Transcripts For CSPAN3 Politics Public Policy Today 20150129

Include Albert Einstein and steve jobs. And on American History tv on cspan3 on saturday the civil war cowboys in postcivil war years. How the cowboy became symbolic of unified america. Andly well sturtour the house that was the headquarters of collarlara barton. Let us know about the programs youre watching. Call us at 2026263400. Email us at comments cspan. Org. Like us on facebook. Follow us on twitter. This sunday on q a, neuro scientist dr. Francis jenson on recent discoveries about the teenage brain. They dont have their frontal lobbies to actually reason. Their concepts of actions are not very clear to them because their frontal lobes are not at the ready. They have frontal lobes, its just connections arent at the ready for split second decision making. And dont forget the hormones are changing in both young men and women and the brain hasnt seen these yet in life until you hit teenage years. So the brain is trying to learn how to respond to these new hormones that are rolling around and actually locking on receptors of different types so theyre trying to sort of trial skper and error. I think this contributes to this roller coaster kind of experience that we watch as parents. Sunday night at 8 00 eastern and pacific on cspans q a. On tuesday the head of the federal Energy Regulatory commission talked about energy policy, and our agencys role in implementing new epa rules on power plants. From the National Press club, this is an hour. Good afternoon and welcome. My name is john hughes. Im an editor for bloomberg first word. Thats the breaking news desk here in washington for bloomberg. Im also president of the National Press club. The club is the worlds leading professional organization for journalists. Were committed to our profession through programs just like this. And we work for a free press worldwide. For more information, visit our website press. Org. And to donate, check out our Journalism Institute website. Thats www. Press. Org institute. On behalf of members worldwide id like to welcome our speaker here today, and those of you attending the event our head table includes guests of the speaker as well as working journalists who are club members, members of the public attend our lunches, so any applause you hear today is not necessarily a lack of journalistic objectivity. Id also like to welcome our cspan and public radio audiences. You can follow the action on twitter. Use the hash tag npclunch. After our guest speaker concludes, well have a question and answer period. I will ask as many questions as time permits. Now its time to introduce our head table guests. I would ask each of our head table guests to stand briefly as your name is announced. From your right, chris newcomit, editor and chief of platz. Clair picard cambridge, bureau chief here in d. C. Julia piper, Senior Writer for green tech media. Kurt longo cochief of staff to cheryl le flur and a guest of our speaker. Marilyn geewax, member of the npc of board governors. Bill kunsic the husband of our speaker and a guest of our speaker. Jerry zrimsky, Washington Bureau chief of the buffalo news. Jerry is the chair of the Speakers Committee and hes a former National Press club president. Going over our speaker for a moment, rod pekoe the Speaker Committee member that organized todays event. Thank you very much, ron. Jen gebhart guest of our speaker. And ed bozarth writer of the report. A Senior Writer and frank rosano senior principal at bracewell giuliani. [applause] so the presence of so many people here in this room today says volumes about how the federal Energy Regulatory commission, or ferc, as many of us call it has emerged from the bureaucratic shadows. The commissions job the commissions job is to regulate interstate Natural Gas Pipelines and electric transmission lines. Ferc plays a central role in the debate over how these industries should evolve in the 21st century. There are questions, for instance, about what, if any role ferc should play in epas plan to curb Greenhouse Gases. Should ferc ensure that the epa plan doesnt harm the reliability of the grid . Questions such as that show why the commissions profile has never been higher. In the center of the spotlight, of course, is our guest speaker today, Cheryl Lefleur. She was nominated to the commission by president obama in 2010. She has been acting chairman and then chairman since november of 2013. She joined ferc after a career as a senior Utility Industry leader in the northeast. She retired in 2007 as acting ceo of National Grid usa which delivers electricity to 3. 4 million customers. The first person in her family to go to college, she holds an undergraduate degree from princeton and a law degree from harvard. According to our National Press club archivist, she is the first chairman of ferc to speak at a National Press club luncheon. Please join me in giving a warm National Press club welcome to Cheryl Lefleur chairman of the federal Energy Regulatory commission. [applause] thank you so much, john, for that very nice introduction and you introduced all the folks at the head table and im so happy to see so many familiar faces and new friends here in the audience. I am deeply honored by the opportunity to be the first ferc chairman or commissioner to speak at the National Press club. I see at least one former commissioner in the audience who we should probably call up book her for next month and i really would like to thank rod cooper for organizing this. When i was nominated to ferc five years ago i definitely learned, if i didnt already know, that it wasnt exactly a household word because i spend most of my time explaining to people what was this acronym to which i had been named. And so even though john did a bit of it i thought i would just take a minute for those who might not be familiar and say a bit of what our responsibilities are. We are responsible for because the energy world is very complicated in terms of the number of people who have responsibilities for different elements. And our duties are to the interstate transmission and natural gas pipe lineslines. We do both rates and permanence of pipelines. We are also responsible for whole wholesale rates, both gas and electric, and wholesale markets as well as licensing of hydrofacilities across the United States and the pricing of Oil Pipelines and the reliability and Security Standards that govern the security of the bulk electric system. So a bit of an eclectic mix but all mostly about intrastate or wholesale work in the United States. I forgot to say we have a whole passel of folks both from my office and senior staff from ferc in the back of the room, and i would like to acknowledge them as well. Now, since i was in the industry for more than 20 years, i know in those days i did not read very many ferc orders. Maybe 1888 or some of the real biggies. So where did i get my information on what ferc did . From the people in the front of the room. What energy daily or platz said ferc did is what it did, as far as i knew. So thats what i read in the morning because that was the record of what happened. Or snl, or any of our other wonderful people who cover us. Now, im not a washington lifer. Ive been here a relativelily short time compared to most people in the room a little less than five years. But i am more or less an energy lifer because ive been in the energy world for more than 30 years, mostly in the northeast. And in that role i was able to be part of the major transformations that have happened in energy in the last few decades. I cut my teeth on the battles to get nuclear licensed in the 1980s and to build the first generation of utility conservation programs. We call them conservation instead of energy efficiency. I was very much in the midst of industry restructuring in the 1990s, including the advent of open transmission access, generation did ivestiture and closing gaps. At ferc for the past five years, i get to respond to todays Energy Issues. Especially the growth of domestic natural gas and its increased use to generate electricity. The introduction of new technologies across the whole spectrum generation, transmission, storage and end use technologies, new threats to grid reliability and security from cyber and physical security to natural threats like gma magnetic disturbances, and the growing awareness of the impact of energy on our climate leading to what i think is the most challenging environmental issue we have faced together. Now, what ive learned from everything ive looked at in the last 30 years is that all Energy Issues really come down to the same thing. And thats balancing three values reliability, cost and the environment. No matter what the issue theyre usually buried somewhere in the discourse. And inevitably there are tradeoffs between the values. And because different people value different elements differently, its hard to get agreement on how to strike the balance. Perspectives vary based on a number of factors. Idealogy certainly but also economic interest and commercial position and geography. As my homie the late great tip oneal said, all politics are equal, and thats definitely true with what were facing at ferc. So weighing factors is complicated by the fact that our nation has a very fragmented and disorganized system of Decision Makers which can make even finding a forum a challenge. There are lawmakers and regulators in 50 state capitols, numerous federal agencies. I know ferc is not the federal government, not even close. Everyone we regulate is regulated by a myriad of other agencies as well and divided branches of government that work on the same issues. So there is a cacophony of different voices and it often seems like theyre not even having the same conversation. But making progress particularly on balancing reliability in the environment requires real conversation about tradeoffs about the real costs and consequences of our choices, and about the effort that it will take to get us where we need to be. And for better or for worse i feel like little old ferc has been thrust into the position of being a forum for these discussions and for the discussion of the many pressing Energy Issues that our generation is facing. Whether theyre in our jurisdiction a little bit or a lot, theyre at our doorstep. One of the most polarizing Energy Issues were facing today is how our electric sector will respond to the epas Clean Power Plan under section 111d of the clean air act. Im going to devote the rest of my remarks talking about fercs role in that response. Hopefully they wont be too geeky so youll invite ferc back. Over the past several months at ferc, weve had a steady stream of visitors at our door from groups across all segments and regions who have a wide range of views on the Clean Power Plan. From those who say that the lights will go out to those who think the epa did not go nearly far enough and pretty much everyone in between. Now, im honored to lead an agency thats bipartisan and independent by design and that build up credibility due to all the people that came before us over decades. Because of that independence and credibility, people both for and against the Clean Power Plan are looking to us to publicly validate their views. Ive taken a pretty firm line that i dont think thats fercs role. Ferc is not an environmental regulator. Blessedly blessedly, were not tasked with writing the final rule this summer. Epa is reviewing their millions of comments and they will put out the final rule. But make no mistake, i think ferc will have a central role to play at the Clean Power Plan and our response to climate is implemented. I believe that we as a nation can achieve real environmental progress, including on Climate Change, but only if were willing to build the infrastructure, both gas and electric, and build the Energy Markets to make that possible. Both infrastructure and market changes will be necessary if the values of reliability and cost are sustained as we make progress on the environment. And thats where ferc comes in. I think we will have responsibilities across three areas infrastructure, markets and to be an honest broker for the discussion. Starting with infrastructure, i think additions to both the gas and electric infrastructure will be needed to carry out the Clean Power Plan. And in the case of Gas Pipelines and gas compressure stations ferc is the one who does the review, permits them and decides the rates. The Clean Power Plan, which is likely to come from the large amount of power production, comes from existing plants across the country. Thats existing plants. I believe, based on everyone ive talked to, that meeting the goals of the Clean Power Plan will also lead to the construction of a lot of new Gas Generation. Because most of the people ive talked to said that can be the most Cost Effective way to meet some of the goals, and epa has given people the flexibility to meet each state goal in the most costeffective way. We are very fortunate to have abundant and relatively affordable domestic natural gas. If we didnt, if we were where we thought we were 20 years ago the gas was in the ground but we didnt know it was abundant and affordable when we thought we were running out of it in the 90s. If we were there our climate goals and our climate aspirations would be much more difficult, if not impossible to achieve with todays technology. But utilizing that gas to meet climate goals require the expansion and construction of Gas Infrastructure, both pipelines and compressure stations to get it where it needs to be to keep the lights on. But while gas is critically important to our climate goals and other environmental goals, it has issues of its own. Pipelines are facing unprecedented opposition from local and national groups, including environmental activists. These groups are active in every ferc docket, as they should be as well as in my email in box seven days a week, in my twitter feed at our open meetings demanding to be heard and literally at our door closing down 1st street so ferc wont be able to work. We have a situation here. We take the views of all stake stakeholders seriously and try as hard as we can to thoroughly consider issues that are relevant to the decisions were required to make. But fercs responsibility under the natural gas act, because were a creature of congress is to consider and act on pipeline applications after assuring that they can be built safely and with limited environmental impact. Under fercs regulations and policy, its market demand and specifically contractual commitments for Pipeline Capacity that determine what Pipeline Infrastructure is needed. The days that ferc went in and said, heres a certificate of need, we need it from here to there, ended with order 630 years ago. We evaluate the need for the project based on market demand. Do they have people signing up for the gas . Then we go in and look at the environmental and safety aspects in detail of the proposed project. Were plesdblessed to have a wide range of engineers and scientists and we look at a wide range of Environmental Issues water, soil, geology fish and wildlife and others. We also look at air quality including Greenhouse Gas emissions. But our review is project specific and confined to the information in the docket. Speculating about unquantifiable impacts is not part of that process. I think that our nation is going to have to grapple with our acceptance of Gas Generation and Gas Pipelines if we expect to achieve our climate and environmental goals. As far as ferc i think our work on gas permitting Gas Infrastructure is going to be essential to the successful implementation of the Clean Power Plan, and im dedicated to ensuring that the process is fair clear, timely and transparent transparent. Because the worst place we want to be is closing down the old stuff and not being able to build the new stuff because were not willing to do the work to get it there. Were also going to have a role to play on electric transmission thats built to support compliance with the Clean Power Plan. Here were not responsible for citing. Thats done at the state level. But were responsible for planning and funding of intrastate transmission. Changes in generation requires changes in transmission. Duh. The grid was built to support whats out there now. Mostly you put a coal or Nuclear Plant an hour or two from the city, build a line to connect them, maybe an extension cord to your neighbors you were done. Thats the old world. Thats not where we are anymore. Building block 3 of the Clean Power Plan is the increased reliance on renewable generation, like the wind thats on my cooking, and i thought i saw solar somewhere too, and Wind Generation is highly transmission dependent. You dont just put it on a power center. Wind and solar are best cited where the winds are more plentiful, usually far from cities. The lines they require is usually long, require a lot of coordination from different people to get planned and built, and theyre expensive. Although they benefit the grid, help reliability, facility meeting environmental goals, they dont always benefit everyone they go by or people who live right next to where the resource is. Because of all those factors, transmission is very controversial. Not only does it face landowner and environmental opposition the same as Gas Pipelines, but sometimes rate payer opposition as well. One of the core responsibilities at ferc, we are working hard to help the transition that the nation needs get built under our order 1000. We are requiring broad transparent, competitive transmission planning processes not locally company by company but across big regions so they can determine what the regions need and what the most costeffective transmission to be built. And were explicitly requiring them to take Public Policy requirements into account like the state plans under the Clean Power Plan when they decide what transmission they need. Now, were only a short way to fully achieving that but were also asking regions to sit and coordinate with each other because there are needs for transmission that arent even within a specific region. And in addition to the planning we are responsible for the transmission rates, and were trying to ensure that there is enough of an investment incentive for the investors as well as enough protection for the consumers to make sure theyre just and reasonable and that we strike that balance right. And while were on it, and im on this infrastructure bully pulpit here, i just want to add that power plants are not the only thing that need infrastructure. The fourth Building Block of the Clean Power Plant is energy efficiency, what we used to call conservation load management. And also distributed generation, like rooftop solar. Thats becoming so pervasive as part of Building Block 3. Those distributed resources need infrastructure of a different source. They need delivery it took us a long time in new england to build up the industry to deliver the conservation programs that have won national awards. They need delivery they need ago aggregation technology, and they need support of market rules. As someone who ran a sufficient program for a long time, i can tell you they may be very, very costeffective, but theyre not free and theyre not selfexecuting. A lot of the work to make that happen is being done at those 50 state houses but ferc has a role, and we have to work to facilitate participation of those new resources in the markets that we have jurisdiction over. And speaking of the markets, thats our second big challenge. Twothirds of the nations population is served by competitive regional electric markets. I tried to keep acronyms out of this speech but they are rtos, regional transmission operators and isos, independent system operators. I see representatives of some of them in the room. These are bodies that work over usually a multistate region to plan and operate the transmission grid independent of the owners and dispatch the power. They run regional capacity markets that incentivize investment needed for the future and realtime Energy Markets that dispatch the power. Basically they look out every five minutes and dispatch whats cheapest at that time. They dispatch by merit order according to cost. Thats how its been done since before there were regional organizations when each company did it. Those markets that they operate are regulated by ferc. And we have worked hard and those markets have made some adaptations to support state environmental initiatives like the portfolio standards to try to adjust the markets to the Environmental Issues. It hasnt been easy but weve made some progress. The Clean Power Plant is a whole different ball game. Now were going to have 49 states coming up with individual implementation plans that by their very nature under the Building Blocks, will say what resources the state wants to use. Less of this a little more of that, do this, do that because thats how the state will build up its plan. That may not automatically be compatible with the way the power is planned and disbursed now. So well have to change the formulas if the markets are to survive and theyve done a good job for customers well have to change the way they work to support the state plans to reconcile these two objectives. I think its going to be a lot more than tinkering around the edges. If you look at pgm, which is the largest market operator in the country, they have all or some of 13 states. And if each of those 13 states have a different plan, then you can imagine as theyre trying to make sure they dispatch the power so each of the states plans are met, it could require significant changes in the way we run our markets. Now, of course, then the obvious mind goes to the obvious solution, why dont they just all get together and agree what they want to do, then you dont have to run statebystate. The regional plan did give extra credit for Regional Cooperation thats one of the comments we had made, and Regional Cooperation will help regional markets make adaptations to the Clean Power Plant. But that itself will require considerable change and compromise. Weve seen some success with regional Carbon Markets like the regional Greenhouse Gas initiative up in the northeast and carb, the california market. But putting those together, and i was there when reg was negotiated, required people to come together and decide on the goals, decide whattal lounsz allowances, who gets in and who gets out. They put states with substantially different portfolios and substantially different epa targets that might not just naturally agree that will require a little bit of negotiation to get there, as well as we have states like texas and indiana and several others that are served by multiple rtos so that if youre trying to achieve the plan you have two different dispatchers who have to make sure its done right. We also the markets themselves are going through a lot of transition at the generation and country changes, and ferc has to make sure the market rules and Market Designs are written to support the investment and resources that are needed for reliability. We put out a fuel assurance order earlier this year. Thats one example of that effort. Also weve been doing a lot on the capacity markets. Working all this out so the we can meet climate goals while keeping these big regional markets wont be easy and its going to require exactly the kind of open dialogue that i spoke of earlier in the speech. Fortunately, this is the kind of hard, boring unsexy technical, dirt under the finger nails snails work that ferc does. They say, do you work on green energy . We work on the sexy underbelly of every energy issue, and this is where our work will be here, i think, in really making those markets work. Because if we dont, well either lose the markets and take a giant step back in how we run our grid or we wont make our climate goals, which is unacceptable in a different way. Despite all our work we still have reliability problems. Letting the lights go out is not going to be an option. So then reliability will have to be maintained by mechanisms like reliability must run contracts or extensions or keeping things on longer than theyre supposed to stay on. That can be expensive or unpopular or usually both. So thats not plan a. Plan a is to get right up top. Our final job, i think, is to serve as an honest broker as the work on the climate plan is finalized and implemented. I believe we did this effectively with respect to the mercury and toxic rule in the last few years. Admittedly, thats a much more straightforward rule, but i think ferc did a good job helping to bring together the states, the federal agencies the state regulators to help ensure that reliability was considered and protected. With respect to the Clean Power Plan, were Getting Started on that next month with four days of technical conferences in february and march, two here in d. C. , two in other regions of the country. Well be hearing from our State Government partners our federal government partners like the epa, people from industry and environmental groups to help address the issues that ferc is going to have to tackle as this goes forward. Our objective is to hear from a wide range of entityies about how compliance with the rule might impact them and really start to dig in to the things ferc will have to do. Based on how many people have asked to speak, i think we could have a lot more than four days. We do have other things to do but i think thats going to be just the beginning of the dialogue. We have to continue our engagement with agencies especially the epa, but also the state regulators to share information, lend expertise and help develop constructive suggestions. And we have to continue to be an independent and honest broker. Living within the bounds of our Statutory Authority and giving up the trend of merging authorities. We cant be afraid to say unpopular things. Saying we need gas lines is unpopular, saying the market will automatically change, but we have to say the hard things confront the hard issues and make the difficult policy choices that wont please everyone all the time. Sometimes id be happy to please anyone any of the time, but i strongly believe this is why this work has been assigned to an independent, appointed, commission of technical experts. Im honored to have the opportunity to be part of fercs work. Im only going to be chairman for three more months, but i expect to be a commissioner for five more years working to balance and maximize reliability, cost and the environment environment. Im pretty sure that if i were here five years from now, the issues i worked on some of them probably i wouldnt even know now, but im sure there will be five years of change, challenge and progress on the Nations Energy and environmental aspirations. Thank you and ill take your questions. [applause] yes . Thank you chairman. I start with some questions related to the epa. Epa has appeared to have held only a handful of meetings with fercs staff about the Clean Power Plan or 111d rule. Given epas extraordinary outreach effort when it was developing the rule and the huge changes it will require to the grid, were you disappointed to have not had more input . Well, recently in a letter that i sent to the hill on december 3rd i really listed all of the meetings we had which i think are more than a handful. I was not disappointed. I think we actually had quite a lot of opportunity for input. I actually wish we had seen the rule a lot earlier, but that would have required that they had written it a lot earlier. But now were in a whole different scene where we have a whole year or more before they finalize it so were still having input. Do you think that aggressively implementing the Clean Power Plan on epas proposed timeline might cause difficulties for reliability . Well as i said, i think that we need to build the infrastructure and adapt the markets to be able to have both reliability we take for granted and the progress on the climate. The timeline for the epa goals particularly the first set of goals in 2020 has really been one of the most controversial things weve been hearing about. What should be the period over which the ultimate 20 of our 30 goals are kind of phased in. I think the epa has been hearing that as well, because in the notice of availability when they were asked about comments last fall, that was one of the main things we heard about. So i think well have to get started earlier and really put our shoulder to the wheel to get the things done that we need to do. Some of your colleagues on the commission think ferc should sign off on state plans to comply with epas rule. Is that something that you can support . Im not 100 sure thats how they would articulate their views, but putting that aside im looking right at the head of the state commissioner association, and i try to remember that our first name is federal, so i think signoff is a bit strong. I think we should be engaged in the state plans because they all operate as part of well for the most part they operate as part of regions, but i think ultimately the states will have the control. Thats why i would love to see more Regional Solutions so they can work together. So as the Utility Industry moves over time to retire coal plants and substitute in renewables are higher Consumer Prices for electricity inevitable . I kind of divide prices into two dimensions. The long run price depends on the long run cost of these things. Once its built, Nuclear Renewables can be very affordable once the initial investment is made. The long run price of coal, gas and even oil plans which we use on the margin depends on the long run cost of those fuels that we dont know. Theres one thing i know in my life, i cant predict gas prices since ive seen them go up and down and everywhere in between. So in the long run i think that ultimately depends on the mix of costs between those fuels but its not at all clear to me that costs will go up. Were seeing gas be very affordable and competitive. With coal certainly nuclear and Hydro Renewables are very competitive once theyre built. The other dimension of costs is proposition. Will it cost to make this change . Yes. It has to. When youre building something new, it costs money. In the long run will it cost more . That depends on the fuel costs. As weve seen this Rapid Transformation occur in the Nations Energy sector, is it frustrating for you that congress has refused to consider any meaningful Energy Legislation or policies in this area . I used to have a mug that said Something Like the serenity prayer. God, grant me the things to fight the things i can fight, not fight the things i cant fight and the wisdom to know the difference. You probably know whatever it says. I try not to spend too much mental anguish on what congress does or doesnt do. There is a whole blogosphere out there complaining about congress. I live by the rules theyve given us. If they pass new legislation, well live by that but i think were doing a pretty good job hobbling through with what weve got now, and if theres new legislation, ill welcome it. You mention the need for additional Gas Pipelines yet we see so much public frustration and public opposition to these sorts of projects. So how can that need for more pipelines be addressed given the level of opposition thats out there . Well i think not speaking of any specific pipeline, i would kind of put the opposition into different buckets. Theres concern about the environmental impacts of the pipelines themselves, and i think that has to be addressed by making sure that theyre constructed, including extraction and everything is done using the most Current Technologies in environmentally correct and environmentally advanced as we can. Everything has a consequence, nothing is free, but i think we have to really, as a society, make sure we do this right. The second set of opposition is local opposition where people just dont want it going through their town or county. Sometimes for reasons that have to do with specific things of other town and county. People dont want infrastructure going right where they are. I think we need to cite these things as carefully as we possibly can and try to make the best decisions. We definitely cant please everyone, but thats what i think we do well is to consider those issues and try to make sure environmental risks are mitigated. Very pugh pipefew pipelines come out at the same route they went in. There are people who dont want pipelines at all, and i think theyre the policymakers the state regulators, the state environmental people, ferc, other regulators have to have the dialogue and really decide because i said my view, other people have other views, but thats a Bigger Picture than a specific citing thing. Fracking is such a significant issue in so many ways. Last year ferc approved construction of a huge lickquefied gas facility and some said there was environmental harm that results from fracking. How would respond to that criticism . Well, we dont regulate the extraction. The permitting statute, the National Environmental policy act that we use, we look at the reasonably foreseeable what is actually from the facility were implementing . So we just try to make sure if you will, that what we permit is done in the right way, safe and environmentally sound. Fracking is regulated at the state level and by the epa. I think its absolutely essential that if you regularte it and regulate it closely but its not done at ferc. We were mentioning the level of protests that weve seen. Has the level of protests and activism at all surprised the commission or Commission Members . And this questioner wonders how that plays out as far as going through the filing process the level of protesting and activism and the effect of that been on the filing process. Well the fact that people have things to say does not surprise us. These are important issues. Our secretarys office does a great job handling thousands, millions of documents that come in and getting them in the files. Some of the things that have surprised me recently are a little bit more of the techniques. Like when i first got a twitter account, i really thought i was cool tweeting out, and i come on and its like, you have eight new entries. I think, people are writing to me. Awesome. And a lot of them were people tweeting about pipelines and dockets and so forth and thats just new. Thats just new to the way i think about things. A lot of the techniques people have used are new techniques. But the fact theyre in the dockets or at the Public Meetings does not surprise me. Here in d. C. A coalition of environmental, political and consumer groups called power d. C. Has emerged to oppose the pepco epsilon merger. They say the merger will result in poor reliability and higher prices for consumers. Are these concerns justified . Why or why not . Well, ferc approved the exilon tepco merger and i just realized its pending rehearing. What we do in mergers is we look at, under the federal power act the effect on rates, are their protections for the wholesale rates that we regulate the effect on regulations. Can the state regulators still have their power and the effect on competition using formulas to see how concentrated the market is. Thats what we do in our dockets. A lot of the other things retail rate protection, rate freezes, where the headquarters are going to be, how many employees are going to have jobs what kind of promises they have to make are done by the state regulators and i think those are still pending. So weve talked about wind and solar power, but what about the oldest resource, hydro power . Is there a possibility of expanding hydro power as a source of electricity, and if not, why . Well there is definitely the potential to expand the hydro power as a source of electricity. There are thousands of dams in the country that are constructed so the river is almost dammed but dont ahave an electric generating set attached to them. I try not to make up numbers if i dont get it right but there are many thousands of opportunities opportunities. We have a couple potential applications in places like alaska for big new hydro. I will just say based on some of the early commentary, theyre not in the filing stage yet, and some of what we hear putting up things like grand cooley dam or the hoover dam would be very difficult to do in 2015. But small hydro, we have tremendous potential. Also hydrokinetic in rivers tremendous potential to harness that. Huge topic of discussion nowadays also is the risk of cyber attacks. How concerned are you that a successful cyber attack on a portion of the nations power grid is inevitable . Well, im vigilant. There are people who attempt to hack in to the bulk electric system every day. In fact, nkit National Cyber Communications Control center part of the department of homeland security, more than half the hacking attempts in the whole United States are on the electric grid. So i know that its an important issue. Part of what we try to do with, first of all, the way all the owners construct the grid but the way ferc meets the reliability standards is to make sure the grid is constructed to be resilient so that there is redundancy, and so that there is cyber protections built in perimeter security, Password Security and so forth so that if something happens in one place, it doesnt cascade to another place. I think the electric grid as well as the nuclear fleet, are the only two sectors in the country that have mandatory cyber rules. I think they deserve them. I think if theres anything you want to protect, its definitely your electric grid. So those rules are designed so that if something happens it doesnt lead to a cascading outage. But should we be vigilant . Absolutely. Would you say that Cyber Threats are far and away the foremost challenge, or are physical acts of vandalism terrorism enough of a threat that they reach sort of the equal level of the cyber concern . And how does the Utility Industry protect itself from these sorts of threats . Oh my gosh, this is like when you were kids. Its like, would you rather be boiled in oil or would you rather be drowned . Which would be drowned . Which would be the better thing to happen. Both sets of threats are important. I tend to worry more about cyberthreats because i dont really understand them. I dont think any over 50 does understand what goes on in a computer. Thats probably unfair. Im sure there are middleaged techies that are wonderful. I dont understand how someone can be in north korea on the other side of the globe and do something on a laptop that affects the grid and something you cant see and cant readily sense and you dont understand the mechanism is always more frightening, whereas physical security at least i understand it its frightening, i understand you have to be in the physical proximity of the grid to do something. Its a little better understood threat and it is a threat as well. What we did last year was for the first time mandate protections for the most important parts of the bulk electric system when viewed by their ability to lead to a cascading outage. More physical protection so we want to make sure while were worried about the 21st century threats we dont forget the oldfashioned threats as well. This questioner just passed up a question that said should fighting Climate Change be part of fercs Central Mission . I think i said in response to couple questions ago if Congress Changes our responsibilities, theyre the boss. I think were well served by having the epa and all the state environmental regulators whose job is to include climate and ferc whose job is reliability and pricing. I think thats a healthy division of responsibility. Industry people say one of the biggest threats to the electric grid is the wave of baby boom requirements at utilities and these are now hitting in full force. Are there enough new workers coming into the industry and if not, why dont young people want to work with electricity . I was already a baby boomer and retirement age when i left the utility. They seemed to have managed without me. No. This is a big issue across many sectors. You read this i used to be on a hospital board, sectors and a big population spike of baby boom and valley and then millennials, our children and their peers. I think its of concern in this electric sector because it takes a while to train somebody to be a lineman or control room line person or control room open rater. That definitely makes a lot of retirements at onetime a concern. A lot of work is being done at colleges colleges theres always plenty of lawyers and all. Its the people that actually work on the electricity that are hard to find and develop those trades and get people interested. I think a lot of companies are working on that. Ill put in a plug military higher is just a natural for the Utility Industry. With so many veterans come back now, i know a lot of them are a wonderful source of Tomorrows Energy people. Have you heard from any grid operators or state regulators there will be difficulties implementing the Clean Power Plant . Yes. We met with almost all the grid operators. They met with Different Levels of concern. Because theyre the ones trying to keep the lights on theyre the ones working through these issues as the generation fleet evolves, what transmission has to build and what markets have to work. I think theyre focused on i cant speak for them but some of the things i talked about in my speech. State regulators, their views change by what resource is in their state and changes under the green power plan and we havent heard from all 50 state regulators but some are quite engaged. Do you envision a broader role for fercs enforcement initiatives for this or will rule making be the methodology for addressing it. Thats an interesting question. To the extent that the Clean Power Plant changes market rules rules, enforcement is one part of making sure markets are fair. So its also a part of ferc only gets involved in the biggest reliability issues most done by nerc the north American Electric corporation under our oversight to make sure liability is protected. I tend to think of the rule making either writing the standards or approving standards in our case or approving market rules as the first phalanx and then enforcement makes sure theyre complied with. I dont think thats what you lead with changing something. Lead with something and then enforce it. Traditionally politics has not played much of a role at the Commission Even though there are appointees from both political parties. This person says. But that seems to be changing with this debate over the ferc role visavis the epa. Does this concern you, does ferc just like so many other parts of washington becoming more political. The vast majority of work ferc does does not divide among partisan line even when we have dissents or splits between commissioners theyre not frequently along party lines. That, i think is good. Were all looking at the law and record. We might have different views but theyre not kneejerk party rules in any sense. Thats how ferc has been a long time and basically still is. I do think when it comes to environmental rules they tend to become very controversial. This area of our work has become more ideologyical than some and i think thats the reality of what we see in washington. To what extent do you see distributed generation transforming and perhaps disrupting the disrupting the electricity system . Well, i think that distributed generation is a huge trend trend, particularly the rooftop solar, which seems to have gone over the the barrier of affordability and ubiquity now and a big big piece of the grid. It seems like even back in the 80s everyone will have heat and power in their basement and wont be more power plants. Most of those trends didnt manifest itself the way expected. Rooftop solar is here and crossed the divide to being economic and a big part of our grid. I dont personally see it as disruptive, a new part of the echo system. I think we will need the transmission grid and distributed solar and maybe some of the other technologies will become that economic. Thats the first to get there. I know you put your ferc regulated electricity transmission to good use at ferc headquarters because im sure you have many wonderful coffee pots that keep the ferc staff alert and awake, therefore, its my pleasure to present you with the honorary National Press club coffee mug i hope its of good use back at headquarters to keep everybody alert over our power grid. [ applause ] one more question before you sit down. Youve been wonderful answering so many questions. We want to wrap up with this one. Everything in the Energy Sector this questioner says seems to be so male dominated. What do you say to girls to get them interested in careers in energy . What can we do to turn that around to make it more of a career for more women . Thats a great question. I think we are seeing more and more women in energy i think that maybe as far as getting more women in some of the blue collar job and engineering job where its lagged the most, a lot of it comes down to stem education, getting little girls interested early. Math and science programs for little girls. I used to be at Worcester Mass and they had a stem program to try to get girls interested in that. I think those important efforts to really build up that piece of the workforce. These are good jobs, good paying jobs. You can support families and we want more girls to be interested in them. At the same time, im living proof im were the parents of a physics teacher. I am not a stem nerd at