The Equitable Life Assurance Society presents This Is Your FBI This Is Your FBI The official broadcast from the files of the Federal Bureau of Investigation presented as a public service by the Equitable Life Assurance Society of the United States and the Equitable Society's representative in your community. Fathers and Mothers of America, attention please. Upon the training you give your children today depends the future of America. Our system of free enterprise, personal liberty and democracy cannot exist without educated and enlightened citizens. In about 14 minutes our sponsor, the Equitable Life Assurance Society of the United States will have some helpful suggestions for parents. If you wish to equip your children to take advantage of all the opportunities the future offers don't miss this important message. Tonight's FBI file, the diamond-studded double cross. It is a grave indictment indeed that the silent accessory to practically every crime is the criminal's own mother, father or guardian. The parent who was always too busy to watch how his or her son or daughter grew up or who just didn't care what kind of companions they kept, where they went and what they did when they got there. Or the parent who was too indulgent, who always gave in, who let the boy or girl have their own way so freely that soon for them the wrong way became the right way, the only way. Joe Bristol's mother had been that kind when he was growing up down along New York's waterfront and she still was. That's why tonight's case is in the files of your FBI. Hot, humid air hung like smoke over the East River. Wrapping a damp shroud about the old barge tied up to the sagging dock. A lantern burned in the galley but the woman was sitting outside on the deck. She was alone. In front of her through the haze, swarms of lights burned in the forest of tall buildings. Behind her an occasional tug or freighter groaned and passing. She paid no attention to either. She just sat. Presently she heard footsteps, familiar footsteps. Hiya, Mom! Quiet, son. What's the matter? You know how Mr. Braddock feels about you coming here. Oh, where is he? He's in the cabin taking a nap. It's laudable to hear him.  Don't you talk that way, Joey. He's very good to me, except about you. He's just jealous because he ain't my old man. It's not that at all. What else does he want? Soon as Pop died, he got you and the barge too. Joey, Mr. Braddock is a good man. Now please run along. Maybe I can meet you somewhere tomorrow, huh? But, Mom, I gotta see you tonight. Oh, Heavens, you're not in trouble again. No, not the kind you're thinking, sweetheart. I just want a little dough for a couple of days. I got a deal cooking, but till it comes off, I need 20. What kind of deal, Joey? Nothing for you to worry about, Mom, honest. Look, I never know what you're doing anymore. I don't even know where you're living or how you... Oh, listen, he woke up. You gotta go, Joey. What about the dough, Mom? I gotta have it. Well, come back in the morning. He'll go to the barge office about eight. Okay. See you in the morning, sweetheart. Have a good nap, John. That was your son just here, wasn't it? Yeah. Want money too, I suppose? I didn't give him any. Mary, I told you he had to stay away from here. Now, I gotta write to see my own boy, John. I'm sorry, Mary. I just wish he was different. It's the only thing that ever makes trouble between you and me. Oh, wait. John. What? Look, that man down on the dock. He's coming aboard. Yeah. Can I help you, Mr? I said, can I help you? What's matter, Mr? Is something wrong with you? I don't know. I feel so... John, he's fainted. Yeah, open the door, Mary. I'll lift him in on the bunk. Maybe you better get the police. No, no, no. He don't need the police now. He needs tendon, too. Just open the door. A little earlier that evening, Special Agent Allen of the New York office of the FBI returned from a trip down to police headquarters and entered the office of assistant to the agent-in-charge, Rutland, to report. Is it a case for us, Allen? Looks as though it might be. What's the story? J.B. Medford, representative of a large Chicago wholesale jewelry house, left Chicago by train yesterday with sample case of jewelry due New York this morning. He hasn't turned up. Hasn't turned up where? He was to check in at the company's New York branch office at 10 a.m. But he didn't. What do they think? Well, they don't suspect Medford. He's been with the firm 20 years. And I take it they suspect foul play. Yeah, the jewelry he carried was worth about $20,000. Here's a complete list and description of it. Looks like a case of robbery. What train was he booked on out of Chicago? The Manhattan, and they know he boarded it. The Chicago office confirmed that. But they don't know whether he arrived in New York on it. No, they haven't determined that yet. Then that's the first thing for us to find out. Oh, I have the number of the car and the space he occupied out of Chicago. Then you better start checking on it right away. Call me as soon as you get anything. He's gone, huh? Uh-huh. Time to do okay. Just give me the dough, Mom, and I'll take... Hey, what's this? Who's the guy sleeping on the bunk? Huh? Oh, him. He's sick. Yeah? Yeah. He wandered under the barge last night, right after you left and then fainted away. Well, who is he? We don't know. Say, what is this? Mr. Braddock asked him, but he just looked kind of funny and said he didn't know, and then he fainted. Yeah, we put him on the bunk, got his clothes off him, and he's been sleeping like that ever since. Mr. Braddock thinks he's got whatever it is they call it. You know, when people forget who they are and what happened and... Joey, what are you doing? Looking for his clothes. Oh, they're hanging in the next room. What do you want with him? Look, you're taking care of that guy. You got to know who he is. Oh. Where are they? Hanging on the peg there. Pretty good set of threads. It could be a big shot or something. What? What have you got? His wallet. Maybe there's a card or something in here that'll tell... Hey, look at this hunk of lettuce. Where? 75 clams. Never mind about the 20, Mom. I'll take it from here. Joey, you should. Yes, Ed, yourself. He don't remember nothing, so he won't miss it. Well, okay, but don't take any more than 20. Here's his identification card. Oh, what's it say? JB Medford, Chicago salesman. Hey. What's the matter? Salesman for a wholesale jewelry company. Well... Maybe that's what happened to him. These guys always carry stuff around with him.  Now what did you find? His keys. Here, hold on to them, Mom. Oh, and what's that? A baggage check. He checked something at Grand Central. See you later, Mom. Where are you going? What do you think? I'm gonna find out what he checked. Rutland speaking. What have you got? Well, I finally located the port on the train. Did he know anything? Medford arrived in New York yesterday morning, all right. But he had a little accident before the train got in. What do you mean? They stopped at Harmon to switch over to electric, and the porter saw Medford start out of his drawing room. Just then the train gave a sudden start, and Medford fell back, striking his head pretty hard against the metal door. Yes. The porter helped him up and asked him if he was all right. I see. You know, if the blow on the head was hard enough, it might... It's highly possible. In which case, most anything could have happened to both Medford and the jewelry. Yes. Well, then, what's the next move? We'll start checking hospitals first to see if anybody's been picked up. And if not, then we'll have to try another...  Joey said if we was taken care of him, we had a right to know who he was. Well, all I'm saying is if he picks up what's checked at the depot, he better bring it right here to the proper owner, or else he'll help me output the police on him. Why don't you pipe down, Braddock? Huh? They can hear you bellowing all over the waterfront. All right, now you brought his bag, now drop it and go. What's in it, Joey? I haven't opened it yet. You got no right to, either. Mom, give me the guy's keys, will you? Oh, sure. I said you got no right to open that bag. Now look here, you leave it alone. Mom, look. Diamond. Yeah, there's enough ice there to make a thought. Close up that bag. What? I said close up that bag. I'm taking charge of it, and you're leaving this barge. Oh, wait a minute. I'm turning it over to the police.  The guy in there don't know nothing about nothing. We got a sack full of stuff we can fence off for a great big bundle.  He's right, John. Mary, you know what you're saying. Sure she does. She makes sense. You give that to me.  Joey, you hadn't ought to have done that. He cracked his head against the stove. He'll come out of it okay. I don't think so. Why? Because he's not breathing, son. That's why. We will return in just a moment to tonight's FBI file. Now, three questions and answers on education. First question, what is the safest investment you can make for your children? An investment they can never lose regardless of inflation or deflation. One that will pay them daily dividends as long as they live. Well, in all the world there's only one investment like that. It's education. Exceptional individuals do rise to the top without higher education. But the proportion of college families earning over $5,000 a year is eight times as great as the national average. Think it over, fathers and mothers. Doesn't it make you resolve that your children are going to get a college education no matter what happens? While your children are still young, start an equitable educational fund for them. Second question, what is an equitable educational fund? It is a plan that includes these important features. The equitable educational fund makes sure that money for education is ready when your child is ready. If you die, the educational fund becomes fully established. If you are totally or permanently disabled, the educational fund continues to build up without any further payments. Educational costs are spread out over many years instead of being concentrated in a few. Last question, how much will it cost to send your son or daughter to college? That question is answered in a memorandum recently prepared for equitable society representatives. It tells the cost of tuition, board and lodging in 192 leading American colleges. In addition, it summarizes the long-range opportunities open to educated men and women in 29 industries and professions such as architecture, dentistry, engineering, chemistry, life insurance, social service, information that every parent should have. Your nearest equitable society representative has a copy and will be glad to show it to any sincerely interested parent. Call him tomorrow. You'll find him in the phone book under Equitable Society. That's E-Q-U-I-T-A-B-L-E. The Equitable Life Assurance Society of the United States. And now, back to the FBI file, the diamond-studded double cross. The parent who always gives in to the will of his or her boy or girl, who makes too many allowances for and thereby condones their wrongdoings. That parent not only destroys the distinction between right and wrong in the mind of the child, but all too often seals off his or her own conscience from a sense of wrong. Little wonder, then, that the mother of young Joe Bristol after long years of hardening herself to his wrongdoing. Little wonder, then, that she was to be found automatically approving his deeds. Joe and his mother stood looking at the lifeless form of John Braddock lying on the floor of the barge galley that slowly the woman turns toward her son.  Look, all I did was hit him. Can I help it if he fell back and cracked his head against the stove? No, the police will blame you for it just the same. There's not going to be any police. But Joey, how are we going to keep it from them? We're not going to be here when they come. What are we going to do? Wait a minute. Huh? That guy in the other room. He might have come too and heard something. I'm getting a come out of it. We've got to get out of here fast. You mean just go off? The cops won't know I was ever here. But they'll know I live on the barge. They won't know you was here when it happened. They might even think that... Yeah. That's it. What? Nobody knows that guy in Medford is here, do they? No. Then nobody's going to know when he got here. What do you mean, son? With his wallet. Oh, I took it out of his coat pocket where you left it to show to Mr. Braddock. Here it is. Okay. Joey, where are you putting it in Mr. Braddock's pocket? I'm not putting it all the way in. I'm leaving a part of it sticking out. Oh. Now, with something heavy, something like... Yeah, this'll do. The crowbar is just the thing. Huh?  I don't get it. Just keep your fingers crossed that Medford don't come to yet. But Joey... Joey, what did you do? The crowbar is lying on the floor by Medford, right where he dropped it after slugging Braddock with it for stealing his wallet and jewels. Get it, Mom? No. Medford passed out from the nut on the head Braddock gave him first. Now, all we got to do is scoop up the sack of jewels, leave the empty sample case here and scram. But Joey... Look, Mom, Medford's coming too. We've got to get out of here. Mr. Medford, what time was it when you regained consciousness? I don't know exactly, Mr. Rutland, but as soon as I saw where I was and all this, I went to call the police and I guess they called you at the FBI right away. That couldn't have been more than an hour ago then. I don't know the meaning of any of this, sir. I swear it. What's the last thing you remember happening? The train had stopped at Harmon. I started from my drawing room to the diner to get a cup of coffee. Yes? The train gave a sudden lurch. I felt backwards striking my head against the metal door. You remember the blow? Yes. And I recall the porter helping me up. I told him I was all right, but I thought I'd better go back to my drawing room and sit down because I felt a bit dizzy. Then what? Believe me, sir, that's all I remember until I came to here a while ago. Then I... Yes? I found this crowbar with blood on it beside the bunk I was on. The rest you see for yourself. Oh, find anything, Alan? His wife's things are still here. Wife? The dead man is John Braddock. The police said his wife lived on the barge with him. Mr. Rutland? Yes? Could I have... I mean, do you think it's possible that I did this? It is possible, yes, sir. Good lord. It's possible, but too many things indicate, sir, that you didn't do it. This, for one. Huh? Braddock is lying here by the stove. Here's some blood on the stove door. Yes, but there's crowbar. If Braddock had taken the jewelry, it would be somewhere here in the cabin, and it's not. He had a stepson, Joe Bristol, with a police record. Now, Joe could have done it and rigged up this clumsy piece of business with a wallet and a crowbar to throw a suspicion your way. But how in the world did I get here in the first place? There's a lot we don't know yet, Mr. Medford. But we do know that the jewelry's gone. Braddock's wife is gone. And her son, that's Braddock's stepson, is a thief. That's enough for us to start on. Alan? Yes? Get back to the office and put out an alert on that list of jewelry. Right. I'll get the police to take over here, have a doctor look after Mr. Medford, and then I'll join you at the office. Good morning, Alan. Good morning. How's it going on young Bristol? I've combed the waterfront, and every other known hangout of his for two days now. No lead. His mother seems to have vanished, too. If the job was Bristol's work, then he and his mother must be together. Well, the whole country is alerted on them. And the jewelry, too. Oh, excuse me. Rutland speaking. Hello, Rutland. This is Durant, Pittsburgh office. Oh, hello, Durant. What's up? The police here have just turned up some of that Medford jewelry. Good. They found six pieces in a pawn shop here this morning. Well, fine. Alan and I will be in Pittsburgh on the next plane. Joey. Mom, haven't you got any brains at all? Oh, what's the matter? What are you doing sitting here in the lobby? Oh, I'm sorry, son. I told you to stay in the room. Well, I got nervous waiting for you. That's a big help. Half of Pittsburgh could spot you here. How'd you make out? I got rid of another bunch of the stuff. That only leaves 10 pieces I still got on me, and four more you got. Yeah, they're up in the room. Well, now here's what you do.  Well, where are you going, Joey? I got to make a phone call.   Yes, Joe. What is it? How much money have we got so far? We're doing all right. Now get up to the room quick. Okay. Look, I'm only saying this once, pal, so listen. You want the dame that's got the rest of the hot Medford jewelry. She's in room 917. What did the room clerk say, Alan? He had the maid go up with some towels. Mrs. Braddock is still there all right. Good. If that was her son who called the police here, it's about as dirty a double cross as I've ever heard. Well, it couldn't have been anyone else. I think I know where he's headed for right now. Where? I checked with the hotel operator. The son called a Chicago number from his room this morning. Chicago? Yes, and I checked the Chicago number. It's a pawn shop. Ah, another fence. Mm-hmm. Which means he's got some more jewelry to get rid of. But he's on his way to Chicago. Here we are in Pittsburgh, and Mrs. Braddock is upstairs. You mean how do we put them all together? All right. I've got an idea on that that may work. Wait here. I'm going upstairs to pay an unofficial call on Mrs. Braddock. Anybody here? Joey. Well, I'm a mom. Oh, Joey, I was so afraid something would go wrong, and I'd miss you. How did you get here to Chicago? I flew here by plane last night, and I was at the pawn shop here first thing this morning. How did you know I'd be here? A friend of yours told me about it, Joey. He was the nicest man. He helped me with my... Wait a minute. Do you remember mine? Yes. Not long after you left Pittsburgh, you came to the room where I was. Yeah? Yeah, and he told me where you were going and why, and said the police were on your trail, and I better get to you quick before they did, and he even helped me get on the plane. That's enough, Mom. I'm getting out of here. Now, Joey, wait. What are you doing? I'm getting out of here. There you are, Bristol. Huh? Joey, this is the one. The nice man. I'm the special agent of the FBI, Bristol. FBI? Don't bother to make a break for it out the door. My partner out there will be waiting for you. Okay, wise guy.   Everything you did was dumb.  Tried for the theft of the jewelry and transporting it across the state line, Joe Bristol was sentenced to a term in a federal penitentiary. Execution of sentence was waived, however, in order that Bristol might be tried on the more serious charge of murder in connection with the death of his stepfather. For which crime, he is now serving a long term in state prison. Bristol's mother received a lighter term for complicity in the jewel theft. Tonight's case was an extraordinary conclusion to a story of years of parental neglect. The prime factor in the development of most of our criminals. In this case, a parent eventually became an actual accessory to her son's crime. But of practically every major crime, it may truthfully be said that the criminal's own mother or father was at least a silent accessory. For respectful law, for the rights and property and lives of others, the responsibility for teaching these things to the children of America belongs to the mothers and fathers of America. In just a moment, we'll tell you about next week's exciting case from the files of your FBI. Again, let me remind you to check with your equitable society representative about the safest and wisest investment a parent can make for his children's future, an equitable educational fund. Without obligation, he will also show you the equitable society's memorandum on the costs of higher education and some of the opportunities it opens. You'll find your equitable society representative in the phone book under the Equitable Life Assurance Society of the United States. Next week, we will bring you another colorful story from the files of the Federal Bureau of Investigation, the Night of Terror. The incidents used in tonight's Equitable Life Assurance Society's broadcast are adapted from the files of the Federal Bureau of Investigation. However, all names used are fictitious and any similarity thereof to the names of persons living or dead is accidental. Tonight, the music was composed and conducted by Frederick Steiner. The author was Frank Ferries and your narrator was Dean Carlton. This is your FBI is a gerrydivine production. This is Milton Cross speaking for the Equitable Life Assurance Society of the United States and the Equitable Society's representative in your community and inviting you to tune in again at the same time when the Equitable Life Assurance Society of the United States will bring you another thrilling story from the files of the Federal Bureau of Investigation, the Night of Terror. On this is your FBI. This is ABC, the American Broadcasting Company.


Oh get that out of here he's dead. Is he dead? Bro, that was a risky place to throw projectiles. Oh no! Is he dead or is that just like one health? How's it going everybody? Tato Dewey here back with some more Samurai showdown rank matches. Once again we are going to be playing Yashimaru. Let's see what my opponent's going to play. Tantam or Top Top. I actually really like that guy's design. Hopefully we can with a couple more real match experience under our belt we can actually be a bit more solid with our play here. Oh! Backed it up with the air. That's the thing I really like about this character is his second air jump. Just running with the heavy. I like it. A fireball? I'm going to respect that. For now. I should not have a... Oh! Okay okay. I can appreciate this game. Ah it didn't work. What? Come on I was... Wow we got out of that too. Jesus that was damage. Oh the skull in the air! Missed him because he jumped over the blade. Dude this guy's going wild. Oh yeah that's death. I was like that looks like a two-parter. That just felt like it should have been death. Damn I got outplayed. I felt like for the first half of that health bar we were the one doing the work. There you go there you go. Ah am I punished? No we are not. In fact we're the ones doing the push. You keep doing that bro. Ah I try to get him again. Get out of the air. Alright we got him now. I got cheese too much that first match. I ain't going to get cheesed again. Dude I love hitting. Heavies in this game just feel so good. You land one of those. You're off to the races. I'm waiting for him to just space something poorly again. Ah I thought we could dodge it. Big hit. I don't know why I do that. I don't know why I try to meet people in the air with that. It's really not working out. Get out of the skies. Dude can't you see I got the air control. Alright I do regret my choices there. Again I didn't do the two buttons. Cross up but we're not in range and that's not going to auto correct. Why did he in range? Oh because it's the last match. Oh tell me I got him. What was that? Dude did a victory cry before it was over. I think that's a part of the animation for his move but that is too funny. That actually cracked me up. That actually oh my god that was great. I love how fast the rematches are in this game. I like that. We're going to back that share. Let him play the air projectile game if he wants to. Oh jeez. I forgot you got to get out of the way of that in the air. You're still going to get hit. Alright I definitely did try to click a button. You caught me. No running into that is not an option either. Get that out of here. He's dead. Is he dead? Bro that was a risky place to throw projectiles. No. Is he dead or is that just like 1 health? You messed with the wrong anime player bro. I came to Sam's show just so I could play anime. I'm in range so I got to do something. DP. DP where you going? Uh oh. I always try to test that. I use my rage to get greedy. I wonder if I'm going to regret that. Probably it doesn't look like I am. Oh come on grab help. Oh the damage. The damage. It's not fun. No jet. What are you doing trying to use those strikes bro? You got to stick to something a little safer. Wow.  Alright. He got the game. He's going to character select. He's got to mix it up dude. Something tells me he did not like those projectiles getting punished. But since he's in character select do I mix it up now? Do I hit him with the young Hanzo? I have not practiced this hot. Why does everybody switch to Yoshi Tora? Why is Yoshi Tora's everybody secondary? Like a Buki stage dude. He is going to not know what hit up with this guy. I barely practice this dude but I know just what I need to. So I can kind of guess what this guy is going to do right? He's going to try to go in with that knee. So let's just jump back. Oh that was not the knee. Gotcha with the low. Let's go. Now if only I could just do something else. Yikes we took the whole beating. Let's try to roll out of the corner here. Oh he's got me pinned. Overhead. I'm not going anywhere. You got to come to me. No no no wait I was supposed to be the one having fun. No I'm dead. I've decided I've lost. Oh he's so dead. Oh I lost. Oh wow we didn't lose. It's a low. You got to guess. You got to guess. That's all the part of the mix. The young Hanzo. I love this character. That is so, that is a decent bit of range. It's always one more than I expected. Wow the dash. Oh nice counter. I can't do the fake out teleport on mine because I'm not good enough at conditioning people to not just punch me square in the face. I try to just guard it. Do we try this? I tried to do the super input but I always forget the second button. I don't know why I'm so trash at that aspect of the game. Remembering that the super down there is two buttons. I haven't done a one weapon flipping segment. See if he sees me go down into teleport position he'll know to block. But I just, I'm not good at... Damn mate that was my chance. That was my chance dude. Every time he goes down that's when I get excited. Oh big hit. That's all he's going for now. He just wants to finish this.  Or just kill me. Or just kill me. Dude I could have done so much better. I just let him get to me in that corner. Call it a wrap. Alright how about one more game. If he hits rematch let's just go right away rematch. That's the move. That's the move. Come on, hey rematch. Give me that last match. Okay, last match of the day. What is Hanzo cooking up in the kitchen? I'm gonna start with a nice B. Serve him up real good. A little bit of damage. No, I gotta watch out for that too. Okay, low. Oh he blocked it, no. They're asking for the punish for this point dude. Nope, I don't even know I was playing the fireball game. What I should have done is just try to go for a cheese overhead teleport. That would have been the more responsible thing to do. But what in my life have I ever been responsible? In fact... I understand. What in my life?   Oh big hit. I'm trying to hit this dude with the command grab. Overhead. Blocked it nice. If he's blocking the overhead version will he block the low version? This is my basic... No, he's just doing it. Oh, oh.   No, I jumped. Oh dude, he's just throwing that out. Oh, I thought we won. I was about to be so mad at myself for just running away there. All right, so he took the win there. We don't have... What do we do? We lost our super, right? So that's not in the picture for us. Low, that's the overhead. I tricked myself. Throwing out random moves. He can't roll away from that. Take that, take that. He blocked it. He's getting better. Oh, I forgot all about that move. That's another part of the mix-up. Look at random stuff.  He just jumped. What a guy. Boom, dead conclusion. I kind of like Hanzo. I am not prepared to play him online at any level.  Hopefully you guys enjoyed this one. If you did, make sure to go down below. Let me know your favorite moment if you have one. Also, make sure to hit that like button and subscribe if you like the stuff here and want to keep seeing stuff like this. Seriously, I really do appreciate all of your guys' support, especially when we're playing things like Samurai Showdown over fighters, for example. Not that I don't love the people that support fighters. It's just that it's nice to, you know, show off all of my fighting game interests instead of just one game, exclusively. But if you do want to watch some other videos, there should be some up on your screen. So just give any of those a watch if they catch your interest. Other than that, I've been Dr. Doia. Thank you so much for taking the time. I'm out of your day to watch this video, and I will see you in the next one.


This next panel is going to focus a little more on the investment picture, both from a macro-micro-economic point of view. Suganda Tuledar is with Nira Economic Consulting. He's the Associate Director in Energy, Environment, and Communications, covers a lot of territory. We're delighted he's here today. He's been working in various areas for quite a bit of time, and I think this probably is his first appearance at a Wires meeting, and we're delighted. He's got a Master of Science in Operations Research, Industrial Engineering, and a PhD in Economics from UT, University of Texas. Thank you, Suganda, for being here. Christy Tezak, you have probably seen her at other Wires events, but she has been a very well-known analyst in the Washington area for quite a while. She's Managing Director at Clearview Energy Partners and covers electricity markets, interstate pipelines, energy infrastructure, and environmental policy. She came to Clearview from Robert Baird and the Washington Research Group. She has been honored by the Women's Council on Energy and the Environment, affectionately known as WISI, and she has a degree in Russian from Boston College, which these days you never know could come in quite handy. So thank you, Christy, for being here as well. Our next panelist is Jim Lucere. Jim is very well known to people in the FERC and energy analytics space. He's Managing Director at Capital Alpha. He used to be Capital Alpha Partners, but I think it's just Capital Alpha now. And he leads the energy environment and tax practices. Jim tells me his first love is really tax, and he's kind of migrating back in that area, but we're happy we could lasso him for this appearance. He was Senior Vice President of Prudential Equity Group and has been doing, sharing his views with Wires and other energy associations for quite a while. Jim is a great friend. Todd Ryan comes to us from SmartWires, where he is Director of Regulatory Affairs. SmartWires is out in the Bay Area, but they're an increasingly prominent, very interesting company, also a member of Wires. Todd previously worked at Beacon Power, did a lot of work in the flywheel-based energy storage area and other technologies. He too has a PhD and is a guy with a fresh perspective on a lot of the issues we've talked about today. So we're going to start with the macro and maybe move to the specific technology. So if you would, thanks, Jim, for having me. This is my first time, as Jim said, participating in Wires, and to be honest, I didn't even know what Wires was before Jim called me last week, and I had to step up because a friend of mine basically pushed me into the fire here. So today my talk is going to be a little bit slightly, not slightly, quite a great deal of difference than what we've heard in the previous panels. And I'm going to take a little bit of a macro approach of looking at infrastructure investment in general and then dive into a little bit about what does this mean in terms of transmission investment to the broad economy at large. Because oftentimes the question comes about is the investment infrastructure in the best interest of the consumers and does it serve as a public interest in terms of public interest determination? Is it good to invest and is it serving the community at large? We've certainly heard earlier this morning about trying to look at an infrastructure or even a transmission project in terms of just from a very micro perspective of looking at the benefit and looking at the cost and then looking at what is the net benefit or net cost and then rationalizing the project on that aspect. But I'm going to take a little bit of more macro approach in a sense that any infrastructure project does not sit in an island, it is connected to the broad economy at large. What the transmission infrastructure does would have impact on the electricity rates and then it's going to have impact on the, let's say, industrial sector, how they use their energy, what might happen to their cost of production, what does it mean in terms of their export values or supplying it to the domestic and then what does it mean to the consumers at large, do they get let off, do they get more wages and their income increases, do they have more purchasing power to sort of spend on goods and services. So that's the broad theme I'm going to talk about and I would sort of conclude sort of just trying to bring all these together, trying to figure out, trying to sort of put forward what are the necessary ingredients of a sort of an economic tool or a model that might be able to capture these uncertainty that surrounds any infrastructure investment, be it some sort of macroeconomic driver or technology uncertainty or other forms of uncertainty. So I try to put forward a framework that might be useful and that's a framework I've been sort of developing over many, many years. And let me start off by my first slide here, you know, so I think I'm going to start off by trying to sort of put all this in context with some of the projects that I've done that might be sort of infrastructure in nature, but not necessarily a transmission project. So we heard a question from there for Pat on Alaska. So my first example is basically looking at an infrastructure project in Alaska. This is basically the LNG, Alaska LNG project, essentially as the gentleman there commented that basically you have pockets of markets in Alaska and the pockets of sort of cities are not well-connected. As a result, there is obviously the gas supply is much more constrained. And if you look at the gas price in Alaska relative to the lower 40, obviously the consumers are paying much higher price. At the same time, there's a potential of this Alaska natural gas resource on the North Slope, right, that might have tremendous value if that was to be exported given that there's a differential between, you know, when I started this project way back then, couple of years back, there was a differential between what the natural gas was being sold in the East Asian market versus what it might cost in terms of trying to produce in the local market. So basically this particular Alaska project is it was like, you know, you've got to build this 800-mile-long pipeline all the way from North Slope down to the LNG liquefaction plant on the south side. At the same time, there was a declining sort of domestic supply from the cook inlet into the domestic market. And then we need to build this liquefaction plant, which is, again, an infrastructure heavy. So there is a combination of building the liquefaction plant, which is quite infrastructure, quite heavy investment, coupled with 800-miles long of pipeline in order to then be able to supply that LNG to the market abroad wherever that might be taking place. So that's the setting. And this to me is like no different than trying to construct a transmission infrastructure anywhere here where either we bring wind energy from North Dakota all the way down to wherever there's a demand pocket by sort of building in a long transmission project. It's a similar concept, but then the question really becomes, is this project in the best interest of the community? Is it in the best interest of the people living in Alaska? Would they be able to enjoy lower natural gas prices? Would that natural gas support the domestic industry? And then would the export value of that natural gas provide additional sort of export value to the U.S. as a whole? And then would that improve our terms of trade? And then at the end of the day, is that beneficial? So that's sort of the scene. And obviously, after doing this analytical work, what we found that is basically, obviously, after we build this pipe, there's a cost associated with building the pipe. But at the same time, there are economic benefit that comes as a result of increasing natural gas. There's more sort of, it relieves the pressure in the domestic natural gas market. So there's a lower price that the domestic consumers, Alaskans, they enjoy than in the current case where there are supply constraints. At the same time, since there's lower natural gas, you get an sort of impetus in terms of natural gas using industry, and there's an industrial growth that essentially means that, you know, the wages goes up, people are getting more income, and then it improves the quality or the purchasing power of the consumers. At the end of the day, there's an improvement in the consumer well-being. So that is sort of how we capture, you know, is it worth investing in this infrastructure? And our analytical sort of, our analysis shows that it certainly had the economic benefit not only to the consumers on the ground, but as also it justified the investment of this magnitude. So that's one example. I think along the same vein, we also did just a couple of years back looking at, not the second example, but a very similar sort of energy-related work was we looked at what would be the potential economic benefit to the U.S. if U.S. was to lift the ban on crude oil export. Basically there, in that analysis, again, we showed that, you know, we need to, then our analysis shows where the crude is going to be produced, how much refinery expansion is possible, and where the demand might be, and what would be the implication on the global crude oil market as well as what are the potential benefits. So again, that's an infrastructure sort of driven project that we are able to look at looking at various economic drivers of, you know, what if there is a change in market condition in Asia or if there was a strategic behavior from UPEC on their price response, what would that ultimately means to the benefit and can we rationalize the infrastructure investment that we are potentially sort of envisioning. So I think one needs to be aware that it is, when we think about infrastructure, transmission infrastructure or any old infrastructure, we need to think much bigger than the sector itself because it has essentially relationship with other aspect of the economy. So the second example is just looking at, again, a small project that I did, we're looking at what is the potential of, you know, building a hydroplane investment in an East European country. Again, this country depends a lot on the natural gas import, obviously, from Russia with a lot of uncertainty associated with it. They wanted to sort of build in hydroplanes so that they can minimize the risk and then basically just to, is it justified in from trying to sort of be dependent on natural gas and sort of move away and try to produce their own domestic sort of produce electricity. And obviously, again, same line of thought where they basically, with this infrastructure investment, which is a hydroplane, which has a lifetime of sort of about 40 years that essentially sort of increase the supply of electricity in the domestic market, reducing the electricity price, and then displacing imports of natural gas. So there are all these benefits at the same time. There's a cost of investment where it was financed by an international bank and these guys have to pay it over a certain period of time. Even with those sort of payments that these guys had to pay, I think it certainly justified. Now, I think moving on, I think moving on, looking at just on the different types of uncertainty that might matter and how it might impact the generation, so this is sort of looking at, I did a couple of just runs where basically I've sort of created a baseline, oops, sorry, so basically we have the baseline generation, obviously we've got coal, natural gas, nuclear gas, CCS, CC with CCS, a wind solar buyer and other generation, and I did a couple of sensitivity just to look at, just to give you a viewpoint that market conditions does matter and the regulatory policy does matter and this provides a wide range of mix of generation which obviously is going to have an impact on how you build your transmission and where the demand pockets and the supply pockets emerges as a result of these types of uncertainty. The first line is obviously the baseline, the second one is a very aggressive RPS, the third is basically I just simulated a very Trumpian economic growth about 3.5%, then the fourth scenario is basically a deep decarbonization scenario, you know, consistent with like a Paris Accord type of scenario and then a very mild $25 tax, so on the right side is the long run sort of generation mix and on the left side is the short run generation mix, obviously not much happening on the short run because the policy uncertainty is not that great in terms of trying to change your generation mix but certainly it does have impact on the long run as to how the market evolves or even the technology or the regulatory uncertainty evolves, so I think one aspect is that when we think about transmission sort of investment we certainly need to think about what is happening or transpiring in the long run either in the form of regulatory policies or in the form of market conditions that might emerge, so I think it is sort of one needs to have some viewpoint of where things are going to evolve in the long run, so this is just a very sort of high level overview of how the market sort of uncertainty might evolve and then impact the total generation mix and then ultimately sort of give you an indication of how the infrastructure might, transmission infrastructure might be devolved over time, obviously I could have shown the like somebody did in the previous panel where it shows how the prices emerge over a period and then layer that with the transmission concession then I can certainly show where the concessions are sort of emerging under these different policies so that certainly give you a much nice pictorial viewpoint in a heat map sense, so I looked at basically between the baseline and in the high growth scenario case basically I sort of counted how many transmission lines were constrained in the baseline versus the high growth scenario and it's sort of doubled and it's not surprising that as your growth picks up your electricity demand picks up and the generation picks up obviously the connecting pipes gets constrained and there's you know rents to be had at some point somebody's can going to build an infrastructure investment going forward, now so tying that all these sort of nuances of what one needs to sort of take into consideration when you're trying to evaluate an infrastructure project, so this is a sort of a cartoon of just a different blocks or different pieces of sort of a model that one can put forward right so on the left side so anyway so on the left side you see these various blocks of sort of economic actors one obviously we need to have representation of region at sufficient granularity right so in the model that we have on the right hand bottom side we have about 63 reasons in our model so we are able to capture exactly you know at a good fine detail level as to how the demand might emerge and what sort of generation pattern might emerge based on the resources that are available in those regions so that's certainly a requirement in order to look at a transmission sort of infrastructure investment to have some sufficient regional representation obviously having a detailed electricity model is a must right in order to sort of do any kind of sensible sort of analysis of the electricity sector so basically buried underneath our electricity sector we have a very detailed dispatch model of not only the US regions but as well as connecting Canadian regions so that we are able to look at cross border issues as well as well as sort of bringing all these new technologies into the modeling framework so that is another sort of a prerequisite when we think about trying to look at how do you look at the problem you know what are the parameters of the modeling framework that we need secondly given that the transmission infrastructure is a long-run investment right you just can't look at one static period and do your analysis you need to have a dynamic sort of model going forward and obviously that dynamic also is required if you are trying to capture the uncertainty surrounding regulatory policy or market condition that might emerge in the future so obviously so anticipation is required certainly there are requirements of capital markets and labor markets in the model because as I said infrastructure investment does not reside in an island it is connected with all parts of the economy so we need to bring that into the into the framework so just concluding here obviously you know we need to have a broad range of modeling instruments if you want to capture the market condition different market conditions or technology that might emerge in the long run so so in general at the end of the day the modeling work the model framework that we have developed is in an economic parlance it's called an equilibrium general equilibrium model that sort of gives these types of flavors such that at the end of the day we are able to sort of evaluate and judge the investment from a pure economic sense with that let me conclude and I look forward to any questions well thank you Jim and I appreciate being back to to be with all of you today I only brought one slide and it got all kinds of super squishy on the screen so and and Jim we're kind enough to make some copies for you which are actually on the table which will probably be a little bit easier to see transmission is a pretty good business when you talk to investors they have different styles as many of you may know you have the the groups called widows and orphans they like dividend paying stocks which utilities and transmission companies tend to be you have folks who prefer higher growth higher risk investments like technology companies or people who invest in Amazon which hasn't even made a profit yet but has a dizzying valuation and so utilities are have a very specific investor base in Wall Street and part of that is because of their stability their income potential income being the fact that they pay dividends the return on your investment is not limited to a hopefully constantly improving stock price and so what you have is a business that has been around for a long time it requires a whole lot of capital to be raised up front and then that capital is recovered by the investing entity in this case the utility over time over a long time usually 40 years so this is the system that we all rely on today the basis of it was actually built there was a lot of capital raised up front with the promise that all that money would come back with a reasonable return over the next four decades or more so what you have is you have a system that in many ways isn't fully paid for that we're constantly asking more of and that everyone wants to in some way avoid so it's a difficult environment to do things revolution that are revolutionary or to change very quickly because that regulatory compact that commitment between the company that went out to investors and raised money and told them they be able to pay it back and the way they have deployed those assets is something that cannot be taken lightly it can't merely be thrown out the window because we'd really rather have an iPhone and it is one of the limitations that not only the company is operating in the space space but also the policy makers and the regulators that are confronted with trying to create an environment that allows them to grow and to deliver the services that all of us as consumers want and so you know when we look at first jurisdictional transmission returns the way first sets rates is a not very complicated math you know math equation but since I'm a Russian major I get to sort of you know just walk talk past that and for purposes of a post lunch conversation I'm definitely going to do that but what you see is you see a basic target for returns on equity that range as low as about seven percent to depending on the year about as high as just over 14 percent and that's what the norm was when interest rates were higher when capital market conditions were different since 2008 that is really started to compress and it really started to compress dramatically after 2014 and so now utility opportunity for returns on equity is really now limited to a band which I tried to show here today of about seven percent still on the bottom and about 12 percent if it's been a good month on top so return potential has come in about 200 basis points which is not inconsistent with the fact that we are in a period of structurally low interest rates and since equity rates tend to follow debt and utility returns tend to be 300 basis points are better over debt that bringing in at the top end of the range in the wake of a change in the FERC methodology and soft capital market conditions have sort of bounded the opportunity set for utilities but it's still a pretty good business the question then is is if the returns are in a vacuum pretty okay then are they really correct and the reason I bring up this question is the fact that there's a lot of politics when it comes to the utility sector in case you haven't noticed notwithstanding the fact it's not a central part of a pending energy bill that doesn't mean it's not important and it doesn't mean it's not political um citing we've talked about today is difficult um getting uh getting your returns back over over the entirety of your investment window is a challenge and why is that because consumer tastes are changing what you have is you have customers who are saying but maybe I want solar on my house or maybe we should have a micro grid for our housing development because interested micro grids is certainly not limited to rural Alaska or places that are isolated okay you have people who are interested in something else other than what's out there there's batteries we have electric cars we've got all this cool stuff and we've got this boring electric grid and that is one of the real things that utilities have to deal with it is a for real problem because there is no value assigned to the electric utility grid by most customers and maybe it's only just my friends who think it's easy that you just turn the switch and the lights come on and they don't want to pay anything for it really the power sector has done a great job delivering a service in fact it's so good it's assumed to be there all the time when we look at um the power sector today we have a surplus of generation we have a dizzying surplus of generation in fact if this were a generation conference everybody would be complaining that prices are too low and what that has done is that has basically driven retail electric utility prices to be pretty flat if not to go down and that's been afforded to us by the decline in natural gas prices that have really sort of caused a lot of the volatility and a lot of the price spikes that we used to see in our power bills driven by natural gas prices to be smoothed out and we've all gotten used to it we all like it so it's difficult to suggest that this wonderful system that we turned the switch and the lights come on and we have the last time we had a big blackout was 2003 it's hard to buy into this argument that the grid's broken could it be better well sure everything could be better my computer could be better my phone could be better everything could be better but that doesn't mean it's broken and it's a challenge I think sometimes to make the case that there's this crying you know need for 80 billion dollars of investment everybody's like what it works it's fine and that's part of the challenge of doing a good job um to Laura's point you know um earlier why has investment been so limited part of it was the demand growth slowdown that Judy mentioned um we have uncertain regulatory and power generation preferences uh people who are out there selling solar for rooftops like to cast the utility as a big bad guy who's being mean to you and that you should get this cool thing on your roof because somebody else is going to pay you money to do it and you get to do this to the utility well what did the utility ever do to you rather than keep your lights on I don't know um when rates are already modest they have one direction to go it's up usually when you talk about bringing market forces into an environment you talk about I'm going to do it for you better and I'm going to do it for you cheaper now the proposition is I'm going to do it for you better and it's going to cost you more okay not as compelling and it's a real impediment for politicians because when we thought we were going to restructure the utility business and wasn't that going to be great the whole idea was prices were too high there was a better more efficient way to do this now in the power industry we have more supply we have softened demand growth we get more gdp gdp out of every unit of energy than we ever have and now people are saying but I want to be paid for value I want to be paid for my emissions free characteristics I want to be paid for being solar I want to be paid for being base load reliability never mind my emissions I want to be paid because I'm a natural gas plant because I'm flexible everybody wants to be paid and the customer is not interested in writing any checks because they like low power prices and we have a new administration that loves low power prices this is a tough environment to raise money in it is a challenge to sell an intangible it is difficult to say that we're all going to be great because we're going to have this great grid okay not everybody thinks lattice towers are beautiful although if you've been on facebook you might see some really cool pictures of what they're doing in parts of northern europe they've got them like sculptures it's really actually kind of cool but they're far away preferably well out of your neighborhood in somebody else's neighborhood solar panels are blue who doesn't like blue my dad likes blue no matter what color it is they're local they're right there you can see them if your power bill goes up you can point at it and say that's what happened to it it's right there it's not in colorado it's not in montana when you're sitting in chicago it's right there that is a tough sell when you're trying to convince somebody that their rate needs to change because of an improvement they can't get their hands around investors really don't care who pays for transmission to them all the money's green they don't care if illinois plays for part of it and west virginia pays for another they just want to know if this company builds this project will they recover the money that they that there's been a commitment to deliver that's all they want to know i would love to be able to call up my mortgage company and say you know i know we had a deal and i know i promise to pay you four percent but you know your cost of capital went down so i'd like to just pay you two you're good with that right that's part of the challenge with renegotiating rates it's logical to say well the utilities cost of capital has gone down i'd suggest but that's utilities that's a utilities existing infrastructure underpinned by existing commitments to the capital markets that still need to be paid that's why we have tensions over rate of return that's why no matter how bad the capital markets get and how low the cost of capital goes that's why when you look at settlements which are all these little green dots for rate cases and complaints they're above the median projection of ferx model which is the bit the blue line that sort of hops through the middle of the gray area okay that's the median projective return based on ferx discounted cash flow but when you look at what customers and utilities negotiate when they have to sit down and work out a settlement it's above that because of all these intangibles and because of the uncertainty that goes on because it works if both sides feel they have gotten a good deal it takes two to tango as my great uncle used to say well actually he used to say it takes one to tango because he used to negotiate with russians and that's the way they like to do it there's other competition for capital and there's other competition within the electric utility for capital we've got a lot of generation i'm going to set that aside for now that's a whole separate psychosis and it involves cocktails lots of cocktails but the other entity competing within the utility for this type of capital is the distribution infrastructure and the distribution infrastructure has an advantage similar to those blue pretty solar panels that you can actually see on your roof for your neighbors there's clear jurisdiction the local regulator the state regulator is going to settle that ray case you don't have to argue with different states in a much bigger stakeholder group you have a much smaller group of cats to herd again it's tangible most outages on the electric system occur in the distribution system they used to occur in my neighborhood all the time and then dominion finally put something in our mailbox it said on wednesday where i'm plugging your power because we're finally fixing that above ground substation that goes out every time it rains awesome we haven't had an outage since and that is again tangible it's close to the customer it's something they can see when people talk about reliability resiliency that's something close to home and it's something that they can get their heads around so if you're going to ask them to pay more you know it's a lot easier for me to say well my rates go up a little bit in virginia then i'm cool with that because dominion finally fix that thing that used to go out all the time you got to make a trade there's got to be value in the transaction and then the last thing i'll leave you with because i when jim said he was going to talk about fashion i thought i'll i'd set him up for the handoff what we've been seeing at clearview is um fragmentation is the theme we are calling it it's this reversion away from globalization it's brexit it's nationalists in europe it's the election of a nationalist oriented new president who feels very strongly to put our country first and so we're seeing neighborhoods put themselves first we're seeing municipalities put themselves first it is difficult to be a fabulous excellent world-class world-beating regional and global technology when everybody's interested in buying their groceries locally so with that i'm going to pass it off to jim well thank you christie that's uh scintillating as always i'd like to say thank you to jim hecker too because jim hecker runs the classiest conference in town i think this is the single best conference venue in dc i like to keep it as a carefully kept secret for my own meetings you get the wonderful view of the capital and of course coming into the elevator and seeing the sign that advertise the new top of the hill menu for cigars and whiskey i thought i have hit the jackpot today so i look forward to the uh i look forward to the libations uh and reception after the event jim also touched on something that front runs my own talk a little bit when he mentioned my background as a tax analyst uh i was actually the tax policy guy at prudential securities until about the year 2000 and then there wasn't much tax going on but there was a california power crisis and they said well mr lucier you can start doing some of this electric power stuff or you can find another job i said i'll take electric power for 2000 please and that's basically what's happened to me for the past 17 years i spoke to a wires meeting with christie and a number of other luminaries uh back in february and i expressed the pious hope that maybe taxes would be back in fashion and i'd be taxing up a storm but sadly sadly no there's not much tax stuff going on maybe um you know maybe we'll get a tax bill out before the fourth of july but i tend to doubt it now so the electricity world has come back but you know electricity is interesting because the story of infrastructure not to mention the industry itself now goes back well more than a century and you've got to look at great historical events and trends that have shaped policy uh i will express my skepticism about the high-tech bionic super grid of the future but the reality is that we've had shocks over these past hundred years that impact fixed assessments over and over and over again whether it is in fact that california power crisis in 2000 uh in 2001 or whether it's the financial crisis in 2008 which ushered in our low interest rate environment or um any number of other things i'll mention in the context of my talk i'm going to focus mostly on policy from a policy makers perspective because i think we have a lot of people from the hill as well as industry in the room and i also knew that christie was going to take us more strictly investor uh view of things so i want to talk about the policy makers case for uh reasonable rates of return and also for building out the grid i've got uh four major topics i'm going to look at which is just first and foremost from a policy perspective the investment case for transmission though i imagine you probably heard quite a lot of that already today i do want to talk about the great historical cycles and transmission investment because that's really what you need to understand what is happening today at the state and regional level which in fact is still where most of the important things are happening i'll talk about the past policy agenda which is going forward from the uh great uh northeastern blackout of 2003 and the energy policy act of 2005 and then finally the future policy agenda what is going on at FERC and what is going on uh on capitol hill with regard to a transmission policy in the near term and again this is sort of geared toward a congressional staff type of audience so those of you who are financial wizards will just have to be satisfied that you heard christie today um look the investment case for transmission it's pretty simple and it's pretty obvious and i think christie nailed it on the head um transmission is an extremely attractive investment it's a great asset we have a world that is aging demographically we have huge retirement populations and we also have a very yield hungry world so the idea of a fixed investment that produces steady cash flow over time is extremely attractive there is lots and lots of capital available for these investments um we've talked a lot at this conference about renewables you see rob back in the the back of the room making sure i bring up wind power or reliability those are all very important drivers and things that justify electric transmission back in the days those long ago days when we cared much more about power prices i think a really key argument for transmission investment from a policymaker's standpoint was that transmission gives you a tremendous amount of bang for the buck from a rate payers perspective relatively small investments in transmission can do a lot to lower power prices and certainly increase reliability and support economic development we've seen it again and again in areas like wisconsin and michigan and other areas where they found that beefing up the transmission infrastructure also supported the industrial employment in those areas so all of these things are very significant reasons why policy makers should want to support adequate if not outright robust levels of transmission investment another one tends to get passed over which is the transmission increasingly is a high tech investment there is a stereotype the transmission means a wire in the ground a wire between two large pylons my personal favorite place is not actually the the electric power pylons of europe i just love driving through the houston ship channel at night when they've lit all the towers up you know that is truly one of the most beautiful sites in america but with regard to um transmission technology whether you think mostly about investment in the distribution level of the grid whether you think about grid 2.0 another fashionable buzzword uh we're incorporating a lot more intelligence into the grid a lot more provision for cyber security we're supporting uh you know micro grids we're supporting many many diverse sources so the bottom line is for policymakers really should understand that the united states does need to proceed and develop much more of a high tech grid with everything from digital switching technologies to advanced composite materials advanced conductors and so forth it's very important strategically and countries such as china such as other asian countries that don't have the benefit of 100 years of electric history the way we have have really been barreling forward uh getting the benefits of a higher tech grid finally from a policymaker's perspective you need to think about transmission as a risky investment and certainly risky for all of the reasons of technology change and thickl consumer preferences that christy mentioned but frankly it's risky for another big reason and this is something that policy makers need to understand uh there is a mentality in utilities world there is a mentality perhaps even at FERC today there's a mentality in a lot of places that wires between two poles that's not high tech that's not so risky that's an asset which will last 100 years and i think that's a really wrong attitude because a lot of the investment risk in transmission is risk up front if you have a project that's going to take you 10 or even 20 years to get approved and you've got to tie capital up while you're waiting for this project and you have to deal with large amounts of uncertainty while waiting for the foreign service to give you a permit that you thought you'd get in two or three years and in fact is taken 10 um you do need those higher ROEs to justify moving into a space where uh you're going to wait a long time you'll have to tie up capital and um you know you'll have any number of last minute surprises um you know it's very very difficult to break into this area so i think our ROE policy definitely does need to represent that level of risk as well so if you look at transmission right now uh clearly trendy for many reasons utilities have uh been talking in recent years not so much now about investing in marquee transmission projects big long-distance high voltage projects as a way of boosting their earnings per share in an environment where power markets are flat if not actually declining you know all of that is fine um but uh the major head ones for transmission investment i would say right now are simply that declining demand demand that is flat declining for good reasons whether it's energy efficiency whether it's demand response whether it is simply moving to more efficient lighting you know all of these things help but the uh declining demand the um the low power prices historically low power prices because of the shale revolution and um other factors are really discouraging major private equity investors and other institutional investors for moving into the transmission space they just don't know what's going to get done uh the sorts of projects that are getting done now tend to be the smaller projects the more regional projects and things that essentially are building out a regional grid or linking a regional grid uh dealing with reliability issues dealing with seams issues and so forth and that gets to me to my point about uh the uh the uh you know massive national backbone power grid that was a slogan and a buzzword really from the 2003 power crisis you know the bush administration to a lot of this they had a report called grid 2030 uh president obama's stimulus bill in 2009 was again supposed to support a lot of grid spending and um you know it's very interesting to wonder where is this national super grid right now you know we talked about it for 15 years after 2003 and you do here and there see references to grid point 2.0 you hear see other grid discussions but it's almost as if this has dropped off the face of the earth and a lot of it is just because number one trends fade over time but number two the us power grid is not something that was designed from the top down in the first place it's really been a bottom up process the us power grid is uh you know something that historically originated as a patchwork quilt uh different regions different business models and it originally wasn't really designed to operate as if it were going to be a set of national super highways for power it was a set of very regional markets and what we're doing in the bottom up process is gradually making that more and more robust more and more regional and it's actually a pretty good network but um you know it's simply not that kind of uh isonhower style national highway for power that some people think about uh if you think about the history of transmission development in the u.s clearly the early days the pearl street station the initial forays into electric power did not involve a lot of transmission building uh frankly dillena roosevelt actually actively discouraged uh utilities from serving more than a limited local area he discouraged interstate transmission building except for a couple of his pet mega projects immediately after world war two uh president truman asked congress to update the natural gas act and he gave furk the authority to do eminent domain for natural gas pipelines which was great but they didn't think about electricity at the time the really great and golden age of transmission development was in the 50s 60s and 70s when you began building out the grid again to serve regional markets but also to serve very large base load power plants whether they were nukes or mega cool plants and that was a trend that continued into the early 70s you could argue what resulted in well i mean jim hecker would tell us there's never excess capacity in transmission but we certainly had a huge build out uh in that era that served us quite well until this second and more recent round of building uh began uh from 2003 onward and as i said at least according to ee i's projections we're still in this second phase of build out um 1990s here in capital hill we're all about uh electricity restructuring about um unbundling about merchant power companies remember those those were a really big deal in the early 2000s and uh really only uh left the stage very slowly and uh now of course we've got the present era where we are looking at um um you know many challenges really challenges that uh that um again make investors pause before moving in i won't go into the challenged economics of base load power but the reality is that the FERC regulated wholesale markets are looking at a very dubious future right now there's a lot of uncertainty there so again you know a strong layer of policy support and attention to this from policy makers is going to be key um moving on quickly uh just mentioned the 2005 energy policy act that was in many ways a uh capitulation after the the electricity wars of the mid 1990s to the early 2000s uh they did have a federal backstop citing there to get transmission lines built they had incentive rates again to give financial incentives for companies to incorporate this great high tech stuff into the grid and to build transmission lines in high priority areas whether it was high priority for renewables or high priority for other purposes and finally FERC was made the ultimate regulator of reliability you know a single agency that had responsibility for the whole wholesale power market and was there to basically police these reliable reliability issues and make sure we had far fewer of the blackout incidents which I think we have and we certainly had a lot of weather related backups we've had to get through the um the uh polar vortex but on the whole you know reliability has improved since 2005 um switching the attention to FERC uh FERC implemented the 2005 energy bill they discovered though that those wonderful adders for transmission were hard to square with just unreasonable rates in a low interest rate world and gradually backed off them uh FERC also um you know looked at order 1000 as a way to expedite the siting process and you know perhaps encourage the financing and transmission projects uh that way um coming up the new agenda at FERC uh clearly we need to come up with a more rational way of doing ROEs a more predictable way uh Christie said the process was complicated it's not really that complicated what you do is you take fortune cookie slips uh and uh these are called a proxy group and you you know write down everyone's R&E ROE and a fortune cookie slip drop it in a hat and you uh pick a number out of the hat until you get a politically acceptable result and you know what could be more predictable and reliable than that uh so we'd like to see FERC work on a more predictable ROE policy the DC circuit has given them an exact opportunity to do that uh we'll be looking at what FERC does on baseload power markets uh we'll be looking at FERC on order uh 2000 as well uh 2000 was a great idea but it was kind of a complex idea too and some key terms uh I think need better definition what does it cost what does it benefit what does a regional market I think that this coming FERC is probably going to be more results oriented they want to cut to the chase rather than planning about planning and I'd like to see them take a strong look at order uh 1000 the congressional agenda really depends on the infrastructure bill will there be an infrastructure bill um the uh best things they could do is possibly revisit some of the backstop siting we talked about that uh a little earlier there are many proposals out there I'm skeptical that Congress is really going to walk right back to the line the federal eminent domain but they're looking for ways of applying some body language to the process and maybe perhaps giving um you know FERC siting authority for allowing eminent federal backstop authority for projects which have gotten approval through a order 1000 deciding process maybe they're not even going to go something maybe they're not even going to do something electricity specific at all and simply try to make the permitting process more predictable by putting a shot clock on different agencies or having some form of accountability for agencies like the interior department or the agriculture department so a Forest Service can't just run out the clock forever without our impunity the way they do now so that's sort of where we are and where the congressional agenda may be tax policy will be important um you know at the beginning of the year investors were very worried about elimination of the interest expense deduction and uh in effect mandatory expensing of capital investments not a good thing in a rate regulated industry I think I told you back in January that I thought there would be a carve out for the electric power industry and I think that's still very likely to be the case overall I wouldn't be surprised if there is a haircut reduction of the interest expense deduction for most industries but I generally think that regulated electric power is going to be fine at the end of the day and that I think is going to go over my notes and see if I missed anything but yeah those are really the major points so I think that you know there are booms and busts there are big swings back and forth and um if the last energy bill was all about dealing with the um the um great blackout of august 3rd 2003 uh the next round of energy legislation is going to be uh dealing with uh um you know supporting development of a grid in this environment where demand growth is flat to declining and there's a lot of uncertainty about how power markets will work in the future so thank you very much as soon as Todd has done with his excellent presentation we'll go directly to the next panel by all means feel free to grab coffee I'm a coffee fiend and I know that this kind of post lunch lull needs a little bit of a leg stretch so please don't hesitate to uh to stretch your legs or get coffee as needed thank you Jim for inviting me it's a real honor to be here I mean so many uh luminaries in the building and um and uh I feel a little uh out of my league but I'll just do my best to uh meet Jim's criteria of not drawing on and actually try to answer the question of the panel which is uh why invest now right we've hearing a lot of questions about or a lot of statements about why it's difficult to invest now right let's actually try to think about what we can do to actually invest today and just to revisit some of the great points that previous panelists have made there's a huge amount of uncertainty that is really causing transmission to not get built even if you have capital available right how much renewables is going to come on the system where they're going to be located how is that going to affect our transmission flows right where is your central as central generation going to be where is your load going to grow is it going to grow net of things behind the meter right so if you don't understand where your central central generation is going to be and you don't understand where your load is going to be how are you supposed to make a 40 year fixed investment in infrastructure it's nearly impossible I don't envy my utility colleagues who are sitting there plugging away doing power flows and having no idea where to build their transmission right can even if you knew where you had perfect you could put your hand on a big glowing orb and see the future and know where you need to build your line can you actually get it built right these are real challenges that are impeding investment today and what you're going to see is that on top of it growing demand that we always have the lights on right that we always can be able to to plug in our gadgets and so you know it's it puts the industry in near paralysis and I think this is what we're seeing and I think what I'm going to do is I'm going to take my smart wire specific hat off and I'm going to represent or try my best to represent a larger coalition of advanced transmission technologies that really can help unlock this paralysis and create near risk-free investment in our grid right the ability to make risk-free great bet investments in our grid today despite all this great uncertainty so it's actually a whole host of technologies right these these technologies include advanced power flow control which smart wires provides and I'll get to what that means dynamic line rating or advanced conductors advanced dms data analytics energy efficiency demand response energy storage all these things can be no regrets investments in this uncertain world a lot of these technologies use existing right-of-ways so you get rid of all of the sighting uncertainty a lot of these technologies are modular so you can scale your investment to precise needs and not have to predict 20 10 20 30 years in the future you can make investments that make sense today for the short term a lot of these technologies are redeployable right so if you have a short term need or you have only a little bit of uncertainty about a need today you use it in that location today and you move it somewhere else right so a lot of these technologies depending on the actual application these technologies mean no regrets investment so that's the one thing I want you guys to understand today is that advanced transmission technologies can allow you to invest in transmission today so how do smart wires do it smart wires is advanced power flow control which unless you have done power flow analysis you're not going to understand but it does one elegant thing and hopefully this is this is something your grandma can understand it pushes and pulls power around problems on the transmission grid that's it one elegant function many many applications and what you see here in this top row is a typical planning study you got load in one side you have generation on the other side you have multiple paths that connect the two on the transmission grid and you have an overload this overload may be five ten years out we don't quite know it may show up in two years it may be five percent it may be 20 percent right all this uncertainty and that I spoke of previously is is driving at what that number is and whether that's 99 or 101 and so what do you do in this case well in the short term you may dispatch generation different differently to get around it operationally but in the long term you're gonna need to re-conductor rebuild or build a new line unless you use advanced technologies to to invest our guardian guardian technology basically goes on the constrained line and pushes power to underutilized capacity wait Jim you said there's no extra capacity on the grid right Jim is there extra capacity on the grid there is there's there's extra capacity on the grid it just currently can't be accessed because of security constraints and I won't bore you with what those are but they if you can help direct power you can soften those constraints and unlock unused capacity in our grid today our second technology is called the router because it both pushes and pulls so you can put it on the constrained line and push power away or you can put it on the underutilized line and pull power towards it just additional level of flexibility a little bit more detail in terms of products and I can't stand animation apologies for this but you have our first technology the power guardian this actually clamps to conductors we've had this deployed at PG&E Georgia Power air grid the Irish national grid operator Australia RTE a whole list of customers I think over four or five years of actual field deployments ready to go being commercialized today you have our power guardian technology that is scheduled to be deployed next year for the first time commercially and you have the power router which would be 2019 first time commercial deployment again pushing and pulling and the key word here is you're going to hear is flexibility flexibility in terms of how we invest flexibility in terms of how we deploy flexibility in terms of your ability to control power in real time so if you want to just deploy a few units you can hang them from the conductor you can put them in a compact deployment between two spans if you need a bit more umph you can hang them from dedicated towers you really need a lot more umph you can put them in state substations and flexibility in terms of deployment right so whatever your our customers need if you want to if your substation space is really limited you put them on towers if you have plenty of substation space throw them in the substation whatever you need so again one elegant function has meant one elegant function of pushing or pulling power around problems can have many many applications right so just trying to build a bit better grid the ability to have more control in real time operations the ability to optimize your spend based on what problems you have where you where you're allowed to deploy capital where you maybe want to try to game the system a little bit you spend in high are we areas and save in other areas maybe you have particular customers that are particularly difficult um in our PG knee uh installation there was vineyards that were particularly difficult with land use rights and by putting our devices on the towers then no boots ever touched the ground of those vineyards we deployed them all via helicopter all the linemen came in through helicopter all the devices got hung through helicopter not a single boot on the ground so that's really solving a very specific locational problem right um again sorry hate up uh capital optimization um not all utilities can put their rates to the sky right so uh when one particular utility we're working with they gave us a portfolio of five hundred million dollars worth of capital improvements they wanted to make they needed to save capital we were able to save two hundred million out of that uh five hundred million dollar uh capital um set and uh we're going to proceed with quite a few of those projects and working with them now to get approval on those projects um rapid solutions our devices can be deployed within a year period full stop right many times with very little to no permitting requirements because we're going into existing substation space or existing towers or in existing existing conductors right all that uncertainty about whether you can actually get iron in the ground and get a project done eliminated and better integration of renewables uh we have a study on our website you can look to where we looked at the pgm uh prism study or prs study uh pgm renewable integration i believe it's the acronym um and essentially to hit 30 percent renewables it would would have cost pgm about four billion dollars in transmission investments we're able to reduce that to 2.2 million dollars in or billion in investment upfront capital so roughly 1.8 in upfront uh billion in upfront capital uh savings an additional 800 to 900 million dollars in reduction in load costs per year which is roughly 10 billion uh net present value so i mean just huge amounts of savings through the ability to tune your investment to the specific need right why invest in an in a gigawatt with our transfer capability when you only need 750 right or we maybe you only need 100 or maybe you only need 10 right so being able to find tune your investments and provide more operational control real-time control of electrons uh provides just huge benefits so um again the one thing i want you guys walking away with today is that you can invest in transmission today using advanced technologies so um to to try to put a second point in your head is that this idea of short term and near term problems is something that the grid hasn't really seen or have been able to deal with recently right with all the uncertainty we're seeing we're seeing a lot of short term projects projects that have a finite duration two years three years four years in duration no longer are they 20 years right there the need is falling off because of declining load or maybe it's uh delay in in build maybe uh it's a generation uh coming offline and then new generation being going back online later on because of a repower those short term problems traditionally are just dealt with through operational problems plan to shed load or or try to redispatch generation but you can actually solve those problems with advanced transmission technologies because they're redeployable and it's not going to be a stranded 40-year investment of permanent iron in the ground right near term problems problems that weren't expected you're permitting instead of taking two years took 10 years and your project isn't coming in on time you thought you were covered you're no longer covered but you no longer have the ability to invest today right because traditional transmission investment does take five 10 15 years to develop so advanced transmission technologies can be rapidly deployed and solve those near term problems right um you know i just going to keep it short keep it sweet and just say again we are uh smart wire specifically is not your typical startup we're not just eight guys in a garage with laptops we are a uh you basically a utility formed startup all of the requirements all the products developed by our utility partners for utilities right we are gaining great momentum around the globe as well as in the united states and uh and i think what we're going to see is that we are able to invest in the transmission grid today so with that i really appreciate being here and look forward to your questions i think you're going to have to deliver your questions in person as these fine folks leave they did a great job i think this is a very very exciting panel and uh i thank them for being here