WASHINGTON — More than 150 people attended the Electric Power Supply Association (EPSA) Competitive Power Summit at

the National Press Club on March 29, where competitive generators and others discussed the market changes they said
are needed to ensure reliability while reducing carbon emissions. (See related stories, EPSA Members Renew Call
for Carbon Price; See Long ‘Bridge’ for Gas; EPSA Panel
Debates Role of ISOs, RTOs in Decarbonization; and NERC
Chief: ‘Longer, Deeper, Broader’ Weather Presents New Reliability Challenges.)

Here’s some more of what we heard.

Frustrations over RTOs

The role of RTOs was a recurrent topic. During the first of five panel discussions, PJM CEO Manu
Asthana and Devin Hartman, energy and environmental policy director for the R Street Institute, acknowledged
frustrations over the RTO stakeholder process.

interests, and their own agenda; they’re at the table, pushing,” Asthana said. “But I also think the stakeholder

process is necessary, [so] please continue participating, keeping in mind … there’s a compromise that we’re going to

have to come to [so] that hopefully everyone will get what they need. Not everyone will get all of what they want, to
quote the Rolling Stones.”

“Market design is anything but a clear fix. Even to the top minds in the field, no one’s going to agree on all the

particulars,” Hartman said. “But this debate is worth having. … The value of organized market structures is actually

increasing over time. So don’t let the frustrations over the debate on the market rules boil over. … I think a lot of

times, there’s some misfires in our public dialogue.”

“I just can’t see the RTO not being an important part of” the transition,” said John Moore, director of the Natural

Resources Defense Council’s Sustainable FERC Project, citing grid operators’ role in ensuring

“transparency, accessibility [and] resource neutrality.”

But David Springe, executive director of the National Association of State Utility Consumer Advocates, said FERC and
RTOs must do more to consider consumers’ input.

“So much of the transmission decisions get made at a regional level, by an organization that is somewhat beholden to

members, that is very difficult to participate in,” he said. He said consumer advocates’ staffs are too small to

“meaningfully” participate.

“A lot of people like to point to CAPS [Consumer Advocates of the PJM States] in PJM. And [CAPS Executive Director]

Greg Poulos does a great job representing the consumer advocates in PJM. But it’s one person,” he continued. “And

there’s not one in SPP [or MISO]. You know, we’re talking about

huge decisions being made in rooms where the people representing consumers aren’t really participating. That’s just

[wrong]. It has to be fixed.”

Rule Churn

Asthana said he gets regular complaints from generators and others that the pace of change of market rules is too
fast. “It’s making it harder for market outcomes to be predictable and is having an effect on financing,” he said.

“Let’s accept that there’s no perfect answer; let’s get a consensus set of answers, and let’s let them run for a

period of time, unless there’s a real issue. I think that needs to be something we should all strive for.”

Kevin Smith, president of Tenaska Power Services, said more stable market rules could unlock innovation.

“When the rules are always changing, then we have to start focusing on our existing assets. And so those human

resources that we innovate with are now focused on existing assets, trying to evaluate the potential impacts of those
changes and, in some cases, mitigate the impacts of those changes,” he said. “And if we’re focused there, then we

can’t be focused on new, innovative products to advance the grid.”

Arnie Quinn, vice president of FERC-jurisdictional markets for Vistra (NYSE:VST), cautioned against a proliferation
of new ancillary service products.

“It’s very seductive [to suggest], ‘Let’s create a new product every time my revenue source needs to be a little bit

more secure. So in the energy and ancillary service [technical conference] comments, there were a couple conversations
about breaking out the regulation service into up and down service,” he said (AD21-10).
(See Stakeholders Ask FERC to Support E&AS Market
Changes.)

“For the most part, I would say that conversation was very principled, [but] some of it was, ‘Do down, because

renewable resources can provide that, and it would be really nice to give them a revenue source.’” Similarly,

traditional generators have sought to create a product to produce additional revenues for being dispatchable. “That

can’t be the answer” either, he said. “If there’s a system need for dispatchability; if there’s a system need for

regulation down differently than regulation up, then … let that system need drive the design.”

Pat Wood: Fix Supply Chain 1st

In a luncheon speech, former FERC and Texas Public Utility Commission Chair Pat Wood III said that Russia’s invasion

of Ukraine, and the subsequent international sanctions imposed on it, has brought new urgency to fixing the U.S.
supply chain.

“The supply chain has got to be fixed before we continue our march toward decarbonization,” said Wood, now CEO of

Hunt Energy Network. “We are running away from what we have plenty of in the U.S., which is coal, gas and oil, for

good reasons. … But we are falling into the arms of Russia and China. They today make the vast majority of the
world’s enriched uranium, batteries … solar panels and even I think about 50% of the world’s wind turbines. So that

should compel us to move this issue — this equipment and technology supply diversity issue — up to the top of our

agenda.” He complimented President Biden for committing to more LNG exports to Europe to make up for Russia’s supply

of gas to the continent.

Wood also provided predictions for what the world will look like in 25 years. For one, he predicted EPSA would have
to call itself “EPSDA” — the Electric Power Supply and Demand Association — “because in those 25 years, we’ll

finally learn how to commoditize the demand side.”

He also predicted a warmer climate, “but I’ll tell you, it was damn cold on Feb. 15, 2021, in Houston, Texas,”

referencing the winter storm. It will also be much more electrified, especially transportation. “All the people who

say, ‘Oh, it’s going to be slow.’” He shook his head. “There’s not a bubba in Houston, Texas, who’s not going to be

dying to have” an electric Ford F-150. “They’re going to be able to have that car be a two-way charger back to the

house, so you don’t have people who are out [of power] for 36, 72 hours like last year in Texas. They’re suddenly

demand response customers who look a lot like a large industrial [customer] on the Houston Ship Channel.”

Renewable Generators as Merchants

Travis Kavulla, vice president of regulatory affairs for NRG Energy (NYSE:NRG), said policymakers should strive to
“make merchants out of clean energy resources,” subject to “tail risks and risks of economic underperformance” by

avoiding long-term contracts that shift risk onto captive customers.

Kavulla noted that state officials have often been critical of wholesale market design, which they do not regulate.
“And yet the design of retail markets — which are exclusively jurisdictional to states; where states are dictators —

are largely undiscussed. And so I think states would be wise to contemplate what barriers are facing decarbonization
of the retail markets. That begins, I think, with retail competition. One of the reasons why you don’t necessarily see

… wholesale market gains pass through to retail rates is the lack of retail competition.”

Calpine CEO Thad Hill said the “bedrock” of private investment in infrastructure is investors’ belief that they can

earn a return on and of capital over time. “We’ve seen this play out in California, where there hasn’t been a new

megawatt built in 20 years without a state contract or state-approved contract. It’s central planning all over again.

I don’t think we want that.”

Kavulla also called for more demand-side participation. “Consumers have spent billions to invest in a smart grid

that’s still very dumb. And very few customers are on any kind of time-varying rate plan that would give them either

visibility into, or an incentive for, switching their loads,” he said, “something that has to happen in order to

accommodate these intermittent supply resources.”

Paul Sotkiewicz, president of E-Cubed Policy Associates, agreed, saying the California “duck curve” is a function of

the state’s retail rate structure. “Nobody has an incentive to consume energy when prices in the wholesale market are

close to zero because they’re based on block tariffs. They’re trying to stay out of that next block. … So you’ve got

smart meters, dumb rates.”

Investment Strategies for the Energy Transition

The conference also featured much discussion on the business opportunities in addressing climate change.

Stephen Gallagher, chief commercial officer for Brookfield Renewable U.S., cited an estimate that it will cost $150
trillion to decarbonize the public and private sector, calling it “the largest commercial opportunity of our

lifetime.”

For its part, Brookfield is about to close its first global energy transition fund, which will bet in part on
decarbonizing industries such as cement, steel and chemical manufacturing. Announced with a target of $7.5 billion,
the fund is expected
to close at $15 billion.

“That’s $15 billion of equity. So by the time you leverage that up, you’re talking probably $60 [billion], $70

billion plus that we [will] deploy into this landscape,” Gallagher said. “We not only provide the renewable [energy];

we also work with them on supplying capital to fund their transition.”

EPSA members agreed that investors have shown an increased appetite for environmental, social and governance (ESG)
investments.

“What’s not so clear is exactly what an ESG investment is,” said Sherman Knight, president and chief commercial

officer for Competitive Power Ventures. “For example, is a renewable project in a highly penetrated market that is

displacing other renewable projects an ESG investment, where natural gas projects displacing coal is not? As we see
things going forward, I think there will be more of a standard, clear definition around what ESG really stands for. At
least … I’m just hoping that that will be the case.”

Vistra CEO Curt Morgan said an ESG label can’t trump profitability. “Make no mistake: Ultimately [investors are]

going to look for returns. We’re going to be driven more by economics than we are by the flavor of the day that will

come and go.”

Tenaska’s Smith, who said his company remains focused on solar and energy storage “despite the current headwinds and

challenges,” predicted a shakeout.

“I think we’ve had the luxury of an abundant capital market where there’s been a willingness to invest in every

technology type,” he said. “People are going to be more focused on returns [in the future]. And so I think that the

focus will gravitate more towards those technologies which will yield near-term cash flows.”

Knight said CPV does not assume there will be a big increase in electric growth from electrification when choosing
its investments.

“We definitely run sensitivities and look at that, because I think that there’s a real potential [for demand growth].

… When I started in the industry 20 years ago, the argument was over 1% or 2% growth. And now, you know, you’re

arguing between, is it going to be flat growth, or we’re going to grow 40%? … The range is so, so large.”

“There’s a huge amount of risk” on betting on electricity growth, Morgan agreed. “There’s a tremendous amount of

money going into hydrogen. That can be a part of the solution, which may dampen the growth of electricity.”

No Immediate Solutions

EPSA CEO Todd Snitchler closed the daylong conference by conceding the group had not solved any of the issues facing
the industry.

“But I don’t think that was the objective when we started,” he said. “So I hope you’ll come away with the same

appreciation I have that we’re trying to figure out how to enable reliability to be paramount and to use competitive

markets to deliver it, because it delivers on affordability and also on emissions reductions — and those are all

things I think everyone here can get behind.”