Californiacation of the Grid

00:00:00:23 - 00:00:21:00

Chris Keefer

Welcome back to Decouple. For those of you watching on YouTube, you can see I've got a pretty large grin underneath this, the soup strainer on my face. And that is because we are rejoined by the one. The only Mark Nelson decouple fan favorites who has been on a temporary hiatus but delighted to bring you back on. Mark.

00:00:21:02 - 00:00:31:15

Mark Nelson

I've been well, but I stayed away because you have a new favorite, James Crow and Steve. And when when Daddy rejects you, it's hard to come back and talk to him about the great.

00:00:31:17 - 00:00:52:20

Chris Keefer

Mark, let's not get to the daddy issues right now. But suffice it to say, the people have been clamoring, you know, I do get a lot of feedback and you've been missed some, but by more people than just myself. But Mark, really excited to have you back today. You reached out wanting to discuss the state of affairs of the grid in California.

00:00:52:22 - 00:01:13:14

Chris Keefer

And, you know, I'm always remarking on the sheer volume of modeling studies that are coming out, you know, and that's one way to sort of project what's to come in the future or help us decide on what to do. And we've indeed done a great episode on modeling, but we have a lot of sort of real world experiments which are occurring and California is is one of those.

00:01:13:14 - 00:01:39:18

Chris Keefer

And so we've been kind of following along with great interest over the years, but we haven't delved into it recently. And I think there are some some developments that you're going to help fill us in on today. Just a couple observations from my part of the world. I heard that the life extension work on the Apple Canyon is is moving in the right direction despite a number of, I think Democratic Senate candidates still lining up in opposition of the continued operations at the plant.

00:01:39:18 - 00:02:07:01

Chris Keefer

I've heard things around rooftop solar subsidies being cut and that generating a certain amount of blowback. And given the sort of general popularity of rooftop solar, I think it's interesting that the decision was made to actually start cutting those subsidies back. I've heard the snowpack is amazing. Skiing in Northern California is absolutely incredible. Right now. I believe hydroelectric capacity was reduced by 50%, I think, in the kind of 2015 window.

00:02:07:03 - 00:02:21:22

Chris Keefer

So that's good news for California. But that's that's kind of all I've been following in my peripheral vision. So, again, excited to have you here to to provide a much more detailed case of place that you used to call home before you fled to nuclear power.

00:02:22:00 - 00:02:49:22

Mark Nelson

Thanks for that intro, Chris. I still suffer from California Derangement Syndrome. I left years ago, and if I get into the wrong conversation at a cocktail party, I completely forget to go on and on about nuclear energy. It turns into just rants about California, trying to understand what I witnessed and what's still happening out there. So just to explain, I moved to California in 2016.

00:02:49:22 - 00:03:25:02

Mark Nelson

I lived in downtown San Francisco for four and a half years and left in the middle of the pandemic and staying away from the social issues there in California. I went to enough meetings of the California public Utilities Commission. The organization, led by five governor of California appointed commissioners that oversees a range of crucial activities in the state, most famously the grid itself, the power grid that it caused me to go a little bit crazy.

00:03:25:04 - 00:03:54:05

Mark Nelson

And I know that people are probably aware of what a Cassandra is. This woman, Cassandra, was a seer who was given the gift and the curse of foresight in Greek mythology. She was a priestess, I believe, in in Troy, and she was given the foresight to see what was coming to Troy, the ruin that was coming to Troy, and then was coerced with the inability to let anybody understand what was coming.

00:03:54:05 - 00:04:20:00

Mark Nelson

So any of her warning sounded like completely incomprehensible babble. So then her story ends really, really badly and tragically. And I'm not trying to say I see either as clearly as she did or ramble as incoherently as she did, and I hopefully won't die like she did. But I do feel a little sense of I warned you, bro, I told you about net energy metering, bro.

00:04:20:00 - 00:04:47:09

Mark Nelson

I told you about nuclear plant shutdowns, bro. A lot of bad things are coming to fruition in California and their electricity costs are exploding faster than almost anyone could have imagined. Like if I had been forced to say, How quickly do I think costs are going to explode in California, even as a California Cassandra, I just don't think I would have.

00:04:47:11 - 00:05:14:18

Mark Nelson

I don't think I could have been a Chicken Little hard enough to predict the costs that we're seeing now. And let me explain a little bit about those costs. I don't know how much ancient history we're going to go into leading up to the Enron debacle of at this point 25 years ago. But California had an enormous amount of costs, an explosion of costs that that escalated as power well above national rates in 2000, 2001 22.

00:05:15:00 - 00:05:53:17

Mark Nelson

But then costs were stable for many years. Some things that we're putting into place, today's problems were happening then, but the costs weren't showing up and the rest of the United States had electricity costs that were approaching. That brings us up to 2010, 11, 12, 2010, 11, 12 Electricity costs in California on average, meaning the industrial electricity, residential and commercial electricity costs all averaged were about 20 to 25% above national average in the ten years since the closure of San Onofre Nuclear Generating Station.

00:05:53:19 - 00:06:13:20

Mark Nelson

Although costs have escalated in the rest of the US, costs in California are now double that of the U.S., meaning the costs are escalating many times faster than that in the rest of the U.S. And if you look at the statements out of the California regulator, they'll say things like, well, we're recovering from the pandemic. Well, guess what?

00:06:13:23 - 00:06:42:01

Mark Nelson

Everybody's recovering from the pandemic. They say, we have the wildfires. Well, you know what? A lot of states have natural issues. They have issues with hurricanes. They have issues with tornadoes. Are wildfires bad? Yes. Are they can they be linked directly to electricity? Yes. But that meant that the managed end of that system ended up in Well, in hindsight, depending on which Cassandra you couldn't understand, it ended up being extremely important and was neglected.

00:06:42:05 - 00:07:17:12

Mark Nelson

And you can say it was neglected by the utilities, or you could say it's neglected by the regulator. In the end, part of the story of California is the breakdown of clear responsibility for energy issues in the state, the escalation of costs. This year I've seen a lot of people say because they went to 20, 25% or so in one year for electricity, When I've seen people talk about it, they say, well, PG and E, one of the large regulated utilities residing in a state that also has a merchant electricity market, which is a confusing hybrid that I'll try to untangle here in a bit.

00:07:17:13 - 00:07:48:07

Mark Nelson

Well, PJM, near which service serves about a third to 40% of the electricity in the state, I believe. Well, they have had to deal with going through bankruptcies caused by liabilities from fires, and they've had to come out of it. Okay. Well, I've seen people say, 85% of the costs are from the fires. Well, hold up 85% of the going forward increase above the already much higher than the rest of the U.S. and escalating faster than the US costs are from that.

00:07:48:07 - 00:08:23:21

Mark Nelson

And that's just the forcing. That's what we can guarantee that much more expense from those fires. But that does not cover extra surprise costs like the fires in the first place. In other words, California set up a system where they were so focused on experimental goals, social and environmental goals that ultimately were experimental in nature and what they wanted to do to achieve them, that they lost focus on providing electricity reliably and cheaply, which was the original mission of regulating utilities in the first place.

00:08:23:23 - 00:08:49:02

Chris Keefer

Well, I'm just interested because we're making some comparisons and relative to the rest of the US, but it seems like there's a pretty significant degree of heterogeneity in terms of prices, like what are some of the states with the lowest electricity prices and how do they compare? I mean, you had a tweet recently as well, just looking at sort of the deindustrialization of Europe, the Spanish nuclear plant closures and how that's driving a lot of business from Europe over to the US where they're seeking lower prices.

00:08:49:04 - 00:09:06:06

Chris Keefer

I'm guessing there's some states which are taking advantage of ultra low natural gas prices, maybe keeping some of their nuclear plants around and they've got very low prices. Just give us a sense again of of the outliers. Sounds like California's the most expensive in the continental U.S. What's the cheapest? What are we talking about and what are the implications.

00:09:06:07 - 00:09:26:21

Mark Nelson

Of let's have a session where we do a a vocal version of a Vaslav Small book where he spends an entire chapter just quoting numbers that you like, you like he's writing, he's typing directly from an Excel spreadsheet. I think that his books are very important and they're also a severe abuse of readers. So although you've asked me to do this task, no, that it gives me no pleasure.

00:09:27:03 - 00:09:49:01

Mark Nelson

All right. Prices for electricity. I'm going to talk about Illinois because I'm here in Chicago. I love Chicago. I love our nuclear system. And Illinois actually ends up being about the national average in everything, despite being cleaner than the national average, especially around Chicago with all our nuclear plants. So I'm going to speak in terms of dollars per megawatt hour.

00:09:49:03 - 00:10:10:15

Mark Nelson

I'm also going to have a big asterisk right now because a bunch of brain disease, electricity nerds are like, that's energy information Agency data that you can't even rely on that. And then you ask them, well, is the real number higher than the EIA numbers or is it lower than the EIA numbers? And they'll say something like, well, it's just very complicated.

00:10:10:15 - 00:10:43:22

Mark Nelson

Okay, So these are the numbers as reported by utilities and responsible parties around the United States and legally required monthly forms to electricity, information agents, Energy Information Agency and DC EIA then gathers up the numbers and publishes them to give a sense of where we are. Utilities are required to report load, serving entities are required to report. There's some difference in who is required to give, what kind of answers and what the EIA can do to force them to give answers.

00:10:44:03 - 00:11:12:06

Mark Nelson

So these are not complete or 100% academically authoritative, but they're as good as we're going to get and they serve for a very good launching point for discussion. Illinois numbers are going to trust more than California numbers and for reasons we might get into later. But in Illinois, electricity costs on average for all sectors are about 11 or $12, 110 to $120 per megawatt hour.

00:11:12:08 - 00:11:48:11

Mark Nelson

Industrial electricity costs, that isn't electricity costs that are primarily generation and only a little bit transmission because these are bulk users of power typically all the time at a fairly steady rate with very simple grid connection issues. Not easy, but very simple grid connection issues where a giant user uses a giant amount of power from one plug in spot on the grid, industrial electricity rates are incredibly important to tease out from residential and commercial because they are the basis of a lot of other economic prosperity.

00:11:48:12 - 00:12:16:17

Mark Nelson

Industrial electricity rates in Illinois are quite low, I believe 70 or about 70 or $80 a megawatt hour. IT residential rates in Illinois are something like $180 a megawatt hour higher than I'd want, but, you know, not far from national average. So where does that leave us compared to California? In California, electricity, residential electricity rates are almost double industrial electricity.

00:12:16:17 - 00:12:52:10

Mark Nelson

What remaining industrial electricity is actually supplied in California is that part? This part really worries me. As high as residential electricity rates in Illinois and the rest of the USA, that is the expense of providing a little bit of power that goes all the way down through the most intricate part of the grid, from the power plant to the transmission lines, to the distribution lines, where it splits up into all the little wires that end up going into the neighborhoods, the apartment buildings that houses, the individual units that are then monitored for their usage and build back to the customer.

00:12:52:13 - 00:13:26:16

Mark Nelson

It's a much trickier procedure for utilities than the large industrial customers in terms of administration and the sheer number of miles of of equipment and number of bits of individual equipment to repair. It's almost artisanal electricity, shall we say. So we should expect it to be more expensive. Well, the fact that in Illinois households get electricity at the same cost that a business source would have to pay in California, this is an extreme case that makes California and I, I struggle to say this about any state in my beloved America.

00:13:26:20 - 00:13:47:02

Mark Nelson

It makes California as bad as Europe. And if you knew just how stupid European leaders have been about energy for decades, just how dumb, how, how irresponsible, the fact that a state in the U.S. as large as California has done as badly as Europe, God makes me, it really depresses me, Right?

00:13:47:04 - 00:13:49:17

Chris Keefer

Boils your blood. I can see that. Well, let's let's.

00:13:49:17 - 00:13:50:00

Mark Nelson

Talk for.

00:13:50:00 - 00:13:51:08

Chris Keefer

Example in California forgot.

00:13:51:08 - 00:14:21:17

Mark Nelson

Got to say what's an extreme like low cost? A number of states in the U.S. are able to offer industrial electricity at 50, $60 a megawatt hour, though I expect this to. Well, it's interesting. In the states with electricity markets, industrial electricity at that cost is going bye bye. It is gone. It is done. You can no longer get large amounts of industrial electricity at at prices in this fifties and sixties.

00:14:21:17 - 00:14:51:18

Mark Nelson

As far as I know, in the United States. It's I mean, I will be eager to have the haters come out and say, Mark, you're a moron. I trade power every day and you can still do it. But I'm hearing that if you want large amounts of industrial electricity, you not only have to rush off in many ways to the market, so you can't there's not enough, even in the regulated utility regions, which are the ones where they're supposed to be able to plan out growing demand and providing the power.

00:14:51:20 - 00:15:09:12

Mark Nelson

I mean, those places are going to have put cases in front of their regulatory commission saying we have all these businesses in order to say yes to them and grow the economy, we need your permission to build power plants. And during the building, we need to charge charge the cost to consumers and guarantee that you'll make sure we get our money back.

00:15:09:16 - 00:15:28:09

Mark Nelson

That's the old world. That's the old American system. The new American system with the markets is one where if a business shows up to a power plant and says, Hey, I see that you're selling all that power off to the grid, how about you stop and just sell it to me instead? I'll buy it right at your power plant.

00:15:28:11 - 00:15:44:15

Mark Nelson

Well, this is the market region, baby. That's what it was designed to do. And if they if they are going to pay, you can just cut off Chicago. You can cut off DC, you can cut off. It doesn't matter. They can go find electricity from the market, can't they? That's what the market is for. You can go invent a power plant from scratch in a few years.

00:15:44:15 - 00:16:02:21

Mark Nelson

In a volatile market. Right. So if I'm a big consumer of electricity and I want power from, say, a nuclear plant and I don't give a damn about anything else, then I have to have the power. I go to the market region and I buy up that nuclear industrial electricity. I can pay above those average rates that things are costing or maybe a little bit below.

00:16:02:21 - 00:16:30:18

Mark Nelson

If I sign a long contract for a long time and you can take that nuclear power that's been underappreciated straight off of the markets and just suck it in and make your air super brain. That's the new world. The old world is that you have to establish with the utilities and the regulators that doing that won't hurt the public too much or that you'll be able to serve that new load without taking kilowatts out of the mouths of babes.

00:16:30:18 - 00:16:56:11

Mark Nelson

Right. Kilowatt hours out of the out of the orphanage, right in the market region. Well, guess what? The whole point is that if you have somebody who wants to buy more electricity, they can just move right in and buy it. And now we have that. So we're going to hear an amount of whining and crying that that is just unprecedented from folks who previously would have defended the markets and their abusive of nuclear plants as just the way of nature.

00:16:56:11 - 00:17:22:07

Mark Nelson

Well, the way of nature is the snake turning back towards your babies. And now it's coming. It's going to swallow a bunch of them whole. So sorry about that rant. It's just it's emerging issue right now and it helps frame the issue of is California a regulated utility state? Mark, weren't you weren't you talking about how this California Public Utilities Commission is is working with BG and the utility to decide how much power cost?

00:17:22:12 - 00:17:57:13

Mark Nelson

Well, yes, but it's also a market region. Which brings us to Californication of the grid, where you have arguably the worst of all worlds. You have a utility that is still providing an enormous amount of the essential services, including generation. But you also have a market that itself is mostly failing, but you also have the politics that are being executed by people who until very recently didn't seem to need to know anything about energy in order to control it or to be put in charge of passing along decisions from people who did know what they were talking about.

00:17:57:15 - 00:18:27:20

Mark Nelson

Well, California seems to be a weird blend of all these issues. And in fact, there's an Antonio Gramsci, quote, Italian communist quote that I like. It goes something like The old world is dying, yet the new world cannot be born. It is the time of monsters. Sorry if I've misquoted all my listeners, but the the sense of this is that we had a system that had provided a certain level of service for a really long time.

00:18:27:22 - 00:18:55:01

Mark Nelson

A lot of that service was taken for granted is just what happens in advanced societies and an effort was made to reform it or produce better outcomes than we are getting. The forces that came together to push for a alteration of the old system, which again is that a utility is given a monopoly over a region because electricity delivery is a physical system, monopoly that is physically it is a monopoly.

00:18:55:04 - 00:19:43:21

Mark Nelson

So institutionally a monopoly was was allowed over that system in an area. In return, there was a responsibility to provide power at levels set by regulators who themselves were either elected officials or appointed by elected officials, and then in return for providing the power fairly and justly and reasonably as negotiated between the utility and the publicly appointed regulators, the utility was allowed to make a return on its capital above whatever rate you could get just sitting on bonds or, you know, sitting on US government debt, you could make a rate that was above that often, you know, maybe a 50 to 100% more than you would make on those bonds, but less than the utility

00:19:43:21 - 00:20:13:15

Mark Nelson

might attempt to need if they were not guaranteed those returns, if they performed to the level set by their regulator. This is the cost of service model, the captive rate base model. What's funny to me is that upon breaking up this system, a number of European countries are now struggling to build any type of power plant, and they're having to go back to thinking about what to them is an exotic system, a rate based model or regulated asset base model.

00:20:13:19 - 00:20:31:02

Mark Nelson

And I'm like, Yeah, that is how we built and still manage much of the USA Today. And for them it's like there's this new system I need to tell you about. Have you heard of Regulated asset Base? And I'm like, Yeah, it's still how we run the grid and the parts of America that tend to have really low industrial electricity price.

00:20:31:04 - 00:20:54:14

Mark Nelson

So California had the old system, what I just described, and then they said, let's let's do some invention, let's experiment with it. This is going to be fun. Let's have an electricity market where eventually each person can decide what brand of electricity they want to buy from their supermarket, from their favorite energy company. You know, maybe they can make up their own energy company and buy and sell electricity for them.

00:20:54:14 - 00:21:28:04

Mark Nelson

And then, friends, you know, if we have competition, what we do is that doesn't mean we have a second set of wires. In other words, you don't have a physical monopoly chain. You still have a physical monopoly on the wires. But what you do is you force the people who still own the wires. Let's say it's still the old utility to accept onto those wires any power plant that meets certain requirements for safety or you know that if a power plant gets built, the people owning the wires have to transport it without bias or favor to their own power plants.

00:21:28:04 - 00:21:48:04

Mark Nelson

Even better, if those utilities are forced to sell all or most of their power plants in order to allow other people to try to operate the power plants better. The idea being is that now that you've induced a lot of competition, you have people competing to see who can drive the other gas powered plant or coal powered plant out of business fastest, then that will drive down costs.

00:21:48:04 - 00:22:18:13

Mark Nelson

Once you reduce the extra power plants that you don't need. The push to do this to a system that apparently worked and was powering more modern growth came from a few places. One, let's say that big utilities were building a power plant type that you didn't like, like a nuclear system. If you break up nuclear, if you want to break up nuclear, maybe the best way was to break up the control and the power of the entities that were building and funding nuclear.

00:22:18:15 - 00:22:41:13

Mark Nelson

Here's another one. If you thought that utilities were trying to make more money by building more power plants and getting a bigger pot of money, getting that steady 10% return, say maybe you get a capped return, but if you grow the size of the pie that's spinning off little pieces of pie, well, then that case, the utility has a reason to keep growing electricity.

00:22:41:13 - 00:23:07:14

Mark Nelson

And if you are ideologically against electricity, if you're ideologically against energy and you want there to be less energy growth or let's say you're okay with growth, but you hate waste and you see you want a less wasteful world where utilities are not incentivized to grow the pie. Well, maybe if you break up the electricity sales business and make it to where it's a brutal business where people are competing against each other, well, then maybe there will be less growth.

00:23:07:19 - 00:23:34:06

Mark Nelson

And so that's a reasonable electricity market. Also, here's another big one. And this one ends up being decisive in U.S. history. If you have a bunch of cheap natural gas and you have a sudden supply of natural gas plants that are better technology than has ever existed in world history for converting fossil fuel to electricity, but you can't build any of them because there's already enough supply from crappy old plants.

00:23:34:06 - 00:24:03:00

Mark Nelson

In your opinion or in reality that are already there on the grid, helping those big fat cat utilities just collect their slice of of returns. Then if you break up the system and you're able to make it a wild, wild West where the new plants can take a go at it, jump on the grid and displace the old plants, that is the new plants with a lower average cost of generating power than the old plants that had a higher cost and burn more fossil fuels or split more uranium.

00:24:03:02 - 00:24:25:15

Mark Nelson

Then what you can say is we make a market. The new capital will replace the new equipment, the good equipment to replace the old equipment. And if there are rewards that go to those new power plant owners for providing power at cheaper rates than the utility once provided, then those rents are justified and the savings will pass along to consumers that was the vision.

00:24:25:15 - 00:24:49:09

Mark Nelson

And the natural gas being cheap led to pushes for deregulation, restructuring around the use of the generation markets. And when the natural gas was expensive or the demand was temporarily supplied by a new wave of of expensive gas plants that needed to then collect rents, then the push for further deregulation of further restructuring was reduced.

00:24:49:11 - 00:25:06:10

Chris Keefer

You're giving me the money. My new favorite sort of interviewing summary is to say you've given me a lot of threads to tug on here, Mark, And you sure have one of those ornate Persian rugs of yours. But, you know, just probably rewinding like a minute and a half back, I had this kind of like, say, Amory Lovins without saying.

00:25:06:10 - 00:25:37:21

Chris Keefer

Amory Lovins And it's been interesting talking with no Redford recently and talking about the challenges of of decarbonization and electrification. You know, he said in terms of process, what we have is a severe electricity shortage. And we on this trajectory, I guess with this big regulated monopoly utility behemoth of just adding more and more generation, which would have again suited us quite nicely now as we try and try to electrify or even as we have these emerging loads like, you know, big baseload hungry air campuses, I think as they're.

00:25:37:21 - 00:25:57:18

Mark Nelson

Called, which by the way, I just have, which is just this is the eternal question. How much is too much? How much is enough? I'm now more skeptical than ever of people who think they know exactly the right amount of energy to be provided and therefore they know that utilities shouldn't provide that much or shouldn't prepare to provide that much.

00:25:58:00 - 00:26:22:09

Mark Nelson

I get really antsy when they say that we we've built enough. Let's just save from here on out. Because as we know from the history of industrial revolutions, if you invent a process that can a much more efficiently use energy, it's much more likely to blow up the energy use than to reduce it. Computation is more energy efficient than ever by by orders of magnitude compared to in the past.

00:26:22:11 - 00:27:00:15

Mark Nelson

And that doesn't mean we need less energy for it. It needs means there's vastly more energy being demanded by it. So one answer is to say, no, that's a bad use of energy. We say No down, Bitcoin down, no bad, bad, bad, viral growth of energy. Don't don't be here. But on the other hand, at the point that you start deciding what are right and wrong uses of energy and saying no to a new industrial sectors, you end up having one of the most dangerous possible ities in the world becoming Europe, which is that you are wrong about which industries should or should have been cut off or worse.

00:27:00:21 - 00:27:28:16

Mark Nelson

You can't control everything. And in trying to reduce energy supply to new industries, you end up messing up energy supply to the old industries. That is basically what a lot of a lot of what's happening now in Europe is the idea was there's too much energy anyway. The problem is how to not have too much of it. Then suddenly you need to electrify for for clean steel or clean concrete or or EVs or all these different things.

00:27:28:19 - 00:27:51:09

Mark Nelson

But they've already severely damaged the competitiveness, the cost of their energy supply and the availability. And then it's a little too late to immediately reform every aspect of how you think and regulate energy and how your industries work. It's a little too late and you got it wrong. It turns out electricity is needed for all these other goals that come from environmentalism.

00:27:51:09 - 00:28:22:14

Mark Nelson

The climate change goals, the and very, very late. A lot of environmentalists have now realized electricity substitutes beautifully for a lot of other things done more in a more dirty fashion, which you said you wanted me to say. Amory Lovins I would say to the listeners, Go, listen to our Amory Lovins episode. He advocated against big grids, efficiently providing a little bit of extremely pure, high grade, controllable energy that we call electricity to homes and to businesses.

00:28:22:17 - 00:28:53:11

Mark Nelson

He was against that. He thought you instead should burn a little bit of fossil fuels at your home or run a little wind turbine or something like that. He was wrong. Is organization has had to pivot around to promoting large grids, pumping green energy into cities. They got it right. But because the institute was founded to advocate against that, because it enabled putting all these loads and all this demand together and building a nuclear plant to serve it and a big grid to take the power straight to the city.

00:28:53:13 - 00:29:04:08

Mark Nelson

Because Rocky Mountain Institute in the Amory Lovins mindset was against that. They were extremely late to have to pivot to electricity and super grids actually being a good thing.

00:29:04:10 - 00:29:22:05

Chris Keefer

So. So Mark, I think you've given us a pretty good overview of sort of the market and policy structures that have have led to this. You know, I mean, I like to get into abstractions and more into sort of granularity things I can touch and feel. So let's talk a little bit more coming back with our focus on California to sort of how that has played out.

00:29:22:07 - 00:29:29:09

Chris Keefer

You know, particularly interested in, again, these turns against what feel like Californian political class instincts.

00:29:29:11 - 00:29:30:05

Mark Nelson

Can we talk solar.

00:29:30:10 - 00:29:55:05

Chris Keefer

Whether they were forced kicking and screaming. Well I mean let's talk about again this this this the saving of the Diablo Canyon power plant, how a governor who was having a strong past dependency were closing. It sort of was forced kicking and screaming, perhaps, although that happened off off screen and into reversing that. You know how it was almost, you know, a it was certainly a clear majority, I think was almost unanimous that that vote to save the plant.

00:29:55:05 - 00:30:18:12

Chris Keefer

So that goes against some of the kind of political class instincts. Also this reversal of rooftop solar subsidies or a decreasing of that subsidy that sort of goes against, I feel like the kind of DNA of the of the California political class. So they're being forced into doing some of these things. Why what were the policies that got us there and then and why why are we seeing these things which are, to me as an outside observer, quite, quite surprising.

00:30:18:12 - 00:30:23:11

Chris Keefer

I mean, it seems obvious why they need to happen, but that's that's quite a phenomenon, at least for me.

00:30:23:14 - 00:30:56:02

Mark Nelson

I love linking California and Germany. So let's let's come up with a new term. Inverse Merkel Merkel to the power of negative one. To me, Gavin Newsom has sort of an inverse Merkel. Merkel came into power in Germany thinking, okay, nuclear is okay. I, I think that nuclear is probably necessary. A bunch of people on the other parties don't like nuclear, but my party likes nuclear, so I'm going to like nuclear and we're going to push back the phase out.

00:30:56:02 - 00:31:18:15

Mark Nelson

So that was what, 2010 or so. Then Fukushima Daiichi happened, an event happens and Merkel turns all the way against nuclear, or at least in terms of policy, regardless of whether she herself had any personal fear, the important thing was to do what was the middle ground to be almost exactly the middle line of politics. And she was very successful.

00:31:18:15 - 00:31:41:15

Mark Nelson

She was almost an apolitical leader in some ways, depending on which German you talk to. And she steered this middle course where no election was ever in doubt. When she was there, she was just the middle line of Germany for a very long time. I saw articles near the end of her tenure saying how Merkel killed democracy by being so perfectly the obvious choice that so centrist.

00:31:41:16 - 00:31:44:04

Mark Nelson

There was no almost guaranteed income inequality.

00:31:44:04 - 00:31:44:15

Chris Keefer

She was has.

00:31:44:16 - 00:31:45:02

Mark Nelson

Nobody.

00:31:45:07 - 00:31:46:19

Chris Keefer

In the government based on coalition.

00:31:46:19 - 00:32:11:18

Mark Nelson

Mantel because she was so to the middle. So in Gavin Newsom's case, he was anti-nuclear. But by all accounts, he's not afraid of nuclear. He's just trying to do exactly the middle line of what Californians think should happen. So on nuclear, he was helping arrange the destruction of Diablo Canyon because in his point of view, it would be bad if Diablo Canyon closed instantly.

00:32:11:18 - 00:32:29:08

Mark Nelson

So he didn't want to chaotic close, but he did want to help get it closed to be able to show Californians that he could execute their political will, that he could get things done. And if Californians in their infinite wisdom and genius wanted nuclear gone, then he would help deliver a nuclear free state after the closure of San Onofre.

00:32:29:13 - 00:32:58:00

Mark Nelson

This takes us back to 20 1516. So Gavin gets meetings with PGE and says, Hey, I have the ability to destroy your plan because I'm a vote on the land. You know, the, the, the I think it's the Landes commission that three votes, one of which is the lieutenant governor of California. The other two are kind of no offense to whoever they are, probably kind of nonentities and the lieutenant governor is the one plugged in with the state, you know, democratic system fully and therefore kind of has the power here.

00:32:58:02 - 00:33:20:20

Mark Nelson

So Gavin Newsom has the ability to, if he wants, help destroy Diablo Canyon immediately by denying the ability to intake water that's required to cool the plant. But he's saying, no, let's be reasonable. Let's do a you know, a planned closure of old nuclear because we're moving forward. California wants to move forward, so let's work this out. So then an agreement was made.

00:33:20:20 - 00:33:41:00

Mark Nelson

They found some unions who didn't care about Diablo and got them to say jump on the agreement because then it's union backed. Right. Even though it's not the unions that have the most to lose from this. And the unions were told, you know, it'll be so devastating to the state energy system that we're going to give you so many jobs trying desperately to make up for the loss of our last large, reliable power plant.

00:33:41:00 - 00:34:02:03

Mark Nelson

So it'll be amazing union. So you guys should just go along with it. And shall we have union backing for this ecumenical deal that brings together the conservation groups, which I hope weren't taking Russian money, but we're going to have to wait to find that out. And then everybody comes together. Kumbaya moment. PGA Near has an internal war between the natural gas guys and the electricity guys.

00:34:02:03 - 00:34:16:19

Mark Nelson

The natural gas guys are like, look, we can make so much money on natural gas shutting down the nuclear plant. Let's just do it. And then the people in the finance department are like, why are we bothering to run this nuclear plant? We are not allowed to make profits on it yet. It remains a risk on our balance sheet.

00:34:17:00 - 00:34:37:22

Mark Nelson

Why? Well, it goes back to that old world dying new world can't be born monsters. Diablo Canyon was plucked out of the set of power plants that he was supposed to sell out to Enron and other people like that. PGE was left burdened with it. But then when power prices went up and it was making hundreds of millions of dollars a year and the state then says, No, that's not fair.

00:34:37:22 - 00:35:01:00

Mark Nelson

You're not allowed to make money. It's supposed to be a bad thing that nuclear exist. So let's take your profit. So Diablo Canyon was carved out as a as a plant that was run like a regulated asset based utility plant, but without the ability for PGE need to really make a bunch of money on it. So it was just a risk of, say, bankrupting PGE if something went wrong or an earthquake or a meltdown or something.

00:35:01:04 - 00:35:40:22

Mark Nelson

So PGE itself was divided against its crown jewel generating asset, the most important power plant on the coast of of of North America. They were not allowed to really think about that broader picture. PGE Leaders in 2015 needed to go along with the lieutenant governor and the environmentalists and the unions and shut down, agree to shut down their plant, but in an orderly fashion by 2024 2025, because in that time you could build a bunch of solar plants that although they went off at night and they're located hundreds of miles through wildfire territory away from the coast where the power is needed, it's all fungible because no one actually has to know about energy because

00:35:40:22 - 00:36:01:05

Mark Nelson

energy's easy. Leave it for the nerds. We're politicians with beautiful political goals. Just. Just PGE, sit down. We're going to talk this through and we're going to dig your grave carefully with you participating with part of the shovel. We're going to give you a golden shovel to dig your grave with. And then we're going to squeeze your neck softly and put you in it.

00:36:01:06 - 00:36:30:09

Mark Nelson

It at least your nuclear division. And then California will move towards a glorious future. That was 2015. That was the equivalent, like I said, inverse Merkle. That was like the zero events moving forward with the standard California elites and even the public view of, what should happen to nuclear in the state. Okay, then events happen now. There was a big campaign to save the plant, which is why we were ready when events happened with the right message and with the right cogs already rolling.

00:36:30:09 - 00:37:03:09

Mark Nelson

But events happened. Those events included a little blackout from giant wildfires. Just a little blackout. It wasn't big. It wasn't like Texas size, for God's sake. It was just a wee little California style blackout. But suddenly, Gavin Newsom's brain, it altered his thinking as much as Fukushima Daiichi altered miracles away from what had been the central, apolitical California direction into the new world, where your very survival as a political leader, the rest of your career is going to be defined by blackouts if you let it happen.

00:37:03:11 - 00:37:21:17

Mark Nelson

And it caused him to get very serious about energy. I thought Europe would be getting serious about energy because of the war in Ukraine and the blow up of Nord Stream, but they still don't get it. I think they're just a little a little slow in the old world. But in the new world, we're quick. That's American dynamism for you.

00:37:21:20 - 00:37:41:08

Mark Nelson

Gavin Newsom was never scared of nuclear. He just was going along with the closure and helped make it happen. When the order comes down that, you know, from Newsom do whatever it takes to not let there be blackouts. Again, one of the most important pieces of that is keeping Diablo Canyon, Y, because Diablo Canyon is not it's not located in a wildfire region.

00:37:41:13 - 00:38:19:20

Mark Nelson

The power lines are not going through forest in the foothills of the Sierras. There's no heat wave that can knock Diablo offline. It's up by the cool ocean, sucks in the ocean, water puts it back, and its operation factor is higher than the builders of Diablo ever could have imagined. Why is that? Will back when the regulated utility world was the only world that anybody knew in America, the PGA and EA had made a argument for building Diablo Canyon that included hopefully getting to 75% operating capacity factor at the plant and the finances of the plant were based on not spending as much as they did to build it.

00:38:19:20 - 00:38:42:21

Mark Nelson

So that blew up. But on the other side, it's not 75% that they operate at. It's down like 90, it's 93, 94, 95% when Siemens generator parts aren't messing up, you know. So what does this mean? It means as much as it costs to build Diablo Canyon. It's now the crown jewel asset of the state's electricity system as a whole.

00:38:42:23 - 00:39:13:02

Mark Nelson

And the removal of it, which we were just going through, zombie style California center of the line, The governor decided, no, we have to keep it. A bunch of other things had to happen to make it possible. He was able to everybody was able to like blame. Everybody is able to blame PGE for almost everything forever. Part of the role of any remaining a regulated utility, vertically integrated utility with a with a ratepayer base in California is to absorb all the shit that rolls downhill.

00:39:13:08 - 00:39:30:11

Mark Nelson

PGE And his job is to sit there and just take infinite amounts of abuse. Did you know that PGE and is a criminal organization like the entire thing is in jail? Like the entire thing is a criminal? They had to sign an agreement that said we are a criminal corporation. You know, a corporation is like a legal body, right?

00:39:30:14 - 00:39:57:17

Mark Nelson

Well, it is a criminal legal bottle. PGE is evil and criminal. Now, did they do things wrong with the wildfires? Yes, there was tree trimming that they had received money to do had said they had done and had not gotten done. But on the other hand, I have an enormous amount of sympathy for them because the amount of tree trimming that they really needed to do to stop wildfire risk was vastly more than Californians had an appetite to allow that.

00:39:57:20 - 00:40:31:12

Mark Nelson

The regulators at the California Public Utilities Commission did not have the stomach, as far as we can tell, to allow PGE to cut that many lines. All of this I know you asked about Diablo. What all of this means is reality has set in just in time for that nuclear plant. It was not in time for San Onofre Nuclear Generating Station, which in many ways to me triggered a lot of the death spiral we're seeing now where a plant that produced, what, something like 10% of the state's power and did it extremely cheaply.

00:40:31:12 - 00:40:55:22

Mark Nelson

Exactly whereas most needed and most irreplaceable in the population centers of around San Diego and Los Angeles, where there's a huge amount of demand, you're not moving those cities just because there's mountains blocking transmission coming in does not mean you're going to take San Francisco or San in Los Angeles and San Diego and move them over the mountains into the desert so they can be powered all day by solar power and all night by YOLO Energy.

00:40:55:23 - 00:41:18:13

Mark Nelson

No, no, you're not going to move those cities. You're going to keep it right there, right there, powered by whatever is along the beach for much of the hours of the day. And that happened to be either oil burners, gas generators or San Onofre Nuclear Generating Station, San Enough Ray was closed. I've had it in Dubai at breakfast at a hotel.

00:41:18:15 - 00:41:37:09

Mark Nelson

James Collins seen and I almost came to blows over the issue of San Onofre Nuclear Generating Station. I can feel him possibly looking over and breathing down my neck and demanding to go on to a special issue of of fighting with Mark on decouple podcast. So we need to avoid being a you know, a daytime soap opera here.

00:41:37:09 - 00:42:08:06

Mark Nelson

But James and I came to almost came to blows over this he says the nuclear industry messed up the the San Onofre nuclear generating station was mismanaged. The parts were of poor quality coming in from Mitsubishi in Japan and the whole thing was bungled. And so that's what caused San Onofre to get closed. And I said, no, the patient was on life support and Californians came in unplugged the life support as as the as the signs of life were coming in, the brainstem was starting to wake up.

00:42:08:11 - 00:42:29:02

Mark Nelson

They yank it and they strangled a patient and said, why would the nuclear industry do this? Why would you know? They came in as the doctors were assessing that the patient could recover. They got out a gun out of their white lab coat. You tell me if this is your procedure and they just shot the patient to death and said, why would the patient be?

00:42:29:04 - 00:42:50:05

Mark Nelson

You know, it's just a victim of the nuclear industry? No, San Onofre could have been saved. The parts could have been replaced. And there was nothing that could replace power of that quality or cost in California on that part of the grid, wouldn't that was lost. There was nothing to bring power anywhere near that cost ever again, and there may never will be.

00:42:50:11 - 00:43:27:13

Mark Nelson

That plant should be running at 30 to $40 a megawatt hour in perpetuity. So I mentioned that the retail rates in Illinois were like about 11 or $12, 110 or $112 a megawatt hour. California rates are now up above 23, 24, $25 a megawatt hour, with residential rates soaring higher than that. What this means is your electricity bill is made up of the cost of producing the power, the cost of sending the power on the big lines, the cost of delivering power to your house, to your business, on the small lines, the cost to administer the whole system.

00:43:27:15 - 00:43:46:01

Mark Nelson

Right. Or and the cost of crazy things like wildfires. If somebody has to pay for it and it ends up on your bill, Right. So that's your electricity bill. Somehow all of that money has to add up to the cost of the system, along with the losses of the of people who have invested money in to build the system.

00:43:46:03 - 00:44:24:02

Mark Nelson

So the generation traditionally generation sorry, I'm still going here. The generation cost was traditionally about approximately half of the cost of delivering electricity broadly for an industrial consumer, the generation cost should be a bigger portion for a commercial and and residential household consumer. The cost of generation is a smaller portion. One of the things that drives me nuts when people say, solar and wind are very cheap, okay, they might be cheap in terms of one particular way of short term accounting in the generation side, What does it do to the rest of your bill?

00:44:24:06 - 00:44:51:15

Mark Nelson

If you have cheap generation that explodes the rest of your bill while not removing the need for a bunch of the remaining now much more expensive remaining generation, then your bills can explode geometrically. They can. They can shoot upwards. And that's basically the story in in California. San Onofre would have been a you know, a reasonable chunk of a reasonable amount of cost for it for generation.

00:44:51:17 - 00:45:12:02

Mark Nelson

It was lost. The substitute for it is much more expensive than the additional sometimes on sometimes off in smaller generation from the wind farms and the solar panels that's going to come in mix in. It's not going to displace as much of that. Now more expensive generation than you thought, but it will explode the other components of your bill.

00:45:12:04 - 00:45:32:16

Mark Nelson

So what we have in California is that they've spent something like $110 billion in nominal nominal dollars on solar. That's not the replacement cost. I have to be clear here. If you wanted to replace every single one of those panels, the cost would be significantly less than 110 billion. For one, the projects are already there for a second.

00:45:32:20 - 00:46:00:05

Mark Nelson

The grid is already there. If the at the projects are on and working three panels are now ultra dirt cheap and because ESG or regulatory or environmental and social and governance criteria for clean energy never really had to consider where those panels are coming from. It's come from anywhere. And it didn't matter. Didn't matter. It means that the the power, the panels, you can get for replacement, if especially if you disregard ESG stuff, can be dirt cheap.

00:46:00:08 - 00:46:37:00

Mark Nelson

So but that doesn't mean that that 110 billion wasn't already spent in California. A bunch of that money was by the the remaining regulated utilities. Why? Because the market players wouldn't build solar when it was too expensive. So the state forced the utilities to do it and say, put it on it. Put it on their tab. Yeah. So California was a solar pioneer at the cost of an immense amount of legacy cost rolled into consumer bills that then provided this big fat base of high cost that when costs started exploding upwards, you're doing it from a high altitude.

00:46:37:05 - 00:46:52:13

Mark Nelson

It's like ascending into the death zone on Mount Everest. It's not that Mt. Everest is the biggest mountain on earth. It's pretty good size, but it's from a high altitude base. It's from a base that would feel exhausting to almost any normal person just to be at the base. And then you're going up into the death zone from there.

00:46:52:17 - 00:47:17:02

Mark Nelson

What we're seeing in electricity in, California, is that they were starting at Everest electricity base camp and then ascending straight into the death zone with and I can't see any reason why we should expect those costs to fall much in the future, even if replacing all that solar is cheaper in the future, you're still having to now replace a bunch of solar that didn't last as long as legacy generation.

00:47:17:04 - 00:47:47:06

Mark Nelson

Now, if legacy generation like natural gas was burning suddenly expensive natural gas and we might have a situation where legacy solar does lead to some kind of lower cost in the future. But those costs are just the generation costs that are now a small bit of customer bills, right? The rest of the costs of administering the grid and dealing with the profound effects of extremely high prices for an extremely long time, you're going to have to spend more to attempt to save more.

00:47:47:06 - 00:47:51:19

Mark Nelson

And it's not clear if that ever ends with cheaper electricity bills in the future.

00:47:51:21 - 00:48:09:00

Chris Keefer

So I'm glad we're getting into the solar side of things. But imports are also a major part of the Californian story. Can you can you walk into a little bit of that and maybe a little bit more on the rooftop solar side of things as well? I think you've been describing utility grade solar off in the deserts, transmitting power over mountains and through forests.

00:48:09:00 - 00:48:17:10

Chris Keefer

And the implications that said, I mean, this has been I've been trying to interrupt, but I've been glad that I've been prevented to because this has been a really illuminating.

00:48:17:13 - 00:48:18:16

Mark Nelson

No pun intended so.

00:48:18:16 - 00:48:24:02

Chris Keefer

So far for me. So your tie and tying efforts? Absolutely. Tie, tie and imports and and tie on the rooftop.

00:48:24:02 - 00:48:40:10

Mark Nelson

Okay. So in order to answer your question, we have to go back to the beginning of history. No, just kidding. But California really was a pioneer in electricity. So-called white gold is can you guess what white gold described? Black gold is is oil. What is white gold?

00:48:40:12 - 00:48:42:10

Chris Keefer

man. I mean, solar lithium.

00:48:42:10 - 00:48:45:00

Mark Nelson

Now it's hydro. Hydro. Well, okay.

00:48:45:00 - 00:48:57:12

Chris Keefer

We we we called it we called it white. We call that white coal. My ancestor, Thomas Coltrane, Kiefer, said we could be, you know, freed from our shackles of bondage to Pennsylvania coal by developing our the white coal of our falling water.

00:48:57:14 - 00:49:20:12

Mark Nelson

So the white gold from the Sierra Nevadas as opposed to the gold gold. Well, maybe this was because you were that was in areas that weren't also producing gold in the same spot. So white gold was making dams high in the Sierras. Really. California helped pioneer the technology of long distance transmission of electricity because you had fuel star dairy along the coast.

00:49:20:12 - 00:49:40:22

Mark Nelson

Not a lot to burn. Everything has to be shipped in pretty much or shipped over once the railroad came in and then you have the electricity up and then Sierra Nevadas, you build the dam, you send it down. Pacific Gas and Electric is one of the grand old dames of the entire world of electricity, along with comet or electricity difference.

00:49:40:22 - 00:50:16:09

Mark Nelson

Right. So Pogany helped pioneer this world. They brought power down from the Sierras. California would have been a center of power generation and consumption. But from before the Enron era, electricity had to be imported to California to meet demand. In fact, California would have been severely constrained in its growth if they couldn't send down huge amounts of hydro from the north through the large hydro projects along the rivers that helped power the Manhattan Project in World War Two.

00:50:16:13 - 00:50:55:04

Mark Nelson

Those big dams helped send power down to California and then from across the west, coal plants and now solar plants and wind, even wind facilities help provide power to California. Natural gas plants and even nuclear, the formerly largest nuclear plant in the United States as of a few days ago. Or, you know, it's now second place as of a few days ago is Palo Verde Nuclear Generating Station, a third of Palo Verde power, or about one reactor out of the three reactors in the deserts around Phenix is dedicated to providing electricity over the power lines into Southern California.

00:50:55:06 - 00:51:16:06

Mark Nelson

So how much of this this is about? It's been running about 20% of California's demand is served from out of state. So what happens when California now saturates the grid day after day for a lot of the year with its solar and then sometimes when production, what happens? Well, that power now flows in the reverse direction on the lines.

00:51:16:08 - 00:51:39:22

Mark Nelson

Only trouble with this is other states have similar energy plans and similar energy goals. You're going to get an inability to geographically adjust. I mean, if you have an immense problem with California losing generating capacity from solar as the sun sets, Arizona isn't going to help you. Nevada is not there for you and and Washington were never there for you in the first place.

00:51:39:22 - 00:52:06:10

Mark Nelson

So what you have is too much similarity between California's goals and what would happen if the states around California followed California's plan. There are coal plants in those states that are turning off, and that's a win because it means less coal power flowing into California, messing up their books. I have to give a shout out to California's rigor in counting carbon emissions from out of state.

00:52:06:10 - 00:52:35:07

Mark Nelson

Intellectual D grid as part of the part of its own budget. Now, it's not it's not purely motivated. This means an immense amount of money that can spend. If it's available, you can find it. You can spend an immense amount of money cleaning up the out-of-state coal by building an enormous amount of infrastructure that's cleaner in California. Batteries to store more of that solar in those in the noontime batteries to store more of the wind, even when it's blowing everywhere.

00:52:35:07 - 00:53:02:20

Mark Nelson

You know, if you can count all the carbon from out of the state, you can figure out a reason why there's a new energy community, energy investment community in California that will grow up to answer that demand of stopping that coal from out of state. But what this means is California is dependent on exports that are going to be possibly less reliable imports from other states, exports from those states that are possibly less reliable in the future.

00:53:02:22 - 00:53:20:13

Chris Keefer

Mark, I'm absolutely loving the kind of geography of energy that you're painting here with California. I had the privilege of attending the Breakthrough Dialogs a couple of times, and Dylan and I rented a car and went up to Yosemite. And so I have a sense and I was in L.A. reason I have a sense of the geography and and the coast and the Sierras and the desert on the other side.

00:53:20:13 - 00:53:31:17

Chris Keefer

And mapping out how California's energy history has played out is just fascinating with that very basic understanding. But yeah, so along the coast, basically not any big fossil fuel reserves.

00:53:31:17 - 00:53:33:00

Mark Nelson

Well, hold up, hold up.

00:53:33:00 - 00:53:34:22

Chris Keefer

They had nuclear plants founded.

00:53:35:00 - 00:53:58:14

Mark Nelson

La Brea Tar Pits. There's yeah, there's California was one of the great oil producing states. There will be blood had it all gave both of us our mustaches. Right. There will be blood with Daniel Day-Lewis that is set in California. That's about building an oil pipeline from the oil fields of southern California over the mountains and through the woods and down to the coast where the demand was so careful.

00:53:58:17 - 00:54:13:08

Mark Nelson

There's we did find fossil fuels is just later. And oil is not an amazing thing to make. Electricity out of unless you've messed up your energy policy so badly that you're forced to.

00:54:13:10 - 00:54:26:20

Chris Keefer

In any case, yeah, there's this kind of the way that this energy policy maps on to and as informed by geography, appeals to the geographic determinism. Me, the Jared Diamond lover, the prisoners of geography, the Daniel Yergin inspired parts of the.

00:54:26:20 - 00:54:51:00

Mark Nelson

Book and we mentioned the one that was used to kill off the nuclear plants to argue that the nuclear plants had to go well for nuclear plants and other heat using power plants, coal, gas, oil, whatever need water to cool off. I mean, typically water, you can use air, but it's really inefficient. They need water. They need something to cool off the system so that they can get a lot of power out.

00:54:51:00 - 00:55:12:13

Mark Nelson

We're not going to have our entropy episode here, but just just trust me out there. You need to cool things off to make things powerful, right? The more you can cool, the more powerful you can make things great. So where do you get as much water as you want that no one else is using the coast? Well, no one else starfish might use it depending on how much you take, fish might use it might mess up tide pools.

00:55:12:13 - 00:55:39:05

Mark Nelson

So if you want a strictly pure environment untouched by man, you can just ban power plants from taking in water from the coast. Easy, especially useful if the main plants with no alternatives are nuclear. So if you see that the only plants left in California, nuclear plants left in California along the coast, you can take the principle that maybe it would be better not to suck in water and put it back a little a few degrees warmer.

00:55:39:07 - 00:55:59:06

Mark Nelson

And you say. let's just have a sweet, innocent little world site. No more coastline where no more, no more taking in water on the coastline. And suddenly that becomes a death sentence for all the power plants. Now, here's what and said. This is the battle that led to the intervention from the lieutenant governor that helped bring about the agreement with the environmental groups.

00:55:59:06 - 00:56:25:04

Mark Nelson

And that unions to close the plant. Anyway, These were the arguments that led up to this while Jeanine was still trying to defend itself and the future of California by defending Diablo, they were saying, that impact rule about the coastline. We can meet the standards. First of all, we're not hurting the coast. So that's good. That's good to know that you have a rule that's supposed to improve a situation that itself is not bad.

00:56:25:04 - 00:56:44:10

Mark Nelson

So we're going to argue that that's a little weird. Second, let's do some mitigation. Let's make you a new artificial reef and all these crabs and fish will play and sharks will come and brutally eat the fish. It'll be nature. It'll be amazing. Should cost like 10 million. 15 million, maybe if you force us 40 and we'll put it on people's tabs easy.

00:56:44:12 - 00:57:03:20

Mark Nelson

So then the state regulators are like, No, no, no, you don't get it. We're not trying to mitigate things. We're trying to kill you. You're supposed to die. You know, it's Diablo Canyon saying you expect me to mitigate, and then the regulators say, No, we expect you to die. So the all the canyon, didn't they hit P.J. and he didn't get in there.

00:57:03:20 - 00:57:26:19

Mark Nelson

Like we can protect the environment. And then the people using the environmental laws are like, do you really think that that's why we use environmental laws to protect the environment? No. If we you know, this is to kill you. So then they argued to Annie, you need to actually not not take any water in. So then and he said, but then we need to build cooling towers on the on the like the coast.

00:57:26:21 - 00:57:49:09

Mark Nelson

I'm like this cramped little spot we need to build cooling towers. And then the regulators were like, no, we didn't. You know, this isn't that's not the reason we're trying to do you dirty. We want you dead, not building cooling towers. So then after the agreement was made, the solution was claiming that the cooling towers would cost about double the cost of having built the plant in the first place.

00:57:49:11 - 00:58:09:20

Mark Nelson

That is a cooling towers with essentially no moving parts, just a cone of concrete where you can you can build it in like three months or whatever. You just make a cooling tower right right there. no. We need some seismic. Seismic structuring, whatever. PJ And then once the hit was in, once they once that knife was in and like, it was all good, P.J. and then had been claimed.

00:58:10:01 - 00:58:27:09

Mark Nelson

The reason we may have to shut down the plant is because cooling towers are going to cost like 10 billion. Now, there was some subtleties in here at first. If you claimed cooling towers cost 10 billion, that's a reason it's not to force you to build them and you should be allowed to do the reefs. At the point that you've decided, you've decided it's best to die.

00:58:27:11 - 00:58:56:17

Mark Nelson

It's claiming, we have to build cooling towers and they cost 10 billion because that's just how much a cooling tower should cost right? Then it's a reason for everybody to say, See, that's why you need decided it was in the economic best interest of everybody to close the plant. Isn't it great We have this issue in Spain now where it's like, stop hitting yourself, you know, quit punching yourself in the face, you dumb utility in Spain, people responded to my visit by saying, No, no, the utilities themselves are the ones that have decided to close the plant.

00:58:56:19 - 00:59:09:02

Mark Nelson

Yes. Because they're being held hostage by your politicians who could kill them at any moment with with dirty your loss. Now, let me sum up this whole coastline story with Diablo Canyon. And it really summarizes California in a way.

00:59:09:08 - 00:59:16:12

Chris Keefer

Because what about the gas plants? What about the oil? Yeah, but they're non-essentials or they're cooling water intakes. Yeah, right, right.

00:59:16:14 - 00:59:43:21

Mark Nelson

Yeah. You know, they're necessary, but mostly okay so in the in the nuclear plants and by the way, this was used as an argument for no sense trying to repair power plants. If you're going to have to shut off because of coastal rules anyway. And within PGE any with insanity within SC, California, San Diego, Gas Electric or Southern Cal Edison, that was owner of songs, the argument would go, They're just going to screw us anyway.

00:59:43:22 - 01:00:03:02

Mark Nelson

We are on limited time. Unless we can convert California's politics to be pro-nuclear, we might as well not fight on the nuclear plant like that was. It was seriously corrosive. These rules at the point that Governor Newsom decided to save the plants, the argument given for why you could save the plants is that the environment around them was fine.

01:00:03:02 - 01:00:25:02

Mark Nelson

So they get a waiver of the coastline rule with no modifications, no artificial reef necessary. Why? Because the environment was already fine. That was the 2022 argument. Whereas the whole point of like forcing them to close in the first place was that you had to improve the little like coastal zone ten meters off of where the plant is.

01:00:25:04 - 01:00:43:15

Mark Nelson

And then the reason given for saving it was, yeah, we have an environmental rule, but that's to protect the environment and the environment. Isn't it hurt by this plan now that we realize we have to have it or scream? It's just sums up so much about California mean they have not yet truly gotten here on on housing policy and all sorts of other policies.

01:00:43:15 - 01:01:05:21

Mark Nelson

They're on their way. I think I have faith in California more than people might think, considering how much I rant about it and how much it traumatized me and my family. But that faith is tempered by the knowledge of how much pain there is left to go just on the policies that were already implemented. There's a path to pendency here that is going to be really rough.

01:01:05:23 - 01:01:23:14

Mark Nelson

Net energy metering with solar and the solar issue in general is really about this. I said 110 billion for solar. Well, that was just that's a that's like a lump sum. I mean, that's not a flow of money, though. That money has to be flowing back to the people who did that or they'll go bankrupt from their investments.

01:01:23:16 - 01:01:45:01

Mark Nelson

The bigger issue I have is that this net energy metering is when people spent money or financed, you know, solar panels on their house and then were given many times more than the value of that power onto their electricity bills, dumping the need to pay for the system onto everybody else. Now that net energy metering is is being changed.

01:01:45:03 - 01:01:56:11

Chris Keefer

And just Mark, just for set because we've shifted over to rooftop solar now from from the coasts of Sun. I can note that as a new chapter. But yeah, just, just for the novices out there, I saw myself kind of included just the net energy metering, just sure to find out.

01:01:56:11 - 01:02:22:12

Mark Nelson

So we the grid Californication of the Grid is the title of this episode. The grid is the power plants. The power lines do you see power lines that bring the big power out from the power plants, the smaller lines that the distribute, the distribution lines that take the transmission line power from the generators and send it to the public, and then the administrative structure to take care of all of that.

01:02:22:15 - 01:02:41:00

Mark Nelson

That is the grid in my definition. I've had grid nerds. That's not the grid. The grid is X or Y or just the lines or just the transmission. Just no, the grid is everything. The culture of one grid means everything. Everything is now the grid, power plants, transmission, distribution. Yeah. So what people were doing were getting solar on their roof.

01:02:41:00 - 01:03:12:15

Mark Nelson

It's sensible, right? Rather than buying power from a distant power, which Amory Lovins, energy whiz kid said was bad, even the losses are like, what, five 6%? To do that it's just not bad, he said. Put the energy you need right at your house so you can generate what you use. So if you put solar on your roof and you if you're a rich California that has a house with a roof and a lot of money for solar panels, you can build enough solar panels to on average cover your energy demands over the years, especially if you don't have an electric car or you have an electrified everything else.

01:03:12:15 - 01:03:31:18

Mark Nelson

And you still have that. You see natural gas hookups, so you have solar on your roof. How much should you get paid for doing your own energy? Now? You're not disconnecting from the grid. I have no problem. If people disconnect from the grid, go for it. Cut that wire. Get out of big perished year and just chop that shit off.

01:03:31:18 - 01:03:54:01

Mark Nelson

Right. Disconnect from the grid, make your own energy, be a homestead. Are right there in in the promised land of coastal California but most people don't because they just something they just don't right so they have their solar on the roof on average it covers a bunch of their demand, but it happens to cover their demand when the value of covering their own demand with their solar is zero.

01:03:54:02 - 01:04:11:23

Mark Nelson

Why? Because their neighbor is doing it because the solar farms out in Arizona and and and deserts of California are making beaucoup power that's already being paid for at extreme rates hundreds per megawatt hour, depending on how old the plant is. That's what those plants were guaranteed by the state in order to get them built, the pioneering solar.

01:04:12:01 - 01:04:30:21

Mark Nelson

So if you get credited a price for solar that's extreme and doesn't represent the cost of providing electricity service, the rest of the hours, there's losses. What net energy metering means was there was just a convention, not a law, not just a convention where what we'll just give people because it's a small amount of solar, who even cares?

01:04:30:23 - 01:04:50:12

Mark Nelson

Let's just take the amount of power they produce at retail. Right? So that is the price. Once you include the entire grid, not just the generation, not just the solar out in the desert, but take all the costs of administrating the grid, average it out per unit of power and say, let's give them that discount per unit of power they make.

01:04:50:14 - 01:05:16:10

Mark Nelson

That is, instead of wholesale, which now are a small percentage of California's energy costs, something like, I don't know, 25%, I believe, of California electricity costs for residential consumers, approximately a quarter is going to be that generation. Let's just hand the entire stack four times that value to them. For every unit of electricity they make, no matter when they make it.

01:05:16:12 - 01:05:47:06

Mark Nelson

When you include the market effects, here is and what's the market price of wholesale generation at the time that people's rooftop solar provides them with power. You're getting into times where we're curtailing power all over the state that has to be paid for by somebody. And then you're telling a rooftop person whose power is literally not needed, not one it at that time that that counts for as much as the average cost to deliver power, including all the dark hours, all that heat, heat wave hours, all the times when energy demand is high.

01:05:47:06 - 01:05:54:02

Mark Nelson

But the sun went down. We're giving people credit during their worthless hours. The average total cost of energy.

01:05:54:02 - 01:06:00:23

Chris Keefer

How many, how many cents and how many cents per kilowatt hour. Now are they getting energy? Californians dumping electricity, maybe selling it negative.

01:06:00:23 - 01:06:02:13

Mark Nelson

California electricity costs. Maybe, maybe.

01:06:02:15 - 01:06:08:19

Chris Keefer

Maybe it's negative pricing exports. Yeah. Okay. So what are we looking at? Comparisons. We're curtailing residential energy rate.

01:06:08:19 - 01:06:19:16

Mark Nelson

Last year might have been 30 $300 a megawatt hour. And if your listeners hear me keep stumbling over that is because I keep thinking of incense. $0.30 per kilowatt hour is $300 per megawatt hour.

01:06:19:16 - 01:06:20:08

Chris Keefer

Kilowatt and I'm going to.

01:06:20:08 - 01:06:38:22

Mark Nelson

Stick with megawatt hours because I think that that's a more understandable convention. Now with the big units we're seeing today. So $300 a megawatt hour, that is your average cost of your entire bill, including the cost to generate power, the cost to transmit it to you, distribute to and administer the whole thing and clean up from the wildfires and all that other stuff.

01:06:38:22 - 01:06:40:18

Mark Nelson

Okay. So.

01:06:40:19 - 01:06:45:10

Chris Keefer

So 30, $0.30 a kilowatt hour opposed to the state dollars is out there like me.

01:06:45:12 - 01:07:13:18

Mark Nelson

So if you produce a few megawatt hours of solar, you were being given $300 a megawatt hour back for that solar. A California house may use five, six, seven, eight, nine, ten megawatt hours of electricity per year. So if you spend $30,000 on a solar panel because you're going to totally make back thousands of dollars in value per year, then it pays itself off in four or five years maybe.

01:07:13:20 - 01:07:33:18

Mark Nelson

But if the value of this service that you're replacing from the grid is actually only a few cents per kilowatt hour or a few tens of dollars per megawatt hour, then you're being given four times that value, five times ten times that value, depending on the location and the severity of of this this residential electricity price grows in the future.

01:07:33:23 - 01:08:01:23

Mark Nelson

Who pays that? You're like, the big bad utility is going to get in the pants. I'm going to induce losses. Well, the thing is, your solar panels aren't necessary, but the utility is or something like the utility. So if it's between politicians being told the utility will literally go bankrupt or destroy every poor person in your state by charging the cost of the rich people's solar to the poor people or you can just tell the rich people the deal was canceled.

01:08:02:01 - 01:08:15:02

Mark Nelson

Screw that, we're going backwards. We just can't afford it. They're going to have to bend the knee and force the people with solar panels not to get a free ride anymore. The amount of teeth gnashing about this is incredible.

01:08:15:04 - 01:08:18:17

Chris Keefer

Not not just a free not just a free ride, but to get quite an expensive.

01:08:18:18 - 01:08:43:06

Mark Nelson

Spending on how you're looking at it. Whenever a compatible ideal, academically approved system where people's solar panels were exactly crediting them, if you could even calculate this. Exactly. Crediting them with the avoided costs of each part of the grid, that would have to be in large if I add or whatever to handle the houses in the area. If they didn't have solar a few hours a day or whatever.

01:08:43:08 - 01:09:05:08

Mark Nelson

If you could exactly quantify that, the thinking is maybe we could not be so harsh and there'd be some middle ground. But it's very difficult technologically, it's difficult economic, it's very difficult to administer this, which means it's opaque to policymakers and they need to just fall back on to easier things like no more net energy metering, free rights.

01:09:05:13 - 01:09:25:20

Mark Nelson

Then you get all sorts of disgusting stuff like net energy meeting was awful for poor people. But then you had groups claiming to represent, I don't know, energy, justice or whatever that were being paid by solar lobby to say, you're going to hurt energy justice if you take away our giant subsidies for Californians who own roofs.

01:09:25:22 - 01:09:34:12

Chris Keefer

So so just let me let me make sure that I understand this. So these homes are getting paid retail rates around $0.30 a kilowatt hour.

01:09:34:14 - 01:09:35:04

Mark Nelson

no, no, no, no, no.

01:09:35:05 - 01:09:50:08

Chris Keefer

For whatever they produce. None of that. But let me just mention I mean, you tell me what I'm wrong on. At a time in which California is overproducing solar and maybe having to dump it or sell it at negative prices, A, you know, across state lines or whatever, the value of the solar is going down to zero or even less than solar.

01:09:50:08 - 01:09:56:01

Chris Keefer

But folks with rooftop solar certain that energy metering are being paid is $0.30 a kilowatt hour because that's at work.

01:09:56:03 - 01:10:24:16

Mark Nelson

And anyway, if you could get $0.30 a kilowatt hour, $300 a megawatt hour in the year of our Lord, 2024 for your residential electricity rate in coastal California, you're doing great. I'm hearing people talk about $400, $500, sometimes peak price of $600 per megawatt hour, which makes it again, and I shudder to say this and I can't believe I'm saying this about a part of America worse than Germany.

01:10:24:18 - 01:10:35:20

Mark Nelson

I know. Right to think that we could have in our country an energy policy so broken that it's as bad as the Germans is unspeakable. It makes me want to puke.

01:10:35:22 - 01:10:36:23

Chris Keefer

Yeah, Yeah, I know.

01:10:36:23 - 01:11:16:05

Mark Nelson

But otherwise, you basically had it right in German policy. You were being paid for. What is replacing an aspect of power and a little bit of the transmission and distribution a bit because you still need that. Or you would have disconnected from the grid. You're replacing a bit of that. But being with the value of all of that and all on averages that don't really represent the timing aspect of this electricity generation, anything you're being a little bit under credit with the location aspect, a little bit tiny bit, but you're being radically over credited with the location aspect or with the timing aspect, which in turn, if you look at the markets, which again I

01:11:16:05 - 01:11:39:04

Mark Nelson

hate, but whatever they're, they're the markets that represent the value to the grid of wholesale electricity at a certain time and at certain place, you're being radically overcompensated. The removing of an unearned subsidy feels like an attack. It feels an assault. The removal of a privilege is one of the most painful things that a human can experience in any context.

01:11:39:08 - 01:12:03:01

Mark Nelson

And that is what is being experienced in California. The reason that politicians are holding the line is because the alternative is awful. The alternative is catastrophic, which is the collapse of the utilities. And then the politicians would really be they would have everything they ever wanted, control over power. They just wouldn't like it. And they would find they have to learn about it and they're not good at it.

01:12:03:03 - 01:12:26:21

Chris Keefer

Okay. So we I think there's one final thing we need to cover. We've we've gone through sort of the market structures. We've talked about nuclear and the kind of coastal politics. We talk about solar. We've talked about imports. We haven't talked about another cost that's being disguised here, which is the behind the meter cost. So I imagine industrial users and we had this great interview with David Mar recently of Extra Energy on Power quality and a number of users.

01:12:26:21 - 01:12:43:21

Chris Keefer

I imagine the remaining industrial users that are still in California are installing backup generators either to deal with power quality issues or actually just try and produce cheaper onsite power generation than what they can buy from the grid. When the markets are going crazy and prices are skyrocketing, when the sun goes down and natural gas beakers take off.

01:12:43:21 - 01:13:01:09

Chris Keefer

So to what degree is that what I tend to call like the Niger ification of the grid? What Amory Lovins might like to talk about is kind of like a nice, decentralized, but in order to get that reliable juice to mission critical, you know, manufacturers or other industrial hospitals, they need some backup on site now in a way they didn't before.

01:13:01:12 - 01:13:07:15

Chris Keefer

The grid used to be reliable. So talk a little bit about those sort of hidden costs that are not even reflected in these outrageous commercial.

01:13:07:15 - 01:13:41:16

Mark Nelson

And of course, solar net energy, metered solar is one aspect of the behind the meter costs, right? Because that is behind the meter on the side of the consumer. But at the point that electricity rates rise high enough and it becomes sensible to just burn your own oil on site or whatever you have call it the Dark Amari Lovins vision, the Amory Lovins vision, but in the Monkeypaw curse way where it's the worst of all worlds, it's everything he thought he was going against terms of outcome.

01:13:41:16 - 01:14:05:19

Mark Nelson

So it's more expensive, but also dirtier. But also Amory Lovins did like prosperity. That's why he was accepted by by mainstream politics. He wasn't trying to de-growth. He just thought there was a better growth method with less waste or whatever. And yes, yeah, yeah. Well, in this case, there's a lot of stuff that can go behind the meter that people are choosing because they don't trust the grid.

01:14:06:00 - 01:14:29:06

Mark Nelson

But it's not, it's not that it's actually cheaper than even the higher cost necessarily. It's just it's hard to put a price on feeling comfortable in your home. Like if you are rich and you have a home and you're not going to move, then buying more solar panels, buying more batteries, doing a buying a generator, all these things make you feel like you've done your duty to your family.

01:14:29:08 - 01:14:47:10

Mark Nelson

You've you've provided when you can no longer trust the public utility to provide. People have a lot of problems with utilities in a lot of places, but a lot of places isn't that the utility won't provide power so that you don't like what they're using to generate it or you don't like their attitudes or you think they're more wasteful than they ought to be.

01:14:47:12 - 01:15:14:12

Mark Nelson

But they provide. In California, trust has declined enough, along with high prices that that get you closer and closer to the the crossover point where it is actually if you're going to stay rich, maybe you shouldn't. It's worth it to invest in equipment. That's a tiny local version of what the grid used to efficiently do at a vast scale for you doesn't mean the grid can stop doing that.

01:15:14:12 - 01:15:18:13

Mark Nelson

It just means you're duplicating the equipment. I can have it.

01:15:18:15 - 01:15:25:07

Chris Keefer

And running it at a very low capacity factor, like the kind of upfront capital cost is high and you're using this generator pretty, right?

01:15:25:07 - 01:15:26:03

Mark Nelson

I mean, the dream of the.

01:15:26:03 - 01:15:27:11

Chris Keefer

Grid and if.

01:15:27:12 - 01:15:55:12

Mark Nelson

I was to spend an enormous amount of money on the largest possible equipment, that then was the most efficient equipment and therefore made the enormous money spread out over a very long time, over a very large amount of customers, big investments for the cheapest rates. That's story of modernity and reading the history of the earliest power plants, you get a feeling of how they were making ten jumps for several decades in a row.

01:15:55:15 - 01:16:32:15

Mark Nelson

I mean, so from one, you know, less than a megawatt electrical capacity for the first plants to one, two, three, four, five megawatts being, this crazy thing that was breaking people's minds to a 30 megawatt plant that held the record for like 20 or 30 years to a few hundred, like they were making these jumps up in these ladders, not because it was cheaper to build the plant on an absolute basis, but because it operated with an extreme efficiency and provided power at low cost that was never dreamed of in volumes to do more customers than you could have ever imagined before.

01:16:32:17 - 01:16:49:15

Mark Nelson

What we are doing now is we're kind of breaking that where we keep having it. We keep having the big plants in the big grid, but we're duplicating the old the old world of tiny stuff for each individual block or home or whatever. Partly it's administrative where you may not be able to control the politics of the grid.

01:16:49:15 - 01:17:27:13

Mark Nelson

In California, you may not be able to make sure they don't have wildfires, but you have an obligation to take care of your home, your factory, your office. Now, one of the issues in Britain had a lot of these issues earlier because they broke their system earlier. They went to the market system earlier when I was studying over there in 2012, 13, 14, I believe one of the biggest brands of supermarkets had decided that in light of not fully trusting grid in the future and wanting to make absolutely certain that their refrigerated products would stay even in a national blackout, they invested in a series of power designed to make sure they had power at

01:17:27:13 - 01:18:04:02

Mark Nelson

their stores and then, if needed, they could sell to the grid as merchant generators to help offset some of the cost. So that's some of what we're saying. The responsibility to provide for yourself has a value that's higher than the purely just the cost of electricity coming in, replacing the cost of electricity coming in from the grid. But as the cost of electricity on the grid skyrockets, if you stay the crossover at which it makes sense to build your own generator to take care of yourself, that the economics get better all the time in a worsening world for everybody.

01:18:04:04 - 01:18:19:03

Chris Keefer

Did you have a sense of how big of a phenomenon this is like you here? I mean, generac stocks are going up like crazy. That's obviously nationwide, but within California of any sense or data to suggest how much of this kind of behind the meter insurance policy people are.

01:18:19:04 - 01:18:41:06

Mark Nelson

I think you should you should probably have a battery episode. So not necessarily not probably not with me where you can ask those questions because I wouldn't want to leave your listeners with the impression that there's no utility, no pun intended, no utility in exploring adding batteries. I look, I think electric cars, I'm going to disagree with some of your speakers and many of your listeners.

01:18:41:10 - 01:19:08:11

Mark Nelson

I think electric cars are brilliant products that are on a path to getting better. I think that making them smaller would reduce some of the pollution issues from the tires. I think it would also reduce some demands on the lithium. But I'm not I'm not an energy or I'm not an energy or resource hawk. I don't think that chasing the smallness is good unless it makes for great, because I think that that's a bad a bad direction, as I said, for reducing the total power supply.

01:19:08:11 - 01:19:31:01

Mark Nelson

I think you're going to have unintended shortages when trying to stop immoral or bad uses of things. So if you're going to have a lot of electric vehicles, there is reason to better use your lines and wires more hours of the day by having some kind of cheap storage on one end of a small wire, filling up all the time, help leveling out the load, which is of course perfect for nuclear plants.

01:19:31:06 - 01:20:02:21

Mark Nelson

And then locally powering your car. There's going to be energy losses with each of those stages, but it may be worth it if you have abundant, steady, cheap, clean power from nuclear. So I see some aspect of behind the scene spending as good. And if rich people are super nervous about the and spend a lot of money getting batteries, some of those benefits indeed will flow back to the system at large, even if breaking that system in the first place is what induced the anxious rich people in building it.

01:20:03:02 - 01:20:40:19

Mark Nelson

Ryan Pickering keeps me updated about solar and battery equipment, good and bad. He says that the Tesla Powerwall version three is an astonishing product and astonishing product. I have issues with the way Elon Musk and Tesla talk about nuclear and promote 100% solar visions. But I have to say, if Ryan says that the Tesla Powerwall three is an astonishing product, we're going to see it being used in homes in ways that should be seen as an opportunity for nuclear, not a barrier to our tribal vision of a world of no power walls, only transmission, distribution and and generate and nuclear generation.

01:20:41:00 - 01:21:09:11

Mark Nelson

I like a world of nuclear plus storage. As I've said in my storage episode with you, nuclear plus storage is the it's the ultimate solution for energy. It will kill off an entire generation of energy modeling PhDs, which is for the best, the existence of a lot of energy modeling PhDs is a sign of things gone wrong. And if we can have a world of cheap behind and in front of the meter storage paired with lots of nuclear generation, that's a vision that I'm pushing towards.

01:21:09:12 - 01:21:28:23

Chris Keefer

Let's leave it there. Mark. We've gone over. It was definitely merited. Great to have you back, man. To be on on this side of the torrent of of wisdom pouring forth, really a masterclass on the Californication of the grid. Thank you for having you back. And we'll have to make sure that we don't go so long before doing it again.

01:21:29:01 - 01:21:38:00

Chris Keefer

Marcel Butcher is in the works. I think we should have you back soon for that. What do you got? I'll save the apple. A very nice.

01:21:38:00 - 01:21:42:20

Mark Nelson

Those of us who fought that battle in California will be a band of brothers and sisters forever.

01:21:43:01 - 01:21:46:19

Chris Keefer

Absolutely. Absolutely. Okay, Mark, We'll talk again soon.