William McCollam, Jr., the president of the Edison Electric Institute from 1978 to 1990, died peacefully on July 30.

McCollam grew up in Houma, Louisiana, and entered Louisiana State University at the age of 15. After graduating LSU in 1943, he entered the U.S. Military Academy at West Point.

Graduating from West Point with honors in 1946, he later served in the Korean War, receiving two Bronze Stars for service in the 2nd Engineer Special Brigade. He participated in the historic Battle of Inchon.

McCollam earned a masters in engineering at the Massachusetts Institute of Technology in 1954. He returned to West Point as an instructor from 1958 to 1961. He also served in the Army Corps of Engineers from 1946 to 1961, achieving the rank of lieutenant colonel.

In 1961, he began his career in our industry. At Arkansas Power and Light Company (part of what is now Entergy), he served in executive capacities for nine years. He then became executive vice president of New Orleans Public Service (also part of what is now Entergy), and was named president in 1971.

McCollam served as chairman of the Southwest Power Pool. And for three years as chairman of the National Electric Reliability Council (now the North American Electric Reliability Corporation), commencing in 1975.

During his dozen-year tenure at EEI, beginning in 1978, McCollam was a tireless spokesperson for the industry, including on the pages of Public Utilities Fortnightly. He led the industry's response to the 1977 Clean Air Act Amendments, 1977-78 bituminous coal strike, 1978 Public Utility Regulatory Policies Act (and the other energy legislation passed that year), 1979 Three Mile Island accident, nuclear prudence cases of the 1980s, and development of the 1990 Clean Air Act Amendments, among other challenges.

He came to EEI right before the association moved from New York to Washington, D.C., and right before EEI's merger with the National Association of Electric Companies. NAEC was the lobbying and advocacy group for investor-owned utilities to that point in time. McCollam had to figure out how to integrate those very different cultures, the technical and legal staff of EEI, and the governmental affairs staff of NAEC.

His successor at EEI, Tom Kuhn, reflected on McCollam's legacy in an interview with Public Utilities Fortnightly on August 5:

"Bill was a pioneering leader in our industry and a wonderful friend, and I learned a great deal from him. Bill was incredibly dedicated and committed. He always did his homework on things and expected others to do theirs, too. He was a specialist at organization management, and had a real concept of completed staff work."

"Bill also expected that each and every employee would take responsibility and accountability for his or her work. He encouraged everyone to put forth the best effort every time. That was a great lesson."

McCollam also established a regular meeting of utility chief executives around the world, and developed key international energy policies. On this accomplishment, Kuhn added:

"After Bill retired in 1990, I asked him to serve as president emeritus to help work in the international arena. He was a great representative for EEI and was known around the world as a leader of our industry."

In this great industry of public service, we've all been touched by individuals with distinguished careers and, from time to time, must mourn the passing of one. On this page we can remember and salute some of them. Suggestions for Energy Memories, for future issues of  Public Utilities Fortnightly, will be welcome. Send your suggestions to mitnick@fortnightly.com. 

Everything in nature is resurrection. – Voltaire 

A Fortune 1000 company, Dynegy is the second largest independent generator of electricity in the U.S. It operates twenty-six thousand megawatts of power generating facilities in eight states. This past June, Bob Flexon celebrated a remarkable five years as CEO of Dynegy.

He joined Dynegy in June of 2011 and within his first year led the company through orderly bankruptcy proceedings. Prior to the end of year two, Dynegy acquired the power generation assets of Ameren in St. Louis for nine hundred million dollars.

Early in Flexon’s fourth year, Dynegy completed the simultaneous acquisition of Duke’s Midwest power generation assets for 2.8 billion dollars, and EquiPower Resources for 3.45 billion dollars. It doubled Dynegy’s net power generating capacity.

During his fifth year, Dynegy announced the acquisition of French company ENGIE’s North American fossil portfolio. This was done through a joint venture with Energy Capital Partners, a private equity group.

This transaction continues Dynegy’s transformation into a predominately gas generation fleet. It will increase net generating capacity another fifty percent to nearly thirty-five thousand megawatts. That’s enough power capacity to supply about twenty-eight million homes.

The complexity and drama of each of these major events in Dynegy’s reformation are worth another article in their own right. But this is not a story about the impressive execution of transactions. Rather, it’s a glimpse into how a CEO in our industry has successfully addressed the biggest challenges in any organization: the environment, culture and people.

Flexon joined Dynegy during a highly distressed period for the company. The financial situation required urgent action. “Dynegy went through a really tough time prior to my arrival,” he reflects.

“The entire executive management team resigned, the board of directors resigned, and there were two failed takeovers. Anybody who could was leaving the company, or about to leave the company, thought that there was probably a bankruptcy four or five months down the road – which there ultimately was.”

From the start, Flexon outlined and communicated a straightforward set of objectives. “I wanted to work through the tough beginnings of the restructuring,” he recalls, “to be accepted by the broader organization, to build a place where people want to come to work and where they’re proud of what they do. And maybe, most of all, to provide the chance for Dynegy to feel what it’s like to win again.”

He determined that the situation required the trust and familiarity of a seasoned team. “The first thing that I did coming out of the gate was ensure that we had an experienced team that could hit the ground running,” Flexon explains. “I brought a half a dozen or so people that I’d worked with in the past. Virtually all of them were at NRG at the time.”

“Being surrounded by some very talented, team-oriented folks made our entrée here into Dynegy that much easier, and set us up for a better chance of success than if I had come by myself.”

Flexon anticipated the consequences that such a radical staff change would entail. “In a distressed environment, people are worried about their future and their careers,” he recounts. “And when you had all these strangers coming in carrying NRG passports, you could easily see an insiders-versus-outsiders situation developing. We worked hard to develop trust with the existing Dynegy employees, and it took time.”

There are parallels that can be drawn between the impact of major life events on us as individuals and the impact of business events on an organization. We can all imagine the impact of major life events such as job change, divorce, a home move, the death of a loved one, or a major illness on our stress levels.

We can also imagine major business events having a similar impact on stress levels in employees of an organization. These events produce a collective and magnified effect on the organization as a whole.

Flexon’s awareness of the impact of the distress and his early focus on getting the team and culture well-established helped the organization in a number of beneficial areas. One area included the ability to better deal with stresses and challenges.

With the team selected and in place, he focused on the chemistry and the culture of the organization. “When the team got here we knew that the restructuring here was about the financial restructuring, the organizational restructuring, but most important of all, the cultural restructuring,” explains Flexon. “Kevin Howell, who came in as our COO at Dynegy and had worked with me at NRG, had experience with the management consulting firm Senn Delaney when he was at Dominion. Kevin brought the experience to NRG.”

While culture can be an ethereal concept, Flexon found solid footing for establishing and sustaining culture through this approach, which “brings tools and methods that will give us the opportunity to shape the culture, as we say, rather than the culture shaping you.”

 “You participate in active listening. Active listening, not being judgmental, but listening to understand and listening to exchange viewpoints. Providing coaching and feedback is important,” according to Flexon.

In referring to the key ‘shadow of the leader’ concept, Flexon explains, “It means that we all cast a shadow and that’s what shapes an organization’s culture. The CEO really influences an organization by the tone that’s set. If you’re visible and you’re leading with the values of the company, your employees feel comfortable with you.”

Culture shaping begins with defining individual purpose and then organizational purpose. “It makes you focus first and foremost on yourself and your behaviors and your actions, because that’s what’s going to start driving the culture,” Flexon says.

He goes on to describe his management team’s purpose and areas of focus. “We want to focus on communication, involvement, and visibility. We don’t have individual offices. It’s just one big, wide-open floor,” Flexon proudly describes.

“It’s important for us to sit with our groups and to be visible on the floor walking around and engaging with people. It’s about making sure they realize that we appreciate what they do, and that what they’re doing creates value. We actually demonstrate concern and care for their careers and being part of the team.”

“It’s really important for us to be visible in the plants,” he continues. “In so many locations you hear that they’ve never seen a CEO, or a CEO hasn’t been here since the 1990s. So you get out to the people in the plants, you talk to them.

I think the most important trait for a CEO, particularly when they’re in front of employees, is really just to be realistic, honest, and open, particularly in tough times.”

Tracing culture to business results and vice versa is more art than science, and the lack of a concrete numerical link can be a barrier for some companies in launching a focused culture program. Nevertheless, there are clear signs of the effectiveness of the program in Dynegy’s experience, as well as some unforeseen fringe benefits.

 “The first acquisition that we did with Ameren,” Flexon says, “we were in the conference room meeting with the Ameren team, and on the walls you see the posters about curiosity, shadow of the leader, honesty, integrity.”

He continues, “So when we acquired the Ameren assets, we were not the best financial offer for them, but it was important to Ameren CEO Tom Voss to have the assets go to an organization that shared similar cultural values and principles. It brought our two organizations that much closer together, that much faster, because we have a lot of shared values about how an organization should work together.”

“Agility is one of our values. And when you think about what we did, doing two acquisitions simultaneously, announcing in August of 2014, that doubled our enterprise value. We had to raise the financing in the debt markets and the equity markets.

“The ability to do simultaneous due diligence, simultaneous closings, when the counterparties of each didn’t know about the other, was important. And in the case of Energy Capital Partners, we were competing against them on the Duke Midwest assets.”

Dynegy competed with Energy Capital Partners to purchase the Duke assets, bought EquiPower from ECP, and partnered with ECP on the purchase of the ENGIE assets.

“I’d say one of the proudest days that we’ve had here is when the Houston Chronicle, after we announced the dual acquisitions in August of 2014, ran the lead story on the business page that Dynegy was ‘back among the power elite.’ And for our organization to see someone from the outside referring to us that way, it’s like, things are different, and that just feeds the culture and feeds the enthusiasm.”

“I’ve always said, since I came to Dynegy, it’s one team, it’s one goal, and we want to be the best independent power producer out there. There isn’t an independent power producer that has done more than we have to transform what we were and what are we becoming. And that’s again, driven by an organization that is enthusiastic, wants to win, and has the right environment to allow people to perform their best.” 

Flexon’s experience at Dynegy demonstrates that cultures can be systematically shaped in order to better support business results and to make companies great places to work. His approach to Dynegy’s situation was unique.

During turbulent times, organizations typically respond by implementing new strategies, systems, processes and organizational structures. It is rare for leaders to address the culture and the people that will actually carry out the changes and ultimately achieve success for the company.

Dynegy’s journey over the last five years is a success story. But the challenges of transforming culture in a dynamic business environment are never over.

To hear the full interview, please visit the podcast Leadership Lyceum: A CEO’s Virtual Mentor at Apple iTunes, or stream the audio here:

Hear Part 1

Hear Part 2

Michael Crew, one of the most influential regulatory economists of recent decades, and a professor at Rutgers University, died peacefully on September 26.

His books, articles, journals and conferences were familiar to very many in utility regulation. For example, the California Public Utilities Commission passed a resolution last year acknowledging his contributions to regulation.

Dr. Ahmad Faruqui from the Brattle Group wrote us this memory of Crew:

“I got the very sad news yesterday morning that Professor Michael Crew of Rutgers University passed away a couple of days ago after a short illness. He had been an informal mentor to me since I first met him in 1979 – 1980 at EPRI.

Michael ran the very successful CRRI [Center for Research in Regulated Industries] conferences on the two coasts and edited the Journal of Regulatory Economics. He was the author of several landmark works on public utility economics and had taught scores of students during his academic career at Rutgers.

I had first encountered his name during my college days at the University of Karachi while reading the compilation, Public Enterprise, by Ralph Turvey. Among its many chapters was one called Electricity Tariffs. It was by Michael.

When I met him at EPRI, I asked him if that was his paper. He said yes. I still have the book. I wish I had gotten it autographed.  

Somehow I had assumed he would always be around to bounce off ideas in regulatory economics, talk about cricket, discuss what it was like to grow up in Bradford (England), share stories from the road (he was an avid traveler) and chat about the state of the world.  

Dr. Stephen Littlechild, the U.K. economist who literally developed price-cap regulation (RPI – X), wrote this memory of Crew on a Rutgers website:

“I first met Michael nearly fifty years ago. We took the same undergraduate degree course at Birmingham University, one year apart. Throughout our careers, we shared interests in public utility economics and regulation. I followed his writings, and attended several of his postal conferences. He was my favorite journal editor.”

Of course by far the most frequent co-author was Michael’s great friend and colleague Paul Kleindorfer. [Paul Kleindorfer was a mentor to the Editor-in-Chief of this magazine, Public Utilities Fortnightly, while at the Wharton School, University of Pennsylvania.]

Presumably they met during Michael’s year visiting Carnegie-Mellon in 1968 – 1969. I remember first meeting them both there at that time. They were intellectually curious, interacting, working on the same sorts of issues that interested me, focused on modelling and assessing public utility pricing. Their first joint publication (A Note on Peak Loads and Non-Uniform Costs, Economic Journal, June 1970) followed soon after.

This was just a short note but it answered a question recently posed in the literature: how to incorporate non-uniform running costs into the peak-load pricing model? It was the start of a lifetime’s joint work with Paul, that produced some seventy more joint papers (by 2010), three books, many jointly edited conference volumes and perhaps hundreds of workshops and conferences organized together.

George Bernard Shaw Got His Start with Edison and Insull

Was reading, for fun, “The Memoirs of Samuel Insull.”

Insull wrote the autobiography in the summer of 1934.

As the Depression deepened in 1932, Insull’s extensive utility holding company had collapsed. The press, public and politicians found a scapegoat. After several attempts to extradite him from Europe, U.S. authorities took him off a ship to stand trial in three high-profile cases.

Insull, the man who went from Thomas Edison’s secretary to the inventor of utility regulation, was acquitted on all charges.

In the memoirs, we learn that the great man of literature, George Bernard Shaw, got his first job working for Edison and Insull.

Edison fiercely competed with Alexander Graham Bell in the development and marketing of the telephone. In 1879, Insull worked in the London operations of Edison’s telephone business.

The telephone was still a novelty then. Edison sent to London several young laboratory assistants, “who called themselves electricians.” They set up a demonstration for a lecture by Professor Barrett of Trinity College.

The Professor’s nephew? George Bernard Shaw. The Professor asked Edison if young Shaw could have a job at the Edison Telephone Company.

At the age of twenty-three, Shaw came with little but a letter of introduction. Insull interviewed him, then put him to work. In the battery room, in the basement of #11 Queen Victoria Street, in the city.

Shaw refers to this incident in the preface of his 1905 novel, The Irrational Knot.

Shaw stayed with the Edison Telephone Company for two years. When it merged with Bell Telephone Company, Shaw left for his literary career.

He won the Nobel Prize for Liter­ature in 1925, for writing the plays Man and Superman, Pygmalion, Saint Joan, and much more. Pygmalion was further popularized much later in the form of the musical My Fair Lady.

President McKinley Collapsed in His Arms, Later He Founded EEI

You can read it in the February 16, 1933 issue of Public Utilities Fortnightly.

This was a great issue. The lead article was written by U.S. Senator Hiram Johnson (Republican – California). He had been the Vice Presidential candidate in 1912 for Teddy Roosevelt’s Bull Moose party.

Another article discussed the founding of a new organization, the Edison Electric Institute. EEI is today’s association of investor-owned electric utilities.

The National Electric Light Association had been the organization for the industry. But NELA lost credibility with much of the public amid the Depression-fueled business failures and scandals of that time.

EEI’s founding was lauded by the press. Especially the new organization’s professional and ethical ideals. The article in PUF, “A New Deal in Kilowatts,” quotes the New York Times, Wall Street Journal and others.

The July 6, 1933 issue of PUF followed up. An article discussed EEI’s founding convention in Chicago during the week of June 5.

Its founding president, George Cortelyou, stated EEI’s goals. Exchange information and experience. Formulate standards based on best practices. Represent the industry to other national bodies.

George Cortelyou was also president of Consolidated Gas Company, which is now Consolidated Edison. But he was one of the most famous Americans in that period.

At age thirty-three, he went to the White House as chief clerk to President Grover Cleveland. Then Cortelyou continued there as personal secretary to President William McKinley. But his life and career soon changed.

On September 6, 1901, while in Buffalo, President McKinley was shot twice at close range by an assassin. The President collapsed into Cortelyou’s arms and whispered “My wife… be careful, Cortelyou, how you tell her. Oh, be careful.”

The new President, Teddy Roosevelt, gave Cortelyou the responsibility to organize the White House. The Office of the President to this day continues many of the procedures Cortelyou developed. Particularly for press access.

Cortelyou went on to become Secretary of the Treasury. It was Cortelyou that advocated the reforms in monetary policy, after the searing Panic of 1907, that led to currency flexibility and ultimately formation of the Federal Reserve in 1913.

He then came to our industry. And eventually founded EEI.

And that is how George Cortelyou found his name in the pages of PUF.

Dr. Benjamin Spock’s Child Care Book, and Reddy Kilowatt

Reddy Kilowatt, our industry’s adorable mascot for ninety years, appears in a different spot in every issue of Public Utilities Fortnightly.

Many of you know Reddy was developed and promoted by Ash Collins, Sr. Collins had been a manager at Alabama Power. He felt our industry needed to engage the public more positively.

Alabama Power copyrighted Collins’ cartoon in 1926. Then, the Edison Electric Institute was founded in 1933. Collins left Alabama Power and joined EEI.

Collins devoted the remainder of his career to popularizing the little man with the light bulb nose and wall socket ears.

He had a young artist and family friend redraw the “electrical servant” for the 1933 trademark. This young woman, who went on to become one of the top illustrators of the twentieth century, was Dorothea Warren.

She was just nineteen years of age. Warren used her pay for drawing Reddy to move to New York City.

At first, she drew pictures of children getting haircuts. Soon Warren was illustrating the top ads such as for Heinz, Arrow Shirts and Ivory Soap. And the top magazines such as the Saturday Evening Post, Esquire and Colliers.

Her big break came in 1946. Dr. Benjamin Spock revolutionized parenting by publishing “The Common Sense Book of Baby and Child Care.” Illustrated by Warren. Spock’s bestseller, that eventually sold fifty million copies, emphasized flexibility over rigidity and affection over toughness.

From drawing Reddy Kilowatt to drawing Dr. Spock’s babies. Dorothea Warren certainly left her mark on our world.

Scarface Al Capone Thwarted by Utilities’ Sam Insull

February 14, 1929. The day of the St. Valentine’s Day Massacre. Scarface Al Capone eliminated the rival Chicago gang of Bugs Moran.

How did federal agent Eliot Ness and the Untouchables bring down Capone? It turns out the utilities industry, Sam Insull particularly, was the key.

Capone was feared by all. Chicago’s mayor and the Illinois attorney general would or could do little.

But Capone made the mistake of murdering a contractor superintendent. Chicago’s Chamber of Commerce was outraged. So the Secret Six was formed.

The Secret Six were courageous business leaders who knew they were endangering themselves and everyone around them. They included none other than Samuel Insull. Insull was arguably the father of utility regulation, the system we use to this day to restrain rates and attract capital.

The Secret Six hired the brother-in-law of federal agent Eliot Ness. Ness was soon immersed in taking down Capone.

Insull and the others set up the speakeasy Garage Café to gather information. They funded the decisive tax evasion case against Capone. And they paid to send an informant to safety in South America.

The Secret Six eventually handled 595 cases, with 55 convictions, and 428 years of jail time.

Al Capone later said: "The Secret Six has licked the rackets. They’ve licked me. They’ve made it so there’s no money in the game."

On November 11, 1859, one of our industry’s greatest founders, Sam Insull,was born in London, England. Starting out as Thomas Edison’s private secretary, Insull literally created our system of regulated monopolies and cost-of-service regulation.

It was June 7, 1898. In the last six years, he had built up Chicago Edison Company as its president. Now also president of the National Electric Light Association (predecessor to today’s Edison Electric Institute), at age thirty-nine, he rose that morning to deliver the welcoming address of the NELA annual convention.

In six historic sentences, Insull outlined our industry:

“While it is not supposed to be popular to speak of exclusive franchises, it should be recognized that the best service at the lowest possible price can only be obtained, certainly in connection with the industry with which we are identified, by exclusive control of a given territory being placed in the hands of one undertaking.”

So, first, Insull proposed our system of regulated monopolies.

“In most European countries public-service operations enjoy exclusive franchises, under proper control, and are able to obtain capital for their undertakings at the lowest commercial rates, thus materially affecting the cost of their product...

In order to protect the public, exclusive franchises should be coupled with the conditions of public control, requiring all charges for services fixed by public bodies to be based on cost plus a reasonable profit. It will be found that this cost will be reduced in direct proportion to the protection afforded the industry.”

In these three sentences, Insull proposed our system of cost-of-service regulation.

“The more certain this protection is made, the lower the rate of interest and the lower the total cost of operation will be, and, consequently, the lower the price of the service to public and private users. If the conditions of our particular branch of public service are studied in places where there is a definite control, whether by commission or otherwise, it will be found that the industry is in an extremely healthy condition, and that users and taxpayers are correspondingly well served.”

And in these last two sentences, Insull makes the case that our system of regulated monopolies and cost-of-service regulation provides the public the best value.

He established the NELA Committee on Legislative Policy to press for state utility commissions. But the committee was hamstrung. The convention generally saw Insull’s proposals as too radical.

The industry, increasingly concerned about municipal takeovers of electric utilities, eventually came around. NELA established a Committee on Municipal Ownership in 1904, which became the Committee on Public Policy in 1906.

The perfect storm took place in 1907. The Committee laid out the principles of state utility commissions in a report. Then, the Panic of 1907 happened, tightening credit for everyone including municipalities.

Then, the National Civic Federation, an organization that brought together business, labor and political leaders, published detailed recommendations for state utility commissions in three volumes.

Of course, Insull was a key player in the Federation. As was John Commons of the University of Wisconsin. The distinguished economist and labor historian set down the principles for Wisconsin’s regulation of utilities.

Almost exactly eight years after Insull’s speech at the 1898 NELA convention, on July 9, 1907, Wisconsin became the first state to empower a commission to regulate the charges of public utilities. Massachusetts and New York quickly followed suit.

In 1931, Public Utilities Fortnightly commissioned one of the most popular poets of the twentieth century to write a poem for PUF's readers. Berton Braley had collaborated with the famous composer John Philip Sousa and was constantly asked to write for the top publications of the day. This Braley poem appeared in the October 14, 1931 issue of PUF:

The gas that lifts the gusher to the sky

The gas that once was squandered in the flare

Of flaming yellow torches blazing high

No longer wastes its riches in the air;

It is done with reckless burning

And efficiently is turning

To the ordinary job of everyday,

Over hill and over hollow

It must dutifully follow

Where the pipe line stretches out to mark the way.

The gas that was a menace and a threat,

That once was roaring power, unconfined,

Now meekly does the work that it is set –

A servant of the will of human kind.

It is cooking steaks and gruel,

It is power, it is fuel

That is changing women’s drudgery to play,

And its lawless days are ended

As it takes the course intended

Through the pipe lines from a thousand miles away,

Now it’s hoarded as a store of weightless gold

As it rises from the subterranean sand,

Now it’s metered and directed and controlled

For our uses – at the turning of a hand.

Here is comfort for our houses

And contentment for our spouses,

Here is energy to serve and to obey,

Here a wizard’s spell is wrought us

And the gusher’s breath is brought us

Through the pipe lines from a thousand miles away.

Lawrence Jones joined the Edison Electric Institute a year ago as the association's vice president for international programs. He had been North America vice president for utility innovation and infrastructure resilience at Alstom Grid Inc., and also vice president for policy, regulatory affairs and industry relations for Alstom.

Jones was born and raised in Monrovia, Liberia. He lived in Sweden for more than a decade, where he received his M.Sc. in electrical engineering and his Ph.D. in power systems engineering from the Royal Institute of Technology in Stockholm.

PUF's Steve Mitnick: What are some of the fun things about your job?

Lawrence Jones: I think there may be three. The first one is dealing with the uncertainty of having a strategic conversation with an electric company executive.

I craft and conduct strategic conversations with electric company executives around the world. The fun part is being able to sit here in Washington D.C., or wherever I may be, and prepare for a conference call or face-to-face meeting with an executive who I've probably never met.

What's fun is after all that preparation, if it's gone as expected, then I walk away with a sense of satisfaction that it was worth the effort. Success to me is not necessarily walking away with a new member [of EEI], but that the conversation has been a win-win for all parties.

It's that the structure of the conversation has met the expectation of the other person - member or non-member. Customer satisfaction, or executives being satisfied with the outcome of conversations we're having, is very good positive feedback.

Another thing that I find fun is the diversity of issues that EEI is dealing with, both domestic and internationally. The intellectual camaraderie that exists both here at EEI and with the representatives of member companies is stimulating. Everyone seems to be moving towards the same ultimate goal of providing safe, increasingly clean, reliable and affordable electricity to society, however, along different pathways.

Then, another real source of excitement is feeling a sense of purpose in what you are doing. I feel like I'm doing something that will have a lasting impact, way beyond this job.

I feel fortunate for the opportunities to have strategic conversations with industry leaders from different countries, especially in parts of the world where there is very limited access to electricity. That's a sense of purpose.

Previously in my career, I was "selling" technology. Now I'm almost seeing myself as kind of an electricity missionary. Missionaries are not there to just convert people. They are also there to fulfill a mission of changing the world. To some extent, that's something that really makes me feel joyful - imagine helping to light up the world.

As the CEO of a Japanese electric company recently told me, "electricity brings light to the heart of his customers." Imagine what joy that must bring. 

Those are three fun things. I know they're not the typical fun things like biking, going to movies, etc., but there's an intellectual joy that comes with what I'm doing. I believe that having a "happy mind" is critically important in today's fast paced world.

PUF's Steve Mitnick: Being the international face for the U.S. industry and creating an international platform for everyone to talk and cooperate and work together, you're in an amazing position to have some impact globally. You must feel that.

Lawrence Jones: When you take on this kind of a job, you don't know what it's going to lead to. The job has so many different facets that come with it. When you sit back and realize the opportunity that comes with having such a platform, you also feel a sense of responsibility.

In this role, our non-U.S. electric company members expect us to reflect their perspectives here, and we have to represent the U.S. perspectives abroad. One has to remain cognizant that it is about creating opportunities for dialogues for addressing a broad range of issues that are relevant to all members.

An important difference between this job and others previously in my career is that now I am selling or advocating new approaches and solutions to address vexing challenges that are global in scale but local in character, and which ultimately affect the interest of a diverse group of stakeholders in many different countries. This is different from selling the same technology solution to many customers.

Selling ideas also requires connecting with the heart and soul of the other person. It is not just a cerebral process. EEI offers a unique platform to create opportunities for convening electric company leaders from around the world to discuss compelling issues affecting their businesses, and to share experiences.

PUF's Steve Mitnick: In your work, you have the opportunity to meet industry executives from different countries and cultures, and who have different expectations about what EEI provides. Can you talk about developing relationships and delivering value to such a wide array of companies? 

Lawrence Jones: A key to success for the EEI international program is creating and delivering a value proposition that's unique for each company. It must also be one that has enough breadth that other electric companies can partake in it.

Electric companies from every continent are being brought together around a universal mission of providing increasingly clean, reliable, affordable electricity. However, each has a unique set of business objectives subject to their customers' and shareholders' expectations, as well as the regulatory conditions under which they must operate.

Furthermore, EEI international programs membership includes companies with diverse ownership - state-owned to investor-owned, and even municipal utilities. On building relationships, while one must understand the issues that are common to all the members, it is important to build trust on a personal level with executives by being responsive and delivering on your commitments. Like any human relationship, one way to maximize trust is to keep your word.

PUF's Steve Mitnick: How do you switch gears going from one country, or culture for that matter, to another and still try to connect with people?

Lawrence Jones: In general, it can be hard. But over time it's about having a flexible and adaptive mindset, and seeking consensus around what can be agreed upon that's a win-win for everyone.

Before accepting this job, I asked someone who's known me all my life to read the job description and give me their feedback. Their immediate response was, "Lawrence, when you were a young boy growing up in Liberia, whenever we moved into a neighborhood, you'd be the first to come home with a bunch of strangers. You would create these friends."

And then I was reminded that when playing with friends, whenever things began to get a bit rough, I would always be the one to say, hey guys, let's calm down. Let's discuss this. Interestingly enough, back then some of my friends saw me as the spoiler because they really wanted to get into a little fight. But then Lawrence came along wanting to find a consensus and work things out.

The more I reflect on the question, I think my life's journey has been preparing for a role like this.

From Liberia, I moved to Sweden, where the idea of finding consensus is something Swedes and their fellow Scandinavians have, in general, ingrained in their cultures. For fifteen-plus years, I went to school, and got my education, and got deeply immersed in the Swedish culture. So perhaps the art of consensus building got reinforced.

Ultimately, the key to successfully switching between and across cultures is about having a common language (spoken and unspoken) and how you communicate.

From Liberia to Sweden and Washington State, I have landed at EEI in a job where now I have to harmonize my conversation, as I engage on a regular basis with people from different countries and cultures to find solutions to address their specific challenges. In fact, sometimes it's even challenging switching conversations between individuals in the same country but from different electric companies.

For example, earlier this year I had a meeting in Adelaide, Australia with a number of electric company CEOs from Australia and New Zealand. I met them one-on-one, and as a group. The Australian CEOs came from New South Wales, Queensland, South Australia, Tasmania, and Victoria, respectively. These are five independent provinces with different regulatory structures, geographies and other realities.

So part of the switching is making sure to put the issues in the right local context even when dealing with companies in the same country.

Throughout my life it seems I have subconsciously been honing the skills of making these cultural switches. Today, when I travel to countries that are culturally very different, I get off the plane, make the switch and get into the flow. It doesn't matter whether I know the language or not.

I am often asked how I do it. I think it's because I have taught myself to realize that in spite of the geographical differences that separate nations of the world, there are actually more we have in common as humans than what makes us different. But, one of the greatest challenges facing humans is how to accept our commonness while at the same embracing the diverse tapestry that is defined by our uniqueness.

PUF's Steve Mitnick: How do you prepare?

Lawrence Jones: I spend a lot of time preparing. This is essential for the switching to occur naturally. My team will tell you that even before I get on a conference call, I need the background information about the CEO and others who will be participating, as well as any other valuable information about the company.

I particularly want to know what their issues are. I try to get enough information and study them before the call. Then when the call begins, I try to put myself in their situation, and make their issues my issues. It is hard to switch when you cannot relate to the situation and this becomes obvious if you have not taken the time to prepare. 

I remember when I started at EEI a top priority was to have conversations with many CEOs of the international member companies, as a way of getting to know them and to familiarize myself with their issues.

On one such day, I had calls with four different executives in Asia, Australia, Canada and Europe, respectively. The calls were conducted within a couple of hours, but each required a great deal of preparation. 

Although preparing before you have the conversation is important, more important is focusing on listening across cultures. For this, I have received much help from one of my true passions - music. For most of my life, I have had the opportunity to sing in many choirs and groups, performed solos before large and small audiences in different countries, including singing a duet with my wife at our wedding. I also directed choirs.

I believe that when you sing in or direct a choir, you develop a kind of listening skill that seeks to find harmony.

I think having a conversation is like singing with another person. If you can't reach the point of harmony, then you're not communicating. It just becomes noise.

The cultural switch occurs just as it does when I'm singing a new song. It might be a different language, but music is universal, and the basics are still there. The notes are the same notes although the structure may be different.

So that means when singing classical music I have to use a whole different part of my musical ability than when singing gospel music. But it's still music even if the lyrics are in English, Swedish, French or any other language for that matter. I still must listen in order to get to harmony! Sometimes all it takes is just finding that one missing note, or one shared value, or a common problem, to achieve harmony.

PUF's Steve Mitnick: What's another real-life example of this?

Lawrence Jones: It is often the case that I go into new environments, not knowing exactly everything that will happen, how I will respond, or what the outcomes will be.

For example I recently visited Mexico City. During the first dinner, exclusively Mexican cuisine was served, and the appetizers included fried grasshopper. At one of the lunches later that week I was offered two special treats - a traditional fried worm and ant eggs.

All three items were actually very tasty. In fact, the presentation and aroma was far more appealing than that of "Surströmming" - a traditional fermented Baltic Sea herring eaten especially in northern Sweden since the sixteenth century. I ate this on a number of occasions while in Sweden. The truth is both the Mexican and Swedish food culture experiences were aided by appropriate levels of tequila and the special Swedish liquor known as "brännvin," respectively.

Both of these experiences seeded a pathway to establishing personal connections, finding a point to harmony, with my Mexican and Swedish hosts. In this case, food became the common language. The flexible and adaptive mindset that caused the shift tells me that if my hosts can eat the grasshopper, worms, ant eggs, or even Surströmmingand survive, there's no reason why I couldn't eat it, except for me telling myself that I couldn't.

Another thing that I try to do to assist the switch is to read the local newspapers, even if I don't understand everything. People appreciate when you show interest in their country, community or culture. However, you have to be sincere about it.

PUF's Steve Mitnick: Like every job, there must be some difficult or challenging things about this job. Anything you'd like to share?

Lawrence Jones: The most challenging part of this job is being away from my family. So it is necessary to find that delicate balance. Even when I am not travelling, it occasionally involves conference calls at odd hours due to the time differences between Washington and the rest of the world.

Fortunately, I have very family-oriented bosses who are constantly asking about the family and are very keen to emphasize the importance of making sure the right balance is kept, with family always coming first and foremost. For example, when I come home from a long trip I take a few days to recover. This also allows me to just stay home, and enjoy the blessing of being a father and a husband.

PUF's Steve Mitnick: Your father was a real inspiration.

Lawrence Jones: Yes indeed both personally and professionally. For example, whenever we would travel, my father was so ingrained in electricity that even when passing areas with beautiful forests, he would spot transmission and distribution lines, or marvel over other electrical connections. He'd say, oh that's a very interesting connection. Look at that tower. Why is it designed like that?

I still remember once when he visited me in Sweden and we were driving in the countryside covered with snow to visit a family friend. The conversation was about underground cabling and how much that would cost in Liberia. For him electricity was more than just a career, it was an important part of his life.

One of the greatest inspirational moments from him took place about three days before he died. He called me into his hospice room. I sat by his bed side. In spite of his ailing health, he began to speak with a strong voice and said "Look son, I know you travel all over the world. But you have to make one promise to me."

I said, what's the promise? He said "Whatever you do, you have to try and see how we can bring electricity to Africa."

I said, yeah, yeah, yeah, assuming that he was joking. But he was very serious.

He said, "No, no, no. Lawrence, son, you have to promise me that. We have to electrify Africa and especially Liberia." You see, my father was one of Liberia's pioneering electrical engineers. He knew every aspect of the system. I have known no one in my lifetime that cared so much about and devoted much of his career to electrifying Liberia.

That conversation with my father in August of 2004 was more than a decade ago. Reflecting on that day and where we are today, I am reminded that life is a journey, and most times you set a goal, you're on a path but don't know all the twists and turns, or the potholes or bridges you'll encounter. But nature, fate, and divine providence have interesting ways of placing you on your ultimate path.

At this juncture in life, it feels like more of the pieces of the puzzle are coming together that might allow me to contribute to making my father's last wish on earth become a reality.

PUF's Steve Mitnick: And your mother?

Lawrence Jones: Throughout my life, my mother has constantly demonstrated the power of faith which drives positive thinking and action. In the midst of any adversity, her focus is always centered on believing that everything is possible if you try. More importantly, you must never forget your purpose and mission in life.

My mother's other influence on me is that one must never stop learning in life. She also taught us the importance of the universal golden rule; "Treat others as you would like for them to treat you." Together, these are guiding principles she lives by and I strive to do the same. 

PUF's Steve Mitnick: Congratulations on your recent appointment as Honorary Industry Fellow at the Monash University, in Australia. What does this entail and will you be relocating to Melbourne?

Lawrence Jones: Monash University is one of the leading universities in Australia and is growing in stature worldwide. It is an honor to be affiliated with Monash's department of electrical and computer systems engineering.

No, I will not be relocating to Melbourne. I will serve on the Monash Energy Materials and Systems Institute Industry Advisory Board and will try to contribute by providing insights on how best to deploy innovation in the electricity sector in Australia and worldwide. An important focus of MEMSI is on solving global energy challenges through partnerships across the world.

In terms of how this role ties back to my work at EEI, it certainly provides the opportunities for me to develop a better understanding of the local issues facing EEI international members in Australia as well as New Zealand.

PUF's Steve Mitnick: What are the similarities and the differences between U.S. and international electric companies in terms of critical issues? Based on your work with electric companies around the globe, what are one or two big areas to watch in the near future?

Lawrence Jones: There is a continuum of similar issues ranging from regulation and new business models, building smarter energy infrastructure, designing and deploying innovative customer solutions, integrating renewable energy. However, how these issues are addressed will depend on a host of exogenous factors.

For example, utilities in industrialized countries are probably dealing with how to modernize or replace older systems subject to legacy regulatory and business models which must also evolve and adapt. On the other hand, those less developed countries could be poised to leapfrog to advanced solutions underpinned by newer value and performance-based rate design principles.

Across the globe everyone is concerned about the industry transformation as part of the ongoing energy transition. However, each energy company will have its own transition pathway, and I don't believe there is going to be the huge upheaval in the electric industry that some people have predicted. Electricity is so vital to our livelihood that if this were to happen, there could be unintended dire consequences for the broader society.

In this regard, I believe that the transformation in the global power industry will be a more evolutionary and adaptive process as opposed to a disruptive one. I'm not saying there won't be changes or that there aren't challenges already here or just around the corner. However, on a broader scale, as customers' expectations change, I confidently believe that many electric energy companies will continue to adapt and so will the regulatory framework under which they operate.

Finally, I think that the art and science of knowing your customers and what they truly value today and in the future will be the source of competitive advantage in our industry. I think that predictive analytics based on behavioral economics and big data will play an increasingly important role in designing new, adaptive, and agile services.

PUF's Steve Mitnick: In five years, what do you want to look back on as a major accomplishment?

Lawrence Jones: In terms of this international program, I would like to measure the success, not only in terms of the number of members, but more importantly in terms of how activities and initiatives we execute have helped our members to be successful in achieving their mission.

A critical part of our strategy is to successfully execute our programs now but then have clear milestones to track our progress in delivering the results both for our members and EEI.

On a personal level, a major accomplishment would be to create the optimal conditions that allow me to spend even more time with my wife and our three children while still doing work that contributes to bringing electricity, the fuel of the future, to every corner of the globe.

The ways of the world are changing our attitudes and actions. Tried and true business models are giving way. Vertically integrated, stand-alone enterprises of all kinds are engaging in horizontal networks of allies. A fresh focus on customers, to create new services and deliver more value, seems to be everywhere.

Technology too often is credited for such changes. But that's wrong. Technology is a critical component, but it is simply enabling.

Yes, the cost to sense data from nearly anything, anytime, anywhere has collapsed. So, too, has the cost of accessing the nearly unlimited computing capability of the cloud. Add to this the emergence of machine learning and the advanced analytics of data science.

In combination, these tools allow us to discover patterns that have long been undetectable. And to design new ways to address unmet needs.

But technology like this is nothing without innovators. It is people who imagine new ways to put technology to work. It is people who see great potential and willingly try to make things better.

The real drivers of transformational change are these entrepreneurial thinkers and doers who strike a chord with consumers.

The proof can be seen in breakout innovations across industries as diverse as agriculture and automobiles, banking and baseball, phones and planes. And yes, slowly but surely, utilities, too.

Overcoming Herd Mentality

Consider Cainthus - a company that's likely new to most readers of this publication. This start-up with an international presence is dedicated to digitizing agriculture. They use data to reduce waste, improve efficiency, and better use the capacity of land for food production.

You'd be correct to think they're working with drones. Aerial infrared and thermal imaging coupled with GPS-guided tractors enables precision farming.

Everything from soil tilling and seed spacing to ground moisture and fertilizer treatments can be optimized in ways that before were not possible. These innovators are using technology to materially improve farm performance and shrink the influence of variables like weather and fuel costs.

This should pique your interest. But novel use of drones is only part of the breakthrough innovations at Cainthus. Another is how they're applying facial recognition software - to milk cows.

By individually recognizing cows and their common afflictions, such as lameness, the technology enables early detection and treatment - cow by cow - before production is affected. The consequences for improving forage conversion and labor value are material.

The potential benefits to climate are global. Transformation in one thing begets transformation in another.

A Different Way to Drive

Not so long ago, reliability, safety, cost and performance defined the most successful cars and brands. Today, innovative thinkers, willing to act in ways that drive new value, are transforming the future of transportation in profound ways.

For example, three-dimensional printing with lightweight materials helps improve product performance, lower inventory cost, and allow distributed production. Connectivity enables an array of safety, information, sharing, and entertainment services to be embedded.

The shift to electric power in place of gasoline improves cars' environmental footprint. And along the way, helps alter the global security implications of oil demand.

The convenience of self-monitoring, self-diagnosing, self-driving, and shared transportation is within reach. But take note: while the big automakers can approach this future with scale advantage, they're also bound by capital-intensive infrastructure and long-standing institutional biases. So it isn't surprising that a host of innovative companies, many of them in software, are disruptors in this massive market.

Change: Inescapable, Pervasive

The first mobile phones were just for making calls. Today, cell phones are for text messaging, news feeds, emails, photographs, video, and internet access. They're also a clock, compass, alarm, and timer.

Let's not forget game console, note keeper, GPS finder, information assistant, and more. Thank innovators and entrepreneurial thinkers and doers for all of that.

For a more entertaining example of an innovator applying data to make better decisions, see the movie Moneyball. And if baseball is your thing, check out the Milwaukee Brewers.

The Brewers are far from the best team in Major League Baseball, but they're top-notch at retaining season ticket-holders. You'll find that effective use of data and personalization are keys to their success.

The airline industry has reduced costs and increased revenues by better understanding customer behavior. Dynamic seat pricing is one example.

Strategic alliances to align transport schedules and bundle services (think packaged deals with hotels, rentals, and restaurants) is another. As a result, whole new business ecosystems have emerged.

Or how about the insurance industry? They once focused only on transactional services. That is, they sold you a policy and then worried about claims and renewals. Imagine that, hidebound, even with all that data about each customer at their disposal.

Problem was, the data was about insurance companies' risks, costs, and usage. Today, the best of them have rethought that paradigm. The others are playing catch-up.

Now, insurance companies view their data with an eye toward the client as a person with preferences. And the new focus is on life events like graduations, marriage, children, retirement and the like that trigger needs the industry can serve. See the difference?

Imagining Your (New) Utility

The utility industry has never been widely known for innovators and entrepreneurial thinkers and doers. You can change that. Seeing what others are doing is one way to rethink and reimagine what might be possible.

What if utilities did power resource planning by evaluating individualized demand and consumption? What if rates were dynamically priced, customer by customer, instead of by class?

Locational marginal pricing at the extreme. You don't need facial recognition software. Smart meter technology, applied data science, and seeing customers as people with preferences makes such things possible.

What if electric system generation was optimized by the performance of discrete units rather than power plant-by-power plant? How might building-specific distributed generation, energy efficiency and battery storage be integrated?

As with cell phones and cars, the utility platform is more versatile than often thought. Disruptors are combining connectivity, data sensing, advanced analytics, and software to achieve a new level of system optimization. Are you working with them?

What if utilities changed paradigms from seeing data as useful for more than improving system operations? What if utilities also mined data to understand customer preferences and improve personal experience?

That's kind of like the airline and insurance industries. Based on deep insights, what new alliances and service bundles might be developed to deliver more value?

Enabling technologies are inescapable. And examples of thinkers and doers creating new value are pervasive.

There is no better time for utilities to step up - to mitigate challenges and capture opportunities that technology enables. Are you among the entrepreneurial thinkers and doers in your organization?

Where do you look for ideas that transfer from other industries? And how are you staying attuned to customer preferences? 

Technology enables. Examples from others abound. But it's up to you to imagine better things.

One of the great names in U.S. utility regulation is that of the late Joseph C. Swidler (1907-1997). His was a remarkable career.

Swidler was a young general counsel of the Tennessee Valley Authority in the 1930's. Newly appointed TVA Chairman David Lilienthal tasked him to complete negotiations for the acquisition of transmission assets from the utility holding company Commonwealth and Southern Corporation.

The utility had been led by future Republican presidential candidate Wendell Willkie. 

Its assets became the backbone of the newly formed Tennessee Valley Authority.

Later, Swidler would serve as Chair­man (1961-1965) of the Federal Power Commission, predecessor to the Federal Energy Regulatory Commission, and after that as Chairman (1970-1974) of the New York Public Service Commission.

I had met Swidler earlier in my career while I served as a Commissioner on the Wisconsin Public Service Commission, the agency where the Tennessee Valley Authority's David Lilienthal began his governmental career as an appointee of Governor Robert "Fighting Bob" LaFollette. But it wasn't until I was on FERC that I had some regular meetings with Swidler.

The topic was always the same - the state of the nation's power systems. Appearing at the Edison Electric Institute's annual meeting on June 4, 1963, Swidler gave a speech on the topic, "The Special Research Problems and Opportunities of the Electric Power Industry."

His influential speech led to the immediate formation of the Energy Research Council, which was later to become the Electric Power Research Institute.

Swidler led the Federal government's efforts to assess the nation's electric grid, starting in 1963 with the creation of the National Power Survey and its final report in 1970. During the preparation of the report, the nation experienced the largest electrical blackout in U.S. history, on November 9, 1965. That event led to the creation of the North American Electric Reliability Council in 1968. The creation of NERC was another Swidler victory.

It was now 1990 and Swidler was adamant that the government needed to immediately update the twenty-year-old National Power Survey report. He wrote in his 2002 memoir, "Power and the Public Interest,""The FPC and FERC abandoned the role of industry leader and gadfly, reverting instead to preoccupation with its regulatory role."

As a new FERC commissioner I was supportive, but budget realities and institutional indifference meant that Swidler's pleas for an update of the report fell on deaf ears.

At one lunch meeting I caught Swidler glancing at the enamel pin I wore in my lapel.

"What's that?" He asked.

"Oh" I replied. "It's a FERC pin!"

"It's very nice!" he said.

"Please," I said. "Take this one, there are plenty of these at the Commission." 

I removed the pin from my lapel and passed it across the table to him. He immediately attached it to his suit lapel, thanking me while doing so.

A week later a package from Joe Swidler arrived at my FERC office. Inside was a handwritten note and a smaller box.

The note said "Dear Branko, Thank you for the new FERC pin. Please accept this FPC Commissioner's pin. It is an extra as I also have a FPC Chairman's pin, which differs, as it has a diamond center. Yours, Joe."

The FPC Commissioners' pin was significantly more elaborate than the enamel FERC pin. First, it is solid gold and second, it has a tooled screw mounting! Clearly I got the best of the swap.

It took another East Coast blackout, this time on August 14, 2003, to get federal legislation to address Joe Swidler's concerns about more frequent monitoring of the nation's power grid.

The Energy Policy Act of 2005 established a National Reliability Organization under FERC to do so. Perhaps, had we listened to Joe a decade earlier, the 2003 electric blackout could have been avoided. Who knows?

A hundred and ninety of us voiced our opinions on utility regulation and policy in 2016 in Public Utilities Fortnightly. From Paul Afonso to Audrey Zibelman; chief execs, commissioners and commoners debated competition, cyber, climate change and all the challenges.

Ten current or retired chief execs weighed in, in PUF: Charles Bayless, Werner Buehler, Bob Catell, Tom Fanning, Bob Flexon, Joe Rigby, Jim Rogers, Bob Skaggs, Bill Spence and Branko Terzic.

Sixteen current or retired commissioners weighed in too, in PUF: Paul Afonso, Lauren Azar, Dian Grueneich, James Hoecker, Ashley Brown, David Boonin, Charles Cicchetti, Tony Clark, Tim Echols, Joshua Epel, Terrance Fitzpatrick, Travis Kavulla, Ann McCabe, Philip O'Connor, Branko Terzic and Audrey Zibelman.

Plus, many of the most respected thought leaders of our time, in utility regulation and policy. We heard from Ralph Cavanagh, Ken Costello, Ahmad Faruqui, Tom Flaherty, William Hogan, Leonard Hyman, Michael Shellenberger, Lisa Wood and Roger Woodworth, among others.

And, many of the most respected regulatory lawyers of our time. We heard from Brendan Collins, Joel deJesus, Carmen Gentile, Delia Patterson, David Raskin, Harvey Reiter and Clint Vince, among others.

There are just too many to mention here. How about an author in July's PUF, Maria Korsnick? She recently became chief exec of the Nuclear Energy Institute. Or an author in March, May, August and September, Tom Sloan? He was reelected to the Kansas House of Representatives. How did Tom have time to campaign?

Or Jan Vrins who heads Navigant's energy practice? Or Michael Deggendorf who heads Grid Assurance? Or Ken Gerling who heads transmission projects at Burns & McDonnell? Or Val Jensen who heads customer ops at Com Ed? Or Barbara Alexander and Sheri Givens who headed consumer advocate agencies? Or Adam Sieminski who heads the Energy Information Administration?

If I've not mentioned you, my sincere apologies. We're grateful, on behalf of all PUF readers, for your contribution. There are 140 of you that I've not named here. But every author of an article, column or letter and every interviewee is listed in the PUF 2016 Index that follows.

Did you watch Robert Borlick, Ashley Brown, Charles Cicchetti, Michael Rosenzweig and John Sheik debate - with gloves off - on the letters page? And Jim Fama reflect on his remarkable career in that candid interview last June?

This year, 2017, we're off to a fast start. The January 1st, 2017 PUF featured 27 authors. We hope to feature nearly 250 voices this year. By doubling of the magazine's frequency this spring, it will be feasible to fit all of them in.

Which brings us to why PUF was founded back in 1928, and what PUF is all about today. It was and is the forum for commentary, opinion and debate on utility regulation and policy. If you express your perspective in PUF, you impact the debate.

Hence our new slogan, highlighting our mission: In PUF, Impact the Debate.

This year, we hope to expand the readership of PUF to 100,000, by transitioning from single-user licenses to site licenses. That's great. But even when our readership was 10,000, it included the senior decision-makers and policy-makers for the electric and natural gas industries.

So, help shape our industries' paths. Make your point in PUF. We and they are all reading and listening.

PUF 2016 Index of Articles, Interviews and Columns

Paul Afonso, Lauren Azar, Dian Grueneich and James Hoecker, "Preparing for the Inevitable," August's PUF

Veronica Ahern, Craig Berry, Bruce Cho, Carmen Davis, Steve Mormann, Naza Shelley, Timour Skrynnikov, interviewed, November's PUF

Jan Ahlen, "The Consumer-Centric Utility," July's PUF

Barbara Alexander, Ashley Brown and Ahmad Faruqui, "Rethinking Rationale for Net Metering," October's PUF

Massoud Amin, "Microgrids & Battery Storage," January's PUF

William Atkinson, "Utility-Scale Storage: Four Utilities, Four Strategies," January's PUF

Charles Bayless, "Reshaping Energy," September's PUF; "Frequency Control and ACE," October's PUF

Betsy Beck, "Finishing Transmission Planning Reforms," October's PUF

Michael Beehler, "Response to Huntoon Re: Big Transmission," February's PUF

Roger Bezdek, "Unsung Role of Fossil Fuels in the Miracle of U.S. Growth," August's PUF; "Essential Role of Fossil Fuels in Future Economic Growth," September's PUF

Adam Bickford and Suzanne Pletcher, "Utility Streetlight Retrofits," March's PUF

Ann Stouffer Bisconti, "Public Weighs In on Market Conditions Threatening Nuclear Power Plants," July's PUF

David Boonin, "Refocusing Rate Design Debates," November's PUF; "Effective Rate Design," December's PUF

Robert Borlick, "Order 745 - A Time Bomb for Electricity Consumers," July's PUF; "Response to Mitnick Re: Costs Fixed Depending on Timeframe," September's PUF; "Response to Cicchetti Re: Net Metering," October's PUF

Cameron Brooks, "Tale of Two Grids," May's PUF

Ashley Brown, "Response to Cicchetti/Wellinghoff Re: Net Metering," February's PUF

Jason Brown, "Technology on the Move," February's PUF

Dave Bryant, "High Performance Transmission Conductors Are Improving Grid Efficiency," June's PUF

Werner Buehler, interviewed, October's PUF

Dave Burg, Alan Conkle and Dennis Curtis, "Do Bigger Investments Yield Greater Returns on Cybersecurity?" February's PUF

Julie Cannell, "Local Financing Benefits U.S. Utilities," November's PUF

Bob Catell, interviewed, September's PUF

Craig Cavanaugh, "Challenging Common Excuses for Ignoring Grid Analytics," December's PUF

Shannon Chu, "Path Forward for Nuclear Fuel Storage," November's PUF

Charles Cicchetti, "Response to Brown Re: Net Metering," and "Order 745: Challenge to Plain Old Power Markets," April's PUF; "Residential Demand Charges are a Bad Choice," December's PUF

Tony Clark, interviewed, July's PUF

Brendan Collins, "Obligations and Opportunities: Wires Cos. Plug In to Clean Power Plan," April's PUF

Ken Costello, "New Technologies Require Regulatory Vigilance and Balance," February's PUF; "Are Utilities and Government Skimping on R&D? April's PUF; "Beware of Vertical Arrangements for Gas Procurement," June's PUF; "Good Ratemaking is Hard to Do," August's PUF; "Is Customer Activism for Real?" November's PUF

Phil Cross, "Net Metering Skirmishes in Hawaii, California, Mississippi, Nevada," February's PUF; "Fate of Conservation Mandates," March's PUF; "Illicit Marketing Practices," April's PUF; "Line Dividing Regulation and Management," June's PUF; "2016 Annual Rate Case Survey," November's PUF

Paul DeCotis, "New Regulatory Paradigm Needed Now to Support Distributed Energy Resources," March's PUF

Michael Deggendorf, "No-Regrets Approach to Enhancing Grid Resiliency," August's PUF

Joel deJesus, "New Grid Security Measures for 2016," February's PUF

Joel deJesus and Carmen Gentile, "FPA 203(a)(1)(B): A Deal is a Deal, No Matter How Small?" May's PUF

Keith Dennis, "Community Storage: Coming to a Home Near You," February's PUF

Vincent DeVito, "Energy Company's Pipe Dream," July's PUF

Joseph Donovan, "The Mobiles are FAST," August's PUF

Shawn DuBravac, "Framing Virtual Reality," April's PUF

Tim Echols, "Nuclear Energy - Tastes Like Chicken," September's PUF

Joshua Epel, James Tarpey, Nicholas Eaton and Jacob Rey, "Giving Credit Where Credit is Due," July's PUF

Jim Fama, interviewed, June's PUF

Tom Fanning, interviewed, Leadership Lyceum podcast, October's PUF

Ahmad Faruqui, "Response to King/Datta Re: Time-Varying Rates," March's PUF; "Gretchen Bakke's Meditation on the Grid," October's PUF

Alan Feibelman and Gerry Yurkevicz, "Transitioning to the Utility of the Future," September's PUF

Terrance Fitzpatrick, "The Price of Retail Electricity Competition in Pennsylvania," March's PUF

Tom Flaherty, "Lessons for Tomorrow's Deals," September's PUF; "Innovation Gains Traction with Utilities," November's PUF; "Challenge of Commercialization," December's PUF

Tom Flaherty and Owen Ward, "Expanding Deals, Shrinking Companies," June's PUF

Sam Flaim and Loren Toole, "Electricity, Economic Efficiency and Growth," April's PUF

Bob Flexon, interviewed, Leadership Lyceum podcast, November's PUF

Colin Fraser, "Rethinking How to Value Energy Savings in Smaller Businesses," April's PUF

Matt Fitch and Josh Freed, "The Middle Way," August's PUF

Daniel Gabaldon, "Is Cleantech Coming of Age?" May's PUF

Daniel Gabaldon, Matt Guarini and Jamie Wimberly, "Here Comes the Sun," July's PUF

Sean Gammons, Glenn George, Robert Southern and Willis Geffert, "Getting Ready for Competition in Japan," October's PUF

Stan Garnett, interviewed, August's PUF

Glenn George and Hans-Martin Ihle, "Success Strategies in New Japanese Electric Power Market," November's PUF

Glenn George, Hans-Martin Ihle and Miura Wataru, "Electricity Market Reform in Japan," August's PUF

Karen George, "Architecture for the Integrated Grid," December's PUF

Ken Gerling, interviewed, July's PUF

Nicholas Giannasca, "Commercial DG - Case for Financeable Contracts," April's PUF

Eric Gimon and Robbie Orvis, "How Much Do Combined Cycle Natural Gas Plants Really Need to be Paid," March's PUF

Sheri Givens, "Solar Consumer Education and Protection," February's PUF; "Today's NASUCA," April's PUF

Jeffrey Goltz, "Facilitating Innovation," December's PUF

Maria Guimaraes, "A Robotic Concrete Crawler," July's PUF

John Hargrove, interviewed, July's PUF

John Hargrove, "Vegas Energy, Baby," November's PUF; "Health Benefits of Energy Efficiency," December's PUF

Bill Hederman, interviewed, October's PUF

Ross Hemphill and Ken Costello, "Regulators Can Win the Trifecta with Residential Demand Charges," July's PUF

Ross Hemphill and Val Jensen, "Illinois Approach to Regulating Distribution Utility of the Future," June's PUF

Darren Highfill and Brad Bauch, "AMI to IoT," December's PUF

Ryan Hledik and Ahmad Faruqui, "Competing Perspectives on Demand Charges," September's PUF

William Hogan, "Demand Response: Getting the Prices Right," March's PUF

Steve Huntoon, "Battery Storage: Drinking the Kool-Aid," January's PUF; "You Say You Want a REVolution," February's PUF; "Musk and Me," March's PUF; "Just Ducky," April's PUF; "The Powerwall Follies," May's PUF; "Getting Berned," June's PUF; "POPS Is Here to Stay," July's PUF; "Nice Work If You Can Get It," August's PUF; "Helter Skelter," September's PUF; "Hooking Up," November's PUF; "Ultimate Triumph of Standard Market Design," December's PUF

Leonard Hyman, "Response to Two Articles Re: Grid Resilience," October's PUF

Leonard Hyman and William Tilles, "The British Electricity Model: Twenty-Five Years of Experience," June's PUF; "Marginal Utility," July's PUF, August's PUF and September's PUF; "Don't Cry for Utility Shareholders, America," October's PUF; "Small Modular Reactors and Path Not Taken," November's PUF; "Capitalism Debates Socialism in Honolulu," December's PUF

Harjeet Johal, Ken Collison, Elliot Roseman and Dan Rogier, "Averting Disaster on the Grid," September's PUF

Andrew Kaplan, "Monetizing Energy Storage," December's PUF

K Kaufmann, "Energy Future in Ohio Corn Fields," December's PUF

K Kaufmann, John Pang, John Sterling and Chris Vlahoplus, "Postcards from Hawaii: Lessons on Grid Transformation," February's PUF

Travis Kavulla, "We, the Regulators," January's PUF

Larry Kellerman, "Reinvigorating a Century Old Business Model," April's PUF

Chris King and Bonnie Datta, "Reply to Faruqui Re: Time Varying Rates," March's PUF

Llewellyn King, "Government Works Better Pulling Rather than Pushing," February's PUF

Lawrence Kirsch and Matthew Morey, "Has Retail Choice Delivered on its Promises," June's PUF

Daniel Klein, "First Look at 2015 CO2 Emission Trends for the U.S.," May's PUF and June's PUF; "Energy Dept.'s Evolving Outlook for U.S. Power Sector," August's PUF

Maria Korsnick, "Action Needed Now to Prevent More Nuclear Plant Closures," July's PUF

Jeremiah Lambert, "Writing 'The Power Brokers,'" May's PUF

Mackinnon Lawrence and Jan Vrins, "Energy Cloud Playbook," July's PUF

Marlo Lewis, Jr., "Schneiderman Targets Peabody Energy," March's PUF

Phillip Lookadoo and Jamie Jackson, "Recent Transmission Develop Selections Based on Cost Containment: Harbinger or Anomaly?" March's PUF

Russell Lowes and Edward Mainland, "Hansen is Wrong about Nuclear Power," May's PUF

Arun Mani, "Storage: Turning Disruptive Technology into Opportunity," August's PUF

Arun Mani and Stephanie Gainger, "Future Service-Oriented Utility," October's PUF

Ann McCabe, with Orijit Ghoshal and Bill Peters, "A Formula for Grid Modernization?" May's PUF

Michael McShane, "Leveraging Gas Smart Meter Technology to Improve Customer Choice," September's PUF

Philip Mezey, "Active Grid," October's PUF

Marc Miller and Bob Gibson, "Texas Solar Two Step," October's PUF

Steve Mitnick, "Forum for Our Industry's Civil Discourse," January's PUF; "No, Edison Wouldn't Recognize Today's Electric Industry," and "Rate Structure Philosophy," February's PUF; "Electricity's Capacity Factor, a Problem?" March's PUF; "We Made Light Free," April's PUF; "Consumers Want What?" May's PUF; "Most Influential Since 1990," June's PUF; "Costs Fixed Depending on Timeframe," July's PUF; "Future Shocked," August's PUF; "Legacy and Generations," and "Challenges of Coops Converging with Other Utilities," September's PUF; "Top Twenty, and Why Financial Strength Matters," October's PUF; "The Way We Live, and Renewables," November's PUF; "Electricity's Complexity," December's PUF

Andrew Moratzka and Sara Bergan, "Community Solar: States Are Testing Designs While Driving Forward," June's PUF

David Mueller, "Geomagnetic Disturbances and the Grid," July's PUF

Michael O'Boyle and Sonia Aggarwal, "Improving Performance in Publicly Owned Utilities," March's PUF

Gary Ockwell, "Going Smart at Scale," January's PUF; "Activating the Human Grid," February's PUF

Philip O'Connor, Wayne Olson and Robert Bussa, "A Five-Point Plan for the Next Wave of Electricity Restructuring," May's PUF

Laura Olive, "Vision of Liquefied Natural Gas Hub," November's PUF

Roy Palk, "An Industry Transformed," April's PUF

Delia Patterson and Harvey Reiter, "FERC Chasing the Uncatchable," May's PUF and June's PUF

Ari Peskoe, "Ratemaking and the Campaign Against Rooftop Solar," July's PUF

Andrew Phillips, "Ti - The Transmission Line Inspection Robot," April's PUF

Suzanne Pletcher, "Benefits Add Up," November's PUF

Bruce Radford, "Going Against the Flow," February's PUF; "The Long and Short of Grid Congestion," March's PUF; "FERC v. Ohio," April's PUF; "It's a Five-Minute World," June's PUF; "Topping the $1K Cap," August's PUF; "Modernizing PURPA," October's PUF

David Raskin, "A Rose by Any Other Name: Response to 'Solar Battle Lines,'" March's PUF

Joe Rigby, Bob Skaggs and Les Silverman, interviewed, Leadership Lyceum podcast, December's PUF

Craig Roach and Vincent Musco, "Federal Versus State Jurisdiction in the Electricity Business," May's PUF

Jim Rogers, interviewed, August's PUF

Steven Rose, "Estimating Benefits of Reducing Greenhouse Gas Emissions," August's PUF

Michael Rosenzweig, "Response to Borlick Re: Order 745," October's PUF

Nancy Ryan and Lucy McKenzie, "Utilities' Role in Transport Electrification: Promoting Competition, Balancing Risks," March's PUF and April's PUF

Ron Schoff, "Incubating the Technologies of Tomorrow," May's PUF

Chip Scott, Justin Lowe and Amanda Levin, "A Holistic Cyber Strategy," January's PUF

Michael O'Sheasy and Joshua Rogers, "Parsing Poles and Towers," January's PUF

John Sheik, "Response to Radford Re: EPSA Complaints at FERC on Ohio Contracts," May's PUF

Michael Shellenberger, "How the Environmental Movement Changed its Mind on Nuclear Power," May's PUF

Adam Sieminski, interviewed, October's PUF

John Simmins, "EPRI Explores Augmented Reality to Improve Grid Reliability," June's PUF

Tom Sloan, "Technological Innovation and Public Policy-Making," March's PUF; "Energy Policy Development - Potential New Paradigm, and a Challenge," May's PUF; "Need for New Regulatory/Business Models," August's PUF; "Legislative and Consumer Advocate Challenges," September's PUF

Bill Spence, interviewed, April's PUF

Michael Strong and Mark Pruitt, "Aggregation 2.0: Evolution of Customer Engagement with Retail Choice?" May's PUF

Branko Terzic, "What Ernie Knew!" September's PUF; "Innovation and Capital Recovery," November's PUF; "Grand Theft with Capital Recovery," December's PUF

Clint Vince, interviewed, December's PUF

Michael Volker, "Investor-Owned and Public Power Can Learn from Co-ops," September's PUF

Aliza Wasserman and Sam Cramer, "States Want to Know About Utility Biz Models," June's PUF; "Governors' Advisors' Energy Policy Institute," September's PUF

Austin Whitman, "The New Standard Offer," November's PUF

Greg Wikler, "Intersection of DER, Energy Efficiency, DR," October's PUF

Lee Williams, "Nuclear Life Extension," January's PUF

Mark Williams and Eric Korman, "FERC Revises Market-Based Rate Procedures," March's PUF

Lisa Wood, Ross Hemphill, John Howat, Ralph Cavanagh and Severin Borenstein, "Rethinking Rate Design," November's PUF

Roger Woodworth, "In Search of Strategic Leaders," September's PUF; "A Mindset to Mimic," October's PUF; "Overcoming Fear of Fire," November's PUF, "Watch Your Language," December's PUF

Alex Zakupowsky, "Other Side of the Story on Tax Implications of NEM Successor Policies," June's PUF

Audrey Zibelman, interviewed, December's PUF   

I have had the pleasure of hearing Susan Story, CEO of American Water, speak to industry groups on numerous occasions over the last several years. Her speeches are engaging and carry power that moves an audience to action.

I realized that the persuasive power of her public speaking and her approach to leadership demonstrate quintessential qualities for effective leadership beyond the boundaries of the corporation that she leads.

A key measure of success for our industry is continuously achieving safe, clean, reliable, affordable delivery of service. These objectives are dynamic and their parameters are often dependent on public policy, legislation, and regulatory relationships.

Industry leaders, therefore, must advocate in these areas by leading and influencing beyond the boundaries of their corporations. They must lead beyond their authority.

But what is leading beyond authority? There are three types of authority, according to the sociologist Max Weber.

There is authority based on legal rules. There is traditional authority, based on traditions, customs and historical precedents. Weber posited an additional authority structure called charismatic authority.

Charismatic authority is conferred on someone not by established norm or rule, but by an individual's personal history, achievements and leadership qualities. Weber defines charisma as possessing exceptional qualities regarded as exemplary in the eyes of his or her followers.

A utility executive leads beyond the boundaries of the corporation with charismatic authority. Leadership effectiveness in this sphere of charismatic authority, above and beyond the corporation's boundaries, requires unique characteristics and competencies often overlooked.

There are many descriptors for the general qualities of the effective leader. But there are very few specific frameworks for effective leadership with charismatic authority. In 1951, Northwestern University professor Franklyn Haiman established a list of qualities desirable for a leader engaged in democratic processes.

These qualities include social sensitivity, which includes a respect and concern for others, extroversion, and a belief in the value of the individual. This sincere interest in other people is the most important attribute of this type of leader. Other qualities include sensitivity to the basic trends and moods of the group; knowledge and expertise in the area where they are expected to lead; facility in verbalizing the ideas of a group; vitality; maturity and patience.

Susan Story has those qualities. They are evident throughout my interview with her. These attributes enable her to successfully lead and influence people beyond her corporate authority into the areas of corporate social responsibility and public policy.

Tom Linquist: American Water is the largest publicly-traded water utility in the country. It serves one of the basic human needs of about fifteen million customers across forty-seven states, and in Ontario, Canada.

The company serves in a mission-critical infrastructure sector. Susan, you continue to be active in policy-oriented activity with a wide array of critical stakeholders. What are the key issues you are discussing in your talks, currently?

Susan Story: When I look at national water policy, there are four issues that jump out. The first issue is water supply. The second is water infrastructure, and the aging nature of water infrastructure and wastewater infrastructure.

The third is water quality, and the emerging issues around water quality. The fourth area is customer connectedness. Utilities in the future will have to connect with customers more along the lines of how they have become accustomed to connecting with Amazon and other service providers.

First, there's a finite amount of fresh water. You get water from underground. You get water from the surface sources such as rivers and lakes. You desalinate and produce fresh water from brackish or salt water, or you recycle and reuse. That's it.

Those are the only options that you have with the exception of conservation, which can also be viewed as a source, similar to the way people consider energy efficiency to be part of the energy supply equation.

The second issue facing everyone in the United States is aging water and wastewater infrastructure. In this country, there are over a million miles of pipe that convey water.

Every year, we lose twenty percent of treated water, or two trillion gallons. We've gone through the expense of getting the water, treating it, putting it in pipes. But before it ever gets to its destination, we've lost it because of leaks and main breaks, generally caused by infrastructure well beyond its useful life.

On the wastewater side, there are about seven hundred thousand miles of wastewater pipes around the country. Every year we have nine hundred billion gallons of untreated sewage that's going into our rivers and streams.

The issue of aging infrastructure is a critical one, because it's also tied in with supply. We can't afford to be losing treated water. We can't afford to have the environmental impacts of untreated wastewater being improperly disposed.

The third element, water quality, has been brought to light with the toxic lead-tainted water in Flint, Michigan and the algae blooms in Lake Erie and the Ohio River. An important context that is unknown to most people is the fact that there are more than fifty million identified chemicals in this country.

It took thirty-three years to register the first thirty million - and only nine months for the last ten million. Every 2.6 seconds a new substance is being synthesized by the breakdown and reformation of chemicals.

There are also fourteen hundred microbes such as bacteria, viruses, and protozoa that can affect drinking water. The EPA regulates ninety. It is not technologically possible or economically feasible to monitor for them all today. Collectively, we have to protect our water resources and find new, innovative technologies that allow us to monitor and ensure that our water supplies are safe.

The last area is customer connectedness. The way we look at the customer is to assume that the traditional utility construct could go away one day. If our customers are given a choice, we want there to be no question in their minds that they would choose us.

What are we doing for the customer experience? What are we doing for customer-facing technology? What are we doing to provide the type of experience that our customers want, so that they enjoy the experience they have with American Water?

Tom Linquist: You are on the board of the Bipartisan Policy Center. The BPC is directly addressing your company's key areas of focus through their unique approach to public policy. What is the BPC's scope and mission?

Susan Story: Jason Grumet leads the Bipartisan Policy Center. He's done an incredible job. They look at numerous critical policy areas: energy, health care, national defense, infrastructure, tax policy.

Senators Bob Dole, Tom Daschle, Howard Baker, and George Mitchell founded the center in 2007. What they said was, "We've got to find a place where both sides of the aisle come in to find ways forward."

They don't say "we're non-partisan." They say "we're bipartisan," which means, "We're not asking you to come to the table and leave what you believe at the door. We're saying, come to the table and together find things that you can agree on." They promote national solutions by bringing people together on elements of major policy issues that they can agree on.

They work with others on proposed legislation, typically starting with the Senate, but sometimes with the House. They go beyond white papers and work to get policy solutions into practical legislation. They measure their success on what actually changes, not on paper output.

Tom Linquist: How is it that they go beyond a white paper?

Susan Story: They build support and momentum for legislation through the coalitions of people that they get involved to work on projects, from political, governmental, corporate, environmental, and NGO arenas.

I was first exposed to the BPC when I was at Southern Company. As part of an energy project that the BPC led, we met over an eighteen-month period with electric companies, oil and gas companies, environmental organizations, Democrats, Republicans. You name it, they were all around the table.

We hammered out what we thought was good policy, and found a way for people with very divergent views to come together on several key issues. Once the paper came out, not only was it the BPC carrying the message, but also BPC's advocacy counterpart. They took over and had built-in support from the people who'd been part of the effort to directly influence change beyond the white paper.

Tom Linquist: How is the BPC addressing aging infrastructure and public-private partnerships?

Susan Story: In 2015, the BPC put together an effort to look at infrastructure investments with the view of public/private partnerships taking the lead. The Center is helping to address this daunting challenge for the United States. Doug Peterson, the CEO of S&P Global, and I were named co-chairs of that effort.

We had CEOs of many different companies and private equity partners involved, but we also had a very strong political advisory council providing strong leadership and input throughout the process.

The leaders of this council included Antonio Villaraigosa, the former mayor of Los Angeles, and Henry Cisneros, former mayor of San Antonio and former HUD secretary under President Clinton. They are both Democrats. It also included Steve Bartlett, former Dallas mayor and congressman, and former Governor of Mississippi Haley Barbour, both Republicans. These folks came together and said, "We all can support the efforts of this work on infrastructure."

The council's report was issued in May 2016. It mainly focuses on transportation and water and wastewater infrastructure, although it provides a model for overall public-private infrastructure investment. It emphasized that we need to give public entities, municipalities, and governmental entities full optionality to address the range of challenges they have.

Their challenges include the ability to get financing from private equity. Municipalities with distressed systems face impediments to the sale of their distressed assets to entities like American Water. They may be better situated to buy, improve, and operate those assets.

Having options is especially relevant for those municipalities having wastewater or water systems that are decades old. They may be in violation of EPA regulations, and might use an infusion of cash for the numerous competing priorities their cities are facing, such as building schools, roads, parks, or unfunded pension liabilities.

One option may be selling those assets. At that point, they get an infusion of cash into the city, and are able to bring expertise on board. These are local people backed by the national operational and R&D strength of a company whose only business is water and wastewater. Then they are able to avoid the type of rate shocks they would face if a city, on its own, tried to address and solve these issues.

Tom Linquist: I think there are seventeen states that have serious state law limitations to public-private partnerships, and there might be four or so that have the right environment to encourage P3s. What is it that you're looking for when you envision the ideal public-private partnership at a state level?

Susan Story: Actually, we are finding many of our states are open and welcoming. Whether it's the state government or the utility commission, they're finding that private purchases, especially of distressed systems, are good public policy for the state.

In states such as California, Illinois, Missouri, Pennsylvania, Indiana, and New Jersey, we have what's called fair market valuation.

Traditionally in regulated sectors when you acquire a company, regulators look at the depreciated value or book value of assets as a starting point. That helps them evaluate how much of the total purchase price should go into rate base.

There is a lot of negotiating around value and sharing of synergies to determine how much of the premium the acquiring company can recover. In the water sector, where we typically purchase from municipalities, these systems are older and in need of investment. The depreciated value results in a potential price that's too low for the city to consider selling.

Under fair market value laws, in many cases there is an appraisal from independent third parties to determine the so-called fair market value of the system. Based on the specific process within each state, an appraisal is chosen as the starting point for rate base discussions. As a result, you don't have these big premiums above the book or fully depreciated value.

We've also seen several of our states adopt single tariffs that encompass all water systems. In Pennsylvania the single tariff covers water and wastewater customers. This Pennsylvania combined single tariff is especially important, because ninety-seven to ninety-eight percent of all wastewater systems are publicly owned.

Prior to the legislation, we might have numerous water customers, but very few wastewater customers. So buying a distressed wastewater system would entail large rate increases for the acquired customers. There wasn't a large base of customers for us to spread the costs around.

The legislation, Act 11, allowed companies buying a distressed wastewater system to spread those costs across a broader water and wastewater base. As a result, rather than the bills going up twenty-five percent or more due to needed upgrades, which actually happened, they go up typically less than five percent. And every customer eventually benefits.

Constructive and reasonable legislation and regulations enable us to address aging infrastructure, water supply and water quality. Those are really encouraging signs that we're seeing spread across the country.

Tom Linquist: How do you go about educating stakeholders and influencing policy in other states to enable more of what you're seeing in Pennsylvania?

Susan Story: We are a local company in our sixteen regulated states. Each of our states has a state president. Our employees live, and in many cases, grew up in the communities we serve.

If an issue touches our customers, our communities, state regulators or legislators, it is managed locally. Our states have a lot of autonomy, because running a water utility in California or New Jersey is very different from running a water utility in Illinois or West Virginia.

Our local folks who live in the community share best practices in operations, engineering, and customer service with each other across the country. And in those states where there is constructive legislation or regulation, those are also shared across our footprint.

It's ground up, grassroots, local community-based efforts. It's not done out of our corporate office in southern New Jersey.

Tom Linquist:Back to the Bipartisan Policy Center, and the effort that they're making in terms of P3s, what other areas are they addressing in the P3 construct?

Susan Story: One of the ideas that the next administration has put forth is an infrastructure bank. Let's say you are Apple, or another large multi-national, and you have a billion dollars of profits overseas. That would be subject to a ten percent repatriation tax if you brought it back to the States.

Under one proposal, that company could bring that one billion back. And take advantage of an eighty-two percent tax credit by putting one hundred twenty-one million dollars into an infrastructure bank as an investment, and thereby eliminate the tax payment.

That investment would seed infrastructure projects. It could serve as the twenty-percent equity requirement for the rest of the debt that municipalities might borrow for projects.

Additionally, hopefully it would be open to private companies to enable us to reduce our financing costs for water and wastewater financing for our customers who also pay taxes.

The infrastructure bank could theoretically not only be good for infrastructure investment, but also offset the cost of the tax credits. That's because of the jobs created and the resulting income taxes paid and sales taxes on materials that would result.

I find that intellectually interesting. I think that infrastructure, Tom, is one of the few areas where you really, truly can have bipartisan support.

People know that our roads are crumbling, and bridges need repair and replacement, as do water and wastewater infrastructure. The American Society of Civil Engineers has said that over the next twenty years we need a trillion dollars to replace the water and wastewater infrastructure just to keep it operating as it does today.

There's a recognized need. How we get there differs maybe, but I think there is support from both sides of the aisle to fix these problems. I think this can be an area of early success for the new administration trying to bring parties together.

Tom Linquist: We've heard those kind of numbers for years, but there always seem to be barriers to the P3 construct.

Susan Story: Maybe so, but the fact is that there's not enough federal money. There's not enough for the scale of projects that we're talking about.

Tom Linquist: That ability comes from the private sector, then?

Susan Story: Right. It has to be both. It probably can't be one hundred percent from private equity, but I do think private industry, private equity, private companies can provide a boost forward.

For those municipalities who are already at their bonding capacity, the ability to be able to sell some assets when they're comfortable and at their own discretion provides a great relief. We should make it easier for that to happen.

I'll give you another example. There's a defeasance of bonds requirement. A municipality that has utilized tax-exempt bonds to invest in its water and wastewater systems and wants to sell to American Water faces an obstacle if any of that asset investment came from tax-exempt bonds. The municipality would have to pay those off before they can sell the assets.

We don't think the benefit of those tax-exempt bonds should come to us, but why shouldn't the city keep the benefit and use the proceeds of the sale for other needs? The city can still keep the debt.

If they have other needs for those funds, for a new school, or to fix a roadway, or for pension funding, why can't they just transfer those tax-exempt bonds to those efforts and not incur new debt? We need to isolate and remove obstacles that impede that option for these cities and municipalities.

Tom Linquist: Where is that obstacle right now?

Susan Story: It's in the U.S. Treasury. Actually, our understanding is that it's one of those regulations that could be changed by an administration. It does not have to be done congressionally.

Tom Linquist: It's evident that you've been very involved, very active, in a much broader cross-industry manner. What are the leadership qualities that enhance your influence beyond your company?

Susan Story:I think the one thing is to recognize that great ideas come from everywhere. As Americans, we basically all want the same things. We have different ideas about how to get there.

I also find that if we listen to each other more than trying to make sure that we're heard, up front especially, we find that we have more in common than we think we do on the big issues.

It's okay not to agree on everything. In fact, it makes life a lot more interesting when you're around people who are different from you. You don't always learn a lot of new things from people who are too much like you.

To actually seek out and be intellectually curious about differing ideas, to realize that we don't have to think the same for us to both want the same thing, makes life a lot more interesting and productive.

Practically, from an American Water standpoint, we serve states that are blue, and we serve states that are red. We have customers of every political persuasion, and that's great. And they all want the same thing with the water services we provide. They want water that's clean, that's safe to drink, that's affordable and is there when and where they need it.

I think the thing that we've got to get back to is, whether it's on a local, state, or federal level, is the recognition that everybody has something to bring to the table.

The vast majority of people are trying to do the right thing. We need to really listen to find those things that we can actually agree on for the good of the people in this great country. It's not easy to do, but I don't think it's hard to understand why it's important. I think we lose that simple basic fact sometimes.

Tom Linquist: How is it that you draw people's opinions and their positions out in a way that inspires a productive dialog?

Susan Story: Open ended questions. And then really listen to the answers. When you ask someone, for example, "so, what do you think about..."; or "what do you believe we should do?"

I am also big on focusing on the most important things. I am always asking my co-workers, "If you can only do one, two, or at most three things ..."

I like to narrow things down so we put our attention on those things that have the biggest impact. Whether it's an individual's tasks, or a big policy issue. I think if you ask that early, it helps you advance the discussion and provide a common basis for understanding.

I may find that even if you and I take polar opposite positions on some issues, that the specific things that are most important to you I'm okay going along with, because there's a couple of different things that are more important to me.

You can sometimes get past a lot of the dancing around and wasted time on issues that may not matter, and you get to a point of agreement faster when you step back and say, "Here's what I really need. Here's what's most important to me." When you do that, you can get to a resolution much more constructively, and much more quickly.

On a personal basis, I think it helps that I just really find people to be so interesting! Where they came from, why they are how they are, what they think is important, how they view the world, how they see things.

I ask open ended questions like, "Well, tell me about yourself. Why did you choose the job you're in? Why do you do what you do? If you could say, this year, 'If I could only get one thing done, what would it be that's most important?'" I think it helps you get to a good place and truly understand the person you are relating to.

People throw around this idea of win-win all the time, without having any idea of what that really means. Win-win is, at the end of the day, you feel pretty good about what we did. You may not have gotten everything you want, and I may not have gotten everything I want. But I feel good about it, and I feel like we've made progress, and that people are better, things are better, communities are better because of the work we did.

This is very foundational. It's human nature. We spend so much time arguing about an issue before we even understand the person. That's a big mistake. Now, I don't always do it, and no one's perfect at it, and I think we always have to work at it. But listening for understanding, and really trying to figure out what's most important helps us get there.

Tom Linquist: What is your approach to moving issues forward in a broad fashion?

Susan Story: Let's take water quality for example. I was at an employee meeting, and had an employee say, "Do the results of the election change what we're going to do environmentally?"

Having clean, safe water is not a partisan issue. We're going to do what we need to do to be environmental leaders in water resources, and it really doesn't matter who wins an election at local, state, or federal levels.

I think the thing you do is focus on what are those fundamental things that bring people together. Things like making sure all children are safe, making sure the water our customers drink is safe, making sure that people have what they need to live their lives every day.

If you talk with those fundamentals in mind, people get it. It draws everybody together. It doesn't matter where you live, what your socio-economic status is, how old you are. Doesn't matter. Fundamentals for life bring us together as human beings, and we don't spend enough time looking for those things.

I feel very blessed, because our American Water employees see what we do as a calling, not a job. What we do is not just a product or service. We aren't just a utility. Water is critical for life.

We take that responsibility very seriously. I think it's important to do what you're proud to do, and at the end of the day you can say, "This mattered and things are better because we're here."

Tom Linquist: What is your vision for the future of American Water?

Susan Story: Clean water for life. Living our values of safety, trust, environmental leadership, teamwork and high performance. A culture that promotes fully engaged employees, constantly looking for ways to better serve very satisfied customers, leading to constructive regulatory outcomes and financial strength and stability for our company.

Safety is first and foremost for our employees and customers. Every employee goes home to his or her family at the end of each day or shift, and every customer knows that every action made by American Water is for their safety and health.

Practically and specifically, water and wastewater would be a fully integrated system such that we would know immediately and be able to instantly remedy any potential contaminant, leak or main break, or any water quality issue.

We would have highly effective two-way communication with our customers, with every message personalized in the way they wanted to hear it and when they wanted it. They would know that they could either go online, or make a call, or contact us in a way that immediately gave them first contact resolution to any issue.

Municipalities or governmental entities would be able to have full optionality as to their choices, and we would be their first choice. They know if it's New Jersey American Water, Pennsylvania American Water, Missouri American Water, Illinois American Water, California American Water, you-name-the-state "American Water", that those are the folks that will take care of their citizens. We will partner with them to make sure that our customers have the best water and water services.

I think we're moving the obstacles to get there. We are doing things that we talked about earlier. Giving municipalities full optionality. With all these emerging contaminants that I talked about earlier, with all of the threats to water quality, we must ensure that we have the people and the resources to monitor, to train, and to use technology. We will make sure that we can meet all these challenges for water supply, water infrastructure, and water quality. We will give the customer the experience that he or she wants, not just needs, but also wants.

It's exciting to apply technology, to apply customer feedback, and to make policy react to what people want, and what they need. At the end of the day we're after safe, clean, reliable, and affordable water and water services; clean water for life. That's the goal. And I find it hard to imagine that anybody would be against those things.

How do we get there? We sit down at a table, and prioritize how we're all going to get there. We're excited at American Water because of our size, scope, and scale. We want to be right up there at the front, offering solutions, and have people saying, "We feel good. We're going to get there because American Water's part of that solution." 

To hear the full interview, please link to the podcast at Leadership Lyceum: A CEO's Virtual Mentor, available at Apple iTunes. Search iTunes Podcasts, with the keyword Leadership Lyceum.

Barry Worthington is the Executive Director of the United States Energy Association (USEA), the U.S Member Committee of the World Energy Council. USEA has one hundred fifty members across the U.S. energy sector, from the largest Fortune 500 companies to small energy consulting firms. Mr. Worthington represents the broad interests of the U.S. energy industry and meets with domestic and international energy leaders to advance information and unearth partnerships to develop energy infrastructure projects across the world.

USEA's team of international energy specialists works with the U.S. federal government, energy companies and energy ministers to build out energy infrastructure in developing countries. Mr. Worthington and his team have developed thousands of energy projects globally, from geothermal drilling operations in sub-Saharan Africa to smart grid electricity projects in central Europe.

PUF's Steve Mitnick: You are one of the faces of the U.S. energy industry internationally. I'm sure there's been a lot of talk about political changes in the U.S. with the election and the new administration, including its impact on energy. Do you have any thoughts about what you've been hearing and the questions people have been asking?

Barry Worthington: The USEA is the U.S. member of the World Energy Council. We were created in 1923 to serve in that role. We have counterparts in about ninety-five countries.

People in other countries are always fascinated by U.S. elections. This time, because so many of the pollsters had discounted Donald Trump, many people outside the U.S. were more surprised than people here, that he was successful.

They get snippets of U.S. news from the major international news media. Of course, everyone gets CNN around the world now, but they don't all get the other channels. So people were getting a little bit of a different perspective in other countries than we were here in the U.S.

During the campaign, if you looked at my hometown in north central Pennsylvania, you did see a lot of Trump signs; you didn't see Hillary signs. 

Many people were pleasantly surprised by the election's outcome. They clearly seek someone who's going to set a different political tone than what we've been used to for the past several decades.

The President said all kinds of good things, positive things about energy, during the campaign. He clearly is a supporter of fossil fuel: coal, oil, and natural gas. That is of great interest to many people.

But I think at the end of the day we're going to see that the new president is an "all of the above" energy guy. I don't recall him being negative toward renewables during the campaign. I think we're going to see an "all of the above" type of administration.

PUF's Steve Mitnick: You've had contact with some of the key people that might be in the administration, like the USEA Man of the Year, Rex Tillerson. You know several more of these key people. Could you talk about what they're thinking, as far as advancing the energy agenda in the new administration?

Barry Worthington: I think that Rex Tillerson was a somewhat surprising, but certainly very positive choice as a nominee for Secretary of State. Rex was a recipient in April 2016 of our United States Energy Award, which is an annual award that we've given for more than twenty-five years.

He was a recipient because of his broad support for developing a greater understanding of energy, both domestically and globally, and his support for the U.S. Energy Association and the World Energy Council. We are very proud that he received our award in 2016.

He clearly has as good an understanding of global energy issues as anybody in the world. No question about it. Exxon Mobil has been active in over fifty countries. He's personally been engaged in negotiating many of those operations. He was involved with us in 2002, when we organized the U.S.-Russia Commercial Energy Summit in Houston.

He's clearly going to have a focus on energy as a part of our international engagement. I think you can expect him to bring a very rational, businesslike approach to managing the State Department.

There are really three attributes that a Secretary of State has to have.

One, he has to manage a very large bureaucracy that's spread all around the world. Rex clearly has experience in doing that from his role as CEO of Exxon Mobil. He is also a diplomat. As Secretary of State, he would be America's number one diplomat.

The Secretary of State has to be able to implement the president's international strategy. Rex Tillerson spent forty years of his life implementing strategy. That's what he did at every level within the Exxon Mobil organization. He's only a little bit of a surprising pick, because he hasn't been in government.

PUF's Steve Mitnick: There must be some voices that you hear in the World Energy Council. Probably dependent on the region, these voices are very strong on certain issues. Their top priority is preventing climate change.

And there are whole constituencies of "keep it in the ground" anti-fossil advocates. Here in the U.S. we have the anti-pipeline folks, whether it's natural gas or oil. Have you heard some of those voices?

Barry Worthington: I think there are certainly individuals who are opposed to fossil energy development. They likely cringed when President Trump won the election. I'm sure they were further outraged when they saw Rex Tillerson nominated for Secretary of State.

They're probably outraged that the former Governor of Texas, Rick Perry, has been nominated for Secretary of Energy.

I think we're entering a new era where America takes advantage of its resource abundance.

We've been living in a world of scarcity. In 1985, we all believed that we only had a thirty-year supply of natural gas. Everyone was unanimous in that belief, which would have meant it would be gone by now.

Our policies, and our mental attitude as a country, have not completely shifted to the notion that we're in an era, and will be in an era, of resource abundance, instead of resource scarcity, for a very long time to come.

I think that the new administration recognizes this and that it can help the economy overall. We can dramatically further reduce our reliance on imported oil.

To the degree that we can dramatically reduce our oil imports, we're going to be able to utilize our domestic natural gas. We're exporting natural gas now. When you look at whatever kind of geopolitical issue abounds, one solution is domestic fossil fuel production, and exporting that to other countries.

Whether it be crude oil, refined oil products, natural gas, or coal, we have a variety of opportunities for the United States to prosper because of our fossil energy development. We would be foolish to not take advantage of that.

I think that's one of the new dimensions you're going to see in this new administration, whether you are concerned about jobs, trade, national debt, or balance of trade payments. There are a variety of issues that are addressed by domestic resource development and exporting.

PUF's Steve Mitnick:USEA already is very active internationally. You talked about the USEA role in the World Energy Council. You have a group that's working in many countries, especially developing countries, to improve their energy situation. Is there a good opportunity for USEA in this new era to do more?

Barry Worthington: I think we can do more, and with an administration that understands how critical energy is. Our members travel on a voluntary basis to developing countries to help those countries better organize and manage their energy industry.

Whether it's a private company, or a government-owned corporation, we've been in probably sixty countries now, helping them reorganize how they do business and showing best practices that we use in every single facet of energy industry operations.

There's a lot of focus on electric power, because that's where some of the greatest needs are. You have African countries where eighty-five percent of the population doesn't have access to electricity.

Energy is the bedrock of economic and social development all around the world. Always has been. Our members volunteer their expertise to help people in a developing country learn how to manage their energy systems better. The success stories are just unparalleled.

PUF's Steve Mitnick: Could you tell us one or two success stories, exciting ones, about the difference that USEA made in country X or Y?

Barry Worthington: We started twenty-five years ago working with the former communist utilities in Eastern Europe. Poland, Hungary, the Czech Republic, Slovakia, those were the first four countries whose utilities we had partnerships with.

The partnerships expanded very dramatically throughout the rest of Eastern Europe, through the Soviet Republic after the Soviet Union collapsed, and all around Asia, South Asia, Africa, and so forth.

CEZ, the utility in the Czech Republic, was a utility partner with Houston Lighting and Power, which is now CenterPoint. Here's one of the remarkable things that HL&P contributed as part of that partnership. Their treasurer took the chief financial officer of CEZ and introduced him personally to all of his Wall Street contacts. That was a jumpstart for CEZ's financial relationship.

CEZ was the first Eastern European, former communist electric utility, to get a bond rating. Now they're regarded as one of the best operating electric utilities in Germany, not only managing their business in the Czech Republic, but also their assets in other countries. They are actually lending their expertise now to other countries in Eastern Europe.

In Ukraine, Pennsylvania Power and Light was the utility partner. It embarked on building a safety program for the Ukrainian utility, Kievenergo. PP&L helped develop a safety manual and implement a safety program. Because of that partnership, fatalities dropped from fifteen per year to only one in the first year of the partnership.

You can look at India, where different utilities have stabilized their transmission and distribution systems and reduced outages dramatically. One of the big problems in India was that its distribution systems were unreliable. When the power would go off, these little businesses would fire up a fuel oil or kerosene generator, which was just pushing junk air out, and local pollution was killing people.

By improving the performance of the transmission and distribution systems, they dramatically reduced outages. Consequently, they dramatically reduced the need for these small businesses to be powered by small generators that are producing unbelievable pollution.

In Africa you have countries that are improving their operation. They're able to extend the distribution circuits and bring more and more people onto the grid. Villages are getting electricity for the very first time.

It completely changes their lifestyle, particularly for women. In African villages, it is very common for women to walk miles, collecting animal dung and little scraps of firewood to burn to cook dinner, to cook their food.

When they get electricity for the first time they're able to use electricity for cooking. It reduces the indoor air pollution in their homes. It improves their children's lives. Their children can read by electric light instead of by candlelight, which also improves their health.

When individual villages become electrified, crime goes down, theft goes down, and rape goes down. It literally transforms people's entire lifestyle. Our members are helping improve these people's lives on a voluntary basis. It's quite remarkable.

PUF's Steve Mitnick: How do you do it? You're one person, as far as I can tell, and yet you have your organizations working in many countries. You're relating to all these other energy associations and organizations and, as you described, you have to work a lot with our industry. What's your typical day like?

Barry Worthington: We've been doing it now for twenty-five years. We have a terrific staff of twenty-five people. They travel extensively.

It's normal for our staff to hit one hundred thousand miles plus in a given year. For the past ten years at least, I've traveled over two hundred thousand miles a year.

The key thing becomes building the trust of the energy organizations in the developing countries that we're working in. They quickly come to understand that we're not there to sell them anything.

We're only there to share our best practices and help them understand what applies in their context and what doesn't. We do that in conjunction with the U.S. Agency for International Development and their staff in the missions in the developing countries. There's involvement by the U.S. Embassy.

The United States has essentially a strategic plan on a country-by-country basis based on their stage of development. Our members, as volunteers, help the countries assess where they are and what their needs are. I can give you a very simple but good example.

Look at countries that are being electrified for the first time, or even that are wishing to just modernize their systems. In many cases, even when electricity has been available, they haven't metered it.

If the customer pays anything, and in some cases they really hardly pay anything at all, it's not based on consumption. It's based on some other attribute. It might be the size of their home. It might be some random variable.

So when a country decides that they're going to meter all of their customers, our volunteers can help them realize what type of technology is most economical and best adopted to their circumstances.

For example, if you are in a country that is capacity-short and your regulatory structure is such that you have time-of-use rates, you may want a kind of smart meter that can calculate consumption at various times. It can provide the incentives for using electricity on an off-peak basis.

In some countries, particularly those that are being electrified for the first time, you may want to go with a metering arrangement where you utilize a pre-paid card.

In many countries, you buy a smart card and you plug it into the meter socket and it debits your card as you are using electricity. That means that you, the customer, ultimately control how much you are spending on electricity.

When the card runs down, you don't have any more electricity until you recharge the card. Customers who have never used electricity before have no idea what consumption is, how much they are going to use, and how they can interpret that relative to how much they can afford to pay. Something as simple as the type of meter that you use has variances in different applications and different circumstances.

The American electric utility volunteer can help the person in the developing country come to the right conclusion as to what kind of metering is going to be most effective under their circumstances.

PUF's Steve Mitnick: You have a remarkable job. All I know is you are from a Pennsylvania small city or town and now you are logging two hundred thousand miles a year. You are having a big impact on millions of lives internationally, working with our industry. How did you get here?

Barry Worthington: When I graduated from Penn State we had witnessed the coldest winter in the history of Pennsylvania. I had three job offers - Harrisburg, Philadelphia, and Houston. My choice was purely based on the weather. The Houston job was the lowest paying of the three, but I went to Houston, worked at the University of Houston and began graduate school. Then after about a year and a half, I was hired by Houston Lighting and Power to work in their Energy Efficiency Department.

I organized their Residential Conservation Service, which grew out of a federal requirement that electric utilities had to provide home energy audits or home energy inspections for their customers. Back in that day, Houston Lighting and Power became the first electric utility to do as many as twenty thousand home energy audits in a year.

We put a very successful program into place. Houston was growing phenomenally. There was a lot of growth in power demand. The company was building nuclear plants and coal plants and lignite plants.

It was very valuable to begin implementing efficiency programs that were effectively reducing peak demand. All of those activities started with a home energy audit.

I was there for some time and then the Thomas Alva Edison Foundation, headquartered outside of Detroit, hired me.

I was there for about a year and a half. My predecessor at the U.S. Energy Association was retiring. The Washington area is much closer to my family, and my wife's family, and we were just married and starting a family. So I applied for the job and was hired, and have been here twenty-eight years.

PUF's Steve Mitnick:It's that time of year to make resolutions. Maybe you feel USEA is doing exactly what you want it to be doing; it sounds like it's doing a lot of tremendous things. Do you have any resolutions for this next year? Ambitions to extend or expand in any areas?

Barry Worthington: This year, we're all going to witness a dramatic change in how our federal government operates. Whether it's a Republican administration or a Democratic administration, USEA has found a way to serve the interests of the United States. We are very excited that we're able to help the Trump administration implement international energy cooperation strategies.

We work very closely with the Department of Energy. We've been very helpful to them. Sometimes as a non-profit, non-governmental organization, USEA can get things accomplished more quickly and simply, and less expensively, than the bureaucracy can. We look forward to working with our new Secretary of State. We look forward to working with our new Secretary of Energy.

Things will certainly be different, and the need for international energy cooperation is going to increase. That cooperation could increase our exports under a new administration. The whole business sphere benefits by relationships that we can build through the World Energy Council and relationships we build directly on a bilateral basis with our colleagues around the world.

We sat down with execs from seven utilities in the Northeast who help lead their companies on future strategies the Future. Utility 2.0. Distribution System Operator. Reforming the Energy Vision. These are just a few of the terms popularized in recent debates about the utility's role in electricity's future. 

Some say the utility's role will be much changed and much diminished. Third parties shall increasingly meet the emerging wants and needs of electric customers. Many more say they're not so sure. But even they accept there will be changes and challenges aplenty.

Navigant and Public Utilities Fortnightly convened a roundtable of utility execs to peer into electricity's future. Hosted by Con Edison at its historic Manhattan headquarters, execs from seven utilities in the Northeast U.S. took part.

PUF's Editor Steve Mitnick led the discussion of part I, focused on what changes are coming down the pike. The transcript of that discussion is here. Navigant's Jan Vrins led the discussion of part II, focused on how utilities are preparing for this future. The transcript of that discussion will be in March 2017's PUF.

Part I: Changes and Challenges

PUF's Steve Mitnick: Why do you think the role of the utility in the electricity industry's future has become a major topic?

Stuart Nachmias, Vice President, Energy Policy and Regulatory Affairs, Con Edison:I would say it's a major topic because it's changing from building and maintaining a system that solely delivers energy to customers as takers on the system, to building and maintaining a system where some customers will also produce energy, using the grid in new ways.

For example, technologies are evolving, and there are customers that might have distributed resources on their property. Some customers may be interested in demand response programs. How the system is going to be managed will change as we consider these resources.

It's not only customer technologies. But, also technologies in terms of how we manage the grid itself. Data and information about the performance of the grid is becoming much more granular and available in real-time. Those factors are just changing the information about the grid and the tools available to manage it.

Paul Haering, Vice President, Engineering and System Operations, Central Hudson Gas & Electric: It is an evolution, in terms of what used to be a one-way power flow system. We are now becoming a much more dynamic power flow system with the proliferation of distributed energy resources. Who knows to what extent that's going to occur?

An example, for us, is an interconnection queue that exists today of close to eight hundred megawatts of PV on a peak of a thousand megawatts. When you start talking to me about penetration levels of that amount of PV on a system like ours, the system could effectively become a net generator for much of the year.

That is going to create a substantial impact on the utility and what the utility's role will be. There are going to be other things that we will provide, including additional services and things that enable market operations.

The state's policy with the clean energy standard, and the implementation of "fifty-by-thirty," is an area where we see a tremendous change in the role the utility has played historically. And where we are planning to head for the future.

Jeff Ballard, Vice President, Smart Grids, AVANGRID: Certainly, the broader ecosystem is changing. I think in terms of timing, there is a convergence of many factors, including decreasing technology prices and increasing focus on clean energy.

There is I think a general recognition of an industry transformation, and the recognition that in order to achieve a sustainable outcome, we need to transition to something more comprehensive than just incenting and subsidizing the endpoint resources.

There's now a shift in looking at the model. And a realization that you need an intelligent network to capture the true value of those resources you are putting out there. Early on, it was about the end points, getting them out there, and prices declining.

Kim Harriman, Senior Vice President, Public and Regulatory Affairs, New York Power Authority (NYPA): Following the Recovery Act of 2009, and the proliferation of smart grid funding, we were all looking at smart sensors and meter deployment in mass quantities, and getting better situational awareness. That was or was not successful, depending on where you were in the country.

What I think happened in New York specifically, is that we had two hundred-year storms back-to-back. You saw the decimation of basic infrastructure from energy to telecommunications to basic human services, in a catastrophic way. This required that senior New York energy officials and experts convene and ask a fundamental question: Why isn't our grid more resilient?

These conversations launched an extensive policy discussion that asked: How do we rebuild a resilient electric system? As the conversation progressed, it became apparent that resiliency is not only about situational awareness at the distribution-to-network level, it is also about how energy flows to the home.

This led us to investigate how we could create a distributed generation supply chain that addresses the resiliency question in a way that is complimentary to and not disruptive of the whole grid. These exchanges culminated in Governor Cuomo's landmark policy, "Reforming the Energy Vision."

We also looked at central station generation as not being the only solution to managing power supplies and flows on the system. And that, coupled with the renewable energy review, led into the Clean Energy Standard, CES. I think there was a cascade effect.

If I had to look back at the sixteen years I have been in the industry, I would say it was the two hundred-year storms that forced people to rethink every stage of power generation and start the process of creating a better solution than what we currently had.

Jorge Cardenas, Vice President, Asset Management & Centralized Services, Public Service Electric & Gas (PSE&G): Here are three components. First, customers want more reliability than ever before. They also want self-sufficiency. They want to be good stewards of the environment, and that means making more green energy available, whether it is generated by the consumer or a utility.

Then, there is technology. Technology has advanced to a point where other solutions, other ways to distribute electricity, like solar, storage, and microgrids, are now available at a reasonable cost, or at somewhat subsidized levels, making them affordable for customers.

Finally, people want reliability. Customers no longer say, "I have no power. No big deal." They want reliable service now and all of the time. This fuels the drive to find other ways to make the grid more resilient, make it more consistent.

There are devices, whether it's a smart meter or something else that can let that customer know when his power is not perfect. These three pieces coming together make it viable. I don't think of it as a utility of the future. I think of it as serving the customer that's now and into the future.

David McHale, Formerly Chief Administrative Officer, Eversource: The customers' expectations are increasing. They have been taught recently to expect more from the marketplace.

Whether it's UPS or FedEx, there's the whole digitization of the economy. Customers are now thinking, wait a minute, why shouldn't I get that from the utility? Kim's comment on the storms, those were so profound, in that the storms did increase customer expectations.

The last four to five years that I have been involved in our customer care, customer service and technology, we are spending more in capital there than we've probably ever spent in the history of the company. Because the customer expects real time information and actionable communication.

They expect to leverage all the investments that have been made into the grid, in the way that they know their package is waiting for them at the front door. Rising customer expectations make for a profound change in our industry.

Mike Calviou, Senior Vice President, Regulation and Pricing, National Grid:The key themes across the industry are driven by de-carbonization, the need to hit 2030-2050 targets, decentralization, changing technology, and fundamentally what customers need.

There's no doubt there's a massive shift going on in the industry. Though actually what that shift will end up looking like is uncertain. None of us know the future.

Ultimately, we have a diversity of customers. Our customer expectations are increasing. Some customers will be very sophisticated. They'll want to be self-sufficient. They'll want to have decentralized energy. They'll want to have their own storage. They'll want to play in very sophisticated ways.

Others won't want to, and will want to rely on the utility to continue providing the very high reliability service that people increasingly depend on to power their everyday lives. And they care about the quality of the environment and the effects of climate change, including the need to hit 2030 and 2050 de-carbonization targets.

That's a diverse set of requirements to manage for our customers, policy makers, and colleagues. It's going to get to be a very complex and messy world.

We won't do some things, maybe, for every customer that we've done in the past. But utilities will need to be the platform, the facilitator that knits everything together, and will need to meet customer expectations that are continually changing and increasing.

PUF's Steve Mitnick: How are the role and scope changing, and what are the risks and benefits?

Stuart Nachmias, Con Edison:If you think about how the utility's role as the operator of the grid is changing, and getting more and more data and information, the question goes back to how can that data be utilized to help customers?

For Con Edison, in 2017, we are starting our biggest capital program we've ever had, to put smart meters in place. We're going to, over seven years, have more data about every customer's energy consumption.

You couple that with what we're doing through REV, and through the demonstration projects, where we're trying to work in new ways with our customers. We will be using data and information in new ways.

We will be able to provide alerts about how they're using energy, how they might use energy in new and different ways, and what types of equipment or products and services might be useful for some customers.

You start to put together the picture of utilities having a role in enabling a lot of these activities, enhancing their relationship with customers, working with third parties, identifying new potential revenue opportunities, and new ways to facilitate the types of technologies that are available. Ultimately to help target those resources in the right place - to manage the system in better and new ways.

I think our role is changing, and the relationship with our customers is going to change, and I think deepen, depending on the preference of the customer. Some customers will want that to deepen one way, and others another way.

Up until now, residential and small commercial customers are in Service Class 1. We treat them all as if they are the same. As we get more and more information, we can start to differentiate among customers.

We probably won't get it all right at first. As we become more flexible and adaptable, not necessarily an inherent trait of a regulated utility, we will evolve further to meet customer needs.

Paul Haering, Central Hudson Gas & Electric:We're a little bit different. We think there's a subset of customers that are and want to be sophisticated about their energy decisions. We see that today, in terms of customers that migrate off bundled service.

We've got customers that are the large commercial, industrial, maybe a small subset of residential customers that have a desire to be more sophisticated, and want to play in these emerging markets.

We don't want to drive our decisions based on policies that treat customers like laboratory rats. We're taking a much different approach. We are implementing some core foundational investments that arguably will provide value to customers regardless of whether these policies are fully implemented or not.

We have a Distribution Management System with further automation of the system and more intelligent sensors. As well as the communication infrastructure that allows for bringing that information back to a central base decision point to make educated decisions about how to operate and manage the system.

The reality is when it comes to smart meters and deploying them, we don't see the business case for that. To the extent customers want that information, we'll make that information available. You want to pay for it? You get that information.

But not to treat three hundred thousand customers effectively the same. Not everybody wants all the information. The reality is, if I look at my concentration of load, four percent of my meters are forty percent of my demand, and fifty percent of my consumption.

Why would I go and treat a hundred percent of my customers the same when I can probably get there with twenty percent customer penetration? And get sufficient scalability in terms of control of demand and consumption?

I think we need to be conscious of what we're doing here. And not just do investment for the sake of doing investment. I'm worried that ultimately the cost burden on customers is going to be appreciable.

Whether we realize these benefits or not is a concern that we have. When you look at it from a role perspective, we've got to enhance our planning proficiency.

There are things we need to do today. When we talk about further DER penetration, to better understand how do we integrate that into the grid, and get value out of that. From an operations standpoint, it's the same thing.

How do we bring back that intelligence that we have, that we're building into the grid, and make better operating decisions? Ultimately, then, into the market as well. How do we create a market?

I think one of the problems we're seeing is with the policymakers. They seem to be avoiding the hard decisions about valuing these new resources. And they are just migrating from providing subsidies of one flavor, treating it as something else. It's effectively still subsidization, and there is still limited requirement for these resources to perform to benefit the grid.

We create rules for resources that may be inequitable to what's required within the wholesale markets. That becomes problematic. Not everyone is playing by the same rules.

Ultimately those risks could result in less reliability for customers, and higher costs. What results then from a wholesale perspective, from an ISO perspective, is we need to commit additional resources. Because we're worried about whether these DER will perform. So, you effectively have an oversupply. Ultimately somebody needs to pay for that.

We better get this right. If we don't, it's going to be back on the utilities, in terms of not being able to meet our obligation of providing safe and reliable service for customers. And we won't get improved reliability. We're going to see reliability deteriorate.

Jeff Ballard, AVANGRID:In terms of how the role and scope changes in the future, first I'd mention that we still retain our role of providing safe and reliable service at just and reasonable rates. So, we have that primary role. On top of that, we're adding functions.

In terms of the role of the utility, it expands our approach to planning. We're now incorporating non-traditional solutions as part of our planning process, where in specific situations we will implement non-traditional solutions, versus build our own traditional solution. That creates a new role and a set of functions that we need to perform as a utility in order to identify, attain and ensure the performance of those solutions on an ongoing basis. So, we're expanding the level of things we do there.

In operations, we're managing the much more sophisticated grid, thousands to millions of resources. At one point, they're generating. At one point, they're consuming. That expands our operational role considerably.

If we apply automation appropriately, it allows us to do that in a coherent way, in a centralized fashion.

From a customer perspective, our customer relationships expand beyond transactional aspects, and start to take on more of a trusted broker role.

We're helping connect them as a market maker in some cases. 'Hey, looks like you may have an opportunity here. Let me connect you with someone who can help you solve that problem.'

There are some modest things that will go away. But, generally, the complexity of running a utility has increased, not decreased.

It's all about timing, and alignment. Making sure what you're doing is not too far ahead of the customer or the market. But having a plan and staying far enough ahead, so you're proactive in building for the future.

That sounds easy. But it's a significant balancing act to get the timing right.

Two other risks are speed and coherency. You need to be careful you don't take shortcuts that might get you to a piece of what you're trying to accomplish faster, but make it very difficult to achieve the ultimate sustainable model. I think those are big risks.

On the benefit side, we are no longer having debates around the value of the grid and the need for a platform. I think the importance of the grid as an enabling platform is now understood. Had we'd gotten around the table six or seven years ago, we might have been having debates on that. I also think there is a realization that you need an intelligent fabric to develop this ecosystem, not only electrically, but also in terms of the construct in programs and roles of the various players.

Kim Harriman, NYPA: With the need for more granular awareness of consumption by our customers, also by customers in the governmental buildings that we serve, we're looking at how we get transparency in usage at a distribution level, without being a distribution provider. We want to do this solely for the purpose of driving informed customer decisions.

New York Energy Manager, if anybody has seen it, is amazing. It's an example of the role change that is happening in the utility space, at NYPA. Eighteen hundred buildings with sensors, both at the meter and equipment level, to measure and track real-time usage. And to inform behavior changes. You can aggregate some of these big buildings, to enable them to bid into a variety of programs that are available, or may become available.

The scope is changing. For the distribution utility, it's like being an air traffic controller at a local airport. You've got more planes up in the sky. How are you going to keep track of them so they don't run into each other?

The good news is that these new digital systems will enable us to address three important issues simultaneously: reliability, safety and security. The risks obviously are, the more portals we make into the system, the more concern you have about cybersecurity.

Jorge Cardenas, PSE&G: Customers don't care where their electricity originated. If something goes wrong, the utility is going to be held responsible for not providing the electricity.

We need to embrace and integrate the technology that will allow us to ensure every customer has reliability. That is our fundamental responsibility.

To do that, we're looking more and more at technology. I'll have been with PSE&G forty years. Twenty-five years on the electric side, fifteen on the gas side. Today we are deploying more advanced technology in our electric and gas systems, and faster than ever before.

A new EMS, a new ADMS, a new SCADA system, fifteen hundred microprocessor relays. These are things that will enable us to be that traffic controller, to ensure that we know where the nodes are. To know what the flows are, where the problems are, and gain a detailed, real-time view of our system in a way we've never had before.

We want to add smart meters in our system, and I know smart meters are much more than smart. They can anticipate failures and provide customers information about their energy usage. If we were able to see a voltage fingerprint indicating a shorted transformer winding and we knew it would fail soon, we could fix it before it fails.

It would save an outage for customers and may prevent an oil spill. And we can do it in the daytime, at half the cost of taking a crew out in the middle of the night.

There are a lot of things that we need to be ready for. Our role is to anticipate, maybe not quantum leap out twenty years, but be attentive to changes. We must ensure sure our system is capable of addressing and integrating those pieces. Some are ours. Some are not.

I remember the blackout I saw from the other side of the river in 2003, and the investments in transmission we made after that. We have invested billions of dollars in transmission during the last few years.

We need to do much more with equipment in our substations and in the street. I call it the last mile. The transformer, the service line. We've done more work with substations. We've raised them, because of flooding from severe weather events like Superstorm Sandy.

Much of the equipment we have out there can't withstand rising water levels. We need to replace it with equipment that can weather a tidal surge or river flood.

David McHale, formerly Eversource: I see an expanding role for the utility. I have never been a believer in the death spiral.

The Eversource companies are building out. The new seaport district in Boston is where GE is moving in. If the lights go out, GE won't be happy.

In parallel, we can start moving towards the customers we've talked about. I think that the customer relationship in this business, even from a Wall Street standpoint, is undervalued, under-appreciated and under-recognized.

There's virtually no customer acquisition cost for a utility. You have the customer.

There are folks in the business who talk about the traditional model being, 'Make, Move, Sell.' Maybe now it's, 'Make, Move, Sell, Service.' Which is more focused on sophisticated services, not just connecting a customer. But, providing integration.

One of the things Eversource did early in the game, and is doing now, is building out energy efficiency offerings and customer engagement platforms. For customers to peer into what's happening in their home.

We don't do this ourselves. We work with a set of emerging companies in the space who act as partners and innovators to help create inventive solutions. Through the data, you can get an understanding of which customers are more likely to use these services.

So, you can focus your investment dollars, and your energy efficiency dollars. If you do this correctly, you can create customer advocates. Everyone sitting at this table needs more customer advocates. You are creating customer value in a way that you hadn't before.

The risk is you get it wrong. That all these great things you promised customers don't come to be, and the company's reputation is in a bad place. The upside is that there is no death spiral.

I spent seven years as a Chief Financial Officer. I still have that DNA in me a little bit.

It gives you that revenue stream. Maybe it helps you with your earnings, and dividend growth aspirations. That's good for shareholders and customers. And you don't dry up and blow away.

I am not saying you can generate billions of dollars off that customer relationship. But I think you can do it in a way that we haven't focused on in the past as an industry. So, in parallel, customer value creation, and shareholder value creation, are not at odds. They are symbiotic.

Mike Calviou, National Grid: There will be a big need for us to come up with more innovative solutions, to partner with people a lot. We can't assume that we're the monopoly, and the way we want to do things will be the only way.

The NY REV demonstration projects are good examples of this. For example, Buffalo-Niagara, a medical campus, where we're partnering with them. Technology providers, for example Opus One, partnering with customer groups, to develop a small-scale demonstration of the Distributed System Platform concept.

Our 'Community Resilience' microgrid project in Potsdam [New York] is very similar. There's real potential for coming up with new and different ways of doing things. That is different from utilities' typical way of acting.

We also have to look broadly at the need to de-carbonize. It's not just electricity we need to de-carbonize. It's the energy use of the entire economy. We need to de-carbonize transport. We need to de-carbonize heat.

Electric vehicles are going to be a massive issue that utilities are going to have to embrace. Yes, that is increasing demand for utilities. But what is our role in the changing infrastructure? I don't think any of us know the answer. But we need to think about that.

The risk is that you make some big bets. I think it is very easy to assume what the future is going to be, and bet your money on that one version. The reality is that there is so much uncertainty.

I think for us and our customers it's better to make a series of small bets. For example, we are doing a smart grid project in Worcester, Massachusetts. We're leveraging off that, with a similar project in Clifton, New York.

We think it's best to take a series of small bets, and not to bet the whole house on one version of the future. The future may turn out different than any of us expect and customers might respond differently to different offerings.

We are putting gas pipe in the ground, and normally recover the costs from our customers over forty to fifty-year asset lives. However, by 2050, customers may rely a lot less on gas because of new technology.

We need to be very thoughtful. What sort of big long-lived investments are we making? And what, fundamentally, is best going to meet the customers' needs?

The January 2017 Innovation Roundtable collaboration between Strategy& and Public Utilities Fortnightly focused on how executives at five leading companies began the stand-up and execution of their innovation programs.

High expectations for innovation exist across all the companies, even though the path to ultimate program success is still to be fully designed. In only a short time, what originally defined success is continually evolving to match the requirements for market positioning.

The executives now recognize that several challenges to innovation success exist related to the role played by the utility and the time-to-market. Also important is the relationship companies want to have with risk. And, these leaders know they have to drive innovation beyond being just a concept to becoming part of their companies' DNA. And developing new business models that they have never considered.

Industrial companies focus on getting to market fast and think in one- or two- year windows. But the utilities industry never had to think about time-to-market and currently tends to consider a three-year plus window comfortable.

Markets move at speeds very different than companies, particularly regulated utilities. If pent-up demand is not met by utilities, someone else will step in to do exactly that. If future customer needs are not defined to enable fulfilling those needs, it will be too late to address the market at a future time.

The key is to connect ideation directly to commercialization. It is far more valuable to turn good ideas into value than to generate a multitude of ideas that do not hold commercial promise or cannot be successfully executed.

These utilities have pursued partnering in many forms: for investment; for expertise; for collaboration, and for big ideas. Partnering has not historically been a characteristic of the utilities industry. Too often partnerships have failed to benefit either party or create any market distinction due to misconstrued purpose and inconsistent motivations.

Successful partnering depends on enterprise and individual chemistry, as well as a shared commitment to what really matters: making customers better off. It is hard for partnerships to stand the test of time. It's still harder for these relationships to weather market adversity or unrealized expectations.

This is particularly true with respect to de-risking utilities' market bets through relationships with savvy financial investors such as venture capitalists. Through those relationships, these utilities are leveraging broad market awareness, risk syndication and capital sourcing strategies that increase the likelihood of successfully taking a new technology into the market. 

Even as companies are only beginning to progress through their innovation life cycle, they are already looking ahead. They want to embed a culture of innovation, where the DNA of the business reflects the challenge of advancing the business.

The executives fully expect that pursuing a market future built on a foundation of innovation and a focus on commercialization will have wide-ranging impacts. Conventional wisdom suggests that the business model will fundamentally change, and it will. But that is not the end of the story. Some elements will stay the same, some components will change and some new dimensions will be added.

Migrating from a model that emphasized investment to generate earnings to a model that focuses on product and service volume to produce margins is a fundamental shift. But the challenge these executives acknowledge is learning how to blend several unique business models as the scope of their business expands.

These executives paint an optimistic picture of how the future may unfold, though it is not without its challenges and risks. Moreover, they understand that the competencies their companies will need have yet to be fully developed. But they are enthusiastically up for the challenge. 

- Tom Flaherty, Partner, Strategy& 

Tom Flaherty: Let's continue, on the time horizon for commercialization. Is the industry thinking rapidly enough in terms of being able to commercialize products or services and take advantage of emerging opportunity?

Bert Valdman, Optimum Energy:It's interesting to ask the 'why'. Why are commercial companies able to launch their solutions so quickly? Why aren't utilities thinking this way?

Part of the why is the mindset of commercial companies. If a product or solution isn't commercialized quickly somebody else may do it. It becomes a lost opportunity. That mindset is absent at the utility.

Quick, targeted commercialization is the lifeblood of competitive companies.

But it's not the lifeblood of a utility.

It's very difficult to commercialize a product or solution in two years if you're trying to figure out what your strategy is to manage risk. That will take much more time. You've got to be able to get yourself in a spot where you're willing to commercialize things quickly without layers and layers of process and expense. That's a big step for many utilities.

Don Clevenger, Oncor: I'm putting transmission lines in the ground today that I expect to be here in 2066. I'm depreciating them over fifty years.

Most of my investors would not even understand a two-year asset or two-year commercialization period. It's incredibly difficult to get our heads around that.

Think about all the work that goes into that. Why did people pick Blu-Ray over HD? They were the exact same. Much of it is just luck.

That's just not the investment profile that most of us have lived in.

Chris Gould, Exelon: We're going to continue to see regulated utilities stand-up competitive sides of their company and leverage that experience with skill sets out of the utilities. Combine other acquisitions that help them attack the market outside of the service territory and you can scale that.

Leverage what your brand recognition is. That's a potential model evolving.

Bert Valdman, Optimum Energy:It's remarkable when you are a company burning cash every month how that drives focus.

You don't have the luxury to boil the ocean and consider all options. You don't have the luxury of deliberating.

You've got to balance intuition with hard analysis and act quickly. Which customers you go after. What markets you go after. How you make a profit. How you manage through the unexpected negative surprises. It changes your mindset.

It's very difficult to successfully commercialize something if you don't have that mindset. Some utilities are trying to create that mindset, but it's difficult to do when you're coming from a position of incumbency, where customers are captive.

Tom Flaherty:How does the industry move toward commercialization when it has so many options in front of it? Is it a matter of focus and differentiation?

Chuck Darville, Southern Company: We do exactly what you imply. We make small bets.

You mentioned the skill set that you have. There's certain skill sets either we have or we go and buy, such as PowerSecure. With them, we can go to market and start commercializing.

We have Pivotal Home Solutions, which is a home solutions company that came with AGL Resources. We may also have interests in other areas where we may not have the skill set. We either buy them, or what else would you do?

Electric transportation is one that is really puzzling. I wonder why as an industry we're not more active in making electric transportation happen. Because it's to all of our benefits.

We struggle with our role. Is it infrastructure? It's the classic chicken and egg situation. There aren't enough cars. You need more cars before you get infrastructure.

We're trying to figure out how we get in there. Do we start finding homes for second owners of electric cars that are coming off lease right now?

To things further afield like aging in place, that'll take us a longer time. We need to find the right partner to help us figure how we might commercialize something like that.

That is not something that would be difficult to accommodate and get something in the market within two years.

Chris Gould, Exelon: Chuck, are you thinking about that market participation nationally? Or are the things you're thinking about just in your footprint?

Chuck Darville, Southern Company: I'm trying to get my mind around why utilities nationally are not much more active around ensuring electric transportation takes off.

Sasha Weintraub, Duke Energy: It's not the shiny object that we're all chasing with technology sometimes. There are customers that are not going to be anywhere near a charging station anytime soon for an electric vehicle.

Just less than fifty percent of our customers have average household incomes of less than fifty thousand dollars. Many of them live in mobile homes or apartments.

How do you provide value to customers who are not focusing on what their utility is doing?

We have many mobile homes in the mountains that are a mile into the woods with feeders. No one would want to serve them if they were doing it for economics. We proudly do it because of our franchise and who we are.

How can you provide products and services to that customer?

It's providing products around bill certainty. It's providing products around the ability to save money. Every bit of it helps them have a better life. It's just a different perspective many times, versus those held internally.

Tom Flaherty: Is that your segmentation challenge, to find the right bundle of individual products to fit the right person?

Sasha Weintraub, Duke Energy: There's value in terms of some of the basic things we talked about. It's not just about the technology that's evolving at a really fast pace. For example, how you help customers with weatherization is not wholly about technology.

Bert Valdman, Optimum Energy: What you just said is such an important reminder. We can't forget the roots of our industry and why electric system costs were socialized in the first place. We had to serve everyone.

There's this mindset of trying to build competitive businesses, and that often means providing service to some at the exclusion of others. It's not in the DNA of our industry. It's a great reminder.

Tom Flaherty: Capitalizing on market opportunity may mean that the industry may need to rely on others as partners. How are you thinking about partnering now since the industry has not been very good it in the past?

Bert Valdman, Optimum Energy: We've done a lot of thinking about this, and we're applying it to our business.

First, we make it very easy to transact. We built a flexible, open system that integrates with any technology. We work hard to eliminate every possible barrier you're likely to encounter to work with us.

Second, full transparency. Anything you want to know about our business and solutions is posted on our website. Our strategy is not to win by being shrouded in complexity and mystery, but instead by being one or two steps ahead of everyone else and capturing the next level of innovation.

Third, engage as much as possible. You have to be in people's faces. The more actively we engage with customers, the sooner we'll figure out a solution for them.

Chris Gould, Exelon: Our partnerships again. I think about them across the value chain at the technology or business readiness levels.

All the way from basic R&D and labs and through ventures, companies and existing technology.

The way that the partnership model worked in some of those instances historically has been very much, "Here's a specific problem, give me the solution. We're done."

We want to be transactive, but very well defined. What we're trying to evolve to is more of a forum for the generation of big ideas.

The product comes after the thinking around the meeting of the minds. What is the biggest challenge to work on? Is it technically or otherwise possible?

There's a lot of upfront ideation and investigation in the actual formulation of the product statement. And in the initial scoping of what you're going to go look at.

We're not coming in with a defined problem. We're coming in with concepts around where we think there are opportunities. We know we don't have all the skill sets to be able to solve that by ourselves. What do you think the challenges are? And where do we converge on a set of focus-areas that are the most meaningful?

You start the collaboration at the beginning. Not, once we've thought about what the problem is, and now we just need you to help solve it for us.

Sasha Weintraub, Duke Energy: Partnerships is a tough word. We tend to do it via an RFP and our partners tend to last only until the next RFP, which is not very helpful.

It's a challenge though. The low-cost prudence test that we have to demonstrate is sometimes challenged when you have a partnership.

We've all probably had that in our history, that is, a partnership that we get blamed for not going well. I even hear things back to when utilities owned coal mines in partnerships; that didn't go well.

The challenge is how do you have a partnership with someone if you're still trying to prove prudency and trying to show you're cost effective?

If you're in the unregulated space, that's a much different relationship that you can have with partners.

It's important to have partners and you can have multiple partners because that allows you to go much farther upstream.

That circumstance allows for much different development and learning cycles versus the partnership is only good until the next RFP.

Chris Gould, Exelon: That's what I meant about being transactive. We don't look at them as one-off problems. We think about what the big ideas are. It's a longer-term relationship.

Sasha Weintraub, Duke Energy: It's tough to turn a vendor into a partner. Because other vendors are saying, "Well, what about me?"

Chuck Darville, Southern Company: For us, it's either we have shared goals, or there's complementarity of skills. We're practicing a little bit. There are a few partners where we thought we were completely aligned, but there just wasn't that chemistry.

We say, there's nothing more important than the customer and these partners often say the same thing. But, when we look at their day-to-day actions, they can appear inconsistent with our objectives, given their high focus on commercialization.

Our culture is so deep. We truly are paternalistic about our customers. We do want what is best for our customers.

We've started making a distinction regarding whether these potential partners would be supportive or simply parasitic. We've been asking ourselves whether these companies can be fully supportive of what we're trying to do for the long-term.

We're practicing, we're learning. Because we are engaging with a lot of different companies.

We have access to about nine million homes and even more decision-makers. And they like us. Which is appealing to a lot of other companies trying to sell products.

We need to make sure we're aligned as far as our values. How we work, and how we behave. That's what we're practicing.

Don Clevenger, Oncor: We're looking for building a relationship because that's how the R& D has been done.

We're going to buy the product. We're going to expect the vendor to make it work.

We've done that in a real successful way with the micro-grid we put in on one of our new facilities we've built.

We went to a couple of magnetic battery manufacturers and said, "Okay, we like what you provide. We're going to buy it. But you're going to put in the sweat equity and make sure it all works.

In one case, it didn't. We had to switch.

In some cases, it was learning for them as much as for us. What they promised in the lab, didn't perform. That's going to happen when we're talking about these new products and new innovations.

We're going to have a relationship where we're going to buy a lot of product. You are going to have to stay around and tweak it until it works. Because it's not going to work the same in the field.

Bert Valdman, Optimum Energy: Earlier we talked about challenging the status quo. That's important. Getting to the status quo was hard won because it was about trust. When a customer trusts, the regulator trusts. That's why maintaining the status quo is so highly prized. It takes so much to earn that trust every day, and it's so easy to lose that trust. Once you've lost it, it's takes a long time to get it back.

All the things that we're talking about might change that relationship of trust.

That's the conflict that the industry is now trying to resolve. How to find the right balance.

Tom Flaherty: Have you utilized a co-investor as a partner type to accelerate development or share risk?

Chris Gould, Exelon: We have two examples of that along the continuum of technology readiness. One is an internal VC group, Constellation Technology Ventures. And one is the partnership R&D model that we're standing up. We've taken two different approaches there, for the following reason.

From our perspective, we're not going to attempt to replicate a physical lab and capabilities that have been developed in institutions over time specifically for R&D. The best model there is to partner.

When I speak of things like MIT or Northwestern or Argonne Labs, we are in consortiums in those relationships, with other companies.

We are trying to think and generate new, big ideas where it's very valuable to get in front of the curve. To try and make a market out of a new development as opposed to a deployment.

In the venture space, that's not the case because you are making equity investments in a company. That's not beyond the realm of thinking for an energy company to do. A small staff of people can do that, and tailor those investments to what you think is uniquely deployable in your business.

We have a different business mix at Exelon than do the other companies here. Everybody has a different set of needs.

It's been more about what is reasonable for us to do internally, versus where do we get the most bang for the buck from external collaboration. That's where it's landed for us, in terms of where our business mix sits today.

Bert Valdman, Optimum Energy: You started out by mentioning financial partners. If you think about it, why would a well-capitalized utility need or want a financial partner? The reason? Discipline. Sense of urgency. The financial partner assures that the focus remains on achieving a risk-adjusted return on capital.

Financial partners bring a sense of urgency to achieve commercialization.

Sasha Weintraub, Duke Energy: Some of our partnerships too have evolved. I'm thinking about hardware, where we have a form of partnership we call the coalition of the willing. This relationship is built around interoperability of different standards, to have different technologies talk to each other and around micro-grids.

How do you get different companies and kinds of companies together that all want to talk? Because they all know if they can work together and provide a solution, there's a business opportunity for the masses.

Sometimes though, the partnerships that you are referring to are just one company trying to figure out a partner to, like you said, multiply. I think that's something that we're all working to do more of versus what historically has been done. That is, an industry type of partnership and not a partnership put in place just for us as a company to advance.

Chuck Darville, Southern Company: We have an exceptional R&D group that truly understands a lot about a lot of technologies. They know what will work and they know how to make things work better. They do not focus on commercial viability of products and how we may be able to commercialize an offering.

Our R&D has traditionally been around generation first, and then T&D. Now their focus is going down that value chain, closer to the customer.

They're tremendous assets for us, tremendous resources. But when we think how do we commercialize? That's not something that they focused on. So we went with an external venture capital group, where we ask them to help us uncover some technologies that may really make a difference in the future.

If we make money, that's great. But understanding and helping us see what's around the corner is as important.

I've personally been in awe at how quickly they're able to sift through deals and separate the wheat from the chaff.

Sasha Weintraub, Duke Energy: We have a technology group that's been around for many years and looks around the corner. It's nice to have many eyes trying to understand five years out what's coming at us that could make a difference.

The challenge of what's around the corner is more than just the traditional infrastructure. That's where it's new and exciting, which is also why it's fun.

It's also a challenge for that group because there are smaller things coming. We used to watch for the big things that might impact the larger pieces of our components. Now there's a lot of little things that can make a big difference.

Chuck Darville, Southern Company: They're in a great position to see where the money is going, much better position than we are.

Bert Valdman, Optimum Energy: Chuck, regarding the portfolio companies of this entity that you are co-investing in, along with some of your peers. Do those companies have an advantage in commercializing their technology with you, or with your other utility partners? I suspect that's their belief.

Chuck Darville, Southern Company: That's right.

Bert Valdman, Optimum Energy: They will get access to your customers and that will allow acceleration of commercialization. Between the belief and the reality, I think that's where there's some uncertainty.

Don Clevenger, Oncor: There's going to be some regulatory hurdles there too for that.

Chris Gould, Exelon: In our venture group, we do that. It's geared very much towards the commercial side of the business. That group is call Constellation Technology Ventures. It sits in Constellation. The investments that it makes are designed and tailored to the needs of that group. And yes, you would put them on a path.

Bert Valdman, Optimum Energy: I'll challenge this group a little bit. Make the first investment, that's great. To then try and figure out how to make these companies successful and scale quickly, that's harder.

It's not the first investment that matters. It's the ability to follow through and ride through the valleys. As somebody who now is looking to find capital, that's where I'm of two minds.

Will capital be there when I need it? Will I get that much of an advantage from an equity investor linked to a utility? Is that really a benefit, or should I go with somebody else who's in a competitive business? Because if the technology is viable and commercial in a relatively short period of time, I have a choice.

I'm not so sure, based on what I know, that I would want a utility partner. It would be great if it worked. But right now, candidly, I'm tempted to go somewhere else.

Tom Flaherty: Will partnering be a table stake or so episodic that you won't need to treat it as a competence that you must have?

Chris Gould, Exelon: The former. The pace of change and the nature of it being outside of what we've been traditionally thought of, requires a partnership competency.

Sasha Weintraub, Duke Energy: It requires a competency around partnerships. The challenge will be are there multiple partners? And what is the nature of a relationship with a partner?

I think about our generation fleet where we have multiple manufacturers. We're not like Southwest where you have just the 737 as a common model.

When I think about a partnership in this space, it's a relationship with the key players, and it's okay to have multiple partners. We need to evolve to being less transactional and more strategic. That's just something that will evolve with where we're going, and the business models that develop.

Tom Flaherty. How do we build a culture of innovation within the DNA of the enterprise that's sustainable and fully engaging?

Chris Gould, Exelon: We've tried to blend what we do well with what's new. We have a focus specifically around a culture of innovation. Aside from technology and business models, the very objective of creating the culture of innovation is, in and of itself, a stand-alone objective. That's one answer to how you do that.

Then, what we've taken from what the company is good at. We try to take what might be a challenge and turn it into an opportunity for us. The DNA of the company emphasizes holding ourselves accountable to metrics and benchmarking and tracking our progress.

Take that energy that exists and shift the mindset into a culture of innovation.

Don't shift the vehicle with which you do it, use a common vehicle.

Create some metrics around how you're doing. How many ideas are we getting? How many of them are moving to commercialization? How have we rewarded employees? Are we actually doing that, or just saying we're doing it?

You can quantify and keep track of the advantage of being well trained and it being a part of our DNA.

Once we get going on tracking metrics, that's how you institutionalize something.

We try to take something we're familiar with. Put it with something that we're trying to do new. Not change both.

We need to change the culture. We need to find a new way to change the culture. We need to use something common to be the vehicle for that future.

Sasha Weintraub, Duke Energy: There's a saying I like to use. "What my boss finds interesting, I find fascinating." We all have leaders of our respective organizations that are finding this topic to be very interesting. That's how it becomes part of the culture.

There's pockets of it now, though maybe in some organizations it's much more pervasive.

It's becoming important in that culture of innovation. Everything we talked about: taking risks, failing fast, that's going to be what the leaders of all of our organizations are looking to build, foster and encourage.

Every company here is in a little different spot. But all of us have leaders that are saying, "This is where we need to go."

Don Clevenger, Oncor: One of the things this industry does really well is train. We may be the last industry in the world that does a really good job of training its employees.

There is a class that we have for every employee on innovation.

The group that leads the class has really gotten into it. They've designed a car wash simulation that teaches in a very simple way how processes can be streamlined. They then empower the employees to apply the same principles to their jobs.

These are things you don't see. But it is what binds our folks together. They own it.

You could see that type of ownership coming out of them as they teach it. They've gone around the whole system teaching it. Now we're going to follow up with our performance metrics and reward it.

We've started that in a soft way through encouraging managers to include innovation as part of their individual modules that employees get. The next step is to make it the permanent metrics that people's bonuses are based off of. That's something the industry does well.

We've just got to make it part of that DNA, like you said.

Chuck Darville, Southern Company: Executive leadership sets the tone. We've been very lucky in that regard. For the ideas that have been submitted by the employees, the ones where you start to see some real results, we share that with the entire enterprise. And we say, "Remember when we did this? Here is where we are on these items." That goes a long way. It reinforces it beautifully.

Bert Valdman, Optimum Energy: It's hard not to be reminded of my favorite Thomas Edison quote as we sit around this table at EEI, which is, "There's a better way to do it, find it." It's really that spirit of inquiry that launched this industry and what will keep this industry relevant in the future.

It's important to stay restless as leaders and avoid complacency.

We must constantly figure out new roles, new ways of doing things. Offer learning opportunities to top talent. Rotate people around the organization. This gives them perspective. It keeps them humble and hungry.

Sometimes I worry that the utility industry isn't hungry or humble enough. That's when mistakes are made.

Tom Flaherty: Provide your perspective on how you think the business model shifts to be able to incorporate what we're going to accomplish through innovation.

Sasha Weintraub, Duke Energy: That's the outstanding question. What is the business model? Traditionally, we've been in a business model based on return on capital and heavy capital investment. Now we're talking about things that are different.

For example, cloud-based versus on-premise? What's O&M versus capital? Rate of return versus regulatory lag? That's the challenge that this industry's wrestling with.

How do we turn that business model around? Well, you can use riders and you can decouple revenues. There are alternatives that get us from one business model to another.

Chuck Darville, Southern Company: For us, we're trying to figure it out now.

If you're in our territory and our traditional business, it's easy. We know how to do that. If it's a new business outside of our territory, I'm not saying it's easy to execute, but from a business model perspective, that's easier.

As you start looking at these new businesses in our territory, that's the one where we're really trying to figure it out.

Don Clevenger, Oncor: I don't think the business model changes. It's how we innovate and react to the market forces like distributed generation that are going to evolve and change.

Sasha Weintraub, Duke Energy: Well said. Sometimes we get accounting rules caught up in the business model, the DNA.

Sometimes, there might be some accounting rules that need to evolve as we're talking about cloud-based versus capital. Certainly, there's some evolution there to acknowledge. The business model might very well be familiar to what it has been for many years.

Bert Valdman, Optimum Energy: Our business will change. In fact, it's changing right now if you boil it down to its essence.

Today, capital is sourced at a low cost and that capital is invested in long-dated infrastructure earning a near-certain margin based on a regulated return.

The depreciation cycle will change as the business becomes more technology-heavy and service-oriented. There will be more uncertainty and risk, particularly as it relates to obsolescence and economic recovery. That old capital model will no longer hold true. There will have to be a different way to get a return on capital or a different type of investment model.

There will be a greater level of margin volatility, very similar to what financial institutions experienced. Price discovery in a global marketplace tightened spreads and banks had to find new ways to make money, taking more risk, adding higher levels of service.

Tom Flaherty: Since some of you operate in a fully competitive market, and others operate in very different global geographic markets, how do you think about the nature of the business model evolution you have to go through?

Bert Valdman, Optimum Energy:It's interesting to compare the North American market with global opportunities as it relates to prospects for success. The North American market is a very local market. And I don't just mean local by region, I mean local by individual facility. Building scale in this environment is tough for competitive businesses. It takes time and resources.

At Optimum, we have customers in the Middle East and in Asia. Our experience is that decision-making is more centralized. We know exactly who the decisions makers are. It's a lot easier for an emerging company to scale in that environment, where it's a centralized decision and especially if there is supportive public policy.

For example, Singapore has a kilowatt per ton metric, and every building's HVAC system must be in compliance by a time certain. You know exactly what you are solving for and who is accountable. It takes fewer resources to get a bigger result.

If you're a small business with limited resources of people and capital, and trying to figure out where to focus, you're going to zoom in on markets where there are clear success metrics and where there is a clear decision-making hierarchy. Right now, that doesn't exist in North America.

Tom Flaherty: Let's fast forward and take a five-year-out and beyond view. What does innovation 2.0 look like and how different is it from today?

Chuck Darville, Southern Company: For us, it's probably still somewhat formulaic. If you ever read the book How Google Works, there's an excerpt in there about Larry Page. Frustrated one day about a particular search, he writes it on a board one Friday afternoon.

Then folks come by, see it, and they solve it over the weekend and have it all done. It's pervasive. You're not talking about it anymore. It's just part of the fabric of what you do.

Product development issues are identified and resolved. As opposed to this hierarchy that we're in today, it gets the entire organization acting like that. As opposed to right now, where we have to think about it too much.

Sasha Weintraub, Duke Energy: I agree with that. The analytics, the data, being focused, everything we said. The example with How Google Works was that people from all over solved the problem. It wasn't just one person's job to go solve it. People from all over, that is, the crowd, took the challenge and tried to figure out a better solution.

That's going to be when problems get much more transparent and faster. When people go at it in a much more collaborative way than project teams.

Innovation's going to be where technology and data are going to allow us to be much more focused and quicker. We'll know what the problem is and we'll be able to go right at it.

We're still enjoying the challenge with innovation 1.0, let alone trying to think through 2.0.

Chris Gould, Exelon: Not everybody drinks Starbucks, right? What do we do for all customers? The ones who like Dunkin' Donuts coffee. Or the ones who like gourmet coffee?

As the industry evolves its capabilities to segment customers, and understand more deeply from data and from other mechanisms, innovation goes from applying a broad brush to much more refined and fine-tuned. It drives towards specific issues within different customer segments.

Tom Flaherty: What final words of wisdom would you give the other panelists who may be pursuing exactly what you have already completed?

Bert Valdman, Optimum Energy: After architecting the utility's response to a more distributed competitive electric system, which involved investing in new business models and emerging companies, I felt I had an obligation to actually make one work. And no surprise, it's fun and gratifying, but it's sure not easy.

I think back to when I was in the utility C-suite with so many resources at the ready. I would pose a question in a meeting out of curiosity, not expecting any follow-up, only to find that an entire team had labored to answer the question. A week later they would be in my office with a PowerPoint presentation.

In an emerging company, resources are limited. It's all about focus and being judicious in where you invest time. If you lose focus as an emerging company, you lose your company.

If there's utility sector interest in investing and enabling an emerging company, then there are several high-level questions to ask when evaluating opportunities: Are the fundamentals strong, and can the business scale without subsidies? How easy is it to buy the product or service? Is the business purpose consistent with your mission of supporting customers?

If the answers to these questions are yes, then take a risk and invest.

A song and an analogy come to mind.

First, the song:

I'm reminded of the lyrics from Adele's song, Hello: "Hello from the other side, I called a thousand times."

I'm now on the other side, outside of the utility and its captive market, commercializing new technology in a sector where competition is keen. It takes persistence and calling a thousand times to build credibility with customers. I now appreciate more than ever the value a utility logo brings, something I no longer have.

Second, the analogy:

I watch how my son who is a high school senior learns calculus. His classroom time is spent solving math problems together with classmates and his teacher only facilitates. Math concept learning happens at home, often with online support from various sources that he's found on his own.

Since problem sets are often completed online, his teacher has a high level of situational awareness and can monitor each student's progress. And provide individualized instruction as necessary.

That's completely different from how I learned calculus, where class time was spent learning the concept. Then homework was completing problem sets alone with only the math book as a resource.

So how does this relate to our electric system?

Rather than the current centrally driven, command and control structure where utilities direct customers, customers will work collaboratively together. They'll build coalitions among themselves, often with non-utility third parties, to develop individualized solutions on a micro level.

The electric utility will facilitate this solutions process and will have situational awareness on a system-wide basis, but won't exert control on a circuit-by-circuit basis.

Being nimble and easy to do business with in this environment will be key to success, and utilities can learn this from emerging companies.

Commissioner Powelson was installed as the 128th president of the National Association of Regulatory Utility Commissioners in November 2016. He serves as a commissioner on the Pennsylvania Public Utilities Commission. He was Chairman of the Pennsylvania PUC from 2011 to 2015. As NARUC president, Powelson's duties include providing general oversight of the Association; serving as NARUC's primary voice; and representing NARUC before Congress, the courts and administrative agencies. His theme for this coming year is Infrastructure, Innovation, and Investment: Driving the Future of Regulation. This PUF interview took place before the February 2017 NARUC meeting in Washington, D.C.

PUF's Steve Mitnick: Commissioner, it must be exciting to be taking the reins of NARUC. What are your top priorities
or initiatives?

Commissioner Rob Powelson:I have an agenda that addresses infrastructure and innovation both in front of and behind the meter. I've also rolled out the concept of investment.

We talk about investment in the workforce, and the human capital aspect of the utility world. I think the infrastructure piece is one that dovetails with the President's desire to see a trillion-dollar infrastructure bill.

When we talk about infrastructure investment, most people talk in terms of the intermodal investment. That includes roads, bridges, ports, networks, and rail systems.

That's got to be part of the discussion. However, as public utility commissioners we are dealing with reliability, affordability, and power plant construction in some markets. As well as integration of renewables, water infrastructure, and other cleantech investments. Let's not lose sight of the fact that we've got to have a loud and clear, unified voice.

We just came off a great success in the last Congress with the passage of the Safe Pipes Act, that is, Pipeline Safety Reauthorization. A lot of members of Congress recognize how important it is to have investment in gas safety at the distribution level. That includes Chairman Shuster, the Chairman of the House Infrastructure Committee, and Congressman Lou Barletta as well.

PUF's Steve Mitnick:It's impressive that NARUC, which is the voice for consumers of utility services, is speaking so strongly on behalf of investment. As opposed to other times when we might be talking about trying to slow down costs and so forth. This is a special time, with a new administration. Why do you think that is?

Commissioner Rob Powelson:Economics is what's driving it. What better time to have infrastructure build than in a low interest rate environment? We've got an environment that's very low cost right now because of cheap natural gas.

From a risk tolerance perspective, you couldn't have picked a better time in which to tee up a conversation about energy infrastructure.

PUF's Steve Mitnick:Now, is there a challenge to this? We've heard in recent days in Washington, some concerns from the Republican majorities in Congress about similarities to the large investment by the federal government in 2009. As well as concerns about the national debt.

How do you think NARUC will distinguish 2017 from 2009?

Commissioner Rob Powelson: I think by having a unified voice and having collective clout as public utility commissioners. I use the example of the work that was done on the Pipeline Safety Reauthorization Act. Policy makers in Washington are looking to hear from us.

I share that with you because I had meetings with incoming House Energy and Commerce Chairman Greg Walden. He wants to hear what's going on across the fifty-state compact and how the committee can align its agenda to reflect that.

I think that's a good sign, and I think that this is a classic opportunity for NARUC to really deliver a message that says, "Look guys, intermodal investment is great. We're all for it, but don't lose sight of energy infrastructure and water utility infrastructure investment that's needed as well."

PUF's Steve Mitnick:Especially at this time where NARUC represents the states. Now there is much more appreciation for the voices of the states as opposed to within the Beltway.

Commissioner Rob Powelson:I think what you're finding, whether you look at election results or you just talk to people who are in your world. Republicans and Democratic commissioners alike got fatigued with too much heavy-handed federalism.

I think that we saw that with the Clean Power Plan. We saw it with Waters Of The United States rights. We've seen it more recently with some new oil and gas regulations. States are the laboratory for energy innovation. States have renewable portfolio standards. States have adopted energy efficiency conservation measures.

We just want to go about doing our jobs and creating an investment structure where our utilities can deploy capital. They can then get into things like smart meters and distributed generation investment.

The federal government has been sending states mixed signals. I think that's part of what you see in this national discourse now. Let's recognize the states' rights and let the states be leaders in energy policy.

We've got to get back to a cooperative federalism model. The federal government has a role to play, but doesn't need to overstep by telling states how to run their business affairs.

PUF's Steve Mitnick:The Federal Energy Regulatory Commission will be going through some changes over the next year with some vacancies and a new chairmanship. Is there an opportunity for a different kind of FERC?

Commissioner Rob Powelson:There's certainly a strong desire among the NARUC community to see that happen. For example, I worked with Joe McClelland.

Joe's been a phenomenal resource for the state around cybersecurity. He's helping us develop the protocols and building capacity within our bureaus that we have back in our state public utility commission.

Then on the other side of it you have PHMSA not working in a cooperative way with state safety department divisions. Let's try to be all rowing in the right direction here. I think that on the FERC question, I've had a great working relationship with Commissioner Cheryl LaFleur.

I've worked with Chairman Norman Bay and with Tony Clark, the former president of NARUC, as well as Colette Honorable, also a former president. I think the current FERC tries to balance states' rights. Some of these issues that are coming down the pike now are going to test that.

PUF's Steve Mitnick:You referenced investment, including in human capital. Could you elaborate on that?

Commissioner Rob Powelson:There's an actuarial train wreck on the horizon in the electric space when it comes to linemen. I can say in my school district in Pennsylvania, outside of Philadelphia, we're not promoting the career opportunity that's going to be out there. Not only for future engineers, but also for someone who wants to go into the trade of being a line worker.

That's just one example. I could use the same example in the gas industry and the water industry. We need to have a national conversation around workforce development. How do we bring in our technical schools in states that have workforce investment boards and training dollars?

How do we incentivize some type of program that will recognize these opportunities for the next generation of workers?

The other part of this group is going to be led by Virginia State Corporation Judge Judy Jagdmann. I've tasked her with running workforce development in our Veteran Affairs Committee. The industry's done a great job around workforce investment with Troops to Energy and Hardhats to Energy.

NARUC can be a clearinghouse. Judy could be working with the defense department doing a 2.0 reboot of these programs and getting utility commissions involved in it.

The other opportunity is veteran small businesses that want to do business with utilities. We're going to be talking a little bit about procurement as well.

PUF's Steve Mitnick:I've spoken to some IBEW and LAMPAC groups and I've heard many stories about the need to bring more young people in.

I've heard frustrations about how utilities have difficulty finding young people who want to do that kind of work. Young people who don't feel they need to be lawyers or bankers.

If there's anything that we can do to further amplify these initiatives, just say the word.

Commissioner Rob Powelson:I appreciate that and like I said, Judy Jagdmann is off to a great start. In fact, at the winter meeting we have all five branches of the military represented on a panel.

PUF's Steve Mitnick:You mentioned the winter meeting, one of several great events that NARUC runs each year. You have just one year as president. Are you planning to unveil some of the big things that you'd like to accomplish when you meet in February?

Commissioner Rob Powelson: For February's meeting in the nation's capital, we have invited Congressman Shuster, who is head of the House Infrastructure Committee.

We've invited U.S. Senator John Thune to join us to talk about some FCC-related issues. We also extended an invite to President Trump.

PUF's Steve Mitnick:Wow.

Commissioner Rob Powelson: You never know. You gotta swing for the fences, but to have a sitting president address NARUC would be an incredible opportunity.

At the meeting, we're going to tee up one of my first agenda items, and that's infrastructure. 

We have speaking commitments from Chris Franklin, the CEO of Aqua America, and Chris Crane, the chairman and CEO of Exelon. We're excited to use the February meeting as an opportunity to start the conversation on that infrastructure piece.

PUF's Steve Mitnick:Asthe president of NARUC, there's a whole lot of issues you circle around and then get moving in one direction. I suppose there are lots of disagreements on this or that.

What's the secret to developing consensus across the states, from Hawaii to Maine, Democrat, Republican, big states, small states? How are you going to manage that?

Commissioner Rob Powelson: That's the sixty-four-thousand-dollar question, but it seems to have worked because of the bipartisan nature of NARUC. I use the term often. NARUC strives to get a unified voice around issues. Pipeline safety is not a partisan issue and so the past presidents before me, the Travis Kavullas, the Fred Butlers, and the Bill Joneses, the Colette Honorables, the Tony Clarks, have always checked their party affiliation at the door.

That's what makes NARUC such a proactive organization. We're able to get things done in a bipartisan way. We're working in committees or on task forces, and that's the DNA of NARUC.

PUF's Steve Mitnick: I'm sure you travelled a long road as a commissioner and at NARUC. Maybe you had one or two mentors, people that had a big impact on your career. Can you talk about how you got to this position?

Commissioner Rob Powelson: I've been on my state commission since 2008. I was blessed to serve as chairman of the commission under our former governor.

Part of getting here was because of my colleagues and my organization back home. We have a wonderful tradition back in Pennsylvania and that's part of what brings me to this spot.

"You can't do it alone," as I said in my acceptance speech. "I didn't get here alone," as Kenny Chesney said once in a song. That's sort of what I mean.

When he does a concert, there's the catering, the crew, and the people who play in his band. That's NARUC.

I've had mentors. They were people like Jim Sullivan, Barry Smitherman, and John Bohn from California. They are smart, dedicated people who you learn from. That's what NARUC can do.

I often enjoy doing the new commissioner orientation at the NARUC meetings. We've got people coming here who are former lieutenant governors, attorney generals, consumer advocates, and state senators.

When they get there, and get involved, they can get immersed in many different aspects of NARUC. If you want to travel abroad and do work for our international department, we're there. You could do a lot of great things. NARUC is an impactful organization.

My success starts with my colleagues back home supporting me. It not just the commission staff at the Pennsylvania PUC, but also the mentors along the way, and the staff at NARUC.

That is what makes every NARUC president successful. You've got to have the support at home. That includes your colleagues and your commission staff.

My start came when I got involved with the Water Committee and I'm still involved with them.

That paved the way for me. Our next President is Jack Betkoski, another former Water Committee guy. Something's going on at NARUC in the Water Committee.

PUF's Steve Mitnick: Something's in the water! The NARUC staff is great.

But everything is not always fine and dandy. Over the last year or two, members of the public with very strong views have approached some commissions and commissioners. Sometimes creating very uncomfortable situations. That ranges from Arizona to Nevada and to other states.

There are the demonstrations that are ongoing at the Federal Energy Regulatory Commission. Any comments on how commissions and NARUC address that activism? Sometimes members of the public can be aggressive.

Commissioner Rob Powelson: We've tried to get ahead of this issue. Our Serving the Public Interest campaign is a role model for defending the mission and the integrity of what we do as public utility commissioners.

It's come under fire in the so-called solar wars or the net metering wars. We're all very bright people and we're all very rational, but things can go viral rather quickly. Things can be said in jest and anger, or misinformation can spread. The public needs to understand the role that we play. It's almost like we're the invisible hand.

I'll use my UBER example because we regulate UBER. People love UBER. If you say, "Do you like UBER?" They will say, "I love UBER!"

I love UBER too, but I can't have the UBER driver out there with five DUIs and a criminal record.

I can't have a vehicle picking you up and moving you around, where the brakes and the overall functions of that car haven't been inspected. Or, God forbid, there's an accident and that driver doesn't have proper lines of insurance.

So, that's just the UBER example. Imagine that the electric utility lets power lines just fall in peoples' back yards and never replaces them, or doesn't do vegetation management.

Imagine a gas utility that doesn't do anything. They know they have hazardous pipes out there that could cause an explosion, but opt to do nothing about it. 

These are the things that people take for granted.

Think about the job that we do. We raise rates, fine companies, and revoke licenses, all unpopular things to do. 

PUF's Steve Mitnick:Sounds terrible!

Commissioner Rob Powelson: Exactly! I don't know of anybody who has ever patted a public utility commissioner on the back and said, "Thanks a lot. I know my electric rate is going to go up by a penny. I appreciate what you're doing, though." It just doesn't happen.

So here we are today, in a world of social media and third parties that are going to great lengths to attack us personally.

We're striking back with a very proactive message about who we are, what we represent and how we're out there protecting consumers and the public interest.

PUF's Steve Mitnick: If I were the President of NARUC, it would feel to me like the time is ticking away. Before you know it, it will be November of 2017, and unlike the President of the United States, you don't have a four-year term, let alone a re-election.

Can you imagine the time after November 2017? What would you like people to say about the year that Commissioner Powelson was leading NARUC?

Commissioner Rob Powelson:I would like people to look back and say that Commissioner Powelson's year was one where there were measurable results from the policy and the programming side.

Second, that he was a convener of different interests within the utility sector.

Third, that he led at an historic time, through a Presidential transition. He made NARUC a relevant player in helping this new government get up to speed on the issues facing utility customers here in the U.S.

Finally, I'd like all my colleagues to say, "You made a difference, and you advanced the NARUC mission."

Recently, I had the good fortune to be named the Woman of the Year by the Women’s Council on Energy and the Environment, also known as WCEE. On March 7, WCEE held its annual gala, honoring me and the 2017 Champion, Dr. Robert Marlay, Director of the Office of Climate Change Policy and Technology at the Department of Energy.

If you are a woman professional in D.C. working in the energy and environmental areas, you likely know about WCEE. As its website states, it is a “non-partisan, policy-neutral organization that focuses on women, energy and the environment.”  As many as 900 women professionals are members – as well as men.

The organization has been around since the 1980s, and is a great way to meet others working in these fields and learn about recent developments. WCEE holds many luncheon programs, happy hours, and educational events.

The gala started with a reception, which was a mob scene. It was amazing how many people I knew there – it was like my entire professional life was passing before me! Everyone from my own Association board members to former law partners and clients and innumerable work colleagues from NRECA, EEI and other industry associations and organizations were at the gala.

Bob Marlay gave a very inspirational talk about his work at the Department of Energy to foster an increased role for women. He is an Ambassador to the U.S. Clean Energy Education and Empowerment Initiative for Women in Clean Energy, and has championed its growth since its inception in 2011.

Robin Cantor of the Berkeley Research Group, WCEE’s President, graciously introduced me. Then Tom Kuhn, the CEO of the Edison Electric Institute, led the group in a celebratory toast to me.

Tom and Marv Fertel, the now retired CEO of the Nuclear Energy Institute, were very supportive of me when I first became CEO of the American Public Power Association in 2014. So it was an honor to have Tom lead the toast.

Being tasked with speaking after dinner is always perilous, given that attendees have been eating and drinking for some time, and are already thinking about the drive home. And Robin had told me I had fifteen minutes – no more.

I decided to skip the deep policy pronouncements and philosophical discussions about our energy and environmental future. Instead, I passed on six pieces of advice I had learned, often the hard way, during my thirty-seven years doing energy work in D.C. Here are the six pieces, in a nutshell:

Do not let the perfect be the enemy of the good: Way too many women (including me) hold ourselves to impossibly high standards in both our work and personal lives. And when we don’t meet those standards, we beat ourselves up for that.

I consoled my listeners by noting the very fact that I was standing before them was living proof that you do not have to be perfect to be a success. Then I shared some real-life examples of less than perfect moments I had, trying to balance being a good lawyer with being a good parent. My moral was, don’t flagellate yourself for not being perfect. Do your best and that will generally be good enough.

Nobody goes away: Over my years in D.C., I learned that nobody goes away. A person you meet in one position is bound to show up later in another position. You may be across the table from someone in a negotiation one day.

Then you wake up the next day to find out they have become your boss, or a client. It helps in dealing with people to know where they have come from and what their experiences have been.

Because nobody goes away, don’t be a jerk: of course, you should not be a jerk anyway, simply because you should obey the golden rule. But if you are ever tempted to do something jerk-like to someone, recall that “Nobody goes away.” That way, when that person ends up being your client or your boss, you will have fewer regrets.

Do what makes sense for you, not what you are “supposed” to do: When you come to D.C. and start your career, there are established ladders you are supposed to climb in your field, and tickets you are supposed to punch.

If doing those things actually makes sense for you, by all means do them. But if that career ladder does not feel right, or is not working for you, then figure out what you might want to do instead, and then do that. Make the choices that make sense to you at the time, given where you are in your life. And don’t lose sleep because you may not be following the conventional path.

Assemble an informal kitchen cabinet of advisors: It helps as you move along in your career to assemble a group of friends and peers whose advice you can seek when you have to handle a tough situation or make a big decision. In the end, you have to make the decision, but having smart and able friends you can bounce ideas off of is invaluable.

If you make the wrong choice, you can make another choice: it can be hard, indeed scary, to make important career and life choices.

Fear of making the wrong choice can be paralyzing. It can keep you in your current place even if it does not feel right. Although, if you think about it, not making a choice is also a choice.

But at some point, you have to quit analyzing the situation, and check in with your gut. And if your gut is telling you to make a change, you should listen. When you do, take comfort in this: if worst comes to worst, and you later realize you made the wrong choice, then you gather your strength and your wits, and make another choice.

You are going to be making choices your entire life. So use those decision-making skills, and exercise those muscles. The more you do it, the more natural it will feel. Don’t feel like the choice facing you now is the last choice you will ever make – it probably is not.

I had a wonderful time at the WCEE gala. I reconnected with many old friends, and had the opportunity to meet many women who I did not know. If my six pieces of advice can help them to avoid making the same mistakes I did, so they can go out and make their own mistakes, then my thirty-seven years in D.C. will have been more than worthwhile.

So, my deep thanks to WCEE for the honor of being named its Woman of the Year.

I first met David Owens in the mid-eighties. At the time, I was surprised the Edison Electric Institute had an intellect like David on staff. Expected an industry association to be a lobbying group, mainly, with member services mixed in. I had a lot to learn.

During my four decades in the industry, EEI has been a vigorous debater in the many scrums about utility regulation and policy. It has sponsored thorough research and offered detailed recommendations. Depending upon where you sit, you might have agreed or disagreed with its positions. But you likely found the work rigorous and well-considered. And you likely observed that David was the driver for the work and its eloquent spokesman.

Indeed, David has been the industry’s debater-in-chief. This month, uncharacteristically, he’s decided to put down the mic for good.

You also likely observed that David exuded passion for helping people and the public, through his intellectual prowess. All while he practiced compassion, religiously, with both proponents and opponents of his positions.

There are hundreds, nay, thousands, who would tell you a story about how David took the time (when he seemed to have little), touched them with his caring, and made a difference in their careers, in their lives. Did he touch your career and life too?

One always hears how tireless David has been. How he constantly travelled to talk, to listen, to persuade, to be persuaded. Though I believe that David was everywhere – from NARUC conferences to board rooms – because he wanted to be everywhere. Because he wanted to learn all he could learn about utility regulation and policy, and to teach all he could teach.

The Public Utilities Fortnightly team considered how we could honor David. We do so by selecting him as the first recipient of PUF’s Owen Young Award, for devoting his powerful intellect to the public interest.

Owen Young was general counsel of General Electric, GE, when he founded our company Public Utilities Reports in 1914.

Young was working with the National Civic Federation to develop and submit to Congress model legislation on utility regulation. The often-drastic inconsistency from state to state troubled both utility leaders and regulators:

“Of more immediate concern was some means of simplifying, or keeping abreast of, the diverse laws and regulations affecting the burgeoning public utilities. As power systems crossed state lines, which was rapidly becoming the rule rather than the exception, the multiplicity of jurisdictions to which these natural monopolies were subject was not merely an annoyance; it was a source of confusion to investors and management, and so, too often, of public suspicion. [Young found] the situation profitable to no one save the politician in search of an issue…”

– From Owen D. Young and American Enterprise, by Josephine Young Case and Everett Needham Case, David R. Godine Publisher Inc., 1982.

The initiative, to have Congress enact national model legislation on utility regulation, ultimately failed:

“… The next best thing was to provide a guide for utilities and investors in the form of case reports on state laws and relevant decisions of the courts and public service commissions.”

– From Owen D. Young and American Enterprise.

Public Utilities Reports was thus founded. After a few years had passed, the first Public Utilities Fortnightly was published. Young’s college roommate, Clifford Spurr, was made its first editor-in-chief, my first predecessor.

Soon after, Young led both the electricity and telecommunications industries as chairman of GE and of the Radio Corporation of America, RCA.  He later, at the request of the president of the United States, engineered the settlement of Germany’s World War I reparations.

And, as one of the nation’s most famous and respected personalities, Young was expected to become president of the United States in 1932. He declined to run, in favor of his friend Franklin Roosevelt.

David Owens also was a friend of a president of the United States. When you ask David what’s his proudest professional achievement, he’ll cite his leadership role in the response to the devastation of Hurricane Sandy at the request of President Barack Obama and EEI president Tom Kuhn.

The Public Utilities Fortnightly team honors David in a second way. We’re starting a new annual list, PUF’s Top 40 Innovators. Debuting in November’s Public Utilities Fortnightly, we’ll announce our selections of the forty most innovative influential thought-leaders in utility regulation and policy in 2017.

We’ll be issuing the criteria shortly, the specs that will guide our picks. That will support our analysis of the greatest thinkers and doers in utility regulation and policy.

But, to make the list, in sum, you need to be a David Owens. A powerful intellect that’s impacting the course of our industry.

Coming up with the list should be a blast. And you have a key role. Send me your nominations, to mitnick@fortnightly.com. Tell me why John Doe or Jane Smith ought to be in PUF’s Top 40 Innovators.

Did they reset how we thought about regulation and policy? Did they make you want to hear them out? Did they change your mind?

Did they reshape our industry’s future?

Were they like Owen Young? Were they like David Owens?

In May, President Donald Trump announced the nomination of two new commissioners to the Federal Energy Regulatory Commission. The Senate must approve the nominees, who are NARUC President Rob Powelson and Neil Chatterjee, energy policy advisor to United States Senate Majority Leader Mitch McConnell of Kentucky. 

Since early February, FERC has faced an unprecedented freeze of certain major agenda items when one of its three remaining commissioners resigned, leaving just two. The agency usually has five commissioners, and typically needs a quorum of at least three to approve certain projects. FERC has never been in a situation in which it had just two commissioners until this year.

PUF's Pat McMurray met with Acting Chairman Cheryl LaFleur and Commissioner Colette Honorable to discuss this historic time at FERC. 

FERC Acting Chairman Cheryl LaFleur

PUF's Pat McMurray: What was it like when you came here, and what it's been like for the past seven years?

Commissioner LaFleur: It's really been a wonderful experience. I've been in the energy field a long time, since 1986, but when I got the call from the White House to be considered for the commissioner position in 2009, it was a surprise.

I had not even known there was a vacancy, so this is a little different than how it usually happens. When I reflect on how many changes have happened in my life in the last eight years since then, the wonderful experience being on the commission and living in D.C., and all the people I've met all around the country, it has been an unbelievable opportunity.

When I arrived here, I joined a full commission. We had four sitting commissioners, and I became the fifth. Jon Wellinghoff was chairman, and the issues that were top of mind then were demand response and transmission planning, working on the order that later became Order 1000.

There were many other issues as well, but those were two of the big ones. Since that time, I've seen and worked with seven other commissioners, and have seen a lot of changes in the industry as well as at the commission.

PUF's Pat McMurray: If you had to name the top three issues that you've dealt with over these years, what would they be?

Commissioner LaFleur: Iusually start with reliability and grid security. That's been one of my top priorities from the day I walked in.

We got this authority in 2005, certified NERC as the Electric Reliability Organization a couple of years later, and when I got here, a lot of the work was still finalizing the baseline standards that were developed in response to the 2003 blackout - tree trimming, relay setting, and so forth.

In recent years, our work has evolved to focus more on the emerging issues of cybersecurity - physical security, geomagnetic disturbances, electromagnetic pulse. That's been a very important body of work.

Second, the work on the competitive wholesale markets in the electric area has been another one of my big priorities.

We've seen a lot of changes in the markets driven by the changes in the resource mix in the country. The growth of natural gas, increased deployment of renewables and the environmental regulations that have taken effect in the last several years have really impacted the resource mix. We have done a lot of work to make sure that the markets fairly compensate the attributes of all types of resources, including demand response, variable resources, and storage. We have also worked to make sure that the resources that are counted on during times of system scarcity are appropriately compensated.

Third are the infrastructure cases, particularly involving gas pipelines and liquefied natural gas. With the growth of domestic natural gas, much of our production is coming from a different part of the country than it had previously, so we've seen a tremendous amount of infrastructure buildup.

To give an example of how this change is impacting our infrastructure work: when I had my hearing in 2010, we were still focusing on LNG import applications, and I prepped for questions on all the import applications at my confirmation hearing. That seemed to turn on a dime, and in recent years we have had many applications to export with all the attendant pipeline infrastructure.

PUF's Pat McMurray: The White House has declared it intends to nominate two new commissioners. There are only two commissioners sitting right now, and there is no quorum. A quorum would be three, of the five commissioner positions. Is that right?

Commissioner LaFleur: That's correct.

PUF's Pat McMurray: One of the things that I've noticed recently is, with the lack of the quorum, that many stakeholders in the industry have been anxious.

Commissioner LaFleur: Without the quorum, we did delegate some authority to staff, primarily to take actions in certain cases to protect customers and to make sure nothing went into effect by operation of law if it needed a commission order.

But, other types of things, including infrastructure projects, mergers, major changes in market rules, and hydro licenses, could not be finalized without a quorum. Normally we issue about a hundred orders a month at the Commission level, and we've issued only a fraction of that under the new delegated authority.

So, many people are eager for us to regain a quorum and be able to deal with their applications. They have commercial reasons, deadlines that they're waiting for orders, reliability, or customer service reasons that they need action from the commission.

We have a clear focus and mission, which is interstate and wholesale energy of all types, but that covers quite a bit.

PUF's Pat McMurray: What do you anticipate once you have a quorum? What's number one on your list?

Commissioner LaFleur: Well, there are a couple bodies of work that we've been preparing since I've been Acting Chairman. The first is there are many draft orders that are drafted for the commission to take up.

We will have to come up with an organization and prioritization of those, triage them if you will, because we can't expect somebody to come in and do several hundred orders on the first day. So, we are working through that to try to make sure we have a good grasp on what's been backed up, what's time sensitive and so forth.

Second, we have quite a large number of rulemakings of different sorts. Everything from proposed changes in market rules, like our price formation proposals, to a notice of inquiry on how to deal with master limited partnerships in oil and gas pipeline rates. We also have a notice of inquiry on the terms of hydro licenses, and some pending reliability standards, and many other things like that. In those cases, we're trying to ensure we've done the homework and can shape what the policy options are for the new FERC 2.0 when they get here. That's another whole body of work besides the actual draft orders.

PUF's Pat McMurray: FERC is always mentioned as one of the top places to work in the federal government and for some reason this agency always gets that kind of commendation. Why is that?

Commissioner LaFleur: This is my first government job, so I have nothing to compare it to. But first, I think it's because FERC has a clearly defined mission. We know what our job is. We know what we're about. I think that we're a very good size.

We're large enough to have a superb body of employees, but small enough that people know each other. The people doing the work know the leadership. There are some huge departments in Washington that have much bigger management issues, I'm sure, than FERC. So, I think we're very focused.

Second, we are an independent agency. We're bipartisan. We've always worked well together. We're not overtly political, and I think there's a long history of collegiality and camaraderie among the commissioners.

Third, we have excellent employees. I worked with FERC on the outside in my past life, so I knew it to be an excellent agency, but I saw it much closer up when I got to see the people here.

When I was in private industry, we heard a lot about the aging of the workforce. I know the average age in the business unit that I oversaw was forty-seven. We had an aging workforce of a lot of baby boomers.

We have a real mix here. We have a lot of employees who have been around for decades and know all the background of everything, and have amazing perspective. But we're one of the top agencies in Washington for people under thirty, in terms of the percentage. We have a great mix of employees.

And finally, I think we have a family-friendly culture. We have good policies, and that's something that is always mentioned in our surveys. That's not because we don't expect people to work very hard, but hopefully we allow some flexibility.

PUF's Pat McMurray: Is there such a thing as a typical day at FERC?

Commissioner LaFleur: Yes. We're back to typical, when we have a quorum. When I hire people in my office, I think about two thirds of the job is in some way related to the orders that we consider, the issues that we vote on.

Typical would be working with staff to frame issues and discuss how to deal with matters that come before us, reading and working on orders, and writing separate statements. That takes a good bit of our time.

Another thing that takes time is that we have a lot of meetings - almost every day we have some combination of internal meetings with staff and other commissioners and external meetings. We have people trekking in from all parts of the energy world - regulated companies, state officials, environmental groups - people who have an interest in issues before us. We do a lot of outside meetings.

Third, I do a fair amount of public speaking and travel. I try to get to different regions of the country when I can, and that's the last big part of the job, really. I think every day is a blend of those: some meetings, time with my team in between working on orders or things that are pending. 

PUF's Pat McMurray: What have you done that's the most fun at FERC?

Commissioner LaFleur: What I have enjoyed the most is all the people I've gotten to know. I really thought when I was in New England that I knew a lot of people. I was so concerned about having backups of backups of my Rolodex. (I know people don't know what a Rolodex is anymore, I guess you would call it a contact list.)

But I know so many more people now, and I feel like I could just kind of parachute into any state capital city and know someone there, whom I'd actually worked with, which is wonderful.

So, as to fun experiences, when I did the Energy Bar Association funny dinner, I did Lady Giga, which is like Lady Gaga except named after a gigawatt. I dressed up like Lady Gaga and did an energy themed entertainment event. That was definitely fun. That was different. Another thing that was very cool is I threw out a first pitch in Kansas City at a Royals game and it was the year they won the World Series.

There have been some unusual events, but I love meeting with people, and there's a lot of that on this job.

PUF's Pat McMurray: FERC is known to be bipartisan. Is the Commission a model in some ways for a way in which to build a relationship with the other side?

Commissioner LaFleur: I do think we have worked in a bipartisan fashion. We certainly don't always agree on everything, either across the aisle or even just commissioner by commissioner of the same party.

And I think the fact that we have relatively few dissents reflects the ability of the staff to find the middle, the compromise, the sense of where the commission is.

One of the things that helps is that we're expressly bipartisan, so we are a bit unusual right now with just two Democrats. Normally you have only one commissioner changing each year, so there's typically a lot of continuity. We process orders over a long time, and people come and go, but there's a continuity in the work that we're doing.

I also think that we decide cases by the facts and the law, and not by ideology. So, if you are deciding by the record, that makes it easier to discuss the issues because you're discussing facts grounded in a shared understanding of the case. 

FERC Commissioner Colette Honorable 

PUF's Pat McMurray: You're here at a very historic time for FERC, when there are only two commissioners. The full complement is five commissioners. Three commissioners would constitute a quorum, which legally you need to transact business. What's it been like working without a quorum?

Commissioner Honorable: It's an interesting time. Some have thought that maybe we are twiddling our thumbs and that certainly isn't the case. It's been very busy, but it's been a different sort of busy.

By way of context, if you think about the number of orders that FERC issues in a year, even with a full complement of commissioners, the commissioners themselves only issued a third of those orders.

Even under preexisting delegated authority, our staff, which is very capable and experienced, issued about two-thirds of those orders. So, before we lost the quorum, we issued an order delegating authority to staff in limited circumstances.

It gives them additional authority to hear uncontested settlement agreements and make decisions about those. Also, to make decisions on certain uncontested waiver requests. It extends the time in certain circumstances such as with certain mergers or acquisitions for the commission to act.

We felt we could authorize them to suspend tariffs and set matters for hearing, and to basically maintain the status quo in most circumstances. But we also wanted to vest them with authority where we felt we could under the law, to hear certain matters that were uncontested.

PUF's Pat McMurray: Is the key word uncontested?

Commissioner Honorable: That's an important part of it because we recognize that the buck stops with us, the commissioners. We certainly didn't want to put our staff in the position of hearing matters that were contested or that we didn't believe we had the authority to delegate to them.

So, I believe that folks in the sector would find that we were very careful with the issuance of this order delegating authority, and it was very limited.

PUF's Pat McMurray: What comes up to your level and chairman LaFleur's level? Is it only the contested issues?

Commissioner Honorable: No, it's not only contested issues. Those matters are still being prepared and orders are still being drafted for our review.

We still receive the orders - we just can't issue them. So, we have quite a backlog to consider. We receive matters of all sorts regarding mergers and acquisitions, issues associated with the operations of markets, enforcement issues, and certain reliability matters. We also receive a number of contested matters.

I should also mention that so much of the work that our administrative law judges carry out under the direction of our Chief Administrative Law Judge Carmen Cintron is still continuing.

They are able to have hearings and complete a full record, issue orders and the like. We have a number of ways in which our work here is still continuing.

Our enforcement bureau is still very active and working diligently on ensuring that markets are free from manipulation. Our work in the Office of Electric Reliability is continuing.

Our work with regard to oversight of energy infrastructure security is also continuing. 

I could go on and on. But there are a number of issues that we can't hear, and the commissioners can't decide until we get a quorum.

I think the one that gets the most attention in the public domain is our work regarding special projects. We hear applications for projects such as hydropower facilities, interstate gas pipelines, and liquified natural gas terminals, but we cannot issue those orders until we get a quorum.

PUF's Pat McMurray: Do you hold open meetings?

Commissioner Honorable: No, we do not. In order to conduct deliberations regarding official commission business, a quorum is required and since we don't have one we're not able to have open meetings.

I'm really proud of our staff. So much of this work in the interim has fallen on their laps, so to speak. We've had a hydropower workshop in the last few weeks. Our staff has prepared an agenda for a two-day technical conference, focusing on the operation of wholesale energy and capacity markets and the intersection with the development of state energy policy.

I can assure you that it will be power packed. I want to compliment our team which put together an incredible agenda. We were able to offer input, but it will be led by our senior staff.

As you know, there are a number of very challenging issues associated with this growing tension, with the operation of markets and the work that states will continue to undertake in shaping their own respective energy futures. So I'm looking forward to the meeting. 

[NOTE: This technical conference was held on May 2 and 3, 2017.]

PUF's Pat McMurray: FERC is one of the best places to work in the federal government, according to a poll I saw recently.

Commissioner Honorable: We have an incredible team of almost fifteen hundred employees here at FERC. They are our colleagues. And we are very proud of having won awards consistently for several years in a row now.

We have been ranked in the top five for the best places to work. I believe we're number four for mid-size federal agencies, and we are again in the top five for the best places to work for millennials.

That's really important in this work because it's very technical. So you need people who have the ability to stick with a project over a period of time, because these issues are very challenging.

But I have to speak for a moment about the strong collegiality of the commissioners and their team members who work here. It's very important to me, and I know that it is for my colleagues, that we work well together.

We don't always agree, but it's important that we remain agreeable even when we aren't all on the same page. We work very hard, and I want to compliment Chairman LaFleur and also my former colleagues, who really demonstrated that it's so important that we work well together.

The simple fact is so much of our work has nothing to do with politics. Yes, we arrive here through what some may call political means. We are appointed by a president who is of a particular party and confirmed by the Senate.

But most of our work we can do without referencing a political affiliation or an ideological perspective. We can work on infrastructure investment that has neither a Democratic or Republican slant, nor independent for that matter. I think we can all gather around that and focus on what's important to ensure that we have the necessary infrastructure.

We can also make sure that fuel shows up when it's needed and that energy is moving the way that it needs to when it's needed.Our work regarding reliability and resilience of the grid, certainly knows no political affiliation. We all want the grid to be strong and secure. We are all focused on affordability.

The difficult thing is the fact that we are all leaders and we do tend to come here with some experience in the sector. So, we may have a certain idea or two about how that should be done. Or how that end goal could be accomplished.

That's where the hard part comes in, so it's important that we protect this precious and valuable asset that we have in our ability to work together.

PUF's Pat McMurray: Are there some big decisions or big issues that stand out as landmarks for you?

Commissioner Honorable: There are probably several. One is our work with regard to transmission as it's evolving. It's very significant as it relates to infrastructure development. I'm really proud of that work.

Our work with regard to market oversight is significant. We've been working on a price formation effort that has really driven our approach to looking at operator action, for instance, and ensuring that markets are not only operating as intended, but that we are providing market participants with certainty and transparency and building confidence in markets.

The [May 2 and 3] tech conference is yet another part of that ongoing work that we're undertaking with regard to market oversight and operation. I'm also really proud of our work with regard to making room for renewables and advancing technologies.

Over the course of my tenure here, we've been very focused on ensuring that, in the transmission planning and cost allocation process, we are trying to improve the timeliness of how projects are moving through the queue. And, focusing on why we're having a lengthier time building the necessary transmission.

But I'm proud also of our work in making room for storage and especially proud of our Notice of Proposed Rulemaking as well as the eventual issuance of the energy storage policy statement.

That really focused on directing the removal of barriers for storage to participate in markets.

PUF's Pat McMurray: On a lighter note, are there humorous moments that you look back on?

Commissioner Honorable: I think my colleagues here on Team Honorable would share with you that we love to find humor in our day-to-day work because at times it can be technical.

I think humor is important not only in laughing at a situation, but also in laughing at yourself from time to time. And I've enjoyed getting to know my colleagues better - my commissioner colleagues, and the men and women who work here at FERC.

Norman Bay, who sadly has left the agency, when we would visit we just would laugh about things so loudly at times. I learned a lot about him and the sense of humor that he has.

Tony Clark and I sat next to each other in the hearing room and the commission meeting room. He's a dear friend. I recall that when he left, I gave him a mug with a picture of Hillary Clinton. And it said that we were stronger together. I talked about the fact that no matter who we voted for, we're stronger together and then gave him the mug.

But he took it and he placed it behind his name placard so no one could see it. And I told him, "No you've got to display that mug."

PUF's Pat McMurray: When you leave do you have a dream, a place you'd like to go? Is there something you'd really like to do that you haven't been able to do yet in your career?

Commissioner Honorable: No. This has been a dream job. I love coming to work every day. I love this job. I've been blessed to be able to bring my best efforts to a place and work with men and women from all walks of life to produce an excellent product.

The work we do here at FERC is so important and it's been an honor to do it here. And I'm focused on today. I'm focused on this week. Throughout the week I'm looking at, what are my objectives and what do I want to accomplish.

Focusing on ensuring that even though we lack a quorum, much of our work will and must continue, and I'm doing what I can to support that work. I still enjoy strong support from both the Democratic and Republican Senate leadership, along with the environmental community and people in the electric and gas sector.

I'm a bit of a unicorn right now to have the decisions that I've issued here and worked so well with so many people in this sector. It really is a dream to carry out this work.

Rudy Wynter oversees electric transmission and generation, liquefied natural gas storage, and gas transmission pipeline investments at National Grid. With over 25 years of experience in the utility sector, Wynter has held positions in customer operations, strategic planning, engineering, and operations.

PUF's Steve Mitnick:Rudy, what do you do in your job?

Rudy Wynter: At National Grid, we meet the energy needs of about 20 million people across the Northeast every day, 24/7. We power virtually every aspect of their lives at home, at work, and everywhere in between. It's an awesome responsibility and one we take very seriously.

I oversee the parts of our U.S. business that are regulated by the Federal Energy Regulatory Commission, including our electric transmission system and a fleet of generators that supply power to customers of the Long Island Power Authority.

I also oversee a group we call New Energy Solutions. It's focused on developing and launching innovative solutions and technologies on our energy networks to deliver value to our customers and communities.

It will help get us to a sustainable energy future.

It's a fascinating time to be in the energy industry. Everything is changing: how we make and move energy, even how we use energy. At the same time, customer needs are changing just as dramatically. Customers want more and more choice and control; many want decarbonized energy; some want to generate their own power; others want more data and information about their energy use. We need to understand what our customers will want down the road, what the future energy landscape will look like, and then build solutions to navigate that transition and help create that future.

Our customers will be our guiding light every step of the way.

PUF's Steve Mitnick: Some people say the utilities are off on the side watching these developments, and that those new companies are going to drive this transition. Where does National Grid stand?

Rudy Wynter: We're right at the heart of that transition and we need to lead it. We're developing new ways of working, revolutionizing our business model, embracing new technologies and promoting new partnerships. We are doing pilot projects that will help us understand what our customers want and what technologies are available or can be designed to meet their needs.

To provide value for the customer, we're finding that more and more often we need to partner with new technology and service players.

PUF's Steve Mitnick: What are your top initiatives?

Rudy Wynter: We've got some key priorities for our distribution and transmission networks, but our number-one guiding principle is that the customer comes first.

We firmly believe that if customers have the right information, the right tools, and the right incentives, they will make better energy decisions. That's one of the concepts we're testing in our pilots.

We also know we must innovate like never before across the whole grid. The generation mix is shifting to cleaner power sources and distributed forms of energy, so we must make sure that the grid evolves to keep pace with these changes.

We're managing the variability that's inherent in these new forms of energy so the grid can continue to deliver power safely and reliably. At the same time, we're evaluating how we can leverage these new distributed resources to provide other services, such as voltage support, to our grid.

In addition, we're talking to policymakers, regulators, and other stakeholders about potential changes to the current regulatory model, to keep pace with the sweeping changes afoot in the industry. It's important that there are new compensation models that support the investing, testing, and experimenting of these new technologies, as well as the evolving role of the traditional utility.

PUF's Steve Mitnick: If the regulatory model isn't made more optimal, what will the negative effects be?

Rudy Wynter: I think if we really want to achieve the scale of change we want on the grid, the regulatory model must be part of the equation. We really need a combination of technology, a more flexible and smart grid, an updated utility business model and a regulatory framework that accommodates these changes. None of these things alone is the silver bullet to create the energy future we think customers want.

PUF's Steve Mitnick: What are you doing out there to advance your goals?

Rudy Wynter: On the transmission side, we're using UAVs and robotics to enhance our existing inspection and maintenance capabilities. We have about 9,000 miles of transmission, some of which is in remote and rugged areas. These new tools will help us get better access to and data from lines that are challenging to reach by land or even by helicopter.

We're also adding sensors and monitors so we can create a more dynamic grid. It will be better equipped to handle new renewable and distributed generation by giving us real-time information.

That means we can make proactive decisions that will increase reliability. 

And we're beginning to deploy substation automation and online monitoring to help us do predictive analyses that are difficult to do quickly today. Those will give us better situational awareness and a holistic view to make better-informed decisions. This all translates to customer benefits in the form of enhanced reliability, resiliency and cost savings.

On the distribution side, we have our Smart Energy Solutions pilot in Worcester, Massachusetts, which includes about eleven thousand customers. The pilot customers received a smart meter and options to see and understand how they use energy.

They also were given the option to receive alerts for time-of-use rates in advance of "peak days," periods of extremely hot or cold weather when demand spikes. On peak days, we encourage customers to conserve energy. It's an opportunity for them to save money and use energy differently.

This pilot is about figuring out what it takes to get customers to change their behavior around how they use and manage energy.

PUF's Steve Mitnick: Do you have any information yet on how people will respond?

Rudy Wynter: The response to the pilot has been very positive. Customers could opt out of the program, and to date our retention rate is about ninety-eight percent. Our surveys also show that customer satisfaction is very positive. Perhaps best of all is that these customers saved about $1.8 million on their electric bills in the first two years of the program. We're currently rolling out a similar pilot in Clifton Park in upstate New York.

There's still much opportunity in this area, including the data services that are being provided by many start-up companies. They are working with the utilities to find out what it takes to really motivate consumers to use energy differently.

PUF's Steve Mitnick: I suppose you could get an app, but maybe it's too hard to do that at this point.

Rudy Wynter: It's an interesting thought and you raise an important point. We're used to just thinking about residential, commercial, and industrial users. Now we've got to think about segments and sub-segments of those customer groups that behave differently and want different solutions from their utility. Some customers just want their energy delivered at a fair price and want to leave everything else to us. In the pilots, however, we're seeing that there is a segment of customers that want to actively engage in managing their energy usage if it's simple for them.

PUF's Steve Mitnick: What's the reaction from regulators?

Rudy Wynter: They know our focus remains on delivering safe and reliable service; that's paramount.

They are reaching out to work with us to develop innovative ideas and approaches to optimize the safety, security, resiliency, and reliability of our energy networks. Especially how we can innovate to help customers save money.

We've been very successful in getting those in-market pilots funded because we develop them collaboratively with the regulator, including setting mutual expectations of what we want to learn over the life of the program.

PUF's Steve Mitnick: It sounds like you've become a tech company instead of a utility. Is that a good business to be in?

Rudy Wynter: It's a great business to be in and we believe technology will continue to play a major role for utilities going forward.

PUF's Steve Mitnick: Why is partnering so important?

Rudy Wynter: It goes back to the customer. Most customers want a one-stop shop for all their energy needs. In some cases, it will make sense for us to add new capabilities to our core business to meet customer needs; in others, it's more efficient and makes more sense to partner with a company that specializes in a particular technology so we can meet the needs of a subset of our customers.

The unregulated side of the company is also partnering with emerging technology and distributed energy companies. They can gain insights into how they work with customers and the technologies themselves. For example, National Grid's Business Development group has a joint venture with Sunrun, one of the largest residential solar companies in the United States.

The partnership includes a pilot in downstate New York to determine if co-marketing rooftop solar with the existing utility leads to greater uptake, and whether the cost to acquire customers comes down. We're also going to work with Sunrun to evaluate the feasibility of aggregating distributed resources to provide grid services.

PUF's Steve Mitnick: Is National Grid well suited for all this cutting-edge tech stuff? 

Rudy Wynter: Absolutely. We know better than most that the grid must be modernized to keep meeting the needs of our customers, and while we don't have all the answers, we do know we'll continue to work with regulators and the market to find innovative ways to deliver cost-effective solutions. We've embraced the fact that technology's going to play a big role in this undertaking.

We also realize that we're better when we work and focus together as a team at National Grid, so we're broadening the team working on these issues to bring in additional expertise.

We can secure the grid, help our customers manage the transition to the energy future, and balance the increasingly diverse generation mix.

At the end of the day we believe this transition is an economic growth engine that will continue creating jobs in this country. Investment will be required to replace aging infrastructure in the U.S., and to build new infrastructure as we see more and more new forms of generation being developed and sited.

There also will be new opportunities for new types of capital investments on the outskirts of the grid. We are looking to develop cost-effective, reliable means to bring the infrastructure to those markets. Think energy storage and other distributed resources. 

Who is better suited to meet those demands than a large energy company like National Grid? We have a vast transmission grid and a service area that includes urban and rural, remote and densely populated areas. We bring our expertise from the U.S. and the U.K. to solve those problems.

PUF's Steve Mitnick: It's a different job than it was fifteen to twenty years ago.

Rudy Wynter: Absolutely. It's different than it was ten or even five years ago. The pace of change we're seeing is unprecedented.

One thing that hasn't changed - and never will - is delivering safe, reliable service. What has changed and will continue to evolve is how we provide those services. Before, we'd just look at building new transmission or distribution infrastructure. Now, we might consider a solution that includes infrastructure in combination with battery storage, or a partnership with a distributed energy resource provider. 

We also must stay ahead of the change curve so we can continue to make smart capital investments on behalf of our customers. Over the next five years we expect to invest about fifteen billion in capital in our U.S. business, which means we must have a "no regrets" investment approach during all the ongoing industry changes. 

PUF's Steve Mitnick: Is it a fun job for you?

Rudy Wynter: It sure is! This is not a routine, paper-shuffling type of job.

For starters, all the change in the industry provides plenty of excitement. But there is so much more. If we want to be able to undertake pilot programs and invest in new technologies, we must ensure that we continue to spend capital wisely and that all of our projects are delivered on time and on budget. 

On top of that, we must look for ways to get better every day, including developing innovative internal business processes. And finally, we need to evaluate and incorporate new technologies that help us get more out of our existing networks. These are all new challenges and massive opportunities that make this job fun.

PUF's Steve Mitnick: Are you trying to build a different mindset with your staff?

Rudy Wynter: Absolutely! At one point, we were producing several pilots for our regulators. At first, we were having our engineers and other employees work on them part-time alongside their day jobs. Then we realized that was not the most optimal way of working. 

So, we carved out a team of about forty or fifty people to be part of the New Energy Solutions group to focus full time on these projects.

This group is helping us chart the future. They get a lot of support from across the enterprise, in part because people care about and believe in their projects, which include solar installations, microgrids, smart grids and residential smart energy technologies.

We've got about twenty megawatts of solar that we own up and running in Massachusetts, with an additional fifteen megawatts to be built, much of which will be accompanied by battery storage.

We've also got several battery storage projects in the planning stages in New England. In fact, we just issued an RFP for a ten-megawatt storage project. These are cool projects, and our employees want to be part of them.

PUF's Steve Mitnick: Where do you want to be three to five years from now?

Rudy Wynter: We need to spend the next two years really understanding what motivates customers to use energy differently and evaluating the full value of deploying technology on the grid.

That three-year mark is when I think we'll be ready to start to scale up what we've been piloting so it becomes business as usual. Just another tool in our toolkit of solutions to deliver the services and benefits our customers want and deserve.

Peter Terium has been Chief Executive Officer and Chairman of the Management Board at innogy SE since April 2016. Previously, he served as Chief Executive Officer at RWE AG. He also served as the Chairman of its Executive Board. Dr. Klaus Grellman is Managing Director, innogy Consulting. He served as Senior Manager for Strategic Planning at RWE AG. Previously, he was a Senior Manager at PricewaterhouseCoopers.

PUF's Steve Mitnick: Peter, many of us know that RWE is a major European utility that you ran as CEO for several years. Now you are CEO of the new RWE subsidiary, innogy SE. Did it really take you less than a year from the decision to found innogy to the IPO?

Peter Terium:To be honest, sometimes I need to pinch myself. Exactly three hundred and two days after the Supervisory Board's December 2015 decision to restructure the RWE Group, I rang the traditional bell on the floor of the Frankfurt Stock Exchange at the first trading day for innogy shares.

That was a great moment for all of our employees, for my colleagues on the Executive Board, and for me personally. Our IPO was the second-largest in the world last year, and the largest in Germany since 2000.

Imagine: a year ago, today's innogy did not exist. Now innogy is Germany's leading energy company, with revenue of around forty-eight billion dollars, more than forty thousand employees, and activities in sixteen countries across Europe.

And we have our innovation teams in hot spots all around the world - in Berlin, London, Tel Aviv and of course in Silicon Valley.

PUF's Steve Mitnick: Only few on this side of the Atlantic are aware of the transformation that gave birth to innogy. Can you walk us through the process that resulted in a new, multi-billion-dollar global utility?

Peter Terium: Globally, the energy industry is currently experiencing a wide-ranging transformation. Take Germany as an example: within just a couple of years, volatile renewable energy became the new normal, power grids needed to be extended and wholesale prices for power fell by more than half.

This is quite a disruption for a well-established industry! And of course, the change continues. In particular, we have identified three megatrends which are resetting the metrics for the energy system: decarbonization, decentralization and digitalization.

In this dynamic environment, energy companies can only succeed if they reinvent themselves completely. With innogy´s three business segments - Grid & Infrastructure, Retail and Renewables, we address the requirements of a modern, decarbonized, decentralized and digital energy world.

Innogy is not just going to sit back during the transformation of the energy system. We want to be the playmakers - the leaders. For this reason, we have set out a future-oriented approach for our organization - a blueprint for the energy company of the future. A blueprint for every traditional utility to use to transform.

PUF's Steve Mitnick: Klaus, what was your role in the transformation as an internal advisor to RWE/innogy?

Klaus Grellmann: When you observe that an entire industry is being disrupted, "wait and see" is not an option. Instead, we stepped up our game to actively shape this transformation.

We helped implement change tools and lean structures to make sure the company was ready for the biggest transition of its history. And of course, we also sent our best people to implement the actual IPO process.

We ensured operational readiness of all the entities, managed the clearing process and helped turn this huge endeavor into a great success. So we did our share to help innogy achieve an instant market capitalization of twenty billion dollars.

PUF's Steve Mitnick: How will innogy expand beyond the EU, and into North America?

Peter Terium: We are not in waiting mode in the U.S. - we are relatively advanced. And I am not only talking about solar and wind power, innovation or consulting activities.

eMobility is a very important business for us. We see clear indicators for exponential growth in that business of future mobility - in Europe and in the U.S. as well. We want to become the leading eMobility solution provider in the U.S. and in Europe.

Klaus Grellmann: Eventually, our activities here are a consequence of our belief in our brand. Yes, we want to increase sustainability. And therefore, whether it is eMobility or our consulting business, we want to have an impact and give the development of the U.S. utility sector an even more sustainable spin.

PUF's Steve Mitnick: innogy has gained a deep understanding of renewables and load management on its home turf in Europe. Do you see the utility bringing that expertise to the U.S. markets? 

Peter Terium: Germany is one of the first industrialized countries that decided to change its entire energy system, from fossil and nuclear energy to renewables. That is an enormous challenge, believe me. We have gained a great deal of experience during this transition period which we are in.

And we would like to share this knowledge and experience with partners in the U.S. Of course, we do not believe that it is possible to simply export the European way to the U.S. That would not necessarily fit with the peculiarities of the U.S. market. Instead, we share experiences and practical knowledge. We are always in it for a mutual exchange and learning.

Klaus Grellmann: This is part of innogy's strength. We can combine a comprehensive range of topics across the entire energy value chain to offer integrated consulting services and solutions to our clients.

We can elaborate on the mindsets, tools and solutions which enable us and our clients to master the challenges we encounter. At the same time, we learn from the best practices that are successful in Europe and the U.S.

PUF's Steve Mitnick: Klaus, given your experience of advising innogy, what is your biggest learning on a personal level?

Klaus Grellmann: You will be surprised, but in the end even in a commodity business like energy it is all about the customer! Alongside regulatory, market and technology changes, I have learned to closely watch customer behavior. I want to be able to get current customer preferences right and have a good forward view about future behavior.

And, of course our unique offering is in combining this experience together with our deep industry expertise. It's a combination few other utility strategy consultants offer. We have done it before, and we have done it successfully. A metric of twenty billion dollars in the utility sector is one that few people could argue with.

PUF's Steve Mitnick: From your point of view, what might be the most important challenges for innogy in the next couple of years?

Peter Terium: Of course I am very happy with last year. We founded our company and we introduced our new innogy brand very successfully. But it is time now to close that chapter.

Complacency and competitiveness do not go together. And competitiveness will count more than ever in the years to come. The goal is for innogy to build on its good starting position in the competition between energy providers and other new players in our market.

A key driving force for us as a company is asking ourselves: what do I need to start doing now to be prepared for future energy trends? We constantly challenge our business model and embrace both transformation and innovation to stay on top of the game in a competitive and profitable way. We promised a lot. Now we must deliver.