Veteran Leaders on Electric Trends: Pat Wood

Deck: 

FERC, Texas PUC

Fortnightly Magazine - June 15 2020

For this panel, we have two association executives, two policymakers, and a leader at a DOE National Laboratory All have long histories in the energy sector and national perspectives. Our objectives were to elicit potentially competing perspectives on what the future of the electric industry may be, and for those responses to stimulate readers to develop their own perspectives and initiate similar discussions within their own organizations.

 

PUF: In the next five to ten years, what technological advancement will most impact the electric industry? Why? How?

Pat Wood: Power Storage. As a regulator keen on driving the move to competitive markets, storage was the missing silver bullet from my electric power artillery, a bullet we did have during the successful natural gas restructuring. 

Without the ability to time-shift power supply, the power grid is only a real-time network - and the product moves a lot faster than natural gas flowing through a pipeline. Now, with cost-effective batteries, and future non-battery storage technologies, we have the ability to rationalize both supply and demand across all parts of the power grid. 

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The ability to store power levels the playing field for low-cost variable supply and demand resources to compete against historic generation resources, lowering prices. It also reduces, if not eliminates, most types of market power abuse.

PUF: During the pandemic, many people worked from home. Will this be a trend in the industry? If, yes, what are its implications?

Pat Wood: Although I am concerned about medically-vulnerable people and for the many that have lost their jobs, the work from home experience has been a more positive one for me. Our work team has been highly productive and engaged, and the elimination of commutes has bought back a lot of time for all of us. 

In some situations, there is no substitute for face-to-face interaction and physical presence, but to the extent it can be reduced without impact on productivity, work from home will likely become much more pervasive across our part of the economy. 

The pandemic has significantly accelerated the use of digital customer interfaces in commercial businesses. As we have seen these past few weeks, the shift in power demand from commercial to residential load has changed consumption somewhat, but I don't see that as anything remarkable.  

PUF: What will determine the future of renewable energy - Economics? Public opinion? Regulatory environment? Technological advances? Transmission development?  Other?

Pat Wood: Based on my experience to date, I expect that economics will drive the evolution of the renewable power industry. Dramatic drops in costs for wind and solar power have moved those resources to the lowest rungs on the cost ladder, so it is likely that will drive their broader adoption. 

That success story will inform public opinion, particularly in retail competition states where customers, like me, can choose to buy power directly from renewable providers - and not pay the price premium seen in regulated markets. To fully capture the wealth of the lowest-cost resources, namely wind in central North America, more interstate transmission projects would be needed. 

PUF: Will the pandemic's impact lead to more distributed generation and/or better utility-customer and customer-customer interactions? If yes, how?

Pat Wood: The trend toward a more decentralized, decarbonized, and democratized power system was well underway before the pandemic, and I expect that trend to continue, likely accelerate.  

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PUF: The current federal Administration has relaxed regulatory and environmental rules regarding fossil fuel emissions. Will electric utilities change their strategic and operational plans in response? Please explain.

Pat Wood: Both regulated and competitive generation owners have to plan investments and operations over multiple years, so while rule relaxation may allow short-term relief, it is not likely to be available in the longer term. Therefore, any business decisions should reflect longer term trends, and cleaner air is such a trend. 

One of the benefits of the pandemic shutdown has been the return of clear skies in most cities across the country and world. Seeing such a future today will unquestionably broaden popular support for emissions reductions. Although most of the pandemic reductions come from the transportation sector, the spillover sentiment is likely to spill over to the power sector.


Our Panel of Veteran Leaders on Electric Trends:

  • Paula Glover, CEO, American Association of Blacks in Energy
  • Pat Wood, Former chair of the Federal Energy Regulatory Commission and Public Utility Commission of Texas
  • Miles Keogh, Executive director, National Association of Clean Air Agencies (and former director of the NARUC Research Lab)
  • Ron Melton, of Pacific Northwest National Laboratory
  • Jeff Morris, of Schneider Electric (former Washington State Representative)