Thirty-Eight Years: Great River's Will Kaul

Will Kaul, Great River Energy's vice president and chief transmission officer, retires July first after thirty-eight years of service at one of the nation's largest generation and transmission cooperatives. Great River serves around one-third of the people of Minnesota. Kaul has been a leader in the extensive transmission program CapX2020. He was also a founder, director, and past president of WIRES, the group that promotes investment in the transmission grid. 

PUF's Steve Mitnick: Please tell us what you're doing or transitioning to doing, now.

Will Kaul: My last official day here at Great River Energy is July first. And then I'll have a contractual relationship with GRE for about six months after that.

The big project I've been working on for the last couple years, that I will continue to work on, is grid modernization at GRE. GRE is a not an integrated utility. It's a generation and transmission business; and we also have twenty-eight distribution members.

Because a lot of the action is at a distribution level, we've had a grid modernization team that's made up of GRE people as well as members, trying to chart our course forward.

PUF: Can you say a word about Great River? It's not a small operation. 

Kaul: Great River Energy is the nation's fourth largest G&T. We have four billion dollars in assets and about a billion dollars in revenue every year. We have about thirty-six hundred megawatts of generation and about five thousand miles of transmission lines.

We're the second biggest utility in Minnesota, next to Xcel.

PUF: What were you doing for the company?

Kaul: I've been here for thirty-eight years. In 1999, two smaller G&Ts decided to consolidate operations and form Great River Energy.

At that time, I was named the vice president of transmission. Up until then, I had other kinds of responsibilities. I started out as an environmental specialist at one of the predecessor companies and eventually became director of generation and transmission services.

It was a big change for me to get into transmission in 1999. Since then, a lot of my time and effort has been devoted to expanding the regional grid with the CapX2020 initiative and participating in the creation of a wholesale market from scratch. It was a pretty amazing thing to be a part of, especially for someone with a dusty old econ degree.

PUF: You said that you were involved in bringing CapX2020 before the commission. Does that mean that, even though your organization is in the cooperative world, that you interface with the public service commissions?

Kaul: We're not rate regulated, but we're regulated with respect to certificates of need and routing permits - that kind of thing - and all environmental regulations.

PUF: What were the biggest things that you did in those thirty-eight years? Would you count CapX2020, as one of them?

Kaul: CapX2020 was probably the big one. That came about at a very uncertain time in terms of transmission expansion.

We'd had a series of failed efforts to get organized around transmission in this region, prior to the creation of the CapX2020 initiative.

Finally, after a transco effort had failed in late 2003, I had a hallway conversation with someone at Xcel and we decided to go the old-fashioned route, which was let's just get together and collaborate on a solution. We formed the CapX2020 organization in the spring of 2004.

I chaired the CapX2020 organization from the very beginning, in 2004, until last December. Early on, I often referred to it as a faith-based organization, because we didn't really know how it was going to get paid for.

We didn't have tariffs for cost recovery for large regional expansion projects at the time.

MISO's planning process wasn't mature yet, the tariffs were under development. But we knew that we had an obligation to serve. And we knew that investment was badly needed.

We also knew we had a great opportunity right then. The east coast blackout was fresh in everyone's mind, and the California blackouts were just a few years earlier. Renewable energy development was becoming a big deal here in this part of the world.

We had a great wind resource that needed to get to the market, and an aggressive renewable portfolio standard in Minnesota to achieve. So, all those things came together and supported the concept of a grid expansion. When we brought it to the commission for a certificate of need, the package had five projects, two billion dollars of investment, and eight hundred miles of line.

There was essentially no opposition. We had the support from the environmental community. We had support from the regulators. We had support from everybody.

We took a two-pronged approach. We had a vision for grid expansion, based on a scenario planning/project portfolio approach, and had a proposal for regulatory reforms that needed to happen to be successful.

We took the reform proposal to the legislature, and got everything we asked for, including formula-based rates for the investor-owned utilities. Up until then, the investor-owned utilities were reluctant to make investments in transmission because of regulatory lag.

The formula-based rates allowed them to recover costs as they spent the money. It reduced the overall cost of the projects, benefitted customers, and made transmission an attractive investment for IOUs.

With our vision for grid expansion and regulatory reforms in hand, the table was set. All we needed to do was execute.

The routing process was a big challenge. But it all worked out in the end, because we had built a strong base of political support, and took the time to work with landowners and accommodate their needs the best we could.

We got it through. We got it done, on time and under budget.

PUF: Being in the industry for thirty-eight years, you've seen a lot of changes. How is the industry now, relative to where it was almost four decades ago?

Kaul: That's an interesting question. Our industry is in a forty-year total transformation and we're in year twenty. The last twenty years have been all about wholesale markets and competition at that level.

We started with a bilateral transaction environment and a grid that didn't support efficient trading. Now we have a very efficient, liquid market. We have the ability for new generation to interconnect and deliver to the marketplace as the resource mix evolves.

That's a total transformation of the wholesale electricity market. That is really a big deal. The next twenty years is going to see more evolution of the wholesale market.

On the distribution side, I think we're going to see something that parallels what we saw on the wholesale side. That will include a lot of new players, like Amazon, Google, Tesla, Solar City, and Direct Energy.

Those companies have access to our retail customers. There's going to be a transformation on the distribution level that is also going to mean a lot more competition.

I think we're going to see the industry move away from being a commodity business to more of a service business. Utility business models likely will need to change to compete.

It will always be, in large part, a commodity business. But, energy services are going to become a much larger part going forward.

PUF: How did you get to this place? Did you have a great mentor, or a big turning point?

Kaul: I ask myself that question from time to time. I've never been qualified for any job I've ever had. I'm an economics major. But I had a strong interest in environmental matters from back in the sixties and seventies when I came of age.

That was an era when every city in the country had a big brown cloud over it. And there was smog and all kinds of air pollution problems like acid rain.

I got an internship at the Minnesota legislature for the Natural Resource and Agriculture Committee. That led to a job working for the Minnesota Environmental Quality Board which had responsibility for routing transmission lines and siting power plants. And that led to getting hired by the cooperative as an environmental specialist to develop a compliance program for a new coal plant just going on line.

Gradually, I started getting more responsibilities there. The CEO at the time, Julian Brix, believed in me and gave me some responsibilities in the transmission area. That was an important milestone in my career.

About five or six years later, when we formed Great River Energy, I was named the transmission vice president.

Another person believed in me. This time it was Jim Van Epps, who was the first CEO at GRE.

Those are important turning points in my career, and two very important people who believed in me.

PUF: Was your job fun? Were there some funny or memorable times?

Kaul: I happen to have the best job in the world. It's because of the basic mission that we have, providing essential services to people on a non-profit basis.

I love the mission. I love the business model, being a cooperative. I love the people. I've had a lot of fun. And that's a requirement, as far as I'm concerned, when you come into work.

But I did have a comical experience one time. I was asked to testify before the U.S. Senate Energy Committee by Leon Lowery, who was the Chief of Staff. He wanted the committee to hear about the success of the CapX2020 project.

This was back in 2008 or 2009. I went to Washington, D.C. to testify. I was on a panel with T. Boone Pickens and some others.

I was nervous. But I was also very excited. I practiced in front of a mirror to make sure I had my five-minute statement down pat.

I woke up the morning of the hearing, and while brushing my teeth I was thinking, "I feel pretty darn good. I think I'm ready for this. I think I'm well prepared." Then I noticed that my toothpaste tasted a little funny. It turned out I was using hydrocortisone cream. So, I guess I was a little nervous.

I got to the hearing. T. Boone Pickens was there. There were klieg lights. The hearing room was packed. All these reporters and the press were there.

He got up, and gave a song and dance. It was really a big deal. A lot of questions. When he was done, he left the room.

Then Committee Chairman Bingaman called for a break. But when they reconvened the hearing, everyone had left. It was me and three other panelists and two senators. That was my moment of fame.