Robert Bryce 0:04
Hi, everyone. Welcome to the power hungry Podcast. I’m Robert Bryce. On this podcast we talk about energy, power, innovation and politics. And pleased to welcome Jimmy Glatfelter. He is a commissioner at the Texas Public Utility Commission. Jimmy, welcome to the power hungry podcast.

Jimmy Glotfelty 0:18
Thank you for having me, Robert.

Robert Bryce 0:20
Now, I’m ambushing you here right off the bat. I didn’t warn you because we just had a little quick chat before we start started recording guests on this podcast introduce themselves. So imagine you’ve arrived somewhere you have 60 seconds. You don’t know anyone. Please tell us who you are.

Jimmy Glotfelty 0:35
I appreciate that. And I’ve heard the ambush. You ambushing other guests on previous versions. So I was ready. Jimmy Glatfelter. I’m currently a commissioner at the Public Utility Commission of Texas. I was appointed by Governor Abbott and 2021 after the the winter storm Yuri when we’ve when we redid our Public Utility Commission. I’ve been in the power industry for over 30 years, I worked for Governor Bush, when we created the wholesale and the retail market in Texas, back in the 90s. And I worked for Calpine and work for for President Bush then in Washington started the electric transmission office with the Department of Energy. After that, I led the 2003 blackout investigation in the northeastern United States, I worked for a consulting firm then got back into project development with HVDC lines started a company called clean line energy was some partners where we tried to build some big, high voltage lines multiregional lines work for Quanah services, which is a big construction company that builds transmission lines. And we want a project to build the rebuild the power system in Puerto Rico. And they’re down there under a company called Luma. And then I decided to take this challenge on glutton for punishment, but having a really good time.

Robert Bryce 1:58
Good. Well, that’s a strong resume, I’m tempted to wisecrack, you can’t keep a job, but that’s okay. You’ve you’ve, you’ve moved around a lot. And I hope we can talk a little bit about Puerto Rico because I’ve been to Puerto Rico. And we talked we featured Puerto Rico in my first film juice, how electricity explains the world. But we’re here to talk about the advanced nuclear efforts that are being made in Texas and Governor Abbott has appointed you to do this work to lead this effort to see how we could in Texas or rather ERCOT and put in the PUC could incent new nuclear in Texas incenting new nuclear anywhere, I think is a good idea. But nuclear faces a lot of challenges. It seems to me that it faces in particular, a lot of challenges in Texas, because of the way the market is structured here. So tell me about you know why Governor Abbott chose you to lead this and then just give us some broad background on what are the challenges? And what are the solutions that you’re trying to find to to bring more nuclear capacity into the ERCOT? Market? Yeah,

Jimmy Glotfelty 3:04
absolutely. I appreciate the question. So I think first of all, Governor Abbott, I applaud him for doing this, there have been a lot of people that have been talking to him about how we prepare the state for advanced reactors, and that there are challenges that we need to to address. So I’m, I’m excited that he asked me to lead this. I don’t know why. But I’m in that been in the industry for 30 years and have done a lot of project development work. So I think that was the good part of the resume to to have me lead this ecstatic that we’re going to, we’re going to find these barriers and and knock them down where we’ve decided that this report is not going to be a we’re going to file a report and a roadmap. But this is not going to be a report that sits on a shelf, this is going to be very action oriented. Our goal is not to write a report, our goal is to build reactors in the state. So we will be taking a look at permitting issues at the state level, we will be working with folks at the federal level on their permitting issues and seeing where we might be able to take over some of those permitting issues. At the state level if the federal government would allow us, we’ve got market design issues that we need to resolve we know those are front and center, and we will address them and then there you know a lot of the issues that if we want to be the, you know, the state for nuclear reactors in the US and perhaps the world, then we want to solve the supply chain issues in the workforce issues. And we have a lot of those those companies here that are servicing the oil and gas industry, the high technology industry. We need to help those folks either get back into this business because they were in it before or adapt if they are able to and part of those kinds of industry class complications that can be part of the supply chain and help them find the resources to buy the equipment and train their workforce to go forward.

Robert Bryce 5:08
So multi multiple, multiple challenges, multi different, multiple different parts of the supply chain, different parts of the regulatory issues, that regulatory scheme that have to be addressed here, you can find more about this Texas advanced nuclear reactor Working Group on the public utility Commission’s website, go to pc.texas.gov. And scroll down under PUC T spotlight, just a little ways, and you’ll see the link to the the working group and you can make comments and you can read more about what they’re doing here. But I’m putting that plug in there because I think it’s important for people want to participate and see what the challenges are. So

Jimmy Glotfelty 5:49
we want participation from from this isn’t just about the nuclear companies. This is localities, this is, you know, companies that want to be involved in this, we want to really understand what the issues are. So anybody is free to click on that link. send us emails and comments. And and we’ll reply.

Robert Bryce 6:09
Well, so let’s let’s take on one of the issues that you talked about their you mentioned workforce, you mentioned supply chains. And then you mentioned reg and you also mentioned regulation. So am I wrong to think that it’s harder will be harder for new nuclear to succeed in deregulated? Or is it Ken Lay said restructured markets, then in markets, like in Georgia, we’re seeing the Vogel reactors come online. Those are markets that are regulated monopolies. Do the monopoly of the regulated monopoly utilities have an advantage in trying to bring new nuclear on board over companies or entities that want to try and do it in in in so called deregulated markets? Well,

Jimmy Glotfelty 6:49
you know, I think there are some structural issues. But in the end, I think we can overcome those companies in the southeast, the big vertically integrated utilities are not going to move into the regulator says, Yes, we know that’s the way that a big regulated utility works. And we have some of those and some of those will be on our working group because this is not just for Arcot. But this is Texas. So we’ll be working with the Entergy, the XL and the El Paso Electric’s as well to see if we can, inside those areas. They’re vertically integrated. But the market design issue is something that we have to solve. We know that large capital cost projects are, you know, at a disadvantage in a market that has so much tax credited wind and solar. So how are you going to pay for those over the long term, and we have some ideas that we’re going to talk about whether they, you know, be required to be dispatched first, over a long period of time, whether there’ll be a price floor, whether there’ll be a some type of a clean energy credit. We don’t know what the universe of those ideas is, but we expect to have a big universe that we will address. I think one thing is clear that a lot of the leader, the leaders of our state believe that new dispatchable resources are critical to our economic growth going forward. So dispatchable resources paired with our renewable resources are going to be our path forward. And we’re not going to be building coal plants. So different types of gas plants and potentially this new type of reactor are going to be the critical baseload going forward.

Unknown Speaker 8:29
Why won’t we build coal plants?

Jimmy Glotfelty 8:32
Well, I think I think it’s hard for in the face of impending EPA regulations, I think what you found is the capital markets are not going to put money into that. So even if we want that, even if we say we want to build those plants, it’s very hard to find capital to to build that technology right now. People aren’t willing to risk you know that much money.

Robert Bryce 9:00
But as I read the headlines, just in the last few days are caught has pledged and I think the state has pledged that is going to fight EPA to keep the state’s existing coal plants open. And for reliability reasons. And the guests BP miso, America’s power, they’ve they’ve all pointed out that in the recent Heatwave, that those coal plants were critical to keeping the lights on so is that the right move? Do you think your regulator here but it’s these cold the existing coal plants, there’s a big push afoot to close the existing ones much less open any new ones? Should we do we need to be keeping those coal plants online?

Jimmy Glotfelty 9:35
I think I think for a time being that the answer is yes, we we here and Arcot want to keep as many plants available for the market as we possibly can. So that includes those ones that have considered being mothballed or to be closed. We want them to be part of our fleet. ERCOT has come out with their proposal on how to do that. The PUC has discussed this for the last Two years, should we create a backstop or liability service, which is fairly similar, where you pay the capital costs, or the Oh nm costs for these facilities to stay in the market. They all send a market signal, either pro or con for new resources. So we’re trying to ensure that we get the right market signals for new builds, while we keep these old facilities around to keep our system reliable and low cost. So there, it’s, as you said, are at the beginning, it’s complex. Right? Complexity has become way more so in the last few years than it was 20 years ago?

Robert Bryce 10:42
Well, let’s talk about that. Because I was gonna reserve that question for later. But it’s been top of mind for me now, for the last several months, I think it was an August FERC, issued Order 2023. And it was the 14 186 pages and 1500 footnotes. And I thought, Man, you need a team of lawyers just to parse what this says. And this was about FERC, saying, well, we want to help interconnection, right, we these are gonna be the new ways that you can figure out how to, you know, connect your utility scale project to the grid. But as I read it, I thought, Man, I mean, I’m passingly familiar, I’m no lawyer, but passingly familiar with how to read these, these kinds of documents. And I thought, this is impossible to understand. And you add in so I’m just so that’s one part of the complexification, then you have the EPA, in April, saying to the automakers, two thirds of the vehicles you sell must be EVs by 2030 to a month later, they say issue a proposed rule that would handicap the nuclear the electric utility sector and with regard to greenhouse gases, and now there’s another effort afoot by the DoD in terms of transmission, it just seems like there are so many new regulations that are coming down, that the complexification itself is becoming a barrier to any kind of positive, the complexification has become so overwhelming that the system is intractable. Is that, do you agree? And I it doesn’t make sense to you, because it’s your looks that way to me?

Jimmy Glotfelty 12:08
Well, I think that the system is complex, there’s no doubt about that. We have more and more resources that are trying to get on the system, we used to have, you know, a handful of very, very large power plants, serving load, you know, within a state and now we have

Robert Bryce 12:25
that were owned by hand that were owned by a handful of companies or a handful of coops and a handful of power public power entities. And now, that’s not the case anymore.

Jimmy Glotfelty 12:33
That’s right, that started to change in 1992. Really 1978 with purpose. But really, in 1992, when, when open access became the law of the land to allow independent power producers to access the transmission system. The complexity, I think, has come from a handful of things. One of them is the regulatory bodies, you’ve got 50 regulatory bodies, at the state level, you’ve got one at the federal level, and you’ve got these RTOS. And they all do different things, all of the RTOS and ISOs, create rules of the road rules of the market rules of the effort as to these states as to the feds, and that makes it very complex, many times they conflict. And when we have conflicting challenges. What that does is it scares away capital, which is the thing that we don’t want to do. But I will say that here in Texas, you know, we are not governed by by FERC regulation on on the pricing of power, or the siting of transmission lines, they do have authority over us, as they do everybody else around the United States on mandatory reliability rules. But that is it. And we have built. I think we have three or $4 billion with a transmission under construction right now or under consideration. And this is really our goal here in Texas is to satisfy our load growth. It’s not to build transmission lines to serve other regions is to serve our own and we know we need all of the resources around our state. We’re not for this minimum transfer level between regions. We are not for them telling us what you know that we have to interconnect with the southeast or the or the Midwest. We’re not for that we want to control our own destiny. And with the exception of winter storm Yuri, we think we’ve done it very well. And winter storm Yuri was a anomaly. It was a wake up call. And we have weatherized. Our weatherization rules are stronger and have been in existence for a year and a half now, and NERC is just getting their rules out. So we’ve already done two years of inspections, so we can move quick. I think all of this is has. We’ve talked about complexity. But this also gets back to the question that I didn’t have answer, which is vertically integrated utilities are a way to fund nuclear reactors. And they are a way, I think Texas has a great opportunity to fund them as well. If we can define the rules of the road, the understanding of return on capital, we will be a very, very attractive place because of our low growth, our can do attitude of building projects, the mega projects that we build here, multi, you know, 19 and $20 billion worth of semiconductor fab facilities, we’ve got multibillion dollar refineries, we have that, that steel that construction, that workforce that know how to make those projects happen. So that’s what’s really exciting for us. That’s what we want to package up in a in a bow and say, Look, world, this is what we have. We are steps that many steps ahead of others, let us solve the few problems that we have, and will be the shining example.

Robert Bryce 16:00
So you use the acronym of NERC that’s North American Electric Reliability Corporation. They have repeatedly looked at Texas and not just Texas. And in fact, in their most recent report on grid reliability, the identified policy as a major reliability risk factor for the first time ever pointing out that that policy bad policy is affecting the reliability of the grid, which is unprecedented really for that that entity, which is not a not a not a public entity as a private corporation, but it monitors grid reliability in North America. They pointed to the issue of gas over reliance on natural gas. And this is something that was clear during winter storm Yuri and NERC has repeatedly pointed out the interconnections and the overlapping area interdependencies rather between the gas grid and the electric grid. There are a lot of questions to ask about this. And I’m not moving away from nuclear when it comes back to the market design issue. But it will ask the first question is Texas to the Texas grid too reliant on natural gas?

Jimmy Glotfelty 17:01
I think the data would show absolutely not the natural gas facilities in our state, about 50% to 60% of the megawatts, they are very efficient. The amount of gas that that we use in the power system to to create electricity is a very small percentage of the amount of gas that comes through the pipelines in TRA and Interstate, those that are going to other regions, those that are going to the Gulf Coast to export terminals, I think it’s between five and 8% of that gas. So when you have 90 plus percent of that gas being used for industrials are home heating and other regions and things like that, we’re not over reliant on that. In fact, we have a long runway for that, I think we’re seeing a transition in the types of facilities, we’re going from combined cycle plants, pretty efficient to less efficient peaker plants, era derivative plants and others that that have more flexibility. They can, they can turn on and turn off very quickly, as opposed to turn on and run like a like a bigger gas plant or a coal plant would.

Robert Bryce 18:16
And so that brings to mind the word Scylla project that LCRA is commissioning was 200 megawatts of very large recent engines, right, the big ship contract container ship style or size engines that forgot where it’s going to be in Caldwell County or somewhere not far from Austin, but it’s going to be in the Central Texas region, I think to meet that peak demand, right because the the system is becoming pickier at picky err, and more variable because of the massive amount of solar and wind that’s being added to the system. Is that Is that correct?

Jimmy Glotfelty 18:50
That’s true. We used to be able to, to predict with a little bit more certainty both the demand on our system and where the supply is going to come from both of those equations have gotten fuzzier. In fact, we’re better at forecasting wind and solar right now than we are outages of the other fleet, other parts of our fleet, but demand where demand responses coming from how much of it’s going to be there on any given day. Really points right back to what you said about the complexity of the system. We’re not relying on one major plant and one major company anymore, we’re relying on hundreds of them to use their financial interest to provide resources to this market and and most of the time that works well to

Robert Bryce 19:41
jump back to nuclear now. So okay, so I’m just gonna read back what I’ve heard you say about, you know, adjusting the market for new nuclear is if I’m gonna paraphrase what you said I’m gonna read it back to you and you’re gonna object and I imagine you will, but you’re gonna have to create a carve out right there’s gonna have to be some incentive that’s going to be special to nuclear that’s only unique to nuclear. Because you, in theory, in an open market like this, you’re not supposed to put your thumb on the scale of any kind of form generation. But inevitably, isn’t that what you’re going to have to do?

Jimmy Glotfelty 20:13
So I think that that would be a proposal under consideration. So I wouldn’t say that’s what we have to do. But it is clear, and it is a a fact that the federal tax credits that are associated with the other types of resources, do give them an advantage in a certain way. And that is what creates the uncertainty in these high cost, high capital cost projects. So there is something that we’re going to have to do in that space. If it is, you know, create a credit or create a, some preference, there’ll be under consideration. We can’t say that that’s, that’s what will be recommended yet, but, but we will consider a you know, a lot of things, including those.

Robert Bryce 20:59
So to just clarify the, you know, the where the thumb is on the scale, and I reported this on my substack, Robert price.substack.com, the federal tax incentives in 2022. According to the Energy Information Administration, 2022, solar energy got 302 times more federal tax love than the nuclear sector did when measured on a per unit of energy basis. So it’s very clear that nuclear is not getting the kind of tax love that tax incentives that solar is, and I think the wind, wind incentives are something like 169x that was given to nuclear. So when we look around, is it it will I’ll ask you the question I made that observation is, are those incentives those the ITC and the PTC at the federal level? Is that what’s driving new generation capacity in Texas and elsewhere?

Jimmy Glotfelty 21:48
I think it’s that paired with a few other things. First of all, we have a robust, a robust economy, it’s growing, and we have load that’s growing. We have easy interconnection rules, we have easy citing rules, we don’t have a state citing authority. So all of those Make, make the developers say, Well, do I want to go to another state that has those requirements in place that we get approval on A Public Utility Commission? Or would they rather, you know, if they can get the capital commitments come here, you’d rather get the capital commitment and come here. And, and obviously, the financial markets understand the tax credit rules, and there’s enough enough tax credit capacity to help fund the the those industries and so we’re seeing that, but I think we we do know that that the tax credits associated with some of these resources, they they create an uneven, uneven market, we know that that’s happening, we know that it has to be fixed. If we want these other types of resources. We’ve thought about that in numerous ways we’ve we’ve increased, while we prioritize dispatchable resources in our interconnection queue, we’ve obviously the legislature has created this Texas energy fund to fund dispatchable resources. These are all ideas that will continue to grow and work to build up the dispatchable fleet so that they can work with that renewable fleet that has been built. And hopefully, we’re going to give a the citizens of Texas a more reliable and a more cost effective system.

Robert Bryce 23:25
So I’ve heard about that. Jimmy, the Texas Energy Fund, can you explain that that was that passed by the legislature in 21? Or was it in 23? What Tell me about that when it was passed and what it does.

Jimmy Glotfelty 23:36
So that was in in 2023. In the regular legislative session, the legislature passed and the governor signed a law that would allow the voters of Texas to approve a state bond fund of $5 billion to put into a fund and allow the Public Utility Commission to fund dispatchable resources. So this would be a low interest loan program to fund dispatchable resources in the Texas in Texas with the Texas Legislature, US or the Texas bonds being used as part of that, that financing. So we hope that that will be valuable. We hope that the resources will come online and voters but the voters have to approve this first. That’s correct. The voters have to approve it in November. And then we have to have an RFP and a process in place by mid next year. And that money out the door by mid next year. This is not for the faint of heart. This is the legislature and the governor saying let’s get these resources on the ground now.

Robert Bryce 24:46
So this would be alternative financing for a developer that would give them lower cost potentially lower cost capital, which could be a big deal now given the interest rates are higher than they have been in previous years. So for capital intensive projects, so but only be for dispatchable. So would that mean could that also mean solar with batteries? Could they fit into that into that under that definition, or is this only,

Jimmy Glotfelty 25:08
they do not fit under this definition for this project or for this program.

Unknown Speaker 25:13
So it specifies thermal generation. I don’t remember

Jimmy Glotfelty 25:15
if the statute does or not, but, but the clear intent is for this to be gas, nuclear, coal, the other types of facilities that are dispatchable, as they have defined, the legislature is defined, which is that can be turned on and off by a human. So the goal is, those that have federal tax credits are not going to be eligible for this. So let’s figure out how we use this to level the playing field and attract those dispatchable resources.

Robert Bryce 25:48
Gotcha. Okay. So let’s just kind of close this loop on s EMRs. And Texas for a minute. So the governor had a sit down with clay cell from x energy and I forgotten the name of the the CEO of Dow to talk about dals proposal to put four of X energies s EMRs. In their facility in Cedar of Texas. I think that technology is really interesting gas cooled high temperature reactors, I think that has a lot of promise that, you know, the the chemistry, I think is in the technology seems appropriate. I know this is asking you to speculate here a little bit. But as I’ve looked at that, I’m thinking, Okay, well, if Dan was doing this, would they even need to connect to ERCOT? Or would they miss maybe use all that process heat and electricity for themselves? It seems to me it gives them the option of just saying, Well, we’re going to Island ourselves and just use our own reactors and make our own power system here and all use all that thermal heat for our own processes, and not necessarily connect to ERCOT. Is there any requirement that they connect to ERCOT? If they actually get that project built?

Jimmy Glotfelty 26:53
No, there’s not. But I think the likelihood is they is they will, because they need backup power. If that reactor would go down, you don’t want to stop your your industrial process when that has a challenge. And you want to make sure that if the if there’s excess electricity that’s being produced, that you have an interconnection with the grid so that you can export excess power. So you wouldn’t want to reduce the the amount of power produced. Just you can’t export it. So you’ll want to export it top to create all of your options. The optionality around the economics.

Robert Bryce 27:36
Sure, but But x energy, as I understand it still has not applied to the NRC for design approval. So I mean, there’s a lot of interest in this, and I’m very interested in it a lot of a lot of press around it, but x energy has a lot of hoops still to jump, don’t think I think they do.

Jimmy Glotfelty 27:51
You know, I think the goal is for these to be online and 2030. So, you know, Is that realistic? You know, I? So I don’t know the technology? So the answer is I have to trust that Dow is a Dow is a major. They’ve built mega projects before they have financial discipline, and they have construction discipline. And if they’ve selected X energy for a reason, then I have to believe that they have done their due diligence on the timing of the NRC approvals. And I believe that they are the appropriate ones to do that, that risk analysis, not us. So I think that they we should trust them on that. Same with these other reactors. I mean, new scale, has a as I understand it, a 50 megawatt reactor that was approved, but they’re upgrading that to a 77 megawatt reactor. That will be you know, one of the few that that has a license and then there will be really pushing for sites that GE Hitachi project that is working at Ontario Power as well as TVA. Clearly they have two of the largest existing nuclear operators who are interested in their technology that says a lot about that technology. We’ve had discussions with them and you know, want to have have more. So I think that I think the last thing that those in Washington want is to stop this. This train is moving when it comes to SM Rs. We think that there have been there’s been a lot of pressure put on the NRC to get their rules, right. They’ve already modified some of their security, safety and security rules for small modular reactors. These things are coming that are going to make the permitting process streamlined and understandable. And the more we do them, the more visibility we’ll have into how these reactors will get permitted and cited and approved.

Robert Bryce 29:53
You mentioned the BW RX 300. This is the GE Hitachi lightwater nuclear reactor design. which is really a, from everything I understand a smaller version of the gigawatt scale reactors that are being built now, but they’re the same chemistry, the same fuel and low enriched uranium as what the existing fleet of reactors in the US use right now. And new scale I think also uses low enriched uranium Leu. But let me talk about jump back to the supply chain issues because this seems to me the we’ve talked now some about capital, we some talk some about regulations. But the fuel part of this is also a big challenge. And that is one where down needs these. Oh, gosh, I get the Nate the term of art escaping, they need Hey, Lou, right. And that has to be a specific kind of hey, Lou, that is their, their their fuel design. Does that concern you the fuel supply issue because of the Russians control now 47% of the global supply of enriched uranium? How much is that going to be a stumbling block in this in this new push for SMRs?

Jimmy Glotfelty 31:00
I think that should be a call to action. Quite frankly, the the amount that we get from the Russians is a is is I think, a fairly challenging issue that the highest levels of our government are working on. I think they are going to solve it. We aren’t going to solve it here in Texas. I again, I want to say while the X energy reactor uses a new fuel type, I think there is a lot of effort to make that fuel type reliable and available within this timeframe. And and I have to trust the industries that are going to put up 50 million 100 million or more on the types of reactor designs that they want at their facilities to trust that the fuel is going to be there for that type of facility.

Robert Bryce 31:47
It’s energies fuel, it’s trisul fuel TR I so so we’ve been talking about half an hour, my guest is Jimmy Glock Felty. We’ve been acquainted for some time, he’s commissioner at the Texas Public Utility Commission, you can find out more about what he’s working on at the Texas public utility Commission’s website, go to puc.texas.gov and then scroll down to Texas advanced nuclear reactor Working Group which Jimmy is heading in this effort to try and incent more nuclear in Texas. Who’s responsible for reliability and?

Jimmy Glotfelty 32:24
Well, Arcot, I will say that there is ERCOT is responsible the PUC is responsible. And the rules are responsible by by the Texas regional entity and NERC. So the written rules, we have a federal responsibility, but the activity that the active responsibility for keeping our system reliable is our comp. They have to follow. They have to operate the system in a way that comports with federal guidelines and state guidelines.

Robert Bryce 32:54
So let me push back earlier, Jimmy because it was seemed to me after winter storm URI, everybody’s looking around, say, well, who’s responsible for reliability? And there’s a lot of well, that was the market and the market fail. Well, why did the market fail? Because well, it was a badly designed market, and that, ultimately, there was no chain of accountability, that in fact, there wasn’t Liz with a monopoly utility, you can pull in the CEO and say, Listen, lights went out. You did not have a system that was reliable. Why not? But we didn’t have I mean, yes, there were some housecleaning after. Definitely. And you were part of the house cleaning part of the new crew that came in after the house cleaning. But the real, I mean, who ultimately it where does the buck stop? I mean, we can say, oh, it’s the whole agency. But is that indictment of the agency indictment of the rules? Is the market too complicated? As I recall the nodal protocol rules in Texas cover 1800 pages? Again, this goes back to the complexity of the system. So is this is anyone really accountable here?

Jimmy Glotfelty 33:54
Yes, we absolutely are. And we are. The PUC is accountable to the legislature and the governor and to the people of Texas as his Arcot. It’s, it’s very clear, if it wasn’t clear before winter storm Yuri, it is clear now, after the legislature passed, Senate Bill three and Senate Bill Two on how they expect this organization to operate going forward, they’ve expanded the commission to five members, they’ve created a independent board at ERCOT. All of those folks are working on reliability from a very independent standpoint, not a vested interest standpoint of a market participant looking out for the people of Texas. So we are we are all operating this electromechanical system where the product travels at the speed of light. We we have to make reactions and actions take them very quickly. Or bad things can happen and we think the accountability is there. A new CEO of Arcot he’s been on the job for about a year now. Pablo Vegas is doing a great job and we are addressing the issues that haven’t been addressed in a long time, so I feel very comfortable. I feel responsible for the reliability of the system. I think my other commissioners do. And I think the ERCOT board does and CEO as well,

Robert Bryce 35:12
your term ends in 2025, are you going to stay on?

Jimmy Glotfelty 35:17
A, you know, I, if something happens on the system, and who knows, I hope so. That would be my goal, I think I can continue to add to the dialogue. My goal wasn’t to become a regulator, it never was, it was to see if I could use some of my development experience in the transmission and distribution space, as well as the generation and rules that at the federal level, and see if we can make the system better for our consumers. And when that when that effort runs out, you know, I’ll be I’ll be done. But I’m not here to just, you know, you know, say I’m here till 25. I’m here to try to do a job and make the system more reliable.

Robert Bryce 36:00
Well, so let’s follow up on that. Because, you know, you’ve had joked with you earlier about not being able to get a job, but you’ve had a wrong, you know, you had a career that’s touched the you’ve been in the in the bureaucracy in the DOD, you’ve been in the private sector, you’ve started a company tried to work in high voltage transmission, now you’re in the regulatory area. ask us this question. So what’s the hardest part of this job? I think it’s this response,

Jimmy Glotfelty 36:34
we get a slow drip of information. So every day we are reading a tremendous amount, whether they be docketed cases, or things that people are sending us, or technologies or audit reports or different things internally, they’re dozens of documents that get filed every single day. And we have to be up on the rules. And we have to be up on the rule changes that we’re passing, and we have to understand what’s going on in the industry, and then take the issues that we are, are really interested in and work on those. And so it is just a tremendous amount of of work to do. And it’s really enjoyable, it gives us a very well rounded understanding of what’s going on in the industry, across the United States and the world in a very granular look at what’s happening in Texas.

Robert Bryce 37:25
So if I read that back to you, did I hear you say it’s just the volume of information and trying to keep track of all the hardest part of the job is trying to keep track of all these different issues, and all these different changes that are going on is that the hardest part, again, surfing this massive amount of info that’s coming your way? I would

Jimmy Glotfelty 37:43
say if I was, for me, if I was new to the industry, that would be very, very hard. For me, you know, I’ve been tracking these and following and been a part of these issues as they’ve been, as they’ve been forming and reforming over the last 25 or 30 years. So I’ve seen the changes happen. And I understand why they’re happening much for economics, but some for technologies and some for for other reasons. And so so it’s just a lot to keep up with. But we can do it. You know, we’ve got a great staff at the Commission, we work very well with ERCOT, we were just we’ve had a huge number of rules that we have to promulgate after the last two legislative sessions. We hope that that dies down after this now and that we get the rules of the road set. And then we don’t change them so that we can give some certainty to the capital markets. And they can they can see what we what we have laid out and they can follow that.

Robert Bryce 38:43
Let’s talk about the capital markets for just a minute. I’ve been told that I think I’m not certain whether it was you or some other people that were saying that even getting financing now for a new natural gas fired power plants is difficult because of ESG because of concerns by lenders that they will get dinged by someone somewhere over lending money on hydrocarbon projects is that has that changed? I’ve heard that definitely in the upstream in oil and gas definitely the case in the coal sector, where there you know, a lot of capital is being constrained capital flows are being constrained, is that the case in the in the power sector where natural gas fired generators are having access to getting capital to build new power plants?

Jimmy Glotfelty 39:27
So I don’t think that access to capital for them is their constraining issue. The constraining issue is is their visibility to returning that capital to the lender? It’s not that they are afraid that the government is going to come after them for any SG issue, but it is specifically due to the energy only market design. How much risk are they willing to take? I do know quite frankly, there was one developer that was building a gas plant in in another state, in the upper Midwest, and they took a coalition of 19 banks to finance a billion dollar facility. If that’s any indication, these big banks aren’t willing to take a whole lot of risk in this space. While there’s uncertainty. I think that was primarily ESG risk down here it is, it’s really the market and to understand how the rules of the road willing, allow them the opportunity to earn back that capital and a profit.

Robert Bryce 40:27
So 19 banks on a billion dollar deal, ordinarily, that would be what five 810, something like that,

Jimmy Glotfelty 40:34
I would say less than five, most of the time two or three banks that would finance

Robert Bryce 40:39
a project like that, right. But so but that’s in that’s in a different RTO. And so you’re saying for here in Texas now, that may be the reason for that large number of lenders on that was because of issues around public perception and not regulation. Whereas in Texas, you’re saying that they’re the lenders would be skittish, because they want to make sure they’re old fashioned that way they want to get their money back. Right, and that the market design in Texas might not assure that that happens, because of the fact that it’s an energy only market that I read in my reading back what you’ve said correctly?

Jimmy Glotfelty 41:13
Yes, you are. Yes, you are. So giving them visibility, and understanding about how a dispatch a high capital cost dispatchable resource will have a reasonable opportunity to earn back their capital and a profit is what they need visibility for. So are we doing that? We think there are some modifications in our market that that would allow that better visibility. I think our industrial friends in the industrial space, have a different view of that. So we’ve, we’ve been working with both of those groups to figure out what the best best path forward is on. We still have many, many facilities that are even dispatchable facilities that are being built across the state. Because they believe in this market.

Robert Bryce 42:04
They aren’t done. Can you put a number to that? Jimmy, because I’ve looked at recently fairly recently, and there was very little new gas fired generation being built. It was all wind and solar and batteries. That was under construction. And and we’ve seen a ton of new solar and batteries built in Texas recently. Do you have a number about how much thermal capacity new generation from gas is being built?

Jimmy Glotfelty 42:23
Yeah, I don’t remember that. Exactly. We hear some things about projects before they’re actually filed for interconnection companies that are that have sites that are looking to build it in certain areas. So we have a little bit other information than then what is actually in the interconnection filings that are caught, but suffice it to say it is low, but it is growing. It is a number that it’s not big combined cycle plant. It’s it’s as we said earlier, it’s error derivatives. It’s it’s research plants, reciprocating engines that try that, that are lower capital costs, but are able to run especially long hours, they can run very efficiently for 24 hours or 48 hours or as long as they need to. And and that the the thought there is if you know wind or solar, you know doesn’t show up. How can these fill in that void?

Robert Bryce 43:18
How important are batteries right now on the Texas grid? I know Jupiter power was was funded by Oh, it was the Houston based company for that what their name wasn’t there.

Jimmy Glotfelty 43:29
They were an endcap. Comp. Yeah,

Robert Bryce 43:31
that’s right in cap investments. And then they were bought by BlackRock, I believe or someone else, then I’m assuming I didn’t see that what the number was, but I’m assuming it was a fairly lucrative deal. Otherwise Encap wouldn’t have Solon. How important are batteries on the Texas grid now? Well, I

Jimmy Glotfelty 43:47
think I think they have their role. Word about how much

Speaker 1 43:50
capacity do we have in batteries? Do you know that off the top of your head, I should have I should have looked this up. I didn’t

Jimmy Glotfelty 43:54
think it’s 5500 megawatts right now something in that neighborhood and expected to double within the next year or 18 months. So we have a huge amount. I think what we’re trying to do is figure out the rules of the road for batteries, and see how they fit into our market design. Are they important? I think absolutely anything that produces an electron when we need it, to serve customers is an important electron. So we want them to be a part of our system. They’re diverse in the sense that they are spread out across the system, which is valuable, which means they’re not exacerbating transmission congestion. They’re in many cases a leaving it. But what we don’t have is the operational understanding of how batteries work together and on the system during the most critical times of the of the year. And for a long period of time and and only time will give us that there’s only time that will give the system operators that are caught the opportunity to understand how these work, understand how much energy is left in it. Battery after they’ve discharged and build up that trust that they can be a part of the system. Every resource goes through this. And this is batteries time to, to either show that they are really going to be a valuable part of the system going forward or that they don’t rise to the challenge. But I expect that they will rise to the challenge.

Robert Bryce 45:20
Well, as you’re saying that I was at a utility meeting, I think I spoke at Southeast electric exchange earlier this year in June in Florida. And they were talking about this as well that, yeah, we have these batteries, but we don’t really see them. We don’t know how where they are necessarily and we can’t control them. We’re not sure how much we can depend on them. We know they’re out there. Some of them were behind the meter, though. So we’re not sure where you know, how they’re going to play in our sandbox here. So just reinforcing what you said that it’s there’s a lot of hype around them. And there’s a ton of money that gets going into them. But it’s it remains to be seen, I think how they will it’s being developed, rather, how they’re regulated or how the regulator sees them. Is that is that? Is there any other color to that that makes sense to you in terms of what that means?

Jimmy Glotfelty 46:06
Well, I what’s happening across the system in Arcata and other areas is you have batteries that are interconnecting at the transmission voltage, and it’s very clear that they interact with are caught and they have communications links with are caught and are caught knows what they’re doing and can dispatch them as they need to. There are other ones that are being interconnected at the distribution level, those batteries are behind the meter, they can operate the same way, if our code gives them that, that telemetry, and as those systems grow, you know, it becomes more complex, they can add very different value to the system and to the distribution system than these ones at the transmission voltage. And both can provide value. But this this the mix of all of these things at one time, in a short decade, along with this influx of solar and this influx of wind, we you know, we’ve just gone from a few facilities around our state few 100 to five or 600, and then the number is going to grow exponentially as we get more at the distribution level. And, and if the world goes the way some predict, you know, and you have the Tesla’s that are going to be plugged into the wall at the house, and they can be aggregated into large batteries, the virtual power plant program that we’ve been working on with Arcot they could grow to be, you know, you piece together, you know, 500 power walls and some Tesla’s and you have 100 megawatt power plant for a certain number of hours. So that’s, that’s, you know, the the future. And, and that exponentially increases the number of elements in the system as well.

Robert Bryce 47:49
Complex, which which takes us back to this complexification thing, whether it becomes too unwieldy just to manage this, this much data, these many inputs, these many outputs, this kind of flow, etc. Let’s talk about high voltage transmission. You worked at clean line Energy Partners and not betraying any confidences here, you raised a lot of money, you worked really hard, but you didn’t build a single centimeter of high voltage transmission. That’s not you know, you Michael, Skelly, I guess where the other you know, Russell Gould wrote a book about it. Right? Why is it so? Well, I’ll ask a simple question. Why didn’t clean line Energy Partners succeed? And why is it so hard to build high voltage transmission? And I guess the third obvious one is, can we speed up that process?

Jimmy Glotfelty 48:37
First, we were disappointed that we didn’t build transmission lines, we did sell two projects. We believe that two of those will be built by other companies guy next year and built a Greenbelt Express. That’s correct. And part of the plains and Eastern project in Oklahoma. So we hope that that will be built. You know, when you start a company, you are at the mercy of the capital markets. And the capital markets viewed us that we were doing the right thing at the right time very early, we had the company for nine years. And towards the end of that nine years, they thought we were ahead of our time, by four or five, six years. So that company went away and you’ve seen other companies, including Michael’s new company, grid united, start up with a with a similar philosophy. So I think the challenge was we were just ahead of our time. The other countries around the world that are they’re doing high voltage transmission. China, obviously, it’s easy to build if you’re the government in China, you know, some of the other regions around the European Union and the big high voltage lines associated with hydro and South America. Those are government mandated lines. The balkanization of our system here the fact that we give states a lot more authority than the federal government. A part of the structure of our Constitution is what makes it hard here. And I’m not opposed to it being hard. But I think that they’re needed. They’re not needed, just for the sake of being needed. There are economic reasons why they can be valuable and that economics have to be shown through the capital markets will prove that, and I hope the regulator’s follow. So how do they get done? You know, I think it’s a combination of some of sometimes it’s the state’s sometimes it’s the feds, sometimes it’s a combination of both and the utilities, seeing that there’s a there’s a valuable resource as part of their resource mix. And it’s the lowest cost resource, you pare wind and solar across a HVDC line, the cost is very, very low. We could have been selling wind to the Tennessee Valley Authority for two cents under a 20 year contract. And that was all that was all wind farms. That was the building of an HVDC line delivered to their substation in Memphis, Tennessee. So

Robert Bryce 51:04
was that was the plains in eastern line.

Jimmy Glotfelty 51:07
That was the plains in eastern line. So

Robert Bryce 51:09
but you’d have enormous resistance both in Oklahoma and the entire Arkansas delegation, if I’m remembering correctly,

Jimmy Glotfelty 51:16
as well as one of the senators from Tennessee. That is exactly right.

Robert Bryce 51:20
All right. Lamar Alexander, who’s now retired, isn’t he is Easterling. He’s on the Senate anymore. He is retired. Right? And you you went to his farewell party, did you and guess who

Jimmy Glotfelty 51:32
was not invited to that point? I wish him went a lobbyist. So listen, we we made great strides with the Tennessee Valley Authority, we we got very close with them. It didn’t happen for a reason. And I’m okay with that. All of these projects, I feel like whether they’re wind or solar, or transmission or nuclear, you got to fight hard for them, and some will happen and some won’t. And that’s the nature of development. So we’ve got to make the economics work we’ve got to make the safety and security work and the reliability for the system work. So

Robert Bryce 52:05
Right. So one of the guests I’ve had on the podcast, you is a friend of yours or former colleague, Bill Magwood, who’s now at World Nuclear agency at the OECD. We’ve talked about SMRs and nuclear and this is an ask your opinion on this. The obviously you’re pushing for SMRs in Texas. They we’ve talked about fuel, we’ve talked about regulation, we talked about capital, which are the key challenges, and I’ve written about that on my substack. And I think the ones that are most obvious challenges, but if you look around the world handicap it for me, I asked Magwood this question. So if you my bias I’ll really reveal I think SMRs are going to happen in Europe, but maybe the BWI DW RX 300 will be built in Darlington and in Ontario before anywhere else, won’t we? But I think you the US will follow if you had a handicap put around the world outside of Canada. What other country do you think is likely to build new nuclear the fastest?

Jimmy Glotfelty 53:04
I think China is because they have the game.

Robert Bryce 53:07
Well, nevermind nevermind China. That’s that’s the easy one because they have oh, well the government says we’re gonna do it. So you got you like this, don’t you everyone? Yes, we do. And President G we love this idea. Yes. So let’s leave China alone. Yes, they’re building 22 reactors. Okay. So sorry. Go ahead. I

Jimmy Glotfelty 53:23
think I think Poland is is pretty deep into these as well as some of the Scandi, Scandinavian countries who are are very interested, a lot of that has to do with of course, getting off Russian gas, are they going to ensure that their electricity production is more secure? So I think you’re gonna see that more around the EU. And if one of them gets built over, you know, over the next decade, you’re probably going to see a lot more even in those countries that are turning down nuclear plants, you may see them come back online and and understand safety and security with this new reactor design with these new reactor designs is a whole lot better than the old ones.

Robert Bryce 54:03
What about France, but Magwood mentioned spin in France, he you know, mag woods in Paris, right? So he has a pretty good view on what’s going on in France. He says they have the regulatory regime they have the workforce, they now have the desire that Macron has, has done an about face on nuclear. He mentioned Poland as well. Have you thought about Francis would you put France in that basket as well?

Jimmy Glotfelty 54:25
You know, I think I would but I’ve just heard more of the companies that I talk with talk about them in Poland then I have them talk about France so France is probably more inward looking on how they’re going to develop these are their own technology their own fuel their own you know efforts so I don’t hear them as much but Poland we hear a lot

Robert Bryce 54:46
about right yeah. I wouldn’t make it goes in Romania as the other one that I guess has been had a lot of attention as well. I

Jimmy Glotfelty 54:54
would not want to dispute go Magwood on that one. Yeah,

Robert Bryce 54:57
no, he’s very interesting guy. Um, we talked about this before, but around it. And I want to jump back to the Texas and kind of these ideas around vertically integrated utilities. Has deregulation been good for consumers?

Jimmy Glotfelty 55:14
I think we found that I think most people that have looked at it have decided that the risk taking the risk of building new power generation off of consumers has been a success over the last 20 years. The question will be, is it the same going forward? I think we’ll have to see how that is. But we’ve got a very high number of people that have chosen their power provider, we have a lot of folks that make that change every year to something that’s less expensive. And we put that power in their hands, and they’ve, they accept it, they like it. So giving them a choice is a is a pretty good thing.

Robert Bryce 55:54
But didn’t but okay, so there were estimates, though, that in fact, the vertically integrated utilities, the Wall Street Journal did a report on this that said that, in fact, the vertically integrated utilities were providing lower cost power than then then the utilities in the deregulated markets. And I’ll just add, there was one other analysis and it was by a former member of the Public Utility Commission said, Yeah, well, we saved consumers, I don’t know $20 billion over, you know, this time since deregulation under the George W. Bush administration. And then during winter storm year, we gave it all back. And now we’ve had securitization by a number of utilities. And on the gas side and the electric side, that are those some of those those paying off those securitized debts is going to take decades. So I mean, is, is it? I’m pushing you on this a little bit? Because it seems to me the jury’s still out is. But you’re saying you think that this whole idea about choice for people in deregulated markets? I’m in Austin, so I don’t have that, oh, I can go pick my power producer. But I guess I’ll ask it a different way. Why is it been good, though? I mean, has it actually saved them money or is it just made it more complicated?

Jimmy Glotfelty 57:00
Now, I believe it has saved them money, it has allowed a freer flow of capital into the, into the into Texas into the ERCOT market to build facilities, we don’t guarantee their rate of return, we don’t guarantee that they’re going to make a profit. And we’ve seen some plants go bankrupt as a result, and they they get bought through the bankruptcy proceedings, and they come back and they stay in the market. And they’re, they’re more competitive. So I think that the fact of the matter is, we’ve had a lot of facilities built the capital flows here very quickly, very easily. Prices have gone down with the exception of giving some money back during URI, which I think that’s a that’s a fair drawing on what happened. I don’t know if it’s on the power market, or if it’s on the fuel market. But both have a little bit of responsibility there. And

Robert Bryce 57:55
as well as the managers of the individual utilities, right, because they weren’t prepared or they weren’t hedged out far enough or, or they were simply too reliant on natural gas, right, that they couldn’t get enough gas and they had to pay the whatever that market market price was at that time. And there were people willing to sell them to sell to them at exorbitant rates. So you have was At Rayburn country or some of the other cooperatives that were, you know, just left, make it on a lot of these and they’re going to be paying through the nose for a long time to come.

Jimmy Glotfelty 58:24
They will. And there are others in Texas that that had that happen. I think CPS and San Antonio, short on gas, a billion dollars. Yeah. So they, you know, you still have to run these companies as a business. And you have to, you know, have good risk managers to make sure that these These risks are addressed for the long term benefit of the customers, not just one year at a time.

Robert Bryce 58:50
Sure. So just two more questions. Jimmy, we’re right about an hour here. And as you know, I like to keep these conversations at about an hour. What are you reading? Besides lots of dockets, and lots of regulatory stuff and lots of papers and rules and such.

Jimmy Glotfelty 59:06
I have I have two books that are open right now actually three books. One of them is Banos autobiography, which I’m loving. It’s it’s great to see his face shine through his music and all of the challenges and consternation of what’s gone on in that band for years and have them still be around. I’m reading a book called The History of New York in 27 buildings. So it’s talking about the different types of architectures in the times of New York City through the these buildings that get built a in those eras. And I’m reading the book, the 9.9%, which is a social policy book about education and the under one man’s view of how everybody’s chasing the point 1% Not the 1% I’m in America. And it’s a. I’ve been reading that for a few months, because it’s fairly challenging for me to get through. I get frustrated at it and I put it down and I’ll pick it up a few weeks later.

Robert Bryce 1:00:11
And that’s called the 9.9%. Yes. So the history of New York, I have to ask because one of my favorite buildings, and it’s an unheralded, unmarked, a building, but pivotal is the postal telegraph building. I’m guessing that there’s not one of the buildings in New York that’s listed.

Jimmy Glotfelty 1:00:27
I haven’t gotten to it, if it’s in there, but I will let you know for sure. Well, that

Robert Bryce 1:00:31
was the building where one of my heroes, Frank Julian Sprague perfected the electric elevator and I write about it in my new book a question of power. Right, that building is right across from City Hall in lower Manhattan. There’s no plaque out in the front. But it was the first building in the world to have fully electric elevators and Sprague who worked for Edison for a very short time perfected the electric elevator in that building, which fundamentally changed the city. But that was my own. And I do have

Jimmy Glotfelty 1:00:57
your book on my bookshelf. It’s, it’s in the queue. I think I have 141 books. In my queue. I most of the time I listened to them on, on my drive back to, to and from Austin. So I get a lot of hours of books on tape. Gotcha.

Unknown Speaker 1:01:14
So my last question, Jimmy, what gives you hope?

Jimmy Glotfelty 1:01:19
Humanity? Yeah, I mean, I really think I think people have hearts in the right place. They want to be helpful. They want to be supportive of their their fellow man. And I just think that you know, we we get bogged down in the minutia of life with, with 24 hour news with, you know, the 140, you know, bit apps or Twitter or whatever it’s called this day and age. But I really think if you sit back and look at you talk to old, older people. I was with a bunch of them this past weekend, and their wisdom shines through and the wisdom of older people that have gone through real things like World Wars and things like that. It’s it’s a joy for me to listen to that and I hope we we continue to, to heed their advice on things.

Robert Bryce 1:02:14
Well, there’s good place to stop. My guest has been Jimmy glop, filthy. He’s commissioner at the Texas Public Utility Commission. He’s working as the head of the Texas advanced nuclear reactor Working Group at the PUC. And you can find out more about that@puc.texas.gov. Jimmy, thanks, a million for coming on the power hungry podcast. It’s been very interesting. And I wish you luck with this nuclear initiative. It’s not going to be cheap, faster, or easy, but you knew that but wish you luck with it.

Jimmy Glotfelty 1:02:42
Thank you so much. I appreciate you having me. Look forward to further discussions.

Robert Bryce 1:02:46
All right. And thanks to all of you out there in podcast land, tune in for the next episode of the power hungry podcast. It might be as good as this one. Until then, see you