had a question for you on that front actually [...] Does anything in SB 100, and I was trying to figure this out and did so unsuccessfully, hinder regionalization? Weren't there provisions in there about you can't import energy that would have a higher carbon footprint than energy that could be procured in California? And would that impact the logistics of regionalization?
Julia Pyper: And, to be clear, regionalization would be opening up California's grid beyond current metrics to bring in cleaner electricity sources. Which died in legislature in this last session.
Michael Picker: I think people just spent so much time trying to deal with fire liability issues that maybe they didn't have the energy for that. I know I didn't have time to spend on it.
Julia Pyper: I was curious why the utilities were so okay with SB 100. Sounds like what you're saying, it's not going to be a huge challenge for them. Wildfires took precedence and regionalization got sidelined in the process, is that right?
Michael Picker: That's the large part, I just don't think that there was any way to sit down and spend the time to take the attention to address some of the lingering issues that people have in terms of jobs. I don't think that there's anything there that hinders regionalization. Regionalization has value in a portfolio where you have a lot of renewables and once you dig into it's pretty simple to understand. The sun comes up earlier in New Mexico and the wind comes up later here. We can always use a little bit of that early solar before it starts to fire up here, I tend to get up early and have to read and answer emails to people on the east coast. And the fact that peak demand is dropping off as some of the wind is starting to fire up means that we can sell that to people in Salt Lake City for their electric light rail in their downtown.
It also has some value in that we know we can depend on those resources as we get good at modeling when resources are available. And when people can procure them days ahead. You're not really buying a 30-year contract, you're buying a contract three months ahead for when you know you're going to need some. And then you get a good price for it.
And so that means two things: One is that people are actually using these new technologies more efficiently because of the geographically diverse sources. And it also means that as we get used to this we can all reduce what we call our planning reserve margin. You always buy more than you need because you're scared that you're going to get short someday. A couple of plants go down, a transmission tower gets knocked down or gets burnt up. And so you always have more power plants than you need. If you know you can depend on resources from out of state, and there's multiple pathways for it to flow to the big commercial and residential markets in California cities, then you don't have to overbuild so much.
Similarly, for other states, there's billions of dollars to be saved by actually having a more rational and efficient and effective grid that covers several states. The West is the only place that does not have this and that's because we're very independent, we're unlike those of you who have moved here recently from Washington, D.C.
Brandon Hurlbut: Speaking of Washington, D.C., we'll have a new Congress next year. If we get Democrats back in control we might actually be able to do something. Is there anything Washington and Congress can do to help achieve the goals that you're thinking about?
Michael Picker: I think that if I was going to point to anything that I thought would really be helpful it's to develop a true jobs program in this country that would help people to feel more secure and less at risk. I think that that will make the conversations with our elected officials and appointed officials much easier. So when I talk to my colleagues as regulators in other states they tell me that they don't think that coal is ever coming back in the West. They don't see any prospects for coal mining in some of the northern Rocky states.
But some of them actually run for elected office to be commissioners. Many of them have to keep an eye to their reappointment to governors who cannot stand for reelection and say that they are going to engage in even a partial market where the best prices are for renewables that will undercut those jobs. So I think that we need to reduce the overall fear that people who work in those industries have that their life is going away.
When I talk to people there, when I go to meetings in these other states, you see lots of people who are picking up and leaving Montana, leaving Utah, leaving Wyoming because they can't get those kinds of good jobs that allow them to live a middle class lifestyle. And I worry that that lack of real attention to how people can earn a decent living and how they find jobs that give them dignity, allow them to raise their families and to see a better future. That's getting eroded. So I don't know that that's a partisan issue, I just think that the politics that we see now is a little poisonous and it's hard for people to sit down and talk about that as elected officials.
Julia Pyper: I know some people are saying there wasn't a parachute landing for travel agents who got replaced by Expedia, why are we doing something like that for coal workers? And isn't that a purely political thing to do so?
Michael Picker: I don't know. I'm not in the travel industry. But as somebody who is helping to flood western markets with cheap renewable power, I just feel like I have some obligation to think about the impacts of my actions on people's lives.
Julia Pyper: One thing we haven't discussed is the CCA movement. [...] One thing we have not addressed is the Green Book which talked about community choice aggregation and direct access providers in California, which could, I think, mean something like 80 percent of load in the state. And in that Green Book it's defined as potentially an energy crisis [because] you have de facto deregulation happening in the state. We talked a lot about utilities, what they can do, how much they're going to be allowed to spend, talked about SB 100 and meeting that, you talked about utilities already finding pathways to do so. But are utilities even the main entities we should be talking about right now given that these other providers are going to be the point of contact for so many customers?
Michael Picker: There's a variety of ways customers can choose their own electricity provider and there's a variety of ways that customers can provide their own electricity. So there's a set of different challenges that come with that. If you have a high procurement goal but the people who procure are really disaggregated or living at the most Jeffersonian level of decision making then it gets harder to meet those large central goals. How do you then get hundreds of people to understand that they probably are undercutting an effective grid that's reliable and clean if they aren't paying attention to these other resources that we need?
What happens if the direct access providers, about 13 percent of all the electric load, [serve] all the consumers in the commercial and industrial sector [...] And there's a bill in the legislature that would actually bump up the amount of electricity that those providers can actually provide. So it's disaggregating in a lot of ways.
It will be a little easier to do that if there was just one way that all these changes were taking place, but we have five or six different flavors of technologies that individuals can procure that help to meet their electrical needs on an individual basis and then we have three different flavors of choice of provider. So whatever we do to ensure that we keep the grid reliable, that we make sure that we hit our goals and that we continue to provide a product for those people who can't, for one reason or another, take advantage of these other choices, they're renters, for example, and don't have any choice to do anything other than just take the stuff that comes over the meter that their landlord provides them. If we don't have a plan then we could get into trouble.
And the thing that worries me the most is if any of these other third party providers, who have maybe as many as a million customers, gets caught up in some kind of a fast paced change in the electricity markets they may not be able to fare very well having to buy expensive electricity.
So we had that phenomenon in 2000, when in San Diego one of the electricity service providers had not fully bought enough electricity for very, very extended hot summer. They were serving San Diego, which is generally got a nice even temperature, coastal, and they just got really hot and it stayed really hot, air conditioning demand went up, the whole west was hot, everybody was using electricity. So they were short, they didn't have enough electricity to supply all the people in San Diego. They had to go and buy stuff at a high price from out of state. They had to do it for a longer period of time than they had the money and they went bankrupt, they shut off service and dumped all those customers back in the lap of the utility, who then had to go out and pay those same very high prices to be able to service all those customers they didn't expect to have.
Now we have laws in California that require all these different entities to have what we call a resource adequacy product, they buy for those peak days even though they don't need it most days out of the year. So that scares me.
Julia Pyper: So that scares you?
Michael Picker: That scares me because not all these providers can actually do that. We know that because they keep coming to us for waivers and saying they can't get resource adequacy products.
Julia Pyper: So do you think California can meet its decarbonization goals while coping with this dramatic change?
Michael Picker: I think we need to solve that, that's why I listed that as being a little bit higher on my list of priorities. I think we have to come up with ways that we can guarantee that there will be enough reliability available in the system.
So, for example, in one of our proceedings they're actually discussing requiring all these entities to buy a multiyear product, rather than year to year, so that we know that they have it across several years and creating a central buyer, a central procurement buyer. So this will make you happy as somebody who is much more of a Hamiltonian that they heavy hand of government is going to step in and ensure that we have those essential services.
Shane Skelton: I'm not sure I've ever been accused of that before, but I'll take it in this particular scenario.
Michael Picker: I could call you Madisonian if that makes you feel better.
Shane Skelton: It does!
Julia Pyper: On this bipartisan note, let's turn to our final segment because we have to wrap this up. And this our "Say Something Nice" segment where, of course, we have our Democrat and Republican say something they found redeeming about the opposing political party. Brandon, let's have you go first.
Brandon Hurlbut: Well, since Shane and I are shacking up together at our Airbnb tonight, I've got two because I want him to be nice to me, not while sleeping stick a pen in my ear or something.
Julia Pyper: That's a thing? Good Lord.
Shane Skelton: I don't think I would ever do that. Okay, I'll take the compliments anyway.
Brandon Hurlbut: So Senator Dean Heller from Nevada is introducing legislation to extend the electric vehicle tax credit. Right now there's a cap, once you sell 200,000 electric vehicles we can no longer use that EV tax credit, so he's going to lift that cap. This would be very good for the EV industry.
Shane Skelton: And you'll help him get reelected, right? You don't want to flip that seat.
Brandon Hurlbut: This is the thing. He's in a tossup race, so he's motivated to do this, it will help his reelection chances. My other nice thing-
Julia Pyper: To be clear, we're not sure if that would pass, he's introducing it but I don't know if there's any momentum yet.
Shane Skelton: With the right muscle behind it it could pass, and Brandon will help him get reelected, we'll be all right.
Brandon Hurlbut: It's a start. He's introducing it so I'm grateful that he's doing that. It's a good piece of legislation and having a Republican introduce it is a good thing.
So the other nice thing is there is a congressman who's running in […] It's not really a tossup race, it's 17 points Trump won that district by in 2016. If the blue wave happens and our people get out and vote, we might be able to take that district. But this guy, Michael Waltz, in Florida, is favored to win and he came out and talked about how climate change is a national security issue. So in a safe district, presumably safe Republican district, he's not motivated to greenwash. He took a strong stance and said that this is a national security issue that we have to deal with. So I thought that was a good thing for him to do.
Shane Skelton: Well, in the sense of comedy, as you guys know much more so than my colleague here, I think that ideology is the enemy of progress on any serious legislative issue. And my compliment goes to Henry Cuellar, a congressman from Texas, who is a participating in a fundraiser […] He's a Democratic congressman, he's participating in a fundraiser for Judge John Carter, who's a Republican congressman in the neighboring district. And when asked why he would do such a thing he said, "In the climate that we're in right now," and I'm not quoting verbatim but pretty close, "friendship is needed more than partisanship." And he's a good representative. And so I think it's important for all of us to remember that.
Kicking the other guy out of office doesn't get any goals met. It just doesn't. Making friends, working together, bipartisan solutions, like Brendan and I working together to keep Heller in his seat.
Brandon Hurlbut: We're going to talk about all our solutions tonight for our podcast episode on solutions.
Shane Skelton: That's right.
Brandon Hurlbut: We're going to be brainstorming together.
Julia Pyper: Commissioner Picker, do you have anything you want to add in the spirit of camaraderie?
Michael Picker: Well, I will proudly say that I actually got hired by Arnold Schwarzenegger, despite my many years of work for Democratic elected officials, to come in and be the straw boss to get a lot of large renewable energy projects built here in the state of California. He was very supportive. Despite the fact that I disagreed with him on many policy issues I thought he was sincere. And he actually, when I gave him talking points, used them.
Shane Skelton: Which is always rare, right?
Julia Pyper: Perfect. Well, thank you so much for coming on and talking to us on our podcast today, Commissioner Picker, really appreciate it. Again, this is Political Climate. Thanks everyone for listening, and check back soon for a new episode. In the meantime you can reach us on Twitter @Poli_Climate we want to hear from you, let us know what you want us to discuss in the future.
