>> I'D LIKE TO WELCOME EVERYONE TO THIS TWODAY TECHNICAL CONFERENCE, WE'RE GRATIFIED BY THE LEVEL OF INTEREST THAT ALL OF YOU HAVE SHOWN. TODAY'S AN OPPORTUNITY FOR US TO HEAR FROM PANELISTS THAT HAVE BEEN PRESELECTED, ACTIONS THAT PURPOSELY INTERFERE OR ATTEMPT TO INTERFERE WITH THE COMMENCEMENT OR CONDUCTING OF THE CONFERENCE OR INHIBIT THE AUDIENCE'S ABILITY TO OBSERVE OR LISTEN INCLUDING ATTEMPT BUYS AUDIENCE MEMBERS TO ADDRESS THE COMMISSION ARE NOT PERMITTED. ANY PERSON ENGAGING WILL BE ASKED TO LEAVE THE BUILDING. ANYONE WHO REFUSES TO LEAVE WILL BE ESCORTED FROM THE BUILDING. ALL RIGHT. [LAUGHTER] SO TO START OUT, I'LL GO THROUGH A COUPLE LOGISTICAL HOUSEKEEPING ITEMS. PLEASE, NO FOOD OR DRINKS OTHER THAN BOTTLED WATER IN THE ROOM. BATHROOMS AND WATER FOUNTAINS BEHIND THE ELEVATORS IN EACH END OF THE BUILDING. PLEASE TURN OFF MOBILE DEVICES OR PUT THEM IN AIRPLANE MODE WHILE IN THE COMMISSION MEETING ROOM TO AVOID INTERFERENCE WITH THE AUDIO/VISUAL AND SOUND EQUIPMENT. IF NEEDED, WE HAVE ARRANGED FOR SPILLOVER SPACE IN HEARINGS ROOM 1, 2 AND 4 AS WELL AS ROOM 3M, 2AB ON THE THIRD FLOOR. THE HEARING ROOMS ARE PAST THE ELEVATORS TO THE RIGHT AS YOU EXIT THIS ROOM. I IMAGINE YOU DON'T NEED TO HEAR THAT. BAGS PUT IN HEARING ROOM 1 AND 2. WE WILL BREAK FOR LUNCH ON THE FIRST DAY TODAY, AT APPROXIMATELY 12:20 UNTIL 1:30, SECOND DAY 12:00 P.M. TO 1:00 P.M. FOR PANELISTS IF YOU'D LIKE TO BE RECOGNIZED TO SPEAK PLEASE PUT UP YOUR TENT CARD. BE SURE TO TURN ON YOUR MICROPHONE AND SPEAK DIRECTLY INTO IT SO THE AUDIENCE AND THOSE LISTENING TO THE WEBCAST CAN HEAR YOU. THIS TECHNICAL CONFERENCE IS BEING TRANSCRIBED SO PLEASE SAY YOUR NAME WHEN YOU START TO SPEAK. WHEN YOU'RE NOT SPEAKING PLEASE TURN YOUR MICROPHONE OFF TO MINIMIZE BACKGROUND NOISE. PANEL DISCUSSIONS WILL NOT INCLUDE OPENING REMARKS BUT WILL CONSIST OF A DISCUSSION BASED ON QUESTIONS POSED BY COMMISSION STAFF IN THE NOTICE. AND FINALLY, DEPENDING ON WHICH DIRECTION THE CONVERSATION PROGRESSES, WE WILL NOT NECESSARILY COVER EVERY SINGLE QUESTION IN THE NOTICE. HOWEVER, WE HAVE MEMBERS OF STAFF WHO WILL HELP US MONITOR TIME TO MAKE SURE WE CAN COVER AS MUCH AS POSSIBLE IN EACH ONE OF THE PANEL SESSIONS. WITH THAT OUT OF THE WAY I'LL TURN IT OVER TO ACTING CHAIRMAN LAFLEUR.

>> GOOD MORNING AND WELCOME. I VERY MUCH APPRECIATE FOLKS TRAVELING HERE EARLY ON A MONDAYS MORNING TO BE PART OF THIS CONFERENCE. AS ARNIE SAID, WE APPRECIATE THE VAST INTEREST IN THE CONFERENCE. I HOPE IT'S NOT JUST BECAUSE THE MOVIE THEATER HAS BEEN DARK FOR A WHILE BUT YOU ACTUALLY WANT TO SEE THE MOVIE YOU CAME TO SEE. THANK YOU FOR BEARING WITH US AS WE ATTEMPT TO MAKE OUR FACILITIES ACCOMMODATE ALL OF YOU, AND I WANT TO THANK STAFF FOR THE TREMENDOUS AMOUNT OF WORK, BOTH SUBSTANTIVE AND LOGISTICAL THEY HAVE DONE TO GET US TO 9:00 A.M. MAY 1. SO THANK YOU. I BELIEVE THE ISSUE THAT WE'RE GOING TO BE DISCUSSING TODAY AND TOMORROW, THE INTERPLAY BETWEEN OUR COMPETITIVE WHOLESALE MARKETS AND STATE POLICY CHOICES ON THE SELECTION OF RESOURCES, IS THE MOST CRITICAL ISSUE WE'RE CONFRONTING RIGHT NOW. AND THE INTEREST IN THIS CONFERENCE SUGGESTS MANY PEOPLE AGREE. IT'S NO SECRET THAT I'M A STRONG SUPPORTER OF THE WHOLESALE COMPETITIVE MARKETS, WHICH I BELIEVE HAVE DONE AN EXCELLENT JOB OF MEETING OBJECTIVES FOR WHICH THEY ARE DESIGNED. PROCURING AND DISPATCHING RESOURCES TO KEEP THE LIGHTS ON, THE MARKETS PARTICULARLY CENTRALIZED CAPACITY MARKETS IN THREE REGIONS WE'RE TALKING ABOUT TODAY AND TOMORROW, ARE DESIGNED TO SIGNAL NEW ENTRY AND EXIT TO TRANSPARENT PRICE SIGNAL RATHER THAN THROUGH INTEGRATED RESOURCE PLANNING USED IN THE VERTICALLY INTEGRATED MODEL. AS WE ALL KNOW, IN RECENT YEARS, RECENT MONTHS AND RECENT WEEKS, STATES THAT RESTRUCTURE THEIR RETAIL ELECTRICITY SERVICE HAVE TAKEN STEPS TO ATTRACT AND RETAIN RESOURCES OUTSIDE THE CONSTRUCT OF THE COMPETITIVE MARKET. THESE ACTIONS ARE DRIVEN BY VARIOUS STATE POLICIES AND SEEM TO INDICATE DISSATISFACTION CHOICES. I'M CONCERNED THAT OUTOFMARKET ACTIONS CAN UNDERCUT OPERATION OF THE MARKET FOR NONSUBSIDIZED RESOURCE AND PRICE SIGNALS NEEDED FOR ENTRY AND EXIT WHEN NEEDED. ON THE OTHER HAND, HAVING BEEN A VETERAN OF THE PROCESSES THAT LED TO THESE MARKETS, I'M VERY WELL AWARE THAT THE WHOLESALE MARKETS IN THE EASTERN STATES ARE PRODUCT OF STATE RESTRUCTURE AND CHOICE CAN ONLY EXIST AND CONTINUE THROUGH THE BUYIN OF THE STATE. THEREFORE, THERE'S A REAL PASSION HERE. THERE'S THREE BASIC WAYS THIS COULD GO. A DESIGN MARKET SOLUTION, A LITIGATED OUTCOME OR PLANNED CHANGE IN THE REGULATORY CONSTRUCT OF HOW WE HANDLE RESOURCE ADEQUACY. FOURTH OUTCOME, UNPLANNED CHANGE IN REGULATORY CONSTRUCT OR UNPLANNED PIECEMEAL REGULATION IS ONE I THINK WE SHOULD AVOID BECAUSE I THINK IT WOULD BE A BAD OUTCOME IN TERMS OF COST, RELIABILITY AND REGULATORY CERTAINTY. BY THE WAY, I READ ALL THE TESTIMONY AND SEVERAL PEOPLE MADE THE POINT WHICH WAS CORRECT THAT THESE THREE DOORS ARE NOT MUTUALLY EXCLUSIVE. THIS COMMISSION WILL HAVE TO DECIDE LITIGATED COMPLAINTS PENDING BEFORE US AS REGIONS MAY BE WORKING ON MARKET SOLUTIONS TO FILE WITH US. DESIGN SOLUTIONS MAY THEMSELVES SUGGEST CHANGES IN THE REGULATORY COMPACT, AND DIFFERENT REGIONS ALMOST SURELY WILL TAKE DIFFERENT PATHS AND DIFFERENT TIMING. BUT I DO THINK THREE DIFFERENT PATHS, REDESIGN OF THE MARKET, LITIGATION OR CHANGE IN HOW WE DO RESOURCE ADVOCACY, LEADS TO VERY DIFFERENT PLACES AND PRESENT DIFFERENT TRADEOFFS AND ISSUES THAT WE HAVE TO CONFRONT. MY GOAL FOR THE NEXT TWO DAYS IS TO REALLY EXPLORE WHERE THE DIFFERENT OUTCOMES LEAD SO THAT WE CAN ALL MAKE AN INFORMED AND DELIBERATE DECISION ABOUT WHAT'S NEXT. WHILE WE CAN'T DECIDE ANYTHING IMMEDIATELY BECAUSE WE LACK A QUORUM, WE MUST SHAPE OPTIONS AND RECOMMENDATIONS FOR FERC 2.0 BASED ON THE RECORDS WE DEVELOP TODAY AND TOMORROW. AS I SAID, I READ ALL THE PREFILED TESTIMONY AND TOOK NOTES, INCLUDING FROM THE PANELISTS WHO AREN'T SPEAKING, AND I KNOW THAT COLETTE AND THE TEAM AND THE SENIOR STAFF DID AS WELL. SO THERE'S NO NEED FOR ANYONE TO REPEAT THEIR TESTIMONY OR RECITE THE POSITIONS THAT YOU'VE TAKEN FOR SOME TIME. OUR GOAL IS TO HAVE A FACILITATED DIALOGUE THAT PUSHES MORE DEEPLY ON THE ISSUES. A FEW OF THE QUESTIONS THAT I WOULD LIKE ANSWERED FOR THOSE OF YOU WHO SAID, AND THERE WERE MANY, THAT STATE DECISIONS TO PROCURE NEW RESOURCES OUT OF THE MARKETS SUBSTANTIAL RESOURCES ARE NOT A PROBLEM AND THE MARKETS SHOULD STEP ASIDE AND LET THE CHIPS FALL, MY QUESTION IS, DO YOU EXPECT THE MARKETS WILL HAVE TO ATTRACT NEW UNSUBSIDIZED RESOURCES IN THE FUTURE MACED ON MARKET PRICE SIGNAL OR DO YOU SEE ALL RESOURCES FROM NOW ON BEING CHOSEN OUT OF THE MARKETS BY THE STATES BEYOND THE ONE RESOURCES WE ALREADY HAVE ON THE MARKET? AND DOES THAT INCLUDE RESOURCES TO REPLACE RESOURCES THAT ARE IN THE MARKETS NOW THAT MIGHT NOT BE ABLE TO SURVIVE A HYBRID STRUCTURE? FOR THOSE OF YOU, THERE WERE ALSO MANY, WHO WISH FOR FERC TO STEP UP AND CORRECT THE STATE SUBSIDIES, DO YOU HAVE A PLAN FOR WHAT HAPPENS AFTER THAT? ARE YOU READY TO NEGOTIATE A NEW MARKET SOLUTION OR DO YOU EXPECT THE STATES TO NOT PROCURE RESOURCES OR PAY SUBSIDIES REQUIRED BY LEGISLATION? AND FOR THE STATE REPRESENTATIVES, BEGINNING WITH MY HOMIES HERE, I KNOW YOU HAVE THE MOST DIFFICULT JOB OF ALL, IT'S HARD FOR YOU TO STATE YOUR POSITIONS BECAUSE OF YOUR POSITIONS, BUT YOUR VIEWS ARE THE MOST IMPORTANT WE'RE GOING TO HEAR WHICH IS WHY YOU HAVE THE FLOOR TO YOURSELVES IN EACH OF TODAY'S PANELS. DO YOU ANTICIPATE RELYING ON THE CAPACITY MARKETS TO ATTRACT INVESTMENT IN THE FUTURE? OR DO YOU SEE ALL FUTURE RESOURCES BEING CHOSEN BY THE STATES TO MEET STATE GOALS? WE CAN BEST DESIGN A SOLUTION AND MODIFY THE EXISTING RESOURCE ADEQUACY CONSTRUCT IF WE HAVE SOME SENSE OF WHERE YOU THINK YOU'RE HEADED, NOT JUST IN THE SHORT RUN BUT GOING FORWARD. AS I WAS READING ALL THE TESTIMONY OVER THE WEEKEND, ONE PIECE OF TESTIMONY REALLY HIT ME IN MY GUT. AND THAT WAS A LONG QUOTE BY SUE TIERNEY FROM TESTIMONY SHE SUBMITTED IN OUR SEPTEMBER 2013 CAPACITY MARKET TECHNICAL CONFERENCE THAT COULD JUST AS WELL HAVE BEEN WRITTEN LAST WEEK. AND IT'S BEEN ALMOST FOUR YEARS SINCE THAT CONFERENCE. THAT REALLY MADE ME REALIZE THAT WE HAVE NOT TO BE DRAMATIC, I THINK WE HAVE A MOMENT IN TIME HERE AND NOW TO CONFRONT THIS ISSUE AND PUT OURSELVES ON A PATH TO RESOLUTION. I DON'T WANT OUR SUCCESSORS TO SET IN THIS ROOM IN 2021 HAVING THE EXACT SAME CONVERSATION OR PICKING UP THE PIECES OF A MESS THAT WE FAILED TO AVERT. AND SPEAKING OF THINGS THAT HIT ME IN MY GUT, I'M VERY HAPPY TO HAVE MY WONDERFUL COLLEAGUE SITTING BESIDE ME, AND VERY SAD WE WON'T HAVE AS MANY FUTURE OPPORTUNITIES TOGETHER AS I HAVE WISHED. COLETTE?

>> THANK YOU, CHERYL. GOOD MORNING, EVERYONE CHERYL AND I HELD HANDS AND SAID WE WOULD NOT HAVE ANY SAPPY MOMENTS THIS MORNING. [LAUGHTER] LET ME ADDRESS THE ELEPHANT IN THE ROOM. THE SURE THING ABOUT COMING TO THIS WONDERFUL WORK IS THAT ONE DAY YOU MUST LEAVE IT. AND IT'S BEEN SHORT IN MANY WAYS. BUT IN SOME WAYS I FEEL LIKE WE'VE DONE SO MUCH TOGETHER. DON'T WORRY, IT ISN'T GOODBYE. WHILE ALAS PARTING IS SUCH SWEET SORROW, THIS ISN'T GOOD BYE. I'LL SEE YOU AROUND. MY DAUGHTER LOVES THIS AREA SO I'M NOT GOING ANYWHERE ANYTIME SOON. WHERE I'M GOING AND WHEN I'M GOING REMAINS TO BE SEEN, SO I WON'T BE TAKING ANY QUESTIONS ABOUT THAT TODAY. IN FACT, I HOPE ALL OF THE QUESTIONS AND ATTENTION TODAY WILL BE FOCUSED ON THE REASON WHY WE HAVE SO MANY OF YOU IN THIS ROOM AND SO MANY OTHERS, MAYBE IT'S A RECORD AT LEAST DURING ANY TENURE HERE, IN WHAT FOUR OVERFLOW ROOMS? IT'S PHENOMENAL. THIS IS THE BEST PARTY THAT WE COULD HAVE TODAY. FOCUSED ON THE INTERSECTION OF WHOLESALE MARKETS AND STATE POLICY, IMPORTANT WORK WE MUST BE FOCUSED ON TODAY. BUT KNOW THAT I LOVE THIS WORK AND I STILL DO, EACH AND EVERY DAY, AND I HOPE THAT YOU'VE SEEN THAT THROUGH OUR MEETINGS AND ENGAGEMENTS, AND I LOOK FORWARD TO OUR CONTINUED WORK TOGETHER. SO LET'S GET TO WORK. I WANT TO THANK ALL OF YOU FOR BEING HERE. CLEARLY THERE'S TREMENDOUS INTEREST IN THIS TOPIC, AND I TOO WANT TO BEGIN BY THANKING OUR STAFF, FIRST SENIOR STAFF WHO YOU SEE LEADING THE WAY, AND ARNIE, WHO ABLY COMMANDED THE PRESENCE IN THIS ROOM MAYBE BETTER THAN WE HAVE. AND ALSO TO JAMIE AND DAVID AND SO MANY OTHERS. I WANT TO ESPECIALLY THANK THE FERC STAFF. SOME OF THEM YOU SEE SITTING HERE. DOZENS OF THE OTHERS WITH WHOM I'VE MET WITH MY TEAM OVER THE LAST COUPLE OF MONTHS THAT WE'VE DISCUSSED THESE ISSUES. I WANT TO THANK THEM FOR ALL OF THEIR WORK. ESPECIALLY IN THIS UNPRECEDENTED TIME WITHOUT A QUORUM. AND CHERYL MENTIONED MAYBE SOME ARE SUGGESTING WE MAN UP AND MAYBE WE ARE WOMANING UP IN THIS MOMENT. WE'RE WORKING HARD. WE HEARD YOU. SOME OF YOU ARE WONDERING. I QUESTION A QUESTION INTERNALLY THIS MORNING, WHY NOW, WHY ARE WE HAVING A TECH CONFERENCE NOW WITHOUT A QUORUM. WE'VE MET OVER THE COURSE OF YEARS ABOUT CHALLENGING THINGS AS THEY ARE GROWING, ESPECIALLY AFTEREL TRILOGY OF THE U.S. SUPREME COURT CASE, A NUMBER OF OUR DECISIONS HERE AT FERC, A NUMBER OF ACTIONS TAKING PLACE IN REGIONS. I REALLY DON'T THINK WE COULD HAVE A BETTER TIME TO TEE UP THIS DISCUSSION AND I WANT TO THANK ALL OF THE STAKEHOLDERS WHO HAVE INVESTED TIME AND EFFORT AWAY FROM THE COMMISSION BUT ALSO THOSE OF YOU WHO HAVE FOR TIME AND TIME AGAIN COME IN TO APPRISE IS OF YOUR CONCERNS. THE QUESTIONS AT THE REGIONAL LEVEL ARE VITAL IDEA INCUBATORS AND THE BEAUTIFUL THING ABOUT THE WAYS IN WHICH WE WORK REGIONALLY IS THAT WE TRULY APPRECIATE THE DIVERSITY OF EXPERIENCE, OF EXPERTISE, AND ABOUT YOUR CREATIVITY AND INNOVATION IN HELPING US FIND THE BEST PATHWAY FORWARD. TODAY'S CONFERENCE IS NOT MEANT TO SUPPLANT OR REPLACE REGIONAL CONVERSATIONS BUT RATHER DESIGNED TO SUPPORT THEM BY BRINGING THE COMMISSION'S PRESENCE INTO A BROADER DISCUSSION. PARDON MY COMMENTS A LITTLE LONGER THAN I WOULD ORDINARILY GIVE. CHERYL AND I HAVEN'T HAD A TIME TO DO THIS IN A FEW MONTHS NOW. SO WE HAVE A LITTLE PENTUP  A FEW THOUGHTS WE'D LIKE TO SHARE. TODAY MY ROLE IS ONE TO ENJOY REALLY THE LUXURY OF SITTING AT WHAT WE CALL THE KIDDIE TABLE, TO TAKE IN WHAT WE'RE HEARING TODAY, I'M EXCITED TO BE ABLE TO DO THAT AND NOT WORRY ABOUT THE CLOCK AND WHO IS MOVING AROUND BUT TO REALLY LISTEN TO EACH OF YOU. THANK YOU FOR SAYING YES AND BEING WILLING TO COME AND SHARE YOUR EXPERTISE WITH US AS WE TAKE ON THESE CHALLENGING ISSUES. I WANT TO TOUCH ON WHAT I'M LOOKING TO GET OUT OF THIS EVER ENSURE. I  CONFERENCE. I HOPE OVER THE NEXT TWO DAYS WE'LL HEAR FROM YOU, NOT THE OTHER WAY AROUND. YOU'VE DONE THAT ENOUGH BY NOW. I'M LOOKING FORWARD TO HEARING ABOUT IN GREATER DETAIL YOUR STAKEHOLDER DISCUSSIONS, WHAT YOU PERCEIVE THE CHALLENGES TO BE, AS WELL AS ANY THOUGHTS ABOUT POTENTIAL SOLUTIONS, EVEN IF UNTESTED. EVEN IN THEIR INFANCY. AT THE CONCLUSION OF THIS EFFORT I'M HOPEFUL THAT WE WILL BE ABLE TO SEE AT LEAST A GLIMMER OF LIGHT AT THE END OF THE TABLE. I'VE HEARD CHERYL SAY WE WON'T HAVE SMOKE COMING FROM THE ROOM. WE CAN DUST OFF OUR HANDS AND SAY WE'RE DONE. LET'S BE REALLY STICK. BUT WHAT I'M HOPEFUL ABOUT IS THAT WE WILL HEAR IDEAS FROM YOU ABOUT POTENTIAL PATHWAYS GOING FORWARD, OR AT LEAST IDENTIFY THE FOUNDATIONS UPON WHICH WE CAN BUILD UPON COLLABORATIVELY. I TOO AM NOT EXPECTING TO HAVE FULLY VETTED SOLUTIONS, BUT RATHER I BELIEVE OUR COLLECTIVE PURPOSE HERE OVER THE NEXT COUPLE OF DAYS SHOULD BE TO DEVELOP A SOUND RECORD UPON WHICH THE COMMISSION CAN ACT AT SOME FUTURE DATE WHEN WE GET OUR NEW COLLEAGUES HERE TO PROVIDE BETTER GUIDANCE TO STAKEHOLDERS, NOT ONLY IN THE THREE REGIONS BUT MORE BROADLY ACROSS OUR NATIONAL FOOTPRINT. SO, THIS CONFERENCE AND SUBSEQUENT COMMENTS WILL HELP BUILD A RECORD THAT WE CAN CONSIDER WHEN WE DEVELOP, WHEN WE ATTAIN A QUORUM, AND AS THESE ISSUES DEVELOP BEFORE US PROPERLY HERE AT THE COMMISSION. IMPORTANTLY, AND I MUST SAY THIS IN DEFERENCE TO MY STATE COLLEAGUES, AS A FORMER STATE REGULATOR I CERTAINTY AND ESPECIALLY WANT TO HEAR HOW WE CAN BETTER COOPERATE AND COLLABORATE. THERE CAN BE A TENSION THAT ARISES AMONGST OUR FEDERAL AND STATE ROLES, BUT I BELIEVE IF WE ARE DISCIPLINED AND WE HAVE THE ABILITY TO HARNESS THIS OPPORTUNITY, WE CAN USE THAT TENSION TO WORK THROUGH AND ARRIVE AT SOLUTIONS THAT WORK WELL FOR ALL OF US, AND MY HOPE IS THAT WE CAN COLLABORATIVELY WORK THROUGH THESE CHALLENGING TIMES AND PROVIDE OPPORTUNITIES THAT ENSURE THAT MARKETS OPERATE AS INTENDED, SUPPORT STATE POLICY OBJECTIVES, AND BEST SERVE CONSUMERS I TOO RECOGNIZE THERE MAY NOT BE A ONESIZEFITSALL APPROACH AND I PARTICULARLY APPRECIATE  YES, I TOO HAVE READ THE PREFILED COMMENTS. THANK YOU FOR DOING THAT IN ADVANCE. THANK YOU FOR SHARING EVEN IF YOU'RE TESTING THE WATERS SOME OF THE WAYS IN WHICH WAYS YOU'RE WORKING TO ACCOMMODATE STATE ACTIONS, PARTICULARLY WITH ISO NEW ENGLAND, I WANT TO HEAR HOW YOU'VE WALKED THIS PATH OVER QUITE A BIT OF TIME TO ARRIVE AT WHAT YOU ARE. AND ALSO FROM THE NEW YORK ISO AND MAYBE SOME OF THE THINGS YOU ARE WORKING ON AND CREATIVE WAYS TO FIND SOLUTIONS GOING FORWARD. FERC HAS ALSO CONSISTENTLY EMBRACED SOLUTIONS THAT EMBRACE THE UNIQUENESS OF EACH MARKET, AND SO ALTHOUGH WE'RE BRINGING THREE REGIONS TOGETHER TODAY, MY EXPECTATION IS THAT A SOLUTION FOR ISO NEW ENGLAND MAY IN FACT DIFFER FOR NEW YORK ISO OR PJM. THE PREFILED COMMENTS BEAUTIFULLY BEAR OUT YOUR COURAGEOUSNESS AND INNOVATION GOING FORWARD. I'M ALSO LOOKING FOR IDEAS THAT CAN SUPPORT MARKETS COMPREHENSIVELY, OVER A BROADER TIME HORIZON, NOT JUST STOPGAPS, BUT EFFORTS TO PLUG HOLES. MARKET PARTICIPANTS INDEED DEPEND UPON STABLE MARKET RULES WHEN MAKING INVESTMENT DECISIONS, AND I WORRY THAT ANY SOLUTION THAT IS SHORTLIVED WILL ONLY SERVE TO INTRODUCE MORE UNCERTAINTY, THAT WILL UNNECESSARILY AND INEVITABLY DAMPEN PARTICIPATION. AND I BELIEVE WE ALL BY VIRTUE OF OUR MERE PRESENCE TODAY TRULY DO EMBRACE ROBUST MARKETS AND I'M HOPEFUL THAT WE CAN REALLY RALLY AROUND THAT CONCEPT AT ITS CORE. AS I MENTIONED IN THE STATEMENT I RELEASED CONTEMPORANEOUS WITH ISSUANCE OF NOTICE ANNOUNCING THIS TECH CONFERENCE, ALL OPTIONS IN MY MIND ARE ON THE TABLE. THIS IS IN FACT A NEW DAY. WE AREN'T GOING BACK TO A TIME WHEN STATES WEREN'T SO ACTIVE, PARTICULARLY IN THE REGION WE'RE HERE TODAY TO FOCUS UPON. AND I THINK THAT WE CAN LEARN FROM THESE CHALLENGES AND THESE TIMES GOING FORWARD, IN A WAY THAT WORKS BEST FOR ALL MARKET PARTICIPANTS. SO IN CLOSING, I HAVE A PAGE LEFT. WHAT ARE SOME OF THE ISSUES ON MY MIND? FIRST, STATES HAVE A RESPONSIBILITY TO ENACT POLICIES BETTERING CITIZENS' INTERESTS. I BELIEVE THE COMMISSION SHOULD TAKE A COOPERATIVE APPROACH AND ONLY TAKE ACTION WHEN NECESSARY TO ENSURE JUST AND REASONABLE RATES. MANY OF THE COMMENTS FOCUSED ON HOW FAR WHOLESALE MARKETS CAN BEND WITHOUT BREAKING TO INCORPORATE STATE POLICY GOALS, AND I THINK THAT THIS NOTION IS CAPTURED IN THE ACHIEVE VERSUS ACCOMMODATE IMAPP PROCESS. AGAIN, I WANT TO HEAR MORE ABOUT THAT. I RECOGNIZE THAT FINDING THE RIGHT BALANCE IS DIFFICULT AND ONE THAT MUST INCLUDE INVESTMENT, POLICY AND CONSUMER PERSPECTIVE. I WANT TO TOUCH ON ISSUES THAT CROSS THREE REGIONS. MOPER HAS BEEN A CHALLENGE, AND I APPRECIATE PERSPECTIVES SHARED IN THE PRETECH CONFERENCE COMMENTS ABOUT PATHWAY GOING FORWARD, I TOOK TO HEART THE COMMENTS FROM DR. PATTON AND OTHERS THAT SPEAK TO YOUR THOUGHTS ABOUT HOW MOPAR SHOULD BE EMPLOYED GOING FORWARD. IT'S A BLUNT TOOL AND APPLICATION VARIES CONSIDERABLY ACROSS THE THREE MARKETS BEING DISCUSSED AT THIS CONFERENCE AND I KNOW OVER THE COURSE OF MY TENURE A NUMBER OF YOU HAVE COME IN EITHER SUPPORTING THE WAYS IN WHICH WE'VE USED IT AND EMPLOYED IT AND OTHERS OF YOU THAT SAID IT ABSOLUTELY HAS TO CHANGE. I HOPE TO HEAR MORE OF THAT DISCUSSION TODAY. IN MY OPINION IT'S OFTEN THE POINT OF FRICTION BETWEEN STATE POLICIES, AND WHOLESALE MARKETS THAT WE REGULATE. BUT I ALSO BELIEVE MOPER IS PART OF THE CONVERSATION AND HOW TOOLS CAN BE EMPLOYED GOING FORWARD. ANOTHER CROSSCUTTING ISSUE IN MY MIND IS THE FUTURE OF WHOLESALE ENERGY AND CAPACITY MARKETS. SEVERAL OF YOU HAVE COMMENTED, WE'RE QUICKLY ADVANCING TO A REALITY WHERE MARGINAL COSTS FOR MANY RESOURCES IN THE ENERGY MARKET ARE NEGLIGIBLE, THIS CAN HAVE PROFOUND EFFECT ON REVENUES COLLECT THE FROM ENERGY MARKETINGS AND PLACE PRESSURE ON CAPACITY AND ANCILLARY SERVICES. I BELIEVE WE'RE SEEING THIS PLAY OUT IN CALIFORNIA AND I WOULD LIKE TO BETTER APPRECIATE ON YOU THE IDEAS DISCUSSED AT THIS CONFERENCE WORK IN CONNECTION WITH THIS BROADER TREND. SIMILARLY, WHOLESALE MARKETS IDENTIFY COST EFFICIENT RESOURCES WITHOUT ATTRIBUTING RESOURCE ATTRIBUTES, WHETHER IT'S INTEGRATE RENEWABLE OR ENVIRONMENTAL CONSIDERATIONS THE FOCUS OF VARIOUS POLICIES. SHOULD WHOLESALE MARKETS APPROACH DIFFERENTLY? ANOTHER QUESTION I HAVE SHOULD STATE POLICIES BE REFLECTED IN EFFICIENCY DECISIONS? SOME OF YOUR COMMENTS HAVE TOUCHED UPON THAT. SOME OF YOU BELIEVE THAT. THERE MAY BE A MIDDLE APPROACH TO ADDRESSING THAT AND SO I'D LIKE TO HEAR FROM YOU. AND IF SO, WHAT BROADER REFORMS SHOULD WE CONSIDER TO REFLECT OR POTENTIALLY PRICE THESE RESOURCE ATTRIBUTES? THESE ARE TOUGH QUESTIONS I ACKNOWLEDGE. I WANT TO CLOSE BY THANKING MY PERSONAL STAFF. IN PARTICULARLY WILL SAUER WHO HAS BEEN MY POINT CONFERENCE BUT MY WHOLE TEAM. I HAVE THE VERY BEST TEAM. SHERYL WILL SAY SOMETHING DIFFERENT, I IMAGINE. [LAUGHTER] BUT I REALLY FEEL WELL SUPPORTED BY THEM AND I WANTED TO THANK THEM AND ALL OF YOU. I LOOK FORWARD TO THE DISCUSSION.

>> ALL RIGHT. THANK YOU, COMMISSIONERS. YOU'VE DONE A NICE JOB SETTING US UP FOR THE DAY AND THE NEXT TWO DAYS. TODAY'S DISCUSSIONS WILL INVOLVE THREE SESSIONS, ONE FOR EACH ONE OF THE EASTERN RTOs OR ISOs, TWO PANELISTS FOR EACH SESSION. THE FIRST IS A PANEL OF STATE REPRESENTATIVES AND THE FOCUS WILL BE ON GETTING THE STATE PERSPECTIVE, THE SECOND PANEL WILL BE OF INDUSTRY STAKEHOLDERS, AND THE FOCUS TO GET THE STAKEHOLDER PERSPECTIVE ON THE BROAD SET OF DISCUSSIONS THAT WE WERE HAVING. AT THE HIGHEST LEVEL DAY RUN WILL BE ABOUT FRAMING ISSUES. DAY TWO WILL BE ABOUT COMPLETING THE PICTURE, ROUNDING OUT SENSE OF WHAT OUR POSSIBLE ALTERNATIVES ARE AND IMPLICATIONS OF THOSE ALTERNATIVES. THERE'S POTENTIAL FOR OVERLAP IN THE DISCUSSIONS TODAY AND CONVERSATIONS WE'LL HAVE TOMORROW. STAFF IS GOING TO TRY TO KEEP THE CONVERSATIONS MOVING TO AVOID THAT OVERLAP BUT IT'S PROBABLY INEVITABLE TO SOME DEGREE. SO TO START OUR FIRST PANEL I'D LIKE TO START BY WELCOMING OUR PANELISTS, THANK YOU YOU FOR YOUR TIME AND PRECONFERENCE STATEMENTS. WE HAVE JEFFREY BENTZ, DIRECTOR OF ANALYSIS FOR NEW ENGLAND STATES COMMITTEE ON ELECTRICITY. WE HAVE SARAH HOFMANN, BOARD MEMBER FOR VERMONT PUBLIC SERVICE BOARD AND SPEAKING ON BEHALF OF NATIONAL COUNCIL ON ELECTRIC POLICY COMMISSIONER ROBERT KLEE, A COMMISSIONER FOR THE DEPARTMENT OF ENERGY AND ENVIRONMENTAL PROTECTION IN CONNECTICUT, WE HAVE CHAIRMAN ANGELA O'CONNOR FROM THE MASSACHUSETTS DEPARTMENT OF PUBLIC UTILITIES AND ROBERT SCOTT COMMISSIONER AT THE NEW HAMPSHIRE PUBLIC UTILITIES COMMISSION. ON THIS FIRST PANEL, WE AGAIN WOULD LIKE TO GET YOUR PERSPECTIVE ON THE POLICIES THAT YOU'RE PURSUING, THE KIND OF GOALS THAT YOU HAVE, AND WE ALSO WOULD LIKE TO BETTER UNDERSTAND WHAT ROLE YOU THINK THE WHOLESALE MARKETS ARE PLAYING BROADLY BUT ALSO IN PURSUIT OF THE GOALS AND OBJECTIVES YOU IDENTIFIED FOR THE POLICIES YOUR STATE DECIDED TO USE TO SUPPORT OR ENCOURAGE SPECIFIC RESOURCES, PARTICULAR RESOURCE TYPES, OR PARTICULAR RESOURCE ATTRIBUTES. SO I THINK WE'LL START WITH I THINK A QUESTION THAT BOTH THE ACTING CHAIRMAN AND COMMISSIONER HONORABLE IDENTIFIED. A NUMBER OF PRECONFERENCE STATEMENTS SUGGESTED THAT NEW RESOURCES, ALL NEW RESOURCES COULD POTENTIALLY COME INTO THE MARKET AS A RESULT OF STATE PROGRAMS TO ENCOURAGE OR SUPPORT SPECIFIC RESOURCE TYPES OR SPECIFIC RESOURCES. AND THAT MAYBE THE ONLY ROLE FOR THE CAPACITY MARKETS AT LEAST IS TO ORGANIZE EXIT OF THE RESOURCES THAT ARE NO LONGER NEEDED. I THINK FIRST WE'D LIKE TO GET A SENSE FROM YOU WHETHER YOU AGREE WITH THAT PERSPECTIVE, BUT MORE BROADLY I THINK WE'D LIKE TO GET A SENSE FROM YOU WHAT ROLE YOU WOULD LIKE THE WHOLESALE MARKETS TO PLAY, AGAIN BROADLY, BUT ALSO IN PURSUIT OF THE POLICIES THAT YOU HAVE. WE CAN GO DOWN THE LINE OR TAKE VOLUNTEERS FIRST.

>> I THINK I CAN START ON THE FIRST PART OF THE QUESTION. THE SECOND PART RELATES TO STATE POLICIES WE HAVE COMMISSIONER BETTER SPEAKING TO THE INDIVIDUAL STATE POLICIES THAN NESCOE. IS ENTRY ONLY GOING TO COME FROM STATE PROCUREMENT, THE STATES COLLECTIVELY HAVEN'T HAD MUCH DISCUSSION. I DON'T KNOW THAT I PERSONALLY WOULD BUY INTO THAT PERSPECTIVE. CERTAINLY IN NEW ENGLAND WE HAVE SOME VERY LOW GROWTH. WE'VE SEEN IT OVER THE LAST FEW YEARS. BUT WE ARE FACING A LOT OF RETIREMENTS COMING UP IN THE NEXT TEN YEARS. SO WHAT WE'VE SEEN IN THE LAST THREE OR FOUR FCAs IS SOME BIG RETIREMENTS THAT HAVE OPENED UP THE ABILITY FOR NEW ENTRY TO COME IN. AND AT LEAST IN MY LAST FIVE YEARS WITH THE STATE, PRIOR TO THAT I WAS ON THE GENERATOR SIDE. ONE THING I KNOW FOR SURE WHEN YOU START LOOKING AT THE RFPs FOR THE MARKET CONTRACTS, THEY TAKE A LONG TIME. THEY ARE VERY TRANSPARENT. THE PROCESS IS JUST LONG. THE APPROVAL PROCESS IS LONG. AS WE SAW IN THE THREESTATE RFP THERE WAS ALL THIS EXPECTATION THAT THERE WAS GOING TO BE THESE LARGE MEGAWATTS THAT ARE GOING TO COME DOWN AT THE END OF THE DAY. YES, THERE'S SOME PROCUREMENT, NOT AS LARGE AS SOME PEOPLE THOUGHT ORIGINALLY WHEN THE RFP HIT THE STREET. WILL ALL THE THE ENTRY COME FROM STATE PROCUREMENT? I DON'T THINK THAT'S TRUE. I JUST THINK THERE WILL BE SOME RETIREMENTS THAT WILL CONTINUE TO HAVE THE MARKETS RUN AS THEY ARE. WILL THERE BE QUITE A BIT FROM STATE PROCUREMENT? AGAIN, THEY ARE TO SOLICIT, NOT PURCHASE, AND TIME WILL TELL WHETHER WE ACTUALLY DO PURCHASE FROM THOSE RFPs. THANK YOU.

>> THANK YOU VERY MUCH. SARAH HOFMANN, I'M ON THE PUBLIC SERVICE BOARD IN VERMONT, SPEAKING FOR THE NATIONAL COUNCIL ON ELECTRICITY POLICY AS ALREADY NOTED. IT MEANS I'M ACTUALLY SPEAKING FOR A NATIONAL GROUP. SO ANYTHING I SAY IS GOING TO BE WRONG FOR SOME MEMBERS OF OUR GROUP BUT I ACTUALLY DON'T SEE THAT ALL ENTRY IS GOING TO BE FROM STATE PROCUREMENT. YOU KNOW, WHEN YOU LOOK AT IT ON THE BROAD SPECTRUM OF ENTIRE UNITED STATES, SOME NOT EVEN IN THE WHOLESALE MARKETS BUT FOR THOSE OF OUR MEMBERS WHO ARE, I THINK THERE'S GOING TO BE A PERCENTAGE THAT COMES FROM THE STATE PROCUREMENT SIDE, BUT THERE'S STILL GOING TO BE A ROLE FOR OTHER WHOLESALE PURCHASERS BECAUSE I THINK WE GENERALLY WOULD AGREE THAT STATES HAVE BENEFITED WHO THE  CONSUMER BENEFITED FROM THE WHOLE SALE MARKET SO I CAN'T SEE IT GOING ALL THE WAY THAT WAY BUT TIME WILL TELL AND WE DO HAVE A VERY DIVERSE GROUP AND STATE AND REGIONS THAT ARE NOT ONE TYPE FITS ALL.

>> THANK YOU. COMMISSIONER KLEE?

>> ROB KLEE, CONNECTICUT DEPARTMENT OF PROTECTION. THIS IS MY FIRST TIME AT FERC. THANK YOU FOR HAVING ME. I PROBABLY AM THE ONE MOST SUITED TO DIVE INTO THE POLICY SIDE BECAUSE THAT IS OUR AGENCY. WE'RE A MERGED ENERGY AND ENVIRONMENT AGENCY. AND BECAUSE OF THAT, WE CLEANING ABOUT OUR ENERGY CHOICES WITH THE ENVIRONMENT IN MIND. AND THAT HAS LET US AND OUR LEGISLATURE AND OUR GOVERNOR TO PUT IN PLACE SIGNIFICANT STATE STATUTORY GOALS AND OBLIGATIONS THAT REQUIRE DELIVERY OF CLEAN RENEWABLE POWER FOR BOTH OUR CLIMATE CHANGE GOALS AND 80% BY 2050 REDUCTION, THAT'S ON THE BOOKS IN CONNECTICUT. WE HAVE OUR RPS GOALS, CURRENTLY 20% BY 2020, BUT OUR LEGISLATURE HAS THREE OR FOUR NEW OPTIONS IN FRONT OF THEM TO INCREASE THAT PERCENTAGE AND WE HAVE OUR EXISTING  WE'RE ALSO THE EPA IN CONNECTICUT. WE HAVE THIS THING, OZONE AND CRITERIA AIR POLLUTION STANDARDS, ALL THAT HAS LED US TO USE THIS NEW OUTSIDE OF THE MARKET TOOL OF PROCUREMENT TO BRING THOSE RESOURCES BECAUSE THE MARKET WASN'T DELIVERING THEM. THE MARKET WAS ONLY DELIVERING ONE RESOURCE. NATURAL GAS. AND BECAUSE OF THAT, PARTICULARLY IN NEW ENGLAND WHERE IT GETS COLD IN WINTER WE WERE HAVING RELIABILITY PROBLEMS. I'M A FAN OF THE ROLE STATES CAN PLAY IN BRINGING DIVERSITY OF RESOURCES AND RELIABILITY RESOURCES INTO PLAY WHEN THE MARKET ISN'T DELIVERING THEM. THAT SAID, WE STILL ARE A FAN OF MARKETS. WE BELIEVE IN MARKETS. WE BELIEVE THEY BRING WITH THEM THAT ABILITY TO DRIVE DOWN PRICES AND GET LOW COST OPTIONS, THAT'S WHY WE'RE HERE. WE THINK THESE TWO THINGS CAN COEXIST IN A WAY THAT'S EFFECTIVE AND EFFICIENT. IT IS BRINGING TO THE STATES THOSE THINGS THAT THEIR STATE LEGISLATURES AND GOVERNORS ARE DEMANDING BUT IN A WAY THAT'S EFFICIENT AND EFFECTIVE. WE THINK THERE WILL BE A MIX OF OPPORTUNITY HERE BUT RIGHT NOW SEEING WHAT'S COMING FROM THE MARKETS WE BELIEVE THERE'S AN IMPORTANT ROLE FOR THE STATES TO PLAY IN DELIVERING RESOURCES THAT WE'RE STATUTORILY OBLIGATED TO HAVE THERE.

>> HI. CHAIRMAN LAFLEUR AND COMMISSIONER HONORABLE AND STAFF, THANK YOU FOR THE OPPORTUNITY TO BE HERE TODAY. THIS ISN'T MY FIRST TIME BUT IT'S INTERESTING BECAUSE I'M ON A DIFFERENT SIDE OF THE TABLE RIGHT NOW. AND I GUESS MASSACHUSETTS HAS DEMONSTRATED ITS COMMITMENT TO MARKETS AND FROM THE VERY BEGINNING WE WERE ALL IN ON COMPETITION, ONE OF THE FIRST STATES TO DO THAT. I'M HERE TO TELL YOU THAT THE ADMINISTRATION IN MASSACHUSETTS IS STILL VERY MUCH COMMITTED TO THAT. BUT NOW LET ME TALK ABOUT THE 800POUND GORILLA IN THE ROOM, WHICH IS OUR PROCUREMENTS, WHICH WERE SET, I THINK MY PREFILE COMMENTS REALLY LAY OUT THE DETAILS PRETTY WELL IN WHAT THE LEGISLATURE HAS REQUIRED US TO DO WHICH WE WILL DO. ALSO OUR GWSA AND ALL THE SAME SORTS OF THINGS THAT CONNECTICUT AND SOME OTHER NEW ENGLAND STATES ARE DEALING WITH. BUT LET ME TURN QUICKLY TO THE  PARTICULARLY LARGE SCALE HYDRO WHICH GETS INTO THE ACCOMMODATE ASPECT THAT COMMISSIONER HONORABLE MENTIONED. THAT LARGE SCALE HYDRO IS COMING. WE WILL PROCURE THAT. DATES ARE SET. WE'RE EXPECTING WE'LL BE SEEING CONTRACTS AS REQUIRED BY STATUTE. BUT I GUESS I WOULD SAY THAT NEW ENGLAND HAS DONE A PHENOMENAL JOB OF FINDING WAYS TO FIGURE OUT HOW TO ACCOMMODATE WHOLESALE MARKETS AND HOW TO WORK THROUGH DIFFICULT DETAILS. AND I THINK WE ARE YET AGAIN, AND I'M SORRY TO SAY THIS, PERHAPS THE CANARY IN THE COAL MINE BECAUSE THERE STILL IS A COMMITMENT TO THOSE MARKETS. WE RECENTLY SAW WHAT ISONEW ENGLAND PROPOSED RELATING DIRECTLY TO PURCHASE OF LARGESCALE HYDRO I SUSPECT, THE DEVIL IS IN THE DETAILS BUT WE'RE EXCITED ABOUT ROLLING UP SLEEVES WITH OUR FELLOW STATES FIGURING OUT IF THAT'S SOMETHING WE CAN DO THAT WILL STILL ALLOW THE MARKETS TO FUNCTION AS THEY SHOULD AND THEY HAVE PROVIDED TREMENDOUS BENEFIT. I GO BACK IN MY ENERGY EXPERIENCE TO THE VERY FIRST ELECTRICITY CONTRACTS, AND SO BACK WITH POWER OPTIONS AND NORTH OF $100 MILLION OF BENEFIT. SORRY, I KNOW THAT'S PAINFUL. BUT THEY HAVE PROVIDED THAT BENEFIT. I STILL HAVE IN MASSACHUSETTS RIGHT NOW BEFORE OUR CITING COMMISSION TWO POWER PLANTS IN THAT CITING PROCESS. YES, CAPACITY MARKETS, BOTH UNITS CLEARED IN THE CAPACITY MARKET, SO THE CAPACITY MARKETS CONTINUE TO DELIVER THE TYPES OF UNITS NEEDED TO MAINTAIN RELIABILITY. WE'RE AT A CROSSROADS. HOW DO WE MARRY THAT AND PROVIDE CONSUMER BENEFITS FOR WHOLESALE MARKETS? THEY WERE NOT INTENDED, THEY ARE NOT GOING TO GET US LARGE SCALE HYDRO OR OFFSHORE WINDS OR FRANKLY GAS PIPELINES BUT WHAT THEY HAVE DONE IS PROVIDE A TREMENDOUS AMOUNT OF DETAIL SO I THINK THAT FOR NEW ENGLAND AND I DO BELIEVE, AND I APPRECIATE THE COMMISSION'S RECOGNITION, THAT IT ISN'T A ONESIZEFITSALL SOLUTION BUT NEW ENGLAND HAS A HISTORY OF WORKING TOGETHER AND I'M CONVINCED THAT PERHAPS I'M A GLASS HALF FULL KIND OF PERSON, IF WE ROLL UP OUR SLEEVES WITH THE APPROPRIATE TIME THAT, AND WE'RE LOOKING FOR THE SUPPORT AND GUIDANCE OF THE COMMISSION, THAT WE CAN WORK THINGS THROUGH THE PROCESS THAT IS WELL ESTABLISHED IN NEW ENGLAND AND LOOK FORWARD TO WORKING WITH EVERYBODY TO DO THAT AND THANK YOU VERY MUCH FOR THE OPPORTUNITY TO BE HERE AND I'M HAPPY TO TRY TO ANSWER ANY QUESTIONS THAT WERE NOT CLEAR IN MY PREFILED STATEMENT.

>> BOB SCOTT, NEW HAMPSHIRE COMMISSION. THANK YOU FOUR PUTTING THIS TOGETHER, A TIMELY AND IMPORTANT TOPIC OBVIOUSLY. ON THE QUESTION OF WOULD STATE PROCUREMENTS BASICALLY ALLOW ROOM FOR OTHER NEW ENTRY, I THINK AS MR. BENTZ MENTIONED, I THINK THE JURY IS STILL OUT ON THAT, MYSELF. WHEN I LOOK AT THE AMOUNT OF RETIREMENTS IN NEW ENGLAND, OR AT RISK AS YOU WILL COMPARED TO THE AMOUNT OF ON THE BOOKS PROCUREMENT, THERE SEEMS TO BE SOME ROOM LEFT. AS FAR AS THE MARKETS FOR NEW HAMPSHIRE AND THIS WILL HIGHLIGHT SOME OF THE DIFFERENCES AMONG THE STATES AND I TRY TO HIGHLIGHT THAT IN MY TESTIMONY, IS WHAT NEW HAMPSHIRES EXPECTS OUT OF THE MARKETS IS TO USE BENEFITS OF COMPETITION TO GET BEST ECONOMIC RESULTS, THE INTENTION OF SOME STATE POLICIES, AND WE LOOK WITH TREPIDATION A LITTLE BIT AT OUR NEIGHBORS TO THE SOUTH OF US BECAUSE OBVIOUSLY THEY IMPACT THE MARKET. THAT'S WHY WE'RE HERE. HAVING SAID THAT, I THINK THAT FACTORS IN AGAIN, SO THE REASON  ANOTHER REASON I THINK THE JURY IS STILL OUT IS THERE'S A COST POLICY, I'M NOT SUGGESTING THERE'S NOT A SOCIAL BENEFIT AND GOOD REASON FOR THE LEGISLATURES TO ACT, BUT I THINK UNDERSTANDING THE FULL COSTS TO THOSE ACTIONS ARE IMPORTANT TO SEE WHAT HAPPENS NEXT, AND I CAN'T REMEMBER IF IT WAS COMMISSIONER HONORABLE OR CHAIR LAFLEUR MENTIONED THE MARKETS, UNDERSTANDING THE FULL DIE  DYNAMICS TO UNDERSTAND A SOLUTION, THE UTILITY MARKETS WILL HAVE A MUCH LARGER ROLE BACKUP QUANTIFYING AND UNDERSTANDING THAT I THINK ARE NECESSARY TO INFORM US AS STATES ON WHAT WE CAN FEEL COMFORTABLE WITH MOVING FORWARD. SO BOTTOM LINE IS I THINK THE JURY IS STILL OUT ON NEW ENTRY, AND WE STILL HOPE TO HARNESS THE COMPETITIVE MARKET TO THE EXTENT WE CAN.

>> THANK YOU VERY MUCH FOR THOSE ANSWERS TO ARNIE'S QUESTION. PICKING UP ON A COUPLE OF THOSE RESPONSES, CHAIRMAN O'CONNOR, YOU MADE A REFERENCE ONE OF THE ROLES TRADITIONALLY OF THE CAPACITY MARKET HAS BEEN THE IDENTIFICATION OF RESOURCES THAT ARE NEEDED FOR RELIABILITY. COMMISSIONER KLEE MADE A SIMILAR OBSERVATION WITH REGARD TO RELY ASPECT. TALK ABOUT WHAT YOU SEE GOING FORWARD AS ROLES OF STATES AND ISO WITH FERC WITH RESOURCES NEEDED FOR THE FUTURE?

>> CLEARLY WE DO RELY ON THE MARKETS AND ISO REGULATED BY FERC TO MAINTAIN RELIABILITY, THAT'S CRITICALLY IMPORTANT. BUT WE HAVE TWO DYNAMICS HERE, DON'T WE? WE'VE GOT THE LEGISLATURE SAYING THOU SHALL, AND WE WILL, AND WE'VE GOT OVER HERE MARKETS THAT ARE DESIGNED TO MAINTAIN RELIABILITY. SO I THINK IT IS ON THE STATE REALLY, AND I APPRECIATE THE COMMENT FROM COMMISSIONER HONORABLE AND CHAIR LAFLEUR THAT THIS IS A TOUGH JOB AS STATE REGULATOR. WE HAVE TO LOOK TO BALANCE THAT. I THINK THAT'S WHAT WE'VE TRIED TO DO IN THE IMAPP PROCESS, AND WE ARE WHERE WE ARE, WHICH IS WE KIND OF HIT A PAUSE BUTTON. IT FALLS INTO TWO BUCKETS, ACCOMMODATE WITH LARGE SCALE HYDRO. WE HAVE TO BALANCE THAT. THERE'S A COMMITMENT ON THE PART OF MASSACHUSETTS AND ADMINISTRATION TO CONTINUE TO DO THAT AND TO WORK WITH THE ISO AND FELLOW STATES AND MARKET PARTICIPANTS TO FIGURE THAT OUT. IF I HAD THE ANSWER I'D BE ON AN ISLAND SOMEWHERE RIGHT NOW.

>> I WOULD ADD, PERHAPS TO CLARIFY, THAT OUR FEELING IN CONNECTICUT IN PARTICULAR IS THAT THE STATE POLICIES AND PROCUREMENTS THUS FAR AND TYPES OF RESOURCES THAT WE'RE SEEING GO INTO PROCUREMENT POLICIES ARE ENHANCING ALSO REGIONAL GRID AND ITS RELIABILITY BY BRINGING RESOURCES WITH WINTER PEAK PROGRAM. WHEN YOU HAVE THE ABILITY TO BRING IN HYDRO, WIND, OTHER NONGAS RESOURCES, EFFICIENCY, THOSE ARE THE TYPES OF THINGS WE'RE SEEING BID INTO PROCUREMENTS, AND THOSE ARE ALL ARBITRARY NATIONAL DESIGNED TO ADDRESS THE WINTER RELIABILITY PROBLEM BECAUSE WE WEREN'T GETTING A SOLUTION, THE MARKETS ARE DELIVERING NATURAL GAS RESOURCES. SO IN ESSENCE THAT'S PART OF HOPEFULLY WHAT I'M TRYING TO GET AT THAT I THINK THAT WHERE STATE PROCUREMENTS ARE ACTUAL A VALUE ADDED TO THE REGION BRINGING IN DIVERSITY AND ENHANCING RELIABILITY, WE'VE BEEN LUCKY TO HAVE MILD WINTERS, WE DON'T WANT TO GO BACK TO THE POLAR VORTEX WINTERS AND IMPACT THAT WAS HAVING THROUGHOUT THE NEW ENGLAND REGION. I THINK THAT'S, AGAIN, THE PLACE WHERE WE NEED TO FIND THAT RIGHT BALANCE AND HOW THESE STATE POLICIES AND PROGRAMS, WHICH IN ADDITION ARE GOING TO BE INCREASING LOAD RISK, SO QUITE A BIT OF WHAT WE'RE DOING IN OUR GOVERNOR'S COUNCIL ON CLIMATE CHANGE IN CONNECTICUT IS LOOKING OUT INTO THE FUTURE AND HOW WE'RE GOING TO REACH THAT 80% BY 2050 BY ELECTRIFICATION OF OUR BUILDING AND HEATING SECTORS, THAT'S A LOT OF GROWTH COMING IN NOTTOODISTANT FUTURE. HOW ARE WE GOING TO WORK COLLABORATIVELY IN PROCUREMENT AND REGIONAL MARKET TO ACHIEVE GROWTH AND HAVE RELIABLE RESOURCE FOR WHAT WE SEE AS GROWTH IN ELECTRIC DEMAND.

>> I'LL FOLLOW UP A LITTLE BIT ON I THINK KIND OF THE LINE YOU DREW A LITTLE BIT, THE LINE DAVID TRY TO DRAW. IN SOME OF THE PRECONFERENCE STATEMENTS TALKED ABOUT WHEN A STATE ACTION, AND I'LL TRY TO PUT THIS IN AIR QUOTES AND NOT OFFEND ANYONE BY SAYING LEGITIMATE. LEGITIMATE STATE POLICY WAS USED IN COMMENTS, A LOW TERM, TRYING TO DISTINGUISH BETWEEN THE THINGS WE SHOULD EXPECT THE STATES TO DO AND WHOLESALE MARKETS TO DO, ONE OF THE PRINCIPLES COMMENTING LAID OUT IF WHOLESALE MARKETS ARE DESIGNED TO DO SOMETHING LIKE RESOURCE ADEQUACY OR ACQUIRE FLEXIBILITY OR ACQUIRE THAT WINTER RELIABILITY, MAYBE THEY ARE NOT DOING IT AS WELL AS THEY WOULD LIKE BUT IF THEY ARE ALREADY DESIGNED TO DO THAT WE SHOULD LET THE WHOLESALE MARKETS DO THOSE THINGS, AND STATE POLICIES SHOULD ADDRESS THOSE THINGS THAT THE MARKETS AREN'T DESIGNED TO DO, LIKE ENVIRONMENTAL POLICIES. AND THAT WAS A FAIRLY BROAD OR VERY STARK DISTINCTION THAT SOME OF THE COMMENTS MADE. I WONDERED WHETHER YOU ALL THINK THAT'S A REASONABLE PRINCIPLE THAT WE COULD USE AS WE THINK ABOUT WHAT ROLE THE WHOLESALE MARKETS HAVE VERSUS WHAT ROLE THE STATES HAVE. IS THAT  LET THE MARKETS DO WHAT THE MARKETS ARE DESIGNED TO DO AND STATES SHOULDN'T INTERFERE THERE. AND THEN WHERE THE MARKETS AREN'T DOING SOMETHING, THAT'S A PLACE WHERE THE COMMISSION SHOULD TRY TO ACCOMMODATE AND DEFER AS MUCH AS POSSIBLE.

>> SARAH HOFMANN. I THINK ONE OF THE PROBLEMS MAYBE IN TERMS OF THAT DISTINCTION YOU'RE TRYING TO MAKE IS THAT WE CANNOT CONTROL WHAT OUR LEGISLATORS DO. THEY ARE GOING TO HAVE POLICIES. IT DOESN'T MATTER WHAT ANYBODY HERE OR ANYPLACE ELSE SAYS. THEY WILL HAVE POLICIES THAT SET THE STAGE FOR WHAT THE STAGE WANTS. THAT'S WHAT LEGISLATORS ARE FOR. SO I'M NOT SURE HOW THAT DIVISION IS GOING TO ACTUALLY WORK IN TERMS OF KIND OF DRAWING A LINE, BECAUSE THERE'S NO WAY TO  I MEAN WHEN YOU THINK ABOUT  I'LL GO BACK TO VERMONT EVEN THOUGH I'M SPEAKING NATIONALLY, AN EXAMPLE. MOST OF OUR POLICIES ARE VERY ENVIRONMENTALLY FORWARD LOOKING IN TERMS OF WHAT WE WANT, GREENHOUSE GASES, RENEWABLES, ALL THOSE KIND OF THINGS THAT WE'RE TRYING TO ADDRESS. BUT AT SOME POINT IT DOES CARRY OVER TO WHAT KIND OF RESOURCES ARE PROCURED, AND I'M NOT SURE HOW WE CAN DIFFERENTIATE ALONG THE LINES YOU'RE TALKING ABOUT.

>> THANK YOU. I THINK ULTIMATELY I AGREE WITH THAT PROPOSITION THE WAY YOU PHRASED IT. AS PRACTICAL MATTER, I'M ONE OF THE OFFENDERS, I HAVE 124 LEGISLATORS IN MY STATE, SO THE GOOD NEWS IS THEY ARE ALL ENGAGED IN ENERGY POLICY. THE BAD NEWS IS THEY ARE ALL ENGAGED IN ENERGY POLICY. SO THINGS CAN CHANGE DYNAMICALLY. BUT RESOURCE ADEQUACY, RELIABILITY, SHOULD IN IN THAT PURVIEW ON THE WHOLESALE MARKET. A GOOD EXAMPLE IN NEW HAMPSHIRE, IF WE'RE GOING TO TRY TO MANAGE ISSUES AT THE STATE LEVEL WE'RE PROVIDING ENERGY TO OUTLYING STATES, HOW DOES THAT WORK? WE HAVE SIX DIFFERENT STATES. YOU END UP WITH A PATCHWORK OF THINGS. PRAGMATICALLY BECAUSE WE'RE NOT ABLE TO CONTROL OUR LEGISLATORS I THINK PRAGMATICALLY IT WOULD NEED TO BE A HYBRID APPROACH. SOME STATES MAY WANT TO WEIGH IN FROM LEGISLATURES AND SAY WE WANT A SUBSIDY FOR NUCLEAR POWER, FOR INSTANCE, NOT MY STATE BUT THAT MAY BE SOMETHING THEY WANT TO DO. WE NEED THE BACK STOP AT THAT LEVEL TO MAKE SURE FOR ALL OF NEW ENGLAND WE HAVE THESE NEEDS MET.

>> QUICKLY, WE OFTEN DON'T ALWAYS SEE EXACTLY THE SAME WAY AS FOLKS UP THERE IN NEW HAMPSHIRE DO, DOWN IN CONNECTICUT, ONE THING I WOULD CAUTION IS THAT THE RESOURCE MIX WAS ALWAYS SOMETHING THAT WAS  RESOURCE MIX BEING DETERMINED BY THE STATE WAS PART OF OUR REGULATION. WE ENACTED RPS AT THE SAME TIME REDEREGULATED, RETAINING THE CHOICE OF WHAT TIMES OF CHOICES WE'RE SEEING COME THROUGH OUR RPS AND OTHER POLICIES. SO I JUST WANT TO SORT OF  CONNECTICUT WOULD PROBABLY BE THE LESS ON THE SIDE OF GIVING UP THAT AUTHORITY THAN NEW HAMPSHIRE MIGHT BE.

>> JEFF BENTZ, NESCOE. SOONER OR LATER THERE'S GOING TO BE A COLLISION. WE NOTICED TENSION. IT'S ONE THING THE IMAPP PROCESS BROUGHT OUT. WE HEARD FROM THE SEVEN TO NINE MEETINGS THAT EVERYBODY IS CONCERNED ABOUT THIS TENSION AND THIS CONFLICT, AND PRESENTATION I CALL IT A TRAIN WRECK. I THINK YOU LET THEM BOTH GO DOWN SINGLE PATHS, SOONER OR LATER THE MARKETS WILL UNWIND THEMSELVES. THE STATES AREN'T INTERESTED IN HAVING MARKETS FOR THE SAKE OF MARKETS AND THE OVERSUPPLY, YOU WOULD END UP WITH TOO MUCH OF AN OVERBUILD. SO MAYBE THAT'S NOT IN THE NEXT 35 YEARS BUT DOWN THE ROAD CLEARLY WE CAN SEE THAT TRAIN WRECK COMING AND PROBABLY THE END OF MARKETS AS WE KNOW THEM TODAY.

>> THANK YOU. THAT'S REALLY HELPFUL.

>> SO I THINK WHAT WE'RE HEARING, THERE'S A DESIRE TO KEEP THE MARKETS, HAVE THEM DO THE JOB THAT THEY HAVE TRADITIONALLY DONE, RECOGNITION THAT THE STATES HAVE POLICIES THAT THEY WOULD LIKE TO PURSUE. I THINK THE FIRST SET OF COMMENTS I HEARD A LITTLE BIT OF THE POTENTIAL FOR ESPECIALLY GIVEN THE INTERCONNECTED NATURE OF THE MARKETS AND THE FACT THAT A PARTICULAR STATE ACTION IS KIND OF NECESSARILY EXPORTED A BIT TO THE REST OF THE STATES AND REGION IT SHARES AN RTO WITH. THAT THERE'S THAT POSSIBILITY FOR, IF NOT CONFLICT BETWEEN STATE POLICIES AND THE MARKET OUTCOMES, OTHER STATES EXPERIENCE, AT LEAST EXPORT OR IMPLICATIONS FOR OTHER STATES. SO DO YOU HAVE A VIEW ON HOW, IF THERE ARE CONFLICTS, OR IF STATES ARE BEING AFFECTED, ONE STATE IS BEING AFFECTED BY ANOTHER STATE IN THIS RTO, WHOSE ROLE IT IS TO IMMEDIATE THOSE CONFLICTS ESPECIALLY AS PROPAGATED THROUGH WHOLESALE MARKETSA ROLE FOR THE COMMISSION, NOT JUST THE COMMISSION, HOW DO THE STATES AND THE COMMISSION SHARE THAT ROLE?

>> ANGELA O'CONNOR FROM MASS DPO. IT CUTS BOTH WAYS, DOESN'T IT? I LOOK AT INVESTMENT, A LOT IS IN MY PREFILED TESTIMONY. WE HAVE  MASSACHUSETTS DOUBLED DOWN ON ENERGY EFFICIENCY WHEN LOAD WAS LIKE THIS. IT IS NOW LIKE THIS. WE WERE 49.5, WE'RE NOW 46%. I HAVE THE MOTHER OF ALL RATE CASES IN FRONT OF ME WITH ALL SORTS OF INTERESTING TASTY TIDBITS OF BEHIND THE METER THINGS THAT INCLUDE ELECTRIFICATION, STORAGE, INCLUDES ALL SORTS OF THINGS. SO THE WORLD IS CHANGING. IT'S NOT THE SAME AS IT WAS. I WAS FIRST IN, I REMEMBER RESTRUCTURING AND DID ORIGINAL CONTRACTS BUT THE WORLD HAS CHANGED. WE HAVE A LEGISLATURE AND I APPRECIATE BOTH BOB AND SARAH TALKING ABOUT THE INABILITY TO CONTROL THEM, THAT COULD NOT BE MORE TRUE THAN IT IS IN MASSACHUSETTS. BUT, YOU KNOW, WE'VE MADE A SERIOUS AND SIGNIFICANT FINANCIAL INVESTMENT SO WE DO SUPPORT THOSE MARKETS. BUT WE STILL HAVE TO MAKE THESE  WE HAVE TO DO WHAT WE HAVE TO DO SO IF THAT IS IN CONFLICT AND THERE'S GOING TO BE SIGNIFICANT COST TO THE THINGS THAT WE'RE DOING WE'VE DONE IT BEFORE AND WE'RE GOING TO CONTINUE TO MAKE INVESTMENTS, BUT THAT PRESENTS ITS OWN SORT OF A CHALLENGE WITHIN THAT MARKET STRUCTURE. SO THE COMMISSION HAS THE RESPONSIBILITY OF REPRESENTING RATE PAYERS HERE SO WE HAVE TO DO  WE HAVE TO MAKE PROCUREMENTS AND DO THIS AT THE LEST COST TO RATE PAYERS WHICH IS A TREMENDOUS BENEFIT THAT THE MARKETS PROVIDED WITH AN ECONOMIC DISPATCH MODEL, ET CETERA. BUT THEY WEREN'T DESIGNED TO DO THIS SO I THINK WHAT WE ALL HAVE TO DO TOGETHER IS TO FIND A WAY THAT WE CAN MARRY THEM BOTH. I APOLOGIZE FOR REDUNDANCY IN THAT COMMENT BUT DON'T KNOW ANOTHER WAY TO DESCRIBE IT.

>> ROB KLEE FROM CONNECTICUT. I THINK TO FOLLOW UP ON ANGIE'S COMMENT TO THE SPECIFIC QUESTION WHEN TWO STATES ARE  OR THEIR POLICIES AND DIRECTIONS ARE POTENTIALLY IN CONFLICT WE'VE DEMONSTRATED IN NEW ENGLAND THAT THE FIRST THING THAT WE SHOULD DO IS FOR THE STATES TO GET TOGETHER AND WORK TOGETHER AND TRY TO WORK IT OUT AND TRY TO RESOLVE CONFLICT AMONGST THE STATES, BEFORE ASKING OR GOING OR TO ANOTHER ENTITY. AND WE'VE BEEN SUCCESSFUL AT THAT IN OUR REGIONAL INITIATIVE, REGGIE PROCESS, IMAPP, MULTISTATE PROCURE. RFPs, WE CAN SIT DOWN IN A ROOM AS COSOVEREIGNS FIGURE IT OUT, WHICH IS A GOOD THING TO DO. I THINK THAT COULD HELP ACTUALLY AVOID INTERVENTION BY THE ISOs OR FERC TO RESOLVE OR MITIGATE THOSE CONFLICTS BECAUSE I THINK THAT WE HAVE PRINCIPLES TOO AND WE APPROACH THOSE CONFLICTS, THOSE ARE IMPORTANT TO HAVE, THAT TO MAKE SURE THAT EVERYONE IS HONORED AND RESPECTED IN THE DIFFERENT POSITIONS AND DIFFERENT PLACES EACH OF US ARE COMING FROM AS STATES, AND THEN BE VERY AWARE OF IF AND WHEN THERE ARE POTENTIAL FOR COSTS THAT MIGHT BE SHIFTING REGIONALLY TO ADDRESS THAT AND TO BE OPEN ABOUT IT. AND THEN ALLOW THOSE TO BE ALLOCATED APPROPRIATELY. WE BELIEVE THE STATES CAN FIGURE THOSE THINGS OUT PRETTY WELL ON THEIR OWN. SO I JUST WANTED TO SORT OF SAY THAT WE'VE HAD SOME SUCCESS AND I THINK WE'RE GOING TO KEEP WORKING AT IT THROUGH THE OTHER SORT OF PROCESSES WE'VE BEEN WORKING ON THIS ON.

>> THANK YOU. AND I THINK HERE IS WHERE ROB AND I DO AGREE. AGAIN, REGGIE WAS NOT AN EASY THING BUT THE STATES ARE DOING IT. A COUPLE CONCERNS OBVIOUSLY, MY OPINION IS I QUESTION WHETHER REALLY A LOT OF THIS HAS IN THE DIFFERENT IMAPP PROPOSALS RESOLVED AROUND CARBON, CARBON POLICIES. I QUESTION WHETHER FRANKLY FERC HAS  THAT'S IN THEIR JURISDICTION FRANKLY, BUT EVEN WITHIN THAT, I THINK THAT THE PROSPECT OF NOT FALLING ROB'S ADVICE, NOT ALLOWING THE STATES TO FIGURE THIS OUT YOU END UP INEVITABLY IN A SITUATION WHERE THE OPTICS ARE THE FEDERAL GOVERNMENT IS FORCING THE SOLUTION ON STATES AND THERE'S A COUPLE  MANY PROBLEMS WITH THAT BUT ONE IS STATE POLICIES ARE DYNAMIC. WE JUST TALKED ABOUT OUR LEGISLATORS, SO WE HAVE TODAY COULD CHANGE TOMORROW. TRYING TO LOCK THAT INTO A FEDERAL POLICY REALLY DOESN'T WORK. AND THE OTHER THING WE HAVEN'T REALLY TALKED ABOUT HERE BUT IT'S ONE OF THE ELEPHANTS IN THE ROOM IS CITING. IF YOU NEED TO CITE PROJECTS IN A WORLD, BUT THERE'S DISCONTENT IN STATES FEELING SOMETHING'S BEEN FORCED ON THEM, THEY TAKES ALREADY ALMOST IMPOSSIBLE SITUATION, AGAIN, WE HAVE A LOT OF ENGAGED PEOPLE, AND MAKES IT EVEN HARDER TO GET WHAT WE ALL COLLECTIVELY MAY WANT TO DO. SO I WOULD ARGUE THERE'S A LOT OF PITFALLS TO THAT APPROACH EVEN IF IT WERE LEGAL, YOU KNOW, I'LL LEAVE IT AT THAT.

>> ON BEHALF OF THE NATIONAL COUNCIL ON ELECTRICITY POLICY, I JUST WANTED TO ECHO SOME OF WHAT THE COMMISSIONERS HERE HAVE SAID IN TERMS OF ON A NATIONAL LEVEL. THERE'S A LOT OF COLLABORATION BETWEEN STATES TO RESOLVE THEIR DIFFERENCES. AND I THINK THEY HAVE BEEN SUCCESSFUL, NOT JUST IN NEW ENGLAND BUT IN OTHER PARTS OF THE COUNTRY IN TALKING TO OTHER PEOPLE ON THE EXECUTIVE COUNCIL. I WANT TO ECHO THAT IN TERMS OF ON A BROADER SCALE.

>> COMMISSIONER SCOTT, I'D LIKE TO FOLLOW UP ON SOMETHING I THINK I HEARD YOU SAY ABOUT THE STATE POLICIES BEING DYNAMIC AND THE POTENTIAL FOR FAILURE IF THERE WAS FEDERAL POLICY THAT LOCKED IN. STATE POLICIES AT A CERTAIN TIME. I'M WONDERING IF INSTEAD OF AS YOU NOTE LOCKING IN POLICIES, WE INSTEAD LOOKED TO PRINCIPLES OF WHAT WE WANT TO ACCOMPLISH, YOU KNOW, KIND OF STATE LEVEL, MARRYING WITH THE FEDERAL LEVEL. AND IN SOMEONE'S FILED TESTIMONY THERE WAS COMMENTS ABOUT MINIMIZING ARTIFICIAL SURPLUSES, AND MINIMIZING EXCESS COST FORM BY CUSTOMERS, AND CHAIR O'CONNOR, I THINK I HEARD YOU MENTION AT LEAST THE MINIMIZING THE EXCESS COST TO CUSTOMERS. SO I'M WONDERING IF WE COULD HEAR A LITTLE BIT ABOUT THE POTENTIAL FOR COMMON POLICY OBJECTIVES THAT MAY HELP MARRY UP WHAT'S GOING ON AT THE STATE LEVEL WITH FEDERAL, AND COMMISSIONER SCOTT, IF YOU'D LIKE TO START.

>> I THINK THAT IS THE CRUX OF THE ISSUE, WHERE SIX DIFFERENT STATES WITH SIX DIFFERENT POLICIES, AND I'LL PICK ON CARBON, THE CRUX OF THE DISCUSSION. WE HAVE REGGIE, AND THAT'S A STATE POLICY, THAT'S SOMETHING WE'RE IMPLEMENTING, THAT'S SOMETHING PERIODICALLY WE REVIEW, WE'RE IN THE PROCESS NOW AND SO FAR, LAST TIME WE DID REVIEW WE STRENGTHENED IT, LOOKING AT IT AT THAT AGAIN. I THINK IT ENDS THERE. I'LL SPEAK MORE MY STATE. WE HAVE RENEWABLE STANDARDS, COMMISSION ENACTED LAST YEAR ON ENERGY EFFICIENCY RESOURCE STANDARDS, SO WE'RE IN DIFFERENT PLACES BUT WE DON'T HAVE THE MASSACHUSETTS AND CONNECTICUT GLOBAL WARMING SOLUTIONS ACT. WE DON'T HAVE THE FUEL DIVERSITY ACT OF MASSACHUSETTS JUST HAD. WE'RE IN VERY DIFFERENT PLACES. I AGREE THAT WE NEED TO MARRY THOSE SO THAT WOULD ARGUE TO ME WHETHER PEOPLE LIKE IT OR NOT YOU TAKE THE LEAST COMMON DENOMINATOR, THE GROUP POLICY, BUT THAT'S REALLY REGGIE. AND WE'RE ALREADY DOING THAT. THAT'S NOT PERHAPS A FULFILLING ANSWER BUT I THINK THAT'S WHERE WE ARE.

>> I'M NOT SURE THERE'S AN EASY ANSWER TO THAT QUESTION BECAUSE, AGAIN, THERE IS, AS BOB SAID, AND BOB AND ROB ARE THE EXPERTS ON REGGIE, THAT'S NOT WHAT MY OFFICE DOES. BUT WE'VE DONE THAT, AND THERE'S A NUMBER OF OTHER THINGS THAT ARE HAPPENING BEHIND THE METER. BUT WE HAVE THE PROCUREMENT. SO PART OF OUR JOB WILL BE, AND IT WILL BE AS I KEEP SAYING THE DEVIL IN THE DETAILS, WE SEE WHAT CONTRACTS LOOK LIKE AND PROCUREMENT, THE NICE THING WHEN YOU HAVE A PARTY AND EVERYBODY WANTS TO COME, THERE'S A GREAT DEAL OF INTEREST IN WHAT MASSACHUSETTS IS DOING, LARGE SCALE HYDRO OR OFFSHORE WINDS. OUR JOB IS TO LOOK OUT FOR RATE PAYERS AS ECONOMICALLY AS WE CAN RECOGNIZING THOSE ARE NOT INSIGNIFICANT PURCHASES. BUT THEN THE FLIP SLIDE OF THAT IS, AND IT GOES TO THE MINIMUM OFFER PRICE RULE, IT'S BECOME PUNITIVE. WE HAVE TO DO THIS BY LAW IN MASSACHUSETTS. SO IF IT TRIGGERS MINIMUM OFFER PRICE RULE THAN AN EXTRAORDINARY PRICE TO THE PEOPLE OF MASSACHUSETTS. THE DEVIL IS IN THE DETAILS IN LARGE SCALE HYDRO, IT SHOULD BE A CAPACITY RESOURCE. IF IT'S FIRM, THAT'S THE WAY THE DECISION IS MADE, IT SHOULD BE A CAPACITY RESOURCE AND COUNT FOR THAT AND RATE PAYERS SHOULD NOT HAVE TO PAY TWICE BUT HOW DO WE DO THAT? I THINK WHAT WHAT, AGAIN, THE DEVIL WILL BE IN THE DETAILS BUT WE'LL SEE WHAT ISO HAS COME FORWARD WITH, IT'S JUST IN THE EARLY STAGES OF DISCUSSION. I GO BACK, I TALKED TO COMMISSIONERS ABOUT GIVE US SOME MORE TIME. WE'RE GOING TO FIGURE THIS OUT AND WAS IT PERFECT? NO, DID WE FIGURE IT OUT? YES, WE DID, FOR THAT TIME. WE'RE AT A CROSSROADS, THE WORLD HAS SHIFTED YET AGAIN IN NEW ENGLAND SO I GUESS MY SUGGESTION IS THAT AS A REGION WE NEED TIME TO SIT DOWN WITH STATE REGULATORS, ISO AND MARKET PARTICIPANTS TO FIGURE OUT HOW WE CAN DO THIS.

>> WOULD ANYONE ELSE LIKE TO COMMENT?

>> I HAVE A TWOPART QUESTION PICKING UP ON STATEMENTS SOME OF YOU HAVE MADE. FIRST, PICKING UP ON A STATEMENT FROM COMMISSIONER SCOTT WHO SAID RESOURCE ADEQUACY SHOULD BE IN THE PURVIEW OF THE WHOLESALE MARKETS. I WAS HOPING TO GO DOWN THE LINE AND SEE DO EACH OF YOU AGREE WITH THAT STATEMENT. SECOND, TO THE EXTENT THAT THERE IS A, AS SARAH HOFMANN HAD NOTED, LIKELY TO BE SOME PERCENTAGE THAT COMES FROM THE WHOLESALE MARKET AND SOME PERCENTAGE THAT COMES FROM STATE PROCUREMENTS, TO WHAT EXTENT DOES THE LARGER DEGREE, AS THE PERSONAL OF STATE PROCUREMENT BECOMES LARGER, HOW DOES THAT AFFECT THE ROLE OF RESOURCE ADEQUACY AND WHOLESALE MARKETS? BUT THE FIRST PART IS JUST DOWN THE LINE COMMENTING ON COMMISSIONER SCOTT'S STATEMENT.

>> I DO THINK RESOURCE ADEQUACY SHOULD  AT LEAST IN MASSACHUSETTS WE'RE NOT LOOKING TO TAKE IT BACK, THANK YOU VERY MUCH, BUT IT DOES PRESENT THAT CHALLENGING DYNAMIC. SO I DO STILL THINK THAT IT DOES BELONG THERE AND I'M SORRY, I FORGET THE SECOND PART OF THE QUESTION. MY FLIGHT WAS DELAYED LAST NIGHT, I'M TIRED.

>> YOU MAY HAVE PICKED UP ON IT. THE SECOND PART WOULD BE DOES THE LARGER DEGREE OF THE  AS THE PERSONAL OF RESOURCES COMING FROM STATES PROCUREMENT INCREASES HOW DOES THAT AFFECT THE WORLD OF WHOLESALE MARKETS WITH RESPECT TO RESOURCE ADEQUACY? WE HAVE LEGISLATIVE MANDATES, THAT'S ALL LAID OUT IN MY PREFILE TESTIMONY. THE WHOLE IS ONCE WE GET PAST THAT IF WE'RE ABLE TO CREATE A MARKET MECHANISM SO INSTEAD OF THE LEGISLATURE SAYING THOU SHALL, YOU KNOW, IT'S HOLD ON, IF WE WANT TO PROCURE THIS, IS THERE A WAY, WHETHER IT'S DEMAND, I'LL TURN IT OVER TO JEFF TO TALK IN MORE DETAIL ABOUT SOME OF THESE OTHER CONVERSATIONS BECAUSE IF WE'RE ABLE TO USE THAT ULTIMATELY THAT WOULD BE THE BEST THING. FORGIVE ME FOR WANTING MY CAKE AND EAT IT TOO BECAUSE WE HAVE TO DO THESE PROCUREMENTS BUT IF WE'RE ABLE FURTHER DOWN THE ROAD THAT WITHIN THE MARKETS OF NEW ENGLAND WE'RE ABLE TO HAVE A MECHANISM TO ALLOW COMPETITION, HERE IS WHAT WE NEED AND ALLOW FOLKS TO BID FOR IT, THE BEST POSSIBLE RESULT IS YOU HAVE MULTIPLE ENTITIES PURSUING WHAT IT IS THAT WE NEED. THAT WOULD BE THE BEST CASE SCENARIO. AND HOPEFULLY, AGAIN, THERE IS NO  YOU CAN'T CONTROL THE LEGISLATURE. BUT IF WE CAN DEMONSTRATE TO THE LEGISLATURE WE'VE WORKED AND THEN GOING FORWARD THERE'S A MECHANISM AND MAYBE STOP THE WORLD OF RFPs AND THESE PROCUREMENTS AND FIND ANOTHER WAY TO DO IT IN THE MARKET WOULD BE IDEAL.

>> OKAY. SO THAT ACTUALLY MADE A WHOLE LOT OF SENSE TO ME, WHICH IS  [LAUGHTER]

>> PRETTY SCARY.

>> WHICH IS A LITTLE SCARY. FULL DISCLOSURE I'M PROBABLY THE LEAST IN THE WEEDS AMONGST THE GROUP HERE. BUT THAT DID MAKE SENSE, PARTICULARLY ON THE NEED TO SORT OF EVOLVE OVER TIME TO THAT FUTURE STATE, WHILE RECOGNIZING, WE HAVE IN CONNECTICUT AS WELL, AND FUNDAMENTAL ROLE OF ISO AND THINGS ISO DOES WELL AND DELIVERS IN THE SAFE, RELIABLE COMPLEX SYSTEM THAT IS MANAGED AND IS DELIVERING, YOU KNOW, POWER EACH AND EVERY DAY. THOSE ARE ALL THE THINGS WE WANT TO  I THINK ACTUALLY THIS GOES BACK TO YOUR QUESTION, FUNDAMENTAL PRINCIPLES ON WHICH WE CAN ALL AGREE, THINGS WE WANT TO HAVE DELIVERED BY OUR GRID, DELIVERED BY ISO, AND RESPECTED IN TERMS OF WHAT THE RATE PAYERS ARE NOT DOUBLE PAYING OR OVERPAYING FOR RESOURCES. I THINK THAT KEEPING THOSE FUNDAMENTAL PRINCIPLES, HAVING THOSE OUT IN FOREFRONT AND THEN HAVING THE SYSTEM EVOLVE TO RECOGNIZE WHAT HAS COME FORTH FROM OUR INDEPENDENT LEGISLATURES DIRECTING US TO DOER IS THINGS AND THEN I DO LIKE THE IDEA THAT OPPORTUNITY IN THE FUTURE WHERE WE CAN POINT TO SAY, HEY, IF YOU WANT THOSE RESOURCES HERE IS THE MECHANISM WE'LL BE ABLE TO DELIVER IN WAYS YOU'RE COMFORTABLE WITH IN TERMS OF COST TO RATE PAYERS, GETTING THE MOST EFFICIENT AND EFFECTIVE IN TERMS OF EFFECTUATING STATE POLICIES GOALS, PARTICULARLY AROUND CLIMATE.

>> SARAH HOFMANN, NATIONAL COUNCIL ON ELECTRICITY POLICY. I THINK THAT AS A GENERAL PRINCIPLES RESOURCE ADEQUACY IS IN THE PURVIEW OF WHOLESALE MARKETS BUT OBVIOUSLY THINGS ARE CHANGING. THAT'S WHY WE'RE HAVING THIS CONVERSATION. I WANT TO THANK FERC FOR ACTUALLY DECIDING THAT WE NEED TO HAVE THIS COLLABORATIVE DISCUSSION. AND THAT IS HAPPENING AT ISONEW ENGLAND IN A BIG WAY. IT'S HAPPENING IN OTHER ISOs AND RTOs AS WELL. YOU JUST NAMED THE WHOLE CRUX OF THE PROBLEM. HOW ARE WE GOING TO INTEGRATE THIS AS STATE PROCUREMENTS GET BIGGER, WITHOUT MAKING THE MARKET USELESS OR NOT DOING ITS FUNCTION BECAUSE I DO THINK IT HAS THIS FUNCTION AND HAS BENEFITED RATE PAYERS GREATLY SO THE QUESTION IS HOW DO YOU MARRY THE TWO?

>> JEFF BENTZ, NESCOE. SINCE WE SPEAK COLLECTIVELY FOR THE STATES, WHAT THEY SAID, IT KEEPS ME OUT OF TROUBLE AT HOME TOO. I WILL SAY THOUGH AS FAR AS INVOLVEMENT ALL SIX NEW ENGLAND STATES HAVE BEEN VERY INVOLVED IN THE IMAPP PROCESS. WHEN IT STARTED NESCOE WAS CLEAR WHAT WE WANTED TO SEE OUT OF THE IMAPP PROCESS WAS POSSIBLE MECHANISM WE COULD ALL EMPLOY TO BETTER INTEGRATE POLICIES AND MARKETSES BECAUSE AS I'VE EXPLAINED TO THE IMAPP GROUP THE STATES HAVE DIFFERENT PATHS THEY CAN GO DOWN. THEY CAN CREATE A CES, RPS, THIS PATH AND THAT PATH BUT THE ONE PATH WE NEVER HAD BECAUSE OF THE MOPAR WAS A COMPETITIVE MARKET PATH. I WANT TO GIVE CREDIT ON BEHALF OF NESCOE TO PARTICIPANTS IN THE IMAPP PROCESS THAT BROUGHT TOGETHER A LOT OF GOOD PROPOSALS, GIVEN US A LOT OF STUFF TO THINK ABOUT. WE HAVE THE ISONEW ENGLAND PROPOSAL. I CAN'T REALLY ANSWER YOUR FIRST QUESTION OTHER THAN TO SAY THAT ALL THE STATES HAVE BEEN  STATE REPRESENTATIVES HAVE BEEN AT ALL THE IMAPP MEETINGS. WE'VE HAD PLENTY OF COLLECTIVE DISCUSSION AMONG THE STATES. THERE'S CONFLICT. TO GET BACK TO THE EARLIER QUESTION THAT STARTED THIS, SHOULD THE FERC GET INVOLVED IN TRYING TO SETTLE THOSE CONFLICTS, I CAN TELL YOU AS NESCOE THAT'S WHAT WE DO. AND GOOD LUCK. [LAUGHTER] BUT I DO APPRECIATE ALL THE COMMISSIONERS' COMMENTS. WE HAVE A GOOD HISTORY OF WORKING TOGETHER, RESOLVING THOSE CONFLICTS. I THINK FROM A FERC STANDPOINT WRITING RULES TO SETTLE THOSE CONFLICTS WOULD BE VERY DIFFICULT. YOU KNOW, WE HAVE A SAYING IN NEW ENGLAND, WHACKAMOLE, YOU FIX ONE THING, THREE MORE POP UP. I THINK TO TRY TO GET INVOLVED IN SETTLING STATE CONFLICTS YOU WOULD SEE THAT COME UP.

>> I'LL ASK COMMISSIONERS WHETHER THEY'VE GOT ANY QUESTIONS FOR OUR PANELISTS.

>> THIS HAS BEEN A GREAT PANEL. I'M JUST TRYING TO UNPACK WHAT YOU SAID AND KIND OF GO AROUND THE MERRYGOROUND HERE. SO THE FIRST THING WE HEARD WAS THAT PEOPLE IN GENERAL STILL WANT THE CENTRALIZED MARKET TO PLAY SOME ROLE IN BRINGING IN RESOURCES FOR LIABILITY AND SUSTAINING EXISTING RESOURCES FOR RELIABILITY, I PRESUME, SINCE THAT'S PART OF WHAT KEEPS THE LIGHTS ON. IT'S MOST OF WHAT KEEPS THE LIGHTS ON RIGHT NOW BUT THAT WILL CHANGE OVER TIME. SO NO ONE SAID NO, WE'RE GOING TO TAKE OVER BUYING ALL THE RESOURCES AT THE STATE LEVEL. WE DON'T WANT THE MARKET TO CALL FOR ANY. SO ON THE ONE HAND THAT FELT GOOD FOR THE FIRST FIVE MINUTES BUT MADE WE REALIZE WE HAVE TO FIGURE OUT HOW TO SUSTAIN A JUST AND REASONABLE PRICE FOR RESOURCE BUILT INTO THE MARKET NOW AND RESOURCES PROCURED BY THE STATE, NOT THE FAVORED TECHNOLOGY. IT BROUGHT ME AROUND. THERE WAS A STRONG THEME IN THE COMMENTS. I'M GOING TO BE BLUNT AND ALL IT OUT WHICH WAS A KIND OF LACK OF TRUST OF FERC SOLUTIONS. ONE THING THE ECONOMISTS WOULD SAY, FIGURE OUT WHAT THE STATES WANT, DEFINE IT. WHEN YOU DEFINE IT YOU CAN PRICE IT. IT CAME THROUGH LOUD AND CLEAR, DON'T DO THAT PLEASE. WHATEVER YOU DO, DON'T FIGURE OUT WHAT OUR STATE LAWS ADD UP TO AND PRICE IT IN THE MARKET. WE DON'T WANT A FERC PLAN. THAT WAS PRETTY CLEAR. THAT PROCESS YOU ACHIEVE OFF THE TABLE, IF YOU TAKE ALL THE WAY, THAT LEADS US TO IF WE HAVE TO PROTECT A JUST AND REASONABLE PRICE AND YOU DON'T WANT US TO REDESIGN THE MARKET FOR WHAT YOU WANT, THEN WE PROBABLY HAVE TO DO WHAT YOU DON'T WANT AND SOMEHOW DO A DOUBLE PRICE CURVE FOR THE UNSUBSIDIZED RESOURCES OR A MINIMUM OFFER PRICE RULE OR SOMETHING TO PROTECT THAT PRICE THAT YOU STILL WANT US TO PROTECT BECAUSE YOU DON'T WANT TO BUY THOSE OTHER RESOURCES SO WE'RE GOING AROUND THE CURB. I KNOW YOU DON'T WANT THAT. THAT ALSO CAME THROUGH LOUD AND CLEAR. NOW WE'RE BACK TO THE BEGINNING. SO THE ISO NEW ENGLAND SOLUTION TO ME IS A PHASED STEP TOWARD THE MARKET GETTING OUT OF RESOURCE ADEQUACY BECAUSE EVERYBODY  ALL THE NEW RESOURCES COME IN, UNLESS THERE'S A CAP TO WHAT THE STATES WANT BUT IF MASSACHUSETTS WANTS 80% CLEAN, THAT'S A BIG CAP, A SMALL MARKET. SO IS THAT THE SOLUTION TO KIND OF WEAN US OFF THIS WHERE EVERY YEAR YOU BUY A LITTLE MORE AND THE MARKET WAS PRICED A LITTLE LESS AND MORE THINGS WOULD RETIRE? OR DO YOU SEE A LONGTERM NONSTATE MARKET IN WHICH CASE WE HAVE TO FIGURE OUT A PRICE FOR IT NO MATTER HOW HARD. MY MIND HAS BEEN GOING IN THIS CURVE FOR A LONG TIME SO HELP ME.

>> IT'S GREAT TO BE ME. SO THANK YOU, CHAIR LAFLEUR.

>> YOU'RE WELCOME. AND THANK YOU, JEFF

>> YEAH, I DID HEAR YOU SAY, YOU KNOW, ACCOMPLISH ISN'T A GOAL, I WANT TO PUSH BACK AND NO, I HOPE YOU'RE NOT HEARING THAT. I KNOW I'VE HEARD COLLECTIVELY FROM THE STATE THAT SOME OF THE QUOTE ACCOMPLISHED PROPOSALS PUT OUT AT IMAPP ARE SOMETHING WE WANT TO CONTINUE TO LOOK INTO. NESCOE IS DOING A MECHANISM STUDY, WE'RE ACTUALLY GOING TO LOOK AT SOME PROPOSALS IN THAT STUDY. I KNOW, I CAN STATE FROM SOME OF OUR COLLECTIVE DISCUSSIONS, THERE'S A LOT OF VALUE IN HAVING ISO RUN MARKETS, QUALIFYING CAPACITY, TRANSMISSION CONSTRAINTS, THEY HAVE THE PEOPLE AND ENGINEERS TO DO IT. THAT'S ONE THING THE STATES ARE LOOKING AT. I WANT TO PUSH BACK THERE'S SOME PROPROSALS OUT THERE.

>> IT'S JUST CARBON PRICING YOU DON'T WANT, OTHER THINGS ARE STILL OKAY?

>> THE STATES HAVE BEEN PRETTY CLEAR ON CARBON PRICE PROPOSALS, I THINK IT'S MORE THAN JUST, LET'S ME USE YOUR WORD, NOT MY WORD, A TRUST ISSUE. THAT'S A BIG ONE THAT CAME THROUGH LOUD AND CLEAR IN OUR APRIL 7 MEMO BUT SIX OR SEVEN OTHER OTHERS, COST CLEARLY BEING ONE. WHAT WE'VE SEEN IN NEW ENGLAND THROUGH THE IMAPP DISCUSSION AND ALSO THROUGH THE NESCOE STUDY THAT WE JUST PUBLISHED, NEW ENGLAND HAS A PRETTY FLAT SUPPLY CURVE AND PRICING CARBON IN NEW ENGLAND PROBABLY IS NOT GOING TO GIVE YOU THE CARBON BENEFITS THAT IT MIGHT IN OTHER REGIONS. SO I DON'T WANT TO SAY THAT CARBON IS BAD EVERYWHERE BUT IN NEW ENGLAND GIVEN THE CURRENT SUPPLY CURVE I DON'T THINK THAT WE'LL GET MUCH CARBON BENEFIT, SO FROM A CONSUMER PERSPECTIVE IF I LOOK AT THE NUMBER OF CLEAN ENERGY MEGAWATTS PRODUCED TODAY, AND I SAY $10 PER MEG WATT SLICE, THAT'S A HALF BILLION DOLLARS, I'M NOT SURE THE SUPPLY STACK IS GOING TO CHANGE, NO ONE HAS BEEN ABLE TO PROVE THAT THROUGH THE IMAPP PROCESS. IT'S NOT JUST TRUST, THERE WERE OTHER REASONS IN THE MEMO.

>> DO YOU THINK THERE'S A WAY TO DEFINE WHAT THE STATES WANT AND PRICE IT? IF IT'S NOT CARBON, AND I DO UNDERSTAND THAT, OR DO THE STATES WANT BY THE VERY DEFINITION THE ABILITY TO CHOOSE, WHICH MEANS EVEN IF WE COULD SOMEHOW PUT AN ATTRIBUTE ON IT AND ASK GORDON BEN WILEY TO RUN AN AUCTION TO PRICE ITS IT WOULDN'T COME OUT WITH THE SPECIFIC THING YOU WANT. BECAUSE IF IT'S THE SPECIFIC THING THEN I THINK WE'RE AT ACCOMMODATE. I WOULD TAKE A GENIUS TO BACK DESIGN THE MARKET TO COME UP WITH THIS MUCH OFFSHORE WIND AND THIS MUCH THAT, DEFINITELY. SO SHOULD WE BE TRYING FOR THAT ATTRIBUTE OR IS IT  SHOULD WE BE TRYING TO PROTECT THE PRICE OF EVERYTHING ELSE AND LET YOU RUN WITH YOUR MARKET?

>> JEFF BENTZ, NESCOE. EXCELLENT QUESTION, ONE THAT HAS BEEN ASKED REALLY EARLY IN THE IMAPP PROCESS. ONE THAT IF YOU LOOK AT OUR APRIL 7th MEMO WE BASICALLY SAID TO NEPOOL WE GET THAT QUESTION. WE HAVE TO ANSWER IT. THAT FALLS IN OUR COURT. WE UNDERSTAND IT'S IMPORTANT BECAUSE YOU CAN'T GIVE ECONOMISTS TO GO DESIGN SOMETHING WITHOUT A GOOD GOAL. SO THAT IS IN THE STATE'S COURT. WE'RE CONTINUING TO MEET ON THAT ISSUE. WE TALKED ABOUT OPENLY AND IMAPP COLLECTIVELY IN STATE MEETINGS MAYBE WE DON'T GET 100 PER CENT, MAYBE WE CAN ONLY ACHIEVE 70% OF WHAT WE WANT BECAUSE, AS THE COMMISSIONERS HAVE SAID, THE LEGISLATURE IS GOING TO DO WHAT IT'S GOING TO DO. MAYBE THERE'S 30% THAT STAYS OUTSIDE THE MARKET BUT IS THAT SUCCESS IF YOU GET 70%? I KINDS OF THINK SO PERSONALLY. IT'S A GOAL WE HAVEN'T DROPPED AT THE STATE LEVEL YET.

>> (INDISCERNIBLE).

>> I HAVE TO ASK THIS QUESTION EVEN THOUGH I THINK I KNOW WHAT THE ANSWER IS GOING TO BE. I JUST WANT TO ASK A QUESTION ABOUT REGGIE. YOU KNOW WE HAVE FOLKS ON THE HILL WHO HAVE BEEN WATCHING THE IMAPP PROCESS SAYING, WHY DON'T THEY USE REGGIE? REGGIE WAS DESIGNED TO DO THIS. REGGIE IS TO GET CLEAN ENERGY, IT ALREADY EXISTS, IT'S CONTROLLED BY THE STATES, NOT FERC. I THINK THERE'S WAYS YOU COULD, YOU KNOW, DESIGN IT TO ALLOW FOR DIFFERENT STATE POLICIES, IF YOU WANTED TO. AND LET THINGS SEPARATE IF YOU HAD A COUPLE STATES THAT WANTED TO DO IT A DIFFERENT WAY. YET EVERY TIME  I MEAN ON THE FACE OF IT, IT LOOKS LIKE IT WAS DESIGNED TO DO WHAT THE STATES ARE TRYING TO DO, WHICH IS MEET THOSE STAIRSTEP CARBON GOALS. ARE WE BARKING UP THE WRONG TREE OR DOES REGGIE HAVE A ROLE IN GETTING US TO DO PART OF THE JOB OR NONE OF THE JOB OR IF NOT WHAT IS IT FOR?

>> SURE, THANKS FOR THAT QUESTION. AND YOU MAY REMEMBER THIS, CHAIR LAFLEUR, AT THE VERY BEGINNING OF THIS PROCESS FOR NEPOOL MY RECOLLECTION IS THAT'S WHAT A LOT OF PARTICIPANTS SAID IS, WELL, JUST OBVIOUSLY THERE'S A MECHANISM, YOU HAVE REGGIE, JUST MAKE REGGIE MORE STRINGENT AND THAT WILL BE YOUR ANSWER. IN A VACUUM I DON'T DISAGREE WITH ANY OF THAT. REALITY, AS YOU KNOW, REGGIE IS NINE STATES. EACH STATES GETS A VOTE. NOT JUST A VOTE, WE HAVE TO UNANIMOUSLY AGREE. AND THAT WHAT'S NEEDED FOR REGGIE, THE ALLOWANCE PRICE FOR REGGIE TO DO WHAT THE MARKET IS NOW IN MASSACHUSETTS AND CONNECTICUT POLICIES FULLY ENGAGED IN, IS AT THIS POINT IS NOT PRACTICAL FOR ALL THE STATES TO DO. SO WE'RE NEGOTIATING BEHIND THE SCENES HOW FAR WE GO ON REGGIE, ONE THING I CAN SAY IS NOBODY'S ANTICIPATING GOING THAT FAR WITH REGGIE. AS A CASE IN POINT OF GOING BACK TO THE CARBON MATTER WHAT A LOT OF PEOPLE ARE SUGGESTING TO US IS, OKAY, STATES, YOU'RE SAYING IT'S A NONSTARTER, AND REGGIE, FOR WHATEVER WORD YOU WANT TO USE, PRACTICAL, POLITICAL, WHATEVER, THE SUGGESTION INSTEAD WE'LL DO IT FOR THE FEDERAL MARKET, THINK ABOUT THE FED, STATES AGREED WE CAN'T DO THIS AT THIS JUNCTURE BUT YET WE'LL DO IT IN THE FEDERAL MARKET HOW DOES THAT WORK, THAT'S THE CONUNDRUM BUT REGGIE IS THE RIGHT ANSWER, I AGREE.

>> REGGIE OR SOMETHING ELSE, IF WHAT YOU WANTED WAS THE MOST CARBON IMPROVEMENT, THE CHEAPEST, SOME STRUCTURE WOULD GET YOU THERE. SO IF WHAT YOU REALLY WANT, IF THE PROBLEM IS, WHOA, IT HAS TO BE A REAL HIGH PRICE TO BRING OFFSHORE WIND OR WHATEVER IT IS WE WANT, THAT MEANS YOU WANT TO SELECT THE SPECIFIC RESOURCE WHICH I WANT TO UNDERSTAND WHAT YOU WANT BECAUSE IF WE  THE WORST THING I WANT IS TO COME UP WITH SOME GOD FORBID MAY I SAY BRILLIANT SOLUTION BUT IT'S NOT WHAT YOU WANT BECAUSE IT DOESN'T PRODUCE  IF YOU WANT TO CHOOSE, THAT'S DIFFERENT THAN WANTING CLEAN, IT'S  THEY MIGHT BE CLEAN THINGS BUT YOU WANT TO CHOOSE SPECIFIC, AT LEAST SOME STATES, IT SOUNDS LIKE.

>> AND TO FINISH MY STATEMENT, WHAT I WANT IS NOT TO PAY FOR MASSACHUSETTS AND CONNECTICUT POLICIES, BLUNTLY. [LAUGHTER] THAT THOSE THE DYNAMIC.

>> YEAH, AND I THINK, BOB, I'LL AGREE WITH YOU THERE ACTUALLY. BECAUSE  WHICH IS NO SURPRISE. BUT BECAUSE ONE OF THE THINGS WE'VE LEARNED THROUGH REGGIE, ONE OF THE THINGS THAT MY GOVERNOR AND OTHER GOVERNORS ARE LASER FOCUSED ON WITH REGGIE IS THE FACT IT'S A NINESTATE COLLABORATIVE WITH A PROCESS THAT HAS TO BRING ALL THIS TOGETHER IN CONSENSUS, AND ONE OF THE MAIN GOALS OF ALL THE MEMBERS RIGHT NOW IS TO KEEP THE BAND TOGETHER, TO KEEP REGGIE TOGETHER. TO DO THAT, IN A WAY THAT RESPECTS THE VARYING PLACES WHERE ALL OF OUR STATES ARE COMING FROM. THAT HAS A PARALLEL IN NEW ENGLAND. WE'RE IN DIFFERENT PLACES IN SOUTHERN NEW ENGLAND WITH OUR LEGISLATIVE ENACTMENTS THAT ARE PUSHING HARD, SOMETIMES ON INDIVIDUAL RESOURCES, BUT NOT ALWAYS. I MEAN, OUR PROCUREMENTS HAVE FOR THE MOST PART BEEN OPEN TO ALL CLASS 1 RESOURCES, WE COMPETE DIFFERENT RESOURCES AGAINST EACH OTHER. THAT'S THE CONNECTICUT WAY. DIFFERENT WAY THAN MASSACHUSETTS. BUT, AGAIN, WE NEED SOMETHING THAT RESPECTS THOSE DIFFERENT APPROACHES AND EACH STATE'S SOVEREIGN RIGHT TO HAVE THOSE APPROACHES. LAST THING ON REGGIE OBVIOUSLY IT'S NINE STATES IN THREE DIFFERENT ISOs AND NOT ALL OF THOSE STATES ARE THE ENTIRETY OF THEIR ISO AS THEY ARE IN NEW ENGLAND, ANOTHER CONCERN SOME MAY HAVE ABOUT REGGIE AS A SOLUTION.

>> I'LL MAKE A QUICK COMMENT AND THEN I'LL ASK BOB, COMMISSIONER SCOTT, TO FOLLOW UP ON SOMETHING YOU MENTIONED EARLIER. I APPRECIATE THIS PANEL BECAUSE YOU HAVE TEED UP NICELY THE LARGER TENSIONS THAT WE'RE FACING. AND I KNOW YOU. I'VE COME FROM WHERE YOU ARE NOW. AND I UNDERSTAND YOU. AND I ALSO SYMPATHIZE WITH YOU. YOU'RE TRYING TOO THREAD A NEEDLE THAT YOU FIND IN A HAYSTACK, AND IT'S A SOWING NEEDLE AND YOU'VE GOT TO THREAD IT WITH WOOL YARN, AND YOU'RE SITTING PRECISELY BETWEEN VERY ACTIVE LEGISLATURES, AND I HOPE THAT YOU SHARE THIS MESSAGE WITH THEM. WE COULDN'T POSSIBLY CONTROL THEM, NOR DO WE WANT TO. AND THEN WE SIT IN THIS UNIQUE PLACE OF TRYING TO PROTECT MARKETS WHICH HAVE BEEN, THOUGH NOT PERFECTLY, OPERATING AS INTENDED. AND NOT  AND WE CAN'T  WE TOO CAN'T BE CONTROLLED BY INDIVIDUAL LEGISLATURES. BUT I THINK THAT WE ALL HAVE DEMONSTRATED REALLY QUITE PASSIONATELY AND ELOQUENTLY OUR WILLINGNESS TO INVEST IN THIS AND BE HOPEFUL, AS ANGELA SAID, ABOUT WHERE WE'RE HEADED FOR THE FUTURE AND HOW WE DO THAT IN A WAY THAT APPRECIATES YOU ARE RESPECTIVE STATE GOALS. YOU ARE VERY ACTIVE, AND WE'LL HEAR FROM NEW YORK AND OTHERS ABOUT THEIR ACTIVITY. IT'S A BEAUTIFUL THING. IT'S A CHALLENGING THING. AND WE'VE ALSO MANAGED TO TOUCH ON IN LESS THAN AN HOUR WHAT'S AT THE HEART OF THIS. IT'S TRUST. YOU GUYS HAVE TEED UP TOO YOUR FAITH JOURNEY WITH ONE ANOTHER. I'M HOPEFUL WE CAN CONTINUE. I'VE OFTEN SAID SO MUCH OF OUR WORK DEPENDS UPON OUR ABILITY TO TRUST ONE ANOTHER AND WORK WELL TOGETHER. YOU'VE DEMONSTRATED THAT WITH YOUR REGGIE EFFORT. THOUGH ROB ELOQUENTLY STATED IT DOESN'T REPRESENT THE ENTIRETY OF THE THREE REGIONS AND I LOOK FORWARD TO OR WORK TOGETHER EVEN IN MY TIME BUT MORE BROADLY THE COMMISSION'S WORK WITH YOU TO HELP YOU ACHIEVE YOUR GOALS WHILE ATTEMPTING TO ACCOMMODATE THEM IN MARKET. LET ME GET TO MY QUESTION. I KNOW WE WANT TO STAY ON TIME. BOB AND I SHOULD SAY COMMISSION IRSCOTT, FOR THE RECORD, YOU MENTIONED EARLIER BUT TOUCHED ON IT BRIEFLY, I WANTED TO ASK YOU TO ELABORATE ON IT JUST FOR CLARITY IN OUR RECORD, A TREPIDATION YOU HAVE ABOUT ACTIVITY TO THE SOUTH OF WHERE YOU ARE. I WANTED TO ASK YOU TO TOUCH ON THAT A BIT AND WHAT ARE THE MARKET CONCERNS YOU MIGHT HAVE ABOUT THAT. IT'S A LOADED ONE, ISN'T IT?

>> I LOVE MY NEIGHBORS TO THE SOUTH. LET ME BE ON RECORD FOR THAT. REALLY IT GOES BACK TO OFFHAND QUIP I MADE, THE CONCERN WE HAVE, I'LL SPEAK FOR NEW HAMPSHIRE, RIGHT NOW THERE'S A LOT OF CONCERNS ABOUT RATES, IT'S NOT SUCH THAT THE RATES ARE SO HIGH IN NEW HAMPSHIRE OR NEW ENGLAND ABSOLUTELY, BUT IT'S REALLY COMPARED TO OTHER REGIONS, RIGHT? SO OUR INDUSTRY SPENDS A LOT OF TIME CONCERNED ABOUT THAT, THERE'S A LOT OF CONCERN ARE THEY GOING TO LEAD THE REGION, THAT'S THE CONTEXT OF A LOT OF THIS. AGAIN, GOOD FOR THEM, LAUDABLE GOALS THE STATES TO THE SOUTH OF US PASSED, AS I MENTIONED. THE CONCERN IS WHAT'S THE ECONOMIC IMPACT TO A STATE THAT THEIR LEGISLATURE DIDN'T TAKE THOSE ACTIONS, RIGHT? SO ONE OF THE REASONS WHY I'M HERE, I'M ON IMAPP, NESCOE REGARDING IMAPP, I DO RECOGNIZE WHETHER WE HAVE A POLICY OR NOT, THEIR STATE POLICIES AND THEY DRIVE MOST OF THE LOAD IN NEW ENGLAND DO HAVE  THEY DISTORT THE MARKET, RIGHT? THOSE DISTORTIONS HAVE SOME IMPACT FOR RATE PAYERS IN MY STATE. THAT'S THE VARIANCE I'M INTERESTED IN DEALING WITH. HOW CAN WE MITIGATE THAT? AGAIN, MY LEGISLATURE TOMORROW COULD DO THE SAME THING, WHO KNOWS? WE'RE NOT THERE AT THE MOMENT. THAT'S MY INTEREST. THERE'S AN IMPACT. HOW DO WE MITIGATE AND MAINTAIN BENEFITS OF THE COMPETITIVE MARKET.

>> I CERTAINLY WANTED TO OPEN IT UP, THIS IS MY ONLY QUESTION, BUT IF ANYONE ELSE HAS ANY THOUGHTS TO SHARE. YES, ANGIE.

>> BUT YOU ALSO BENEFIT FROM SOME OF THE THINGS WE DO WITH FLATTENING THAT LOAD CURVE SO IT DOES CUT BOTH WAYS.

>> AND OUR IMPROVEMENTS TO WINTER RELIABILITY AS WELL.

>> ONE. THINGS WE DID AS A REGION, NOW SPEAKING AS VERMONT, NOT AS NATIONAL COUNCIL FOR ELECTRICITY POLICY, WE MADE PRINCIPLES, WHAT WE'RE WERE INTERESTED IN, WHAT OUR FINAL OUTCOME WOULD BE. ONE OF THE PRINCIPLES WAS NOT HAVE STATES PAY FOR OTHER STATES' PUBLIC POLICIES AND WE'VE BEEN RESPECTFUL OF THAT THROUGHOUT THIS PROCESS.

>> I'LL ADD, JEFF BENTZ FROM NESCOE, WHEN THE MOPAR CAME OUT, I WAS HERE FOR THE CAPACITY MARKET TECHNICAL CONFERENCE, A LOT OF TALK ABOUT RENEWABLES, WE SEE THAT THE SIX STATES DID SEE THAT AS A WAY TO ACCOMMODATE, IF YOU WILL, POLICIES IN THE MARKETS, AND WE WROTE THAT TO BE VERY NARROW AND VERY TAILORED TO PROTECT THE MARKETS, AND THEN, YOU KNOW, AS THE POLICIES CONTINUE TO GROW I GUESS WE CAN DEBATE AND QUESTION WHETHER THAT EXEMPTION NEEDS TO GROW, AT LEAST MAYBE BY DEFINITION, MAYBE THE MEGAWATTS DON'T NEED TO CHANGE. WE VIEW THAT A WAY TO ACCOMMODATE CERTAIN STATES APRIORITIES WITHOUT HARMING THE MARKET. I'M SHOWING DEBATE WHETHER IT HARMS THE MARKET. IT'S BEEN IN PLACE THREE YEARS. WE'VE HAD THREE GOOD OPTIONS. CLEARED ALL THREE OPTIONS, FIRST TWO BEING GAS TURBINES, THE LAST ENERGY EFFICIENCY BUT WE'VE SEEN NEW CLEAR WHAT THAT RENEWABLE EXEMPTION IS.

>> SARAH, YOUR COMMENTS HEARKEN BACK TO SOMETHING JAMIE ASKED ABOUT, THAT WILL BE A TAKEAWAY FOR ME TO REALLY THINK ABOUT HOW YOU DEVELOP THOSE PRINCIPLES AND HOW THAT COULD REALLY SAID A REGIONAL EFFORT. THANK YOU ALL.

>> I WILL THANK YOU FOR YOUR FRANK COMMENTS, WE'RE GOING TO MOVE YOU OFF THE HOT SEAT AND INTO THE WARM SEATS. AND ASK OUR SECOND PANEL TO COME UP. THANK YOU.

>> WE'D LIKE TO GET GOING ON THIS PANEL. IF FOLKS COULD TAKE THEIR SEATS.

>> ALL RIGHT. WE'RE GOING TO GET THIS PANEL GOING. WE'D LIKE TO TRY TO KEEP AS MUCH ON TIME AS POSSIBLE. RELUCTANT SITTERS, YOUR LAST PANEL IS  ALL RIGHT. THANK YOU. I WANTS TO THANK OUR PANELISTS. AGAIN I'LL BRIEFLY INTRODUCE THEM. MATTHEW WHITE CHIEF ECONOMIST AT ISO NEW ENGLAND. DIET PATTON PRESIDENT OF POTOMAC ECONOMICS. BRIAN FORSHAW, PRINCIPAL AT ENERGY MARKETS LLC SPEAKING ON BEHALF OF THE CONNECTICUT MUNICIPAL ELECTIVE COOPERATIVE AND NEW HAMPSHIRE, AND VERMONT PUBLIC POWER SUPPLY AUTHORITY. PETER FULLER, VICE PRESIDENT OF MARKET AND REGULATORY AFFAIRS AT NRG. WE HAVE SETH KAPLAN, SENIOR MANAGER OF REGIONAL GOVERNMENT AFFAIRS EDP RENEWABLES, SPEAKING ON RENEW NORTHEAST. TOM KASLOW FOR NEPOOL, ALEKSANDAR MITRESKI FROM BROOKSFIELD RENEWABLE AND FINALLY BILL MURRAY FROM DOMINION RESOURCES. THANK YOU FOR JOINING US AND THANK YOU FOR YOUR PRECONFERENCE STATEMENTS. OUR HOPE WITH THE STAKEHOLDER PANEL IS TO COVER A LITTLE BIT OF THE SAME GROUND WE COVERED WITH THE STATES, PARTICULARLY I'D LIKE TO EXPLORE THE ROLE OF THE WHOLESALE MARKETS GENERALLY IN LIGHT OF STATE POLICIES BUT ALSO IN PURSUIT OF STATE POLICIES. BUT ALSO FOR THIS PANEL, I'D LIKE TO EXPLORE A LITTLE BIT MORE THE IMPLICATION OF THOSE POLICIES ON WHOLESALE MARKETS AND DECISION MAKING THE MARKET PARTICIPANTS ARE ATTEMPTING TO DO. WE SPENT SOME TIME AT THE LAST PANEL TALKING ABOUT THE ROLE, THE RELATIVE ROLE, OF THE STATE IN ADDRESSING RESOURCE ADEQUACY AND MARKET ROLE IN GETTING THOSE RESOURCES. I THINK WHAT I HEARD WAS STATES DESIRE TO CONTINUE TO HAVE THE WHOLESALE MARKET BE THE PLACE FOR RESOURCE ADEQUACY AT FERC, BUT THE VERY END OF THAT PANEL WE HAD THE DISCUSSION A LITTLE BIT ABOUT MAYBE WHAT THE TIPPING POINT IS REGARDING WHEN THE AMOUNT OF PROCUREMENT COMING THROUGH THE STATES STARTS TO MAKE THE REMAINING ROLE OF RESOURCE ADEQUACY FOR THE MARKET MORE DIFFICULT, AND SO I'D LIKE TO START THERE ON THIS PANEL AND ASK ALL OF YOU WHAT YOU THINK THE RELATIVE ROLE OF STATES AND MARKET IS IN ADDRESSING RESOURCED A QUESTIONS AND IF YOU SEE DIMINISHED ROLE FOR RTO AND AS YOU'RE GIVING AN ANSWER TO THAT, PARTICULARLY FOCUSED ON HOW IMPORTANT IT IS TO HAVE THAT ROLE DEFINED, WHETHER IT'S THE STATE OR THE MARKET, HOW IT'S IMPORTANT FOR THE DECISIONS YOU MAKE AND HOW WELL THE MARKET FUNCTIONS.

>> BILL MURRAY WITH DOMINION. TO THE EXTENT OF THINK OF GAS AS A ROUGH PROXY FOR THE MARKET, I THINK THAT'S A FAIR APPROXIMATION, IF YOU LOOK AT THE NEW ENGLAND MARKETS FROM WHEN THEY WERE RESTRUCTURED TO NOW IT WOULD BE HARD TO SAY GAS IS A LESS CENTRAL RESOURCE IN NEW ENGLAND, IN ANYTHING THE REGION IS SUBSTANTIALLY MORE DEPENDENT ON GAS AND IT MAKES SENSE IF WE STEP BACK AND LOOK AT THE WORLD AS WE SAW IT IN ENERGY, WHEN MARKETS WERE RESTRUCTURED ASSUMED EXISTENCE OF BASE LOAD COAL, NOT A GOOD ASSUMPTION ANYMORE. WE ASSUMED A NUCLEAR RENAISSANCE, DEBATABLE ASSUMPTION. EVEN THE MOST ARDENT SUPPORTER OF SOLAR ENERGY, SOME EXTENT RETOP ENERGY, IF ANYBODY SAW SHALE GAS REVOLUTION WHY YOU'RE NOT ON A YOUR PRIVATE ISLAND AND YOU'RE HERE WITH US IN D.C., THE WORLD CHANGED SUBSTANTIALLY. WHAT I DON'T THINK HAS CHANGED IS GAS IS AT THE MARGIN AND IF ANYTHING NEW ENGLAND HAS BECOME SIGNIFICANTLY MORE GAS DEPENDENT WITHOUT NECESSARILY THE CORRESPONDING INCREASE IN NATURAL GAS INFRASTRUCTURE. AT DOMINION WE LIKE NATURAL GAS. WE'RE MAJOR NATURAL GAS MIDSTREAM DEVELOPER BUT WE DON'T THINK IT'S SMART TO RELY ON ONLY ONE RESOURCE AND WE THINK APPROPRIATELY, WHEN A MAJOR NATURAL GAS MIDSTREAM DEVELOPER TELLS YOU IT'S NOT SMART TO RELY ON ONE SOURCE THAT MAY BE SALIENT. STATES ARE LOOKING AT RESOURCE DIVERSITY, CARBON AND RENEWABLES, NOT ONE AND THE SAY THE. RPSs TENDS TO GET UP WHEN NO ONE WAS THINKING ABOUT A NATIONAL CONVERSATION ON CARBON CONSTRAINTS, IMPERFECTLY DESIGNED IN STATE RPSs, NOW YOU SEE STATES STEPPING UP WITH SEPARATE OR COMPANION CLIMATE POLICIES SO WE'VE GOT TO SORT OF THINK OF NOT JUST THE ENERGY MARKETS BUT ALSO CARBON AND RENEWABLES, BUT I CERTAINLY DON'T SEE US AT ANY SORT OF TIPPING POINT, IF ANYTHING QUITE THE CONTRARY.

>> THANK YOU. GOOD MORNING, EVERYONE. COMMISSIONER LAFLEUR, COMMISSIONER HONORABLE, ARNIE, THANK YOU, EVERYONE, FOR ORGANIZING THIS WONDERFUL CONFERENCE. EVERYONE IS LOOKING FORWARD TO DISCUSSING THIS PREVALENT TOPIC AND HEARING OPPOSITE INTERESTING IDEAS AND VIEWS FROM DIFFERENT PERSPECTIVES. SO THANK YOU FOR THAT. FROM RENEWABLE, WE'RE 1100 MEGAWATTS OF GENERATION, 88% IS HYDRO. I WANTED TO PUT THAT AT THE PERSPECTIVE. WE'RE VERY MUCH A BIG SUPPORTER OF THE WHOLESALE MARKETS ITSELF. VERY, VERY SMALL SUBSET OF OUR RESOURCES RECEIVE OUTOFMARKET REVENUE SO WE RELY ON REVENUES IN THE HEALTH AND THE WHOLESALE MARKET. WE ALSO ARE A SUPPORTER OF PUBLIC POLICY INITIATIVE AND GOALS THAT THE STATES HAVE THE RIGHTS TO PURSUE GOALS, WE'RE IN SUPPORT OF THOSE. I DO THINK THAT IT WILL BE SHORT SIGHTED IF THESE TWO ELEMENTS ARE NOT INTEGRATED. I THINK THE MARKETS AND PUBLIC POLICIES HAVE BEEN OPERATING SORT OF IN A VACUUM A STANDALONE BASIS BUT COMING TO A POINT NOW WE'RE REACHING LANDMARK YEARS OF 2020, 2025 AND SO ON WHERE TITLE PROCUREMENTS WILL HAPPEN. I THINK WHAT IS VERY IMPORTANT TO KEEP IN MIND IS CONSUMER COST AND MAKING SURE THE CONSUMERS DO NOT PAY TWICE. MAYBE I'LL JUST ILLUSTRATE WITH AN EXAMPLE. IF I OWN A BAKERY IN A NEIGHBORHOOD, LET'S SAY THE BAKERY IS ALSO HYDRO IN MAIN, A BAKERY MOVES NEXT DOOR, A WIND FACILITY, I DON'T THINK IT'S RIGHT PLACE OR LOCATION TO IMPLEMENT THAT FACILITY. WHERE I'M GOING WITH THAT EXAMPLE WHOLESALE MARKETSES DO AN EXCELLENT JOB EXTENDING PRICE SIGNALS WHERE AND WHEN SEARCH RESOURCES NEED TO COME IN AND I THINK INTEGRATING THOSE WILL ENSURE THE WIND FACILITY NEEDED TO MEET PUBLIC POLICY, MAYBE PUT IN A BIGGER POSITION ON THE SYSTEM AND NOT INTERFERE WITH HYDRO OR OTHER RENEWABLE POLICIES BECAUSE THAT WOULD BE COUNTERINTUITIVE. FROM PERSPECTIVE THE TIME IS RIGHT TO INTEGRATE PUBLIC POLICY IN THE WHOLESALE MARKETS.

>> THANKS. TOM KASLOW, CHAIR OF NEW ENGLAND POWER POOL. I YOU WANT TO THANK COMMISSIONERS AND STAFF FOR INVITING NEPOOL TO MAKE COMMENTS. I WANT TO THANK THE PRIOR PANEL FOR MULTIPLE COMPLIMENTS ON THE NEPOOL INTEGRATION MARKET AND PUBLIC POLICY INITIATIVE. CERTAINLY THAT'S SOMETHING THAT OUR REGION AND NEPOOL HAS TRIED TO BE AT THE FOREFRONT. WE RECOGNIZE THE ISSUES THE COMMISSION IDENTIFIED AND WE STARTED A PROCESS ALMOST A YEAR AGO, WE'RE A YEAR INTO OUR PROCESS. I THINK WITH RESPECT TO THE SPECIFIC QUESTION, OUR FOCUS IS REALLY ON HOW DO WE AVOID THE TIPPING POINT, RIGHT? IF THERE ARE SOLUTIONS THAT CAN ACCOMMODATE OR ACHIEVE STATE POLICY THROUGH THE MARKETS, PERHAPS THE TIPPING POINT ISN'T THE QUESTION AS MUCH AS HOW WE ADDRESS AVOIDING IT. WE REPRESENT 450 MEMBERS. WE HAVE A LOT OF DIFFERENT PERSPECTIVES. SOME ON THIS PANEL. THERE ARE WILL 17 PROPOSALS THAT WERE MADE WITHIN OUR PROCESS. I'M SURE YOU'LL HEAR ABOUT ALL OF THEM IN THE COMMENTS FOLLOWING THE TECHNICAL CONFERENCE. THE TAKEAWAY FROM NEPOOL, WE HAVE PROPOSAL, ACTIVE ENGAGEMENT AT THE STATE, ACTIVE ENGAGEMENT OF YOUR STAFF, AND I THINK FROM OUR PERSPECTIVE WE WOULD LIKE THE OPPORTUNITY TO FIND A WAY TO AVOID THAT. THANK YOU.

>> GOOD MORNING. SETH KAPLAN, EDT RENEWABLES, RENEW NORTHEAST. I WOULD PICK UP ON SORT OF THE HISTORICAL PERSPECTIVES THAT BILL STARTED WITH. AT THE TIME THAT THESE MARKETS, ALSO I THINK THE REASON TO THINK ABOUT THE HISTORY, IS TO DISTINGUISH BETWEEN MARKETS IN ABSTRACT AND THE EXACT MARKETS THAT WE HAVE GOTTEN USED TO AND THAT WE HAVE ALL BUILT IN THE PAST. THE ENERGY MARKETS, AS WE KNOW THEM, WERE CONSTRUCTED WITH GAS TURBINES IN MIND. YOU KNOW, INITIALLY SIMPLE TURBINES, AND THEN MOVING MORE TOWARDS COMBINED CYCLE. THE MARKET DESIGN WAS SHAPED BY THE TECHNOLOGY. WE ARE INCREASINGLY MOVING, IN THE CASE OF MY COMPANY IS BUILTED ALL AROUND THE WORLD. WE BUILT A LOT IN NORTH AMERICA, WE SOURCES WITH NO FUEL PRICE, THAT HAVE LARGE CAPITAL COST, AND THAT THE WAY YOU BUILD THEM IS BY TAKING ADVANTAGE OF THE CUSTOMER VALUE THAT FLOWS FROM HAVING CERTAINTY WHAT THE PRODUCTION COST WILL BE 10, 20, 30 YEARS IN THE FUTURE. YOU KNOW, THE MARKETS QUITE SIMPLY WERE NOT DESIGNED WITH THESE KINDS OF RESOURCES IN MIND. SO IT IS NOT SURPRISING THAT THE SQUARE PEG DOESN'T FIT INTO THE ROUND HOLE. IT IS VERY LEGITIMATE FOR THE STATES TO WANT TO GET THE ENVIRONMENTAL AND ECONOMIC VALUE OF THESE RESOURCES. THEREFORE THE TASK AT HAND IS TO, YOU KNOW, AS WE'VE ALL BEEN SAYING, REDESIGN THE MARKETS. YOU KNOW, TO GET OUT A DRILL AND RESHAPE THE HOLE IN ORDER TO BE ABLE TO ACCOMMODATE THE RESOURCES THAT ARE ON THE TABLE IN FRONT OF US. I WOULD TAKE NOTE OF THE FACT THAT THIS COMMISSION HAS OTHER TOOLS. YOU KNOW, AS SOMEBODY WHO HAS BEEN WORKING TO TRY TO BUILD  ALEKSANDAR, WHO SEEMS TO HAVE CHARACTERIZED THE BAKERY ACROSS THE STREET, SOMEONE TRYING TO BUILD WIND IN MAIN SINCE BEFORE THE RED SOX WON THE WORLD SERIES FOR THE FIRST TIME WE HAD PROJECTS WITH CONTRACTS WITH STATE OF CONNECTICUT THAT WERE READY TO GO AND THE ONLY THING I CAN TELL YOU FROM MY UNIQUE PERSPECTIVE THAT FOILED THAT WAS TRANSMISSION. AND THE FACT THAT, YOU KNOW, THE ISO NEW ENGLAND TRANSMISSION PLANNING PROCESS AND COST ALLOCATION PROCESS AND A VARIETY OF THINGS OVER ON THE TRANSMISSION SIDE OF THIS COMMISSION'S JURISDICTION HAS FRUSTRATED THE IMPLEMENTATION OF THOSE STATES' GOALS IS A VERY REAL THING. AND THAT WE MUST UNDERSTAND THE NEED FOR THE COMMISSION TO USE ALL OF ITS TOOLS TO BOTH ASSIST THE STATES IN REACHING GOALS AT THE LEAST  IN THE LEAST COST WAY AND TO MOVE THE MARKETS FORWARD IN AN EFFICIENT WAY. YOU KNOW, AT THE END OF THE DAY, IT IS ABOUT COOPERATIVE FEDERALISM. IT IS ABOUT COMITY, DESIGNING STATE POLICIES TO DEAL WITH REALITY AS THE COURTS SAID INEVITABLY STATE POLICY IS GOING TO AFFECT WHOLESALE PRICES. STATES DON'T HAVE THE RIGHT TO SET WHOLESALE PRICES BUT STATES HAVE THE INHERENT ABILITY THROUGH THEIR ACTIONS TO AFFECT THEM AND FIGURE OUT HOW TO SET THAT BALANCE AND TO DESIGN THE WHOLESALE MARKETS IN A WAY THAT ACCOMMODATES THOSE STATE POLICIES AND THAT RECOGNIZE THIS REALITY THE STATES ARE GOING TO AFFECT. IT WON'T BE EASY. WE NEED TO HAVE SOME FAITH THAT AS WE SET UP A GOOD MARKET DESIGN THERE WILL BE MORE STORAGE, MORE TECHNOLOGIES THAT CAN RESPOND TO THE MARKET SIGNALS.

>> GOOD MORNING. PETE FULLER WITH NRG. FIRST OF ALL, CHAIR LAFLEUR, COMMISSIONER HONORABLE, THANK YOU VERY MUCH. THANK YOU TO THE STAFF FOR PUTTING ON THIS VERY TIMELY AND IMPORTANT EFFORT. ACTUALLY I WANT TO PICK UP WITH A POINT THAT SETH RAISED. I THINK IT'S IMPORTANT TO KEEP IN MIND THIS IS SORT OF THE THIRD A IN OUR AAA SERIES OF ACCOMMODATE, ACHIEVE, ADAPT. WE NEED TO BE THINKING ABOUT THAT WORLD WHERE THE WORLD  THE GRID IS PRIMARILY POWERED BY RENEWABLES, BY INTERMITTENT RESOURCES, HOWEVER YOU THINK OF IT. WE NEED TO THINK OF THE DIFFERENT PARADIGM THAN THE FOSSIL FUEL INPUT, HEAT RATE WORLD WE'VE DEALT WITH FOR THE PAST CENTURY OR SO. WE NEED TO THINK ABOUT THAT, WHAT NEW PRODUCTS ARE GOING TO BE NECESSARY, HOW DOES THAT WORK IN A MARKET CONSTRUCT, AND I DON'T START WITH THAT BECAUSE IT'S WHAT WE NEED TO DO FIRST, BUT WE NEED TO BE DOING IT BECAUSE WE CAN'T LEAVE THAT. WE CAN'T WAIT FOR THAT. WHAT WE HAVE IN FRONT OF US RIGHT NOW IS PERHAPS THE STATES NOT IN THESE TERMS BUT THE STATES ACTUALLY RECOGNIZE SOMETHING SOONER THAN MANY OF US IN THE MARKETS DID, WHICH IS THE MARKETS AREN'T GIVING US WHAT WE WANT. WE WANT CLEANER ENERGY. WE WANT OTHER KINDS OF ENERGY. WE WANT OTHER KINDS OF RESOURCES. AND WHEN THAT WASN'T HAPPENING THROUGH THE MARKETS, THE STATES TOOK ACTION THROUGH TOOLS THAT THEY HAVE AT THEIR DISPOSAL THROUGH LEGISLATION, OR REGULATION, AND SAID, NO. LET'S GET WHAT WE WANT. AND THAT CREATES THE TENSION AND CHALLENGES IN FRONT OF US NOW. I THINK WHAT WE  IN ORDER TO REALLY PLOT A GOOD PLOT WE NEED TO GET IN MIND HOW THIS IS GOING TO WORK WITH WIND, SOLAR, STORAGE, CONTROLLABLE DEMAND AS YOUR PRIMARY MEANS OF ENERGY PRODUCTION AND DELIVERY. SO STEPPING BACK FROM THAT, WHERE WE ARE TODAY IN TERMS OF THE ROLE OF MARKETS, WE BELIEVE THAT THE MARKETS ARE FUNDAMENTAL AND CAN BE ADAPTED, CAN BE MODIFIED, TO GET THE STATES WHAT THEY WANT, TO GET CONSUMERS AND THE NATION WHAT WE ALL NEED IN TERMS OF RELIABLE AND AFFORDABLE ENERGY, AND ADDRESS AND GET AHEAD OF THE CLIMATE AND OTHER ENVIRONMENTAL GOALS THAT WE ALL HAVE. SO AS NRG, WE'RE FULLY COMMITTED TO MOVING DOWN THE MARKET ORIENTED PATH AND WE THINK IT CAN BE DONE. IN THE NEAR TERM THE STATES HAVE BEGUN TO ACT, AND CHAIR O'CONNOR AND OTHERS REFERENCED THE SUBSTANTIAL MOVES IN NEW ENGLAND THAT ARE UNDERWAY. THOSE ARE GOING TO HAPPEN, AS FAR AS I KNOW. I CAN'T SEE ANY WAY TO STOP THEM FROM HAPPENING. SO WE NEED TO ACCOMMODATE THEM IN THE MARKETS, RECOGNIZE DOUBLE PAYMENT PROBLEM, DOUBLE PURCHASE PROBLEM, FIGURE OUT A WAY TO ALLOW THOSE RESOURCES TO ACTUALLY HAVE THEIR ROLE IN THE MARKETS, WHILE NOT UNDERMINING THE MARKETS FOR THOSE OF US WHO HAVE INVESTED STRICTLY ON THE BASIS OF MARKETS, MARKET REVENUES, SO WE HAVE OUR TWO CHAIR PRICING MECHANISM, ISO PROPOSED ITS SUBSTITUTION AUCTION, BOTH GOOD IDEAS THAT MERIT FURTHER CONSIDERATION. I DON'T THINK WE'RE AT THE TIPPING POINT YET, BUT IF WE DON'T MOVE FAIRLY QUICKLY ON THIS ACCOMMODATE SIDE, AND MOVE A LITTLE FARTHER INTO HOW DO WE BUILD SOME OF THOSE INTO MARKET AND FURTHER HOW DO WE ENSURE THAT MARKETS CAN ACTUALLY SUPPORT THE KIND OF RENEWABLEBASED FUTURE, IF WE DON'T DO ALL OF THOSE THINGS THEN WE COULD VERY WELL TIP OVER. AND I THINK THAT WOULD PUT US IN PERHAPS I THINK OPTION 4 FROM CHAIR LAFLEUR, ABOUT THE WORST OF ALL POSSIBLE WORDS. WE NEED TO COMMIT TO MARKETS AND MOVE DOWN THE AAA PATH WE LAID OUT OR SOMETHING ALONG THOSE LINES.

>> GOOD MORNING. THANK YOU FOR THE OPPORTUNITY TO BE HERE. I'M HERE TODAY SPEAKING ON BEHALF OF A GROUP OF MUNICIPAL ELECTRIC UTILITIES FROM CONNECTICUT, VERMONT AND NEW HAMPSHIRE. I ALSO HAVE THE FEELING I'M PROBABLY GOING TO BE A LITTLE BIT OF AN OUTLIER IN SOME OF MY COMMENTS. FIRST OF ALL, STARTING WITH RESOURCE ADEQUACY, I THINK IT'S IMPORTANT TO NOTE THAT REALLY WE NO LONGER HAVE A UNIFORM OR SINGLE RESOURCE ADEQUACY STANDARD IN NEW ENGLAND NOW. WE HAVE A VARIABLE RESOURCE ADEQUACY STANDARD THAT SAYS WE'LL PROCURE A CERTAIN QUANTITY RESOURCE AT A GIVEN PRICE. AND THOSE CAN VARY OVER TIME. MANY FOLKS BELIEVE THAT ACTUALLY WE TALK ABOUT A CAPACITY MARKET, WE'RE REALLY, YOU KNOW, TALKING MORE ABOUT AN AUCTIONBASED ADMINISTRATIVE PRICING CONSTRUCT THAT DETERMINES HOW MUCH WE PAY FOR RESOURCES THAT COMMON TO THE NEW ENGLAND SYSTEM, HOW MUCH DO WE PAY FOR RESOURCES THAT WE WANT TO KEEP OPERATING WITHIN THE NEW ENGLAND SYSTEM. IT'S NOT REALLY A FREE, YOU KNOW, OPEN ENTRY, OPEN EXIT TYPE STRUCTURE. WE SPEND MANY, MANY, MANY MEETINGS, AS A CONSULTANT I LIKE THAT, BUT COMING UP WITH A BUNCH OF ADMINISTRATIVE ASSUMPTIONS ON, YOU KNOW, WHAT'S THE COST OF RESOURCES, WHAT ARE THE PROJECTED NONCAPACITY MARKET REVENUES GOING TO BE? WHAT ARE THE FORECASTED ECONOMIC CONDITIONS GOING TO BE? HOW SUPPLIERS ARE GOING TO BEHAVE, PROJECTED LOADS, HOW ARE RESOURCES GOING TO PERFORM? YOU KNOW, WHAT KIND OF EXPOSURE WILL THE REGION HAVE AND CONSTRUCT DEMAND CURVES AND EVALUATE SUPPLY OFFERS BASED ON, YOU KNOW, ALL OF THOSE SETS OF ASSUMPTIONS. I THINK THE CONCERN THAT WE HAVE IS WE'RE IN A MODE RIGHT NOW, MANY HAVE MENTIONED IT, WHERE WE HAVE THESE NONELECTRIC MARKET POLICY REQUIREMENTS THAT HAVE BEEN SET OUT BY THE STATES, SOME OF THEM ARE ENVIRONMENTAL, SOME OF THEM QUITE FRANKLY ARE ECONOMIC DEVELOPMENT. SOME OF THEM ARE, YOU KNOW, IN RESPONSE TO, YOU KNOW, EXTREME WEATHER EVENTS WE'VE HAD IN THE PAST AND PEOPLE LOOKING FOR ADDED RESILIENCY TO THE SYSTEM ON A LOCAL LEVEL. ALL THOSE ARE OUT THERE, WE HAVE A CONSTRUCT WHERE STATES HAVE OBLIGATIONS TO PURSUE THOSE. CUSTOMERS WANT TO PURSUE THOSE. IN TERMS OF THE ISO RESOURCE ADEQUACY, THEY ARE INDEPENDENTLY GOING TO LOOK AT MEETING THOSE REQUIREMENTS, YOU KNOW, THROUGH THE RESOURCE ADEQUACY CONSTRUCT, THAT WILL PUT US IN A POSITION TODAY WHERE WE'RE GOING TO HAVE SORT OF TWO BUCKETS OF RESOURCES. WHOLE SET OF RESOURCES THAT ARE PROCURED FOR THESE NONMARKET OBJECTIVES, AND AT THE SAME TIME HAVE A BUNCH OF RESOURCES PROCURED TO MEET ALL OF THE ISO WHOLESALE MARKET RESOURCED A QUESTIONS OBJECTIVES. AND THAT'S WHERE YOU GET THE REDUNDANCY. I THINK IN THE LAST PANEL TOWARDS THE END PROBABLY THE MOST SALIENT DISCUSSION WAS HOW DO WE INTEGRATE THOSE, ALLOW STATES WHO MIGHT ENTER INTO BILATERAL CONTRACTS WITH PEOPLE TO SAY, OKAY, I'M WILLING TO DEVELOP A PROJECT, AND WHERE CUSTOMERSES OR ON BEHALF OF CUSTOMERS ARE WILLING TO PAY THAT IRRESPECTIVE OF WHERE THE MARKETS BITE BE  MIGHT BE. THERE'S A CRITICAL MASS, WE NEED TO RECOGNIZE THAT IN TERMS OF RESIDUAL MEETS THROUGH THE MARKET WHOLESALE CONSTRUCT, IF YOU WILL. THAT'S THE POINT WE NEED TO FOCUS ON TO COME AROUND AND COME TOGETHER ON. THANKS.

>> GREAT QUESTION. THE I THINK THE QUESTION WAS THE ROLES THAT MAINTAIN RESOURCE ADEQUACY. IT IS UNAMBIGUOUSLY FERC'S ROLE, AND THE MARKET'S ROLE IN FACILITATING AND STATES HAVE A ROLE. I THINK THIS IS REALLY A KEY QUESTION TO DELVE INTO. THE STATES HAVE A ROLE. WHAT MAKES THESE MARKETS UNIQUE IS, AND WE THROW THE WORD ADMINISTRATIVE AROUND ALL THE TIME, WHICH FRANKLY BOTHERS ME, BECAUSE WHAT MAKES THESE MARKETS UNIQUE IS CONSUMERS DON'T PARTICIPATE DIRECTLY IN THE MARKETS. SO SOMEBODY HAS TO FIGURE OUT WHAT THEY ARE DEMANDING. ONE THING THEY ARE DEMANDING IS RELIABILITY. WE PROCURE A LOT OF THINGS TO PROVIDE THE KIND OF RELIABILITY THAT CONSUMERS ARE DEMANDING SO WE PROCURE OPERATING RESERVES. IT'S SOMEBODY'S JOB TO FIGURE OUT WHAT CONSUMERS WANT AND I THINK THE STATES HAVE A ROLE IN DEFINING WHAT THAT IS. I'D LOVE AT SOME POINT FOR SOMEBODY TO TAKE A STEP BACK AND LOOK AT THIS ONE DAY BUT THERE ARE LOTS OF OTHER REQUIREMENTS. AND I THINK TO THE EXTENT THE STATES HAVE A ROLE IN ESTABLISHING THE PLANNING STANDARDS, THAT'S A KEY ROLE AND I WOULDN'T DISCOUNT THAT. BUT THEN WHEN YOU ASK YOURSELF THEN ONCE THE REQUIREMENTS ARE DETERMINED WHOSE JOB IS IT TO SATISFY THOSE REQUIREMENTS, IT IS THE MARKET'S JOB TO MEET THOSE REQUIREMENTS. THE  AND I WOULD CHALLENGE YOU OR CAUTION YOU NOT TO THINK ABOUT THIS TOO SIMPLISTICALLY. LOTS OF TIMES WE THINK ABOUT, WELL, A STATE WANTS TO BRING IN A THOUSAND MEGAWATTS OF WHATEVER, HYDRO IN NEW ENGLAND, FOR EXAMPLE. SO THAT MAY DISPLACE SOME RESOURCES. AND IT'S EASY TO THINK ABOUT THAT IN A POOLWIDE CONTEXT, BUT THERE'S FAR MORE GOING ON IN THESE MARKETS THAN SIMPLY WHAT IS THE AGGREGATE AMOUNT OF MEGAWATTS THAT WE HAVE TO PROCURE, TRANSMISSION SECURITY NEEDS AND LOCAL AREAS, SECOND CONTINGENCY REQUIREMENTS IN LOCAL AREAS THAT REQUIRE US TO BUY CAPACITY IN THOSE AREAS. SOME OF THAT CAPACITY HAS TO BE CONTROLLABLE AT A CERTAIN LEVEL, IF THEY ARE NOT GAS TURBINES WE'RE IN TROUBLE. WE CAN'T JUST STICK A WIND TURBINE AND IMAGINE IT'S GOING TO PROVIDE THE SAME SERVICE. THE NICE THING IS THE MARKETS GIVE US A MECHANISM TO PRICE ALL OF THOSE REQUIREMENTS SO WE HAVE LOCAL REQUIREMENTS IN A LOT OF THESE MARKETS THAT SERVE A VERY IMPORTANT ROLE. A LOT OF TIMES PEOPLE WILL THINK, WELL, THE MARKET CAN OPERATE AS A RESIDUAL, BUT THERE'S NO SUCH THING AS A RESIDUAL MARKET. THE MARKET IS THE MARKET. YOU CAN SORT OF PRETEND IT'S A RESIDUAL BUT IT IS SETTING THE MARGINAL PRICE FOR EVERY MEGAWATT THAT'S BOUGHT AND SOLD WHICH IS WHY THE MOPAR IS SO DEVASTATING FOR RESOURCES IT'S SUPPLIED TO. SO IF YOU THINK IN THAT CONTEXT, AND YOU SAY, WELL, WE'VE DEREGULATED WHOLESALE MARKETS, HOW CAN WE  WHAT IS OUR THEORY ON WHY THESE  WHY THE PRICES THAT CONSUMERS ARE GOING TO PAY IS JUST AND REASONABLE, THE WORST POSSIBLE OUTCOME FOR A CAPACITY MARKET IS WE NEED NEW RESOURCES, WE SET A PRICE THAT LOOKS LIKE IT WOULD RECOVER MORE THAN THE COST OF NEW ENTRY FOR NEW UNITS AND INVESTORS DON'T RESPOND SO THE PRICE KEEPS GOING UP. AND WE'RE WATCHING BILLIONS OF DOLLARS FLOW OUT THE DOOR. IT WOULD BE HARD TO IMAGINE WHO COULD LOOK AT THAT SCENARIO AND THINK WHAT WE'RE SEEK IS JUST AND REASONABLE. WHAT'S STOPS THAT IS WILLINGNESS OF INVESTORS TO PUT MONEY INTO THESE MARKETINGS, TO EITHER BUILD ASSETS, I LIKE THAT WE'RE FOCUSING ON RETIREMENT BECAUSE IT TAKES MONEY TO KEEP AN OLD 40, 50YEAROLD UNIT IN THE MARKET. AND THEIR WILLINGNESS TO PUT MONEY IN THE MARKET IS DIRECTLY DEPENDENT ON HOW CREDIBLE THE MARKET IS. THEY ARE NOT PAYING OFF IN ONE YEAR. THEY ARE PAYING OFF IN MANY YEARS. IF THEY SEE THINGS DOWN THE ROAD THAT COULD UNDERMINE THE MARKET AND REVENUE STREAMS THAT THEY MAY EXPECT FROM THE MARKET, THEN THEIR WILLINGNESS TO INVESTS IS GOING TO BE FUNDAMENTALLY UNDERMINED. THAT HURTS EVERYBODY. THAT HURTS THE STATES. IT HURTS CONSUMERS. IT HURTS INVESTORS. THIS ISN'T US VERSUS THEM. WE HAVE TO FIND A WAY TO KEEP THE MARKETS WORKING BECAUSE WE HAVE NO BACKSTOP. I KNOW WHAT IT MEANS IN THE MIDWEST TO SAY LET THE STATES TAKE IT OVER BECAUSE THEY ARE VERTICALLY INTEGRATED. I DON'T THINK WHAT IT MEANS IN THE NORTHEAST IF WE DON'T HAVE A MARKET THAT'S FUNCTIONAL. AT THE END OF THE DAY WE HAVE TO  BUT I ALSO RECOGNIZE THE IMPORTANCE OR THE TRUTH THAT LEGISLATURES PASS LAWS AND THERE'S NO CHOICE BUT TO IMPLEMENT THE LAWS THAT THEY PASSED, SO I THINK AT THE END OF THE DAY WE HAVE TO REALLY PUT OUR EYE ON WHAT IT IS THAT WOULD UNDERMINE THE MARKETS, YOU KNOW, WHERE THE RUBBER MEETS THE ROAD AND I TRIED TO ARTICULATE THAT IN THE COMMENTS AND I WORKED WITH ISONEW ENGLAND ON THEIR PROPOSAL TO REALLY FOCUS ON THE CORE OF THE ISSUE WHICH IS ARTIFICIAL SURPLUS, IF YOU CAN AVOID ARTIFICIAL SURPLUS THEN THERE'S AN AWFUL LOT YOU CAN ALLOW THE STATES TO DO THAT WOULD NOT FUNDAMENTALLY UNDERMINE THE MARKET. BUT I DON'T THINK, BACK TO YOUR QUESTION, I DON'T THINK ANYONE CAN MOVE AWAY FROM THE ANSWER TO THIS QUESTION WITH ANY OTHER ANSWER BUT THAT IT'S FERC'S RESPONSIBILITY TO ENSURE THESE MARKETS WORK TO MAINTAIN RESOURCE ADEQUACY AND FRANKLY THE OTHER PLANNING REQUIREMENTS THAT I MENTIONED.

>> GOOD MORNING, COMMISSIONERS AND COMMISSION STAFF. IT'S AN HONOR TO BE HERE. NO PUN INTENDED. DR. QUINN, YOU ASKED ABOUT RESOURCED A QUESTIONS. THE ISO BELIEVES ENSURING RESOURCE ADEQUACY REQUIRES A SINGLE ENTITY TO BE ACCOUNTABLE TO THOSE STANDARDS, THOSE ARE COMPLICATED STANDARDS, AND YOU FULFILLED THEM BY HAVING SOMEONE WHOSE FEET YOU CAN HOLD TO THE FIRE TO KNOW THEY ARE FULFILL. IN NEW ENGLAND GOING BACK 20 YEARS THAT RESPONSIBILITY WAS VESTED WITH THE ISO, AND OF COURSE INDIRECTLY AS NOTED WITH REGULATORS, THE FERC. IT IS POSSIBLE AS CHAIR LAFLEUR NOTED, I BELIEVE THE THIRD DOOR STATES COULD TAKE ON THAT MANTLE, I WOULD REFER TO AN ALBATROSS THROUGH ACTION WAS STATEREGULATED UTILITIES. ECHOES THE PRIOR PANEL, STATES HAVE NOT INDICATED TO US ANY INTEREST IN TAKING ON THAT ACCOUNTABILITY IN NEW ENGLAND, AT LEAST TO DATE. TO BE CLEAR, STATES HAVE TREMENDOUS INFLUENCE OVER WHAT GETS BUILT IN NEW ENGLAND THROUGH THEIR CITING AUTHORITY, ENVIRONMENTAL PERMITTING AUTHORITY, THROUGH OBLIGATIONS TO CARRY OUT LEGISLATIVE MANDATES. WE DON'T SEE THAT CHANGING. THAT'S BEEN TRUE FOR MANY, MANY YEARS. BUT ULTIMATELY WE DO NOT SEE  WE SEE THAT AS SOMETHING WE HAVE TO ACCOMMODATE. WE NO NOT FORESEE THE ISO FACING A DIMINISHED ROLE IN THE ENTITY THAT'S ACCOUNTABLE TO STANDARDS FOR RESOURCE ADEQUACY.

>> THE LAST TWO COMMENTERS, DAVID AND MATT, I HEARD VERY UNEQUIVOCALLY SAY IT'S THE MARKET'S ROLE AND ISONEW ENGLAND'S AND FERC'S ROLE TO DO RESOURCE ADEQUATELY, ULTIMATELY THE USE OF THE WORD ACCOUNTABILITY, ISO AND ISO NEW ENGLAND ARE ACCOUNTABLE FOR RESOURCE ADEQUACY IN NEW ENGLAND. IS THERE ANYONE ON THE PANEL WHO DISAGREE WAS THAT FAIRLY STARK STATEMENT? I SHOULD HAVE ASKED THE OTHER WAY SO I COULD GET COMMENTS. [LAUGHTER] IF NO ONE DISAGREES THAT THERE IS  THAT ULTIMATELY 

>> JUST  YES, I AGREE THE ISO PLAY AS CENTRAL ROLE. I WOULD ARGUE THAT DEFINES THE MINIMUM LEVEL OF RESOURCES THAT MIGHT BE NEEDED GOING FORWARD TO MEET THE RELIABILITY OBJECTIVES. MATT, I LIKE YOUR CHARACTERIZATION THAT, YOU KNOW, AT THE END OF THE DAY, THE ISO, YOU KNOW, REALLY IS GOING TO STAND TO BEING THE ACCOUNTABLE ENTITY. THANK YOU.

>> I'LL SIMPLY ADD THE WAY I HEARD THOSE STATEMENTS WITH THE CAVEAT THAT YOU STILL ARE RESPONSIBLE FOR IMPLEMENTING THE PLENARY REGULATORY POWER OF THE STATE LEGISLATURE, I WORKED IN THE GOVERNOR'S OFFICE WHEN MY HOME STATE OF VIRGINIA HAD LEGISLATION TO JOIN AN RTO. HAD ANYBODY REPRESENTED TO ANY GOVERNOR OF VIRGINIA THAT YOU'RE SURRENDERING STATE SOVEREIGNTY WHEN YOU JOIN THE RTO AND GIVING UP YOUR ABILITY TO ACT IN AREAS, WHETHER CLIMATE, RENEWABLES, GENERAL ENVIRONMENTAL POLICY, I WOULD HAVE A HARD TIME SEEING ANY GOVERNOR OF VIRGINIA I'VE KNOWN IN OUR MODERN HISTORY SIGNING SUCH LEGISLATION. IT'S WITH THE UNDERSTANDING THE STATES REMAIN THE ONE UNIT OF GOVERNMENT TO HAVE PLENARY POWERS, YOU DON'T ASK WHERE IS THE STATE ENUMERATED POWER, YOU ASK WHAT STOPS, ASSUME TO HAVE GENERAL REGULATORY POWER, THE ONLY CAVEAT.

>> THANKS, ARNIE. TO TAKE THE BAIT ON THAT ONE, I ABSOLUTELY AGREE THAT, YOU KNOW, IT'S THE ISOs, RTOs, FERC THAT ARE RESPONSIBLE FOR AND ACCOUNTABLE FOR THE RESOURCE ADEQUACY. AND RELIABILITY GENERALLY. AND I THINK WE KEEP HEARING THAT LOUD AND CLEAR FROM THE STATES AND I THINK EVIDENT IN THE DESIGN. THE CHALLENGE WE HAVE, JUST TO CONTINUE TO PILE ON, THE CHALLENGE IS THAT NOT WITH STANDING THAT, YOU KNOW, AS BILL DISCUSSED, THE STATES HAVE CERTAIN AUTHORITIES, HAVE CERTAIN INTERESTS, AND THOSE ARE BEGINNING TO INCREASINGLY IMPEDE OR STEP IN TO AFFECT THAT RELIABILITY ISSUE. SO WHEN STATES ARE DOING THINGS FOR OTHER PURPOSES, I WANT CLEAN ENERGY, OKAY, THAT'S FINE, YOU CAN GET CLEAN ENERGY. BUT THAT HAS EFFECT ON PRICE, IT HAS EFFECT ON RELIABILITY. HOW DO WE WALL THAT OFF, HOW DO WE ACCOMMODATE AND MAKE THAT WORK? I ABSOLUTELY AGREE THE RESPONSIBILITY IS HERE, BUT THE BIGGER CHALLENGE NOW IS TO SAY IN THE FACE OF ACTIONS THAT ARE GOING ON BEYOND THAT, CAN WE BUILD THE MARKETS THAT ACTUALLY STOP THE STATES FROM FEELING THAT THEY ARE NOT  THEIR NEEDS ARE NOT BEING SERVED AND HOW CAN WE ACCOMMODATE SO THE MARKETS REMAIN VIBRANT AND SUSTAINABLE.

>> AND TO CONTINUE ON IN THE DIRECTION THAT WE'RE GOING, THE ISO AND ANY FEDERALLY DESIGNATED AGENCY THAT'S IMPLEMENTING THIS RESPONSIBILITY OF COURSE NEEDS TO BE AWARE OF, YOU KNOW, THE REALITIES AROUND IT. I MEAN, ANALOGIZE IN MY WRITTEN COMMENTS UNDERSTANDING IMPLICATIONS OF STATE POLICY, IGNORING STATE POLICY, IN THE DESIGN OF MARKETS, IN THE ADMINISTRATION OF THE TRANSMISSION PLANNING PROCESS IS A TICKET TO HIGHER COSTS. PAY NOW OR PAY LATER. FAILING TO PLAN IS PLANNING TO FAIL. IT'S PLANNING TO FAIL AT HIGHER COST. IF THE WAY IN WHICH THAT VERY ACCURATELY DESCRIBED RESPONSIBILITY THAT WE ALL AGREE AS MATT SAID, IF WE  IF WE IGNORE THESE REALITIES IN DISCHARGING THAT RESPONSIBILITY BY THE ISO OF MAINTAINING RESOURCE ADEQUACY, IF WE IGNORE THE REALITIES OF THE STATE POLICIES, THEN WE WILL INCREASE COSTS. AND IT IS INCUMBENT UPON THE ISO IN DISCHARGING THAT RESPONSIBILITY TO PAY MIND TO POLICIES IN TERMS OF MARKET DESIGN AND IN THE WAY THAT IT DOES TRANSMISSION PLANNING AND COST ALLOCATION.

>> ALEKSANDAR MITRESKI, BROOKFIELD RENEWABLE. TO ADD ON TO WHAT WAS DISCUSSED EARLIER, I THINK IT WAS A THEME THROUGHOUT ALL OF THE COMMENTS THAT I READ THAT THE ISOS DO AN EXCELLENT JOB WITH LEAST COST ECONOMIC DISPATCH AND MEETING RELIABILITY. AND I THINK WHEN LISTENING TO PANEL WITH STATE REPRESENTATIVES AND IN PICKING UP TWO THEMES, ONE IS FRUSTRATION AND TRUST. SO FRUSTRATION THAT THE MARKET IS NOT DELIVERING THE NEEDS OF THE STATES. AND SETH SAID THE ISOs NEED TO DESIGN THE MARKETS WITH THAT IN MIND, I THINK THAT THE ISOs DO NOT HAVE THE MANDATE RIGHT NOW. THAT'S WHY THEY ARE ONLY FOCUSING ON THOSE TWO OBJECTIVES, LEAST COST AND RELIABILITY. NEW ENGLAND, THERE WAS A NEED, LEAST COST BASIS TO MAINTAIN RELIABILITY. I THINK WE'RE HERE FOR THE THIRD NEED, THIRD CONSTRAINT IN THE ISO MODEL IS NOT THERE AND HOW DO WE GET THERE WHERE THE ISOs DO FACTOR IN SOME OF THESE STATE POLICIES, SO THAT THEY OPTIMIZE THE SOLUTION TO THAT. I THINK THE ISOs HAVE THE ABILITY, HAVE THE TOOLS, HAVE CERTAINLY THE EXPERTISE TO DESIGN THAT MARKET, BUT I THINK IT TAKES A LITTLE BIT OF A TRUST AND PARTNERSHIP WITH STATES TO HAVE AN INPUT AND WHAT AND HOW THAT DESIGN IS IMPLEMENTED, SO THAT PUBLIC POLICIES ARE MET THROUGH THE MARKETS.

>> TOM?

>> ONLY WANTED TO REALLY COMMENT ON ONE THING, FROM A NEPOOL PERSPECTIVE WE'RE CERTAINLY INTERESTED IN THE INFORMATION THE COMMISSION HAS WITH GUIDANCE ON THESE ISSUES. BUT AT THIS POINT I'M NOT SURE WE'RE ASKING FOR A MANDATE ON THE ISO. ISO NEW ENGLAND HAS BEEN ENGAGED IN THE NEPOOL IMAPP PROCESS, AS HAVE REGIONAL STAKEHOLDERS IN THE STATES AND THE DISCUSSIONS ARE STILL ONGOING.

>> MAYBE THAT'S WHERE I'LL FOLLOW UP. IN THE COMMENTS, PRECONFERENCE STATEMENTS, ESPECIALLY WITHIN NEW ENGLAND THERE WAS A CERTAIN THEME AROUND THE ACCOMMODATE VERSUS ACHIEVE TYPE SOLUTIONS, AND TO SOME EXTENT SOME OF THE COMMENTS SUGGESTED THAT IT WAS REALLY A TWOSTEP PROCESS, THAT THE FIRST STEP WOULD BE ABLE TO ACCOMMODATE, THE SECOND STEP TO ACHIEVE, AND I THINK I'VE HEARD A LITTLE BIT OF THAT IN THE COMMENTS TO THE FIRST SET OF QUESTIONS. I WONDER, THE QUESTIONS, IT FEELS LIKE JEOPARDY WHERE YOU ANSWER BEFORE I ASK. [LAUGHTER] IS THE SENSE THAT YOU COULD STOP AND ACCOMMODATE, OR IS THERE A SENSE THESE THINGS THAT YOU HAVE TO START WITH ACCOMMODATES BUT THEN GET TO ACHIEVE, GET THAT MANDATE TO INCORPORATE? IF IT'S THE LATTER, WHAT HAPPENS IN BETWEEN, IS IT THAT WE MAGICALLY DISCOVER THE ACHIEVE ABILITY? AND HOW URGENT IS ALL OF THIS? IS IT URGENT TO GET FROM ACCOMMODATE TO ACHIEVE OR IS ACCOMMODATE A FINE LANDING SPOT? I DIDN'T PAY ATTENTION TO WHO WENT FIRST.

>> THANKS. I'M GOING TO SPEAK GENERALLY SO MAYBE I'LL GO FIRST. FIRST OF ALL, WHEN NEPOOL SAID UP ITS IMAPP PROCESS IT DIDN'T HAVE A SPECIFIC SOLUTION IN MIND. IN FACT, THAT WAS ITS PURPOSE, TO TRY TO INCREASE EDUCATION OF THE REGIONAL STAKEHOLDERS AND EXPLORE IDEAS TO HOW TO ADDRESS CHALLENGES. WE IS 17 DIFFERENT PROPOSALS. IN THE COURSE OF DISCUSSIONS, THERE ARE MANY ISSUES, A LOT OF COMPLEXITY, AND I THINK THINGS NATURALLY BROKE DOWN IN THE PROPOSALS BETWEEN ACCOMMODATE AND ACHIEVE. FROM NEPOOL PERSPECTIVE, ONE WAS NOT NECESSARILY PURSUED BEFORE THE OTHER. AS A PRACTICAL MATTER PROPOSALS WERE MADE, AS YOU'LL HEAR FROM ISO NEW ENGLAND WITH A SPECIFIC ACCOMMODATE PROPOSAL THEY ARE GOING TO BE BRINGING THROUGH THE COMMITTEE PROCESS. OUR PARTICIPANT AGREEMENT SETS FORTH STAKEHOLDER RULES, GIVE ISO NEW ENGLAND ABILITY TO BRING PROPOSAL TO THE PROCESS AND BRING COMPETING PROPOSALS BUT THERE'S A TARGET IN MIND ISO NEW ENGLAND HAS FOR A FEBRUARY 18, 2018 CAPACITY AUCTION. WE'RE GOING TO BE TAKING, CONSIDERING THE ACCOMMODATE APPROACH, AT LEAST ISO NEW ENGLAND AND PERHAPS OTHERS, BEFORE THE LONGER TERM BUT WE'RE STILL DETERMINING THE PACE AND DIRECTION EVER LONGERTERM SOLUTION. I WOULD EMPHASIZE AGAIN AT THIS POINT WE'RE HOPING THERE ISN'T A SPECIFIC MANDATE BUT WE'RE INTERESTED IN GUIDANCE.

>> BRIAN?

>> FIRST OF ALL, I THINK WE'RE CLEARLY IN THE ACCOMMODATE CAMP. I THINK WHEN WE STARTED THINKING ABOUT AND LOOKING AT HOW DO WE ACHIEVE A LOT OF THE OTHER OBJECTIVES THAT ARE OUT THERE, YOU KNOW, OUR CAPACITY MARKET CONSTRUCT IS INCREDIBLY COMPLEX. IT'S FROM A CONSUMER STANDPOINT, IT'S DIFFICULT TO UNDERSTAND. WHEN YOU SEE, YOU KNOW, AUCTION RESULTS WHERE, YOU KNOW, JUNE 1 OF 2017 CAPACITY COSTS ARE GOING TO TRIPLE, THE FOLLOWING YEAR THEY ARE GOING TO GO UP FOUR TIMES WHAT THEY ARE TODAY. THEN THEY ARE GOING TO DROP BACK DOWN, ONLY TRIPLE. AND THEN A YEAR AFTER THAT IT'S 2.4 TIMES WHAT THEY ARE. SO, YOU KNOW, THAT'S, AGAIN, LOOKING AT IT FROM THE PERSPECTIVE OF THE PEOPLE ON THE GROUND, PEOPLE AT THE ENDS OF THE PIPELINE WHO ARE GOING TO HAVE TO PAY THE BILLS, THERE'S DIFFICULTY UNDERSTANDING IT. WHEN WE LOOK AT ACHIEVEMENT, THE QUESTION BECOMES WHAT ARE THE OBJECTIVES, WHAT ARE YOU GOING TO DESIGN WHATEVER THE MARKET CONSTRUCT IS GOING TO BE, TO ACHIEVE? EACH OF THE NEW ENGLAND STATES AND THE REGULATORY JURISDICTIONS IN THE STATE HAVE THEIR OWN DISTINCT SET OF POLICY OBJECTIVES, THEIR OWN DISTINCT SET OF POLICY REQUIREMENTS. EACH OF THOSE HAS POTENTIAL IMPLICATIONS ON WHOLE SALE MARKET OUTCOMES. SOME STATES PUT A GREATER EMPHASIS ON ENVIRONMENTAL STEWARDSHIP. WE HEARD ANYTIME THE LAST PANEL. OTHERS LOOK MORE TO FUEL SECURITY. FUEL DIVERSITY. OR A NUMBER OF OTHER THINGS. IN ADDITION THERE'S A CONCERN OF ONE GROUP, ONE STATE HAVING TO SUBSIDIZES THE DIFFERENT POLICY OBJECTIVES OF ANOTHER STATE. SO WHEN YOU PUT ALL THAT TOGETHER, EVEN HAVING SMART PEOPLE LIKE DAVID PATTON AND MATT WHITE, TRYING TO DESIGN SOMETHING, UNLESS YOU CAN FIRST GET ALL THE PARTIES TO AGREE ON WHAT THE COMMON SET OF OBJECTIVES ARE GOING TO BE, AND THEN SECONDLY CONSOLIDATE ALL OF THOSE COMPETING OBJECTIVES INTO A SINGLE OBJECTIVE FUNCTION THEY CAN DESIGN AROUND THAT'S GOING TO BE VERY DIFFICULT TO DO. THAT'S THE CONCERN GOING TOO FAR IN TERMS OF THE LONGER TERM AND REALLY WHAT BROUGHT US TO  LET'S GET DOWN TO THE ACCOMMODATE, AVOID THE TRAIN WRECK NOW AND, YOU KNOW, GET SOME EXPERIENCE WORKING THROUGH THAT, AND MAYBE SOMETHING WILL COME UP WHERE WE CAN DO SOMETHING BETTER IN THE FUTURE. I MEAN, YOU KNOW, WE'VE HAD OUR MARKETS IN PLACE SINCE, YOU KNOW, THE EARLY 2000s, AND MAYBE THERE'S BEEN SIX OR EIGHT MONTHS WE HAVEN'T HAD A MARKET MAJOR REDESIGN INITIATIVE DURING THAT TIME.

>> THANKS.

>> PETE.

>> PETE FULLER, NRG. I THINK THE  IT'S A GOOD QUESTION, IT'S THE RIGHT QUESTION. I'D SAY THE ACCOMMODATE PIECE IS URGENT. I APPRECIATE ISO'S COMMITMENT TO MOVE FOR THE FC 18 TIME PERIOD, THAT'S ON A GOOD TRACK. I WOULD SAY IT'S A NECESSARY BUT NOT SUFFICIENT STEP. IF WE GO THAT FAR TO ACCOMMODATE, WHETHER THROUGH A SUBSTITUTION AUCTION OR SOME OTHER MECHANISM, I THINK WE CONTINUE TO HAVE THE SITUATION THAT I THINK THE STATE LEGISLATURES AND OTHER POLICYMAKERS LOOKED AT. WELL, YES, BUT THE MARKET'S NOT DOING WHAT I WANT SO I NEED TO ACT. WHAT I HOPE WE CAN DO, AND I GRANT IT'S NOT A TRIVIAL PROBLEM, IT'S A MASSIVE ONE, WE CAN MAKE PRETTY GOOD EFFORT AT IT TO FIGURE OUT THAT OBJECTIVE FUNCTION THAT BRIAN REFERRED TO, FIGURE OUT WHAT THE REGION NEEDS, EVEN IF IT'S NOT PRECISELY THE PRESCRIPTION THAT ANY ONE STATE WOULD LAY OUT BUT THAT ACTUALLY ADDRESSES THE CLEAN ENERGY AND RELIABILITY AND AFFORDABILITY GOALS AND BUILD SOMETHING THAT MOVES US IN THAT DIRECTION. AND THE HOPE WOULD BE THAT, YOU KNOW, THE NEXT TERM OF THE LEGISLATURE, THEY CAN LOOK AND SAY, WELL, YOU KNOW WHAT? THAT'S DOING WHAT WE REALLY WANT, OR IT'S CLOSE ENOUGH. IT GETS US WHERE WE'RE GOING. WE DON'T NEED TO ACT SEPARATELY. SO I THINK THE ACHIEVE PART IS  IT'S A NOW PROBLEM IN TERMS OF WORKING ON IT, BUT I THINK IT COMES JUST AFTER THE ACCOMMODATE IN TERMS OF IMPLEMENTATION. I WOULD SAY WE NEED TO GET THERE, IF WE'RE GOING TO GETS OUT OF THE CYCLE AND TO CHAIR LAFLEUR'S COMMENTSES AND SUE TIERNEY NOT TALKING ABOUT IT IN FOUR OR FIVE YEARS. I THINK WE HAVE TO GET THROUGH ACHIEVE.

>> WE'LL DO DAVID, MATT, BILL. AND THEN WE'LL GO TO THE COMMISSIONERS FOR QUESTIONS.

>> OKAY. SO I THINK IT'S HARD TO IMAGINE THAT ACHIEVE IS A GOOD IDEA, GOING BEYOND ACCOMMODATE. A LOT OF IT CENTERS AROUND THE OBJECTIVE AND WE CAN'T IGNORE WHAT THE OBJECTIVE IS. IF IT'S A TECHNOLOGY NEUTRAL PUBLIC POLICY OBJECTIVE LIKE WE DO CARBON EMISSIONS, THAT CERTAINLY IS ACHIEVABLE THROUGH MARKETS. WE MONITOR THE RGGI MARKET IN THE NORTHEAST, AND IT WORKS GREAT. THERE'S NO QUESTION IN MY MIND YOU COULD USE THE RGGI TO ACCOMPLISH ANY CARBON GOAL YOU COULD ARTICULATE, AND THEN THE WHOLESALE ELECTRICITY MARKETS WOULD ACTUALLY HELP YOU. ALSO NO QUESTION IT WOULD BE VERY EXPENSIVE IN THE SHORT RUN BUT IN THE LONG RUN I THINK SUBSIDIES END UP BEING MORE EXPENSIVE, ALLOWING THE MARKET TO ACHIEVE AN OBJECTIVE LIKE THAT ON THE OTHER HAND IF YOUR OBJECTIVE IS TECHNOLOGY SPECIFIC OR UNIT SPECIFIC EVEN, THAT'S JUST NOT SOMETHING THAT I CAN IMAGINE ACHIEVING. HAVING THE RTO ACHIEVE THAT IS NOT DIFFERENT FROM THE STATE RUNNING AN RFP, I'M NOT SURE WHAT THE ADVANTAGE OF DOING IT IS OTHER THAN IT GIVES YOU A MECHANISM TO SPREAD THE COST TO MORE PEOPLE WHICH SEEMS LIKE A DISADVANTAGE, IN MY MIND. I THINK ACCOMMODATE IS THE ESSENTIAL PIECE BECAUSE OUT ALLOWS YOU TO NAVIGATE WHERE THE MARKETS ARE GOING TO STRUGGLE TO PROTECT THE MARKET IN LIGHT OF WHAT STATES WANT TO ACHIEVE BUT I DON'T KNOW HOW YOU GO FARTHER BEYOND THAT. THE PROPOSAL THAT WE WORKED ON WITH NEW ENGLAND I THINK IS A SOUND LONGTERM PROPOSAL.

>> MATT?

>> FIRST I'D LIKE TO THANK DAVID FOR HIS LAST COMMENT, NOT AGREED ON IN ADVANCE SO I CERTAINLY OWE YOU A BEER FOR IT. I WOULD SECONDS A NUMBER OF COMMENTS RAISED BY BRIAN AND DAVID. WE AGREE ACCOMMODATING CURRENT ACTIVITIES OF THE STATE IS A PRESSING ISSUE FOR NEW ENGLAND. I THINK THAT'S AN INCREASINGLY PREVALENT VIEW I TAKE AWAY FROM MARKETS AND PUBLIC POLICY PROCESS TOM AND NEPOOL SHEPHERDED. WE'VE DEVELOPED A FAIRLY DETAILED PROPOSAL THAT WE BELIEVE IS WORTH VETTING AND WORKING WITH STAKEHOLDERS THE COMING YEAR AND CAN HELP LEAD TO A PRODUCTIVE SOLUTION TO THAT PROBLEM IN CONCERT WITH IDEA STAKEHOLDERS ARE BROUGHT FORWARD, AND THAT IS REALLY TIMELY AND ESSENTIAL BECAUSE OF THE PROCUREMENT TIMING HIGHLIGHTED BY COMMISSIONER O'CONNOR'S COMMENTS IN THE PRIOR PANEL. THAT SAID, YOU ASKED IN YOUR QUESTION, AND AS I WROTE IT DOWN, GET A MANDATE TO ACHIEVE AND SO FORTH. I KIND OF STOPPED AT THE WORD MANDATE, BECAUSE BEING ON THE BUSINESS END OF NINE COMPLEX MOPAR'S AND ORDERS UNDER THE PRIOR CHAIRMAN THE WORD MANDATE MAKES ME SHUDDER. IT'S A CHALLENGE TO MAKE PROGRESS AND KEEP UP WITH VOLUME OF ISSUES PRESSING PRICE FORMATION ISSUES AS IT STANDS TODAY. THAT SAID I THINK TO YOUR QUESTION ABOUT THE ACHIEVE OBJECTIVES, I THINK THERE ARE DIFFERENCES OF OPINION AMONG REGIONAL STAKEHOLDERS. I THINK IT RAISES  WHERE THAT WILL GO IS UNCLEAR AND WOULD WARRANT GREATER VETTING BEFORE ANYONE DRAWS FIRM CONCLUSIONS ABOUT THE REGIONAL POSITION ON THAT. AND AT A ROOT CAUSE, PART IS THAT IT RAISES SIGNIFICANT ISSUES THAT GO BEYOND THE ISSUES POSED BY JUST THE ACCOMMODATE SOLUTION. ONE OF THEM WAS HINTED AT BY ALEKSANDAR MITRESKI WHERE HE COMMENT THE ON SCOPE OF ISO'S AUTHORITY, CREATED ESSENTIALLY  ONE THING, KEEP LIGHTS ON EFFECTIVELY AND WHAT'S NOT NOTED IS MEET CERTAINLY ENVIRONMENTAL OBJECTIVES, IF WE'RE ASKED TO DO THAT THERE'S AN IMMEDIATE QUESTION, MAYBE THAT'S NOT A LITTLE STEP. THAT'S CHANGING IN FACT THE SCOPE OF WHAT ISOS ARE ASK THE TO DO. THERE'S NOTHING IN THE CORPORATE MISSION STATEMENT AND THIS TEES UP BROADER JURISDICTION QUESTIONS OF THE COMMISSION'S SCOPE OF AUTHORITY. THERE'S THE QUESTION OF WHAT ARE WE ACTUALLY SEEKING TO ACHIEVE, AS DAVID AND MANY OTHERS HIGHLIGHTED, PERHAPS JEFF'S PANEL THIS MORNING SAID ECONOMISTS REQUIRE SPECIFIC OBJECTIVES BEFORE THEY CAN GO DESIGN A GOOD MARKET FOR ANYTHING. I COULDN'T AGREE MORE. THERE ARE NO TRULY SPECIFIC OBJECTIVES ON THE TABLE FOR THAT, THAT PROCESS HAS NOT GONE FAR ENOUGH. PERHAPS MORE IMPORTANTLY, NOT ALL STATES NECESSARILY AGREE ON SPECIFIC OBJECTIVES THEY MIGHT WANT TO ACHIEVE. SO THAT MUST BE RECONCILED TAKING US BACK TO THE CHALLENGING ISSUES YOU POSED THIS MORNING ABOUT HOW DOES ONE RECONCILE DIFFERENCES WHAT THE STATES WANT THE ISO TO DO. THERE'S ONE ISO. WE'VE WRITTEN A FAIR BIT, THE JANUARY 25th PAPER MIGHT COLLEAGUES AND I DEVELOPED, TO GIVE BOTTOM LINE SO YOU DON'T HAVE TO READ ALL 25 PAGES, MANY OF THE IDEAS UNDER ACHIEVE WITH POSSIBLE EXCEPTION OF SOMETHING AN EXPANSION OF RGGI, RESTRICTED FROM STATE'S DOMAIN, ARE RESOURCE INTENSIVE, HIGH LEVEL INVOLVE NEW PRODUCTS, NEW AUCTIONS, ANYTHING THAT INVOLVES CREATING NEW PRODUCTS AND AUCTIONS INVOLVES NEW RULES AND STAKEHOLDERS PROCESS BUT SOFTWARE, FINANCIAL, ACCOUNTABILITY, PERFORMANCE STANDARDS AND YOU'RE IN A MULTIYEAR PROJECT, NOT SOMETHING FOR WHICH THE PATH IS ENTIRE CLEAR.

>> MY FEELINGS ARE NOT HURT BY THE WAY ABOUT THE PRICE FORMATION COMMENT. [LAUGHTER]

>> I'LL CLOSE BY SAYING MY OWN VIEW, I THINK CERTAIN VIEW, WE DON'T VIEW IT AS MARKET FAILURE WHEN THE STATE ACTS. THE STATE ACTS BECAUSE THEY ARE A SOVEREIGN ENTITY WITH BROAD REGULATORY POWER AND WHAT MAKES SENSE FOR A STATE IS SOMETHING THAT THE ELECTED OFFICIAL SAID ARE OFTEN IN THE BEST POSITION TO JUDGE. WE'VE BEEN HERE A COUPLE HOURS NO. NO ONE SAID THE WORD "CONGRESS" BECAUSE WE'RE IN A POLICY AND POLITICAL BUREAU WHERE WE REALLY DON'T EXPECT A LOT OF POLICY MAKING AT THE NATIONAL LEGISLATIVE LEVEL. IN THE ABSENCE OF FEDERAL LEGISLATIVE ACTION, IT'S NEITHER BAD NOR GOOD, SIMPLY AN OBSERVATION, OF COURSE YOU'LL SEE STATES BEING MORE ACTIVE. SHOULDN'T BE SURPRISING. WE'VE HAD REFERENCE TO RGGI, NINE STATES, DIFFICULTY OF CON SENSE SUSS. NEW ENGLAND AND SOUTHERN NEW ENGLAND IS A UNIT OF ANALYSIS. WHERE THE LOCUS OF POLICY IS, THE STATE LEVEL, THE WHOLE U.S. FEDERAL SYSTEM HAS BEEN DESIGNED. NOT A JUDGMENT OF REGULATORS OR MARKET FAILURE, SIMPLY PREROGATIVE OF THE STATE LEGISLATURE, NOTHING MORE THAN THAT.

>> AND TO PUT A LITTLE BIT OF A LEGAL AND CONSTITUTIONAL GLOSS ON THE MESSAGE THAT ACHIEVE IS MUCH HARDER. I THINK A BASIC PRINCIPLES OF COMITY AND COOPERATIVE OF FEDERALISM, FEDERAL EXERTION OF AUTHORITY OVER THE STATES IS MINIMIZED IF ONLY JUST IN ORDER TO KEEP THE WHEELS TURNING, YOU KNOW, THE FEDS ACT WHEN NEEDED. AND, YOU KNOW, SIMPLY THE ACHIEVE KIND OF GOALS WHERE THE FEDS  WHERE FERC AND DELEGATED AUTHORITY THROUGH ISO IMPOSES A SYSTEM THAT IS INTENDED TO ACHIEVE STATE GOALS AS OPPOSED TO ACCOMMODATE WILL REQUIRE MORE EXERTION OF FEDERAL AUTHORITY, MORE FRICTION, AND GOOD PRINCIPLES OF COOPERATIVE FEDERALISM SAY TRY THE THING THAT IS LOWER FRICTION FIRST BEFORE YOU DO THE THING THAT INDUCES MORE FRICTION. ONE THING THAT IS JUST IN TERMS OF REALITY OF WHAT'S GOING ON HERE AS CHAIRMAN O'CONNOR NOTED, MASSACHUSETTS EVEN DOING ANOTHER PROCUREMENT FOR TEAR 1 RENEWABLES AND HYDRO, LEGISLATION CALLS FOR, BOTH ARE ELIGIBLE, AND THAT PROCUREMENT IS LAUDABLE AND WONDERFUL, THAT WE REFLECTS A LONGERTERM GOAL, A DESIRE BY MASSACHUSETTS TO GET THEIR CUSTOMERS THE BENEFIT OF THOSE LONGERTERM OBLIGATIONS OF POWER THAT IS NOT  WHERE THE PRICE IS NOT SENSITIVE TO FUEL PRICES, JUST LOOKING WHETHER WE HAVE VACUUMS, WE DO NOT HAVE A FEDERAL MECHANISM THAT GETS CUSTOMERS THAT VALUE, THAT COMMODITY. NOW, IN THE LONG TERM, COULD SUCH A MECHANISM BE CREATED? CERTAINLY. THERE'S NOTHING THAT SAYS ALL FEDERALLY REGULATED MARKETS NEED TO BE REAL TIME OR DAY AHEAD, OR ONE YEAR OR THREE YEARS OR FIVE YEARS OR 15 YEARS. ONE COULD IMAGINE A MECHANISM WHERE A FEDERAL MARKET GOT CUSTOMERS THE VALUE OF THAT LONGERTERM RESOURCE BUT THAT WILL BE A HEAVIER LIFT, CIRCLE BACK WHETHER I STARTED, OVERALL THEME HERE, LET'S DO WHAT WE CAN THAT INDUCES LESS FRICTION, THAT IS ACCOMMODATE BEFORE WE START GOING DOWN THAT PATH OF TRYING TO FILL IN THAT  TO MEET THAT NEED THE STATES HAVE IDENTIFIED FOR CUSTOMERS TO GET THAT VALUE THROUGH A FEDERAL MECHANISM.

>> THANK YOU. COMMISSIONERS?

>> WELL, SINCE MOST OF YOU HAVE EXPRESSED A FAIR AMOUNT OF OPTIMISM OF COMING UP WITH SOME SORT OF REGIONAL SOLUTION, I HATE TO PILE ANOTHER KIND OF FUEL ON THE FIRE BUT I FEEL LIKE IT'S MY LAST CHANCE TO SEE YOU AND IT'S NO THE A CAR CHASE. THAT'S WHAT GOING AROUND MY HEAD, WHAT WORKS FOR NEW RESOURCES, WHO PICKS NEW RESOURCES, WHAT WORKS FOR EXISTING RESOURCES AND WHAT'S GOING ON. AND MOST OF THE POLICIES THUS FAR IN NEW ENGLAND ARE PROCUREMENT, SOME VERY SPECIFIC, AND THE ISO NEW ENGLAND CASPR PROPOSAL IS GEARED DO THAT, LET NEW THINGS IN, WEAN OTHER THINGS OFF. THE CONVERSATION IN OTHER RTOs WE'RE ABOUT TO START IS OUTOFMARKET PAYMENTS WHAT THE CONNECTICUT LEGISLATURE WAS TALKING ABOUT. MR. MURRAY SAID IN PREFILE COMMENTS HE DOESN'T THINK PAYING WHAT CONNECTICUT IS TALKING ABOUT IS AN OUTOFMARKET SOLUTION, AND IT WOULD NOT AFFECT THE MARKET, IF WHAT HAPPENS IN THE OTHER TWO REGIONS IN NEW YORK AND ILLINOIS HAPPENS HERE WHAT WILL HAPPEN IF THAT GETS PASSED IN A COUPLE DAYS WE'LL GET A COMPLAINT TO FERC. IT DOESN'T SEEM LIKE WHAT YOU'RE TALKING ABOUT IS ABOUT STORING UP EXISTING RESOURCES YET THE MORE NEW RESOURCES GETS PILED ON THE MORE THEY MIGHT NEED THAT. I'D LIKE TO ASK ANYONE ELSE WHILE WE HAVE THIS OPPORTUNITY TO COMMENT ON SUPPORT FOR NUCLEAR IN NEW ENGLAND, WHERE YOU SEE THAT FITTING INTO THIS PICTURE BECAUSE IT DOES SEEM WE SEE A LOT OF STATE POLICIES AND NOT ALL OF THEM FIT INTO THE PROCUREMENT PLAN THAT ISONEW ENGLAND TALKED ABOUT SO IF ANYONE HAS ANYTHING TO ADD I WOULD APPRECIATE IT.

>> I WILL TRY AND KICK IT OFF. THANK YOU, MADAM CHAIR. I THINK THE STRUCTURE THAT WE'VE TRIED TO ARTICULATE IN MY STATEMENT AND THAT WE PUT FORWARD IN THE IMAPP PROCESS WAS A BILATERAL RESIDUAL TYPE OF CONSTRUCT. REALLY WHAT WE'RE FOCUSING ON THERE IS SIMPLY IF A LOAD CUSTOMER OR STATES ON BEHALF OF CUSTOMERS IN GENERAL COME UP WITH A CONTRACT, AND THAT'S ENOUGH TO SUPPORT THE RESOURCE WITHOUT GETTING ANY AFTERMARKET PAYMENTS THAT COMES IN THERE, THE CHALLENGE IN THAT STRUCTURE, WHICH YOU MENTIONED WITH YOUR EARLIER PANEL, IS MAKING SURE THERE'S A CRITICAL MASS IN THE RESIDUAL MARKET, SO THAT PRICING IS SUFFICIENT TO ALLOW EXISTING RESOURCES TO REMAIN, CONTINUE OPERATING ANY OTHER RESOURCES THAT AREN'T PROCURED, SUBJECT TO BILATERAL CONTRACT, YOU KNOW, PRICES ARE HIGH ENOUGH THOSE CAN COME IN, THAT'S NOT A TRIVIAL CHALLENGE EITHER. AT A HIGH LEVEL, YOU KNOW, WE SEE THAT AS THAT FIRST STEP, BILATERAL MARKET, DOESN'T NECESSARILY HAVE TO DIFFERENTIATE BETWEEN NEW RESOURCES, EXISTING RESOURCES OR ANYTHING ELSE.

>> PREFILED COMMENTS, I DO UNDERSTAND THAT WHEN THE NEW ENGLAND STATES DEREGULATED, THEY DIDN'T DEREGULATE THE MUNIs, I UNDERSTAND THAT. IT SOUNDED LIKE YOU SAID TURN NEW ENGLAND INTO AN ISO, I DIDN'T SEE STATES DOING IN A. THERE ARE REGIONS THAT RUN WITH STATE RESOURCE, CAPACITY MARKET IS RESIDUAL BUT THAT'S A DIFFERENT CONSTRUCT. THAT'S JUST I MEAN  I KNOW WHERE YOU'RE COMING FROM. OKAY. THANK YOU. I'LL SHUT UP AND LET OTHER PEOPLE TALK.

>> I GOT BILL, ALEKSANDAR, PETE AND DAVID.

>> WITHOUT REPEATING WHAT'S IN THE PREFILED TESTIMONY ONE COMMENT I'LL MAKE, THE QUESTION THE CHAIR POSED ABOUT NEW YORK, ILLINOIS AND CONNECTICUT, I DON'T WORK IN NEW YORK OR ILLINOIS, SO I'LL SPEAK AT A GLOBAL LEVEL, GLOBALLY WHAT THE THREE STATES HAVE IN COMMON IS THEY ARE ATTEMPTING TO RECOGNIZE AN AROUND THE CLOCK CARBONFREE RESOURCE IN A WAY IN VARIOUS FORMS, IN A WAY THAT'S ANALOGOUS TO WHAT THEY HAVE DONE SINCE EARLY STAGE OF THE MARKET, RECOGNIZING WITH NUCLEAR FEWER UNITS WITH MORE MEGAWATT HOURS, ABILITY TO RUN AROUND THE CLOCK. YOU'VE GOT A MARKET FOR ENERGY. WHAT THE STATES ARE DOING IS RECOGNIZING CARBON ATTRIBUTES AT A TIME WHEN STATES ARE  THOSE THREE STATES SHARE A PHILOSOPHY TOWARDS MOVING TOWARDS A LOWER CARBON PUBLIC POLICY, LOWER CARBON ECONOMY, AND THAT IN OUR VIEW IS ENTIRELY COMPLEMENTARY TO THE ACTIVITIES OF THE MARKET. I WILL SAY MORE BROADLY WORKING BACK TO WHAT I SAID ABOUT SORT OF THE ABSENCE OF FEDERAL ACTION, WE WERE INVOLVED IN THE NUCLEAR INEQUALITIES IN WISCONSIN, A WELLRUNNING NUCLEAR UNIT THAT CLOSED FOR PURELY ECONOMIC REASONS. I DON'T THINK THAT WAS A PUBLIC POLICY SUCCESS AND I WOULD NOT NECESSARILY JUST SPEAKING ONLY FOR ME POINT THAT TO THAT AS A SUCCESS. IT'S SOMETHING YOU WOULD SAY WAS A MARKET FAILURE. THERE'S PROBABLY BROAD RECOGNITION AT THE FEDERAL LEVEL THIS IS A PROBLEM. THERE'S NOT EQUALLY BROAD FEDERAL ACTION, ABSENCE OF FEDERAL ACTION, STATES WERE APPROPRIATELY USING TOOLS THEY HAVE AND EXERCISING TOOLS, ALBEIT IN THREE FORMS, BUT WHAT IS IN COMMON AMONG THREE STATES RECOGNIZING CARBON ATTRIBUTES OF NUCLEAR.

>> THE STATE IS RECOGNIZING CARBON AND SOME OF THE DISCUSSION OF RESILIENCY AND SO FORTH WHICH IS FAIRLY HEAVY OVERLAP WITH WHAT THE ISO IS PRICING.

>> STATES ARE CHOOSING TO RECOGNIZE CARBON, NUCLEAR IS UNUSUAL, AND THAT IS AN AROUND THE CLOCK OR BASICALLY RESOURCE, IT'S AN INDUSTRY, WE'VE GOT TO USE MORE COMMON  WE'VE GOT TO LET BASE LOADED DISPATCHABLE, ONOFF SWITCH, NUCLEAR HAS THOSE ATTRIBUTES BUT THEY ARE DISTINCT ATTRIBUTES AND THERE'S ANOTHER ANOTHER RESOURCE THAT HAS BOTH THOSE ATTRIBUTES THAT'S IN PLACE NOW. STATES ARE BRINGING IN HYDRO, WHICH HAS SOME ATTRIBUTES. THEY ARE BRINGING IN MORE HYDRO, RIGHT.

>> ALEKSANDAR MITRESKI, SPEAKING OF HYDRO, EXCELLENT QUESTION, COMMISSIONER, BECAUSE  I'VE HEARD THE PANEL DISCUSS ACHIEVE AND ACCOMPLISH AND ACCOMMODATE BUT IF WE DON'T COME UP WITH A COMPREHENSIVE EXCLUSION WHAT'S HAPPENING IN THE CASPR SOLUTION A LOT GEARED TO NEW RESEARCH TO MEET STATE POLICIES, BUT THOSE NEW RESOURCES WILL HAVE SOME CONTEXT, SOME MAYBE INADVERTENT, STATE POLICIES DO NOT INTEND TO BE COUNTERINTUITIVE AFFECTING EXISTING RESOURCES, WHAT I STARTED INITIALLY THE COMMENT IF YOU PLACE ONE BAKER NEXT TO ANOTHER BAKER, THEY ARE PROVIDING THE SAME PRODUCT, ONE WILL CERTAINLY HAVE THE EFFECT ON ANOTHER IN TERMS OF REVENUE AND SPEAKING FROM HYDRO RESOURCES I THINK THERE'S COMPANIES FROM VARIOUS TECHNOLOGIES HERE NOTICE ROOM BUT IF I ASK ANYBODY THAT HAS A RESOURCE THAT'S 100 YEARS OLD AND STILL PERFORMING VERY FEW COULD RAISE THEIR HANDS. THEY GO THROUGH 30 OR 40 YEARS, INVESTMENT OF CAPITAL PERFORMING OVER THE LONGTERM PERIOD SO HAVING A COMPREHENSIVE SOLUTION THAT MAYBE AS JEFF POINTED OUT MAYBE WON'T MEET 100% OF STATE GOALS BUT MAYBE MEET 90% OF STATE POLICIES IN THIS SITUATION YOU COULD MAKE SURE THE EXISTING RESOURCES SUCH AS NUCLEAR, HYDRO, WIND, ALSO COMING IN, WILL CONTINUES TO MEET SOME STATE POLICY GOALS AND I THINK THAT'S WHERE IF WE OVERLOOK THAT WE'LL COME UP IN A SITUATION, I WANT TO LIST ONE MORE POINT, FCA TENT IN NEW ENGLAND WHERE A THOUSAND MEGAWATTS OF CAPACITY CLEARED BECAUSE THAT'S WHAT THE MARKET WAS SENDING THE SIGNAL. HOWEVER, WITH THE PROCUREMENTS NOW A THOUSAND MEGAWATTS MAY COME IN AND HYDRO. THE THOUSAND MEGAWATTS, WAS IT NECESSARY, THAT'S WHY GOING BACK TO THE ISO HAVING THAT COMPREHENSIVE VIEW, THEY CAN ENSURE THE PUBLIC POLICIES ARE MET.

>> PETE?

>> THANKS. AND CHAIR LAFLEUR, I HEARD THE ZING BETWEEN NEW RESOURCE, PROCUREMENT OF NEW, PAYMENTS TO EXISTING. I THINK THIS IS ONE OF THE CONUNDRUMS I'M STRUGGLING WITH AND STRUGGLING WITH IMAPP AND OTHER PROCESSES. I BELIEVE THE STATES AND REPRESENTATIVES ARE VERY SINCERE IN THEIR DESIRE FOR MARKET. AND RECOGNIZE THE TREMENDOUS VALUE THAT'S BEEN DELIVERED THROUGH MARKET BUT I THINK ONE OF THE PRINCIPLES WE HAVE TO KEEP IN MIND IN MARKETS IS, FOR LACK OF BETTER TERM, EQUAL PAY FOR EQUAL WORK. WE NEED TO COME UP WITH WAYS TO DEFINE WHAT IT IS WE WANT, IN WAYS THAT ARE TECHNOLOGY NEUTRAL, FUEL NEUTRAL AND LET THE MARKET FIND THE LOWEST COST OUTCOME. WHETHER IT'S NEW YORK OR ILLINOIS OR CONNECTICUT PENDING DISCUSSIONS AND FRANKLY A LOT OF WHAT MASSACHUSETTS IS DOING IN ITS RFPs IS NOT ABOUT THAT. IT IS VERY SPECIFIC. IT IS VERY DIRECTED. SOME CASES, THE DEFINITIONS ARE A LITTLE MORE TORTURED AND CIRCUITOUS BUT GET YOU TO THE SAME PLACE. WE KNOW EXACTLY WHAT WE WANT AS THE SOLUTION. TO TO ME IS WHERE THE RED FLAG SHOULD GO UP FOR THE COMMISSION AND SAY IF YOU REALLY DO SOMETHING THAT'S TECH NEUTRAL, FUEL NEUTRAL. WE CAN WORK WITH IT. IF YOU START TIPPING THE SCALE THERE'S GOING TO BE A PROBLEM. SO I THINK RECOGNIZING THAT EQUAL PAY FOR EQUAL WORK IS AN IMPORTANT PRINCIPLE TO KEEP IN MIND.

>> A LOT IS REVOLVING AROUND CARBON. EVERY STATE HAS A CARBON GOAL. RGGI, WE GOT A CLEAR PAPER FROM NESCOE, DON'T PRICE CARBON. NOW CONNECTICUT WANTS TO PRICE CARBON. WE GOT A LITTLE DISCONTINUITY.

>> IF I COULD JUMP IN, ONE QUESTION I HAVE IS COULD WE EVEN AGREE UPON THIS OBJECTIVE? WE HEARD FROM THE ECONOMISTS. IF WE NEED TO IMPROVE OUR MARKET DESIGN, WE NEED TO START WITH SOME METRIC. WHAT IS THE OBJECTIVE? CAN WE EVEN AGREE UPON THAT IF WE'RE GOING TO FIRST TACKLE ACCOMMODATING STATE POLICY, BEFORE WE EVEN GET TO THE TOPIC OF ACHIEVING, WHICH I THOUGHT I HEARD DAVID PATTON SAYING. LET'S START WITH ACCOMMODATING. THEN WE CAN TALK ABOUT ACHIEVING. SO I WANTED TO JUMP IN ON THAT CONVERSATION AND ASK YOU CAN WE EVEN AGREE UPON THAT FIRST OBJECTIVE?

>> IF I COULD, COMMISSIONER, YOU KNOW, WE PRESENTED THIS IDEA IN THE IMAPP PROCESS A FEW MONTHS AGO, AND AT THE TIME DID NOT REPRESENT IT AS THE ANSWER. BUT I THINK IT GIVES AN INTERESTING WAY TO SORT OF GET INTO THIS DISCUSSION, TO START TO GET YOUR HEADS AROUND IT. IN NEW ENGLAND, ALL OF THE SIX STATES HAVE RPS GOALS. SO CLEAN ENERGY GOALS. AND THOSE ARE LEGISLATIVE, AND THEY ARE ON THE BOOKS. AND SO AS A STARTING POINT TO BEGIN TO THINK ABOUT THIS, COULD WE LOOK AT THE ACHIEVE ELEMENT IN TERMS OF CLEAN ENERGY MARKET OR CLEAN ATTRIBUTE MARKET, TO SAY THEY HAVE ALL GOT THEIR TRAJECTORIES OF HOW MUCH CLEAN ENERGY THEY WANT. COULD THAT FORM THE BASIS OF A PURCHASE REQUIREMENT THAT IS CENTRALLY PROCURED? AND 

>> (INAUDIBLE).

>> SURE.

>> IF YOU AGREE WITH, I THINK A PANELIST ON THE EARLIER PANEL SAID MAYBE  MAYBE IT WAS BOB SCOTT, STARTING MAYBE WITH THE LEAST COMMON DENOMINATOR, SO I WANT TO PUSH YOU A LITTLE BIT ON THAT. WHAT DO YOU THINK ABOUT THAT AS A BEGINNING POINT?

>> IF YOU'RE THINKING THAT'S THE LEAST COMMON DENOMINATOR, WE PUT IT FORWARD TO MAKE IT TANGIBLE, THERE MAY BE ALIGNMENT EVEN IF IT ISN'T EVERYTHING IN THE FULL REQUIREMENTS, THERE IS AT LEAST A BASIS TO BEGIN WORKING ON SOMETHING, CREATE A STRUCTURE, CREATE A MECHANISM, AND AGAIN GLASS HALF FULL, IF PEOPLE SEE THAT THAT CAN BE EFFECTIVE AND CAN ACTUALLY BRING THE KIND OF INVESTMENT THAT THE MASSACHUSETTS LEGISLATION IS TRYING TO DO AND OTHERS ARE THINKING ABOUT, CAN WE, YOU KNOW, GET SOME MOMENTUM GOING AND BUILD ON THAT.

>> DAVID, YOU WANT TO TAKE A SHOT AT BOTH QUESTIONS?

>> SURE. I'M NOT QUITE AS OPTIMISTIC ON BRINGING SOME FORM OF CONSENSUS AROUND THE OBJECTIVE. I THINK IT'S INTERESTING BECAUSE THE OBJECTSIVE AND RATIONALE ARE WHO DIFFERENT THINGS. THE RATIONALE OR THE NEW ACTIONS IS ZERO CARBON, BUT AS WE'VE SHOWN IN OUR REPORTS IT'S GENERALLY CHEAPER TO ACHIEVE CARBON REDUCTION BUILDING REALLY EFFICIENT COMBINED CYCLE UNITS AND RETIRING IN CERTAIN LOCATIONS AND RETIRING HIGH EMITTING UNITS, WHICH IS OBVIOUSLY NOT AT ALL WHAT IS CONSISTENT WITH WHAT POLICIES THEY ARE PURSUING. I THINK WHAT WE HAVE IN WORKING IN VARIOUS REGIONS, WE HAVEN'T SEEN COALESCENS AROUND A SINGLE SET OF OBJECTIVES AND CERTAINLY WHEN YOU GET TO RENEWABLES, IT'S HARD TO EQUATE THAT WITH CARBON BECAUSE CARBON PRICE CAN'T BE HIGH ENOUGH TO MAKE A LOT OF RENEWABLES ECONOMIC. BUT TO YOUR QUESTION ON THE UNECONOMIC RETENTION, I SAW YOU RUBBING YOUR HEAD. IT LOOKED VERY FAMILIAR TO ME, I FIND MYSELF DOING THAT A LOT, THINKING ABOUT THESE ISSUES. AND WHAT MAKES IT A LITTLE EASIER I THINK IS WE ALWAYS TRY TO START WITH THE PRINCIPLE WHICH IS WHY I PUT THAT IN OUR COMMENTS ABOUT ANY SOLUTION YOU COMING UP SHOULD HAVE A SET OF PRINCIPLES AND IF THE FIRST PRINCIPLE IS THAT THE THREAT TO THE MARKET IS RELATED TO ARTIFICIAL SUPPLY YOU CAN SORT OF PUT EVERYTHING INTO THAT CONTEXT AND SAY, OKAY, HOW BIG A THE THREE ARE RENEWABLES, HOW BIG A THREAT IS HYDRO OR NUCLEAR INTERVENTION? RENEWABLES ENDS UP BEING A MUCH SMALLER THREAT THAN YOU WOULD THINK AND WE PUT A TABLE IN OUR COMMENTS SHOWING HOW MUCH  HOW MANY MEGAWATTS WE THINK ARE GOING TO BE GENERATED THROUGH VARIOUS INITIATIVES OVER TIME. AND THE REASON IS THAT MOST OF THE RENEWABLES GET VERY SMALL CAPACITY VALUE, SO THEIR ACTUAL SUPPLY IN THE CAPACITY MARKET IS SMALL WITH THE EXCEPTION OF HYDRO AND OFFSHORE WIND IS QUITE A BIT BIGGER THAN ONSHORE WIND BUT NUCLEAR ENDS UP BEING A BIGGER THREAT IN SOME REGARDS THAN SMALLER AND OTHER. BIGGER WITH RESPECT TO THE SIZE OF THE UNITS WE'RE TALKING ABOUT. THERE'S NOTHING ON THE HORIZON ON THE RENEWABLE SIDE THAT COMES EVEN CLOSE TO THE SIZE OF SOME OF THESE NUCLEAR UNITS. ON THE OTHER HAND, THEY ARE FAR CLOSER TO BEING ECONOMIC THAN SOME OF THE RENEWABLES. BUT IN THINKING ABOUT IT IN THAT CONTEXT I THINK YOU CAN LOOK AT SOLUTIONS LIKE THE CASPR SOLUTION AND IT COULD ACTUALLY BE APPLIED IN AN UNECONOMIC RETENTION SORT OF CONTEXT. BUT THEN THE LAST THING I WOULD SAY IS AT THE BEGINNING OF OUR COMMENTS WE TALK ABOUT AND I CAN'T THINK OF ANOTHER WORD OTHER THAN LEGITIMATE BUT WE  I THINK SOMEBODY MENTIONED THAT DISTINCTION OF LEGITIMATE POLICY AND POLICY THAT IS TARGETED AT OBJECTIVES RTOs HAVE HANDLED. WHEN YOU START LOOKING AT UNECONOMIC RETENTION, THE NUCLEAR I THINK THERE'S SOME ARGUMENTS ABOUT IT BEING CARBON RELATED BUT THERE ARE OTHER UNECONOMIC RETENTION THAT I THINK IS MUCH HARDER TO PUT IN THAT CONTEXT. SO IF YOU'RE DOING DOWN THE ROAD OF ADDRESSING UNECONOMIC REESSENTIAL IT'S IMPORTANT TO MAKE THAT DECISION AND NOT ACCOMMODATE EVERYTHING.

>> TO COMMISSIONER HONORABLE'S QUESTION, BILL, SETH, TOM AND BRIAN.

>> WE TALK ABOUT THREE STATES, ZEROED IN ON CONNECTICUT A LITTLE BIT. WE'VE BEEN TALKING ABOUT UNIQUE ATTRIBUTES OF EACH STATE, ONE ATTRIBUTE OF CONNECTICUT HIGHEST POWER PRICES PAID BY RETAIL CUSTOMERS IN THE LOWER 48 SO THERE'S AN OPPORTUNITY, THAT VARIES A LITTLE MONTH TO MONTH, BUT THINKING OF STATES WE OPERATE IN RESIDENTIAL RATES IN VIRGINIA ARE COMPARABLE, SO LOOK AT CONNECTICUT POLICYMAKERS AND OPTIONS AVAILABLE TO THEM, AS I UNDERSTAND THE CONVERSATION AROUND 106, THE LEGISLATION THAT'S BEEN REFERENCED, THERE'S DISCUSSION, IS THERE AN OPPORTUNITY TO RECOGNIZE THE CARBON ATTRIBUTES OF TWO VERY LARGE NUCLEAR UNITS, CONNECTICUT HAS. ONE REASON CONNECTICUT IS ACTING IN THIS AREA IS CONNECTICUT'S GOT TOO BIG NUCLEAR UNITS, OVER HALF GENERATION OF THE STATE, STATE WITHOUT NUCLEAR UNITS MAY FEEL LESS PRESSED TO ACT IN THAT REGARD. SO AS I UNDERSTAND THE POLICY CONVERSATION, CONNECTICUT, THIS IS HAS NOT PASSED THE GENERAL ASSEMBLY YET, CAN WE HAVE OUR CAKE AND EAT IT TOO. CAN WE RECOGNIZE CARBON ATTRIBUTES AS THE CHAIR ACKNOWLEDGED AT THE SAME TIME PROVIDES LONGTERM PRICE CERTAINLY FOR CUSTOMERS RECOGNIZING AS WAS SAID THAT NUCLEAR IS AS A RESOURCE MORE COMPETITIVE WITH WHERE GAS IS NOW AND OTHER TIMES OF RESOURCES, RECOGNIZING ANY WHO FEEL WE CAN PREDICT NATURAL GAS MARKETS FOREVER AND EVER AGAIN SHOULD BE ON THE PRIVATE ISLAND WE'VE BEEN TALKING ABOUT. IS A SPOT TO HAVE OUR CAKE IN CONNECTICUT AND EAT IT TOO WITH LONGTERM PRICE CERTAINLY, POTENTIALLY A SAVINGS TO CUSTOMERS BY CUTTING OUT INTERMEDIARY PARTIES INVOLVING THE MIDDLEMAN AND ACHIEVE CARBON GOALS. AS I UNDERSTAND THE CONVERSATION AROUND THE LEGISLATION, THAT'S THE GOAL OF THE LEGISLATION.

>> WE DON'T HAVE TIME FOR HOW MUCH OF YOUR COST INCREASES ARE DRIVEN BY THE WHOLESALE ENERGY MARKETS AND VERSUS OTHER THINGS AND I THINK THIS IS ANOTHER THING YOU'RE GOING  IT'S GOING THROUGH RETAIL RATES I ASSUME. I MEAN, IT'S A STATE DECISION.

>> I'LL SIMPLY OBSERVE THE VERY SIGNIFICANT DOWN TURN WHOLESALE POWER PRICES IN NEW ENGLAND HAS NOT BEEN FULLY REFLECTED IN RETAIL BILLS SAVED BY CUSTOMERS IN CONNECTICUT.

>> ONE VERY SIMPLE THOUGHT IS THAT THE  THAT YET ANOTHER REASON TO FOCUS ON ACCOMMODATE RATHER THAN ACHIEVE IS FOR THIS REASON OF IDENTIFYING OBJECTIVES, THAT, YOU KNOW, IT IS YOU NEED TO REFINE OBJECTIVE NEEDED MUCH MORE SHARPLY, IF YOU ARE ACTUALLY SHAPING AN ACHIEVEMENT MECHANISM AS OPPOSED TO ACCOMMODATE. I WOULD SIMPLY SUGGEST IN TERMS OF THE CONVERSATION GOING ON HERE ABOUT, YOU KNOW, THE QUESTION OF A, YOU KNOW, AN OPEN PROCESS INTENDED TO INSPIRE NEW GENERATION AS OPPOSED TO SUBSIDIZING EXISTING GENERATION THAT ONE PRINCIPLE ONE MIGHT LOOK AT IS THAT A STATE IN ATTEMPTING TO ACHIEVE A LEGITIMATE GOAL LIKE GREATER PRICE STABILITY, NOT DICTATING BUT TRYING TO ACHIEVE CUSTOMER PROTECTION AGAINST VICISSITUDES OF RISING FUEL PRICES, THAT A STATE MIGHT BE REQUIRED TO EMPLOY MORE OF A MARKET MECHANISM, WHETHER THAT'S THROUGH A COMPETITIVE RFP THAT'S TRULY OPEN AND COMPETITIVE TO ALL COMERS OR MORE OF AN AUCTION OR SOMETHING LIKE THAT, BUT AS OPPOSED TO, AS PETE WAS SAYING, SOMETHING MORE FOCUSED ON A TARGETED EXISTING RESOURCE, SIMPLY SAYING TRYING TO WALK THAT LINE, THE STATE HAS THIS LEGITIMATE DESIRE TO MAINTAIN GREATER STABILITY FOR THE CUSTOMERS THAT LIVE WITHIN ITS BORDERS, LET'S FIGURE OUT A WAY TO ACCOMMODATE THAT IN A MECHANISM THAT, YOU KNOW, RECOGNIZES THAT THERE IS  THAT THEY ARE DOING THAT IN A METHOD THAT IS MOST RESPECTFUL OF MAINTAINING MARKETS.

>> TOM.

>> BEFORE I CONCLUDE, ONE IS THAT I THINK OUR  OUR MERE PRESENCE HERE TODAY SHOULD REFLECT THAT WE ABSOLUTELY WANT TO BE ACCOMMODATING. BUT WE ALL HAVE MANDATES TOO. I THINK IT WAS MR. MURRAY THAT SAID THE C WORD, CONGRESS. WE'RE GETTING OURS FROM CONGRESS. AND WE CAN HAVE ANOTHER SUBJECT, ANOTHER CONVERSATION ON ANOTHER DAY WHAT TIME LOSS IS AND THE ROLE OF STATE AND FEDERAL GOVERNMENT. FOR OUR STATE WE WANT TO ACCOMMODATE STATES BUT IT'S GOING TO TAKE COOPERATION ON BOTH OF OUR PARTS. IT'S NOT JUST THE FEDS DOING SOMETHING TO THE STATES. OR INCREASING RATES ON RETAIL CONSUMERS. THIS IS ABOUT  THIS IS THE HARD PART. WHILE MAYBE DR. PATTON ISN'T AS HOPEFUL AS I AM, I'M HOPEFULLY WITH THE EXPERTS WE HAVE HERE WE'RE GOING TO FIND A GLIMMER OF THE START COOPERATION WE'RE BOTH OPERATING IN REALITY, OUR GOING IS GOING TO IMPACT THE OTHER SO I APPRECIATE YOUR COMMENTS TODAY.

>> TOM?

>> THANKS. A GOOD FOLLOWUP. THE NEW ENGLAND REGION HAS BEEN COOPERATIVE DIALOGUE. WITH RESPECT TO YOUR QUESTION ABOUT WHAT'S THE OUTLOOK ON PROGRESS OF ACHIEVING SOME TYPE OF PROPOSAL TO ACCOMMODATE STATE RESOURCES, WE ALL WORK BETTER UNDER DEADLINES AND ISONEW ENGLAND IS INTRODUCING ITS PROPOSAL INTO OUR PROCESS IN JUNE. THEY ARE GOING TO HAVE A CERTAIN SCHEDULE ON THAT. I PRESUME IF THEY ARE LOOKING FOR THE FEBRUARY AUCTION, SOMETIMES TOWARDS THE END OF THIS YEAR. AND WE HAVE THE RIGHT UNDER PARTICIPANTS AGREEMENT TO OFFER CONTINUING PROPOSALS, THEY CAN ULTIMATELY REQUEST A VOTE HOPEFULLY WITH THE CONSENSUS, AND I'M SURE THAT'S WHAT THEY ARE WORKING TOWARDS. BUT IF NOT, THERE CAN BE COMPETING PROPOSAL, IT COULD BE A JUMP ALL FILING UNIQUE TO NEW ENGLAND, BUT I THINK THAT YOU'LL HAVE MORE FEEDBACK ON THAT BY THE END OF THIS YEAR. THANK YOU.

>> I JUST WANT TO CONFIRM AND SECOND TOM'S CHARACTERIZATION, THE ISO BELIEVES ACOMING  ACCOMMODATING ISSUE IS PRIORITY. THERE ARE ISSUES ON THE TABLE. WE'VE ADDED OURS, WE THINK IT'S PRUDENT FOR REGION TO WORK TOWARD BEING ABLE TO AVAILABLE THIS TO USE IN THE AUCTION IN 2019 REQUIRING BECAUSE OF THE TIMING WHEN RESOURCES MAY ELECT TO MAKE DEADLINES UNDER THE CURRENT TARIFF WOULD REQUIRE COMMISSION DECISION, HOPEFULLY A FULL COMMISSION DECISION, BY APPROXIMATELY MARCH WHICH MEANS WE WOULD BE AIMING WITH THE REGION TOWARD A FILING NO LATER THAN THE FIRST OF THE NEW YEAR, A PUSH FOR THE REGION, WE LOOK FORWARD TO THE OPPORTUNITY TO WORK WITH EVERYONE.

>> WE HAVE TO WRAP UP. I'LL SAY THANK YOU TO THE PANELISTS, APOLOGIZE TO THOSE WHO DIDN'T HAVE THE CHANCE TO SPEAK AND LOOK FORWARD TO THE NEW YORK STATE PANEL RIGHT NOW. THANK YOU.

>> WE'RE GOING TO TRY TO GET GOING. WE'RE RUNNING BEHIND SCHEDULE AND YOU'RE GOING TO HAVE TROUBLE GETTING LUNCH IF YOU WANT TO COME BACK FOR THE AFTERNOON. WE'RE GOING TO GET STARTED NOW. WE'RE RUNNING ABOUT 15 MINUTES BEHIND SCHEDULE. AT THIS POINT I THINK OUR PLAN IS JUST TO ADJUST THE SCHEDULE A BIT SO THAT WE KEEP THIS PANEL GOING FOR ABOUT 40 MINUTES, THAT WILL HAVE US ENDING FOR LUNCH AROUND 12:37 AS A HARD STOP. THAT WILL GIVE YOU ALL A LITTLE LESS THAN AN HOUR FOR LUNCH. ALL RIGHT. SO APPRECIATE THE DISCUSSION SO FAR THIS MORNING WITH OUR SECOND SESSION, FOCUSED ON NEW YORK ISO. WE'LL START AGAIN WITH OUR STATE PANEL, EXACTLY THE SAME FORMAT, SAME OBJECTIVE AS WE HAD FOR OUR STATE PANEL WITH ISONEW ENGLAND. SO I WILL CUT TO THE CHASE AND INTRODUCE OUR PANELISTS AND STAY THANK YOU FOR JOINING US. WE HAVE SUSANNE DesROCHES, FROM THE DEPUTY DIRECTOR OF POLICY INFRASTRUCTURE FOR CITY OF NEW YORK. WE IS JANET JOSEPH, VICE PRESIDENT FOR INNOVATION STRATEGY AT NYSERDA AND SCOTT WEINER, DEPUTY OF MARKETS AND INNOVATION FOR NEW YORK STATE DEPARTMENT OF PUBLIC SERVICE. THANK YOU FOR JOINING US. WE LOOK FORWARD TO HAVING YOU JOIN US AFTER LUNCH AT THE STATE TABLE, BUT SO I THINK THE FIRST COUPLE SESSIONS THIS MORNING WE HAVE KIND OF GRAVITATED TO THE OPENING QUESTION WHAT ROLE DO YOU SEE AS REPRESENTATIVES OF THE CITY OR THE STATE FOR THE WHOLESALE MARKETS BROADLY BUT ALSO VERY PARTICULARLY IN PROVIDING RESOURCE ADEQUACY. I THINK WE HAD  WE HEARD ONE MESSAGE FROM NEW ENGLAND, BUT THE PURPOSE REALLY OF OUR FIRST DAY OF DOING REGIONAL PANELS, REGIONAL SESSIONS, IS BECAUSE WE THINK THERE'S POTENTIAL YOU'LL GIVE US A DIFFERENT ANSWER. SO WE LOOK TO HEAR WHAT YOUR POINT OF VIEW IS ON WHAT ROLE YOU HOPE FOR THE WHOLESALE MARKETS AND IN PARTICULAR IN ACHIEVING RESOURCE ADEQUACY.

>> THANK YOU. I'LL START. WITHOUT WANTING TO BE FACETIOUS I WOULD SAY IT DEPENDS. ONE OF THE TAKEAWAYS FROM ALL THE DIALOGUE THAT'S PRECEDED THIS MORNING, AND THE COMMISSIONER, MANY OF YOU WERE IN NEW YORK CITY ABOUT TWO YEARS AGO, TWO AND A HALF YEARS AGO WHERE PART OF THIS DISCUSSION TOOK PLACE. IT TAKES PLACE IN MANY VENUES AND MANY FORUMS. WE HEARD THIS MORNING, IT DEPENDS. I WANT TO REALLY STRESS THE POINT THAT HOW WE COLLECTIVELY DECIDE SOMETHING IS A NECESSARY PREREQUISITE AND IT CAN BE AS IMPORTANT CERTAINLY, MAYBE MORE IMPORTANT THAN WHAT WE DECIDE. AND I'D LIKE TO STRESS THAT IF WE'RE GOING TO TACKLE THAT, WE'RE IN A REFLECTION POINT, ONE IS THE ELEPHANT, THE HERD OF ELEPHANTS IN THIS ROOM, IS TO REALLY NOT ONLY RECOGNIZE THAT WE'RE AT THIS INFLECTION POINT, NOT THE SAME SET OF ENVIRONMENTAL INFLUENCES THAT AFFECT OR SHOULD INFLUENCE MARKET DESIGN THAT AS THE PAST, WE NEED TO EMBRACE AND SET THAT. I WANT TO ENDORSE THE POINT WE HAVE TO COME UP WITH PRINCIPALS, UNLIKE DAVID PATTON I'M VERY OPTIMISTIC THAT WE CAN FIND SIMILARITY, NOT JUST BECAUSE WE HAVE TO, BUT BECAUSE IF WE'RE WILLING TO START AND SAY LET'S RECOGNIZE THE PARADIGM THAT EXISTED TODAY, NOT THE 1990s, NOT THAT EVOLVED THROUGH WELLMEANING AND WELLTHOUGHTOUT BUT BOLTED ON SOLUTIONS TO A PRIOR STRUCTURE, I'M VERY OPTIMISTIC. WE TRY TO MAINTAIN CURRENT STRUCTURE, IGNORE THE FACT THERE ARE STATE POLICIES, THERE ARE NEW TECHNOLOGIES. NEW YORK'S JUST AN EXAMPLE OF THAT. WE'RE GOING TO TALK ABOUT MARKETS AND SOMETIMES THE TERM MARKETS IS CONFLATED TO MEAN FEDERAL WHOLESALE MARKETS BUT THIS ROOM IS AWASH WITH NOT JUST MARKET PARTICIPANTS BUT PEOPLE WHO OPERATE IN VARIOUS MARKETS. NYSERDA, MY COLLEAGUE WILL TALK ABOUT THAT, OPERATES A COMPETITIVE MECHANISM TO GET THE ATTRIBUTES AT THE HEART OF OUR STATE'S POLICIES. WE'RE THE CORNERSTONE OF REGS OF DEVELOPING A CORNERSTONE MARKET TO INTERFACE WITH THE WHOLESALE MARKETS. TO ANSWER THE QUESTION, IS THERE A ROLE FOR WHOLESALE MARKETS, ABSOLUTELY. IS IT GOING TO CHANGE? PROBABLY. I DON'T WANT TO SIT HERE AND TRY AND TAKE OUT MY SCALPEL AND SAY HOW WOULD I SURGICALLY ADJUST THINGS TODAY IF NOTHING ELSE COMES FROM THIS CONFERENCE, I HOPE IT'S THAT THERE'S SOMETHING THAT WE'RE DOING ON WEDNESDAY, SOMETHING TO CONTINUE THE DISCUSSION THAT HAPPENS TODAY. I WANT TO CLOSE FOR THE MOMENT AND SAY THAT THERE IS A LOT OF GOOD WORK GOING ON AT THE REGIONAL MARKET LEVEL. TOMORROW MY TEAM, JANET'S TEAM, TOGETHER WITH BRAD JONES' TEAM WILL BE TAKING A LOOK AT AN IDEA DEVELOPED AT THE NYISO. WE DON'T KNOW WHETHER IT CAN BE OR SHOULD BE SUPPORTED OR SHOULD BE EVOLVED BUT WE HAVE TO TURN OVER THE STONE. WE HAVE TO WORK TOGETHER TO SEE WHAT POSSIBLE SOLUTIONS ARE, BUT ALSO I THINK THERE'S A ROLE FOR THE FEDERAL AGENCY. AND I PUT THAT IN MY REMARKS. I THINK THE FEDERAL AGENCY CAN BE A CONVENER OF THOSE THAT WORKED AT THE STATE LEGAL WITH THE STATE MARKET, THAT COULD BE A STARTING POINT BECAUSE WE NEED TO FIND COMMONALITY. WE NEED TO IDENTIFY THE FIRST PRINCIPLES. SOMETIMES THE EXERCISE FEELS TOUCHYFEELY BUT I DON'T KNOW HOW WE SHALL GOING TO GET AN ANSWER THAT'S GOING TO PREVENT US FROM BEING BACK HERE HAVING THE EXACT SAME DISCUSSION A YEAR OR TWO FROM NOW UNLESS WE START WITH RECOGNITION THAT THINGS CHANGE AND NEED TO DEVELOP A PRINCIPLE.

>> LET ME TRY TO BUILD UPON THAT. THANK YOU VERY MUCH FOR INVITING US TO PARTICIPATE IN THIS SESSION. WE DO BELIEVE THIS IS A VERY IMPORTANT DIALOGUE AND ONE THAT WILL NEED TO CONTINUE. NYSERDA, FOR THOSE NOT FAMILIAR, WE'RE THE CLEAN ENERGY ORGANIZATION IN NEW YORK STATE. NOT THE REGULATORS. THAT'S THE PURVIEW AT THE DEPARTMENT OF PUBLIC SERVICE. WE WORK VERY CLOSELY TOGETHER TO DESIGN OUR POLICY STRUCTURES AND IMPLEMENT OUR PROGRAMS. NYSERDA IS CHAIR OF THE ENERGY PLANNING BOARD SO WE'RE INVOLVED IN DESIGNING POLICY AND IMPLEMENTING A NUMBER OF PROGRAMS THAT ARE BEING DEVELOPED UNDER THE REFORMING THE ENERGY VISION FRAMEWORK. IN DOING THIS, WE WORK WITH A RANGE OF ENERGY MARKET PARTICIPANTS FROM UTILITIES TO NEW TECHNOLOGY SOLUTION PROVIDERS TO RESEARCHERS, CLEAN TECH COMPANIES, FINANCERS, CONSUMERS, AS WELL AS MARKET PARTICIPANTS THAT ARE IN THIS ROOM. IT IS VERY CLEAR THAT THE ENERGY LANDSCAPE IS CHANGING. WE HAVE DISTRIBUTED ENERGY RESOURCE TECHNOLOGY TODAY THAT WE ONLY DREAMED OF BACK IN THE EARLY DAYS WHEN WE WERE RESTRUCTURING THE INDUSTRY. WE'RE SEEING PRICES COME DOWN AND DISTRIBUTED ENERGY RESOURCES IN RENEWABLE ENERGY. WE'RE SEEING EXPRESSION OF CUSTOMER PREFERENCE CHANGING. WE ARE SEEING SOME CUSTOMERS WHO WANT MORE GREEN PRODUCTS OR MORE SECURE LONGTERM VISIBILITY INTO PRICE. WE'RE SEEING NEW SOLUTIONS FOR RESILIENCY. AND WE'RE EVEN SEEING NEW BUSINESS MODELS THAT WE BELIEVE CAN OPEN UP CLEAN TECHNOLOGY TO NEW CLASSES OF CONSUMERS. SO MY MESSAGE HERE IS CERTAINLY AGREEING WITH THE EARLIER PANEL, THE MARKET IS CHANGING, OUR ENERGY LANDSCAPE IS CHANGING. OUR POLICY CONSTRUCT IS CHANGING. THAT WILL NO DOUBT AFFECT THE MARKETS. NOW, THESE CHANGES THAT I JUST WENT THROUGH ARE POSITIVE, GENERALLY, THEY ARE POSITIVE. FROM A POLICY PERSPECTIVE IN NEW YORK, WE STILL DO NOT SEE BUSINESS AS USUAL EVOLUTION SOLUTION TO ADDRESS THE ENERGY POLICY CHALLENGES. WHEN WE LOOK AT ENERGY, I'M GOING TO CITE SUE TIERNEY'S REMARKS, THEY TALKED ABOUT INVOLVING SIMULTANEOUS EQUATIONS, WE'RE TRYING TO SOLVE AN EQUATION THAT'S GOING TO BUILD AN INCREASINGLY RESILIENT ENERGY SYSTEM, A DYNAMIC SYSTEM THAT'S CAPITAL EFFICIENT, WE NEED TO DEVELOP CLEAN TRANSPORTATION SYSTEMS. WHEN WE LOOK AT CLEAN TRANSPORTATION FUTURE IT IS LINKED TO OUR ELECTRIC SYSTEM AND WE NEED TO THINK THROUGH ALL OF THAT. AND YES WE NEED TO REDUCE GREENHOUSE GAS EMISSION AND PRESERVE QUALITY OF OUR ENVIRONMENT. AND THEN ALL OF THIS NEEDS TO BE DONE WHILE MAINTAINING AFFORDABILITY AND DRIVING SYSTEMWIDE SAVINGS TO CUSTOMERS. THERE ARE MULTIPLE THINGS IN OUR POLICY FRAMEWORK THAT WE TRY TO SOLVE FOR. I THINK THAT'S VERY CRITICAL TO UNDERSTAND FROM THE STATE PERSPECTIVE. SO THE ECONOMIC EFFICIENCY OF A WHOLESALE POWER MARKET IS ONE PIECE OF OUR ENERGY EQUATION. WE VIEW IT AS A VERY IMPORTANT PIECE OF THE EQUATION. IN ADDITION TO THESE OTHER ELEMENTS THAT WE'RE TRYING TO SOLVE FOR. MANY OF YOU MAY BE FAMILIAR WITH THE POLICIES THAT HAVE BEEN ESTABLISHED IN NEW YORK STATE. WE HAVE A GOAL TO REDUCE GREENHOUSE GAS EMISSIONS 40% BY 2030. WE HAVE A GOAL TO TRANSFORM THE ELECTRIC GENERATION SECTOR SUCH THAT HALF OF IT BY 2030 WILL COME FROM RENEWABLE RESOURCES AND WE HAVE AN ENERGY EFFICIENCY GOAL THAT'S AN ALLFUEL GOAL TO REDUCE ENERGY CONSUMPTION IN BUILDINGS BY 23%. NOW, WHEN WE LOOK TO THE FUTURE, THERE IS NO DOUBT UNCERTAINTY IN THE TECHNOLOGY EVOLUTION AND PACE OF THESE DISTRIBUTED ENERGY RESOURCE TECHNOLOGIES AND SOLUTIONS AND PACE WE DEVELOP MARKETS. GIVEN THAT UNCERTAINTY, GIVEN NONE OF US CAN PREDICT THE FUTURE WE BELIEVE IT'S VERY IMPORTANT FOR STATES TO HAVE THE ABILITY TO DEVELOP THE POLICIES IN COLLABORATION WITH THE LOCAL MARKETS, WITH CUSTOMER PREFERENCE IN MIND, WITH STAKEHOLDERS, TO MEET THE POLICY OBJECTIVES AS WELL AS THE SYSTEM REQUIREMENTS. SO WE DO SEE WHOLESALE MARKETS AS A CRITICAL PART OF THIS, BUT ONE PART OF OUR INTEGRATED ENERGY POLICY FRAMEWORK. OUR ROAD MAP IN NEW YORK STATE FOR AN INTEGRATED ENERGY POLICY FRAMEWORK IS LAID OUT IN OUR STATE ENERGY PLAN WHICH IS STATUTORILY REQUIRED. I GUESS IN CLOSING, CERTAINLY CONCUR WITH MY COLLEAGUE WE LOOK FORWARD TO A COLLABORATION WITH FERC, WITH OUR NEW YORK ISO. WE BELIEVE WE WILL HAVE TO RESOLVE HOW WE MARKET AND POLICY OBJECTIVES WILL WORK INTO THE FUTURE. WE DO HAVE A NEW EMERGING SYSTEM TODAY THAT'S DIFFERENT THAN THE ONE WE DESIGNED BACK IN THE MID'90s AND WE ALL NEED TO BE COGNIZANT OF THAT. SO LOOK FORWARD TO CONTINUING THE COLLABORATION AND, AGAIN, THANK YOU FOR INVITING US HERE TODAY.

>> SUSANNE.

>> I WANT TO THANK THE COMMISSION FOR EXTENDING THE INVITE, SEEING NEW YORK IS HAPPY TO PARTICIPATE IN THIS. ONE THING THAT I'VE BEEN REFLECTING ON AS I'VE BEEN LISTENING TO THE OTHER PANELISTS IS REALLY WHY ARE WE HERE AND HOW DOES IT AFFECT PEOPLE AND HOW DOES IT AFFECT OUR ECONOMY. SO WHEN WE GOVERN AT THE LOCAL LEVEL, RIGHT, WE DO A LOT OF THINKING ABOUT THAT. HOW DO WE MAKE PEOPLE'S LIVES BETTER? AND AT THE LOCAL LEVEL, IN NEW YORK, WE ARE SEEING THE EFFECT OF A CHANGING CLIMATE TODAY. SO WE'RE GETTING HOTTER, RIGHT? JUST A COUPLE OF INTERESTING NOTES ON THAT. 450 EMERGENCY ROOM VISITS EVERY SUMMER, AS WELL AS 150 HOSPITALIZATIONS DUE TO HEAT. WE SEE APPROXIMATELY 13 DEATHS A YEAR, AND THIS IS IN A CLIMATE THAT IS GOING TO CONTINUE TO GET HOTTER. WE HAVE 115 EXCESS DEATHS, FOLKS THAT DIE OF NATURAL CAUSES, BUT THAT ARE EXACERBATED BY HEAT. SO WHEN WE TALKED EARLIER ABOUT URGENCY, THIS IS REALLY AT THE LOCAL LEVEL. WE'RE DEALING WITH ISSUES TODAY THAT WE EXPECT TO GET WORSE. ENERGY PLAYS A BIG PART IN THE SOLUTION. SEA LEVELS ARE RISING. WE SAW A FOOT OF SEA LEVEL RISE SINCE 1900. WE SAW THE DEVASTATION OF SANDY, 44 LIVES LOST IN NEW YORK CITY. $19 BILLION IN DAMAGES AND ECONOMIC LOSSES FROM ONE EVENT. THE CLIMATE IS CHANGING. WE'RE ANTICIPATING THESE EVENTS TO HAPPEN SOONER, AND OUR ELECTRICITY, OUR SOURCE, NEEDS TO ADJUST SO THAT WE CAN PROVIDE SOLUTIONS TO WHAT WE SEE IS COMING. SO NEW YORK CITY'S BEEN A LEADER IN BOTH MITIGATING GREENHOUSE GASES AND ADAPTING TO A CHANGING CLIMATE. WE ALSO HAVE A SERIES OF GOALS, 80% REDUCTION OF GREENHOUSE GASES BY 2050, BUT I WOULD ARGUE THAT WE'RE NOT TALKING ABOUT AN ENVIRONMENTAL ISSUE. WE'RE TALKING ABOUT AN ECONOMIC ISSUE. AND WE'RE TALKING ABOUT OUR LIVELIHOODS. WE'RE TALKING ABOUT OUR FUTURE. EFFECTS IN NEW YORK CITY HAVE A GLOBAL REACH. THAT'S A SERIOUS ISSUE. WE TAKE THAT VERY SERIOUSLY. IN THE ENERGY SECTOR, WHICH PLAYS A LARGE ROLE IN THIS EQUATION, WE NEED TO USE ALL THE TOOLS THAT WE HAVE. WE NEED TO INNOVATE. AND SO WE SUPPORT WHOLESALE MARKETS. WE ALSO WANT TO USE OUR ENERGY EFFICIENCY GOALS. OUR DISTRIBUTED GENERATION WILL BRING CLEAN AND RESILIENT ENERGY SOURCE IT'S A LOCAL LEVEL. WE NEED TOO GET RENEWABLES TO NEW YORK CITY. WE'RE ELECTRIFYING TRANSPORTATION GOALS. AS WE MOVE CLOSER TO NATURAL GAS WE THINK RENEWABLES WILL PLAY AN EXCELLENT BALANCING ROLE TO THAT FUEL SUPPLY. SO IN NEW YORK CITY WE HAVE THE 80% INCITY GENERATION AS A RULE. 76% OF OUR UNITS WILL BE 50YEAR OR OLDER IN FIVE YEARS TIME. WE HAVE A VERY AGING FLEET. AS WE LOOK AT HOW THE MARKET WORKS, WE BELIEVE WE'RE NOT INCENTIVIZING REPOWERING. WE UNDERSTAND WE'LL NEED FAST RAMPING TECHNOLOGIES TO BALANCE RENEWABLE GOALS IN THE CITY. SO WE'D LIKE TO SEE REPOWERING HAPPENING QUICKLY. WE'VE ALSO COMMITTED TO 100% OF NEW YORK CITY'S POWER TO BE RENEWABLE. AND WE WILL WORK TO MEET THOSE GOALS. SO IN CLOSING, I'D LIKE TO JUST SAY THAT I ECHO WHAT MY OTHER PANELISTS TALKED ABOUT, ABOUT A COLLABORATIVE PROCESS. WE SUPPORT THE WHOLESALE MARKETS BUT WE SEE THAT INNOVATION IS NEEDED. AND WE WOULD ESPECIALLY AT THE LOCAL LEVEL, WHERE WE'RE ALREADY SEEING THESE IMPACTS HAPPEN TODAY, WE NEED TO FIGURE OUT A QUICK PATH FORWARD, A WINNING PART FORWARD AS SCOTT MENTIONED TO INTEGRATE THESE INNOVATIONS. THANK YOU.

>> THANK YOU ALL. A COUPLE QUESTIONS FOLLOWING UP ON THAT. IN LIGHT OF THE CHANGES THAT YOU NOTED IN THE ENERGY LANDSCAPE AND THE BEGINNING, MR. WEINER, OF YOUR PREPARED REMARKS YOU NOTED STATES THAT SETTLED JURISDICTION WITH A NUMBER OF TOPICS INCLUDING BOTH RESOURCE ADEQUACY AND RELIABILITY, NOTING YOUR SUPPORT FOR THE WHOLESALE MARKETS WHAT DO YOU SEE AS THE SUBSTANTIVE CONTRIBUTIONS WHOLESALE MARKETS MAKE PARTICULARLY A CAPACITY MARKET AND CORRESPONDINGLY WHAT DO YOU SEE AS THE SUBSTANTIVE ROLE FERC SHOULD HAVE IF IT GOES BEYOND THE CONVENER ROLE YOU WERE DESCRIBING?

>> FERC HAS A CLEAR ROLE IN TERMS OF THE ADMINISTRATION OF WHOLESALE MARKETS. AGAIN, CONFLATION, AS WE THINK ABOUT THE FEDERALLY ADMINISTERED WHOLESALE MARKETS I TRY TO THINK ABOUT THEM SEPARATELY AND NOT CONFLATED. SO THE ENERGY MARKET I THINK WILL ALWAYS BE THERE. THE CAPACITY MARKET, AS THE CHAIR NOTED, MAY NOT BE. THERE WERE MODELS WHERE IT DOESN'T EXIST. I DON'T WANT ANYBODY TO READ THAT I INDIVIDUALLY AND CERTAINLY NOT THE STATES, I'LL SPEAK FOR THE STATES, ADVOCATES THAT BUT THAT'S OUR SPECTRUM OF OUTCOMES. AND I THINK AS WE SIT DOWN AND TRY AND IDENTIFY WHAT ARE OUR FIRST PRINCIPLES, WE'LL BE ABLE TO SEE WHAT THE ROLE PLAYS. IT CAN PLAY A ROLE BUT POSSIBLY NOT AN EXCLUSIVE ROLE DEALING WITH ENTRY AND EXIT. MAYBE HEAVILY ONE OR THE OTHER. BUT I WILL, AND IT SHOULD COME AS NO SURPRISE, WE HAVE A BELIEF, I HAVE A BELIEF THE CURRENT OPERATION OF THE MARKETS WITH THE BUYER SIDE MITIGATION AS A SUPPLY, NOT JUST NEW YORK BUT THROUGH THE REGION, THAT ISSUES OF THE MOPAR, NOT JUST NEW YORK BUT THROUGHOUT THE REGION CREATES COMPLEX LABYRINTH THAT RICHARD TALKS ABOUT IN NEW YORK THE ENTIRE ENERGY SETTING, HOLD HISTORIC STRUCTURES AND WE TRIED TO START AGAIN WITH REV, AND IN LOOKING AT REV WE START AT THE CUSTOMER. I WANT TO TAKE EXCEPTION WITH ANYBODY WHO THINKS THAT THE STATE OR CITY ISN'T FINELY ATTUNED TO CUSTOMER NEEDS. WE CAN'T DO IT BY OURSELVES BUT AGAIN THIS IS AN AREA OF COOPERATION THAN PRESUMPTION. WE TRY TO ACKNOWLEDGE EMERGING TECHNOLOGY, RECOGNIZING LOAD CAN NOW BE A RESOURCE. WE'RE DOING THINGS IN NEW YORK. WE'VE JUST ADOPTED AS YOU PROBABLY KNOW, THE COMMISSION DID, A NEW METHODOLOGY TO VALUE AND COMPENSATE DER RESOURCES WHICH AMONG OTHER THINGS IS GOING TO LEAD TO THE ELIMINATION OF ANY NEW ENROLLMENT IN NET METERING AS A MECHANISM AS OF JANUARY 1, 2020, IT'S CONTINUING TODAY ONLY FOR ONSITE MASS MARKET APPLICATION. THAT WAS BASED UPON A COMMON SHARED PRINCIPLE OF THE IMPORTANCE OF ACCURATE PRICING. WITHOUT WANTING TO BE FACETIOUS WHO COULD ARGUE AGAINST ACCURATE PRICING? IT'S NOT JUST A VIRTUE. BUT BY HAVING ACCURATE PRICING THAT IDENTIFY DIFFERENT VALUES THAT DIFFERENT DERs ARE BRING AT DIFFERENT MOMENTS IN TIME, DIFFERENT LOCATIONS, IT WILL SEND PRICE SIGNALS TO PEOPLE TO INVEST IN IT, AND TO DEPLOY IT AND TO MAKE IT AVAILABLE AS A RESOURCE. NOW, ALL OF THAT AND ALL THAT SURROUNDS THAT HAS TO COUPLE WITH WHAT'S TAKING PLACE AT THE WHOLESALE MARKET. AND IT WAS ABOUT A YEAR OR SO AGO THAT, AGAIN, MY COLLEAGUES, BRAD'S COLLEAGUES AGAIN THE CONVERSATION. IT WAS PUT ON A HIATUS BECAUSE OF OTHER MATTERS BUT THAT'S SOMETHING ELSE COMING UP. I WANT TO END NOW JUST BY ACKNOWLEDGING THE BEGINNING OF BRAD'S FORMAL STATEMENT WHERE HE NOTED HISTORICALLY THAT THINGS WE HAVE DONE TOGETHER, AND I THINK IF WE STEP BACK AND LOOK AT WHY ARE WE SUCCEEDING THERE, AND WHY IS IT SO DIFFICULT IN OTHER PLACES, PART OF THAT I THINK IS THE CHANGING PARADIGM, THE NEED TO RECOGNIZE THAT BUT ALSO BECAUSE WE STARTED WITH FIRST PRINCIPLES, WE HAD VERY CLEAR OBJECTIVES, THIS PART IS NOT ROCKET SCIENCE BUT IF WE DON'T DEAL WITH THOSE FUNDAMENTALS WE JUST GET INTO THIS CONTINUOUS CONVERSATION.

>> I WANT TO MAKE SURE THE COMMISSIONERS HAVE A CHANCE TO ASK QUESTIONS.

>> THANK YOU VERY MUCH TO ALL OF YOU FOR BEING HERE. IT WOULD SEEM ON THE SURFACE THAT A ONESTATE ISO, IN A ONESTATE ISO, DEALING WITH RECONCILING STATE POLICY AND HOW MARKETS ARE DESIGNED SHOULD BE EASIER BECAUSE YOU'RE NOT DEALING WITH MULTIPLE STATES WITH DIFFERENT POLICIES. IN THIS PREFILED TESTIMONY, BRAD JONES SUGGESTED IF THE STATE DEFINES THE ATTRIBUTE OR ATTRIBUTES IT WANTS, THE MARKETS CAN PRICE THAT. WHICH SEEMS REASONABLE. IS THAT SOMETHING YOU WANT? I'M INTERESTED IN WHAT YOU'RE LOOKING FOR FROM THE MARKET. I MEAN, ARE YOU LOOKING FOR HELP FOR NEW ENTRY, IS IT JUST ABOUT EXISTING GENERATORS? THE MARKET IS RIGHT THERE IN YOUR STATE. YOU SHOULD BE ABLE TO USE IT TO PRICE WHAT YOU WANT, IF WE KNOW WHAT YOU WANT.

>> WELL, I THINK IT'S PART OF KNOWING WHAT WE WANT THAT'S PART OF OUR OBLIGATION. TO ARTICULATE IT, BEARING THIS, COMMISSIONER, I BELIEVE STATE POLICIES ARE FAIRLY CLEAR. EARLIER TODAY WE'VE ALSO HEARD FROM OTHERS I THINK FUNDAMENTAL PRINCIPLES FROM A STATE'S PERSPECTIVE. A STATE IS NOT GOING TO EXCEED SOVEREIGNTY, NOBODY IS ASKING IT TO DO SO, BUT IT'S A BIG DIFFERENCE OF  I FORGET THE PHRASE THAT WAS USED, CREATIVE FEDERALISM, WHERE WE COME TOGETHER AS PEERS. THERE'S A RECOGNITION THERE ARE BOUNDARIES, AND THERE ARE RESPONSIBILITIES. AND THAT WE WORK TOGETHER TO SEE HOW IT CAN BE SOLVED. I CAN THINK OF LOTS OF SCENARIOS WHERE WHOLESALE MARKETS CAN MAKE A VALUABLE CONTRIBUTION TO A STATE'S ENERGY POLICY. I DON'T KNOW THAT THAT'S BEEN THE CASE TODAY, NOT BECAUSE ANYBODY LACKS THE INTENT, BUT I'LL GO BACK TO THE BOLTING ON OF TRIED AND TRUE TOOLS ON A FRAMEWORK THAT MAY NEED TO BE RETIRED ITSELF. SO THERE'S  I WANT TO MAKE IT CLEAR THERE'S A ROLE, WE BELIEVE IN MARKETS, WE BELIEVE IN MARKETS AS A CONCEPT, IN THE FEDERAL WHOLE SALE MARKETS, CAPACITY GIVES US CONCERN. BUT THAT'S NOT A SURPRISE. WE NEED TO WORK TOGETHER TO FIGURE OUT, AND I DO BELIEVE THAT SOME MONTHS OF CONVERSATION BETWEEN THE ISO AND STAFF AND BOARD AND COMMISSIONERS AND OTHER ENERGY LEADERSHIP THROUGHOUT THE STATE AND ITS CONSTITUENTS HAS BROUGHT US TO A POINT IN NEW YORK WHERE WE HAVE THAT OPPORTUNITY, AND THAT ALL STARTS TOMORROW.

>> THANK YOU. WHEN I READ YOUR TESTIMONY, I THOUGHT MAYBE WE HAD FOUND THE NEW TOPIC FOR FERC CHURCH, IN THE FERC COLLABORATIVE. WHAT I'M TRYING TO GET A SENSE OF IS THE URGENCY YOU FEEL I FEEL LIKE WE'RE DISCUSSING NEW PRINCIPLES, NEXT MONTH, IT'S IMBUING SOME PEOPLE WITH A SENSE OF URGENCY TO INCORPORATE THAT. WHAT IS YOUR SENSE OF URGENCY TO FIGURE OUT THIS ISSUE?

>> WELL, NUMBER ONE, I THINK FROM A STATE POINT OF VIEW WE DEVELOPED A FRAMEWORK WHICH IS VERY EFFECTIVE THAT CAN STAND ON ITS OWN. THAT'S NOT A VIEW THAT'S SHARED UNIVERSALLY, BUT THERE IS AN URGENCY, NOT WITH STANDING THAT FEELING, BECAUSE THERE ARE OTHER ISSUES AROUND THE CORNER AND WHILE THE DISPUTES CONTINUE TO EXIST THAT YOU POINTED OUT, IN A PURELY ADVERSARIAL FORM, THAT WE'RE NOT ABLE TO HAVE THESE DISCUSSIONS. AND I WILL ADMIT MY FILTER, AS YOU KNOW I WAS AN ENVIRONMENT AND ENERGY COMMISSIONER IN NEW JERSEY, LITERALLY A GENERATION AGO. WE HAD WITH THE EPA WRESTLING WITH IMPLEMENTATION OF THE CLEAN AIR ACT, BACK IN THE '90s, 1990s. AND THE EPA CONVENED SOMETHING THAT WAS VERY DIRECTLY CALLED THE STATE EPA COMMITTEE, POLICY COMMITTEE, PERIOD, FULL STOP, ADMINISTRATOR, ADMINISTRATOR KEY STAFF AND SET OF REPRESENTATIVES FROM STATES AROUND THE COUNTRY. WE TALKED TO EACH OTHER. IT BECAME THE BASIS OF FURTHER COLLABORATION. AND NEW YORK WILL BE TALKING A LOT INTERNALLY BUT I DO THINK THAT THERE'S A ROLE FOR THIS AGENCY TO CONTINUE THESE KINDS OF DISCUSSIONS.

>> TODAY IS AN OPPORTUNITY TO TALK ABOUT THINGS EX PARTE.

>> GOING BACK TO COMMENTS AROUND URGENCY, ONE THING I DIDN'T DISCUSS WAS PUBLIC HEALTH, VALUING PUBLIC HEALTH BENEFIT WHICH WE CURRENTLY DO NOT SEE. AT THE LOCAL LEVEL WE DON'T SEE THE MARKETS VALUING A PUBLIC HEALTH BENEFIT. WE LEGISLATED THE REDUCTION OF HEAVY FUEL OILS IN NEW YORK CITY. SINCE 2009 WE HAVE SEEN AN 18% DECREASE OF PM 2.5 LOCALLY, FACILITIES AND GENERATORS, A PLACE WHERE WE LEGISLATED BECAUSE THE MARKET WAS NOT INCENTIVIZING A SWITCH FROM HEAVY FUEL OIL. THAT HAS AVOIDED ON A YEARLY BASIS 100 PREMATURE DEATHS AND 250 EMERGENCY ROOM VISITS AND HOSPITALIZATIONS. FROM OUR PERSPECTIVE, THE MARKET WAS NOT STEPPING IN, AND INCENTIVIZING A PUBLIC HEALTH BENEFIT. CLEARLY, WE HAVE AN ISSUE IN NEW YORK CITY WITH OLDER GENERATIONS. AND THAT REPOWERING IS NOT HAPPENING URGENTLY. SO THE STATE HAS ANNOUNCED INDIAN POINT WILL CLOSE IN 20 21, 2022, WITH A POSSIBLE EXTENSION, INCREASING INCITY GENERATION, 76% OF 50YEAROLDS AND GREATER. THERE'S ANOTHER WHERE THE MARKET, WE CAN GET INTO MITIGATION, BUT THE MARKET HAS AN ISSUE THAT'S NOT BEING RESOLVED THAT WE THINK IS EXTREMELY URGENT.

>> THE MARKET WILL DO WHAT IT'S DESIGNED TO DO, BACK TO FIRST PRINCIPLES.

>> RIGHT.

>> ONE THING I'D LIKE TO ADD WITH RESPECT TO THIS I'LL CALL IT URGENCY TIMING DIMENSION, IF WE TALK ABOUT A COLLABORATIVE WHERE AN END GOAL MIGHT BE ACHIEVING THE GOALS, I THINK THE FIRST PLACE WE HAVE TO START IS TO SORT OF ASSESS THIS, ASSESS THE SITUATION AND SEE WHERE WE'VE CREATED OBSTACLES AND ROAD BLOCKS WHERE MAYBE OUR POLICIES ARE CONFLICTING, ADDRESS THOSE FIRST, THEY ARE PROBABLY EASIER TO FIX, WHILE WE WORK TOWARDS, YOU KNOW, BUILDING PERHAPS A MORE HARMONIZED SYSTEM THAT REFLECTS THE CURRENT ENERGY SYSTEM THAT WE HAVE IN CURRENT ENERGY POLICY GOALS SO I WOULDN'T OVERLOOK THOSE OPPORTUNITIES TO FIX SOME OF THE PROBLEMS THAT HAVE EMERGED, AND I'M NOT A MARKET DESIGN EXPERT BUT MITIGATION AND MOPAR, WE SHOULDN'T GLOSS OVER THOSE. WE SHOULD SEE IF WE CAN MAKE PROGRESS. THE OTHER THING I'LL PUT ON THE TABLE FROM THE STANDPOINT OF ACHIEVING OUR RENEWABLE ENERGY GOALS, INTERCONNECTION IS A VERY BIG PROCESS, IT'S A VERY BIG ISSUE. AND IT'S A CHALLENGE. IT WILL BE A CHALLENGE AS WELL AS CITING IN NEW YORK STATE, SO THERE MAY BE OPPORTUNITIES WORKING COLLABORATIVE WITH OUR ISOs, WITH FERC, TO IMPROVE THE LARGE FACILITY INTERCONNECTION PROCEDURES AND REQUIREMENTS, AND THAT CAN ACTUALLY HELP US IN THE NEAR TERM FROM AN URGENCY STANDPOINT, THAT COULD REALLY HELP US.

>> THANK YOU FOR YOUR PREFILED COMMENTS. I THINK TAKEN TOGETHER VERY NICELY AND ELOQUENTLY DEPICT HOW NOT ONLY BUSY BUT SUCCESSFUL YOU'VE BEEN IN NEW YORK, AND WE'VE CERTAINLY CONTINUED TO LOOK TO YOU TO LEAD. AND WE LEARN FROM YOU, QUITE HONESTLY, EVEN THOUGH YOU ARE A SINGLESTATE RTO OR ISO. I WANT TO CONGRATULATE YOU ON YOUR WORK. AND I ALSO WANT TO ENCOURAGE YOU ALL, AND PARTICULARLY YOU, SUSANNA, TO CONTINUE TO REMIND US ABOUT THE IMPACT OF THIS WORK AND WHY WE'RE DOING THIS WORK IN THE FIRST PLACE. AND I SAY THAT EVEN AS THIS COMMISSION WILL CHANGE AND WE WILL IN THE SAME WAY THAT WE CONTINUE TO EDUCATE LAWMAKERS AND CONSTITUENCIES, YES, YOU HAVE TO CONTINUE TO EDUCATE US REGULATORS AS WELL. SO IT'S VERY IMPORTANT THAT YOU CONTINUE TO PUT INTO THE RECORD THAT IMPORTANT MESSAGE ABOUT THE IMPACT OF THIS WORK NOT ONLY TODAY BUT TOMORROW. THE QUESTION I HAVE FOR YOU IS SOMETHING THAT CHERYL MENTIONED, I DON'T WANT TO PUT YOU ON THE SPOT TODAY BUT I WANT TO URGE YOU TO CONSIDER IN YOUR WORK WITH NEW YORK ISO, WHAT IS THE OBJECTIVE YOU WANT WHOLESALE MARKETS TO ACHIEVE, BOTH ENERGY AND CAPACITY MARKETS? AND I THINK YOU MADE NICELY VERY CLEAR WHOLESALE MARKETS ARE ONE PART OF NEW YORK'S PLAN FOR HOW IT IS PACKING ENERGY CHALLENGES, ADDRESSING THEM AND PLANNING FOR THE NEEDS OF YOUR PEOPLE. SO THE ANSWER TO THAT QUESTION IN MY MIND, AND I THINK MR. WEINER HIT ON IT, IT'S THE IDENTIFICATION OF THAT. WE'RE SING THE FROM THE SAME HYMN BOOK.

>> AMEN.

>> AMEN. I'M FROM THE SOUTH SO I SAY AMEN ALL THE TIME. I ALSO WANT TO URGE YOU, AND I WANT TO THANK YOU FOR YOUR OPENNESS TO BE WILLING TO CONSIDER NEW AND DIFFERENT PROPOSALS. I THINK WE'LL HEAR AND WE'VE READ IN THE COMMENTS YOUR WORK WITH THE NEW YORK ISO THOUGH IN ITS INFANCY COULD BE A POTENTIAL SOLUTION FOR YOU, AND I APPRECIATE THAT YOU'RE LOOKING FOR NEW AND DIFFERENT WAYS. I DON'T DISAGREE WITH OUR ACTING CHAIR'S FOUR DOORS IF YOU WILL. I'VE ESPOUSED THEM DIFFERENTLY, I THINK, IN THE WAY THAT I SPEAK WITH PEOPLE. I TOO WOULD RATHER THAT WE ARRIVE AT A SOLUTION COLLABORATIVELY AND NOT THROUGH YEARS OF PROTRACTED LITIGATION. BUT I'M ALSO OPEN TO THE IDEAS THAT YOU'RE BRINGING IN. SO THAT'S WHY I'M PARTICULARLY ENCOURAGED BY THIS NEWS ABOUT THIS NEW EFFORT ALONG WITH THE BATTLE GROUP, I'LL BE LOOKING FORWARD TO AND ENCOURAGING YOU GUYS ALONG THE WAY. THANK YOU.

>> JUST ASK MAYBE A FOLLOWUP QUESTION. I'VE HEARD IN COMMENTS SO FAR A SUGGESTION THAT MOST OF THE NEW RESOURCES ARE  THE STATE AND CITY WANT THE FLEXIBILITY BOTH TO BRING NEW RESOURCES BECAUSE THERE'S A CHANGING PARADIGM, DISTRIBUTED RESOURCES PERHAPS, RENEWABLE RESOURCES PERHAPS, BRING NEW RESOURCES ON, REPOWERED RESOURCES. BUT ALSO POTENTIALLY MANAGE EXIT AS WELL. SO I THINK FOR THE EARLIER SESSION WE TALK ABOUT MAYBE THE ROLE OF CAPACITY MARKET AS BEING  WHETHER OR NOT THE ROLE OF CAPACITY MARKET WAS TO ORGANIZE EXIT OF RESOURCES AND ACCEPT STATE AND LOCAL POLICIES WOULD DICTATE WHERE NEW RESOURCES WOULD COME FROM. THE COMMENTS HERE MAYBE YOU'D LIKE TO MANAGE EXIT AS WELL. AND SO I GUESS ULTIMATELY, THIS IS PROBABLY A STARK QUESTION, IS THERE REALLY ANY ROLE LEFT OVER FOR THE CAPACITY MARKETS AT ALL OR IS KIND OF THE FUTURE THAT YOU WOULD ENVISION ONE WHERE THE STATE WOULD DICTATE THROUGH VARIOUS POLICIES WHERE ALL NEW RESOURCES COME FROM, WHICH RESOURCES WOULD RETIRE AND THEN THE EMERGENCY MARKETS WOULD JUST ON A DAYTODAY HOURTOHOUR BASIS FIND THE LEAST COST DISPATCH?

>> I'LL END THE WAY IT BEGAN AND SAY IT DEPENDS. I DON'T MEAN TO BE AS ABRASIVE AS I KNOW THAT SOUNDS. BUT I THINK IF WE START WITH WHAT THE OBJECTIVE IS, WHAT ARE THE TOOLS WE ALL HAVE AT HAND, HOW MIGHT A CAPACITY MARKET OPERATE, WHAT WOULD UNDERLYING ASSUMPTIONS BE, WHAT ARE THE PROBLEMS THE ADMINISTRATORS OF THE WHOLESALE CAPACITY MARKETS HAVE TO FACE, THEIR OBLIGATION, WE'LL FIND OUT IF THERE'S ROOM. RIGHT NOW THE STATE, THE DPS, AND THEN THE PSC, ARE RECIPIENT OF PETITION OF INCUMBENT SOURCES WHOSE ATTRIBUTE CONTRACTS ARE COMING TO AN ENAND THEY WANT TO CONTINUE. WE'RE FACED WITH THAT TODAY. WHEN IS THE RIGHT SET OF CIRCUMSTANCES THAT THE STATES SHOULD STEP IN AND OPERATE A MAINTENANCE TIER, IF YOU WILL, AND THE CES ADOPTED BY OUR STATE COMMISSION HAS THAT TIER TWO, AND WE'RE ABOUT TO START A PROCEEDING TO LOOK AT WHAT THE RULES OF ENGAGEMENT WILL BE FOR THAT TIER 2. NOT SAYING WE WANT TO HOLD ON BUT ISSUES BROUGHT TO US BECAUSE OF WHAT I DESCRIBE AS BOLTED ON, WE KEPT BUILDING ADDITIONS, NOW IT WOULD BE REALLY INTERESTING, EVEN CRITICAL, FOR US TO SIT DOWN TOGETHER AND SAY WHAT'S THE PROBLEM WE'RE TRYING TO SOLVE, WHAT ARE THE BENEFITS THAT A CENTRALLY ADMINISTERED WHOLESALE CAPACITY MARKET COULD BRING TO SOLVING THAT PROBLEM AND HOW CAN WE DO IT. WHEN THAT CONVERSATION IS HELD IN RECOGNITION OF STATE SOVEREIGNTY AND COMPLIMENT AND RESPONSIBILITY WE'LL BE YOUR PARTNER. I KNOW WE RECOGNIZE THERE ARE OBLIGATIONS, THERE ARE BOUNDARIES, THAT THE FEDERAL WHOLESALE MARKETS IF RECOGNIZED, CAPACITY MARKET, IS GOING TO OPERATE IN. WE'LL FIND THAT WAY OR COLLECTIVELY DECIDE MAYBE THERE'S A BETTER WAY. WHAT I DO KNOW IS THE STATUS QUO CAN'T BE MAINTAINED MUCH LONGER, AND IF THAT HAPPENS, WE GET TO I THINK TWO POINTS. THE FOURTH DOOR, IF YOU WILL, OF COMMISSIONER LAFLEUR, AND ALSO SUE TIERNEY'S CONCLUSION. THAT'S NOT OUR OBJECTIVE. THE FEDERAL WHOLESALE MARKETS ARE A TOOL. THEY ARE A RESOURCE. THEY ARE AN ASSET THAT I THINK ARE BEING UNDERUSED RIGHT NOW BECAUSE THEY ARE BEING BURDENED BY A STRUCTURE THAT DOESN'T REFLECT TODAY'S ECONOMIC REALITY.

>> SO JUST TO ADD ON A BIT TO WHAT SCOTT SAID, SO WE ALSO WOULD LIKE THIS TO BE A COLLABORATIVE PROCESS AND A PLANNED CHANGE. DEFINITELY ADVOCATING FROM THE LOCAL LEVEL THAT OUR  THAT YOU LOOK AT WHAT THE LOCAL NEEDS ARE, AND YOU LOOK AT WHY WE ARE USING PUBLIC POLICY IN THE WAY THAT WE ARE TO BEST SERVE OUR POPULATIONS. SO THAT WE COME TO THE TABLE WITH OUR PERSPECTIVE, THE MARKETS COME TO THE TABLE WITH THEIR PERSPECTIVE AND WE TRY TO MEET SOMEWHERE IN THE MIDDLE, RIGHT? CAN'T BE A ZERO SUM GAME. WE HAVE TO MIGHT IN THE MIDDLE. IT'S NOT JUST HOW THE MODELS WORK AND WERE CONSTRUCTED BUT WE'RE TALKING ABOUT TANGIBLE OUTCOME, THAT I HAVEN'T HEARD A LOT ABOUT AFFORDABILITY TODAY BUT THE TANGIBLE OUTCOMES TO THE FOLKS THAT LIVE IN OUR STATES AND OUR CITIES, AND HOW DO THESE POLICIES AND THIS CHANGE THAT NEEDS TO HAPPEN TO THE MARKET GOING TO AFFECT THEM? IF WE CAN COME TO THE TABLE IN A COLLABORATIVE PROCESS THAT HAS ALL THE VOICES AT THE TABLE, WE'LL HAVE A BETTER OUTCOME.

>> I THINK WE HIT OUR HARD STOP OF 12:37. [LAUGHTER] WE APPRECIATE YOUR COMMENTS. LOOK FORWARD TO HAVING YOU BACK ON OUR SIDE PANEL FOR OUR SESSION AFTER LUNCH. WE WILL TRY TO COME BACK AT 11:30. I'M SORRY, 1:30 AFTER LUNCH FOR OUR SECOND PANEL, OF THE SECOND SESSION. (LUNCH RECESS).

>> WE'RE GOING TO GIVE IT A COUPLE MINUTES. WE'VE GOT SOME FOLKS TRYING TO GET BACK THROUGH SECURITY AFTER LUNCH. (RECESS).

>> ALL RIGHT. WE'RE GOING TO GET STARTED. TOO MUCH POWER. SO WELCOME BACK TO THE SECOND PANEL OF THE SECOND SESSION. WE'RE GOING TO FOLLOW PRETTY MUCH THE SAME GOALS AND FORMAT AS WE FOLLOWED FOR THE FIRST SESSION. I'LL REMIND IT'S STATE PARTICIPANTS AND LOCAL PARTICIPANTS IF YOU'D LIKE TO TALK DURING THE PANEL PLEASE PUT YOUR TENT CARD UP. I'LL REMIND OUR PANELISTS THAT WE'RE LOOKING FOR AN OPEN DIALOGUE, WE'VE ALREADY READ YOUR TESTIMONY SO TO AVOID OPENING COMMENTS THAT WOULD BE GREAT. WE START WITH BRAD JONES, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF NEW YORK ISO. DAVID PATTON, PRESIDENT OF POTOMAC ECONOMICS. KATHLEEN BARRÓN FROM EXELON, WE HAVE JAMES HOLODAK, ENVIRONMENT OF REGULATORY STRATEGY AT NATIONAL GRID, NEXT WE HAVE JOHN REESE, SENIOR VICE PRESIDENT OF EASTERN GENERATION, I SKIPPED OVER, I'M SORRY, MARK KRESOWIK, REGIONAL DIRECTOR OF BEYOND COAL CAMPAIGN, SIERRA CLUB. AND JOHN SHELK, ELECTRIC POWER SUPPLY ASSOCIATION. WE HEARD IN WE CONFERENCE COMMENTS AND STATEMENTS AND DISCUSSION FOR THE FIRST PANEL A DISCUSSION ABOUT HOW NEW YORK STATE IS TRANSITIONING TO A NEW ENERGY ENVIRONMENT FOCUSED ON ROUTE PROCESS, DISTRIBUTING ENERGY RESOURCES, RENEWED AND INCREASED FOCUS ON CLEAN ENERGY. I THINK WHAT WE'D LIKE TO UNDERSTAND FROM ALL OF YOU IS IN THE TRANSITION FROM WHERE WE ARE TODAY TO WHERE WE  WHERE NEW YORK STATE BELIEVES IT'S GOING, ONE, DO YOU HAVE A SENSE FOR HOW LONG THAT TRANSITION IS GOING TO TAKE, BUT, TWO, HOW DO RESOURCES AND MARKET PARTICIPANTS MAKE DECISIONS ALONG THAT TRANSITION PATH IN AN ORDERLY WAY SO THAT THE EXISTING SET OF RESOURCES THAT ARE NEEDED DURING THE TRANSITION BUT MAYBE ARE GOING TO NEED TO FALL OUT AT THE END KNOW WHAT THEIR TIME FOR STAYING AND THEIR TIME FOR GOING IS. AND IS THERE A WAY FOR MARKET RULES THAT NEW YORK ISO RUNS TO HELP WITH THAT TRANSITION PERIOD? IF YOU'D LIKE TO TALK PUT YOUR TENT CARD UP AND WE'LL GO WITH THE FIRST PERSON WITH A COHERENT THOUGHT.

>> NOT NECESSARILY A COHERENT THOUGHT. IF THERE'S A REAL DICHOTOMY GOING ON, ON HOW LONG, BECAUSE WE HAVE VARYING GOALS, AS YOU HEARD. YOU KNOW, PROBABLY THE MOST  THE LONGESTTERM GOAL IS 80% BY 2050. WE HAVE 40% RENEWABLE ENERGY BY 2030. AND THEN WE HAVE SOME INTERIM GOALS IN BETWEEN. AND, YOU KNOW, LOOK, THIS IS A LONG  THIS IS A MARATHON. THAT NEW YORK, MY ENTIRE CAREER, IN AND OUT OF PUBLIC SERVICE IN NEW YORK, HAS BEEN WITH ORGANIZATION, SINCE WE'VE ADDED ENVIRONMENTAL EXTERNALITY OF $40 A MEGAWATT OUR IN 1989, THIS ISN'T ANYTHING NEW. WE KNOW HOW TO DO THIS. THERE ARE SYSTEMS IN PLACEMENT FOR THE LAST 19 YEARS THE MARKET HAS BEEN ABLE TO RESPOND TO NEW YORK'S ENVIRONMENTAL ISSUES. AND THE ENVIRONMENTAL GOAL. IF THIS IS ABOUT CARBON IN OUR VIEW, WE CAN DO THAT. IT CAN'T BE ABOUT MULTIPLE PRICES OF CARBON FOR THE MARKET TO RESPOND. THE MARKET IS VERY GOOD AT RESPONDING TO THE SIGNALS, YOU'VE HEARD FROM A BUNCH OF PEOPLE. THOSE ARE THE LONGTERM ISSUES. WE NEED A MODEL THAT GETS US TO THAT LONGTERM TRANSITION. WHAT DOES IT LOOK LIKE IN 2040? WE ALSO NEED TO KNOW WHAT IT LOOKS LIKE IN 2023. AND 2024. AND THAT'S THE CHALLENGE BECAUSE WE'RE FACING SOME ADDITIONAL ENVIRONMENTAL CHALLENGES THAT AREN'T ON THE TABLE TODAY, DUE TO REGULATIONS AFFECTING KNOCKS AND PEEKERS IN NEW YORK CITY, WE'RE LIKELY TO SEE 3000 MEGAWATTS IN ZONE J AND K, BE AT RISK. THIS IS THE AGING INFRASTRUCTURE. THE CHALLENGE ON HOW SOON YOU NEED ON ACT, I NEED A SIGNAL. INDIAN POINT, I NEED A SIGNAL. THE MARKETS CAN RESPOND BUT WITHOUT FERC ACTION, WITHOUT THE NEW YORK ISO ACTION, WITH SIMPLY A REGULATORY ACTION I HAVE NO WAY FOR INVESTMENT. I'M BACKED BY EQUITY INVESTORS. WE NEED THAT SIGNAL TO SAY, YOU KNOW, UNLIKE NEW ENGLAND THIS MORNING AND PJM THIS AFTERNOON, I DON'T HAVE A THREEYEAR FORWARD MARKET. I HAVE A ONEYEAR MARKET. MONTH OF MAY, WE SAW THE IMPACT OF ZEC. THERE WAS NO IMPACT OF ZEC IN APRIL. THE CAPACITY WENT TO A 6YEAR LOW. I CAN'T WAIT FOR 7 OR 8 YEARS FOR THIS TO WORK OUT. REGARDLESS OF WHAT MODEL WE END UP WITH WE NEED TO BE SENDING INVESTMENT SIGNALS NOW.

>> GOOD AFTERNOON. I APPRECIATE FERC FACILITATING THESE DISCUSSIONS, THE OPPORTUNITY TO BE HERE. (INAUDIBLE) WE'RE SUPPORTIVE OF STATE GOALS TRYING TO REDUCE CARBON EMISSION.

>> MIC.

>> OH, SORRY. HOW'S THAT, BETTER? WE ABSOLUTELY SUPPORT THE STATE'S GOALS WHETHER THEY BE 40 BY 30 OR 80 BY 50. WHAT'S INTERESTING THOUGH IS THAT THE  IN ORDER TO ACHIEVE THOSE GOALS THE GENERAL  CAN'T DO IT ALONE. A THIRD COMES FROM TRANSPORT, A THIRD FROM RESIDENTIAL COMMERCIAL HEATING, THE THIRD FROM THE GENERATION SYSTEM. IN ORDER FOR STATES TO MEET AN 80 BY 50 GOAL IT'S GOT TO BE AN ALLENCOMPASSING  HAS TO AFFECT EACH ONE OF THOSE ASPECTS, EVEN IF THE GENERATION SECTOR WERE TO GO 100% RENEWABLE, STILL ONLY GET HALFWAY THROUGH WHERE YOU NEED TO BE. SO WITH THAT SAID, I THINK FOLKS EARLIER TODAY INDICATED THAT THEY WERE FOCUSED ON TRANSPORT, ON ELECTRIFICATION OF HEATING, ALL THAT WILL TEND TO INCREASE THE LOAD FURTHER THAN WHAT WE HAVE TODAY, AND I DON'T KNOW THAT MORE FOCUS ON ENERGY EFFICIENCY WILL HELP REDUCE THAT TO KEEP FLAT WITHOUT GROWING. IT'S INCUMBENT AND WE'RE HOPEFUL THAT WE CAN COME TO A SOLUTION THAT STILL INVOLVES THE WHOLESALE MARKETS. I DON'T KNOW THAT NATIONAL GRID IS ALL THAT HAPPY ABOUT MANDATED OBLIGATIONS PUT UPON IT THROUGH CONTRACT OR OTHERWISE, SO TO THE EXTENT THAT WE CAN SOLVE THESE THROUGH WHOLESALE MARKETS AS OPPOSED TO WHAT I LIKE TO CALL VIRTUAL OWNERSHIP, HAVING THE UTILITY BEING MANDATED, A CONTRACT ARE RENEWABLE GENERATOR, ALL THAT DOES IS SHIP THE BURDEN OF FINANCING FROM THAT DEVELOPER TO THE UTILITY AND ITS CUSTOMERS. WE'VE GOT VIRTUAL OWNERSHIP OF THE ASSET WITHOUT REALLY HAVING ANY OF THE BENEFITS, TERMINAL VALUE OF IT. SO WE'RE HOPEFUL THAT RATHER THAN WORKING THROUGH, SAY, ONE OFF OR FIVE OFF OR TEN OFF MANDATED RFPs AND PPAs, THAT WE CAN FIND A WAY TO PRICE THINGS INTO THE WHOLESALE MARKET, PRICE THOSE CARBON ATTRIBUTES OR ENVIRONMENTAL ATTRIBUTES THAT ALL THE STATES ARE INTERESTED IN, INTO THE WHOLESALE MARKET AND SEE IF WE CAN'T COME UP WITH A SOLUTION THAT WAY. NOW, YOU CAN'T NECESSARILY DO THAT IF STATES ARE HONING IN ON ONE ASSET OR ANOTHER. IF THE GOAL IS CLEAN ENERGY AND ENVIRONMENTAL ATTRIBUTES, THAT OUGHT TO BE THE GOAL AND WE OUGHT TO PRICE THAT INTO THE MARKET AND LET INNOVATION AND COMPETITION BRING SOLUTIONS ABOUT. SCOTT WEINER'S EARLIER POINT, NEW YORK IS DESIGNING A DISTRIBUTION PLATFORM AT THE DISTRIBUTION LEVEL THAT SECONDS CORRECT PRICING SIGNALS TO ENTICE PEOPLE INTO THE MARKET, THEN I CAN'T FATHOM WHY THE WHOLESALE MARKETS CAN'T DO THE SAME THING.

>> BRAD?

>> THANK YOU. ARNIE, I DIDN'T LIKE YOUR QUESTION SO MUCH, BUT I DID LIKE THE ANSWER THAT CAME UP, SO I'M GOING TO PLAY OFF OF THAT ONE. JIM HAS TALKED ABOUT THE 40 BY 30 GOAL. THAT'S A 40% REDUCTION OF CARBON FROM 1990 LEVELS BY 2030, ECONOMYWIDE. HE MENTIONED THAT. IN THE ELECTRICITY SECTOR ALONE, WITH STATE POLICIES, THAT HAVE DRIVEN US TOWARD A MORE EFFICIENT AND LOWER CARBON GRID NYISO MARKETS DELIVERED ON THAT ALREADY. IN THE ELECTRICITY MARKET ALONE THERE'S A 50% REDUCTION IN CARBON FROM 1990 LEVELS BUT THAT'S NOT ENOUGH. JIM, WE HAVE TO DO MORE. THE REASON WHY THE TRANSPORTATION SECTOR, AS JIM MENTIONED, CONTINUES TO SHOW INCREASES IN CARBON OUTPUT, SO AS TRANSPORTATION SECTOR GROWS WE HAVE TO GET MORE REDUCTIONS OUT OF THE ELECTRICITY SECTOR WHERE THE STATE OF NEW YORK ACTED, TWO THINGS THEY PASSED TO DRIVE MORE RENEWABLES INTO THE GRID AND PRESERVE NUCLEAR UNITS TO MAINTAIN THE LOW CARBON BALANCE. WHY DID NUCLEAR GENERATION NEED SUPPORT? BECAUSE THE WHOLE SALE MARKETS OPERATED BY NYISO ARE AT RECORD LOW PRICE, AND RECORD LOW PRICES HAVE PUT THESE NUCLEAR PLANTS AT ECONOMIC JEOPARDY. JEOPARDY OF LEAVING OUR SYSTEM. SO THE STATE STEPPED IN AS A BRIDGE TO A FUTURE, AN OPPORTUNITY TO OBTAIN UNITS WHICH GETS TO PART OF YOUR QUESTION HOW QUICKLY DO WE REACT. A BRIDGE INTO THE FUTURE THAT WE SEE FOR MOVING TOWARD THESE LOWER CARBON SOLUTIONS. NOW, THE NYISO HAS SUPPORTED THE ZEC PROGRAM BUT WE'VE BEEN SPECIFIC IT NEEDS TO MOVE INTO A COMPETITIVE ENVIRONMENT, WHOLESALE MARKETINGS CAN RESOLVE THIS PROBLEM. WE'VE BEEN WORKING COLLABORATIVELY WITH THE STATE AND MARKET PARTICIPANTS. COLETTE OR CHERYL MENTIONED COLLABORATIVE IS OUR NEW CHURCH WORD. WE'RE GOING TO CHANGE IT TO PARTNERSHIP, WE'RE AT PARTNERSHIP WITH THE STATE OF NEW YORK AND MARKET PARTICIPANTS TO FIND A SOLUTION TO INTEGRATE PRICE OF CARBON INTO OUR MARKETS. WE BELIEVE IT CAN BE DONE BUT HAVE TO TEST ASSUMPTIONS, RUN SENSITIVITY ANALYSIS, KNOW THIS IS THE RIGHT PATHWAY FOR THE STATE OF NEW YORK. WE'RE IN THE MIDDLE OF THE PROCESS, WE HIRED BRATTLE GROUP. THEY WILL BE HERE TOMORROW. IF YOU HAVE SPECIFIC QUESTIONS, HAPPY TO ASK THEM. RESULTS SO FAR ARE THEY PRELIMINARY. THEY ARE PROMISING THOUGH. WE BELIEVE THERE IS AN OPPORTUNITY FOR US TO INCORPORATE CARBON DIRECTLY INTO OUR MARKETS. ULTIMATELY WHAT WE'RE LOOKING FOR IS A MODEL WHICH WILL MEET THE FULL GOAL OF RELIABILITY, LOW COST, LOW CARBON OUTPUT, AND FINALLY AND ALSO IMPORTANTLY A BALANCE BETWEEN STATE AND FEDERAL JURISDICTIONS. IF WE CAN ACHIEVE ALL THOSE ELEMENTS, I THINK WE HAVE A PROCESS THAT WILL WORK.

>> MARK.

>> I WANT TO ECHO THE THANKS FOR INVITING ME TO SPEAK HERE TODAY. I THINK NEW YORK HAS SENT THE RIGHT LONGTERM POLICY SIGNALS, AS JOHN SAID EARLIER, IN TERMS OF THE 50% BY 2030 CLEAN ENERGY STANDARD, 40% BY 2030 AND REGIONAL GREENHOUSE GAS INITIATIVE WHICH HAS CERTAINLY GOTTEN SOME AIR TIME HERE TODAY. A FANTASTIC COLLABORATIVE OF THE NINE STATES IN THE NORTHEAST TO PRICE AND REDUCE CARBON POLLUTION. AT THE SAME TIME I THINK WHAT YOU'RE HIGHLIGHTING IS A MISGUIDED POLICY, THAT NEW YORK ENGAGED IN TO INTERVENE IN A RESOURCES DECISION TO EXIT THE MARKET. WHICH RESULTED AND WILL RESULT IN CONSUMER PRICES IN SOME CASES BEING HIGHER THAN THEY SHOULD BE. BUT I WANT TO MAYBE PLAY OFF SCOTT'S EARLIER EXAMPLE WHERE WE TALKED ABOUT OPERATING WITH A SCALPEL. I COME FROM A MEDICAL FAMILY, AND SO WOULD REMIND THE STAFF AND COMMISSIONERS OF ONE OF THE FIRST PRINCIPLES OF MEDICAL PRACTICE WHICH IS DO NO HARM. FIRST DO NO HARM. AND SO I THINK THAT MANY OF THE IDEAS THAT HAVE BEEN PUT FORWARD IN NEIGHBORING JURISDICTIONs, WE HAVEN'T SEEN YET WHAT NEW YORK HAS SPECIFICALLY IS GOING TO PROPOSE, BUT MANY OF THE PROPOSALS IN ISO NEW ENGLAND AND PJM WOULD IN FACT DO MORE HARM THAN THEY WOULD HELP, THE CURE WOULD BE WORSE THAN THE DISEASE. I THINK IT'S VERY IMPORTANT WHEN WE LOOK AT ACCOMMODATIONS, AS WAS DISCUSSED EARLIER, IT SHOULD START BY NOT DOING MORE HARM THAN GOOD, WHICH MEANS, FIRST, LIMIT THE MINIMUM PRICE RULE TO SITUATIONS THAT VIOLATE FEDERAL LAW. DON'T EXPAND THE MINIMUM OFFER PRICE RULE INCREASE AS WE'VE SEEN IN ISO NEW ENGLAND, THAT IN FACT EVEN WELL INTENTIONED IDEAS SUCH AS CARBON PRICING AS NEW YORK ISO IS WORKING ON WITH THE BRATTE GROUP WOULD UNDERMINE THE GREENHOUSE GAS EMISSION WHICH DR. PATTON HIGHLIGHTED AS PREFERENTIAL WAY TO PRICE CARBON. I THINK IT'S VERY IMPORTANT WHATEVER WE DO, WHATEVER NEW YORK CHOOSES TO DO IN REACTION TO GENERATOR DECISIONS POTENTIALLY TO EXIT DOES NOT DO MORE HARM THAN GOOD.

>> DAVID AND JIM AND WE'LL GO TO SCOTT NEXT.

>> OKAY. SO YOU'VE HEARD ME EXPRESS SOME OPINIONS. LET ME CLARIFY ONE THING. (INDISCERNIBLE) ONLY ABOUT ACHIEVING CONSENSUS AMONG EVERYBODY ON WHAT OBJECTIVES ARE BUT I THINK ACTUALLY I'M PRETTY OPTIMISTIC THAT THERE ARE SOLUTIONS OUT THERE THAT CAN ADDRESS SOME OF THESE PROBLEMS IF WE ROLL UP OUR SLEEVES AND WORK ON IT. WITH REGARD TO NEW YORK, THERE'S SOME THINGS THAT ARE VERY DIFFERENT AND SOME THINGS THAT ARE NOT VERY DIFFERENT IN NEW YORK THAT I THINK WE NEED TO KEEP IN MIND. ONE IS THE MARKET PLAYS AS KEY A ROLE IN NEW ENGLAND AND ELSEWHERE, PRIVATE INVESTORS, MOST GENERATING ASSETS ARE HELD BY COMPANIES THAT ARE PRIVATE. SO THEY ARE RELYING ON THE MARKET SIGNALS ON THE DECISIONS THEY MAKE TO ENTER AND EVEN MORE IMPORTANTLY TO EXIT THE MARKET. ANOTHER UNIQUE ASPECT OF THE NEW YORK MARKET IS WE PROBABLY  I'D HAVE TO LOOK. I'D PLACE A LOT OF MONEY IT'S THE OLDEST PORTFOLIO OF GENERATION IN THE COUNTRY, IT IS COME DATED BY A GENERATION  DOMINATE BY 40 OR 50 YEARS OLD, GENERATORS AT THE RETIREMENT TIME FRAME, HAVE TO MAKE KEY DECISIONS ON MAKING INVESTMENTS TO KEEP UNITS IN OPERATION. SO WHEN WE START THINKING ABOUT REGULATORY UNCERTAINTY, GENERATED AT THE STATE LEVEL OR FEDERAL LEVEL, THAT WILL UNDERMINE PRIVATE INVESTORS' ABILITY TO MAKE DECISIONS EFFICIENTLY THEN IT'S GOING TO BE COST INCREASING AND LEAD TO A DISORDERLY TRANSITION, WHICH IS I THINK NOT WHAT WE WANT. SO I THINK A LARGE PART OF WHAT WE'RE TALKING ABOUT HERE GOES BACK TO SOME OF THE CONCEPTS THAT WE TALKED ABOUT IN THE NEW ENGLAND CONTACT, COORDINATING THE ENTRY AND EXIT DECISIONS WHICH IS CRITICAL IN NEW YORK. YOU HEARD THE CITY OF NEW YORK TALK ABOUT REPOWERING, THEY HAVE AN INTENSE INTEREST IN MOVING AWAY FROM SOME OF THE OLD UNITS THAT WE CURRENTLY RELY ON IN NEW YORK CITY. ONE OF THE ASPECTS OF NEW YORK THAT YOU HAVE TO THINK ABOUT I THINK THE CASPR IDEA IS VERY APPLICABLE TO NEW YORK, BUT ONE OF THE CHALLENGES OF APPLYING SOMETHING LIKE THAT IN NEW YORK IS THAT NEW YORK IS PROBABLY THE MOST LOCATIONALLY COMPLICATED AND HAS MORE LOCATIONAL RELIABILITY CONCERNS THAN ANY MARKET THAT WE'VE SEEN. YOU CAN'T JUST SAY, OKAY, WE'RE GOING TO RETAIN A NUKE IN WESTERN NEW YORK AND RETIRE SOMETHING IN NEW YORK CITY. AND EVEN WITHIN NEW YORK CITY, THERE DIFFERENT VOLTAGE LEVEL SYSTEMS AND DIFFERENT LOAD POCKETS WHERE IT MATTERS A WHOLE LOT. YOU CAN'T JUST BUILD SOMETHING ONE PLACE IN NEW YORK CITY AND RETIRE SOMETHING ELSEWHERE. SO AS WE DEVELOP SOLUTIONS THAT ATTEMPT TO COORDINATE ENTRY AND EXIT, WE HAVE TO THINK HARD HOW WE KEEP THE RELIABILITY OBLIGATIONS OF THE ISO, RESOURCE ADEQUACY OBLIGATIONS, TRANSMISSION SECURITY OBLIGATIONS IN MIND SO THAT WE DEVELOP SOLUTIONS THAT ARE ACTUALLY PRACTICAL, WHICH MAY BE MORE DIFFICULT IN NEW YORK. AND FINALLY I THINK THE CARBON PRICING IS THE EASIEST THING TO THINK ABOUT AS A POTENTIAL SOLUTION. I DO THINK UTILIZING RGGI IS PROBABLY THE BEST APPROACH, PROBABLY HARDER THAN DOING SOMETHING IN ONE STATE, BECAUSE IT REQUIRES MORE AGREEMENT ACROSS THE BOARD. BUT TO THE EXTENT THAT THE GOALS ARE THE  THE OBJECTIVES ARE REALLY CARBON REDUCTION I THINK YOU'LL GET BIGGER REDUCTIONS FASTER AT LOWER COST, AND CAUSE SOME, MAYBE NOT ALL, INTERVENTIONS TO BE TAKEN CARE OF NATURALLY THROUGH THE MARKET. THERE ARE STILL SOME EXPRESSED GOALS THE STATE HAS THAT CARBON PRICING WON'T GET YOU THERE, SO I THINK IT'S STILL INCUMBENT ON US TO THINK ABOUT HOW WE DEAL WITH THOSE IN A WAY THAT'S NOT DISRUPTIVE TO THE MARKET.

>> THANK YOU. JOHN?

>> GOOD AFTERNOON, AND THANKS FOR THE OPPORTUNITY TO PARTICIPATE IN THE CONFERENCE. BUILDING ON WHAT MR. JONES SAID, BENEFITS YOU'VE SEEN IN THE MARKET TO DATE THAT YOU TALK ABOUT IN TERMS OF TRANSITION THAT'S ALREADY OCCURRED, REDUCTION IN POLLUTANTS, CARBON EMISSIONS, PUTTING IN NEW RESOURCE AT INVESTOR NOT CUSTOMER RISK UNDER THE CURRENT STRUCTURE. LIKE NEW YORK, LIKE OTHER STATES, HAVE INTEREST IN CLEAN ENERGY, NEW TECHNOLOGIES, THAT'S ALL FINE. WE CAN DISCUSS THOSE. BUT WHAT WE HAVE TO KEEP IN MIND IS THAT AS COMMISSIONER HONORABLE SAID, WE ARE HERE TODAY AFTER THREE UNITED STATES SUPREME COURT DECISION. THE HUGHES DECISION HELD LAST YEAR STATES CANNOT PURSUE EVEN LEGITIMATE ENDS THROUGH IMPROPER REGULATORY MEANS. THE COURT SAID THIS COMMISSION IS NOT REQUIRED TO ACCOMMODATE EVERYTHING A STATE WANTS TO PURSUE. IN FACT JUST THE OPPOSITE. SO THE MERE FACT THAT WE'RE HERE TODAY FOR TWO DAYS WITH 60 WITNESSES AND 20 QUESTIONS INDICATES TO US THAT THE STATES ARE IN FACT IN SOME INSTANCES ENCROACHING ON THIS COMMISSION'S JURISDICTION, AND FOR THAT REASON WE AND MANY MEMBERS ARE PARTIES TO LITIGATION IN NEW YORK AND ILLINOIS, MANY OF EPSA'S MEMBERS. THIS TRANSITION YOU'RE REFERRING TO IN YOUR ORIGINAL QUESTION REQUIRES ALL OF THE RESOURCES THAT ARE IT'S ON GRID. WE DON'T HAVE A NUCLEAR GRID OR GAS OR COAL GRID, DON'T HAVE A SEPARATE GRID FOR BASE LOAD OR PEAKING. IT HAS TO WORK TOGETHER. BACK WHO WHAT COMMISSIONER HONORABLE SAID EARLIER IT HAS TO BE DONE COMPREHENSIVELY AND IN THE LAW. WHAT SHOULD A MARKET DO IF IT DOESN'T LIKE THE STATUS QUO? WHEN IS UNILATERAL ACTION ALLOWABLE? THAT'S WHAT'S HAPPENED TO DATE. WE'RE NOT HAVING A COORDINATED COMPREHENSIVE DISCUSSION THROUGH THE ISO IN THE CASE OF NEW YORK OR WHAT WE'RE DISCUSSING FOR TWO DAYS TO BRING EVERYTHING TOGETHER, TO ACHIEVE GOALS THAT ARE RELIABLE AND AFFORDABLE, UNTIL NOW WE'VE HAD UNILATERAL ACTION WHICH MAKES IT HARDER, NOT EASIER, TO DO WHAT JOHN REESE AND OTHERS SAID, HAVE THIS TRANSITION IN AN ORDERLY FASHION THAT RECOGNIZES IF YOU WANT BENEFITS OF MARKETS, THEN YOU HAVE TO KEEP THE MARKETINGS IN A WELLFUNCTIONING MANNER. ACCOMMODATION OF EVERY SINGLE THING THAT IS BROUGHT FORWARD IS NOT THE LAW, IT'S NOT GOOD POLICY, AND WE DON'T THINK THAT SHOULD BE THE FOCUS. WE SHOULD BE WORKING TOGETHER TO ACHIEVE WHAT WE'VE BEEN ABLE TO DO TO DATE, WHICH IS LOWER EMISSIONS OF CRITERIA POLLUTANTS, LOWER GREENHOUSE GASES, BRING NEW TECHNOLOGIES, BUT DO IT IN A WAY THAT WORKS THROUGH THE MARKET, RATHER THAN WORK OUTSIDE THE MARKET.

>> THANK YOU. SCOTT?

>> JUST A COUPLE OF QUICK POINTS. I WANT TO BUILD UPON BRAD'S COMMENTS, NUMBER ONE I LIKE THAT WE'RE A PARTNERSHIP. I'LL BE CLEAR ABOUT THAT. I ALSO LIKE HARMONIZE BETTER THAN ACCOMMODATE. IT HAS A BETTER RING AND TALKS ABOUT COMING TOGETHER. AND I WANT TO CONNECT BRAD AND DAVID'S COMMENTS. WE ARE ABSOLUTELY COMMITTED, AS I TALK ABOUT, AS BRAD MENTIONED, THE PARTNERSHIP TO EXPLORE. WE DON'T KNOW WHAT THE OUTCOME IS YET. I THINK THERE'S A GOOD STARTING POINT THAT HAS BEEN PRESENTED BY THE ISO THROUGH THE BRATTLE APPROACH. WE'LL TAKE A LOOK AT THAT. BUT I WOULD VENTURE TO GAS WHEN ALL IS SAID AND DONE, WHEREVER WE END UP IT WON'T BE A SINGLE SOLUTION WILL YOU A PIECE PART OF THE MOSAIC OF ACTIONS AND POLICIES THAT HARMONIZE WITH EACH OTHER. RGGI BEING ONE OF THEM. I CAN, IN FACT I DID, MANY PEOPLE IN THIS ROOM, I WAS PRESENT AT THE BIRTH OF RGGI. BUT WHEN WE CAME TOGETHER WE CAME TOGETHER TO LOWER CARBON, WE DIDN'T COME TOGETHER TO CREATE A MARKET PRICING. IT DOES THAT, PROVIDES VALUABLE INFORMATION. AND IT'S SOMETHING WHICH IS HARMONIZED INTO OUR POLICY FRAME. THAT'S SOMETHING THAT WILL CONTINUE. SO I WANT TO CONTINUE AND SAY AMEN TO PARTNERSHIP AND AMEN TO (INDISCERNIBLE).

>> COORDINATION, PARTNERSHIP, HARMONIZATION ARE ALL THINGS THAT WE SHOULD CERTAINLY DO. AND NO DOUBT GOING TO RESULT IN SOMETHING THAT WILL GET YOU SOME MORE HARM ANY ON THIS SIDE OF THE TABLE. NO QUESTION THAT'S WHAT THE GOAL SHOULD BE. THE QUESTION IS WHEN WE DON'T HAVE THAT, DON'T HAVE A SOLUTION AT A WHOLESALE LEVEL, WHAT ARE THE STATES TO DO? ARE THEY TO STEP BACK AND IGNORE THEIR CLEAN ENERGY POLICY GOALS, IGNORE HEALTH EFFECT ON THEIR CITIZENS, AND IGNORE WHAT THEY THINK IS IN THE BEST INTEREST OF THEIR COMMUNITIES, AND THAT IS WHAT THE STATE OF NEW YORK WAS FACING WITH RESPECT TO THE CLEAN ENERGY STANDARD, AND IT'S CLEAR MARKETS HAVE DELIVERED DECARBONIZATION, HAVE DELIVERED LOWER CRITERIA POLLUTANTS. BUT THAT'S OBVIOUSLY NOT BY DESIGN. THAT'S JUST BY LUCK. IT'S A FUNCTION OF GAS PRICES AND LOW LOAD GROWTH. SO AGAINST THAT BACK DROP AND FACING RESOURCE DECISIONS THAT WERE BEING MADE ON BEHALF OF MY COMPANY AND OTHERS THAT SAW A LACK, AS BRAD SAID, OF PRICING TO STAY IN THE NUCLEAR MARKET MADE DECISIONS TO RETIRE, THE STATE STEPPED IN TO SAY IT'S NOT A GOOD OUTCOME FOR CONSUMERS. NUCLEAR IS A VERY LOW COST CARBON ABATEMENT OPTION AND WE'LL TAKE ADVANTAGE AS WE LOOK FORWARD TO ADDING NEW CLEAN GENERATIONS TO THE SYSTEM AND DISPLACING EXISTING EMITTING GENERATION. I MEAN, LET'S BE HONEST. THAT'S WHAT THIS DISCUSSION IS ABOUT. WE HAVE A PRETTY HEALTHY RESERVE MARGIN IN NEW YORK AND ELSEWHERE. THE EARLIER DISCUSSION WAS FOCUSING ON THE ISSUE OF HOW DO WE AVOID CONTINUING OVERSUPPLY. THAT'S WHAT WE HAVE. AND WHAT THAT MEANS IS WE DON'T HAVE A RELIABILITY CONSIDERATION, WE DON'T HAVE LACK OF WE SOURCE ADEQUACY. WE HAVE TOO MUCH ON THE SYSTEM RIGHT NOW AND WE'VE HAD ALUSION TO FACILITIES BEING 50 YEARS OLD. KEEPING THE FLEET IN THE MARKET, IF IT RETIRED WOULD HAVE A TREMENDOUS IMPACT ON THE MARKET BUT IT'S NOT CHANGING WHAT THE CAPACITY PRICE CLEARS, WHAT IT'S DOING IS MAKING SURE THESE ASSETS REMAIN AVAILABLE TO THE STATE AS THEY MOVE FORWARD WITH THEIR CLEAN ENERGY POLICY. AND TAKING STEPS TO STOP THE STATE FROM DOING THAT WILL SERVE ONLY TO KEEP PRICES HIGHER IN A MARKET WE DON'T NEED NEW RESOURCES, WHAT WOULD THAT SOLVE TO PREVENT WHAT I CONSIDER PESSIMISM ON THE EARLIER PANELS ABOUT THE PARADE OF HORRIBLES THAT COULD COME DOWN THE ROAD. WE'RE NOT SEEING THOSE OUTCOMES NOW. LET'S KEEP WORKING TOWARDS THIS HARMONIZATION AND PARTNERSHIP AND COLLABORATION THAT WE HAVE BEEN SPEAKING OF AND TRY TO GET THAT DONE. LET'S NOT TRY TO STOP THE STATES FROM DOING THE THINGS THEY THINK THEY NEED TO DO AND INDEED IT WAS THE ONLY THING THAT THEY COULD DO IN THE INTERIM.

>> A QUICK FOLLOWUP.

>> VERY QUICK. I WANT TO EMPHASIZE WHAT KATHLEEN SAID. IN ALL THREE REGIONS, INCLUDING NEW YORK ISO, THERE'S NO EVIDENCE OF A RESOURCE ADEQUACY ISSUE. YOU KNOW, THAT WAS ONE OF THE QUESTIONS THAT WAS ASKED REPEATEDLY ON THE EARLIER PANEL. AND THERE IS NONE. THERE IS NO RESOURCE ADEQUACY ISSUE. THAT'S IMPORTANT TO EMPHASIZE.

>> JOHN?

>> AT THE TABLE FOR NEW YORK WHEN RGGI WAS CREATED, WE TALKED ABOUT MARKETS ALL THE TIME AND SETTING RGGI UP WITH STATES OF MASSACHUSETTS, CONNECTICUT. WITH MANY STATES. IT WAS A MARKET SOLUTION, AS I RECALL IT. BUT MORE IMPORTANTLY, I THINK YOU'VE POINTED OUT A LARGE PORTION OF THE GENERATION IN NEW YORK IS MATURE. IF I WAS A LITTLE YOUNGER I WOULD SAY IT WAS OLD. [LAUGHTER] BUT IT'S MATURE. AND OVER THE TIME HORIZONS WE'RE TALKING ABOUT, WE'RE GOING TO SEE A PORTION OF THAT GENERATION DISAPPEAR. WHETHER FORCED TO BY OTHER MARKET SOLUTIONS OR JUST BY, YOU KNOW, REACHING  YOU GET TO 2030 AND WE'RE 12 YEARS OUT, 13 YEARS OLD, SOME OF THOSE ASSETS, NOT OURS, SOMEBODY ELSE'S OF COURSE, MAY NOT BE AROUND. WE NEED TO THINK ABOUT HOW WE REPLACE THOSE ASSETS BECAUSE WHEN YOU LOOK AT THE AMOUNT OF RENEWABLES, FOR EXAMPLE, THAT IS PROJECTED TO COME INTO NEW YORK, OVER THE NEXT 12 YEARS, THAT DOESN'T MAKE UP A QUARTER OF THE ASSETS THAT ARE OVER 50 YEARS OLD. OR 45 YEARS OLD. THERE'S NOT A GOOD MATCH ON THE AGING OUT OF THE RESOURCES AND THE PROJECTED REALISTIC, YOU KNOW, HOW LONG DOES IT TAKE TO BRING RENEWABLES INTO THE MARKET. SO I THINK IT'S NOT SOMETHING, YOU KNOW, WE CAN WAIT FOR A DECADE UNTIL WE HIT A CRISIS. WE NEED SOMETHING BEFORE THAT.

>> I THINK WE HEARD A LITTLE BIT ABOUT CARBON PRICING AND WHETHER IT'S GOT POTENTIAL TO BE THE NEARTERM MANNER TO HARMONIZE. I'D LIKE TO TALK MORE ABOUT THAT AND MAYBE CONNECT TO THE CONVERSATION WE HAD EARLIER THIS MORNING ABOUT THE DIFFICULTY OF DOING THAT IN ISONEW ENGLAND WHERE THERE ARE NINE STATES, NINE DIFFERENT GOALS, THE CARBON PRICE ENDS UP BEING MAYBE I THINK WE HEARD THE TERM LOWEST COMMON DENOMINATOR. NEW YORK IS ONE STATE. SO I'D LIKE TO TALK ABOUT WHETHER THE FACT THAT NEW YORK IS ONE STATE MAKES THE CARBON DISCUSSION AND EASIER DISCUSSION TO HAVE, AND ALSO WOULD LIKE TO CIRCLE BACK TO SOMETHING DAVID SAID ABOUT RGGI BEING THE PLACE TO DO THAT THAT CLEARLY TURNS A ONESTATE QUESTION INTO A MULTIPLESTATE QUESTION, SO THAT FEELS LIKE A COMPLICATION, BUT I SENSE THAT THERE'S SOME DESIRE TO AVOID CREATION OF THEMES OR THE FACT RGGI BEING MULTISTATE ACTUALLY HAS BENEFITS AS WELL AS SOME COMPLICATIONS. SO MOSTLY LOOKING FOR FOLKS TO KIND OF REACT TO THAT TAKE.

>> AGAIN, I DO WANT TO EMPHASIZE REGIONAL GREENHOUSE GAS INITIATIVE WE NEW ENGLAND IS THE RIGHT MECHANISM TO PRICE CARBON IN THE NINESTATE REGION AND BEYOND IF OTHER STATES WANT TO JOIN. WITH NEW YORK IN PARTICULAR, IT IS POSSIBLE FOR A STATE TO PRICE CARBON IN ADDITION TO THE REGIONAL GREENHOUSE GAS INITIATIVE. MASSACHUSETTS HAS A PROPOSAL TO DO THAT RIGHT NOW. I'M NOT SURE THAT IT'S ADVISABLE AND I THINK IT'S PARTICULARLY TROUBLING TO IMAGINE THE MARKET OPERATOR KIND OF PROPOSING TO DO THAT. THE MARKET OPERATOR, YOU KNOW, THE STAKEHOLDER PROCESS IS NOT A PUBLIC ENTITY. IT IS NOT A PUBLIC PROCESS. IT IS NOT A SET OF SOVEREIGNS GETTING TOGETHER TO MOVE FORWARD A POLICY. AND SO I THINK THERE IS SOME VERY BIG UNINTENDED CONSEQUENCES THAT WOULD HAPPEN IF THE MARKET OPERATOR WAS THE ENTITY IN ORDER TO MOVE FORWARD A PRICE ON CARBON, INCLUDING UNDERMINING THAT SOVEREIGN PROCESS BY DRIVING DOWN RGGI PRICES AND ULTIMATELY UNDERMINING THE RGGI PROGRAM ITSELF. SO WE DON'T SUPPORT AND THINK THAT THE MARKET OPERATOR IS THE RIGHT ENTITY TO PRICE CARBON. WE THINK IT SHOULD BE THE STATE.

>> THAT'S NOT THE CORRECT ORDER. WELL, THANK YOU. I'LL FOLLOW BEHIND MARK ON THAT POINT. THE QUESTION IS, IS IT EASIER FOR NEW YORK TO ACCOMPLISH THIS GOAL THROUGH UTILIZING ENERGY MARKETS AND INCORPORATING THE PRICE OF CARBON. I THINK EASILY THE ARGUMENT COULD BE YES. NUMBER ONE, BECAUSE THE STATE WANTS TO BE THE LEADER IN LOW CARBON ELECTRICITY. OUR STATE IS VERY FOCUSED ON PROVIDING A LOWCARBON SOLUTION. SO THE FACT THAT THE STATE IS ALREADY IN THAT POSTURE WANTS TO BE ONE OF THE LEADERS IN THE NATION TO ACCOMPLISH THAT GOAL HELPS US TO GET THERE. NEXT BEING A SINGLE STATE HELPS US TO GET THERE. THE STATE IS ALL ONE SO THEY ARE ALL FOCUSED ON THE SAME OVERALL GOAL. IF WE WERE TO USE RGGI, IT'S HARD TO BE THE LEADER WHEN YOU NEED TO MAKE SURE THAT SIX OTHER PEOPLE OR I GUESS IT'S EIGHT OTHER PEOPLE ACTUALLY COME ALONG AT THE SAME TIME. OR NINE AS MARK SUGGESTED. IT'S HARD TO BE THE LEADER. THE STATE HAS AN ADVANTAGE AS WELL. ONE OF THE GREATEST ADVANTAGES THOUGH IS THAT THE HARDEST THING TO FIGURE, TO DETERMINE, IS WHAT IS THE COST OF CARBON THAT SHOULD BE SET? I'M HAPPY TO SAY THAT OUR STATE HAS ALREADY SET FORTH A SOCIAL COST OF CARBON WHEN THEY DEVELOPED THE ZEC PROCESS. SO THAT WAS A HURDLE THAT WE'VE OVERCOME. THERE ARE A NUMBER OF THINGS THAT PUTS US AT AN ADVANTAGE TO MOVE FORWARD AND CREATES THE GREATEST OPPORTUNITY TO SOLVE THIS IN A WAY, AS I LIKE TO SAY, NINE OUT OF TEN DENTISTS WOULD SAY THE RIGHT WAY TO DO IT IS THROUGH THE ENERGY MARKET, WE HAVE THE OPPORTUNITY TO DO IT.

>> KATHLEEN?

>> YEAH, I'LL JUST CHIME IN IN SUPPORT OF WHAT BRAD SAID. I THINK THE ISSUE IS NOT WHETHER A STATE CAN PUT A PRICE ON CARBON. IT CLEARLY CAN DO IS THAT. IT CAN ENACT A CARBON TAX. IS THAT GOING TO HAVE THE EFFECT THE STATE WANTS? SURE, IT'S GOING TO MAKE ITS GENERATION RUN LESS. BUT IN AN INTERCONNECTION LIKE WE'RE IN RIGHT NOW, THAT MEANS THAT THE GENERATION IN THE STATES ABUTTING THAT STATE IS GOING TO RUN MORE AND TO WHAT  TO WHAT END WOULD YOU CAUSE A NEGATIVE IMPACT ON THE GENERATION IN YOUR STATE WHEN YOU'RE NOT ACTUALLY ACHIEVING A CARBON ROLE, THAT'S A PROBLEM ANY STATE LOOKING TO DO THIS UNILATERALLY IS FACING AND CHALLENGES RGGI HAD DEALING WITH THAT LEAKAGE ISSUE ARE WELL KNOWN. I HATE TO PUT A SPOTLIGHT ON THIS BUILDING BUT THIS IS ONE OF THE FEW PLACES THAT COULD ADDRESS THAT QUESTION HOW TO ADJUST IN THE WHOLESALE MARKET, FLOWS BACK AND FORTH TO STATES THAT DON'T. THAT'S PART OF THE WORK THAT NEEDS TO HAPPEN THROUGH THE WORK THAT THE NEW YORK ISO IS DOING AND THE WORK THAT PJM SIGNALED IN PREFILED COMMENTS THEY ARE DOING AND THAT I THINK THE NEW ENGLAND PROCESS IS ALREADY WELL ALONG THE WAY OF EXAMINING, WHETHER THE STATES CHOOSE THAT OR NOT IS A DIFFERENT MATTER. BUT PUTTING IT IN THE TARIFF AS THE COMMISSION HAS DONE IN CALIFORNIA TO DEAL WITH FLOWS ACROSS THAT BORDER IS A PREREQUISITE TO A STATE ACTING UNILATERALLY TO PRICE CARBON BECAUSE OTHERWISE IT WON'T ACHIEVE THE GOAL THAT IT HAS BECAUSE PLANTS IN NEIGHBORING STATES WILL JUST RUN MORE.

>> JOHN?

>> SO I'M FROM NEW YORK. IT'S MISERY IN NEW YORK. LET ME JUST TELL YOU. IT ISN'T AN EASY PLACE TO DO BUSINESS. HOWEVER, I AGREE WITH WHAT EVERYBODY HAS HEAD. IT IS  IT WILL BE EASIER TO ACCOMPLISH THIS BECAUSE IT IS A ONESTATE ISO. WHEN THE PSC MAKES A POLICY AND ISO REACHED AGREEMENT THE MARKET PARTICIPANTS COME UP WITH SOLUTIONS. WE DID A STUDY IN 1994 PART OF RGGI WHAT IF NEW YORK WENT ALONE, THE IMPACT ON THE MARKET AT THAT POINT. I THINK IT CAN BE ACCOMPLISHED BUT KATHLEEN POINTS OUT THE ISSUE WILL BECOME SEAMS ISSUES, HOW DO YOU DEAL WITH THAT, THAT'S A ROLE FOR YOU.

>> SCOTT, COULD YOU ADD ANYTHING?

>> ALL RIGHT. JIM, YOU'RE NEXT.

>> YEAH, JUST A COUPLE THINGS ON CARBON PRICING AS WELL AS ON RGGI. I TEND TO AGREE WITH KATHLEEN THAT THE EMISSION REDUCTIONS THAT HAVE OCCURRED SO FAR HAVEN'T NECESSARILY BEEN BECAUSE OF RGGI, I WON'T SAY THEY ARE DESPITE RGGI BUT IT'S HELPED, BUT IT'S MOSTLY BEEN ABOUT SHALE GAS AND HUGE REDUCTION IN NATURAL GAS PRICES AS WELL AS THE ECONOMY, LOWER GENERATION THAT WAS REQUIRED I THINK. IN ORDER FOR RGGI TO REALLY DRIVE IT, A SINGLE STATE AS EVERYONE IS SAYING OUGHT TO BE EASIER BUT I'M NOT SURE NEW YORK IS EASY WITH ANYTHING. I'D LIKE TO FLIP IT ON ITS HEAD A BIT AND SUGGEST THAT RATHER THAN TAXING CARBON, YOU OUGHT TO BE ABLE TO FIND ENVIRONMENTAL ATTRIBUTES WILLING TO PAY FOR IT. AS OPPOSED TO TAXING, COLLECTING FUNDS, REDISTRIBUTING TO CUSTOMER OR FOR GENERAL FUNDS, WHATEVER MEETS THE SOVEREIGN ISSUE UNLESS YOU PRICE THAT TAX HIGH ENOUGH, RGGI PRICED HIGH ENOUGH THAT IT WILL ACTUALLY MOVE PEOPLE TO CLOSE PLANTS AND REINVEST IN RENEWABLES. I DON'T KNOW THAT WE'VE NECESSARILY SEEN THAT. IF WE HAD, YOU WOULDN'T NEED RPFs AND MANDATED PPAs FOR OFFSHORE OR ONSHORE SOLAR OR ANYTHING ELSE. RATHER THAN TAX AND SPEND, I WOULD SUGGEST AN ALTERNATIVE TO PRICE A POSITIVE ATTRIBUTE AND FIGURE OUT ANCILLARY MARKET TO ACCOMPLISH AND DRIVE BEHAVIOR THAT WAY, TWO VERSIONS, SIDES OF THE SAME COIN.

>> OKAY. SO AT RISK OF UNDERCUTTING MY EARLIER COMMENTS THAT RGGI IS THE PREFERRED MECHANISM, I DO AGREE WITH YOU THAT IT'S EASIER TO GET CONSENSUS IN A ONESTATE CONTEXT. I ACTUALLY DON'T THINK THE THEME ISSUE IS A BIG DEAL BECAUSE YOU CAN ESTABLISH A CARBON CONTENTS VALUE OF IMPORTS COMING IN AND PRICE IT SO THAT YOU DON'T FAVOR GENERATION OUTSIDE VERSUS GENERATION INSIDE. SO THAT PART ACTUALLY MAY EVEN BE EASIER TO DO, ONESTATE CONTEXT THAN RGGI LEAKAGE CONTEXT, BUT IT'S HANDLED IN RGGI TOO. ONE ADVANTAGE OF RGGI, A COUPLE THINGS. ONE IS ESTABLISHING THE VALUE OF CARBON I THINK THE CAP AND TRADE SYSTEM ESTABLISHES A VALUE RATHER THAN HAVING THE SPECIAL VALUE OF CARBON JUST BE SORT OF PLUCKED. IF YOU LOOK AT THE UNDERLYING ANALYSIS, THERE'S  I MEAN THAT NUMBER CAN END UP ANYWHERE DEPENDING ON ANY NUMBER OF THE ASSUMPTIONS THAT GO INTO CALCULATING IT. SO I THINK ONE OF THE CHALLENGES YOU HAVE AGAIN BACK TO YOU'VE GOT ASSETS IN THE HANDS OF PRIVATE INVESTORS WHO HAVE TO HAVE TRUST AND HAVE THE  THE MARKET HAS TO BE CREDIBLE. YOU KNOW, FOR DECADES DOWN THE ROAD FOR THE KINDS OF DECISIONS THEY ARE MAKING, SO THAT CARBON VALUE OR WHATEVER YOU SET UP TO PRICE CARBON THERE HAS TO BE A DEGREE OF CREDIBILITY TO IT. YOU HAVE TO TRUST FIVE YEARS DOWN THE ROAD NEW ADMINISTRATION IS NOT GOING TO COME IN AND SAY CARBON'S WORTH $5, FOR INSTANCE. AND SO THE RGGI MARKET AND I THINK ALSO PROVIDES A LITTLE MORE CREDIBILITY TO THE PRICE OF CARBON THAT THEN FLOWS THROUGH THE ELECTRICITY MARKETS AS WELL, BUT IT'S NO DOUBT MORE DIFFICULT A SOLUTION.

>> THANKS. SO JOHN AND WE'LL DO BRAD AND THEN MARK.

>> THIS HAS BEEN A HELPFUL DISCUSSION BECAUSE THE PRIOR COMMENTS ILLUSTRATE THE DILEMMA WE FACE WITH THE STATUS QUO WHICH IS WHY IN THE FILING WE MADE AT THE BEGINNING OF THE YEAR WITHIN THIS REGARD WE SAID THE STATUS QUO WAS NOT ACCEPTABLE, THERE'S AN AN EXISTENTIAL THREAT, HERE IS WHY. MR. JONES SAID THE STATE OF NEW YORK PUT A PRICE ON CARBON. STATE OF NEW YORK PUT A PRICE ON CARBON FOR THREE POWER PLANTS, $45 A TON OR THERE ABOUTS. EVERYBODY ELSE IN THE STATE SEES THROUGH THE RGGI PROCESS AND DR. PATTON AND MR. JONES, CORRECT ME IF I'M WRONG, A PRICE OF $3. EVERYTHING WE HEARD ABOUT CLIMATE SCIENCE IS THAT A TON OF CARBON AVOIDED IS A TON OF CARBON AVOIDED WHETHER IT'S DOWN STATE NEW YORK, UPSTATE NEW YORK, NEW ENGLAND, HALFWAY AROUND THE WORLD. THIS IS THE PROBLEM WE HAVE. THIS COMMISSION ACTS IN THESE AREAS, YOU'RE BOUND BY THE LAW THAT SAYS THINGS HAVE TO BE NOT ONLY JUST AND REASONABLE BUT NOT UNDULY DISCRIMINATORY OR PREFERENTIAL. SO WE HAVE A SYSTEM TODAY WHERE OSTENSIBLY MORE, NOW $35 A MEGAWATT SO WHEN THE ZEC PROGRAM TAKES EFFECT THOSE THREE UNITS GET 50% PREMIUM, AND THE PEOPLE WHO PAY FOR IT IN THE STATE OF NEW YORK INCLUDE PEOPLE WHO CONSUME 100% RENEWABLE ENERGY. DOWN STATE. IF YOU BUY A 100% RENEWABLE PRODUCT YOU STILL HAVE TO PAY FOR IT. IF WE'RE GOING TO PUT A PRICE ON CARBON AND ATTRIBUTES IT NEEDS TO HAPPEN IN A NONDISCRIMINATORY BASIS, IF IT'S CARBON, OPERATIONAL FLEXIBILITY, WHATEVER IT HAPPENS TO BE, BUT I THINK WHAT WE'VE HEARD THIS MORNING, THIS PANEL AND WE OURSELVES, IT HAS TO BE BUN EQUALLY FOR EVERYBODY OR THE PRICE SIGNALS AREN'T THERE TO DO IT COST EFFECTIVE MAN HE WERE AND IT'S A DEATH SPIRAL. THAT'S NOT SUSTAINABLE AND THOSE ARE THE FACTS WE NEED TO KEEP IN MIND AS WE EVALUATE WHAT TO DO GOING FORWARD.

>> KATHLEEN?

>> A QUICK ONE. JOHN IS MY FRIEND, I'LL BE NICE.

>> THAT'S WHEN I GET NERVOUS.

>> CLARIFY THE RECORD. THERE'S A PRICE ON CARBON FOR RENEWABLES IN THE STATE OF NEW YORK. THERE WAS A PYRAMID HELD RECENTLY RESULTED IN $24 A MEGAWATT HOUR, ZEC IS $17 A MEGAWATT OUT. IT'S ALL THE RENEWABLES AS WELL. THAT'S PART OF A CLEAN ENERGY PROGRAM THE STATE ENACTED AS I SAID EARLIER BECAUSE WE BELIEVE THAT'S THE BEST OUTCOME FOR CONSUMERS. THE QUESTION HERE IS COULD WE DO SO ON A MORE GENERIC BASIS, TECHNOLOGY NEUTRAL, NOT SPECIFIC. THAT'S WHAT BRAD IS WORKING ON. LET'S BE CLEAR, IT'S NOT JUST THE THREE UPSTATE PLANTS THAT GET A PRICE SIGNAL FOR BEING LOW CARBON.

>> BRAD AND THE STATE AND SEE WHERE WE'RE ARE FROM THERE.

>> I'M GLAD KATHLEEN POKED JOHN SO I DON'T HAVE TO. SO SHE COVERED THAT. I WILL SAY THAT I AGREE WITH DAVID PATTON, IT'S GOOD BECAUSE WE'RE HERE SITTING TOGETHER. HE SAID WE CAN MANAGE THE LEAKAGE ISSUE. THAT'S NOT A CONCERN. THERE'S MULTIPLE WAYS WE CAN DO THAT. SO WE HAVE NOT SHOWN A CONCERN FOR THAT. AND TO RESPOND TO JIM WHO WAS CONCERNED ABOUT A TAXANDSPEND APPROACH, WHAT WE'RE DISCUSSING IS NOT A TAXANDSPEND APPROACH. IT'S AN APPROACH WHERE WE CHARGE GENERATORS PRODUCING CARBON AND RETURN REVENUES EQUITABLY BACK TO CUSTOMERS TO CLEAR UP THE TWO POINTS.

>> THANK YOU. JANET?

>> A SINGLE STATE SYSTEM, YOU KNOW, TO PRICE CARBON, I THINK WE'RE ASKING THE WRONG QUESTION, RIGHT? I THINK THE QUESTION NEEDS TO BE WHAT WILL THE IMPACT BE FROM THE MECHANISM. SO WHEN WE LOOK AT OUR DIALOGUE WITH ISO, WE WILL BE APPROACHING IT FROM THAT STANDPOINT. MAKING A PREDETERMINATION THAT PRICING CARBON IS THE WAY TO GO IS SORT OF AHEAD OF WHERE WE'RE AT. WE WANT TO LOOK AT WHAT ARE THE INSTRUMENTS AND MECHANISMS THAT CAN ACHIEVE IMPACT. WE HAVE TO LOOK AT THINGS LIKE LEAKAGE. WE HAVE TO LOOK AT THINGS LIKE WHAT WILL THE IMPACT ON RGGI BE AS WE ASSESS THIS. SO I GUESS I WOULD ASK THE PARTICIPANTS NOT TO GET SUCKED INTO THE MECHANISTICALLY CAN WE DO IT. MECHANISTICALLY SHOULD WE USE THE WHOLESALE MARKETS TO DO X, Y, Z. WE HAVE TO KEEP BRINGING IT BACK TO THOSE IMPACTS THAT WE TALKED ABOUT EARLIER. THAT'S ULTIMATELY WHAT WE WANT TO ACHIEVE.

>> SCOTT, DID YOU HAVE ANYTHING ON TOP OF THAT?

>> JUST ONE POINT IN RESPONSE TO WHAT JOHN SAID. THE COMMISSION IN ADOPTING THE CS PROGRAM INCLUDED A PROVISION THAT ALLOWS A COMMUNITY THAT IS IN FACT 100% RENEWABLE FROM NEW SOURCES TO APPLY TO BE RELIEVED OF THE ZEC OBLIGATION. THAT HAS NOT YET BEEN IMPLEMENTED BUT IT'S  WE'RE WAITING AND EXPECTING SOME APPLICATION SOON.

>> MAYBE I'LL FOLLOW UP, REFRAMING OF THE QUESTION ABOUT NOT WHETHER WE CAN BUT WHETHER WE SHOULD AND WHAT WOULD THE IMPACT BE. CERTAINLY DIDN'T MEAN TO, YOU KNOW, SOLICIT A FILING FOR CARBON PRICE. BUT WHEN YOU LOOK AT THOSE IMPACTS, IS ONE OF THE IMPACTS YOU LOOK AT AND MAYBE THIS IS A BROADER QUESTION, IS ONE IMPACT YOU LOOK AT NOT JUST THE IMPACT ON COST AND HOW THE COSTS ARE ALLOCATED BUT HOW CONGRUENT THAT THOSE IMPACTS ARE IN THEY ARE BROUGHT INTO THE WHOLESALE MARKETS VERSUS STAYING OUTSIDE THE MARKET, IS THAT A CONSIDERATION WHEN YOU THINK ABOUT IMPACT?

>> FOLKS ARE NODDING.

>> YES.

>> THANK YOU. MARK AND JOHN AND THEN WE'LL LET THE COMMISSIONERS JUMP IN HERE.

>> I THINK ONE OF THE PERSPECTIVES THAT HAS BEEN LOST, I APPRECIATE HERE, IS CONSUMER PERSPECTIVE HERE. PERHAPS BECAUSE THE PREVIOUS RESPONDENT PANEL AND THIS PANEL ARE MOSTLY GENERATORS WHICH I THINK THE CONSUMER IMPACTS WERE HIGHLIGHTED IN TERMS OF PUTTING THE PRICE ON CARBON AND PREDOMINANTLY GAS SYSTEMS MAY NOT ACTUALLY LEAD TO SIGNIFICANT CARBON POLLUTION REDUCTIONS. SECONDARILY TALKING ABOUT RETURNING THE REVENUES GENERATED TO CONSUMERS, MAY OR MAY NOT BE THE BEST POLICY FOR CONSUMERS, REGIONAL GREENHOUSE GAS INITIATIVES STATES HAVE DEVOTED TO ENERGY CITY FOR LOW INCOME FOLKS OR ASSISTANCE, A VARIETIES OF MECHANISMS, IT'S IMPORTANT TO HIGHLIGHT THE BENEFITS OF THE MECHANISMS THAT WOULD BE LOST IF THE MARKET OPERATORS IN MANY CASES WERE THE ONES WHO MOVED THE POLICY FORWARD, THAT'S ONE REASON WE SUPPORT THE REGIONAL GREENHOUSE GAS INITIATIVES AS OPPOSED TO MARKET OPERATORS BECAUSE OF IMPACT ON CONSUMERS. WHEN YOU GET TO JUST AND REASONABLE RATES, I THINK IT'S VERY IMPORTANT TO REMEMBER WHAT ARE THE IMPACTS ON THE ULTIMATE PEOPLE WHO ARE PAYING FOR THIS WHICH I THINK HAS GOTTEN LOST IN THE CONVERSATIONS.

>> JOHN?

>> I WILL TRY TO SYNTHESIZE ALL THAT. FIRST, JUST TO BE CLEAR, ONE OF THE REASONS WHY, YOU KNOW, I WAS URGING ACTION AND WHY I THINK FERC REALLY NEEDS TO TAKE ACTION IS WE HAVE THREE PRICES FOR CARBON IN NEW YORK. WE HAVE A PRICE FOR THE TWO OF THE THREE OLDEST NUCLEAR FACILITIES IN THE NATION, AROUND $40. WE HAVE A PRICE FOR BRANDNEW COMPETITIVE BASED ON RFP RENEWABLES, WHICH IS $24. AND THEN WE HAVE THE PRICE FOR MY MATURE UNITS AND BRANDNEW 5900 HEAT RATE COMBINED CYCLES, $2.70. THERE'S A DISPARITY THERE, THERE'S A DISPARITY THAT MARKET WITHOUT MODIFICATIONS CAN'T SOLVE. TO GO TO CONSUMERS, JUST TO BE CLEAR, SEVEN YEARS AGO COMMODITY, WHOLESALE MARKET PRICE, WAS 40% OF THE NEW YORK CITY CUSTOMER'S BILL. IT'S 28% OF THE CUSTOMER'S BILL. PART THAT HAS FERC OVERSIGHT THAT THE MARKETS ARE RESPONDING TO FOR A VARIETY OF REASONS HAS GONE DOWN. WE HAVE  THE REMAINDER IS FOR, YOU KNOW, LEGITIMATE TRANSMISSION, TAXES, AND FEES GOING TO THESE PROGRAMS AND SERVICES. INTEGRATING THOSE FEES, INTEGRATING OUR OBJECTIVES INTO THE MARKETPLACE IS GOING TO BRING US LOWER PRICES. WE KNOW THAT.

>> THANK YOU. CHAIRMAN LAFLEUR, COMMISSIONER HONORABLE.

>> THANK YOU, ARNIE. THIS HAS BEEN A REALLY INTERESTING CONVERSATION. I'M STILL STUCK A LITTLE BIT WHERE I WAS FIRST THING IN THE MORNING. TO THE EXTENT THAT WE WANT THE NEW YORK ISO COMPETITIVE MARKETS TO ATTRACT INVESTMENT OR SEND EXITS SIGNALS FOR NONFAVORED RESOURCES, IS IT CAPABLE OF DOING THAT JOB IN THE SHORT RUN? I KNOW WE'RE GOING TO HAVE A LONG COLLABORATIVE PROCESS AND SING KUMBAYA BUT I'M WORRIED ABOUT JUNE 1, JULY 1, AND WHAT'S GOING TO HAPPEN NOW. I KNOW YOU FILED SOMETHING IN JANUARY. WE LOST QUORUM FEBRUARY 4. HERE WE ARE. I GUESS MY QUESTION IS, IF WHEN THE STATE HAS CHOSEN TO MAKE SURE CERTAIN EXISTING RESOURCES STAY IN THE MARKET AND IS DOING A LOT OF OTHER THINGS TO MAKE SURE OTHER RESOURCES THAT THE STATE WANTS GET BUILT, AND I SAW IN JIM HOLODAK'S TESTIMONY, NATIONAL GRID IS WILLING TO BUILD RENEWABLES BUT DOESN'T WANT TO BUILD ANYTHING ELSE. A LOT OF PEOPLE ARE WILLING TO COME IN AND BUILD RENEWABLES WITH THE SYSTEM. MY CONCERN WHEN I HEAR YOU TALK ABOUT REPOWERING, TO ME REPOWERING SOUNDS LIKE GAS. IF I WAS ADVISING A BOARDS OF DIRECTORS TO PUT CAPITAL DOWN INTO THIS MARKET TO BUILD A GAS PLANT, GIVEN ALL THE OTHER CURRENTS OF MONIES GOING TO OTHER THINGS, I'M JUST WONDERING IF I WOULD. AND THAT MAKES ME WONDER, ARE WE GOING TO GET INTO A THING WHERE EITHER WE NOW HAVE TO SUBSIDIZE GAS, WHICH WHY NOT REREGULATE AND BE HONEST, ONE STATE ISO AND RUN A GREAT ENERGY MARKET OUT OF YOUR BEAUTIFUL CONTROL CENTER OR HAVE RMRs WHERE WE KEEP THINGS ON AND HAVE MORE RMRs? SOME SAID IN TESTIMONY DON'T WORRY, THIS WON'T AFFECT MARKET PRICES, JOHN REESE SAID IT ALREADY HAS. DO WE WANT TO ATTRACT INVESTMENT? DO WE NEED IT? I KNOW THERE'S LOTS OF PLANS UPSTATE, FOREVER. THERE'S WINDS, NUCLEAR, OLD COAL. DOWN STATE WHERE THE PEOPLE LIVE THERE'S NOT LOTS OF PLANTS. AND I MEAN SOME, I KNOW PEOPLE LIVE UPSTATE, I'M SORRY, I USED TO GO THERE ALL THE TIME. [LAUGHTER] BUT WHERE MOST OF THE PEOPLE LIVE. ARE WE TRYING TO ATTRACT INVESTMENT? ARE WE GOING TO PAY PEOPLE TO COME IN? I'M JUST WORRIED ABOUT ALL THE THINGS WE'RE DOING IN THIS MARKET. THAT'S MY SOLILOQUY.

>> DO YOU WANT TO GO FIRST?

>> DAVID? YEAH, YEAH. YOU WERE THE FIRST ON THE SWITCH.

>> WELL, OBVIOUSLY I HAVE A FAIR AMOUNT OF SYMPATHY FOR WHAT YOU JUST SAID. YEAH, I THINK WHAT I WORRY ABOUT IS THE ANSWER TO THAT IS NO, IN THE SHORT TERM. I MEAN, I THINK WE HAVE TO KEEP IN MIND THAT ANY DOLLAR AN INVESTOR SPENDS IS GOING TO BE ON EXPECTED REVENUE OVER MANY YEARS, THERE'S NO SOLUTION IN SITE AT THIS MOMENT AND YOU'RE ASKING ME TO PUT MONEY IN AS AN INVESTOR AT THIS MOMENT. I DON'T KNOW WHY THEY WOULD. SO THAT'S THE CONCERN, AND THAT'S THE URGENCY, AND I THINK WHAT WE  WHAT I'M AFRAID WE'RE GOING TO GET TO IS A COMPETITIVE MARKET FOR RENTS AND SUBSIDIES RATHER THAN COMPETITIVE MARKET FOR GENERATING ASSETS AND ENERGY AND ANCILLARY SERVICES. SO I THINK WE HAVE TO GET OUR HANDS AROUND THIS, AND FIGURE OUT WHICH DIRECTION WE'RE GOING RELATIVELY QUICKLY.

>> BRAD?

>> THANK YOU. I AGREE WITH WHERE DAVID IS. IN THE SHORT TERM, THIS IS NOT A SHORTTERM PROCESS. THIS IS SOMETHING THAT WILL TAKE SOME TIME TO GET TO. JUST AS WE DISCUSSED OUR PARTNERSHIP WORKING THAT DIRECTION, IT WILL TAKE PROBABLY A NUMBER OF YEARS TO FIND A SOLUTION. IN THE MEANTIME, MY HOPE IS THAT IF THE STATE HAS TAKEN SOME ACTIONS TO PRESERVE SOME GENERATION, IN A WAY THAT WILL CARRY THEM INTO THAT FUTURE MARKET, IF WE DECIDE TO GO INTO THAT MARKET FUTURE, YOU TALKED ABOUT INVESTMENT ULTIMATELY. IF WE DO CRACK THIS ISSUE, IF WE'RE ABLE TO FIGURE IT OUT, WE HAVE THE REAL POSSIBILITY OF DRIVING THE TYPE OF INVESTMENT WE WANT. SO QUITE A BIT OF DISCUSSION FROM THE CITY OF NEW YORK ABOUT REPOWERING GENERATION. WE'LL ACTUALLY BE SENDING SIGNALS TO GENERATION IN THE NEW YORK CITY AREA BECAUSE IF YOU CAN AVOID A HIGHER CARBON OUTPUT, BY PUTTING IN A MORE EFFICIENT FACILITY, THAT CAN BE DONE.

>> I COMPLETELY AGREE. BUT I DIDN'T HEAR ANYONE SAYING THAT FILING IS COMING ANYTIME SOON. MY WORRY 

>> IT'S NOT COMING ANYTIME SOON. IT WILL TAKE SOME TIME TO GET THERE. IT'S A PROCESS, AS YOU KNOW, WORKING THROUGH MARKET SYSTEMS TAKES A LONG TIME, WORKING WITH THE STATE TO GET THEM COMFORTABLE WITH THIS APPROACH WILL TAKE A WHILE. THE ENTIRE PROCESS I BELIEVE AT A MINIMUM WOULD BE THREE YEARS.

>> I THINK JIM, YOU'RE NEXT.

>> IN MY TESTIMONY WE DID OFFER SOLUTION THAT NATIONAL GRID WOULD BE WILLING TO BUILD LARGE SCALE RENEWABLES UNDER COST OF SERVICE REGULATION. WE WOULD PREFER THAT THE WHOLESALE MARKETS CAN FIGURE IT OUT, THAT THAT'S OUR ABSOLUTE PREFERENCE. SECONDLY, IN ABSENCE OF THAT, WE DO LIKE THE NYSERDA MODEL THAT PROCURES REVs ON BEHALF OF THE STATE. WHETHER THE STATES COLLECTS SUBSIDIES, THE ANSWER FOR US IS YES, BUT WE CERTIFICATE THROUGH TO NYSERDA. THERE'S NOTHING IN IT FOR US. WHAT WE'RE TRYING TO DO IS MAKE SURE THAT TO GET WHERE WE NEED TO GET TO, WE'RE ALWAYS MINDFUL OF THE COST AND IMPACTS ON OUR CUSTOMERS. SO IN THE ABSENCE OF WORKING MARKETS, OUR PROPOSAL ON COST OF SERVICE REGULATION WAS JUST THAT. WE THINK IT'S A CHEAPER WAY TO DO IT, POTENTIALLY MORE COST EFFECTIVE WAY TO DO IT BECAUSE OF ACCESS TO CAPITAL MARKETS. BECAUSE OF THE FACT THAT AFTER A PPA EXPIRES RENEWABLE ATTRIBUTES GO BACK TO THE GENERATOR, IN NEW YORK THOSE CONTRACTS WERE TEN YEARS. NOW, WE MAY BE EXTENDING TO 20. CUSTOMERS PAY FOR THE GENERATOR, TO BE INSTALLED, RECOVER CAPITAL COSTS AND AT THE END OF THE TERM LOSE THE ECONOMIC BENEFITS OF RENEWABLE CREDITS. UTILITY OWNERSHIP WOULD SOLVE THAT. WE BUILD IS, HAVE A DEVELOPER BUILD THROUGH COMPETITIVE PROCESS, AS CHEAP A PRICE AS YOU CAN, FLIP TO THE UTILITY TO OWN AND OPERATE UNDER COST OF SERVICE AND THEN WE MAINTAIN THOSE VALUABLE ENVIRONMENTAL ATTRIBUTES POST WHEN A NORMAL CONTRACT WOULD HAVE ENDED.

>> COULD YOU ALSO FINANCE GAS CHEAPER THAN SOMEONE COMING INTO THE MARKET? I KNOW YOU DON'T WANT TO. BECAUSE OF YOUR BALANCE SHEET AND ALL. I MEAN, THAT'S JUST LIKE  I MEAN 

>> BACK TO NEW ENGLAND, WE WORKED WITH EVERY SOURCE TO POTENTIALLY DO SUCH A THING.

>> I DIDN'T MEAN PIPELINE, I MEANT GAS UNIT. IF YOU WANT TO BUILD A PIPELINE, I'M NOT YOUR PROBLEM. [LAUGHTER] NOT THAT I'M PREJUDGING ANYTHING.

>> (INAUDIBLE) NO, WE WOULD CONSIDER THAT, IF THAT'S WHAT IT TOOK.

>> RUN DOWN THE LINE, MARK, JOHN, JOHN, AND SUSANNA.

>> DOWN STATE FOR A MOMENT, LONG ISLAND POWER AUTHORITY IS NOT HERE NOR PSG, THE PLAN WHERE THEY FOUND REPOWERING IS NOT THE CHEAPEST OPTIONS, RENEWABLES, ENERGY EFFICIENCY ARE THE RIGHT THINGS TO KEEP DOING. MY BROADER POINT A LOT OF THIS, I THINK TO THE EXTENT THERE IS IN TERMS OF, YOU KNOW, RESOURCE ADEQUACY PROBLEM IF THERE ARE OTHER RELIABILITY ISSUES THAT GOES TO BETTER DEFINING WHAT RELIABILITY SERVICES ARE NECESSARY DOWN STATE, RIGHT? IF THERE'S RESOURCE ADEQUACY I WANT TO BE CLEAR BASE LOAD IS NOT A RELIABILITY ATTRIBUTE. IT IS A DEFINITION OF CAPACITY FACTOR. BLACK START SERVICE IS A RELIABILITY ATTRIBUTE. IT'S BETTER TO DEFINE, CREATE MARKETS TO DELIVER RELIABILITY ATTRIBUTES BEFORE ASSUMING THERE'S A RESOURCED A QUESTIONS OR REDEFINING CAPACITY IN SOME WAY. I JUST WANTED TO HIGHLIGHT THOSE THINGS.

>> SO I STARTED THE PANEL BY TALKING ABOUT URGENCY. YOU KNOW, WE'RE IN CITY GENERATORS, WHERE THE CONSTRAINTS IT IS WHERE THE OLDEST FLEET IS. YOU KNOW, JIM, BEG MY PARDON, BUT YOU WANT TO DO COST OF SERVICE, WE CAN DO COST OF SERVICE. I CHANGE MY INVESTOR, WHERE I CAN GET INVESTORS WHO WANT TO PROVIDE THAT KIND OF INVESTMENT FOR THAT DURATION FOR, YOU KNOW, A 40YEAR RECOVERY, WE MOVED AWAY FROM THAT MARKET, FROM THAT CONSTRUCT FOR A REASON. ONE OF THE REASONS WAS BECAUSE YOU COULDN'T CITE GENERATION IN NEW YORK CITY WHERE YOU NEEDED IT. BECAUSE WHEN YOU MOVED INTO A FULLY REGULATED MARKET, IT BECOMES MORE DIFFICULT TO DO A LOT OF THINGS. OTHERWISE WE WOULD HAVE A LOT MORE TRANSMISSION. SO THERE IS URGENCY. AND THE MODEL WORKS. AND I THINK THE MODEL IS THE SOLUTION, BUT WE NEED ACTION. I'M GOING TO HAVE TO COME AND ASK FOR INVESTMENT TO MEET ENVIRONMENTAL CONCERNS OVER THE NEXT DECADE. IT TAKES ME BETWEEN TWO AND THREE YEARS TO PERMIT A PROJECT IN NEW YORK CITY. YOU KNOW, LOOK, IF YOU CAN HAVE SOMETHING IN PLACE THAT WORKS 24 MONTHS FROM NOW, OH, THAT COULD WORK, ABSENT SOMETHING CATASTROPHIC OUT THERE. THAT COULD WORK. BUT IT CAN'T BE FIVE YEARS FROM NOW. I NEED TO MAKE THOSE INVESTMENT DECISIONS, YOU KNOW, IN THE NEXT FIVE YEARS. ALL OF THE PORTFOLIOS WOULD. BECAUSE IT'S GOING TO TAKE YOU FIVE YEARS.

>> THANK YOU.

>> I WOULD UNDERSCORE WHAT JOHN SAID, URGENCY. TO BE HONEST WE'VE BEEN USING THAT WORDS FOR FOUR YEARS NOW. WE ORIGINALLY WERE JOINED BY THE NUCLEAR ENERGY INSTITUTE AND EDISON AND NATURAL GAS INDUSTRY, A FUEL NEUTRAL BASIS, OTHERS DECIDED TO BREAK THAT AND GO ON THE FUEL SPECIFIC BASIS. MY CONCERN IS WHAT THE ACTING CHAIRMAN SAID, ON THIS I'LL MAKE IT CLEAR FOR FUTURE RELIABILITY, A PERSON LIKE ME, THIS IS MY OWN PERSONAL VIEW, BUT I'VE BEEN IN THIS POSITION 12 YEARS NOW. IT'S BEEN A PRIVILEGE TO REPRESENT THIS INDUSTRY. IT IS EVERY DAY. I HAVE NEVER IN 12 YEARS HAD THE DEGREE OF INQUIRY AND CONCERN ON A NEARLY DAILY BASIS THE LAST 612 MONTHS THAT I'VE HAD FROM INVESTORS, ANALYSTS ON WALL STREET, THE TRADE PRESS, MEMBERS AND NONMEMBERS. THE FEAR, WE'RE GOING TO BE BACK HERE, SADLY, IF THIS COMES TO PASS, BUT IT'S THE DEFAULT PATH WE'RE ON AS WE SPEAK TODAY, ABSENT ACTION TO THE CONTRARY, WE'RE GOING TO GET TO THE ONE PLACE THAT THIS VERY TABLE, MENTION WAS MADE EARLIER MUCH THE CONFERENCE IN SEPTEMBERS OF 2013, THERE WAS DISAGREEMENT, CAPACITY OF MARKET, AS I WALL CORRECTLY THE LAST PANEL, THOUGHT LEADERS, MANY WE'LL HEAR FROM TOMORROW, THE ONE AREA OF AGREEMENT IS EXACTLY THE PLACE WE'RE HEADED TO EVERYONE SAID FOUR YEARS AGO, DON'T GO THERE. WHICH WAS TRAUNCHES. WE'RE PICKING UNITS. THERE GOES THE ROAD WITH YOUR MARKETS. THE PROBLEM, ONE THING WE SAID DON'T DO IS THE TRAUNCHES. SOMEBODY SAID THE OTHER DAY, GASPING ON THE PHONE, WE'RE GOING TO HAVE TO MAKE A FILING OR GO TO STATE LEGISLATORS FOR FLEX. FLEXIBLE ENERGY CREDITS. YOU CAN'T GET TO YOUR TRANSITION POINT, YOU CAN'T GET TO A POINT WITH ALL THE RENEWABLES WHICH ARE GREAT, AND NOT COMPENSATE PEOPLE PROVIDING RAMPING AND OTHER SERVICES DIFFERENT THAN HOW PLANTS OPERATE TODAY. SO HEAVEN HELP US, AND THE THING THAT HASN'T BEEN SAID THAT NEEDS TO BE SAID IS THIS MAY HAVE STARTED IN NEW YORK LAST YEAR ON AUGUST THE 1st, BUT IN SHORT ORDER IT WAS ADOPTED IN MY HOME STATE OF ILLINOIS, AND AS EVERYBODY KNOWS, IT'S NOW BEING EQUITABLY CONSIDERED IN OHIO, PENNSYLVANIA, NEW JERSEY AND CONNECTICUT. THIS ISN'T A THREAT TO THE MARKET IN NEW YORK, NEW ENGLAND. THIS IS A THREAT TO THE THING SO MANY PEOPLE FOR DECADES SPENT INCREDIBLE SERVICE IN THIS BUILDING TO MAKE HAPPEN, I HATE TO SAY IT IS ON THE PRECIPICE OF FALLING OVER UNLESS THERE IS SOME CONCRETE PLAN WITH SPECIFIC DATES AND DEADLINES THAT I SHUDDERED WHEN I HEARD BRAD, THREE YEARS, THREE MORE YEARS WE'LL BE AT THE DISCUSSION WHAT CONTRACT WILL EVERYBODY RECEIVE TO KEEP THE LIGHTS ON. I HOPE IT'S NOT TRUE BUT AFTER ALL THE TIME WITH THE LAST DOZEN YEARS I WOULD BE REMISS IF I WASN'T THAT CANDID ABOUT WHERE I THINK WE ARE TODAY.

>> THANKS. SUSANNA?

>> SO I WANTED TO GO BACK TO EARLIER QUESTION FROM THE COMMISSIONER AROUND SENDING A SIGNAL TO THE REPOWERING SIDE TO, YOU KNOW, USING NATURAL GAS, NOT USING NATURAL GAS. AND FIRST LET ME SAY, I'M THRILLED THAT THERE'S THIS MUCH ATTENTION ON REPOWERING NEEDS IN NEW YORK CITY. I'M GLAD TO HAVE BROUGHT IT UP EARLIER. BUT, YOU KNOW, FROM OUR PERSPECTIVE WE KNOW WE'RE GOING TO NEED BOTH. I THINK JOHN JUST TALKED TO  WE'RE GOING TO NEED FAST RAMPING, EFFICIENT TECHNOLOGIES TO BALANCE OUT WHAT WE PROJECT AS POTENTIALLY ABOUT A 70% RENEWABLE, LARGE SCALE RENEWABLE PORTFOLIO ON TOP OF MANY, MANY GIGAWATTS OF SOLAR. WHEN WE MAPPED OUT NEW YORK CITIES 80 BY 50 PLAN, YES, TRANSPORTATION BUILDING, ENERGY SECTOR WAS ROLLED INTO THE CALCULATIONS, WE CAME OUT WITH, YOU KNOW, IT'S HARD TO GET TO 70% RENEWABLE PLUS DISTRIBUTE GENERATION SOLAR GOALS. SO WE KNOW WE'RE GOING TO NEED TO BALANCE THAT WITH THE FAST RAMPING TECHNOLOGIES SO THAT WE, YOU KNOW, THAT COMPLETES THE PICTURE AND THAT IS A BALANCE. SO TO GO BACK TO YOUR QUESTION, YES, AT THE MOMENT THAT IS A NATURAL GAS RESOURCE. IN 30 YEARS WILL THAT BE A NATURAL GAS RESOURCE? WE DON'T KNOW BUT ANTICIPATE NEEDING BOTH.

>> I AGREE WITH EVERYTHING THAT'S BEEN SAID ABOUT ANCILLARY SERVICES AND RAMPING AND SO FORTH BUT  AND I ALSO DON'T GET OUT OF BED AND WANT TO REREGULATE. I LIVED THROUGH THE TRANSITION ALSO, BUT I WANT TO MAKE SURE IF WE RUN A CAPACITY MARKET, IT'S A REAL MARKET WITH ENOUGH IN IT. I'LL STOP THERE.

>> SOME OF YOU HAVE BEEN READING MY NOTES BECAUSE ONE BY ONE YOU'RE LEADING TO WHERE I WANT TO HEAD NEXT. WHERE DO WE GO FROM HERE? BECAUSE YOU ALL HAVE VERY WELL LAID BARE THE URGENCY OF WHERE THINGS STAND TODAY, WHERE WE NEED TO HERE. BRAD, I WANTED TO ECHO THE COMMENTS I MADE TO THE NEW YORK STATE COLLEAGUES, KEEP WORKING ON YOUR EFFORT. I APPLAUD YOUR INNOVATION AND YOUR WILLINGNESS TO TRY SOMETHING DIFFERENT, TO SEE IF THAT WILL ACCOMPLISH ALL OF THE OBJECTIVES THAT YOU'VE ENUMERATED. I'VE ALSO HEARD TODAY REALLY A CHICKEN AND EGG SORT OF ISSUE WHEN I'M ASKING YOU WHAT DO YOU SEE COMING NEXT. WHEN YOU LEAVE HERE TODAY, AND I THINK JOHN SAID WE'VE GOT TO START WORKING TOMORROW OR SOMEONE, MAYBE IT WAS  WAS IT SCOTT THAT SAID TOMORROW WE'RE GOING TO START WORKING. WHAT DOES THAT LOOK LIKE FOR YOU? BECAUSE I'VE HEARD A NUMBER OF THINGS HERE TODAY AND FILED IN YOUR PREFILED COMMENTS. I'VE HEARD FROM SOME OF YOU, FERC, WE LIKE YOU BUT LEAVE US ALONE. I'VE HEARD FROM OTHERS OF YOU, FERC, WE NEED GUIDANCE FROM YOU. KATHLEEN TEED UP IN HER COMMENTS, MAYBE WE NEED REGIONAL TECH CONFERENCES. WE DON'T MIND TAKING THE SHOW ON THE ROAD IF YOU'LL OPEN THE DOOR AND LET US IN. [LAUGHTER] A LITTLE KIDDIE TABLE TO THE SIDE SOMEWHERE FOR US.

>> (INAUDIBLE).

>> THAT'S TRUE. WE BETTER DO IT QUICK, RIGHT? AND THEN I'VE HEARD FROM SOME OF YOU THAT THINGS ARE FINE. WE DON'T NEED TO DO ANYTHING. WHAT IS NEXT? BECAUSE WE ARE CREATING A RECORD HERE WHICH WILL AID US IN SHAPING POLICY THAT WILL SUPPORT YOU. NOT ERODE OR TAKE AWAY OR UNDERCUT. WE NEED CLARITY FROM YOU ABOUT WHAT YOU LEAVE NEEDS TO HAPPEN NEXT.

>> NOT EVERYBODY AT ONCE.

>> THANK YOU FOR THAT QUESTION. AND AS MUCH AS I DON'T FONDLY RECALL THE ROAD SHOW TECH CONFERENCES WE DID WITH A NUMBER OF MANY OTHER INITIATIVES HERE, I DO THINK THAT A CONTINUING DIALOGUE IS ESSENTIAL, THAT TRYING TO DO THIS THROUGH PAPER AND WHEN EVERYTHING IS EX PARTE IS VERY DIFFICULT. THERE ARE OTHERS IN THE ROOM WHO DESCRIBED THIS AS AN EXCEEDINGLY COMPLEX PROBLEM, HOW DO WE HARMONIZE STATE POLICY WITH WHOLESALE MARKETS. NEW ENGLAND SHOULD BE COMMENDED FOR THE WORK THAT THEY INITIATED LAST SUMMER, THROUGH NESCOE, TO HAVE A DIALOGUE. YOU SENT STAFF THERE, BUT THAT'S NOT THE SAME THING AS YOU AND YOUR STAFF AT THE TABLE TALKING WITH PEOPLE ABOUT WHAT TO DO NEXT. THAT IF IT HAPPENS, JOHN REESE SIGNALS 24 MONTHS, AS A BOGEY. BRAD AT 36. WE HAVE SOME TIME TO TALK ABOUT WHERE WE GO, NOT AN UNLIMITED AMOUNT OF TIME, BUT AS BRAD SAID, AT LEAST IN THE CASE OF NEW YORK I MEAN HIS COMMENTS REPRESENT A SIGNAL THAT TAKING STEPS TO AT LEAST KEEP SOME OF THE EXISTING STATIONS, THE ONES WE KNOW WE'RE GOING TO NEED TO DECARBONIZE THE MARKET IS SOMETHING THEY HAVE DONE AND THE QUESTION IS WHAT MORE DO WE DO, HOW DO WE FACILITATE THIS TRANSITION OVER TIME, AS I SAID I THINK THAT YOU NEED TO STAY INVOLVED WITH THAT. BUT I DO THINK IT'S IMPORTANT. YOU KNOW, THE SUGGESTION THAT THIS PROBLEM WE'RE TRYING TO SOLVE IS JUST ABOUT THE NUCLEAR PROGRAMS, IT'S A VERY SMALL PART OF WHAT WE'RE DEALING WITH RIGHT NOW. JOHN PAINTS A PICTURE WHERE THIS SORT OF IS CONTAGIOUS ACROSS THE COUNTRY. I DON'T KNOW, NO ONE IN THIS ROOM KNOWS WHETHER THAT WILL HAPPEN, BUT WE HAVE OTHER CLEAN ENERGY GOALS THAT ARE REPRESENTED THROUGH ALL KINDS OF PROGRAMS INCLUDING PLENTY OF THEM THAT ARE UNIT SPECIFIC. OFFSHORE WIND PROGRAMS FOR EXAMPLE ARE LOOKING FOR A SPECIFIC TYPE OF ASSET BECAUSE THE STATE FEELS LIKE IT'S OF SOME VALUE GIVEN OTHER CONSIDERATIONS. SO WE HAVE A LOT OF THINGS IN FRONT OF US AND THE QUESTION IS WHAT SHOULD WE DO IN THE MEANTIME, SHOULD WE TAKE ACTION ON ONE COMPLAINT WE HAVE PENDING WHICH IS ONLY TARGETING THE LEAST COST CARBON ABATEMENT SOLUTION OR TAKE A STEP BACK AND FIGURE OUT IF THAT'S A BETTER SOLUTION. THAT'S WHAT I WAS TRYING TO INDICATE.

>> MARK AND JOHN AND DAVID.

>> THANK YOU FOR YOUR GREAT QUESTION. I WOULD SAY LIMIT THE APPLICATION OF THE MINIMUM OFFER PRICE RULE TO ONLY SITUATIONS THAT DIRECTLY VIOLATE THE FEDERAL POWER ACT AND SECONDLY TO BETTER DEFINE THE RELIABILITY ATTRIBUTES AND SERVICES THAT NEED TO BE DELIVERED TO MAINTAIN AN AFFORDABLE RELIABLE ELECTRIC SYSTEM AND ENSURE THAT THE MARKET OPERATORS HAVE MARKETS SET UP TO DELIVER THOSE RELIABILITY ATTRIBUTES, SOME OF THE ONES THAT WERE MENTIONED A MOMENT AGO, INCLUDING PRIMARY FREQUENCY RESPONSE, FAST RAMPING CAPABILITY, YOU KNOW, VERY SPECIFIC ABOUT WHAT THOSE RELIABILITY ATTRIBUTES ARE. BASE LOAD IS NOT A RELIABILITY ATTRIBUTE.

>> JOHN REESE?

>> SITTING BEFORE YOU IS A COMPLAINT, AND 24 MONTHS IS FINE BUT AS SOON AS YOU HAVE A QUORUM WHICH I WOULD HOPE IS BEFORE 24 MONTHS ADDRESSING THAT AND ADDRESSING THE ISSUE IMMEDIATELY THAT 24 MONTHS IS GREAT TO WORK OUT A PROBLEM. OUR REAL PROBLEM IS IMMEDIATE. IS IMMEDIATE.

>> DAVID?

>> WELL, SO I THINK ONE THING I'VE BECOME CONVINCED OF IS THE HARDER THE PROBLEM, THE LESS CONFIDENCE YOU SHOULD HAVE THAT THE STAKEHOLDER PROCESS CAN NEGOTIATE ITS WAY TO A SOLUTION WITHOUT ANY GUIDANCE OR TIME, YOU KNOW, TIME PARAMETERS. SO I PROBABLY WOULD DISAGREE WITH SOME OF THE PANELISTS HERE. I THINK IT WOULD BE REALLY HELPFUL TO AT MINIMUM ESTABLISH SOME PRINCIPLES, ARTICULATE WHAT THE PROBLEM IS THAT YOU WANT TO SEE SOLVED, ESTABLISH ECONOMIC PRINCIPLES SO THAT WHEN STAKEHOLDERS ARE NEGOTIATING THEIR NEGOTIATING WITHIN A SPACE THAT THEY MIGHT COME UP WITH A SOLUTION THAT'S GOING TO BE HELPFUL, AND GOING TO ACHIEVE THE ECONOMIC OBJECTIVES. I THINK WE'VE BEEN MAYBE THE STAUNCHEST SUPPORTER OF MOPAR, BUT TO PUT THAT IN CONTEXT IT WAS DESIGNED FROM DAY ONE AS AN ANTIMANIPULATION PROVISION OR FIRESIDE MITIGATION PROVISION SO THE WHOLE LOGIC BEHIND MOPAR IS DETER ACTIVITY SO IT DOESN'T HAPPEN SO THEREFORE THE MARKET IS PROTECTED, THE SUPPLY DOESN'T ENTER. IT'S A LOUSY TOOL TO APPLY TO SITUATION WHERE IS ACTIONS ARE BEING TAKEN THAT ARE BEING TAKEN FOR REASONS ENTIRELY OTHER THAN MANIPULATION OR MARKET POWER ABUSE SO YOU ENDS UP WITH SUPPLY NOT BUYING DETERRED, IT ACTUALLY ENTERS. AND IF YOU  I MAY HAVE BEEN TOO CHARITABLE, IN MY COMMENTS. IF YOU READ MY ECONOMIC PRINCIPLES I'M NOT SURE THE MOPAR SATISFIES ANY WHEN APPLIED TO RENEWABLE AND SUBSIDIES AND OTHER STATE ACTIONS. SO THAT'S WHERE THE PROVISION THAT WE'VE BEEN WORKING ON WITH NEW ENGLAND ACTUALLY IS PROMISING BECAUSE IT PROVIDES  IT DOESN'T DISMANTLE THEM, THE MOPAR AND ITS APPLICATION TO INVESTMENTS IT SHOULD APPLY TO BUT PROVIDES A WAY OUT TO ADDRESS THE UNINTENDED CONSEQUENCES OF MOPAR FOR ALL THE OTHER INVESTMENTS THAT IT WOULD APPLY TO AND I THINK FRANKLY, YOU KNOW, NEW YORK OUGHT TO BE LOOKING AT THAT IN TANDEM WITH THE CARBON PRICING BUT I THINK, YOU KNOW, YOU'VE HEARD ME SAY THIS IN FILING MANY TIMES, IT WOULD BE HELPFUL FOR THE COMMISSION TO ESTABLISH A TIME FRAME AND PRINCIPLES TO GUIDE THE STAKEHOLDER PROCESS IN TRYING TO DEAL WITH THIS.

>> ALL RIGHT. I THINK THERE'S ONE  I THINK WE PROBABLY NEED TO MOVE ON. SORRY. SURE.

>> I WANTED TO DISAGREE WITH DR. PATTON'S ASSESSMENT THAT THE PROPOSAL AND ISO NEW ENGLAND IS DISASSEMBLED. IT'S IMPORTANT TO HIGHLIGHTED.

>> WE'LL MOVE TO THE THIRD SESSION. WE'LL THANK OUR PANELISTS FOR A GREAT CONVERSATION. WE APPRECIATE YOUR COMMENTS.

>> ALL RIGHT. WE'RE TRYING TO GET STARTED. EVERYONE, PLEASE TAKE YOUR SEATS. I'LL THANK THE PANELISTS FOR BEING READY TO START THIS NEXT PANEL. WE'RE GOING TO GET STARTED. I APPRECIATE FOR ALL OF YOU WHO HAVE BEEN HERE ALL DAY. OUR LACK OF BREAKS HAS PROBABLY BEEN NOT IDEAL. BUT NONETHELESS WE'RE GOING TO START THE THIRD SESSION AND OUR FIRST PANEL, WE APPRECIATE THE PANELISTS' PATIENCE WAITING TO GET STARTED. I HOPE THIS DOESN'T FEEL LIKE GROUNDHOG DAY FOR YOU ALL. WE'VE GOT A THREAT OF SOMEONE SINGING IF PEOPLE DON'T SIT DOWN. ALL RIGHT. I'M BRINGING JOHN TO ALL OUR MEETINGS FROM NOW ON. THAT'S THE NICE VERSION. THANK YOU TO THE PANELISTS, WE APPRECIATE YOUR WILLINGNESS TO PARTICIPATE. THIS IS OUR THIRD SESSION, FOCUSED ON THE PJM MARKET. OUR FIRST PANEL OF THAT SESSION WILL BE WITH REPRESENTATIVES FROM THE PJM STATES. I'M PLEASED TO WELCOME ROBERT IRVIN, GENERAL COUNSEL AT THE MARYLAND PUBLIC SERVICE COMMISSION, PRESIDENT RICHARD MROZ OF THE NEW JERSEY BPU, VICE CHAIRMAN ANDREW PLACE OF THE PENNSYLVANIA PUC AND BRIEN SHEAHAN, CHIEF EXECUTIVE OFFICER OF ILLINOIS COMMERCE COMMISSION. WE'LL FOLLOW THE SAME PROCESS FOR THE TWO EARLIER SESSIONS, A FIRST PANEL WITH OUR STATE REPRESENTATIVE WHO WILL THEN ASK TO SIT ON THE SIDE FOR OUR SECOND PANEL WITH BROADER STAKEHOLDER GROUP. LIKE THE EARLIER SESSIONS WE'D LIKE TO START OUT WITH BROAD DISCUSS ABOUT WHAT THE STATES' EXPECTATIONS ARE FOR THE ROLE WHOLESALE MARKETS PLAY BROADLY IN PURSUIT OF STATE GOALS GENERALLY, SPECIFICALLY IN PURSUIT OF GOALS RELATED TO SPECIFIC RESOURCE TYPES, ATTRIBUTES, READING THE PRECONFERENCE STATEMENTS FOR MANY OTHER REGIONS, FOR NEW YORK AND NEW ENGLAND, THERE MIGHT HAVE BEEN A SENSE THAT I THINK IT'S CONVERSATION DIDN'T BEAR THIS OUT, MAYBE THERE WASN'T AN EXPECTATION THAT THE MARKETS WOULD GET NEW RESOURCES BUT RATHER ORGANIZE ASSETS. I DON'T THINK THAT'S HOW WE WENT ABOUT THAT QUESTION. FOR PJM I READ THE PRESTATEMENT, PRECONFERENCE STATEMENTS POTENTIALLY NEEDING A NEW SET OF RESOURCES AS WELL AS STATE ACTIONS BRING SPECIFIC RESOURCE TYPES INTO THE MARKET, A NEED TO ALSO HAVE ORDERLY EXIT. SO WE'LL START OUT WITH, AGAIN, LIKE WE HAVE THE OTHER SESSIONS, YOUR VIEWS ON THE ROLE OF PJM MARKETS, PARTICULARLY WHAT ROLE PJM HAS IN ENSURING RESEARCH ADEQUACY AND IDENTIFYING SET OF RESOURCES ON A LONGTERM BASIS.

>> THANK YOU, ARNIE. LET ME THANK THE COMMISSION AND CHAIRMAN LAFLEUR AND COMMISSIONER HONORABLE FOR PERMITTING MARYLAND, THERE WOULD A LOT OF PEOPLE WHO WOULD HAVE RATHER BEEN HERE THAN MARYLAND, BUT WE'RE PLEASED TO PARTICIPATE. I WANT TO APOLOGIZE FOR MY COMMISSIONERS THAT ONE OF THEM ISN'T SITTING HERE. IT WASN'T FOR LACK OF INTEREST. THEY ARE IN A PROCEEDING ALL DAY TODAY AND ALL DAY TOMORROW. SO THAT TOOK PRECEDENCE. THE WRITTEN STATEMENT THAT WE FILED WAS REVIEWED AND APPROVED BY THE COMMISSIONERS. SO THAT IS THE COMMISSION STATEMENT. WHAT I SAY HERE TODAY ARE MY OWN VIEWS, AND ARE NOT NECESSARILY THE VIEWS OF THE COMMISSION OR ANY INDIVIDUAL COMMISSIONER. LET ME START BY SAYING I DISAGREE A LITTLE BIT WITH SOME OF THE EARLIER STATE PANELISTS. MARYLAND DOES NOT CONSIDER THE PJM MARKETS OF RESOURCED A QUESTIONS AND RELIABILITY. LET ME TELL YOU WHY. FIRST OF ALL, AS MY FORMER CHAIRMAN AZARIA USED TO SAY IF THE LIGHTS GO OUT MARYLAND RATE PAYERS ARE NOT GOING TO STORM VALLEY FORGE WITH PITCH FORKS AND TORCHES. THEY ARE GOING TO COME TO THE MARYLAND COMMISSION AND THEY ARE GOING TO SAY HOW DID YOU LET THAT HAPPEN? AND WHEN WE TALK TO THAT REPORTER FROM THE BALTIMORE SUN WE WON'T WANT TO SAY DR. BOWERING AND PRESIDENT OTT TOLD US IT WAS GOING TO BE FINE. WE'RE NOT GOING TO RELY ON THAT ALONE. THERE'S A REAL REASON IN THE REAL WORLD. IN 2007 PJM SAID YOU'RE IN TROUBLE, YOU BETTER DO SOMETHING. THEY KNEW THEY GOING TO GET NEW GENERATION. WE ISSUED A GAP RPF. WE TOLD OUR DISTRIBUTION UTILITIES ENTER INTO CONTRACTS WITH DEMAND RESPONSE RESOURCES. WE GOT 400 MEGAWATTS OF DEMAND RESPONSE RESOURCES THAT COULD BE ACTIVATED IMMEDIATELY, INTERESTINGLY WE DID THAT THROUGH A CONTRACT FOR DIFFERENCES, NOT UNLIKE THE ONE WE SIGNED WITH  SIGN WITH CP B. SAME INSTRUMENT, NOBODY SAID A PEEP. NOBODY CLAIMED THAT WE WERE CRATERING THE MARKET OR DEPRESSING PRICES ARTIFICIALLY. IT ALL WENT SMOOTHLY AND WE STEPPED IN AND COOPERATIVELY GOT THE JOB DONE, BETWEEN THE MARKET, THE ECONOMY TANKING AND ALL THE REST, WE NEVER DID HAVE THE LIGHTS GO OUT. THANKFULLY. FIRST OF ALL, WE'RE NOT RELYING SOLELY ON DR. BAUERING AND PRESIDENT OTT. THE SECOND THING I WANT TO SAY, AS LONG AS THE CAPACITY MARKET'S FUNDAMENTAL PREMISE IS IT'S GOING TO BE COSTBASED AND RESOURCE NEUTRAL THERE WILL BE CONFLICT WAS STATE ENVIRONMENTAL POLICIES. STATE ENVIRONMENTAL POLICIES BY DEFINITION ARE NOT RESOURCE NEUTRAL. WE'VE BEEN AT THIS FOR A LONG TIME IN MARYLAND. INDEED EVEN BEFORE THERE WERE CAPACITY MARKETS. IN 2004 MARYLAND PUT IN OUR RPS. AND WE'VE BEEN USING A SYSTEM OF RECS FOR RENEWABLE INTERESTS FOR TEN YEARS. 2008 WE ENACT THE OUR EMPOWER ENERGY EFFICIENCY PROGRAMS. 2009 WE ADOPTED A GREENHOUSE GAS REDUCTION ACT. WHICH WE IMPLEMENT THROUGH RGGI. SO WE'VE BEEN MESSING WITH THE FERC MARKETS FOR A LONG TIME. AND I DON'T THINK WE'VE HAD ANY TERRIBLE IMPACTS, I DON'T THINK THE MARKET IS GONE TO HELL IN HAND BASKET BUT I DO AGREE WITH THE NEW YORK FOLKS THAT SAID WE REALLY NEED TO RETHINK THE BASICS OF ARE WE GOING TO CONTINUE TO BE COST BASE AND RESOURCE NEUTRAL OR START RETHINKING HOW WE'RE SENDING SIGNALS OUT OF THAT CAPACITY MARKET. THANK YOU.

>> THANK YOU FOR HAVING ME. GOOD TO BE HERE. I DO APPRECIATE THE FERC UNDERTAKING THIS EFFORT. IT'S A CONVERSATION THAT'S NOT ONLY WORTHWHILE BUT WILL BE VERY VALUABLE. HOWEVER, IT IS QUITE CLEAR THERE ARE MANY OPINIONS, MANY MOVING PARTS. AND MY COMMENTS TODAY WILL BE CONFINED FOR THIS AFTERNOON'S PURPOSES TO WHAT FORMS MY OPINIONS AS PRESIDENT OF THE NEW JERSEY BOARD OF PUBLIC UTILITIES. I THINK SOME OF YOU KNOW I HAVE PERSPECTIVE THAT'S INFORMED FROM OTHER AFFAIRS THAT RESPONSIBILITIES I HAVE VERSUS THE PRESIDENT OF OPSE, CHAIRMAN OF INFRASTRUCTURE CRITICAL COMMITTEE, I'M NOT SPEAKING FOR THEM TODAY. IN NEW JERSEY'S EXPERIENCE AS MOST OF YOU KNOW WE HAVE A DIVERSE GENERATION PORTFOLIO. WE HAVE 45% OF THE ELECTRICITY THAT'S GENERATED COMES FROM NUCLEAR IN OUR STATE. 45% COMES FROM FROM NATURAL GAS, THE REST IS A MIX OF OUR SOURCE, FOSSIL FUELS AND ROBUST RENEWABLE ENERGY PORTFOLIO. WE'RE PROUD OF THAT. IT'S ONE THAT IN MY ESTIMATION YEARS AGO WHEN NEW JERSEY AND THE OTHER STATES TALKED ABOUT HOW THE MARKETS WOULD EVOLVE, THERE WERE PROBABLY EXPECTATIONS THAT GENERALLY THAT DIVERSE PORTFOLIO WOULD STILL BE AROUND. TODAY LARGELY BECAUSE WHAT'S HAPPENED IN THE LAST SEVERAL YEARS, BECAUSE OF THE PRICE OF THE FUEL SOURCE, THIS DISCUSSION AND THE WAY WE LOOK AT THE MARKETS HAS CHANGED DRAMATICALLY. THAT'S ONE FACTOR, WHAT IS DRIVING THIS AND A NUMBER OF PRESENTERS EARLIER REMARKED ABOUT THAT HOW WE'RE NOW SHIFTING THE FOCUS OF WHAT THE MARKETS MIGHT NEED TO CONSIDER IN TERMS OF VALUATION. THAT IS JUST ONE GENERAL OBSERVATION. AND I HAVE BEEN VERY VOCAL TO SAY I THINK THE MARKET NEEDS TO VALUE THESE VERY IMPORTANT RESOURCES, LIKE OUR NUCLEAR RESOURCES IN NEW JERSEY. FOR THE REASON I MENTION, THEY ARE VALUABLE, THEY CONTINUE TO HELP PROVIDE FOR THE LONG TERM, A DIVERSE ENERGY MIX. AND THAT IS ONE ASPECT THAT IS NOT QUANTIFIED WITHIN THE MARKETPLACE. IT'S ONE NOW THAT I THINK FOR BOTH RELIABILITY PURPOSES AS WELL AS LONGTERM PRICING WE DO NEED TO GIVE THOUGHT TO. AND THE RELIABILITY ASPECT IS ONE THAT HITS HOME FOR ME. AS THE PRESIDENT. BOARD, I NOT ONLY HAVE RESPONSIBILITY TO THE CHAIRMAN BUT ALSO THE CHIEF ENERGY OFFICER OF THE STATE AND RELIABILITY ASPECTS ARE ONES THAT HIT HOME IF THERE ARE OUTAGES LIKE MR. IRWIN SAID, THE MARYLAND COMMISSION WOULD BE EQUALLY AS PUT UPON TO ANSWER THE QUESTIONS IF THE LIGHTS GO OUT. RESEARCH ADEQUACY IS IMPORTANT TO US BUT I LOOK AT IT IN TERMS OF THE PRACTICAL ASPECTS OF IT. WHAT IF THERE IS IMPINGEMENT TO FUEL SOURCES? IN NEW JERSEY WE HAD A LOOMING THREAT LAST YEAR, FIRST ORDER OF CONTINGENCY FOR NATURAL GAS IN NEW JERSEY WHICH I WAS VERY CONCERNED ABOUT. I LOOK AT THE SITUATION OF WHETHER WE CAN MAINTAIN ORDERLY MARKETS TO ENSURE DIVERSE PORTFOLIO OF ENERGY MARKETS CROSS PJM, WHETHER WE'LL VALUING THEM APPROPRIATELY AND GOING ONE STEP FURTHER AND I WANT TO THANK PJM FOR THE WORK THEY HAVE DONE IN THE LAST COUPLE WEEKS, PARTICULARLY, TO START A CONVERSATION ABOUT WHAT GOES BEYOND JUST THE GENERATION SOURCE, THIS DOES WIDEN THE CONVERSATION ADMITTEDLY TO CONSIDER WHAT THE ADDITIONAL COSTS ARE, ASSOCIATED WITH THE BULK POWER SYSTEMS DELIVERY OF THAT ENERGY. TRANSMISSION, PIPELINES, OTHER ASSOCIATED INFRASTRUCTURE. I THINK ABOUT IT IN THAT RESPECT, ALSO FROM THE CONSUMER STANDPOINT. NEW JERSEY, THERE ARE  THERE'S INFRASTRUCTURE WHICH IS BEING BUILT IN AND AROUND THE NUCLEAR PLANTS. AND I THINK TO MYSELF, THOSE PLANTS WERE TO GO AWAY AND THOSE ASSETS, THOSE TRANSITION ASSETS HAD TO BE UPGRADED, RESIDENTS OF PJM CONTINUED TO PAY FOR THOSE WE END UP WITH STRANDED COSTS. THERE ARE ASPECTS I BELIEVE TO WHAT THE MARKET REALLY SHOULD START TO CONSIDER BEYOND WHAT WE'VE ALREADY TALKED ABOUT FROM A RELIABILITY STANDPOINT AS WELL AS A MORE HOLISTIC VIEW OF THE WAY WE VALUE THIS BULK POWER SYSTEM. SO I KNOW PROBABLY BROADENS THE CONVERSATION, MAYBE EVEN COMPLICATES IT FURTHER FROM WHAT WE'RE STARTED TO TALK ABOUT BUT I DO BELIEVE THERE ARE MANY ASPECTS THAT THE MARKETPLACE CAN AND SHOULD VALUE LEST STATES GO ON A STATE BY STATE BASIS BEGIN TO VALUE THOSE THEMSELVES. NEW JERSEY HAS NOT SPOKEN, OUR LEGISLATURE HAS NOT TAKEN A POSITION ON THESE ISSUES. MY GOVERNOR HAS NOT. I CERTAINLY RESPECT THEM AND ANY FUTURE POLICY STATEMENTS THEY MAY MAKE ON THESE ISSUES. FOR THE TIME BEING NEW JERSEY BOARD WILL CONTINUE TO LOOK AT THIS AS A RELIABILITY ISSUE, CONTINUE TO SUPPORT THE MARKETS, AND ADVOCATE FOR THE MARKETPLACE. THANK YOU.

>> THANK YOU.

>> THANK YOU VERY MUCH. IT'S A GREAT PLEASURE TO BE HERE. THANK YOU FOR THE OPPORTUNITY. I ALSO NOTE MY OPINIONS ARE SOLELY MY OWN. IT'S I THINK A VALUABLE PROGRESSION HERE MOVING FROM MARYLAND TO NEW JERSEY TO PENNSYLVANIA. THE MARKETS HAVE SERVED US WELL. IT DOESN'T GUARANTEE THEY WILL ALWAYS SERVE US WELL. THERE ARE CLEARLY TWEAKS TO THE CAPACITY MARKET WE WOULD FAVOR. HOWEVER, IF YOU'RE LOOKING, THINKING ABOUT THE CONVERSATION THIS MORNING AND INTO THIS AFTERNOON, THE ISSUES IN NEW ENGLAND AND NEW YORK, THAT'S OUR FUTURE, LIKELY, IF WE'RE NOT THINKING ABOUT THESE ISSUES TODAY. I AM FUEL AGNOSTIC. I WOULD ARGUE, I WOULD BE CAREFUL OF THINKING THAT PENNSYLVANIA SHOULD GO FURTHER THAN WE ALREADY HAVE. OR MUCH FURTHER THAN WE ALREADY HAVE IN SELECTING RESOURCES OR BILATERAL CONTRACTS. WE HAVE SUCCESSFUL APS. WE HAVE SUCCESSFUL ENERGY EFFICIENCY. HOWEVER, THEY WOULD BE LARGELY ON THE MARGINS AND IMPACTS TO THE MARKET'S FUNCTIONING AS BEING ARGUABLY MINIMAL TO DATE. BUT GIVEN THE CONVERSATION ABOUT WHAT WE DO WITH NUCLEAR, WE HAVE 10.3 GIGAWATTS OF NUCLEAR IN THE COMMONWEALTH, THESE ARE SUBSTANTIVE SUDDENLY CONVERSATIONS, TODAY OR NEXT YEAR, THE YEAR AFTER. THAT GETS US TO CAN WE CONTINUE TO FUNCTION WELL IF WE SELECT, FOR EXAMPLE, A ZEC. I WOULD ARGUE THAT I WOULD RATHER, MUCH RATHER SEE AN INTEGRATED CARBON PRICE THAT'S FUEL AGNOSTIC AND I DON'T THINK IT WOULD CREATE ISSUES FOR RELIABILITY, AND I THINK CAN YOU DO THAT IN THE ENERGY MARKET AND DEAL ON BORDER ISSUES, AND DO IT WELL. QUESTION WHETHER WE COULD DO IT ON THE RTO LEVEL PREFERABLY, MORE CLEAN, MORE ELEGANT BUT I DON'T WRITE OFF THE POSSIBILITY IN THE COMMONWEALTH WE COULD CONCEIVABLY DO IT AND MANAGE THE COMPLEXITIES WITHIN THE BROADER RTO WITHOUT DISTURBING THE MARKET AND IF WE DO IT BY DOING A CARBON MATTER, YOU'RE GETTING BETTER PRICE SIGNALS AND EVEN IF YOU WANT TO DO A HYBRID APPROACH, THE STATE WANTS TO DO FOR EXAMPLE OFFSHORE WIND YOU CAN LAYER THAT ONTO THE UNDERLYING CARBON PRICE AND AT LEAST THE CARBON PRICE IS MITIGATED MUCH OF THE IMPACT OF INTRODUCING THAT STATE ATTRIBUTE INTO THE MARKED UP RESOURCE INTO THE MARKET, SO FOR THOSE REASONS I DO THINK THAT'S HOPEFULLY OUR FUTURE. I DO NOT  I'M NOT IN THE LEGISLATURE OR GOVERNOR'S OFFICE. THEY HAVE NOT OPINED ON THIS. LOOKING AT THE FUTURE THAT'S BEFORE US, A CRYSTAL BALL, THESE ARE DOABLE. THEY DON'T INFRINGE ON FERC'S RESPONSIBILITIES. IT'S WITHIN THE MARKET. IT DOESN'T IMPEDE, NOT NECESSARILY MARKET POWER, SO THAT I WILL CONTINUE ON. THANK YOU.

>> CHAIRMAN SHEAHAN?

>> THANK YOU. I APPRECIATE THE OPPORTUNITY TO BE HERE. WHEN I WAS THINKING BIT I KNEW I WOULD BE ON THE HOT SEAT BUT NOT LITERALLY THE HOT SEAT. IT'S WARM IN HERE. [LAUGHTER] ILLINOIS HAS A LONG HISTORY OF PROGRESSIVE WITH A SMALL P LEADERSHIP IN ENVIRONMENTAL ENERGY POLICY. THE ILLINOIS RENEWABLE PORTFOLIO STANDARD AND ENERGY EFFICIENCY PORTFOLIO STANDARDS WERE ENACTED IN 2008. IN 2011 THE STATE ENACTED EMA, WHICH WAS PRIMARILY DIRECTED AT ILLINOIS'S ENERGY INFRASTRUCTURE BUT ALSO TO ENABLE A BROADER ARRAY OF ENERGY EFFICIENCY AND DEMAND RESPONSE PROGRAMS. MORE RECENTLY OF COURSE THE GENERAL ASSEMBLY ENACT THE THE FUTURE ENERGY JOBS ACT, WHICH AMONG OTHER THINGS CREATED THE ZEC. ADOPTION OF ZERO EMISSION STANDARDS IN PARTICULAR ARE A CONTINUATION OF ILLINOIS'S LONG HISTORY OF ADDRESSING CLIMATE CHANGE AND THE ENVIRONMENTAL IMPACT OF INSTATE GENERATION BY TAKING INTO ACCOUNT EVENTS AND CIRCUMSTANCES AFFECTING THE STATE'S ELECTRIC INJURY. THE ZEC PROGRAM PROMOTES THE ENVIRONMENTAL BENEFITS OF CARBONFREE NUCLEAR GENERATION BY UNBUNDLING THE NEGATIVE EXTERNALITY ALLOWING CARBONFREE GENERATION TO EXCEED THE VALUE. IN TERMS OF RTO'S ROLE THEY PLAY AN IMPORTANT ROLE AND THEY WILL CONTINUE TO PLAY AN IMPORTANT ROLE. APART FROM PROVIDING AND OPERATING MARKETS, THE RTO IS AS YOU KNOW CURRENTLY HAVE PROCESSES TO IDENTIFY FUTURE CAPACITY NEEDS. BUT MARKETS ARE NOT SACROSANCT. THEY EXIST TO SERVE STATE PURPOSES. IT'S IMPORTANT FOR THIS DISCUSSION I THINK TO RECOGNIZE AND RESPECT THAT STATES LIKE ILLINOIS THAT HAVE LEGITIMATE ENVIRONMENTAL CONCERNS HAVE THE LEGAL AUTHORITY TO REQUIRE AND ENCOURAGE THOSE MARKETS TO REFLECT THOSE PRIORITIES. THANK YOU.

>> THANK YOU. SO I THINK WE HEARD  THIS WAS A NICE PROGRESSION OF HOW MUCH OF WHAT WE ARE ATTEMPTING  WHAT THE STATES ARE ATTEMPTING TO ACCOMPLISH WITH THEIR POLICY OBJECTIVES CAN BE ACCOMPLISHED WITHIN THE MARKETS AND HOW MUCH OF IT HAS TO TAKE PLACE OUTSIDE THE MARKETS OR EVEN I THINK TO WHAT MR. IRWIN SAID, SOME THINGS THAT THE MARKET IS ATTEMPTING TO ACCOMPLISH ITSELF WHETHER THE STATES WANT TO ACCOMPLISH THOSE THINGS AS WELL OR PROVIDE SOME SORT OF COMPLEMENT. ONE OF THE PRECONFERENCE STATEMENTS TALKED ABOUT THOUGH THE FACT THAT BECAUSE OF THE INTEGRATIVE NATURE OF THE PJM MARKETS ANY ONE STATE DECISION NECESSARILY FLOWS INTO THE MARKET OUTCOMES THAT THE OTHER STATES ARE GOING TO EXPERIENCE. AND THAT THERE CAN EITHER BE CONFLICT, DIRECT CONFLICT BETWEEN WHAT STATES ARE PURSUING OR A SIDE EFFECT THAT ONE STATE IS PURSUING A SET OF POLICY OBJECTIVES THAT WILL INFLUENCE THE MARKET OUTCOMES OF ANOTHER SET OF RESOURCES. YOU KNOW, I THINK I HEARD FROM BOTH NEW JERSEY AND PENNSYLVANIA A SENSE THAT WITHIN THE MARKET, THE MORE THOSE THINGS CAN TAKE PLACE WITHIN THE MARKET, THE LESS THAT'S POTENTIAL CONFLICT IS. BUT I GET I'D LIKE TO HEAR WHAT ROLE THE RTO PLAYS IN RESOLVING POTENTIAL CONFLICTS IN ANY ONE STATE IF THE PJM MARKET ISN'T THE PLACE WHERE THE CONFLICT WILL BE RESOLVED, WHAT'S THE OTHER FORUM FOR RESOLUTION?

>> LET ME START BECAUSE I'VE GIVEN THAT ISSUE SOME REAL SERIOUS THOUGHT. I THINK THAT'S SOMETHING MANY OF US IN THE PJM STATES ARE GRAPPLING WITH VERSUS REGULATORS LOOK AT BOTH THE GENERATION AND RESOURCE ADEQUACY NICKS AS WELL AS WHAT THE STRUCTURE COULD BE TO WORK FOR THOSE ISSUES. AS THE PRESIDENT OF THE NEW JERSEY BOARD, WHEN I CAME TO THE POSITION THREE YEARS AGO, STRUCK BY THE FACT THAT WE REALLY NO LONGER HAVE THE APPARATUS TO EVALUATE THE BROADER SET OF QUESTIONS THAT WAS AVAILABLE TO COMMISSIONS IN PJM BEFORE DEREGULATION WHEN WE HAD IRP. WE JUST DON'T HAVE THE RESOURCES. WE DON'T HAVE THE BANDWIDTH. WE DON'T HAVE THE STAFF. WE DON'T HAVE THE STRUCTURES IN PLACE TO INFORM US AS STATE REGULATORS AT THIS POINT IN TIME. ACTUALLY POINTS OUT TO ME WHAT I THINK IS LARGELY  I DON'T MEAN IT IN A REGULATORY BUT THE GAP IN TERMS OF THE WORK THAT SHOULD BE GOING ON. I'VE HAD MANY CONVERSATIONS WITH REPRESENTATIVES OF PJM ABOUT HOW PJM CAN AND SHOULD FILL PART OF THAT VOID. I THINK A LOT OF WORK THEY HAVE DONE RECENTLY HELPS, AT THE SAME TIME I THINK IT'S INCUMBENT UPON US AS STATE REGULATORS, INDIVIDUALLY AND COLLECTIVELY, ALONG WITH FERC, ALONG WITH PJM TO THINK ABOUT HOW TO FILL THAT VOID AND TO MANAGE THOSE ISSUES IN A BETTER WAY. I'M REMINDED, AND I'VE MENTIONED THIS MANY TIMES WHEN I'VE SPOKEN ABOUT THESE ISSUES THAT OUR COLLEAGUE FROM OHIO, CHAIRMAN HOCK, HAD TALKED ABOUT AN ENHANCED PLANNING COLLABORATIVE IN THE CONTEXT OF TIME ABOUT TRANSMISSION ISSUES, IT SEEMS TO ME THAT THAT CONCEPT IS EQUALLY AS APPLICABLE TO BOTH TRANSMISSION AS WELL AS IT IS TO GENERATION, MIX AND IT MAY BE THAT THERE SHOULD BE SOME CONSIDERATION TO HOW WE CAN HAVE A VEHICLE LIKE THAT IN THE REGION TO INFORM AND GIVE US THE TOOLS TO WORK TOWARDS THESE ISSUES IN THE FUTURE.

>> CERTAINLY MARYLAND WOULD PREFER THAT THE STATES WORK OUT THESE ISSUES WITH THE OTHER STATES. THE COLLABORATIVE PROCESS, WE'VE BEEN ACTIVE PARTICIPANTS IN OPSE, THAT'S A HARD GROUP TO GET TO COME TOGETHER. PRESIDENT MONROE'S WORK IS LIKE HERDING ANTS, I SUSPECT. WE UNDERSTAND THAT. THE SECOND PLACE WE'D LIKE TO SEE THOSE KINDS OF THINGS RESOLVED ARE IN THE STAKEHOLDER PROCESSES AT PJM. WE DON'T WANT TO SEE FERC OR PJM BECOMING, IF YOU WILL, A COURT IN WHICH VARIOUS STATES FIGHT OUT THEIR VARIOUS POLICY. THAT'S NOT THE WAY IT OUGHT TO BE DONE.

>> YEAH, IN THE COURSE I WOULD REINFORCE WHAT WHAT JUST SAID BY BOTH SPEAKERS. I CLEARLY DON'T SEE A ROLE FOR PJM OR FERC TO BE AN ARBITER OR JUDGE, AS POINTED OUT, THEY SHOULD BE A PATH THROUGH THE MODELS IN WHICH WE BUILD, MARKETS WE BUILD. BUT FOR LACK OF BETTER WAY TO PHRASE IT THERE IS ALWAYS GOING TO BE TENSION BETWEEN THE STATES, THIS ISN'T THE ONLY VENUE WE HAVE TENSION. PERHAPS I WOULD CAUTION MY OWN THOUGHTS ON THIS, THERE WILL BE BRUISES AND DINGS IN THIS PROCESS. AND THAT IS UNAVOIDABLE.

>> BRIEN SHEAHAN. I THINK MY COLLEAGUES' SUGGESTIONS ARE GOOD. I THINK, YOU KNOW, REGULATORS ACROSS STATES WORK WELL TOGETHER. WE'RE OFTEN IN THE SAME REGION OR NATIONAL ASSOCIATIONS, AND I THINK WE CAN DEFINITELY WORK THROUGH THESE. BUT I DON'T KNOW THAT THE CONFLICT WILL NECESSARILY BE BETWEEN STATES. IT SEEMS TO ME IT'S REALLY SORT OF A BUSINESS COMPETITION BETWEEN GENERATORS. WITH RESPECT TO ILLINOIS'S SITUATION IF A STATE DESIRES CLEANER GENERATION TO SUPPORT HEALTH OF ITS CITIZENS AND LEGISLATURE HAS CHOSEN IN ILLINOIS, IT'S A BENEFIT, NOT A CONFLICT. BUT I THINK WHETHER IT'S THE STATES OR PJM OR FERCCONVENED GROUP I THINK IT WOULD BE PREFERABLE TO WORK OUT THESE ISSUES IN THAT WAY, A COLLABORATIVE WAY.

>> I'LL ASK OUR COMMISSIONERS IF THEY'VE GOT ANY QUESTIONS AT THIS POINT.

>> ARNIE, THANK YOU. AND MY DEAR COLLEAGUE CHERYL WAS KIND ENOUGH TO GIVE ME THE MIC FIRST. THANK YOU, CHERYL. GOOD AFTERNOON, GENTLEMEN. AS I THINK ALL OF YOU WERE SITTING IN THE ROOM EARLIER WHEN I SAID, I GET WHERE YOU ARE. THIS PANEL IN PARTICULAR I THINK IS QUITE INTERESTING BECAUSE YOU ARE TEEING UP DIFFERENT CHALLENGES, AND CERTAINLY WITH REGARD TO MARYLAND, ILLINOIS IN PARTICULAR, WE'VE HAD DIFFERENCE TENSIONS. I ACKNOWLEDGE JUDGE BRYNNER. I WAS SHOCKED HE CAME BACK AFTER THAT CASE WE'RE SO GLAD LARRY DID. HE'S SHAKING HIS HEAD. THIS IS A NEW AND DIFFERENT TIME FOR PJM. I WANT TO ASK THE QUESTIONS MORE BROADLY SO THAT IF OTHERS OF YOU HAVE POINTS OF VIEW, YOU CAN RAISE THOSE AS WELL. ONE OF YOU TEED UP THE FACT THE CURRENT WHOLESALE MARKET CONSTRUCT MAY BE SUFFICIENT FOCUSED ON LOWEST COST RESOURCES IN A WAY THAT'S FUEL NEUTRAL, PRESIDENT MONROE SAID WE SHOULD THINK ABOUT OTHER ATTRIBUTES AND VALUING THOSE. I WANTED TO ASK THE OTHER PANELISTS AND GIVE THE OTHER GENTLEMEN A TIME IF YOU WANT ANOTHER BITE AT THE APPLE, DO WE NEED ADDITIONAL VALUATION OF ATTRIBUTES IN WHOLESALE MARKETS TO MEET YOUR NEEDS?

>> THANK YOU, COMMISSIONER. MY VIEW WOULD BE YES. I THINK THAT WAS REFLECTED IN OUR PREFILED STATEMENT. WE WOULD NOT ENCOURAGE EITHER YOU OR PJM TO CONTINUE TO TWEET THE RPM OR THE MOPAR. WE WOULD AGREE WITH DR. PATTON, THE MOPAR ORIGINALLY STATES WE'RE EXEMPT FROM THE MOPAR. OUR RESOURCES WEREN'T SUBJECT TO THE MOPAR. IT WASN'T UNTIL WE STARTED DOING THINGS THAT SOMEBODY SAID WAIT A MINUTE, YOU NEED TO BE SUBJECT TO THE MOPAR. EVERY SINGLE YEAR THERE HAVE BEEN PROPOSALS FOR CHANGING RPM. WE DON'T THINK THAT THAT CONTINUING TO TRY TO TWEAK THAT MODEL IS GOING TO BE VERY CONSTRUCTIVE. WE NEED TO GO BACK TO THE BASICS AND SAY WHAT IS IT WE WANT AND WHAT DO WE WANT THE MARKET TO VALUE, AND THAT'S GOING TO BE OVER AND ABOVE JUST THE CHEAPEST. THE OTHER THING I WOULD WANT TO SHARE WITH YOU IS DO YOU REALLY WANT TO GET RID OF ALL THE NUKES MERELY BECAUSE THEY ARE UNECONOMIC? IS THAT REALLY A GOOD IDEA? I'M SAYING NO. IF WE DO GET TO A POINT WHERE RENEWABLES ARE 40, 50, 60% OF OUR GENERATION, YOU'RE GOING TO HAVE MORE AND MORE IMPORTANT OF AN ISSUE OF THAT RESOURCE MIX FOR THE BASE. AND DO YOU REALLY WANT IT ALL GAS? THAT MAKES NO SENSE TO ME. SO YOU'RE GOING TO HAVE TO HAVE THOSE MARKETS START LOOKING AT MORE THAN JUST THE CHEAPEST, AND SAY TOO BAD, NUKES, YOU'RE UNEFFICIENT, GOODBYE. WE DON'T THINK THAT CONSTRUCT IS GOING TO BE VERY GOOD GOING FORWARD.

>> AND TO YOUR POINT I APPRECIATED PJM REPORT THAT RECENTLY ISSUED, SPEAKING TO NOT ONLY THE VALUE OF FUEL DIVERSITY BUT A BALANCED PORTFOLIO. I THINK THAT'S THE POINT YOU'RE TRYING TO MAKE. ANYONE ELSE?

>> YEAH, BRIEN SHEAHAN. I WOULD AGREE WITH THAT 100%. I THINK THAT STATES LIKE ILLINOIS HAVE EVERY RIGHT TO VALUE THE ENVIRONMENTAL ATTRIBUTES OF CERTAIN GENERATION. BUT WHOLESALE MARKETS CERTAINLY COULD BE A MECHANISM TO PRICE, SO LONG AS IT RESPECTS THE STATES' GOALS. IN OTHER WORDS, I THINK IF YOU DID IT REGIONWIDE, AND THE RTO DECIDED, WELL, THOSE ATTRIBUTES MAY BE, YOU KNOW, WOULD BE MORE ECONOMIC TO ACCUMULATE SOMEWHERE ELSE, AND YOU END UP WITH SORT OF POLLUTION CENTERS AND PARTICULAR AREAS, THEN THAT WOULD BE AN EXAMPLE WHERE THE WHOLESALE MARKET WOULDN'T BE AN APPROPRIATE MECHANISM FOR THAT VALUE.

>> YEAH, I'M TORN. I WOULD PROBABLY COME DOWN THINKING I WOULD RATHER SEE A TWEAK IN THE CAPACITY MARKETS THAN STARTING FRESH. IT COMES WITH BAGGAGE, COMPLEXITY AND CONSTRAINTS CHALLENGING TO QUANTIFY. HOWEVER I THINK IN THE AGGREGATE IT'S A FAIR WAY TO THINK ABOUT IT. BUT THAT SAID, IF WE'RE TALKING ABOUT BIG CHUNKS, NUCLEAR ISSUE, ON THE ENERGY SIDE, AND USE CAPACITY MARKETS, WE CAN DEAL WITH SOME OF THE MORE MARGINAL ISSUES OF STATE PRIORITIES IN THE CAPACITY MARKETS, ARGUABLY. TO ME THE ENERGY MARKET IS A BETTER MECHANISM, THINKING ABOUT INCORPORATING THE CARBON SIDE, CARBON ISSUE TO IT. THERE'S A BETTER WAY TO THINK ABOUT IT THAN GOLDBERG OR THAT END DIMENSIONAL COMPLEXITY OF THE SPACE.

>> I'D NEXT LIKE TO MOVE TO SOMETHING THAT A NUMBER OF YOU HAVE TEED UP ALSO. THAT IS THE PROPER ROLE OF THE RTO OR ISO AND PROPER ROLE OF THE FEDERAL REGULATOR, REALLY WHAT I'VE HEARD IS THAT WE REALLY SHOULD TAKE A MORE SUPPORTIVE ROLE. I HEAR YOU LOUD AND CLEAR, ESPECIALLY RICK, ABOUT THE STAKEHOLDER PROCESS, THE FACT YOU'RE CHALLENGED TO HAVE THE RESOURCES AND MANPOWER TO REPRESENT THE INTEREST OF YOUR RESPECTIVE STATES AND REGULATORS AS A WHOLE AS YOU'RE PURSUING THE PUBLIC INTEREST. I APPRECIATE THAT HAVING BEEN A PART OF OMS AND REGIONAL STATE COMMITTEE AND SOUTHWEST POWER POLL REGIONAL STATE COMMITTEE. I UNDERSTAND THE INVESTMENT OF TIME AND EFFORT AND RESOURCES AND THAT IT HAS WORKED, AND THERE HAVE BEEN TIMES YOU'VE BEEN ABLE TO WORK COLLABORATIVELY TOGETHER, AND I WANT THAT TOO. I WANT TO SAY THAT I THINK THAT IS A TERRIFIC WAY BECAUSE IT SUPPORTS THE VIBRANCY AND ROBUSTNESS OF STAKEHOLDER PROCESSES WHICH I THINK LENDS TO A HEALTHIER PROCESS OVERALL IF YOU'RE CONTINUING TO COME HERE TO FIGHT IT OUT OR TELL ON THE OTHER ONE. YOU'LL ALWAYS BE READY TO SHOOT FIRST AND ASK QUESTIONS LATER RATHER THAN SITTING AROUND WORKING THROUGH THE CHALLENGES. SO I TOO WANT MORE AND BETTER COLLABORATION. BUT THIS GETS TO THE HEART OF MY CONCERN THAT YOU MAY FIND WITH US AS WELL, I WANT TO GET TO THE HEART OF WHAT YOU SEE AS TENSIONS AS IT RELATES TO YOUR INTERACTION WITH FERC OR FERC'S OVERSIGHT OF MARKET. SO I WALKED IN GENTLY BUT I'D LIKE STRAIGHT ANSWERS. TELL ME WHAT YOU THINK THE PROBLEM IS AND IF THERE'S ONE WITH REGARD TO HOW WE WORK WITH MARKETS AND PJM REGION, IF WHAT YOU SEE A PATHWAY FORWARD TO RESOLVING THOSE.

>> WELL, WHERE DO YOU WANT TO START? LET ME FIRST GO BACK TO I THINK COMMISSIONER, YOUR FIRST QUESTION WAS THE WAY WE VIEW THE INTERACTION WITH PJM OR WHAT WE'D LIKE TO SEE OUT OF THAT RELATIONSHIP. LET ME PUT IT IN THE CONTEXT OF WHAT WE'RE TALKING ABOUT HERE TODAY WHICH IS REALLY ABOUT GENERATION. AND IT'S MULTIPLES. I CAN TELL YOU AND REPORT FROM MY PERSPECTIVE THE RELATIONSHIP WITH PJM HAS BEEN VERY POSITIVE. BUT OF COURSE THERE ARE ASPECTS OF WHAT GO ON IN THE PROCESS THAT AS YOU WELL KNOW AS A FORMER STATE REGULATOR THAT WE DON'T OFTEN KNOW. WE AS THE STATE REGULATORS BECAUSE WHAT I SAID EARLIER ABOUT NOT REALLY HAVING AN APPARATUS AROUND THE PLANNING PROCESS ANYMORE, WE'RE THE LAST TO FIND OUT OFTENTIMES. EVEN WHEN A GENERATION FACILITY IS BEING CITED IN OUR STATE. IF WE'RE GOING TO HAVE A MORE ROBUST DISCUSSION ABOUT SORT OF WHERE THE  WHAT OUR RESPONSIBILITIES ARE, OUR NEED TO ASSERT OURSELVES AS RESPONSIBLE PARTY AROUND RESOURC ADEQUACY WE NEED TO TALK ABOUT THAT. WE NEED TO REPORT THAT. THAT COLLABORATION FROM NEW JERSEY'S PERSPECTIVE IS POSITIVE IN MY TENURE. IN TERMS OF WHAT ELSE WE'D LIKE TO SEE FROM MY PERSPECTIVE, IT IS FIRST THIS KIND OF DISCUSSION REALLY ASKING THE QUESTIONS OF WHAT IT IS THAT WE WANT. I APPRECIATE YOU AND COMMISSIONER LAFLEUR EVEN ASKING THE QUESTIONS THAT WAY. WHAT IS IT THAT WE BELIEVE WE NEED OR SHOULD HAVE. WE'LL GIVE I DIRECT ANSWERS ABOUT IT. THAT'S THE FIRST STEP. HERETOFOR IT'S UNWILLINGNESS WITH ISSUES. WE'VE HEARD THESE ISSUES NEED TO BE DEALT WITH SOON. AND IT IS INCUMBENT UPON ALL OF US TO WORK THROUGH IDENTIFY WHAT'S NEEDED AND IDENTIFY SOLUTIONS AND IMPLEMENT FOR THE SHORT TERM AND LONG TERM BUT DO SOMETHING RELATIVELY QUICK, LEST AS I'VE HEAD AS OTHER PRESENTERS SAID, AS IS HAPPENING WITH AT LEAST A PLACE LIKE ILLINOIS WHERE STATES ARE PROCEEDING ON THEIR OWN TO DEAL WITH THOSE ISSUES.

>> YEAH, I WOULD SAY THAT FROM ILLINOIS'S STANDPOINT, THE MARKETS DON'T VALUE EXTERNALITYIES THAT THE STATE VALUES. PARTICULARLY THE ENVIRONMENTAL ATTRIBUTES. BUT ALSO OTHER VALUABLE ATTRIBUTES OF BASE LOAD NUCLEAR. IN TERMS OF URGENCY, I HAD AN INTERESTING CONVERSATION THE OTHER DAY WITH A PRINCIPLE, WE TALKED ABOUT URGENCY. THIS WAS AN URGENT CONVERSATION THREE YEARS AGO. THIS IS A CRISIS TODAY. AND JUST TO PUT A FINER POINT ON IT, GIVEN THE CHALLENGES THAT ILLINOIS HAD, TO PASS THE LEGISLATION IT DID, IN THE VETO SESSION, REALLY SAYS SOMETHING. IT SHOULD SAY SOMETHING. I MEAN, THIS IS REALLY CRITICAL FOR STATES LIKE ILLINOIS. IT'S VERY IMPORTANT. AND SO THE TIME FOR URGENCY SORT OF PASSED.

>> FIRST FOR CHAIRMAN LAFLEUR, AS A BATTLESCARRED VETERAN OF THE RECENT LEGAL WARS, LET ME SAY THAT MARYLAND CERTAINLY PREFERS THE COLLABORATIVE APPROACH TO LITIGATION. BOTH AS LOOSE LOSER IN HUGHES V TALON AND WINNER WITH FERC. IN BOTH CASES I DON'T THINK LITIGATION IS THE BEST WAY TO GO. COLLABORATIVE PROCESSES AT THE PJM LEVEL WHERE THESE QUESTIONS CAN BE ADDRESSED AND I WANT TO PUBLICLY THANK PJM FOR ITS RECENT WORK IN WORKING WITH MARYLAND TO FIND AGGREGATION FOR OUR DEMAND RESPONSE RESOURCES FOR THE UPCOMING MAY VRA AND WE LOOK FORWARD TO WORKING WITH PJM TO EXPAND THAT EFFORT. SO WE HAVE BEEN ABLE TO WORK WITH PJM. THEY HAVE BEEN RESPONSIBLE AND RESPONSIVE AND WE LOOK FORWARD TO CONTINUING THAT. ONE THING I WOULD CAUTION FOR FERC IS I THINK IT'S IMPORTANT FOR YOU TO ENCOURAGE DIVERSITY. THIS SHOULD NOT BE A TOPDOWN ONE SIZE FITS ALL SOLUTION TO ALL THESE PROBLEMS. DIFFERENT RTOs AND ISOs CAN AND SHOULD BE ENCOURAGED TO FIND DIFFERENT SOLUTIONS SO THAT WE CAN EXPERIMENT AT THAT LEVEL RATHER THAN SAY, OKAY, HERE'S THE SOLUTION.

>> LET ME MAKE ONE FURTHER COMMENT, COMMISSIONER. THIS GOES TO MAYBE A SUGGESTION THAT YOU WANT TO FURTHER EXPLORE WITH THE INDUSTRY AND EVEN WITH THE RTOs. ONE OF THE CONTINUING CONCERNS WITH MULTIPLE ISSUES AROUND AN RTO LIKEPJM BECAUSE OF SO MANY INTERESTS THAT ARE PART OF THAT PROCESS, AND BY THE WAY I'D BE THE FIRST TO BE OBVIOUSLY TO DEFEND A PROCESS WHERE ALL VOICES AND INTERESTS ARE ACCOUNTED FOR AND HAVE THEIR VOICE HEARD BUT THAT IS THAT PROCESS IN AN RTO LIKE PJM ARE 14 JURISDICTIONS THAT THE PROCESS ITSELF CAN BE WEIGHING DOWN ANY SOLUTION AND YOU'LL HEAR THAT FROM OTHERS FERC'S ROLE WE COULD SEE AS FOR LEADERSHIP THAT HELPS TO MOVE THAT, SOLUTIONS THROUGH THAT PROCESS.

>> NOT TO BELABOR THE POINT, HETEROGENEITY IS ONLY GOING TO INCREASE AND YOU THINK ABOUT CONVERSATIONS WE'VE HAD HERE, THINK ABOUT WHAT CALIFORNIA'S DONE. THERE ARE, UNLIKE ANY TIME BEFORE US THERE'S A NEED FOR BILATERAL, STATES AND RTOs TO FERC AND REVERSE, IF WE DON'T DO THAT SUCCESSFULLY, TO BRIDGE TO WHAT PRESIDENT MONROE SAID, THAT'S WHERE THE RUBBER WILL HIT THE ROAD IN A TIMELY MANNER, AGAIN STATING THE OBVIOUS IN A WAY BUT BACK AND FORTH PROCESS, COLLABORATIVE, WE NEED TO UNDERSTAND YOUR CONSTRAINTS AS YOU UNDERSTAND THE CREATIVE WAYS THAT WE BRING OUR STATE ISSUES THROUGH THIS PROCESS.

>> THANK YOU, GENTLEMEN. THIS WAS VERY HELPFUL. AND I APPRECIATE THAT YOU THOUGHT BEFORE YOU RATTLED OFF A LIST OF 20 THINGS WE DO HORRIBLY WRONG. BUT MORE IMPORTANTLY, I APPRECIATE THE FACT THAT YOU THOUGHT ABOUT HOW YOU'RE INTERACTING AND HOW STAKEHOLDERS ARE INTERACTING WITH PJM AND HOW YOU ARE INTERACTING WITH US AND HOW WE CAN DO SO IN A WAY THAT ALLOWS US ALL TO KEEP OUR EYES ON THE PRIZE, AND REDUCING LITIGATION AND ADDITIONAL YEARS, BRIAN, OF WAITING AROUND FOR A SOLUTION. THANK YOU SO MUCH.

>> THANK YOU, COLETTE. WELL, HERE WE ARE IN PJM, THE LARGEST RTO CERTAINLY EXTRAORDINARILY DIVERSE IN DIFFERENT POLITICAL ECOSYSTEMS WITH STATES AS DIFFERENT AS MARYLAND AND WEST VIRGINIA, EVEN THOUGH THEY TOUCH EACH OTHER, DIFFERENT POLITICAL ECONOMIES. AND ANOTHER DIFFERENCE INPJM IT'S FAIR TO SAY YOU'RE EARLIER IN THE PROCESS OF DISCUSSING THIS, CERTAINLY THAN NEW ENGLAND WHICH HAS BEEN AT IT FOR SOME MONTHS AND EVEN THEN NEW YORK. I GUESS I JUST WANT TO ASK, WE TALKED THIS MORNING, I KNOW YOU'RE ALL HERE, ABOUT DIFFERENT WAYS FOR RTOs TO LOOK ON THE WORKING STATE POLICIES INTO THE MARKETS, AND THE TWO BASIC MODELS, ONE WAS PEOPLE WERE CALLING IT ACHIEVED, TO DEFINE AN ATTRIBUTE AND HAVE THE MARKET PRICE IT. AND I KNOW PRESIDENT MONROE TALKED ABOUT RESILIENCE, SOMETHINGPJM HAS BEEN TALKING ABOUT, CAPACITY PERFORMANCE, MORE ABOUT PRICING RESILIENCE, THE MARKET CAN PRICE CARBON IF ASKED TO, WE'RE FINDING AN ATTRIBUTE AND PRICING IT. THE OTHER IS TO LET THE STATES HAVE DIFFERENT GOALS AND SOLUTIONS LIKE MULTITIER PROCESSING. WHAT STRIKES ME IS THAT WE'VE JUST HEARD TWO STATES WITH CHAIRMAN SHEAHAN TALKING ABOUT VALUING NUCLEAR UNITS FOR THEIR EXTERNALALITIES, OR LACK OF, AND PRESIDENT MONROE TALKED ABOUT VALUING THEM FOR OTHER ATTRIBUTES, YOU KNOW, DO YOU THINK WE COULD AGREE ON ATTRIBUTES, SHOULD WE ACCOMMODATE SOLUTIONS? I MEAN WE'RE A LITTLE EARLIER AND CAN GO DIFFERENT PATHS HERE.

>> WELL, SINCE  I'LL ANSWER FIRST. I DO THINK THAT WE CAN VALUE THESE OTHER ATTRIBUTES. THE QUESTION IS WHETHER WE ALL AGREE WHAT THOSE VALUATIONS ARE. WE NEED TO HAVE THE CONVERSATION. THE FIRST IS FUEL DIVERSITY. OTHER INDUSTRIES UNDERTAKE, OTHER BUSINESSES, THEY UNDERTAKE CONCENTRATION ANALYSES ALL THE TIME. WHETHER THEY ARE IT'S A FINANCIAL INSTITUTION AND THEY ARE INVESTMENT, IF IT IS A MANUFACTURING FACILITY ON WHO THEY SELL TO ONE CLIENT OR JUST A SMALL NUMBER. THOSE ARE CLASSIC BUSINESS DECISIONS MADE IN RISK ANALYSIS EVERY DAY IN ALL INDUSTRY. WE'RE NOT DOING IT. START THERE, WE CAN BEGIN TO ALSO LOOK AT ISSUES I MENTION OF OTHER RELATED INFRASTRUCTURE INVESTMENTS THAT ARE INTENDED TO EXISTING GENERATION THAT OTHERWISE WOULD EITHER HAVE TO BE STRANDED OR IF THERE IS REPLACEMENT GENERATION, WHAT THE RELATIVE COSTS OF THOSE OTHER INVESTMENTS MIGHT BE. THOSE ARE CONVERSATIONS WE DON'T HAVE, LIKE I SAID WITHOUT IRP, EVEN A SEMBLANCE OF IT, WE NO LONGER ARE ABLE TO IDENTIFY WHAT THEY MIGHT BE. HOWEVER IT IS THE BEGINNINGS OF THE WORK THAT PJM STARTED TO UNDERTAKE WHERE WE'VE HAD THOSE CONVERSATIONS I THINK WILL THE KINDS OF QUESTIONS THEY HAVE TO ASK AND KINDS OF ISSUES WE NEED TO CONSIDER WHETHER THEY SHOULD BE ATTRIBUTES TO VALUE.

>> I WANT TO SAY I'VE SEEN SOME WORK THAT ACTUALLY SHOWS EVEN THOUGH IT SEEMS CONTRARY SINCE WE WENT TO COMPETITIVE MARKETS SOME REGIONS ARE MORE DIVERSE, THEY USED TO BE EXTREMELY HEAVILY COAL, NOW WITH GAS AND SOME COAL STILL LEFT, NUCLEAR, THERE'S SOME EVIDENCE THAT THERE'S MORE DIVERSITY. IS IT THE TYPE OF DIVERSITY, DEPENDENCE ON GAS, IS THAT WHAT SCARES YOU?

>> IN A WORD, YES. I COME BACK TO WITHOUT GETTING TOO SPECIFIC, IN NEW JERSEY WHERE WE SAW LAST YEAR THE POTENTIAL FOR IMPINGEMENT ON SUPPLY INTO THE STATE, WHICH WOULD MEAN FIRST ORDER OF CURTAILMENT WAS GENERATION. THOSE ARE THE THINGS THAT SCARE ME. AND WE JUST DON'T KNOW ENOUGH ABOUT WHAT MIGHT BE THE RISK ASSOCIATED WITH THAT OVERSUPPLY IN NATURAL GAS.

>> BRIEN SHEAHAN. PJM TOLERATES A LOT OF OUT OF MARKET RATEBASED GENERATION AND, YOU KNOW, RECs IN VARIOUS STATES. IT REMAINS TO BE SEEN WHETHER THE MARKET HAS TO DO ANYTHING TO ADJUST OR ACCOMMODATE THE STATE SUPPORT FOR THE ENVIRONMENTAL ASPECTS OF NUCLEAR GENERATION. AND IF RESOURCE ADEQUACY BECOMES A PROBLEM,PJM HAS A LOT OF TOOLS TO DEAL WITH THAT WHICH THEY COULD APPLY ACROSS ALL GENERATING TYPES. I DON'T KNOW THAT THAT'S THE PROBLEM TODAY.

>> SOME OTHER CASES LIKE WITH THE  I'M FORGETTING THE ACRONYM, FRR, WHERE PEOPLE CAN GO ENTIRELY FIND THEIR OWN GENERATION, IT'S PART OF AN ORGANIZED STRUCTURE, BUT, YES, THERE'S MORE CRITICAL MASS IN PJM. ANYONE ELSE?

>> IF I MAY, I WOULD CAUTION, AGAIN I MIGHT GO BACK AND FIND THAT LEGISLATURE HAS BLOWN UP MY CAR. [LAUGHTER] BUT I'D CAUTION STATES TO BE CAREFUL. I THINK IF WE TRY MONETIZE EVERY ATTRIBUTE WE SEE OF VALUE WE PUT AT RISK TRANSPARENCY AND SIMPLICITY AND COST EFFICIENCY OF THE MARKET WE HAVE. THAT BRINGS ABSOLUTE BENEFITS, CERTAIN IN PENNSYLVANIA AND ACROSS PJM. THIS IS AN ENORMOUSLY VALUABLE MARKET FOR US. AND TRYING TO GET IT TO SOLVE ALL OF OUR PROBLEMS MAY BE IN AN ETHEREAL OR THEORETICAL WAY ADMIRABLE BUT I CAUTION IT COULD ENDS UP WITH INADVERTENT CONSEQUENCES OF DRAGGING DOWN THE VALUES WE SEE HERE, TRANSPARENCY AND SIMPLICITY. IT DOESN'T MEAN I WON'T GO HOME TONIGHT AND SAY, MAN, WE NEED TO DO THIS, BUT I WOULD JUST CAUTION, MYSELF, AND PERHAPS OTHERS IN MY STATE TO THINK THROUGH THAT CAREFULLY.

>> CERTAINLY, CHAIRMAN, MARYLAND DOES NOT SEE AN ADEQUACY PROBLEM IN PJM. IT GOT 22% OVER AND ABOVE WHEN THEIR RESOURCE IS SUPPOSED TO BE 15. WE'RE ALREADY PAYING FOR AN AWFUL LOT OF GENERATION OUT THERE THAT POTENTIALLY ISN'T USED AT ALL. AND CERTAINLY MARYLAND IS  I'M SURE THE OTHER GUYS ARE TOO. THERE'S ONLY ONE SOURCE OF REVENUE FOR ALL OF THIS. AND THAT'S YOUR NEIGHBORS AND MY NEIGHBORS.

>> YES.

>> WE CAN TALK ABOUT MARKETS AND ALL THIS KIND OF STUFF BUT THE BOTTOM LINE IS RATE PAYERS. WE NEED TO BE COGNIZANT OF THAT. FOR PJM, I THINK WHAT THEY NEED TO THINK ABOUT IS THE RESOURCE MIX, NOT ADEQUACY. AND I'M NOT CONVINCED NECESSARILY THAT THE CHANGES IN THE MARKETPLACE ARE TOTALLY DUE TO PJM'S SIGNALS, UNQUOTE. I THINK A LOT OF THEM ARE JUST MARKET FUNDAMENTALS, COST OF GAS, COST OF COAL, THOSE KINDS OF BASIC MARKETDRIVEN THINGS ARE CAUSING AT LEAST PJM TO DIVERSIFY, NOT BECAUSE WE HAVE AN ELEGANT SIGNAL OUT OF THE CAPACITY MARKET.

>> I DIDN'T MEAN TO SAY THAT IT WAS. I THINK THERE IS DIVERSITY, JUST I DIDN'T  IT WASN'T A DIRECT CONSEQUENCE BECAUSE IT WAS RUN AS A FUEL NEUTRAL COMMODITY MARKET. I GUESS I'LL SHUT UP AND KEEP US ON TIME. THANK YOU VERY MUCH, GENTLEMEN.

>> ALL RIGHT. THANK YOU VERY MUCH. WE'RE GOING TO ASK OUR REPRESENTATIVES TO MOVE OFF THE HOT SEAT INTO THE WARM SEATS. WE WANT TO STAY ON TIME AS MUCH AS POSSIBLE SO I WOULD LOVE TO GET THE NEXT SESSION GOING BY 5 MINUTES TO, SO I KNOW PEOPLE WANT TO GET UP AND STRETCH YOUR LEGS A LITTLE BIT BUT WE'D LOVE TO HAVE THIS GOING AGAIN IN ABOUT 5 MINUTES. (RECESS)

>> ALL RIGHT. WE'D LIKE TO GET STARTED PLEASE. I NEED MARK TO YELL AT YOU ALL TO SIT DOWN. I WOULD REMIND YOU IT'S 4:00 P.M., IF WE GO FOR AN HOURANDAHALF THAT'S 5:30. YOU ALL WILL BE TIRED. I KNOW I'LL BE TIRED. SO WE'RE PLEASED TO START THE LAST SESSION, THE LAST PANEL OF OUR DAY, THANKFUL FOR OUR PANELISTS TO HAVE WAITED AROUND ALL DAY TO GET YOUR TURN TO ANSWER WHAT WE HOPE WILL BE, YOU KNOW, NOT THE SAME SET OF QUESTIONS THAT WE'VE BEEN ASKING ALL DAY OR HAVE A DIFFERENT KIND OF CONVERSATION THAN WE'VE BEEN HAVING ALL DAY. I'LL START BY INTRODUCING AND THANKING OUR PANELISTS. WE HAVE ANDREW OTT, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF PJM. JOSEPH BOWRING FROM MONITORING ANALYTICS, PAUL BAILEY AT SOME POINT, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF AMERICAN COALITION FOR CLEAN COAL ELECTRICITY. WE HAVE JENNIFER CHEN, WHO IS FROM THE SUSTAINABLE  YOUR NAMES ARE IN DIFFERENT ORDER. JAMES COCCO FROM OLD DOMINION AND REPRESENTING NRECA, WE HAVE CRAIG LATHRAM, ROBERT FLEXON, GREGORY POULOS AND RAJA SUNDARARAJAN FROM AMERICAN ELECTRIC POWER. WE'LL FOLLOW THE SAME FORMAT. WE'RE GOING EARLIER BECAUSE ACTING CHAIRMAN LAFLEUR NEEDS TO LEAVE MEETINGS BY 4:45. WE'LL THROW IT OVER AND MAYBE PITCH IT BACK. I THOUGHT I WOULD START THIS PANEL'S DISCUSSION DIFFERENTLY THAN WE'VE STARTED THE OTHER PANELS, MOSTLY TO MIX IT UP A BIT. I HAD A SENSE FROM SOME OF THE PRECONFERENCE STATEMENTS THAT ESPECIALLY IN THE PJM STATES POTENTIALLY BECAUSE YOU'RE A LITTLE EARLIER ON IN THE PROCESS MAYBE JUST BECAUSE OF THE HISTORY THAT WE'VE HAD WITH THE PJM MARKETS, A CERTAIN AFFINITY FOR THE HYBRID APPROACH THAT WE'VE REFERENCED IN SOME QUESTIONS, WHERE TO SOME EXTENT FOR SOME STATE POLICIES AND OBJECTIVES STAKEHOLDERS BELIEVE THE COMMISSION SHOULD PROVIDE MORE DEFERENCE, NOT ATTEMPT TO INTERFERE, NO REAL NEED TO ACCOMMODATE ONLY IN THE SENSE OF TRY TO LET THE POLICIES MOVE THROUGH THE MARKET WITH AS LITTLE IMPEDIMENT AS POSSIBLE. BUT THEN ANOTHER SET OF POLICIES THAT STAKEHOLDERS FELT REALLY NEEDED TO BE ADDRESSED WITHIN THE  EITHER ADDRESSED COMPLETELY IN THE WHOLESALE MARKET SO THROUGH THE WHOLESALE MARKET OR, YOU KNOW, BE SUBJECT TO SOMETHING LIKE THE MINIMUM OFFER PRICE RULE WHERE AT LEAST THE EFFECT OF THAT STATE POLICY IS CONNECTED TO THE MARKET OUTCOMES. SO WONDERED IF  IN THAT SETUP WE WERE THINKING ABOUT A HYBRID WHERE AGAIN SOME STATE POLICIES WE TRY TO BE VERY DEFERENTIAL, IF THERE'S ANY PRINCIPLE WE COULD USE TO DECIDE BETWEEN THE TWO SETS OF STATE POLICY AND OBJECTIVE, THE KIND OF POLICY, WHETHER IT'S ENVIRONMENTAL SO INHERENTLY NOT PART OF OUR MARKET, RESOURCE ADEQUACY, IS IT THE SIZE OF THE STATE INTERVENTION SMALL THINGS ARE OKAY TO IGNORE, BIG THINGS ARE THINGS WE NEED TO BRING INTO THE MARKET. SO THAT'S WHERE I'D LIKE TO START THE DISCUSSION WITH THIS PANEL, YOU ALL HAVE A POINT OF VIEW ON THAT. MICHAEL?

>> YEAH, GOOD MORNING. I'M MICHAEL COCCO, REPRESENTING OLD DOMINION ELECTRIC COOPERATIVE. IN THAT CAPACITY AS MEMBER OF NRECA I'D LIKE TO THANK THE COMMISSION AND STAFF FOR INVITING ME TO SHARE MY VIEWS. I'M A FIRSTTIMER AT THESE TYPE OF PROCEEDINGS SO ESPECIALLY LOOKING FORWARD TO IT, I THINK. SO FIRST ODEC AS MAYBE THE ONLY COOP ON THE PANEL, ADDRESS ONE ISSUE PARTICULAR TO THIS SECTOR. ODEC SERVES 11 ELECTRIC DISTRIBUTION COMPANIES, FOR REQUIREMENT SERVICE. AND AS SUCH, WE RECEIVE A PAYMENT FROM THOSE LSEs, FROM THOSE EDS, EDCs, FOR PAYMENT FOR THE SERVICES THAT ARE PROVIDED IN A FLOWS OUTSIDE THE PJM MARKET SETTLEMENT SYSTEM. NOW, JUST BECAUSE IT FLOWS OUTSIDE THE MARKET SETTLEMENT SYSTEM WE DON'T CONSIDER THAT TO BE AN OUT OF MARKET PAYMENT. IT'S A VOLUNTARY CONTRACT AMONG THE LSEs. WHEN DONE AT ARM'S LENGTH. AND WHILE THIS POINT MAY BE SOMEWHAT INTUITIVE TO MOST OF YOU, IT'S CERTAINLY A TOPIC THAT COMES UP IN OTHER FORUMS SO I JUST WANTED TO ADDRESS THAT PARTICULAR POINT NOW. SPECIFICALLY TO YOUR QUESTION, ODEC BELIEVES STATESPONSORED PROGRAMS CAN WORK IN HARMONY WITH WHOLESALE COMPETITIVE MARKETS. COMMISSIONER LAFLEUR ASKED THE QUESTION, I THINK IT WAS TO NEPOOL REPRESENTATIVE, ONLY WORRY ABOUT PROTECTING THE PRICE OF EVERYTHING ELSE, WORKING WITH MARKET PROGRAMS, THE WAY I VIEW THE PJM CAPACITY MARKETS, A COMMODITIZED MARKET, PRICE TIED TO LOCATIONS. WHEN STATES LOOK TO PROCURE DIFFERENT ATTRIBUTES, THEY ARE PAYING FOR SOMETHING THAT ISN'T VALUED IN THE PJM MARKET. AND THAT'S OKAY. WHAT HAPPENS IS THOSE GENERATOR ENTITIES ARE LEFT TO COMPETE FOR REMAJORS MONEY IN THE COMMODITIZED MARKET. SHOULD THERE BE ACTION NEEDED TO ADJUST THAT PRICE, I WOULD SAY NO. I THINK THE MARKET FUNCTIONS FINE. I THINK INVESTMENT IS ATTRACTED TO THE MARKET. PEOPLE WILL PUT CAPITAL AT RISK, ARE GOING TO NOT ONLY LOOK AT THE MARKETS, THEY ARE GOING TO EVALUATE THE GOVERNMENTDRIVEN PLATFORMS AND MAKE THEIR BUSINESS DECISIONS ACCORDINGLY. I THINK THE PROBLEM IS WHEN THESE STATE POLICIES ARE TARGETED AT A VERY UNIQUE BENEFICIARY, THAT'S NOT GENERALLY TIED TO SOME PUBLIC POLICY OBJECTIVES, THOSE TYPE OF DISTORTIONS IN THE MARKETS CAN CREATE PROBLEMS. AND IF YOU'RE AN INVESTOR, THOSE TYPE OF UNCERTAINTIES ARE ONES YOU WOULD LIKE TO STAY AWAY FROM. SO THAT'S HOW I DISTINGUISH THOSE TWO SETS OF ATTRIBUTES. THANK YOU.

>> THANK YOU. I THINK WE'LL GO, I SAW ANDY, RAJA, LATHROP.

>> DOES THAT MEAN I'M ON? THANK YOU. THANK YOU SO MUCH TO THE COMMISSIONERS AND STAFF FOR PUTTING THIS ON AND INVITING US TO ATTEND. I THINK FIRST I'D LIKE TO DIFFERENTIATE, THERE'S CERTAINLY OBVIOUSLY WITHIN PJM WE HAVE INTEGRATED STATES, INTEGRATED RESOURCE PLANNING AND STATES DEPENDING UPON THE MARKET FOR COMPETITIVE INVESTMENT. FIRST DIFFERENTIATING, THE ISSUES THAT WE SEE HERE ARE WHERE YOU HAVE CONFLICT, IF YOU WILL. SO CERTAINLY A STATE THAT HAS  THEY HAVE TAKEN RESPONSIBILITY FOR 100% OF THE RESOURCE ADEQUACY IN THEIR STATES SO INTEGRATED RESOURCE PLANS, COVER 100% OF THE LOAD SEE NO CONFLICT WITH STATE POLICIES RELATED TO GENERATION THERE BECAUSE THEY EXISTED FOR MANY YEARS IN THE WHOLESALE MARKET AND CERTAINLY PJM COVERS THOSE TYPES OF VERTICALLY INTEGRATED STATES AND COMPETITIVE STATES. WE DON'T SEE A REAL CONFLICT THERE. I THINK WHEN YOU START TO LOOK AT WHERE WE GET INTO DIFFICULTY, IT'S WHERE STATES ARE TAKING TARGETED ACTIONS, IF YOU WILL, TO CHANGE OUTCOMES, IF YOU WILL, FOR CERTAIN GENERATION. CERTAINLY MATERIALITY DOES FACTOR IN, IS IT SOMETHING MATERIAL ENOUGH WE COULD SEE, YOU KNOW, A HARM TO THE MARKET. LET'S FACE IT, WHAT PJM HAS GONE THROUGH A SIGNIFICANT TRANSITION. WE'VE LOST PROBABLY AT LEAST 20,000 MEGAWATTS, MY NOTES IN FRONT OF ME, OF COALFIRED PLANTS. THE MARKET ESSENTIALLY HAS REPLACED THAT WITH COMPETITIVE INVESTMENT. WE DEPEND UPON THAT MARKET INTEGRITY IN ORDER TO PRESERVE RELIABILITY. WE WOULD BE SITTING HERE IN A DIFFERENT SPOT HAD THE INVESTORS NOT COME IN, PUT CAPITAL AT RISK, TAKEN RISK ON BEHALF OF PJM AND ALL CUSTOMERS, IF YOU WILL, TO PUT FORTH THAT INVESTMENT AND ESSENTIALLY REPLACED WITH VERY LITTLE FANFARE A SIGNIFICANT AMOUNT OF RETIRING GENERATION. THAT'S WHAT WE'RE TRYING TO MAKE SURE WE CAN PRESERVE. THAT CONFIDENCE THAT THE INVESTORS HAVE THE MARKET WILL IN FACT BE EQUITABLE, GIVEN A FAIR SHOT. ANYTHING THAT WOULD DISTRACTS FROM THAT OR PUT THAT IN HARM'S WAY IS WHAT WE HAVE TO ADDRESS. I THINK FIRST MATERIALIT,Y, SECOND IS THE ISSUE OF HOW TARGETED IS THE ACTION. IN OTHER WORDS IF IT'S A BROAD ACTION WHERE THERE'S A LOT OF PLAYERS WHO CAN COME IN AND COMPETE, THAT WOULD BE A DIFFERENT METHOD. AGAIN, WHERE WE'RE AT ON THIS, WE'VE TRIED TO ADDRESS THIS PROACTIVELY, IN THE PAST FEW MONTHS, AS YOU PROBABLY SAW IN MY TESTIMONY WE HAVE A COUPLE TRACKS OF ACTIVITY, FIRST AND FOREMOST THIS ISSUE OF CONTINUING TO FIGHT AND HAVE LITIGATION IS AGAIN AS OTHERS HAVE SAID NOT A GREAT STRATEGIC PLAN. BETTER STRATEGIC PLAN IS HARMONIZE IF YOU WILL AND FIND WAYS, TAKE ACTION, FIGURE WAYS TO SET ASIDE THAT IMPACT, IF YOU WILL, HAVE THE COMPETITIVE SIDE OF THE MARKET CONTINUE FORTH WITHOUT MAJOR IMPACT. SO FOR THE OPENING COMMENTS WE'LL LEAVE IT AT THAT. THANK YOU.

>> RAJA NEXT.

>> YEAH, THANKS YOU, CHAIRMAN LAFLEUR AND COMMISSIONER HONORABLE, FOR ALLOWS US TO PARTICIPATE IN THE PANEL. AEP AND OPERATING COMPANIES, 11 STATES, UNITED STATES, SEVEN IN PJM. IF YOU ASK ANY OF OUR SEVEN STATES WHAT IS THE MOST IMPORTANT ISSUE THAT YOU CARE ABOUT, YOU GET SEVEN DIFFERENT ANSWERS. NORMAL ATTRIBUTES ARE PROBABLY NOT THE TOP ONE. IF YOU ASK THEM WHAT THEY ARE WORRIED ABOUT, FUEL DIVERSITY, AND LONGTERM PRICE SIGNALS ARE WHAT THEY CARE ABOUT. SO THAT THEY CAN BE ASSURED AS I THINK SOME STATE COMMISSIONER AND PJM WERE TALKING ABOUT THAT WHEN LIGHTS GO OUT, THEY ARE ON THE HOOK FOR THE CUSTOMERS WHO CALL UPON THEM. IT'S AN IMPORTANT DISTINCTION BETWEEN I THINK WE GET LOST IN FACT WHETHER THESE ARE OUT OF MARKET OR IN MARKET. AT THE END OF THE DAY IF YOU ASK OUR STATES WHO IS ON THE HOOK FOR THESE THINGS, THE STATES WOULD SAY THEY ARE ON THE HOOK FOR MAKING SURE OBVIOUSLY RESOURCE ADEQUACY IS AN ISSUE THAT IS SHARED WITHIN PJM AND THE STATES, OTHER ATTRIBUTES BEYOND RESOURCE ADVOCACY CURRENTLY NOT COMPENSATED ON THE MARKETS WOULD PARTICULARLY BELONG IN THE STATE'S CONTROL. STATES ARE DOING WHAT IT TAKES TO PURSUE THOSE REQUIREMENTS. AS YOU GO TO WEST VIRGINIA OR KENTUCKY WHERE THEY HAVE LOST 20% OF THE LOADS OVER THE LAST FIVE YEARS, NORMAL ATTRIBUTES ARE THE LAST THING TO COME TO MIND. THEY ARE TRYING TO MAKE SURE THEY HAVE JOBS, GET LOAD GROWTH IN THE STATE, EVEN WITHOUT DOING ANYTHING RETAIL RATE PAIRS HAVE SEEN 20% RAID INCREASE WITH THE LOAD LOSS IN THE LAST FIVE YEARS, THAT'S WHY YOU SEE DIVERSITY IN THE PJM STATES IN TERMS OF WHAT THE VIEW  WHAT IS THE BURNING ISSUE THAT THEY ARE TRYING TO SOLVE FROM A GENERATION RESOURCE ADEQUACY POINT OF VIEW, GETTING AGREEMENT WITHIN ALL THE STATES ACROSS 13 STATES, 14 STATES, IS NOT GOING TO BE AN EASY TASK. FIGURING OUT A SOLUTION OBVIOUSLY WE'RE SUPPORTIVE, IF SOLUTIONS CAN BE STARTED BY MARKET CHANGES, MARKET REFORMS, WE'RE FULLY ON BOARD WITH THAT. THE PROBABILITY OF THAT HAPPENING IS A LITTLE REMOTE. THERE NEEDS TO BE A CONSTRUCT THERE. UTILITIES OR LOAD SERVING ENTITIES CAN ENTER INTO BILATERAL NEGOTIATION AND ENTER INTO LONGERTERM CONTRACT TO SOLVE THE ISSUE THE STATE IS IMMEDIATELY WORRIED ABOUT. WE WOULD SUPPORT SOME KIND OF BILATERAL CONTRACT THAT THEY CAN ENTER INTO FOR CAPACITY AND RESOURCE OBLIGATION NEEDS SO THAT THEY CAN INCORPORATE THESE EXTERNALITIES.

>> THANKS VERY MUCH. AND I'LL REITERATE THANKS TO CHAIRMAN LAFLEUR AND COMMISSIONER HONORABLE FOR ORGANIZING THIS AND INVITING US TO COME TO SPEAK TODAY. I'LL PROBABLY REITERATE A LOT OF POSITIONS THAT HAVE ALREADY BEEN STATED, BUT, YOU KNOW, THE QUESTION WAS ESSENTIALLY HOW DO WE DRAW THE BOUNDARIES AROUND WHAT'S ACCEPTABLE AND WHAT ISN'T ACCEPTABLE. I TELL YOU THAT'S CERTAINLY SOMETHING THAT WE HAVE STRUGGLED INTERNALLY AT PSEG TRYING TO DRAW THOSE LINES SO I THINK IT'S NOT SURPRISING THAT THAT QUESTION, YOU KNOW, STILL EXISTS AND HASN'T BEEN ANSWERED YET. I THINK WHERE WE'VE COME OUT ON THIS IS IT'S PROBABLY ALWAYS GOING TO BE DIFFICULT TO DRAW THE LINE OR DRAW THE BOX AHEAD OF TIME TO KNOW EXACTLY WHERE EVERYTHING FITS BUT THAT SAID, I THINK WE CAN START TO PLACE CERTAIN THINGS ON EACH SIDE OF THE LINE. AND, YOU KNOW, MAYBE THAT'S THE BEST WE CAN DO FOR NOW BUT WE SHOULD DO THAT AND MOVE FORWARD APPROPRIATELY. YOU KNOW, I THINK WE'VE ALL SORT OF LEARNED THE LESSON THAT THINGS THAT ARE CLEARLY JUST TARGETED AT CHANGING, I USE THAT WORD, THE PRICE IN THE MARKET, ARE NOT APPROPRIATE. AND I DON'T KNOW TO WHAT EXTENT, YOU KNOW, WE'LL SEE SOMETHING THAT BLATANT GOING ON IN THE FUTURE BUT CLEARLY WE'VE LEARNED THAT'S NOT ACCEPTED. ON THE OTHER SIDE A LOT OF THINGS WE'VE HEARD TALKED ABOUT TODAY WHICH FIT BROADLY INTO TWO CATEGORIES, ENVIRONMENTAL GOALS THAT HAVE NOT BEEN INTERNALIZED IN THE MARKET AND THEN WITH WHATEVER WORDING WE WANT TO USE WHETHER IT'S ENHANCED RESOURCE ADEQUACY OR FUEL DIVERSITY OR WE LIKE TO CALL IT RESILIENCY AFTER SOME EXPERIENCES THAT OUR COMPANIES HAD AND THINGS LIKE SUPER STORM SANDY AND THEN THE LITTLE BIT OF SCARE WE HAD THIS SUMMER AS WE HEARD COMMISSIONERS REFER TO WITH POTENTIAL GAS SUPPLY ISSUE THAT WAS FORTUNATELY FIXED BEFORE THE WINTER CAME ABOUT. YOU KNOW, I THINK THOSE THINGS THAT OUR STATES CLEARLY EXPRESSING THEIR CONCERNS OVER WHAT ARE ESSENTIALLY, YOU KNOW, PUBLIC HEALTH AND SAFETY AND WELFARE ISSUES, AS I SAID, WE HAVE NOT YET FIGURED OUT HOW TO OR AT LEAST AGREED ON HOW TO INTERNALIZE THE MARKET ARE ENTIRELY APPROPRIATE AND NEED TO BE ACCOMMODATED SO THAT THOSE VERY VALID PUBLIC POLICY GOALS ARE NOT THWARTED WHILE WE GO THROUGH THE PROCESS OF FIGURING OUT HOPEFULLY HOW TO INTERNALIZE THEM IN THE MARKETS WHICH WE COULD ABSOLUTELY AGREE IS A BETTER WAY TO PURSUE THAT IN THE LONG TERM.

>> ROBERT?

>> THANK YOU FOR ORGANIZING THIS FANTASTIC EVENT. I APPRECIATE THE OPPORTUNITY TO HEAR THE STATES' PERSPECTIVE. GETTING THEM AT ONCE HELPED SHAPED THE THINKING. WE HAVE 30,000 MEGAWATTS OF GENERATION, 13,000 IN PJM. BEING INDEPENDENT POWER PRODUCER AND NOT UTILITY WE RELY ON BEING THE MOST ECONOMIC PERSON OUT THERE. WE FOCUS ON COST STRUCTURE AND WANT TO COMPETE ON THE LEVEL PLAYING FIELD. WHAT'S THE CHEAPEST MEGAWATT FOR THE CUSTOMER. A TERM THAT CREATES FEAR, WE HEAR HYBRID. HYBRID IS THE WORST MARKET. YOU ARE DOOMED TO FAILURE IF YOU GO DOWN THE HYBRID ROAD. MISO ZONE 4 IS HYBRID, IN SOUTHERN ILLINOIS IT WILL BANISH (INDISCERNIBLE) THOSE PLANTS WERE PUT IN THE UNECONOMIC CATEGORY. HAVING A MODEL THAT STARTS BLENDING OTHER THINGS INTO IT THAT BLEEDS INTO THE COMPETITIVE PRICE FORMATION IS GOING TO UNRAVEL THE MARKET. AND THE SESSION TODAY I HEAR THE TERMS WE'RE LOOKING TO ACCOMMODATE OR WORK IN HARMONY AND PARTNERSHIP, IT'S LIKE WE'RE LOOKING NOW TO FIX THE BARN DOOR WHEN THE HORSES RAN OUT. THE PROBLEM EXISTS, THE SUBSIDIES IN THE MARKET ARE HAVING A MATERIAL EFFECT ON PRICE FORMATION. WE THINK ABOUT THE MODEL, THE BEND DON'T BREAK, ARNIE, YOUR COMMENT, MAYBE THE ALSO THINGS SHOULD LET GO, THAT'S REALLY ESSENTIALLY WHAT HAS HAPPENED. I THINK DAVID PATON POINTED OUT SUBSIDIES FROM NUCLEAR IS A DIFFERENT BALL GAME, SIGNIFICANT MATERIAL EFFECT ON OUR PORTFOLIO. LOOK AT THE MARKET CAP OF INDEPENDENT PRODUCERS WHAT IT'S DONE IN THE PAST YEAR IS IT'S COLLAPSED. INVESTORS HAVE LOST CONFIDENCE IN THE SPACE. AND THE VERY THING THE STATES ARE WORRIED ABOUT IN TERMS OF CREATING INSTABILITY, THE STATE POLICIES THAT ARE BLEEDING INTO COMPETITIVE PRICE MARKETS ARE IN FACT GOING TO CAUSE THE INSTABILITY THAT THEY ARE WORRIED ABOUT. THAT'S WHY WE NEED TO FIX IT. IT'S GREAT TO TALK ABOUT OTHER SOLUTIONS BUT IT WOULD BE GREAT TO TALK ABOUT THE SOLUTIONS BEFORE THE PROBLEM EXISTS. I WAS LISTENING TO THE PANEL EARLIER, BASKETBALL IN THE 1980, PRINCETON WOULD GET THE LEAD, NOT GET THE BALL BACK. EXELON HAS $10 BILLION UNTIL IN SUBSIDIES, NOW INTERESTING IN HAVING A DISCUSSION TO SEE IF THERE'S ANOTHER WAY. IN THE MEANTIME THAT'S BLEEDING INTO THE MARKET IMPACTING US. THE FINAL THING I'D LIKE TO POINT OUT, TAKE OHIO AS AN EXAMPLE. WE'RE THE LARGEST GENERATOR IN OHIO. WE'RE ONE OF THE LARGEST RETAIL PROVIDERS IN THE STATE OF OHIO. LAST YEAR THERE WAS A BATTLE WITH TWO OF THE INCUMBENT UTILITIES, THEY WANTED TO DO FIXED PURCHASE PRICE CONTRACTS WITH COAL PLANTS, TWO WE HAD OWNERSHIP STAKES IN BUT WOULD NOT HAVE COVERED OUR PORTION OF THE OWNERSHIP STAKES. THE ARGUMENT AT THAT TIME WAS WE'RE GOING TO ELIMINATE PRICE VOLATILITY, AS WE HEARD EARLIER TODAY, AND ELIMINATING PRICE VOLATILITY BY PUTTING ALLTIME HIGH PRICES AND PROMISING NEVER TO MOVE IS A NECESSARY SOLUTION FOR THE CONSUMER, THE COMMENTS FROM SIERRA WERE ON POINT, IT'S CONSUMER NEEDS TO BE BROUGHT IN, WHAT'S THE APPROPRIATE WAY TO DO IT. TWO PLANTS THAT PPAs WERE GOING TO, THAT AWAY BEING FOUGHT FOR BEFORE FERC STEPPED IN LAST YEAR WE'VE ANNOUNCED WE'RE RETIRING THEM, 3000 MEGAWATTS OF COAL PLANTS IN OHIO ARE GOING TO BE RETIRED IN JUNE OF 2018, THAT JUST A YEAR AGO WERE GOING TO GET PURCHASE POWER AGREEMENT AT SIGNIFICANTLY ABOVE MARKET RATE. SO THE COMMENT WE HEARD A MOMENT AGO, EXCESS RESERVES IN PGM, THAT'S BECAUSE IT'S BEEN A REALLY COMPETITIVE MARKET AND PEOPLE ARE GRABBING AT ANYTHING THEY CAN, BUT THOSE ASSETS WILL EXIT THE MARKET IF YOU ALLOW THE PROPER PRICE FORMATION TO OCCUR AND PROPER PRICE SIGNAL. MY ONE MESSAGE TO LEAVE WITH FERC, THEIR INVOLVEMENT WITH OHIO WAS WELCOME. WE GOT THE RIGHT DECISION. AND TO THESE OTHER THINGS WE CAN'T STAND AND SIT BACK AND SEE WHAT'S GOING TO HAPPEN. WE'VE GOT TO TAKE THE LEADERSHIP ROLE BEFORE THE INSTABILITY STARTS REALLY BLEEDING THROUGH THE MARKET BECAUSE AGAIN THE INDEPENDENT POWER PRODUCERS WE RELY ON CAPITAL MARKETS AND THEY ARE NOT BEING KIND BECAUSE OF THEIR LACK OF CONFIDENCE IN WHAT'S GOING ON IN THE DESIGN OF THE MARKETPLACE. THANK YOU.

>> THANKS TO THE COMMISSION AND STAFF FOR INVITING ME TO SPEAK TODAY. THE PGM MARKETS HAVE WORKED. IT'S SURPRISE WE'RE HAVING LONG CONVERSATIONS HOW TO INTERVENE AND CHANGE THEM. PROGRESS IS GOOD. LET'S NOT FORGET THEY HAVE WORKED. ARE THEY PERFECT? WE WRITE SEVEN PAGES ONCE A YEAR, EVERY QUARTER TO INDICATE WHY THEY ARE NOT PERFECT BUT THEY ARE CLOSE. THEY ARE DOING, AS ANDY SAID, THEY HAVE MANAGED SUCCESSFULLY TO DEAL WITH RETIREMENT OF MORE THAN 20,000 MEGAWATTS OF COAL, SORRY, WITH GAS, POINT OF MARKETS TO PROVIDE AT THE LOWEST POSSIBLE COST AND DOING IT SUCCESSFULLY. ARE ENERGY PRICES TOO LOW? I DON'T THINK SO. TEN YEARS AGO LOAD WOULD TELL ME THEY THOUGHT PRICES WERE TOO HIGH. I WOULD EXPLAIN MARKETSES PASS THROUGH COST OF INPUTS, NOW WE SAY THE SAME THING. MARKETS PASS THROUGH THE COST OF INPUT, GAS IS LOW, ARE THEY TOO LOW? OF COURSE NOT. ASK CUSTOMERS IF THEY THINK THE PRICE IS TOO LOW. DOES THAT MEAN WE SHOULD STEP IN AND INTERVENE AND SUBSIDIZES UNECONOMIC UNITS? I DON'T THINK SO. WE'VE SEEN A SERIES OF CASES IN OHIO, ILLINOIS, ELSEWHERE WHERE UNITS WANTED TO BE SUBSIDIZED BECAUSE THEY ARE NOW ECONOMIC, TO PRETEND THAT DOESN'T HAVE A SIGNIFICANT IS INCORRECT. IN NEW JERSEY AND MARYLAND, A SUBSTANTIAL INCREASE ON THE MARKET AND AFFECTS EVERYBODY, EVEN IN ONE STATE. TO ACTUALLY DIRECTLY ANSWER YOUR QUESTION WHERE DO WE DRAW THE LINE? WE DRAW THE LINE WHERE THERE'S SIGNIFICANT IMPACTS ON PRICE. SIGNIFICANT OF COURSE IS A DECISION THAT ULTIMATELY THE COMMISSION HAS TO MAKE, PASSING A DIFFICULT QUESTION TO YOU. BUT WHETHER THERE'S AN IMPACT ON PRICE THAT AFFECTS PRICE FORMATION, UNCERTAINTY, INCENTIVES, ABILITY OF THE MARKET TO FUNCTION TO PROVIDE INCENTIVES FOR NEW ENTRY. APPROPRIATE INCENTIVES FOR EXIT. SO ANY SUBSIDY, ALL SHOULD HAVE THE SAME LINE DRAWN. THAT'S THE LINE WHERE I BELIEVE THAT FERC IS RESPONSIBLE FOR MAINTAINING INTEGRITY OF PRICES, MAKING SURE THERE'S NOT PRICE DISCRIMINATION FOR SPECIFIC TECHNOLOGIES. THANKS.

>> WE'LL DO JENNIFER AND GREGORY AND I WANT TO GET TO ACTING CHAIRMAN LAFLEUR.

>> THIS IS JENNIFER. THANK YOU TO CHAIRMAN LAFLEUR AND COMMISSIONER HONORABLE FOR HAVING US. IT'S GREAT TO SEE YOU ALL. THE QUESTION BEING ASKED, THE DEADLINE, IT IS A COMMON THEME AMONGST THE COMMENTS. THE PROBLEM IS THAT QUESTION YOU ASKED ASSUMES A CERTAIN PROBLEM. THAT PROBLEM HAS NOT BEEN WELL DEFINED. THE QUESTION YOU ASKED IS LEADING US DOWN A PATH WE DON'T THINK PARTICULARLY SOLVES ANY PARTICULAR PROBLEM. YOU'RE ASKING WHAT IS THE DISTINCTION BETWEEN SOME OF THESE VARIOUS SO CALLED SUBSIDIES. IF WE KEEP GOING DOWN THAT PATH, THAT THE PROPOSALS ON THE TABLE THAT ARE SUPPOSED TO SOLVE THAT PROBLEM, MOPAR EXPANSION AND TWOTIERED MARKETS THAT STAKEHOLDERS DISCUSSED SO FAR I'M NOT SURE WHERE IT'S GOING TO GET US. THE BIGGER QUESTION THAT NEEDS MORE ATTENTION RIGHT NOW THAT COULD POTENTIALLY SOLVE THE QUESTION YOU BROUGHT IT MIGHT BE TRYING TO GET AT, NAMELY SUPPOSED PRICE SUPPRESSION IN THE MARKET I THINK ARE THESE. THERE IS VAST OVERSUPPLY IN PJM. PJM CLEARED 22.4% CAPACITY, EXCESS CAPACITY IN THE LAST TEST OPTION. 5.5 GIGAWATTS, NEW GAS, DESPITE OVERSUPPLY AND RELATIVELY LOWER THAN EXPECTED CLEARING PRICES 5.5 GIGAWATTS IN GAS CAME ON ACCORDING TO ICF BROUGHT PRICES DOWN BY 15 TO $25 PER MEGAWATT. IF YOU LOOK AT CLEARING PRICE OF 100MEGAWATT THAT'S A SIGNIFICANT IMPACT. IF THE QUESTION IS WHAT IS SOCALLED SUPPOSEDLY SUPPRESSING THE PRICING, I WOULD SAY IT'S OVERCAPACITY. WHATEVER IS DRIVING ALL OF THIS NEW GAS TO COME ON DESPITE THE FACT WE HAVE PLENTY OF CAPACITY ON THE SYSTEM, SO THAT'S A SIGNIFICANT DRIVER WE HAVE NOT BEEN LOOKING AT. THE OTHER QUESTION THAT I THINK IS A BIGGER QUESTION ALONG WITH OVERSUPPLY QUESTION IS REALLY THE QUESTION IS HOW CAN WE BETTER ACCOMMODATE SOME OF THESE STATE PREFERRED RESOURCES IN THE CAPACITY MARKET. FOR EXAMPLE, WE LOOK AT POLL AFTER POLL FROM CUSTOMERS FROM SOME VOTERS, WE KNOW THEY WANT CLEAN ENERGY. WE KNOW THAT EVEN AMONGST TRUMP SUPPORTERS THAT AT LEAST 75% WANT ACCELERATED  ACCELERATION OF CLEAN ENERGY ADOPTION. ALL OF THE PGM STATES, THE VAST MAJORITY OF PEOPLE POLLED WANTS AT LEAST 20%, THIS IS THE QUESTION ASKED, THEY WANT AT LEAST 20%, UTILITIES TO PROCURE AT LEAST 20% WIND AND SOLAR. SO WHEN YOU LOOK AT THE CAPACITY MARKET AND PJM, PROCURES 167,000 MEGAWATTS OF CAPACITY, ONLY ABOUT A GIGA WATT, 1.3 IS WIND AND SOLAR, LESS THAN 1%, A VAST DISPARITY IN WHAT CONSUMERS WANT AND WHAT IS CLEARING THE CAPACITY MARKET. THOSE ARE TWO MAIN QUESTIONS THAT I WOULD LOVE TO SEE MORE EMPHASIS ON. BUT I CAN'T ANSWER YOUR QUESTION, ARNIE. THE DISTINCTION IF PUSH COMES TO SHOVE THERE ARE A LOT OF ENVIRONMENTAL POLICIES THAT ARE ATTEMPTING TO ADDRESS THE FACT THAT THE MARKET DOES NOT INTERNALIZE EXTERNALALITIES ASSOCIATES THE WITH POLLUTION. CARBON IS ONE. THERE ARE MANY OTHER FORMS OF POLLUTION. SO THERE COULD BE A SET OF POLICIES THAT AIM TO PROCURE NEWER RESOURCES. TECHNOLOGIES THAT ARE STILL SCALING UP, STILL SEEING COSTS DECLINE, NOT UNIT BY UNIT, THESE ARE NOT TARGETED AT EXISTING UNITS THAT HAVE BEEN SHOWN TO BE UNECONOMIC OVER TIME. THESE ARE NEWER RESOURCES THAT TYPICALLY DO AS WE'VE SEEN IN THE PAST HAVE A LEGITIMATE  I DON'T WANT TO USE THE WORD LEGITIMATE BUT WE'VE SEEN GOVERNMENT INTERVENE TO SCALE UP RESOURCES. IF YOU HAVE A LARGE UNIT, JOE COVERED THIS PRETTY WELL, THAT MIGHT SIGNIFICANTLY IMPACT THE CLEARING PRICES DEPENDING ON WHETHER IT CLEARS, THAT MIGHT HAVE A BIGGER IMPACT. BUT AGAIN THIS IS  I'M NOT SURE IT'S TAKING US IN THE RIGHT DIRECTION, AND IT'S A VERY FUZZY DISTINCTION. SO WITH THAT I'LL 

>> THANK YOU. GREGORY AND COMMISSIONER  ACTING CHAIRMAN LAFLEUR.

>> APPRECIATE THE OPPORTUNITIES, CHAIRMAN LAFLEUR, COMMISSIONER HONORABLE, AND COMMISSION STAFF. I APPRECIATE THE OPPORTUNITY TO BE HERE. JUST TO MAKE CLEAR, I'M HERE TODAY ON BEHALF OF THE JOINT CONSUMER ADVOCATES WHICH IS FIVE OF THE 13 CONSUMER ADVOCATE OFFICES WITHIN THE PJM REGION, THOSE BEING DELAWARE, ILLINOIS UTILITY BOARD, NEW JERSEY, PENNSYLVANIA OFFICE OF CONSUMER ADVOCATE AND WEST VIRGINIA CONSUMER ADVOCATE DIVISION. VERY CLEAR I HAD TO MAKE THAT POINT BECAUSE THERE ARE MANY CONSUMER ADVOCATE OFFICES THAT HAVE ALREADY TAKEN POSITIONS. FOR EXAMPLE, THE OHIO CONSUMER COUNCIL HAS TAKEN POSITIONINGS IN FERC IN PROCEEDINGS, MENTIONED IN OUR COMMENTS. SO THE JOINT CONSUMER ADVOCATES WERE THE ONES THAT MADE THE COMMENTS, THESE FIVE. THEY ARE A DIVERSE GROUP. TO YOUR POINT THAT YOU MADE WITH THE COMMISSIONERS THAT THEY ARE VERY DIVERSE GROUP, I HAVE A SUBSET OF ALL THOSE. AND THE DIVERSITY OF RANGE IS ON BOTH ENDS OF THE SPECTRUM, STATE ACTION, WHERE IT'S RUNNING. YOU HIT THE ISSUE WHERE I DID GETTING OFF AND RUNNING AS EXECUTIVE DIRECTOR FOR PJM CONSUMER ADVOCATES HIT THE HIGH NOTE WHERE THE DISTINCTION COMES, WHERE IS THAT LINE. AND I THINK WHAT WE TRIED TO DO IS GET DOWN TO THE BASIC PRINCIPLES FIRST. WHAT DO WE LOOK AT FIRST FOR PJM. WE SAW THIS IS A VERY COMPETITIVE MARKET, REASONABLE RATES FOR THE MOST PART, RELIABILITY IS THERE. MOST IMPORTANT FOR ME, IN MY OPINION, IS THE NEW ENTRY. WE HAVE NATURAL GAS WHICH CAME IN KIND OF OUT OF NOWHERE IN SOME RESPECTS AND SUBSTANTIAL AMOUNTS AND REALLY BROUGHT THIS DISCUSSION TO A HEAD WHICH IS STILL IMPORTANT TO HAVE THAT OPPORTUNITY FOR NEW RESOURCES TO ENTER THE MARKET AND COMPETE. THAT'S A KEY FACTOR FOR WHAT WE LOOKED AT AND SAW A VERY BIG PART. WHERE DO WE GO FROM HERE? ONE THING WE'RE CONCERNED WITH IS WHILE IT IS RELIABLE MARKET THERE HAS BEEN ADMINISTRATIVE FIXINGS PUT IN PLACE WITH CAPACITY PERFORMANCE, FOR EXAMPLE, HOW THAT'S IMPACTED RESOURCES LIKE DEMANDS RESPONSE AND ENERGY EFFICIENCY AND ABILITY TO PARTICIPATE ALONG WITH NEW RESOURCES. AND THOSE REALLY HAVE BEEN A CONCERN, PARTICULARLY FOR THE IMPACT ON CONSUMERS TO PARTICIPATE IN THE MARKETS. AND CONSUMERS ARE THE ONES WHO BEAR THE COST OF THIS MARKET. SO THE FACT THAT WE'RE REDUCING THEIR ABILITY TO IMPACT THEIR OWN PRICING IS A GREAT CONCERN TOO TOO. WHEN YOU PUT ADMINISTRATIVE FIXINGS IN IF YOU TOO MUCH YOU'RE GOING TO IMPACT ENTRY AND CONSUMER PRICES. THOSE ARE THINGS WE HAVE A CONCERN ABOUT. AGAIN, IT'S WHOLE SPECTRUM, PROBABLY PGM AND IIM ARE THE TWO BEST TO GIVE US INFORMATION AND GET US INVOLVED. THE DIALOGUE IS CRITICAL TO KNOW WHAT'S GOING ON AND THE BEST CHANCE. IN THE END, THIS ISSUE WHERE THE LINE IS DRAWN, IT REALLY DEPENDS ON CIRCUMSTANCE BECAUSE THEY EACH HAVE THEIR OWN INTEREST. EVERY STATE'S GOING TO HAVE THEIR OWN INTEREST IN ALL THE WAY OVER TO ILLINOIS TO ALL THE WAY TO NEW JERSEY, THEY ALL HAVE DIFFERENT INTERESTS, AND IT'S HARD TO TELL YOU, IT'S HARD TO TELL SPECIFICALLY HOW THAT INTEREST IS IMPACTED AND WHERE THAT LINE SHOULD BE DRAWN WITHOUT KNOWING THIS SPECIFIC CIRCUMSTANCES. THANK YOU.

>> THANK YOU.

>> ACTING CHAIRMAN?

>> THANK YOU, ARNIE. THANK YOU TO EVERYONE TODAY. THE ONLY THING THAT COULD MAKE ME LEAVE IS BEING SUMMONED TO THE HILL, AND SO THAT'S WHY I'M LEAVING. I'LL BE BACK TOMORROW MORNING. FIRST A COMMENT AND THEN A QUESTION. I WAS LISTENING TO BOB FLEXON TALK ABOUT THE IPP MODEL AND WHERE IT FALLS OUT, I FELT LIKE IT'S LIKE HEARING A MIRROR IMAGE, PEOPLE USED TO PLAY THE BEATLES ALBUMS BACKWARD TO SEE IF THERE WERE CODES? IN THE LATE '80s, EARLY '90s, THE YEARS OF IPPs, WANTING TO COMPETE WITH UTILITIES, NOW WE'RE HEARING THE FLIP SIDE, STATE REGULARRATORS WANT TO BUY TO COMPETE WITH UTILITIES. QUESTION OF GEARS, YOU KNOW, CHANGING HERE, IT'S BEEN REMOVED. TO ARNIE'S QUESTION, I WANT TO SAY I DON'T HAVE ANY INTEREST IN TRYING TO FIGURE OUT IF STATE POLICIES ARE RIGHT OR STATE POLICIES ARE WRONG. I'M PRETTY SURE THAT'S NOT MY JOB. I LOOK AT THE PRISM FROM THE OTHER END, IS THE PRICE THAT THE MARKETS THAT WE'RE IN CHARGE OF JUST REASONABLE AND NONDISCRIMINATORY? THAT GIVES ME A PREFERENCE, IF WE CAN GET THERE, FOR PRICING AN ATTRIBUTE IF YOU'RE LOOKING FOR ENVIRONMENTAL EXTERNALITYIES RATHER THAN GIVING MONEY TO SPECIFIC UNITS. AND IN ANDY OTT'S PREFILED TESTIMONY, EVEN IF THE WHOLE REGION COULDN'T AGREE ON AN ATTRIBUTE AS LONG AS YOU GOT CRITICAL MASSES OF STATES TO COME TOGETHER IF A BUNCH WANTED TO PRICE CARBON AND PRICE THIS RESILIENCE, IF WE CAN FIGURE OUT WHAT IT IS AND SO FORTH, THAT MIGHT WORK. I GUESS I JUST WANTED TO PUSH ON THAT A LITTLE BIT MORE. DO YOU THINK THERE ARE GROUPS OF STATES THAT CAN GEL LIKE THAT? OR I MEAN BECAUSE HOW MUCH CRITICAL MASS DOES IT TAKE TO HOLD THE PJM MARKET TOGETHER? I AGREE IN LARGE MEASURE WITH JOE AND WHOEVER SAID THE HIPPOCRATIC OATH EARLIER, WE DON'T WANT TO MESS UP WHAT HAS WORKED. I MEAN, HOW DO YOU SEE THAT? IT INTRIGUED ME.

>> OKAY.

>> I'LL GET YOU STARTED. MR. BAILEY HAS A PUSH FOR LATER.

>> THERE ARE TWO  SO PART OF MY DESIRE WITHIN PJM IS FOR US TO TAKE ACTION WHERE APPROPRIATE. I CAN'T WAIT THREE YEARS TO DO THIS. WE NEED TO DO THINGS NOW. ONE OF THE THINGS THAT WE'RE HOPING FOR FROM THE COMMISSION IS GIVE US A TIME FRAME, PUT A TIME FRAME ON US TO DEAL WITH THIS ISSUE OF FIGURING OUT A WAY TO, YOU KNOW, WE CALL IT HARMONIZE BUT RATIONALIZE, IF YOU WILL, THESE ISSUES AND CAPACITY MARKET AND MAKE SURE THE CAPACITY MARKET IS PROTECTED. SECOND IS WE HAVEN'T  WE'VE SPENT A LOT OF TIME ON CAPACITY MARKETS AT PJM, NOT AS MUCH TIME LOOKING AT HOW THE ENERGY MARKET NEEDS TO ADAPT. THERE'S TWO FUNDAMENTAL ADAPT INDICATIONS. YOU SAID CHAIRMAN LAFLEUR CAN WE PRICE PUBLIC POLICY ATTRIBUTE LIKE CARBONS WITHIN THE PJM MARKET. QUICKLY AS RAJA INDICATED WE WON'T HAVE AGREEMENT ACROSS 14 JURISDICTIONS. HOWEVER COMPETITIVE STATES, CERTAINLY MAY HAVE A CHANCE TO DO THAT. I THINK HAVING SOME TYPE OF PRICING MECHANISM AVAILABLE TO THEM AND PROTECT OTHER STATES BY HAVING TRANSFER PRICE AT THE BORDER OF THAT I THINK WILL WORK AND WE HAVE THOUGHT ABOUT THAT.

>> (INAUDIBLE).

>> RIGHT. THE POINT IS I CAN'T ANSWER YOUR QUESTION. WE CAN START THE BY DIALOGUE HOW THAT WOULD WORK AND WORK THROUGH THE DETAIL WITH FOLKS. THERE IS A FUNDAMENTAL INCONSISTENCY IN THE ENERGY MARKET, WE NEED YOUR HELP TO GAVE US A TIME FRAME TO GET THAT DONE. IT'S GOT TO BE RELATIVELY SHORT. THIS COMES BACK TO WE HAVE NEGATIVE PRICES IN OUR MARKET. WE HAVE SOME ENVIRONMENTAL ATTRIBUTES PRICED INTO OUR ENERGY MARKET. SOME ARE NOT. IT'S CAUSING A DEVLAUATION FRANKLY AND ALREADY CAUSING DISTORTION IN OUR ENERGY MARKET. WE'VE TRIED TO POLITELY IGNORE THESE THINGS BUT THEY AREN'T  THEY ARE NO LONGER IGNORABLE. WE NEED TO ADDRESS THIS IN THE ENERGY MARKET. WE TRY TO MOVE FOUR OR FIVE HUNDRED MEGAWATTS OF WIND AND NEGATIVE PRICES FOR A SUBSTANTIAL NUMBER OF HOURS. ALSO NOT SUSTAINABLE. IT DEVALUES ASSETS THAT ARE INFLEXIBLE AND CAN'T MOVE BECAUSE THEY HAVE TO BE ON A LINE ANYWAY. THAT'S ONE ISSUE. ANOTHER IS THIS FUNDAMENTAL NOTION THE WAY ELECTRICITY PRICES ARE FORMED, I THINK I'VE COMMENDED THE COMMISSION FOR HAVING AN OPEN DOCKET ON ENERGY PRICE FORMATION BUT WE NEED TO GO DEEPER AND LOOK MORE BROADLY AT WHAT'S NECESSARY BECAUSE I THINK THAT THE ATTRIBUTES GO BEYOND OTHER PRICES. I DO BELIEVE WE CAN ATTEMPT  ALSO RESILIENCY THING IS NOT  THERE IS AN ISSUE OF RESILIENCE, IT COMES BACK TO YOU'RE NOT PRICING AN ATTRIBUTE. WHAT YOU'RE DOING IS CHANGING THE DEFINITION OF RESERVES. YOU'RE CHANGING DEFINITION OF CONTINGENCY. THAT WILL PASS THROUGH THE ENERGY MARKET. WE DON'T NEED TO CREATE A NEW MARKET. FOR EXAMPLE TODAY IN PJM THERE'S CERTAIN CIRCUMSTANCES UNDER CERTAIN BREAKER CONFIGURATIONS WE'RE GOING TO LOSE TWO NUCLEAR UNITS DURING THAT MAINTENANCE PERIOD. WE OPERATE WITH INSTEAD OF 2000 MEGAWATTS, MIGHT BE 3000, FOR EXAMPLE. THE SAME  WHAT I'M SAYING WE SHOULD EXTEND THAT SAME MINDSET TO SAY IF WE HAVE A COMMON MODE RISK, OPERATIONAL RISK, WHERE WE COULD HAVE A PIPELINE EVENT AND LOSE FOUR OR FIVE GAS UNITS AT ONCE WE SHOULD OPERATE WITH THAT MUCH PENDING RESEARCH. IT'S CHANGING DEFINITIONS OF RESERVES WHICH WOULD ENHANCE THE VALUE THEN OF THOSE RESOURCES THAT PROVIDE THOSE RESERVES. DO YOU SEE?

>> YES, I DON'T SAY RESILIENCE IS  I TRIED TO SAY RESILIENCE RATHER THAN RESILIENCY, RESILIENCY HAS TAKEN OVER. I JUST GET SUSPICIOUS WHEN THERE'S A WORD THAT MEANS DIFFERENT THINGS TO SO MANY PEOPLE WHO USE IT LIKE A FEW YEARS AGO IT WAS BACK TO BASIC BUT A LOT OF DIFFERENT PEOPLE HAD DIFFERENT  AND SO I JUST THINK ANYTIME YOU PRICE SOMETHING, LIKE WE FOUND WITH CAPACITY PERFORMANCE, WINNERS AND LOSERS.

>> RIGHT.

>> WHATEVER IT IS YOU'RE PRICING WE BETTER BE SHARP ABOUT IT. TO MAKE SURE THAT WE DON'T HAVE INADVERTENT CONSEQUENCES AND NEED ANOTHER CORRECTION.

>> THE WAY I THINK ABOUT RESILIENCE, TO PUT IT IN ENGLISH, IT'S REALLY LOOKING AT THE N MINUS ONE CRITERIA WE'RE OPERATING TO IS IT STILL SUFFICIENT, ARE WE SEEING MORE OPERATIONAL RISK THAN WE'RE WILLING TO TOLERATE, IN CERTAIN CIRCUMSTANCES SHOULD WE PRICE INTO THE ENERGY AND RESERVE MARKET A HIGHER STANDARD OF MARGIN, IF YOU WILL. IT'S REALLY SAYING LET'S BE MORE CORRECT ABOUT THE OPERATIONAL RISK WE SEE EMERGING BECAUSE OF OTHER THREATS AND PRICE THEM ACCORDINGLY. IT'S NOTE A BRANDNEW PRODUCT. NOW, THE BYPRODUCT OF THAT 

>> IT'S LIKE A RESERVE IS AN ANCILLARY SERVICE MARKET OR ENERGY RESERVE.

>> WOULD ENHANCE ANCILLARY, NOT DEFINING A NEW ONE. THINK ABOUT IF YOU HAVE A RISK ON A LOSS OF FOUR OR FIVE GAS PLANTS IN A CERTAIN AREA SYSTEM THAT WOULD ENHANCE THE VALUE OF THE OTHER PLANTS THAT DON'T HAVE THAT DEPENDENCY FOR THAT PERIOD. SO FROM A POINT OF VIEW, THAT WOULD PUT VALUE ON FUEL ASSURANCE BUT DOESN'T CREATE A FUEL ASSURANCE ANCILLARY SERVICE. IT JUST PUTS VALUE ON ATTRIBUTE BECAUSE IT'S INHERENT IN PROVIDING RELIABILITY. TOGETHER WE IGNORE IT.

>> THANK YOU. I AM GOING TO SAY THANK YOU TO EVERYONE AND WHILE I HAVE THIS AUDIENCE OF MAYBE HUNDREDS OF PEOPLE ON THE COMPUTER OR WHATEVER, I WANT TO SAY WE HEARD A LOT OF PEOPLE SAY THE COMMISSION HAS TO DO THIS IMMEDIATELY, WE'VE BEEN WAITING, THE TIME IS OF THE ESSENCE. WE NEED MORE COMMISSIONERS TO BE ABLE TO ADDRESS SOME OF THESE THINGS. WHOEVER IS LISTENING OUT THERE IN CYBERSPACE, THAT WOULD BE MY DEVOUT HOPE.

>> THANK YOU.

>> (INAUDIBLE).

>> AT POTUS. [LAUGHTER]

>> GOOD LUCK ON THE HILL. ARNIE, IF YOU DON'T MIND, I WANT TO YIELD TO MR. BAILEY AND ANY OTHER OF YOUR QUESTIONS AND THEN I'LL JUMP BACK IN.

>> OKAY.

>> THANK YOU. WELL, OF COURSE.

>> (INAUDIBLE)

>> MICROPHONE.

>> THERE WE GO. I WANTED TO CONNECT TWO OR THREE DOTS AND HOPE THIS IS SOMEWHAT ON POINT TO YOUR QUESTION. ONE, I HEARD ABOUT WHAT THE PUBLIC WANTS. TWO, I'VE HEARD ABOUT AFFORDABLE ELECTRICITY PRICES. THREE, I'VE HEARD ABOUT COAL RETIREMENT AND PJM. MY ORGANIZATION REPRESENTS COAL FLEET. I'M NOT HERE ADVOCATING PEOPLE BURN MORE COAL. BUT I AM HERE ADVOCATING THAT WE DO NEED A CERTAIN AMOUNT OF COAL FOR OUR GENERATORS CAPACITY IN PJM OR MISO OR ANYWHERE ELSE, COAL FLEET IS AN INSURANCE POLICY. PJM AT ONE TIME WAS 80,000 MEGAWATTS, 20,000 MEGAWATTS HAVE GONE AWAY. LET'S JUST SAY FOR THE SAKE OF ARGUMENT THOSE ARE SMALL OTHER INEFFICIENT, UNECONOMIC UNITS, FOR THE SAKE OF ARGUMENT. WE'RE FACING ANOTHER EIGHT OR NINE THOUSAND MEGA WATTS OF COAL RETIREMENT OVER THE NEXT TWO OR THREE YEARS. THERE ARE OUT OF MARKET SUBSIDIES, RENEWABLES, WE'VE TALKED ABOUT NEW YORK AND ILLINOIS. WE'RE ALL FAMILIAR WITH THAT. THERE ARE ARGUABLY OUT OF MARKET PENALTIES ON THE COAL FLEET. WE'RE GUESSTIMATING THAT THE COAL NEED IN PJM FACES ANOTHER $15 BILLION IN COMPLIANCE EXPENDITURES, ROUND NUMBERS, SOMEWHERE ON THE ORDER OF MAGNITUDE NUMBER. UNLESS THE MARKETS ALLOW THOSE ELECTRICITY GENERATORS TO RECOVER THOSE COMPLIANCE COSTS IN SOME FASHION WILL WILL BE MORE COAL RETIREMENT. AND AT THAT POINT, WE THINK TO USE THE TERM RESILIENCE WHICH WE'RE ALL WRESTLING WITH, IT SOUNDS GOOD, IT LOOKS TO US LIKE THE RESILIENCE OF THE GRID IS THREATENED. OUR BOTTOM LINE IS WHATEVER ACTION CAN BE TAKEN TO REDUCE THE NUMBER OF COAL RETIREMENTS, WHETHER IT'S TAKEN BY THE COMMISSION OR BY PGM OR MISO OR THE STATES, WE'RE ALL FOR THAT. THANK YOU.

>> (INAUDIBLE)

>> THANK YOU. I WANT TO ADDRESS THE POINT ON RESILIENCE, PGM DID TRY TO RESOLVE AFTER THE POLAR VORTEX, AN EVENT NOT ANTICIPATED, AND I DO WANT TO REMIND EVERYONE THAT RESILIENCE ISN'T JUST ABOUT FUEL ASSURANCE, NOT ABOUT FUEL SECURITY NECESSARILY BECAUSE FLEXIBILITY OF THE SYSTEM CAN HELP ENSURE RESILIENCE AS MUCH AS ACTUAL FUEL, HAVING FUEL ON THE PREMISES. SO IN THE 2014 POLAR VORTEX WE LEARNED THAT ACTUALLY IT WAS DEMAND RESPONSE, AND FUEL RESOURCES THAT CAME TO THE RESCUE TO ENSURE THE GRID COULD CONTINUE FUNCTIONING. IT WAS THE COAL HAD FROZEN, COAL DELIVERY WAS INTERRUPTED, AND 13.7 GIGAWATTS OF COAL WORTH OF CAPACITY WAS NOT ABLE TO PERFORM. SO WE DO NEED TO BE CAREFUL, IF RESILIENCE IS A GOAL WE'RE NOT SINGLING OUT FUEL SECURITY. FLEXIBLE DEMAND STORAGE, ENSURING ENOUGH TRANSMISSION, ALL OF THESE THINGS GO TOGETHER. ON THE COAL, THE STATISTICS MR. BAILEY PROVIDED, I DO WANT TO SAY IT'S NOT THE ENVIRONMENTAL RULES DRIVING THE RETIREMENT OF COAL PLANTS. IF YOU LOOK AT THE RECENT COLUMBIA AND RHODIUM GROUP STUDY THE RETIREMENTS OF COAL ARE ABOUT 5% DUE TO ENVIRONMENTAL RULES. 50% OF THE RETIREMENTS IS DRIVEN BY LOW GAS, LOW GAS PRICES, ABUNDANCE OF NATURAL GAS. THAT IS A STUDY THAT JUST CAME OUT IN APRIL OF 2017. ANOTHER 26% IS DUE TO DECLINING DEMAND. SO I MEAN DUE TO A BROADER STUDY BEFORE YOU BLAME ENVIRONMENTAL RULES FOR THAT, I THINK THAT MIGHT BE IT FOR NOW BUT I MIGHT HAVE SOMETHING LATER. THANK YOU.

>> MICHAEL?

>> YES, THANK YOU. I WANT TO REITERATE ONE EARLIER POINTS THAT THE MARKET DISTRESS RIGHT NOW ISN'T BEING PRIMARILY DRIVEN BY SUBSIDIES. IT'S BEING DRIVEN BY THE MARKET ITSELF. WE HAVE TREMENDOUS ADVANCEMENTS IN SHALE GAS DRILLING TECHNOLOGIES, AND YOU COUPLE THAT WITH HIGHLY EFFICIENT COMBINED CYCLE UNITS AND CREATE VERY LOW PRICES AND THAT BY ITSELF IS CREATING THE DISTRESS IN THE MARKET. SO THE UNITS THAT ARE PRIMARILY IMPACTED BY THESE ARE THE TRADITIONAL, WE USE THE TERM BASE LOAD BEING AN OLD IRP GUY, THE SOLID FUEL PLANTS IN THE MARKET. SO THE ISSUE THEN TURNS TO THESE ARE THE ONES WHO MAY BE ON THE ECONOMIC BUBBLE AND THE ISSUE TURNS TO THE TWO TERMS THAT I HAVEN'T QUITE GRASPED THE MEANING, FUEL DIVERSITY AND RESILIENCY. I JUST LIKE WANT TO CAUTION THE COMMISSION AND STAFF GOING TOO QUICKLY TO ADDRESS FUEL DIVERSITY. I BELIEVE THAT, YOU KNOW, THAT'S SOMETHING AS AN IRP PLANNER, SOMETHING WE USED TO CONSIDER TO COVER IF ONE FUEL WENT UP, YOU HAD A DIFFERENT FUEL SOURCE. BUT IN A MERCHANT MARKET IF YOU'RE NOT PROTECTING  PEOPLE ARE PAYING FOR THAT DIVERSITY MAY NOT BE THE ONES RECEIVING BENEFITS. IF GAS PRICES GO UP AND WE'RE SUBSIDIZING THE SOLID FUEL UNITS, THE PEOPLE THAT GET THE ADVANTAGES ARE THE MERCHANT PLAYERS THEMSELVES. POINT ONE, THERE IS IT A LEGITIMATE ISSUE AROUND SECURITY AND DIVERSITY BUT I DON'T THINK WE NEED TO RUSH TO THE ANSWER IS TO LOOK AT TRYING TO FAVOR CERTAIN TYPES OF ISSUES. I MEAN, ONE THING WE COULD POTENTIALLY BE LOOKING AT IF WE'RE CONCERNED ABOUT GAS IS CHANGES TO THE GAS PLANNING PROCESS OR TO MAINTAIN GAS AS A SECURE FUEL, SECURE FUEL OPTION FOR RESOURCES. SO I'D LIKE TO MAYBE CLOSE AND I WOULD ASK THE COMMISSION TO FOCUS ON A CORE SET OF PRINCIPLES. ONE IS THAT AS AN LSE OFF THE TABLE HERE MAINTAIN A FOCUS ON RELIABLE SERVICE ADJUSTING REASONABLE RATES FOR END USERS, ENSURE THAT LSEs CAN ENTER INTO LONGTERM INVESTMENT AND GENERATIONS AND THESE TRANSACTIONS ARE NOT ONLY HONORED BUT ENCOURAGED. AVOID VOLATILITY OF REPEATED REACTIONARY REVISIONS TO MARKET DESIGNS, I PERSONALLY DON'T SEE THE URGENCY TO DO SOMETHING, I THINK IT SHOULD BE A WELLTHOUGHTOUT PROCESS AND I THINK IT'S SOMETHING THAT CAN BE ADDRESSED REGIONAL AT EACH RTO. ADOPT WHOLESALE MARKET POLICIES WHICH CAN ENCOURAGE RESOURCE DIVERSITIES AND ACCOMMODATE AND I HATE USING YOU THE WORD LEGITIMATE STATE POLICY OBJECTIVES. THANK YOU.

>> THANK YOU.

>> THANKS. I WANTED TO RESPOND TO A COUPLE THINGS THAT ANDY SAID ACTUALLY. SO HE SPOKE ABOUT SOME THINGS THAT PJM IS LOOKING AT TO IMPROVE PRICING IN THE ENERGY MARKET WHICH WE ARE WE'RE IN FAVOR OF STARTING WITH LOOKING AT WAYS TO ADD CARBON VALUE INTO THE ENERGY MARKET BUT ALSO YOU REFERENCED A NUMBER OF ADDITIONAL PRICE FORMATIONS CONCEPTS THAT WE AGREE SHOULD BE EVALUATED. ONE THING, YOU KNOW, WE'VE JUST STARTED TO HEAR THIS COMING FROM PJM, VERY EARLY, HAVEN'T SEEN THE REAL DETAILS HOW THIS WOULD BE IMPLEMENTED, OBVIOUSLY VERY IMPORTANT, BUT JUST ONE CAUTIONARY NOTE, THAT I'VE ASKED EVERYONE TO THINK ABOUT AS WE GO FORWARD ON THAT JOURNEY WHICH I HOPE STARTS SOON AND MOVES QUICKLY, IS THAT WHAT I WANT  ONE OF THE THINGS I HEAR IN THAT SO FAR IS THIS IDEA THAT BECAUSE WE MAYBE HAVEN'T BEEN IDENTIFYING THE RIGHT CONTINGENCIES TO PLAN TO, THE RESPONSE IS TO ADD ADDITIONAL RESERVES, IN THE CAPACITY OR ENERGY MARKET. AND I'M VERY CAUTIOUS WHEN I HEAR THAT BECAUSE I THINK ONE OF THE THINGS THAT WE HAVE BEEN HEARING CONTINUING THROUGH THIS IS ONE OF THE BIGGEST PROBLEMS IN THE MARKETS RIGHT NOW IS FRANKLY OVERSUPPLY. THAT'S TRUE IN CAPACITY MARKETS AND ENERGY MARKET. AND WHAT I THINK IS MORE IMPORTANT AS WE DO THIS AS WE FIGURE OUT, YOU KNOW, PUT DEFINITIONS KIND OF MORE SPECIFIC DEFINITIONS AROUND RESILIENCE, I'LL TRY TO CHANGE THAT WORD, OR THAT FORM OF THE WORD, THAT WHAT WE'RE TARGETING IS SCHEDULING THE RIGHT RESOURCES, NOT NECESSARILY JUST SCHEDULING MORE RESOURCES. I'M BEEN HERE A NUMBER OF TIMES TRYING TO SHOW IMPACTS OF SCHEDULING, TO MANY RESOURCES NOT ALLOWING THOSE TO SET PRICE. WE NEED TO GET RIGHT PARTICULARLY IF WE WANT SIGNALS TO CORRECT THE ENERGY MARKET TO SCHEDULE RIGHT RESOURCES AND MAKE SURE THEY DO SET PRICE.

>> THANK YOU, ROBERT.

>> I WANT TO FOLLOW UP ON A COUPLE COMMENTS ON THE COAL PLANTS AND RETIREMENT. WE HAVE 12,000, 13,000 MEGAWATTS OF COAL GENERATION AND WE'VE PROACTIVELY RETIRED OVER 2000 MEGAWATTS TO DATE. A LOT OF THOSE RETIREMENTS AND NATURAL GAS OR ENVIRONMENTAL POLICY, THE TWO COME TOGETHER. THE WAR ON COAL HAS BEEN ESSENTIALLY DRIVEN BY THE UNDERLYING ECONOMICS OF LOW COST NATURAL GAS. WE HAVE SOME COAL PLANTS NEXT TO COMBINED CYCLE PLANTS, SOMETIMES 35 CENTS PER BTO, WE CAN'T COMPETE, THE PLANTS RETIRE, TODAY IT'S DIFFERENT. THAT WHITTLING AWAY HAS HAPPENED. THOSE THAT CAN'T SURVIVE LOW PRICES HAVE FALLEN TO THE WAY SIDE. ONES STILL STANDING, IT'S BECAUSE THEY CAN. AS A COMPETITOR, THE ONES GENERATE POSITIVE RETURNS. THE NEW WAR ON COAL IS SUBSIDIES. COAL CANNOT COMPETE WITH SUBSIDIES. THE REASON IS EVERYONE HAS ACKNOWLEDGED ECONOMICS. THE LAST THING I COMPARE, WIND ASSETS NEED FLEXIBLE RESOURCES. PAIRED WITH NUCLEAR, YOU WON'T ACCOMPLISH WHAT YOU WANT. MY VIEW ON COMPETITIVE MARKETS IS ANYBODY OWNS A NUCLEAR UNIT WANTS TO RUN THEM, HAVE AT IT. IT'S THEIR RIGHT. THEY RUN THEM VERY WELL. THEY DO A GOOD JOB WITH ALL OF THAT. GO AHEAD AND RUN IT. DON'T LEAN ON OUT OF MARKET SUBSIDIES TO MAKE IT WORK. IF YOU WANT TO RUN IT, RUN IT TO YOUR BALANCE SHEET, RETURN TO YOUR INVESTORS, IF THAT'S WHAT THEY WANT, DO IT. IF YOU'RE LOSING MONEY YOU CAN DO THAT. YOU HAVE TO ANSWER TO SHAREHOLDERS IF YOU WANT TO DO THAT OTHERWISE YOU GET TO MAKE THE SAME TOUGH DECISIONS.

>> TWO COMMENTS FROM CONSUMER ADVOCATES, ONE ABOUT RESILIENCE, MR. IRWIN POINTED THIS OUT IN THE PREVIOUS PANEL, IF THERE WAS AN ISSUE WITH RESILIENCY OR RELIABILITY, CONSUMERS WOULD LOOK AT CONSUMER ADVOCATES BUT COMMISSIONERS FIRST, THAT SPEAKS OF STATE INTEREST AND STATE INTEREST MAKING SURE THEY HAVE THE ADEQUATE MIX AND ABILITY TO MAKE SURE THEY HAVE RELIABLE, IF THAT'S A KEY PRIORITY THAT THEY HAVE, THE RIGHT MIX OF RESOURCES GOING FORWARD. ONE OF THE THINGS THAT'S COME UP RECENTLY FOR CONSUMER ADVOCATES, THE JOINT GROUP, THE GASLINE PIPELINE INFRASTRUCTURE AS WE GO MORE TOWARDS GAS WE HAVE THIS ELECTRIC GRID THAT'S REGULATED AND DOCUMENTED AND A NUMBER OF CONTROLS ON IT. AND HOW DOES THE NATURAL GAS LINE PIPELINE INFRASTRUCTURE, DOES IT HAVE THE SAME QUALITY AS WE GROW MORE TO RELY ON IT, WHERE DOES THAT COME INTO THE PICTURE? AND I THINK THAT'S SOMETHING WHERE WE AS THE JOINT CONSUMER ADVOCATES FEEL STRONGLY IT HELPS TO HAVE PJM AS A GROUP OUT THERE LOOKING AT THIS ISSUE AND WORKING WITH US TO MAKE SURE WE HAVE THE INFORMATION TO TAKE BACK TO OUR CONSUMERS TO GIVE THEM THE CONFIDENCE GOING FORWARD. THAT'S CERTAINLY AN ISSUE THAT WE'RE LOOKING MORE AND MORE AT.

>> THANK YOU, RAJA.

>> YEAH, A COUPLE COMMENTS. ONE IS ON THE PRICE FORMATION SIDE THAT ANDY HAD MENTIONED, FULLY SUPPORTIVE OF CHANGES ON THE ENERGY MARKETS AND CAPACITY MARKETS BUT AS YOU ALL KNOW THE PRICE SUPPRESSION IS NOT JUST IN CAPACITY BUT ENERGY MARKETS ALSO AND THAT NEEDS TO BE ADDRESSED IN ORDER TO FULLY VALUE THESE ASSETS IN OUR PROPERTY PLAN. THE SECOND THING IS RESPONDING TO CHAIRMAN LAFLEUR'S ISSUE ON STATE SUBSIDIES, WHICH ONES CAN BE INCORPORATED INSIDE THE MARKET. A WORD OF CAUTION, LET'S SAY YOU GO ON THE PATH OF INCORPORATING INTO THE MARKETS. NOW YOU CAN PROBABLY CREATE A CONSTRUCT WHERE STATES THAT DON'T VALUE NORMAL ATTRIBUTES ARE NOT PAYING FOR THEM. I NEED TO SEE EVIDENCE THAT CAN HAPPEN. SECONDLY, DO UNDERSTAND NOW YOU SET ONCE THEY GO INTO THE CENTRALIZED MARKET NOW EVERYTHING ELSE FOLLOWS. TRANSMISSION PLANNING PROCESS FOLLOWS WHAT'S BEEN RPM. AND WHAT RPM MAKES. LET'S SAY NORMAL ATTRIBUTES ARE INCORPORATED INTO THE WHOLESALE MARKETS. NOW YOU GOT TO SEE HOW DO I MODIFY THE TRANSMISSION PLANNING PROCESS TO MAKE SURE THAT STATES THAT DON'T VALUE NORMAL ATTRIBUTES ARE CERTAINLY NOT PAYING FOR TRANSMISSION ASSETS COMING OUT AS A RESULT OF INCORPORATION OF THESE PRICE SIGNALS INTO THE WHOLESALE MARKETS. AS YOU ALL KNOW WHEN ORDER 1000 START COMMISSION ISSUED A MANDATE TO BE INCORPORATED INTO THE TRANSMISSION PLANNING PROCESS AND PGM CLEARLY RESPONDED WITH THE STAKEHOLDERS THAT THE BEST WAY TO SOLVE THAT ISSUE IS I CAN'T DECIDE WHICH STATES ARE GOING TO INCORPORATE WHAT THEY ARE GOING TO MAKE IN THE TRANSMISSION PLANNING PROCESS AND LET EACH STATE COME AND CREATE A STATE AGREEMENT APPROACH AND THOSE COSTS BEING ALLOCATED TO THOSE STATES THAT SPONSORED THOSE PROJECTS. SO NOW YOU GOT  LET'S SAY YOU INCORPORATE PRICE SIGNALS, HOW DOES IT CHANGE THE TRANSMISSION PLANNING PROCESS, RESULT IN EFFECTIVELY THE STATE AGREEMENT AND WAS AGREED BY THE STATES, JUST A WORD OF CAUTION SO YOU UNDERSTAND THE DOWNSTREAM AMPLIFICATION OF INCORPORATING CERTAIN SUBSIDIES AND PRICE ATTRIBUTES VERSUS NONE. WE BELIEVE STATES ARE GOING TO DO WHATEVER THEY BELIEVE IS A LONGTERM SOLUTION TO PRICE THESE ATTRIBUTES IN. I THINK YOU CAN'T GET AWAY FROM THE FACT YOU NEED A BILATERAL MARKET COEXISTING WITH RPM MARKETS THAT SUPPLIES CLEAR STABILITY NOT TO PERMEATE TO THE OTHER STATES THAT DON'T, AND THE SECOND THING IS AS LITTLE OR NO AMPLIFICATION ON OTHER ASPECTS OF RTO THAT RTO SUPPOSEDLY INCORPORATES, NOTHING SAYS BILATERAL CONTRACTS CAN BE COMPARATIVE PROVIDER, ALL IT PROVIDES A BETTER LONGTERM PRICE SIGNAL LSC IS LOOKING FOR AS OPPOSED TO THE MARKET AND RPM.

>> SO JUST A COUPLE OF SMALL POINTS TO BEGIN WITH. FIRST OF ALL NOT ALL NUCLEAR UNITS ARE ECONOMIC (INDISCERNIBLE) AND NOT ALL COAL UNITS ARE ECONOMIC, A BASIC FACT SINCE WE SEEM TO BE MISSING THAT. TO ADDRESS COMMISSIONER LAFLEUR'S QUESTION ABOUT A PARTIAL CARBON PRICE IF WE'RE RIGHT ABOUT EVERYONE LIKING IT, THE POLL SHOWS I EVER WON LIKING IT, SHOULDN'T BE A PROBLEM GETTING 13 PLUS ONE POLITICAL ENTITIES ON BOARD, IF IT'S TRUE THERE SHOULD BE A WAY TO DO IT. ONE THING TO THINK ABOUT IT'S CONSISTENT WITH A RATIONAL CARBON PRICING SCHEME TO RETURN ALL THE DOLLARS TO THOSE WHO PAY THEM. IT DOES NOT HAVE TO BE A HURT TO CONSUMERS PAYING HIGHER PRICES BECAUSE OF CARBON PRICE, CARBON TAX. THIS IS POINT ONE. THAT'S ENTIRELY CONSISTENT WITH THE RIGHT INCENTIVES. MORE BROADLY I'M SKEPTICAL OF A PARTIAL SOLUTION BUT IT WOULD BE BETTER TO TALK ABOUT THAT AT LEAST SEEING IF IT CAN WORK THAN TALKING ABOUT THE CLEARLY MARKETBASED SOLUTION WITH CARBON PRICE BETTER THAN SUBSIDIES. I'M SKEPTICAL OF ABILITY OF MARKET TO HAVE TWO PRICES, WHATEVER THE TERM WAS USED, ACCOMMODATE SUBSIDIES. I THINK THAT'S A RECIPE FOR MAKING THE CAPACITY MARKET RESIDUAL AND CAPACITY MARKET CANNOT WORK AS A RESIDUAL MARKET. FINALLY ON RESILIENCE OR LIABILITY, I THINK THAT RESILIENCE AS IT'S BEEN DEFINED, ANDY DID A GREAT JOB, IT'S JUST ANOTHER ATTRIBUTE, ANOTHER ELEMENT OF RELIABILITY. IF AFTER ANALYSIS IT MAKES SENSE TO THINK ABOUT ADDING ADDITIONAL N MINUS ONE OR CONSTRAINTS BASED ON THE GAS SYSTEM OR WHATEVER ELSE LET'S DO THAT BASED ON ANALYSIS, THE DISPATCH BASED ON THAT AS A MARKETBASED SOLUTION, NOT A TECHNOLOGY SPECIFIC SOLUTION, ONLY AFTER THE APPROPRIATE ANALYSIS IS DONE.

>> A FOLLOWUP, COULD YOU TAKE ABOUT WHAT YOU MEAN WHEN YOU SAY CAPACITY MARKET CAN'T BE RESIDUAL MARKET AND HOW ARE YOU DEFINING RESIDUAL MARKET IN THAT SITUATION?

>> SURE. SO RIGHT NOW THE CAPACITY MARKET IS MUST OFFER, EVERYONE MUST BY. IF YOU CHANGE THAT RULE, CAN IT WORK? IF YOU SAY IT'S GOING TO BE TWO DIFFERENT PRICE CAPACITY CAN IT WORK, IF YOU SAY SETTLEMENT WILL BE VOLUNTARY AND CAN BE RESIDUAL, SO RESIDUAL MEANINGS SOME CAPACITY DOESN'T HAVE TO BE IN IT NOW AS WELL UNDERSTOOD PGM HAS ENTITIES NOT PART OF THE CAPACITY MARKET BUT ENTIRELY STAND ALONE, ENTIRELY RESPONSIBLE FOR RELIABILITY NEEDS CONSISTENT WITH, NOT A PERFECT SOLUTION, CONSISTENT IN PARALLEL WITH CAPACITY MARKETS. IF A STATE OR AREA SAYS THEY DON'T WANT TO BE PART OF THE CAPACITY MARKET WHILE STILL NOT SETTING UP RP ENTITY, THE PRICE FORMATION WON'T BE THERE, IMAGINE ONLY TRYING TO BUY A THIRD OF CAPACITY OR 50%, BY DEFINITION WILL NOT BE CONSISTENT WITH THE MARKET. DOES THAT ANSWER YOUR QUESTION?

>> IT DOES. I THINK I HEARD, MAYBE I'VE HEARD IT TODAY, DISCUSSION ABOUT RESIDUAL MARKET BEING SLIDELY DIFFERENT THAN THAT. AND BEING A MARKET WHERE THERE ARE A SET OF RESOURCES THAT BECAUSE OF THE MINIMUM OFFER PRICE RULES WON'T GET THROUGH THE CAPACITY MARKET. AND THAT YOU FIND A WAY FOR THEM TO GET CAPACITY SUPPLY OBLIGATION. SO THEY STILL WANT TO MOVE THROUGH THE CAPACITY MARKET. WHAT'S RESIDUAL THEN IS THE PRICE SIGNAL FOR ALL THE RESIDUAL MARKET OF THE CAPACITY THAT IS NOT GOING TO HAVE STATE SUPPORT. IT'S KIND OF  IT'S A LITTLE BIT OF THE MODEL OF THE STATE GETS TO GO FIRST. THEIR RESOURCE FINDS A WAY INTO THE CAPACITY MARKET, GET A CAPACITY SUPPLY OBLIGATION, GETTING THE REST OF THE RESOURCES THAT DIDN'T GET PROCURED.

>> THE REASON I SAY THAT CAN'T WORK COMMISSIONER LAFLEUR ASKED EARLIER TODAY THAT IS A SLIPPERY SLOPE TO WHICH THE END IS ALL STATE SUBSIDIZED RESOURCE AND COMPETITIVE RESOURCE CREATES UNCERTAINTY, SURPRISE SUPPRESSION, CAN'T WORK AS A STABLE MODEL. IT WILL END UP RESULTING IN ULTIMATELY SUBSIDIZED UNITS PUSHING OUT UNSUBSIDIZED ONES.

>> JENNIFER?

>> I JUST WANTED TO  I GUESS I HAVE A DIFFERENT UNDERSTANDING OF RESIDUAL MARKET. I DON'T HAVE A MONOPOLY ON UNDERSTANDING SO THANK YOU FOR EXPLAINING THAT TO ME. FIRST WE DON'T WANT TO, YOU KNOW, WE WOULD LIKE TO WORK TOGETHER WITH PJM AND STAKEHOLDERS TO COME UP WITH WHATEVER PROPOSAL WE'RE GOING FORWARD WITH. BUT I DON'T THINK THAT PUTTING SUBSIDIZED RESOURCES OR STATE PREFERRED RESOURCES IN ONE BUCKET AND ALL OF THE REST OF THE RESOURCES IN A SEPARATE BUCKET REALLY WORKS OUT IN TERMS OF BEING A PRINCIPLE NONDISCRIMINATORY PROPOSAL. WE'VE DONE WORK ON THIS. SUBSIDIES ARE EVERYWHERE AND HIDDEN. IF YOU ONLY SELECT OUT THE MOST VISIBLE SUBSIDIES LIKE RENEWABLE PORTFOLIO STANDARDS YOU'RE LIKELY TO SELECT OUT THE SUBSIDIES THAT RECEIVE THE MOST PUBLIC SUPPORT. AND YOUR NEGLECTING ALL OF THOSE TAX EXEMPTION FUNDS LIKE BLACK LUNG, I LOOKED UP A BUNCH OF DIFFERENT SUBSIDIES THAT GO TO FOSSIL FUELS THAT ARE HIDDEN AND PERMANENT. THEY ARE NOT UP FOR RENEWAL. THEY ARE NOT AS VISIBLE. IT'S VERY DIFFICULT TO GET AT ALL SUBSIDIES AND DO IT IN A PRINCIPLED MANNER THAT YOU CAN MAKE THAT DIVISION, THAT SUBSIDIZED RESOURCE VERSUS NONSUBSIDIZED. AND COME ONE A CONSTRUCT THAT'S NOT DISCRIMINATORY. THAT'S ONE THING THAT I WANTED TO REACT ON. THE OTHER POINT I WANTED TO TALK ABOUT IS THAT RIGHT NOW AS JOE MENTIONED THE CAPACITY MARKET IS A MARKET WHERE CUSTOMERS MUST BUY FROM THE CAPACITY MARKET UNLESS THERE'S SOME SORT OF EXEMPTION BUT THE DEMAND CURVE IS AN ADMINISTRATIVELY SET DEMAND CURVE SO YOU MUST PROCURE A CERTAIN AMOUNT OF CAPACITY FROM THAT MARKET. THAT MARKET ONLY OFFERS ONE TYPE OF CAPACITY PRODUCT NOW SO YOU HAVE TO BUY THAT KIND OF CAPACITY PRODUCT. CUSTOMERS REALLY NEED A CHOICE. SO IF YOU HAVE  SO THE KIND OF RESIDUAL MARKET THAT I HAVE IN MY HEAD AT LEAST IS THAT CUSTOMERS OUGHT TO BE ABLE TO CHOOSE TO GET CAPACITY THROUGH A BILATERAL CONTRACT OR THINK GO TO THE MARKET IF THEY PREFER THAT. AND SO THE MARKET NEEDS COMPETITION TOO. THE MARKET CONSTRUCT NEEDS THAT KIND OF OUTSIDE COMPETITION, ATTRACT CUSTOMERS. IF YOU HAVE A MARKET THAT OFFERS WHAT CUSTOMERS WANT THEY WILL COME AND YOU CAN HAVE A ROBUST MARKET AND BETTER PRICE FORMATION THAT WAY.

>> LATHROP?

>> JOE SAID EARLIER, ASKED IF PRICE IS TOO LOW, OF COURSE NOT, ASK THE CUSTOMERS IF YOU DON'T BELIEVE THAT. YOU KNOW, WE'VE TALKED ABOUT ATTRIBUTES. AND I THINK THAT WHAT THAT COMMENT MISSES IS THE ATTRIBUTES THAT THINGS LIKE NUCLEAR GENERATION LIKE NUCLEAR BRINGS TO THE TABLE. IT'S LATE IN THE DAY. I HAVEN'T HAD ANYTHING OTHER THAN WATER SINCE THIS MORNING SO I'M THINKING ABOUT COFFEE. AND, YOU KNOW, IF YOU ASK THE CUSTOMERS AT THE LOCAL COFFEE SHOP IF A $1 CUP OF COFFEE IS TOO EXPENSIVE THEY ARE GOING TO TELL YOU NO. A LOT OF THEM ARE STILL GOING TO WALK ACROSS THE STREET AND BY A VENTE MOCHA FRAPPUCINO. THAT DOESN'T MAKE THE FRAPPUCINO UNECONOMIC. IT MEANS THE CUSTOMERS WANT CHOICES. THEY VALUE OTHER THINGS. AND THAT'S WHAT WE'RE DEALING WITH HERE. IF THE PRICES ARE RIGHT FOR INPUTS THAT ARE CURRENTLY ALLOWED TO GO INTO THEM, AND THEY ARE PRETTY EFFECTIVE AT DRIVING BEHAVIOR BASED ON THOSE THINGS, YOU KNOW, AS A COMPANY WE ARE RESPONDING TO THOSE PRICES AND SO I'M  WHEN I HEAR THINGS LIKE THE MARKETS WORK, I AGREE WITH THAT FOR THE LIMITATION FOR THE PRODUCT THEY ARE PRICING AND TRYING TO GET RESPONSES FOR. WE'RE CURRENTLY INVESTING IN THREE NEW COMBINED CYCLES, NATURAL GAS UNITS, A LOT OF MONEY, $2 BILLION OR SO, BECAUSE WE SAW THOSE PRICE SIGNALS MAKE IT VERY CLEAR THAT WHAT THE MARKET WANTS, WHAT THE MARKET VALUES, IS THAT KIND OF ECONOMIC EFFICIENT FLEXIBLE GENERATION. AND AT THE SAME TIME WE'RE LESS THAN A MONTH NOW FROM SHUTTING DOWN TWO OF OUR COAL PLANTS IN NEW JERSEY, ABOUT 1200 MEGAWATTS, RESPONDING TO EXACTLY THOSE SAME PRICING. WHEN WE LOOK AT NUCLEAR, WE ASK OURSELVES THE QUESTION, AND WE'RE STARTING TO ENGAGE WITH OUR STATE ON ASKING THE SAME QUESTION ABOUT WHETHER THOSE MARKET SIGNALS ARE SUFFICIENT. WHETHER THOSE PRICES THAT ARE RIGHT FOR WHAT THE INPUTS THAT THEY HAVE BEEN ALLOWED TO PRICE OUT ARE COMPREHENSIVE ENOUGH OR MISSING SOMETHING AND I THINK OUR ANSWER IS WE'RE CLEARLY MISSING SOMETHING. WE SEE CUSTOMERS CHOOSING TO VALUE THE SAME ATTRIBUTES NUCLEAR BRINGS AND CHOOSING TO PAY MORE, AN INDICATION PRICES MIGHT BE RIGHT FROM ONE PERSPECTIVE ARE NOT COMPLETELY RIGHT AND CHANGES THE VIEW.

>> WE WANT TO GET TO COMMISSIONER HONORABLE, I SEE A NUMBER OF TIME CARDS UP. KEEP YOUR COMMENTS BRIEF SO WE CAN MAKE SURE COMMISSIONER HONORABLE HAS A CHANCE TO ASK HER QUESTIONS AND EVERYONE CAN GET COFFEE.

>> THANK YOU. I WANT TO FIRST A QUICK COMPLIMENT TO SIERRA AND RBC THINKING IN THE CONTEXT OF THE CUSTOMER WHICH SOMETIMES IN OUR POSITION IN INDUSTRY WE SLIGHT THAT. WHEN YOU THINK ABOUT ENVIRONMENTAL ATTRIBUTES, WE HAVE A RETAIL BUSINESS AND AS AN EXAMPLE CITY OF CINCINNATI CAME TO US, THEY WANTED AN ALLGREEN PRODUCT. WE GOT THEM AN ALLGREEN PRODUCT. WE'RE SEEING MORE CITIES LOOKING FOR A GREEN PRODUCT. WE HAVEN'T HAD ANY CONSUMER YET COME TO US AND SAID WE WANT 100% NUCLEAR. LISTEN TO THE CUSTOMERS. THEY ARE GETTING RETAIL GREEN PRODUCTS AT A VERY COST EFFECTIVE PRICE VERSUS LAYING A MULTIBILLION DOLLAR LEVY FOR FIVE LOCATIONS. THE STATES WITH RETAIL CHOICE ARE ACCOMPLISHING GOALS EFFICIENTLY, I WANTED TO PASS THAT ON. THANK YOU.

>> THANK YOU. I'VE GOT PAUL, MICHAEL, GREGORY AND RAJA.

>> THANK YOU. COMMENTING ON SUBSIDIES FOR FOSSIL FUELS, RENEWABLES, UNIVERSITY OF TEXAS AUSTIN STUDY CAME OUT IN NOVEMBER OF LAST YEAR, IT LOOKED AT VARIOUS KINDS OF FEDERAL SUBSIDIES FOR DIFFERENT ENERGY SOURCES. THEY LOOKED AT THE YEAR 2010, THE YEAR 2013, PROJECTED THE YEAR 2016, PROJECTED THE YEAR 2019. SUBSIDIES FOR WIND AVERAGE THE $4 BILLION A YEAR. SUBSIDIES FOR COAL $40 MILLION A YEAR.

>> MICHAEL.

>> I JUST WANTED TO DOVETAIL ON A STATEMENT JENNY MADE, THAT IS LSEs DO NEED THE ABILITIES TO FIGHT IOA CONTRACTS TO GET THE KIND OF PRODUCTS THAT THEY NEED, AND THEY NEED TO DO SO WITHOUT ANY RISK OF HAVING TO PAY TWICE. SO I DO LIKE HAVE CONCERNS WHEN I DO HEAR TERMS LIKE MOPAR AND MAYBE OTHER TWO SETTLEMENT SOLUTIONS THAT TEND TO TAKE THE ONLY MARKET PART OUT OF THE CAPACITY MIX. YOU HAVE TO HAVE A SUPPLY CURVE THAT'S DETERMINED, I MEAN DEMAND CURVE THAT'S DETERMINED BY THE RTO, YOU'LL HAVE THE QUALITY IMPORTANT CONSTRAINTS DETERMINED BY THE RTO. AND WHEN YOU  THE ONLY MARKET PART OF IT IS THE SUPPLY CURVE OFFERS, THE MINUTE YOU SUBSTITUTES A TYPE OF PROXY TYPE PRICING TO SET PRICES, I JUST BEGIN TO EXPRESS CONCERNS WE'RE MOVING AWAY FROM THE MARKETS, AGAIN I JUST ADVISE THE COMMISSION TAKING INCREMENTAL STEPS TO ISSUE SO WE DON'T HAVE A SECOND AND THIRD ORDER UNINTENDED CONSEQUENCES.

>> GREGORY?

>> THANK YOU. JUST AS A POINT YOU HAD MADE EARLIER ABOUT THE LINE BETWEEN WHERE STATE ACTION SHOULD BE PAID FOR OR SUBSIDIZED OR NOT AND HOW THAT LINE IMPACTS, THE NUCLEAR FACILITIES IS ONE EXAMPLE WHERE THERE ARE SOME THAT ARE ECONOMIC, SOME DR. BAUERING MENTIONED BEFORE, SOMETHING CONSUMER ADVOCATES OFFICES, JOINT CONSUMER ADVOCATES RAISED, WE DON'T WANT TO PAY EXTRA FOR NUCLEAR FACILITIES THAT ARE ECONOMIC AND CLEARING AND IN ADDITION WE ALSO DON'T WANT TO PAY FOR STATE ACTIONS OF OTHER STATES. WE DON'T WANT TO PAY FOR DOUBLE OR THIRD TIME FOR A RESOURCE. ALES WE'RE LOOKING AT THESE THERE ARE GOING TO BE SITUATIONAL, IT'S GOING TO BE SOMETHING WE'RE GOING TO HAVING TO PLAY IT ONE BY ONE AS THEY COME DOWN THE LINE TO DECIDE WHERE THAT LINE FITS AND THOSE ARE JUST SOME EXAMPLES THAT CAME UP AND SOME THINGS JUST MENTIONED.

>> THANK YOU. RAJA?

>> YEAH, MINE IS A SHORT COMMENT. A COUPLE OF MY COLLEAGUES HERE MENTIONED RESIDUAL MARKETS CANNOT WORK. ENERGY STATES WE'RE COMFORTABLE WITH IT. EFFECTIVELY YOU HAVE DISPATCHED NEGATIVELY PRICING, SETTING PRICE, SO I DON'T  I FIND IT INTERESTING WHY IT SEEMS TO WORK IN ENERGY STATES WHEREAS NOT IN CAPACITY SPACE.

>> THANK YOU.

>> COMMISSIONER HONORABLE?

>> THANK YOU. AND I WANT TO THANK ALL OF YOU FOR YOUR SPIRITED COMMENTS AND ALSO FOR BEING DISCIPLINED ENOUGH TO STOP. [LAUGHTER] YOU'LL HAVE ENOUGH TIME TO ENGAGE IN DEBATE I'M SURE, FOR SOME YOU'RE NEVER GOING TO CONVINCE THE OTHERS OF YOU. I JUST WANTED TO TELL YOU THAT NOW BEFORE YOU GET STARTED. I ALSO APPRECIATE THAT MAYBE YOU GUYS HAVEN'T ARRIVED AT THE PLACE OF URGENCY THAT SOME OF OUR OTHER COLLEAGUES HAVE IN OTHER REGION, SO MAYBE IF WE SPOKE WITH YOU ALL IN SIX MONTHS OR A YEAR AFTER YOU KEYED ON UP SOME THINGS ANDY MENTIONED IN PRECONFERENCE COMMENTS WE MAY SEE MORE CLARITY ABOUT YOUR CONCERNS ABOUT NOT ONLY THE TENSIONS WITHIN WITHIN PGM AND ALSO AS IT ALIGNS WITH YOUR SISTER REGIONS. AND PARTICULARLY BECAUSE PGM IS SO DIVERSE AND LARGE I'M PLEASED YOU DON'T EXPRESS THE URGENCY. I HAVE TAKEN TO HEART ANDY'S COMMENTS, I WANT TO ASK YOU TO ADD TO THE LIST ABOUT THE TOPIC OF WHOLESALE ENERGY MARKETS AND DEVELOPMENT OF STATE POLICY. SOMEONE TWEETED EARLIER HAD I OPENED THE DOOR TO TALK ABOUT ENFORCEMENT AND SO ON? NO, I HAVEN'T. WE'RE STILL VERY FOCUSED NOW. EARLIER ANDY PUT ON THE TABLE WHAT HE THOUGHT THAT YOU ALL COULD USE FROM US AND THAT IS MAYBE JUST A LITTLE PRODDING BY WAY OF PROVIDING A DEADLINE TO GIVE YOU SOME IMPETUS TO BEGIN TO RATIONALIZE OR HARMONIZE. THESE MAY BE EXTERNALALITIES TO CONSIDER WHETHER TO INCORPORATE THOSE INTO YOUR WHOLESALE MARKET PROCESSES. AND THE OTHER THING THAT ANDY MENTIONED WAS, AND I FIRST WANT TO START WITH ANDY TO PUT SOME MEAT ON THE BONES OF THIS, HE SAID WE NEED TO GO DEEPER ON PRICE FORMATION. AND I RECOGNIZE THAT WE STILL HAVE WORK TO DO THERE. AND I'M AFRAID TO ASK, ANDY, I WILL, WHAT IS STILL LEFT TO BE DONE AND THEN I WANT TO ASK THE OTHER PANELISTS IN OUR LAST FEW MINUTES WHAT ELSE CAN WE DO TO SUPPORT YOUR WORK IN THIS AREA.

>> THANK YOU. I WILL KEEP THIS BRIEF. THE ENERGY MARKET PRICE FORMATION I THINK IS EFFECTIVELY I THINK THE ISSUES ARE SIMILAR TO WHAT I THINK HAS ALREADY BEEN DISCUSSED IN THE PRICE FORMATION DOCKET. WE HAVE  THERE ARE PERIODS OF TIME, I'LL SAID ASIDE NEGATIVE PRICING COMMENTS BEFORE BECAUSE I THINK THAT STANDS ALONE, THIS IS PURE PRICE FORMATION. THERE ARE PERIODS OF TIME WHERE WE HAVE GENERATORS THAT ARE ONLINE AND GENERATING BECAUSE WE NEED THEM TO MEET THE CURRENT SUPPLY DEMAND BALANCE ON THE SYSTEM SO THEY ARE ONLINE, RUNNING, BUT NOT PERMITTED TO SET PRICE BECAUSE WE HAVE RULES AROUND YOU HAVE TO HAVE A CERTAIN AMOUNT OF FLEXIBILITY AND SHALL ABLE TO MOVE AROUND IN ORDER TO SET PRICE, THE REASON FOR THAT OF COURSE IS THAT WE NEED TO SOMEHOW DISCIPLINE THE OUTPUT OF GENERATION IN ORDER TO MEET THE SUPPLY DEMAND BALANCE. SO THE OPPORTUNITY WE HAVE THERE IS I THINK WE CAN LOOK TO PRICE THE COMMODITY ENERGY, MEANING BASED ON THE SUPPLY/DEMAND CURVE AND WHERE THEY CROSS AND PRICE FLEXIBILITY AS PART OF A GRID SERVICE AND I THINK THAT WOULD CREATE PRICE SIGNALS AND REDUCE UPLIFT. I THINK THERE'S MORE WE CAN DO THERE IF WE BROADEN THE LOOK AND SAY LET'S NOT LOOK AT FAST START RESOURCE LEVEL, ALL RESOURCES TO MAKE SURE WE'RE NOT PAYING FOR RESOURCES WE DON'T NEED.

>> BUT WE'RE MAKING SURE THAT THE PARTICIPANTS ARE BEING COMPENSATED FOR VALUE THAT THEY ARE PROVIDING.

>> CORRECT, PRICE SIGNALS ARE ACCURATE. AS WE LOOK AT THAT OPPORTUNITY, I THINK WHAT  THAT ONE BECAUSE IT'S SUCH A  IT'S A CONTROVERSIAL DISCUSSION, THE TIME FRAME, BY THIS DATE RATHER THAN YOU ALL DECIDE FOR US HOW ELSE TO DISCUSS IT, ET CETERA, BUT HAVE THE TIME FRAME. I THINK WHAT'S KEY HERE IS THAT THE RESOURCES THAT ARE NEEDED TO SERVE THE LOAD TO PARTICIPATE IN SETTING PRICE, AS SIMPLE AS THAT, THIS IS NOT A REVOLUTIONARY CONCEPT. AS WE'VE GROWN OVER TIME, HERE'S WHAT'S HAPPENED. IT USED TO BE ALL THE FLEXIBLE RESOURCES, MIDMERITS, TODAY WE HAVE CONVERSION, THE KEY IS WHY DO WE NEED TO LOOK AT IT, BECAUSE OF THAT FUNDAMENTAL CHANGE IN THE SUPPLY. I WOULD HELP WITH HIGH PENETRATION RENEWABLES. THAT'S WHAT WE MEANT. THAT'S WHAT I MEANT IN THE CALL TO ACTION LOOKING AT WHAT'S CHANGED AND WHY DO WE NEED TO LOOK AT ENERGY MARKET REFORM.

>> I WELCOME THAT. AND ESPECIALLY IN VIEW OF THE COMMENTS THAT SOMEONE MADE ABOUT THE NEED TO HAVE A BOTTOMUP APPROACH, SO I TOO WANT TO BE DISCIPLINED AND NOT SAY OKAY, PGM, THIS IS YOUR DEADLINE, THIS IS WHAT WE WANTS BACK BUT TO ALLOW THE PROCESS TO WORK AND TO REALLY ALLOW THE STAKEHOLDERS TO ADD VALUE. AND TO INFORM US AND THEN WE CAN THEN RESPOND TO YOUR PROPOSAL.

>> THANK YOU.

>> THANK YOU. PAUL, ARE YOU PARTICIPATING? YOUR TENT CARD IS STILL UP? OKAY. MICHAEL?

>> I WANTED TO STAY IN MY PLACE, ARNIE, I WAS GOING TO CALL ON MICHAEL.

>> I'M HAPPY TO TAKE MY PLACE BACK. FIRST OF ALL, THERE IS URGENCY IN PGM. WE HAVE A NUCLEAR UNIT RIGHT NOW RECEIVING SUBSIDY FROM THE STATE, GOING TO AFFECT CAPACITY MARKET, HAPPENING IN MAY. IT IS CONTAGIOUS. AS A RESULT OF THAT THE NUMBER OF OTHER NUCLEAR POWER PLANT OWNERS, SOME ARE ECONOMIC OR ACTIVELY SEEKING, SO IT IS URGENCY. IT'S A DIFFERENT KIND OF ISSUE.

>> IT IS. I'M AWARE. PLEASE CONTINUE.

>> SORRY. IT'S URGENT. AND THEN THE SECOND POINT, I DISAGREE WITH ANDY ABOUT THE ENERGY PRICE COMMISSION.

>> REALLY?

>> I KNOW.

>> HERE IN THE LAST FIVE MINUTES, THE FIREWORKS START. PLEASE CONTINUE.

>> I DON'T THINK IT'S AS SIMPLE AS ANDY SAID. WE'RE AT RISK AT RECEIVING MORE INCENTIVE TO INFLEXIBLE UNITS. I WOULD BE URGING NOT TO RUSH INTO A DECISION ON THAT ONE.

>> WHAT I CAN COMMIT TO IS THAT WE WOULD ENDEAVOR TO DEVELOP A COMPLETE RECORD WHICH ALLOWS FOR THE VIEWPOINTS OF MANY DIVERSE STAKEHOLDERS TO BE ACCOUNTED FOR.

>> THANK YOU.

>> MICHAEL.

>> JUST TO THE SECOND PART OF YOUR QUESTION, WHAT CAN THE COMMISSION DO AND THIS MAY BE A NAIVE SUGGESTION BUT I THINK IT WOULD BE GOOD IF FERC HAD A MORE OF A DIALOGUE WITH THE STATE COMMISSIONS, TO BETTER UNDERSTAND WHAT TYPE OF PROGRAMS THEY ARE COMING FORTH WITH, AND TO BETTER UNDERSTAND THEIR PLANS FOR HOW THAT COULD BE INCORPORATED INTO THE MARKET. I SEE SOME SMILES ON THIS SIDE. BUT IF I THINK THAT WOULD BE HELPFUL. I DON'T KNOW HOW THAT GETS FACILITATED, MAYBE A REPORT OR SOMETHING TO THE COMMISSION BUT I THINK THAT SORT OF PROACTIVE, BEING PROACTIVE WITH THAT APPROACH MIGHT SMOOTH OUT SOME OF THESE ISSUES.

>> THANK YOU. AND WE CERTAINLY HAVE ENDEAVORED TO CONTINUES WORKING WITH OUR STATE COLLEAGUES. I'M DELIGHTED SO MANY COULD PARTICIPATE IN THIS TECH CONFERENCE AND IN FACT WE MOVED THE DATE BECAUSE WE HAD ORIGINALLY CONSIDERED APRIL DATES BUT SO MANY OF THEM HAD OTHER CONFLICTS AND WE CERTAINLY COULDN'T HAVE THIS DISCUSSION WITHOUT THEM. AND I THINK THAT AROUND AND DURING MEETINGS IS A PRIME OPPORTUNITY. I WOULD RATHER HAVE AN INPERSON DIALOGUE AND DEBATE ABOUT SOME OF THESE ISSUES VERSUS PASSING PAPER BACK AND FORTH ALTHOUGH THERE'S VALUE IN THAT, MAYBE THAT COULD CULMINATE OUR WORK TOGETHER. BUT I THINK IT'S A TERRIFIC SUGGESTION. THANK YOU.

>> ROBERT.

>> YES, QUICKLY FOLLOWING UP FROM THIS MORNING ONE THING THAT'S CLEAR VARIOUS PARTICIPANTS IDENTIFIED STATE LEGISLATURES ARE GOING TO DO THAT, THEY HAVE TO CARRY IT OUT, PROCURING OFFSHORE WINDS, HYDRO, WHATEVER THE CASE, THESE ARE EXPENSIVE FORMS OF GENERATION AND THEY  THE TAKEAWAY FROM TODAY, STATES MUST BE FULLY RESPONSIBLE FOR THE COST OF THOSE ACTIONS AND I THINK AS GREG MENTIONED IT SHOULD NOT BLEED INTO OTHER STATES AND IT'S VERY IMPORTANT TO PROTECT PROPER PRICE FORMATION AND HELP THAT WE NEED FROM FERC AS WELL AS VARIOUS ISOs AND RTOs ENSURING PROTECTION IS THERE, POLICY IN PLACE, TIME LINE SET BECAUSE THE MARKET NEEDS TO SEE THE CONFIDENCE THAT THE COMPETITIVE MARKETS ARE GOING TO FUNCTION PROPERLY AND WITHOUT THAT INVOLVEMENT THEY ARE DEFINITELY UNDER DURESS AS JOE JUST POINTED OUT WE'VE GOT CAPACITY AUCTION COMING UP THIS MONTH WHERE IT'S GOING TO BE IMPACTED BY SUBSIDIES AND SO TIME IS OF THE ESSENCE AND PARTICULARLY IN PJM, ISO NEW ENGLAND AND NEW YORK, LITIGATION IS THE LEAST DESIRED PATH FOR ALL PARTIES AND PROACTIVE INVOLVEMENT IN THE COMPLETE WELCOME OF FERC INVOLVEMENT IS WHAT WE NEED. THANK YOU.

>> GREG.

>> THANK YOU. TO THE QUESTION COMMISSIONER HONORABLE OF WHAT CAN COMMISSION DO, I WOULD JUST INTERJECT AND SAY PROVIDING AN OPPORTUNITY FOR THE CONSUMERS TO HAVE A VOICE HERE WAS A SIGNIFICANT STEP. I THINK SHOWING THE VALUE THAT YOU PLACE IN THE CONSUMER VOICE IS VERY IMPORTANT AND IT SPREADS TO THE OTHER PARTICIPANTS AS WELL. OTHERS REACHED OUT TO ME, EXELON, AEP, TO GET OUR VOICE, YOU SHOWING THE VALUE PROVIDES AN OPPORTUNITY TO HAVE OTHER DIALOGUE WITH OTHER PARTIES. I DO APPRECIATE THIS OPPORTUNITY.

>> THANK YOU.

>> THANKS, COMMISSIONER HONORABLE. FROM AEP'S POINT OF VIEW, SINCE THE URGENCY IS INVOLVING INCORPORATION OF ENVIRONMENTAL ATTRIBUTES INTO THE WHOLESALE MARKETS BECOMES THE SOLE FOCUS BROAD REFORMS GET SIDELINED. THAT'S A BIG ISSUE FOR US BECAUSE NOW EVERYBODY IS TALKING ABOUT ZEX OR FORMATION, OF ZERO EMISSION, ONE PART OF THE BIGGER PROBLEM THAT WE SEE, AND THAT ARE IN OUR OPINION IS OVERTAKING ALL THIS CONVERSATION WITHOUT UNDERSTANDING THE FULL SCOPE OF THE PRISON AND HOW TO SOLVE IT. AND THE SECOND THING IS THERE ARE STATES IN PGM WHO ARE NOT PURSUING CERTAIN THINGS AND THE COST SHIFT IS A BIG CONCERN. AGREEING ON PRINCIPLES, DEFINING THE PROBLEM HAND AGREES WHAT PRINCIPLES WE SHOULD ADHERE TO WOULD GO A LONG WAY COMING UP WITH SOLUTIONS, RIGHT NOW THEY ARE BASED ON THEIR INTERPRETATION LEADING TO CONFUSION WITH WHAT THEY ARE TRYING TO SOLVE AND HOW. MAYBE SOME DOCKET THAT WILL OPEN IN TERMS OF WHAT THE PROBLEM IS AND WHAT ARE WE TRYING TO SOLVE AND ADHERE TO CAN GO A LONG WAY.

>> THANK YOU. I APPRECIATE YOUR POINT THERE NEEDS TO BE A COMPREHENSIVE REVIEW OF ACTION AND INACTION, THOSE WHO THINGS IMPACT MARKET PRICING AND MARKET OPERATIONS AROUND I THINK THE GENTLEMAN FROM ODEC MENTIONED OBJECTIVES EARLIER, THAT MIGHT BE A STARTING POINT WHEN YOU TAKE IT BACK TO THE STAKEHOLDER GROUPS.

>> LATHROP AND JENNIFER.

>> AS TO WHAT WOULD BE MOST HELPFUL COMING BACK FROM THE FERC, I THINK YOU LISTENED TO THREE PANELS AND A LOT OF DIVERSE OPINIONS, WE DON'T AGREE AND WE'RE NOT LIKELY TO. I THINK WHAT WOULD BE VERY HELPFUL WOULD BE SOME INDICATION IT'S FROM FERC AFTER HAVING LISTENED TO THIS, WHERE DO YOU SEE PROBLEMS AND WHERE DO YOU NOT SEE PROBLEMS? YOU KNOW, WHERE IS THE ACTION THAT IS BEING TAKEN OR CONTEMPLATED JUST A NORMAL AN EXPECTED IMPACT ON THE MARKET FROM COMBINATION OF THE FEDERALLY OVERSEEN MARKETS AND STATE ACTION RESULT IN A PARTICULAR OUTCOME, AND WHERE IS THAT POTENTIALLY BECOMING A PROBLEM. TELL US WHAT PROBLEMS IT IS YOU THINK WE NEED TO SOLVE AND THEN I WOULD DEFINITELY AGREE THAT IF THE NEXT STEP AFTER THAT IS GO BACK INTO A STAKEHOLDER PROCESS WHICH MAY BE APPROPRIATE TIME LINES ARE ALWAYS HELPFUL. BECAUSE WITHOUT THAT I THINK WE'VE SEEN TIME AND TIME AGAIN THEY CAN TAKE A VERY LONG TIME AND I WOULD DEFINITELY AGREE FERC  SOME OF US SEE PROBLEMS TO BE SOLVED, THERE'S THINGS THAT NEED TO BE SOLVED SOON.

>> THANK YOU.

>> IN TERMS OF WHAT FERC CAN HELP WITH AND STAKEHOLDERS CAN START WITH, ARTIFICIAL OVERSUPPLY PROBLEM. 25,000 MEGAWATTS OF GAS CAME ONLINE, DON'T QUOTE ME, PROJECTED GOING FORWARD 20,000 MEGAWATTS OF GAS FIREPOWER BY 2019. HAVING OVERSUPPLY IS BAD FOR BOTH CONSUMERS AND GENERATORS. AND COULD RESULT IN COST IN THE FUTURE.

>> SORRY. THERE IS NO OVERSUPPLY. THERE'S A DOWNWARD  THERE'S A DOWNWARD SLOPING DEMAND CURVE. WE BOUGHT WHAT WE BOUGHT ON PURPOSE.

>> IT'S A BARGAIN.

>> EXACTLY.

>> AND THERE ARE BENEFITS ON THE ENERGY SIDE. MORE CAPACITY YOU HAVE, THE CHEAPER THE PRICE OF ENERGY. THANK YOU.

>> ARNIE, IF I MIGHT JUST JUMP IN AND SAY THANK YOU NOT ONLY TO THIS PANEL, I SEE YOU'LL HAVE A LOT OF FUTURE DISCUSSIONS TO TAKE UP. AND I WANT TO THANK OUR ENTIRE GROUP OF PANELISTS TODAY, AS WELL AS ALL OF YOU WHO SAT ALL DAY LONG OUT IN THE AUDIENCE. AND I ESPECIALLY WANT TO THANK OUR SENIOR STAFF HERE AT FERC AND ALSO THE FERC STAFF WHO AREN'T SO VISIBLE HERE BUT WHO HAVE WORKED VERY, VERY HARD. THANK YOU SO MUCH FOR AN EXCELLENT DAY ONE, AND I LOOK FORWARD TO DAY TWO.