>> ALL RIGHT, IF WE COULD GET FOLKS TO START TAKING THEIR SEATS. ALL RIGHT. IF WE COULD PLEASE GET SETTLED SO WE COULD START THE CONFERENCE.

>> GOOD MORNING. AND WELCOME BACK TO DAY 2 OF OUR TECHNICAL CONFERENCE ON STATE POLICY AND WHOLESALE ELECTRICITY MARKETS. I'D LIKE TO WELCOME OUR PANELISTS AND ALL OF OUR GUESTS. A COUPLE OF HOUSEKEEPING ANNOUNCEMENTS TO START OUT WITH. AGAIN, TODAY ACTIONS THAT PURPOSELY INTERFERE OR ATTEMPT TO INTERFERE COMMENCEMENT OR INHIBIT AUDIENCE'S ABILITY TO OBSERVE OR LISTEN TO THE CONFERENCE INCLUDING ATTEMPTS BY AUDIENCE MEMBERS TO ADDRESS THE COMMISSION ARE NOT PERMITTED. ANY PERSONS ENGAGING IN SUCH BEHAVIOR WILL BE ASKED TO LEAVE THE BUILDING. ANYONE WHO REFUSES TO LEAVE VOLUNTARILY WILL BE ESCORTED FROM THE BUILDING. ALSO, A QUICK HOUSEKEEPING ANNOUNCEMENT, YESTERDAY AT THE END OF THE CONFERENCE A FEW ITEMS WERE LEFT BEHIND, A JACKET, UMBRELLA AND WATER BATTLE. IF YOU WERE PERSONALLY ATTACHED TO ANY OF THOSE THINGS PLEASE SEE OUR SECURITY STAFF. WE HAVE THAT. I WASN'T TOLD HOW NICE ANY OF THE THREE THINGS WERE. [LAUGHTER] SO COMMISSIONERS, I THINK ANY OPENING STATEMENTS?

>> (INAUDIBLE).

>> ALL RIGHT. LET'S PLOW. SO YESTERDAY'S CONVERSATION WAS REGIONALLY FOCUSED. THE DESIRE AND HOPE YESTERDAY AND I THINK LARGELY ACCOMPLISHED OR AT LEAST I'M DECLARING VICTORY WAS TO UNDERSTAND THE OBJECTIVES THE STATES WERE PURSUING, PERSPECTIVE MARKET PARTICIPANTS HAVE ON THAT PURSUIT, AND ALSO TO GET A SENSE OF URGENCY FOR WHETHER THE COMMISSION CAN  NEEDS TO TAKE ACTION OR THE COMMISSION KIND OF WAIT AND ALLOW REGIONAL CONVERSATIONS TO CONTINUE ON. TODAY'S FOCUS WILL REALLY BE ON COMPLETING THE PICTURE ON THE LONGTERM PATHS FORWARD. IT'S FAIR TO SAY THAT IN PRECONFERENCE STATEMENTS AND THE DISCUSSION WE HAD YESTERDAY, THERE WAS I WOULD SAY FOUR OR FIVE BROAD PATHS FORWARD DISCUSSED. I'LL TRY TO LAY THOSE OUT. THE HOPE FOR TODAY IS WALK THROUGH EACH PATH ONE BY ONE, A SENSE OF WHAT PATHS INVOLVED AND IMPLICATIONS OF WHAT THE PATHS WERE. PATH NUMBER 1 THAT WE HEARD ABOUT WAS DEFINED BY NO OR LIMITED MINIMUM OFFER PRICE RULES. SO A REQUEST THAT THE COMMISSION ROLL BACK THE MINIMUM OFFER PRICE RULES TO EITHER SOMETHING LIKE ONLY THOSE THINGS THAT ARE PREEMPTED UNDER HUGHES OR TO NOTHING AT ALL. PATH NUMBER 2TY THINK LOOKS LIKE ACCOMMODATION, IN THE WAY ISO NEW ENGLAND TALKED ABOUT IT, FINDING A WAY TO ALLOW STATESUPPORTED RESOURCES TO GET A CAPACITY SUPPLY OBLIGATION BUT STILL RESET THE PRICE IN THE CAPACITY MARKETS TO REFLECT WHAT A COMPETITIVE MARKET WOULD HAVE PRODUCED BUT THERE ARE ALTERNATIVE VERSIONS OF THAT ACCOMMODATE OR, YOU KNOW, A LITTLE BIT OF DEFERENCE PATH. I THINK THE MIDDLE PATH IS A HYBRID PATH THAT WE'RE PROBABLY ON RIGHT NOW. IT'S AN ATTEMPT TO IDENTIFY SOME STATE ACTIONS THAT WE WILL APPLY A MINIMUM OFFER PRICE RULE, SOME STATE ACTIONS THAT WE WON'T APPLY THAT MINIMUM OFFER PRICE RULE. FAIRLY ACTIVE LITIGATION ABOUT THE BOUNDARY BETWEEN THOSE TWO POINTS. PATH, YOU KNOW, MOVING ALONG THE SPECTRUM TOWARD PUTTING MORE THINGS INTO THE MARKET. I THINK WE HAD A CONVERSATION IN NEW YORK,ING IN PJM, ABOUT TRYING TO IDENTIFY ATTRIBUTE THAT THE STATE POLICY IS TARGETING AND SEEING IF WE CAN GET THAT ATTRIBUTE INCORPORATED INTO THE MARKET, LARGELY A DISCUSSION ABOUT ENVIRONMENTAL ATTRIBUTE AND CARBON PRICING. WE DIDN'T TALK ABOUT THE CAPACITY MARKET RULES IN THAT SITUATION, WHETHER OUR MOPAR RULES CHANGE OR STAY THE SAME. AND THEN I THINK THE EXTREME VERSION WITHIN MARKET IS EVERYTHING IS EITHER IN THE MARKET OR THERE'S A STRONG MINIMUM OFFER PRICE RULE THAT SAYS ANY STATE SUPPORT IS GOING TO BE INCORPORATED INTO SOMEONE'S BID AND IF YOU GOT STATE SUPPORT AND WE PUT IN YOUR BID YOU DON'T CLEAR THE CAPACITY MARKET, YOU JUST DON'T CLEAR THE CAPACITY MARKET, AND THAT'S KIND OF THE EXTREME WITHINMARKET PATH. THERE PROBABLY ARE VARIANTS ALONG THE WAY, PROBABLY LITTLE OFFSHOOTS OF EACH ONE. WE'D LIKE TO WALK THROUGH THE PATHS THIS MORNING. I THINK THEY MAP FAIRLY WELL INTO ACTING CHAIRMAN LAFLEUR'S DOORS. WE'D LIKE TO TALK ABOUT WHETHER THE TWO EXTREME VERSIONS THAT I LAID OUT DEVOLVE INTO DIFFERENT VERSIONS OF REREGULATE. WE'LL LOOK AT THAT MIDDLE PATH, THE LITIGATE DOOR. AND THEN EITHER SIDE OF THAT MIDDLE PATH IS THE KIND OF FIND A NEGOTIATED WAY TO MOVE FORWARD WITH SOME BALANCE BETWEEN THE WHOLESALE MARKETS AND THE STATES. THAT'S THE PLAN FOR THIS MORNING. WE'RE GOING TO WALK THROUGH EACH PATH ONE BY ONE. APPRECIATE THAT EACH ONE OF YOU PROBABLY HAVE A FAVORITE PATH. AND I IMAGINE WE'LL FIND OUT ABOUT THAT AS WE WALK ALONG THAT PATH BUT WE HOPE TO HAVE THE FOCUS BE COMPLETING THE PICTURE, AND UNDERSTANDING THE IMPLICATIONS. THIS IS A LONG PANEL. IT'S ABOUT THREE HOURS. WE WILL TAKE A BREAK AT SOME POINT. I'LL TARGET ABOUT HALFWAY THROUGH. IF I OR ANYONE UP HERE STARTS TO FALL OVER, WE'LL CALL IT A LITTLE EARLIER. BUT WITH THAT, WE'LL GET STARTED. SO I'D LIKE TO START WITH THE EXTREME KIND OF FURTHER ALONG ON THE DEFERENCE OR KIND OF ACCOMMODATION SIDE OF THE PATH TO START. SO WOULD BE INTERESTED FOR ALL OF YOUR PERSPECTIVES ON THAT KIND OF NO MOPAR PATH. SO VERY LIMITED MOPAR, LOOK LIKE PREEMPTION. DOES THE CAPACITY MARKET STAY THE SAME, DO THE ENERGY MARKETS STAY THE SAME?

>> ARNIE, SHOULD WE INTRODUCE THE PANEL FOR THE PEOPLE WATCHING.

>> THANK YOU, CHERYL.

>> TWOMINUTE REPRIEVE TO ANSWER THAT QUESTION.

>> I HAVE IN MY NOTES RIGHT AFTER TAKE A BREAK, INTRODUCE THE PANEL. [LAUGHTER] SO THANK YOU. OBVIOUSLY THANK YOU TO THE PANEL FOR BEING HERE. WE HAVE FROM EXELON KATHLEEN BARRON, THAD HILL FROM CALPINE, JOHN HUGHES CHIEF EXECUTIVE OFFICER OF CONSUMER RESOURCE COUNSEL. LISA McALISTER GENERAL COUNSEL FOR REGULATORY AFFAIRS FOR AMERICAN MUNICIPAL POWER. WE HAVE. RICHARD MROZ FROM NEW JERSEY BOARD OF PUBLIC UTILITIES, ANDREW PLACE VICE PRESIDENT OF THE PENNSYLVANIA PUBLIC UTILITY COMMISSION, MICHAEL POLSKY FROM INVENERGY. BRIEN SHEAHAN CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF ILLINOIS COMMERCE COMMISSION. WE HAVE ABE SILVERMAN, VICE PRESIDENT AND DEPUTY GENERAL COUNSEL REGULATORY NRG ENERGY, AND MARK VANNOY. APOLOGIZE FOR NOT INTRODUCING YOU TO START WITH. WALKING DOWN THE NO OR LIMITED MOPAR PATH, TO THE EXTENT YOU THOUGHT ABOUT THAT PATH WHAT MARKET RULE CHANGES DO YOU THINK WILL BE NECESSARY WALKING DOWN THAT PATH, ALSO INTERESTED TO KNOW WHAT YOU THINK THE IMPLICATIONS ARE OF WALKING DOWN THAT PATH FOR THE THINGS THAT YOU'RE RESPONSIBLE FOR, FOR YOUR BUSINESS MODEL, FOR THE POLICIES YOUR STATE HAS, THE BUSINESS DECISIONS YOU HAVE TO MAKE. PLEASE, AGAIN, AS YESTERDAY, IF YOU WANT TO TALK RAISE YOUR TENT CARD. WE'RE NOT GOING TO PROBABLY WALK DOWN THE PANEL AT ANY POINT. WE'LL JUST LET FOLKS TALK WHEN THEY THINK. THAD.

>> SURE, THANKS. SORRY, I WASN'T HERE YESTERDAY. I'M GLAD I GOT THAT RIGHT. LOOK, YOU KNOW, THE CHAIRMAN'S THREE DOORS, I THINK YOU'RE ASKING ABOUT, I DON'T KNOW IF I HAVE THIS RIGHT, BUT DOOR NUMBER 2. DOOR NUMBER IS WHERE THE STATES DO WHAT THEY ARE GOING TO DO AND THERE'S SOME KIND OF ACCOMMODATION MADE TO PROTECT THE MARKETS. DOOR NUMBER 3 IS A FULL REREGULATION RECOVERY, COST, ALL KINDS OF ISSUES. DOOR NUMBER 2 IS JUST, YOU KNOW, LET IT GO AND DON'T WORRY ABOUT IT. THERE'S SOME PRETTY GOOD EXAMPLES OF WHAT HAPPENS IN THAT CASE WHICH WAS ONE OF YOUR QUESTIONS I THINK. YOU KNOW, I'LL TELL YOU IT DOES NOT WORK, IF YOU WANT TO HAVE A COMPETITIVE MARKET. YOU END UP WITH LAYERS OF SUBSIDIES AND THEN ONCE SUBSIDIES HELP SOMEBODY ELSE YOU END UP WITH ANOTHER LAYER OF SUBSIDIES. WITH THE MIDWEST, NOT A STATE ACTION, THE FEDERAL PRODUCTION TAX CREDITS LED TO WIND GETTING BUILT, LED TO NUCLEAR ISSUE OUR FRIENDS AT EXELON HAD IN THE FIRST PLACE, THEIR SOLUTION WAS ANOTHER SUBSIDY, THAT WILL LEAD TO ANOTHER. WE'VE SEEN IT IN MISO ZONE 4, SOME WAY TIED TO THE SUBSIDIES NUCLEAR PLANTS IN ILLINOIS RECEIVED. LET ME TELL YOU THE MOST APPLICABLE. THE STATE OF CALIFORNIA I WOULD SAY TODAY OPERATES THEIR MARKET EFFECTIVELY IN DOOR NUMBER 2. AND THERE'S BEEN LITERALLY  THERE'S A MANDATEDRIVEN EFFORT WHERE THE STATE LEGISLATURE OR THE PC PROCURES SPECIFICALLY THINGS AS THEY DO, AS THAT HAPPENS IT IS CAUSED ALL OTHER CAPITAL TO PULL BACK. YOU CAN ARGUE IT HAS ENCOURAGED INVESTMENT IN THE LAST 10 OR 11 YEARS, 10,000 MEGAWATTS OF GAS AND 20,000 OF RENEWABLE BUILT WITH CONTRACTS FOUR OR FIVE TIMES THE MARKET PRICE. PACIFIC GAS AND ELECTRIC, CONSUMERS PAY THE HIGHEST RATES IN THE LOWER 48 AND VERY LOW ENERGY PRICES. THAT'S THE DEFINITION OF A FAILED MARKET, WE HAVE HIGH CONSUMER RACE AND LOW WHOLESALE POWER RATES. THIS CREATES LIABILITY RISK, CALIFORNIA ISO PUT OUT A STUDY THEY VIEW THE NUMBER IS 8600 MEGAWATTS AT RISK FOR RETIREMENT, A LIABILITY ISSUE. IT CREATES SOME CRAZY THINGS N CALIFORNIA AND THIS IS PRETTY INTERESTING, BECAUSE OF THE STATE MANDATE TO BUILD A WHOLE BUNCH OF SOLAR, WITHOUT ANY KIND OF, YOU KNOW, RESTRAINT, WE NOW HAVE NEGATIVE PRICES IN CALIFORNIA IN THE MIDDLE OF THE DAY. THE ONLY PLACE IN CALIFORNIA WE'RE SPENDING CAPITAL RIGHT NOW AND IT IS PRETTY AMAZING IS WE'RE FIGURING OUT EVERYWHERE WE CAN TO WASTE HEAT IN THE MIDDLE. DAY. LET ME TELL YOU IF YOU HAVEN'T THOUGHT ABOUT THIS, THAT SHOULD GET A ROOM FULL OF ENGINEERS THAT HAVE BEEN IN POWER GENERATION BUSINESS THEIR ENTIRE CAREER AND TELL THEM THE HIGHEST MPV IS WASTE HEAT IN THE DAY BECAUSE PRICES ARE GOING NEGATIVE BECAUSE OF THE STATE MANDATE. YOU CAN BRING UP GERMANY, OTHERS AS WELL. THE PATH OF NO MOPAR IN THE MANDATE DRIVEN WORLD IF THERE'S NOT SOME PROTECTION IN MY VIEW YOU NEED TO GO STRAIGHT TO DOOR NUMBER 3, RETROACTIVE RATE MAKING, CULTURE OF RECOVERY AND YOU HAVE TO GO THAT WAY IF THAT'S THE PATH YOU'RE GOING TO PURSUE.

>> LISA.

>> THANK YOU. THANKS TO THE COMMISSIONERS FOR HAVING THIS IMPORTANT EVENT AND FOR STAFF. APPRECIATE YOUR EFFORTS HERE TODAY. I WOULD SAY ONE OF THE MAJOR CONCERNS WITH THE HYBRID APPROACH IS THE RTOs ARE GOING TO CONTINUE TO BE FORCED INTO A REACTIVE ROLE TO CONTINUE TO CHANGE MARKET RULES TO ADDRESS POLICIES INITIATED BY THE STATE AND RESULTS CAN PROHIBIT TRUE MARKET BEHAVIOR MANIFESTED BY BILATERAL CONTRACTING. WILLING BUYERS AND SELLERS ARE ABLE TO GET THE PRODUCTS THAT THEY ARE LOOKING FOR, AND WE THINK THAT APPLYING THE MOPAR TO THE EXITING UNITS IS REALLY CONTRARY TO THE BASIC ECONOMIC THEORY WHERE EXISTING RESOURCES RATIONAL BID IS TO BE A PRICE TAKER. AND USING THE MOPAR REALLY TAKES MORE OF THE PROCESS BEHIND CLOSED DOORS WHERE THE RTOs NEED TO ADMINISTRATIVELY DETERMINE PRICE AND WE REALLY THINK ANY BLANKET PROPOSAL THAT REPLACES A LOWER COST OFFER WITH A HIGHER ADMINISTRATIVELY DETERMINED OFFER HAS MORE TO DO WITH MAINTAINING SIDE MARKET POWER THAN REALLY TAILORING A REAL SOLUTION TO A REAL PROBLEM. AND ONE THING THAT WE HEARD YESTERDAY, AND YOU KNOW YOU'RE IN INTERESTING TIMES WITH WATCH, WE AGREE WITH BILATERAL CONTRACT, UNDER THAT APPROACH WE THINK AN RTO COULD RETAIN A ROLE OF DEVELOPING RESOURCE ADEQUACY REQUIREMENTS FOR ITS FOOTPRINT. AND THEN WE'RE NOT ACTUALLY ADVOCATING FOR MISO AND PJO. THERE ARE DIFFERENT WAYS YOU CAN SUPPORT BILATERAL CONTRACTING AND I DON'T THINK WE'VE REACHED THE LEVEL OF DETAIL THAT WOULD ACTUALLY RESULT IN ANY KIND OF CONSTRUCT. BUT STATES COULD HAVE A CHOICE WHETHER THEY WANTED TO ALLOW THE RETAIL ELECTRIC RELIABILITY ENTITY TO ENTER INTO LONGTERM BILATERAL CONTRACTS TO SATISFY THEIR OBLIGATIONS AS DETERMINED BY THE RTOs, OR THEY COULD CONTINUE IN THE MANDATORY CONSTRUCT. SO IT IS KIND OF A HYBRID APPROACH BUT I THINK IT'S A LOT MORE FLEXIBLE THAN THE CURRENT CAPACITY CONSTRUCT WHICH RIGHT NOW REALLY IS JUST FOCUSED ON ONE TYPE OF RESOURCE AND TO THE DETRIMENT OF ALL OTHERS.

>> THANK YOU, LISA. FOLLOWING UP ON THAT QUESTION, THE DESCRIPTION THAT PJM WOULD RETAIN RESOURCE ADEQUACY ROLE UNDER THAT CONSTRUCT, CAN YOU TALK A LITTLE BIT MORE ABOUT THAT RECOGNIZING WE HAVEN'T GOTTEN INTO DETAILS AT THIS POINT, BUT RELATIVE TO I THINK IN SOME REASONS WE HEARD YESTERDAY THERE'S A VIEW THERE SHOULD BE A CLEARLY DEFINED ENTITY WHETHER IT IS THE RTO OR THE STATES OR THE GROUP THAT ARE RESPONSIBLE FOR RESOURC ADEQUACY. IN YOUR DESCRIPTION IT SOUNDED LIKE THAT ARE MANY ENTITIES WITH A ROLE IN RESOURCE ADEQUACY. IF YOU COULD TALK A LITTLE BIT ABOUT WHO IS ACCOUNTABLE UNDER THOSE CIRCUMSTANCES.

>> YES. AND ONE OF THE THINGS WE HEARD YESTERDAY IS HOW IMPORTANT THE FINDING THE OBJECTIVES ARE, AMP HAS TAKEN A LEADERSHIP ROLE IN PJM TO HAVE A STAKEHOLDER PROCESS IN THE CONVERSATION,S, IT TOOK SIX MONTHS TO GET STAKEHOLDERS TO AGREE TO HAVE CONVERSATIONS AND WE'RE NOW TALKING ABOUT THE OBJECTIVES. SO I DON'T THINK WE'RE THERE YET AND RIGHT NOW WE ARE BATTING AROUND 77ISSUES OF WHAT A CONSTRUCT SHOULD LOOK LIKE. WE AGREE IT'S A FEDERAL AND RTO ROLE TO HAVE THE ADEQUACY CONSTRUCT, OR THE ADEQUACY OBLIGATION. BUT OTHER FOLKS CAN DO THEIR PART IN MEETING THOSE GOALS. SO THE RTOs WOULD CONTINUE CURRENT PROCESS OF DETERMINING WHAT'S NEEDED AND THEN IT WOULD BE UP TO DIFFERENT ENTITIES WITH DIFFERENT RESPONSIBILITIES TO GO AHEAD AND ALLOCATE RESOURCES TO MEET THOSE OBLIGATIONS.

>> LISA, TO YOU, BUT ALSO TO OTHERS, RECOGNIZING THAT THERE ARE SITUATIONS ALREADY WHERE STATES HAVE THAT KIND OF COMPLEMENTARY ROLE, DO PEOPLE HAVE A VIEW AS TO WHETHER THAT WORKS BETTER IN A VERTICALLY INTEGRATED CONSTRUCT OR IN A  HOW DOES THAT WORK IN A RESTRUCTURED ENVIRONMENT?

>> IF I CAN, I THINK THE ANSWER IS THAT IT DOESN'T. COMING BACK TO ARNIE'S FIRST QUESTION, IF WE ELIMINATE ANY KIND OF MOPAR, REALLY WHAT THAT REALLY TRANSLATES IS ALLOWING STATES TO PURSUE ANY TYPE OF OBJECTIVE, WHETHER IT'S ZERO ENERGY CREDITS, RENEWABLE ENERGY CREDITS, WHETHER IT'S DIRTY ENERGY CREDITS, WHETHER IT'S JOBS, EXTERNALITIES, WE'LL LOSE THE COMPETITIVE MARKETS. THE IDEA COMPETITION DRIVES DOWN PRICE, INCREASES INNOVATION AND PROTECTS, IF WE'RE GOING TO MOVE TOWARDS A SYSTEM WHERE THE STATES ARE ALLOWED TO TAKE 20, 40, 50, 60, 80, 100% OF THE MARKET AND INSULATE FROM COMPETITION I DON'T KNOW WHAT THE COMMISSION'S JOB IS ANYMORE AND CERTAINTY DON'T SEE HOW THE COMMISSION CAN MEET ITS STATUTORY OBLIGATION TO ENSURE THAT THE CAPTIVE RATE PAYERS ARE GETTING JUST AND REASONABLE RATES IF AT THE END OF THE DAY THE COMMISSION HAS NO ROLE IN EVALUATING THE SALES OF ENERGY AND THINGS THAT DIRECTLY AFFECT THOSE SALES. WE THINK ABOUT WHERE WE'RE GOING TO END UP, AND THIS IS NOT AN ABSTRACT CONCEPT. COMPETITION IS THE RIGHT WAY TO DRIVE DOWN PRICES. AND I OFTEN HEAR DISCUSSIONS FROM STATE ACTORS, AND I THINK WHY ARE YOU VOLUNTARILY SIGNING UP YOUR RATE PAYERS TO PAY MORE THAN THE MARKET ACTUALLY WANTS FOR THAT PRODUCT? AND WE COULD TALK ABOUT HOW TO INTEGRATE THE RIGHT PRODUCT INTO THE MARKET. IN FACT, I THINK THAT'S ARNIE'S JUMPING AHEAD TO YOUR FOURTH YES QUESTION, THIRD AND FOURTH, THOSE ARE STATIONS ON THE ROAD WE NEED TO GO THROUGH. ULTIMATELY WE WANT TO GET TO THE POINT WHERE THE WHOLESALE MARKETS FACILITATE THE STATE DESIRES TO MEET THE ENVIRONMENTAL EXTERNALITIES AND OTHER EXTERNALITIES THEY WANT TO PRICE INTO THE MARKET BUT WE CAN DO THAT BETTER THROUGH COMPETITIVE MARKETS. YOU KNOW, I HEARD A LOT OF TOOK OF COOPERATIVE FEDERALISM, IT WORKS WHEN THERE'S A GIVE AND TAKE, PUSH AND PULL. THUS FAR I HATE TO SAY IT BUT I THINK THE COMMISSION HAS ABANDONED THE FIELD. THEY ARE NOT PUSHING BACK, THERE'S NOT HEALTHY TENSION WHEN STATE PROGRAMS DIRECTLY AFFECT OR AIM AT OR TARGET THE WHOLESALE MARKETS. THOSE ARE APPROPRIATE PLACES FOR FERC TO COME IN AND EXERCISE JURISDICTION. IT MADE SENSE OVER THE PAST DECADE TO LET STATES BE LABORATORIES OF DEMOCRACY TO PURSUE ENVIRONMENTAL INITIATIVES THAT PERHAPS COULDN'T BE DONE AT SCALE OR ON AN ECONOMIC BASIS. BUT THESE ARE NOW INCREASINGLY MATURE TECHNOLOGIES, AND WE WILL ALL BE BETTER OFF AS A NATION IF WE'RE RUTHLESSLY EFFICIENT USING THE COMPETITIVE MARKET TO DEPLOY CAPITAL. TO SAY FERC HAS NO ROLE THERE I THINK REALLY DOES MEAN THE DEATH OF COMPETITIVE MARKET AND THE TIMELINE HAS TO BE VERY QUICK IF WE'RE GOING TO STOP THAT FROM HAPPENING.

>> IN ANSWER TO DAVID'S QUESTION, WITHOUT COMING BACK TO THE MAIN QUESTION ON THE TABLE ABOUT THE DIFFERENT CONSTRUCTS, DAVID, TO JUST RESPOND TO YOUR QUESTION, I'LL COME BACK TO A COUPLE THINGS I MENTIONED YESTERDAY AND MAYBE JUST TO PUT A FINER POINT TO IT WHICH IS THAT AS I MENTIONED, STATES, COMMISSIONS, FIND THEMSELVES IN A PLACE WHERE THOUGH WE WANT TO PROTECT OUR ROLE IN RESOURCE ADEQUACY, RESPONSIBILITIES, WE DON'T HAVE THE TOOLS TO DO IT. AND WHAT HAS BEEN MISSING AT LEAST IN PJM IS THAT THAT CONSTRUCT IS HOW THE INDIVIDUAL STATES AND STATES COLLECTIVELY ALONG WITH PJM CAN ENSURE THAT THOSE RESPONSIBILITIES AT THE SAME TIME FOCUS ON THE RELIABILITY ISSUES ALONG WITH THE GRID OPERATOR. IN OTHER RTOs, OTHER ISOs, IT'S EASIER. PARTICULARLY ONESTATE ISOs. THERE'S SOME COMMENTATORS YESTERDAY TALKED ABOUT FERC MAY NEED TO LOOK AT THIS DIFFERENTLY, IN DIFFERENT REGIONS, WITHIN DIFFERENT ISOs. SO I JUST WANT TO COME BACK TO THE QUESTION YOU RAISED IN REACTION BECAUSE IN PJM WE SEE A VARIETY OF ISSUES THAT ARE IN NEED OF ATTENTION TO GET TO THE RESOURCE ADEQUACY ISSUES AND THE PLANNING ASPECT GOING FORWARD. STATES ARE REACTING TO CLEARLY  IN THE VARIOUS STATES THAT ADOPTED LEGISLATION, THEY ARE SPEAKING OUT BECAUSE THEY ARE MAKING THAT POLICY DECISION THAT THEY FEEL THAT THERE IS NOT AN APPROPRIATE FOCUS ON RESOURCE ADEQUACY OF A PARTICULAR TYPE. THAT'S THE REACTION YOU'RE SEEING. IT'S A REFLECTION OF THE FACT WE DON'T HAVE AN APPROPRIATE CONSTRUCT TO CAPTURE THAT RESPONSIBILITY AND MANAGE IT.

>> THANK YOU. RELATED QUESTION, IF THE OPTION NUMBER 1, AS ARNIE IS DESCRIBING, IS IN SOME WAY SIGNIFICANTLY REDUCING TRADITIONAL TOOLS FERC USED AND THEREFORE THE ISOs HAVE HAD AVAILABLE FOR RESOURCE ADEQUACY, SOMEONE ELSE WOULD HAVE THE ADEQUATE CAPABILITY TO FILL IN WHATEVER GAP THERE WAS IN RETURN FOR FERC HAVING LESS TOOLS AVAILABLE THERE, DO YOU SEE THAT AS SOMETHING THAT WOULD BE PRIMARILY A QUESTION OF ADDITIONAL MARKET RULES OR ARE THERE ADDITIONAL RESPONSIBILITIES THAT WOULD NEED TO BE DONE IN THE STATES THROUGH THIVE OR REGULATORY ACTION TO FILL, ONE, IS THERE A GAP, TWO, IS IT SOMETHING THAT COULD BE FILLED THROUGH TARIFFS OFFER NEEDS TO HAPPEN AT THE STATE LEVEL?

>> I HAVEN'T THOUGHT THROUGH THE SPECIFICS BUT IT WOULD SEEM PROBABLY BOTH. PROBABLY A COMBINATION OF EFFORTS HERE AT FERC AT THE STATE LEVELS AND ALONG WITH THE RTOs OR ISOs WE WOULD HAVE TO UNDERTAKE.

>> JOHN, DO YOU HAVE A REACTION TO THE INITIAL QUESTION OR DAVID'S FOLLOWUPS?

>> I WANT TO THANK THE COMMISSION AND COMMISSION STAFF FOR ALLOWING ME TO PARTICIPATE. I HAVE THE PRIVILEGE OF WORKING WITH COMPANIES THAT ARE LARGE POWER BUYERS, ALL OVER THE WORLD AND ALL OVER THE UNITED STATES. QUITE A BIT OF EXPERIENCE WITH ALL OF THE ISOs AND ALL THE DIFFERENT VARIATIONS OF ISOs AND RTOs THAT EXIST. AND GENERALLY THERE'S DISSATISFACTION WITH ALMOST ALL OF THEM, FOR ONE REASON OR ANOTHER. AND MUCH OF IT HAS TO DO WITH THE WADE THEY HAVE BEEN IMPLEMENTED OR CONTINUED TO BE IMPLEMENTED. THERE DOESN'T SEEM TO BE A STEADY STATE IN THE WAY THESE MARKETS ARE DESIGNED WHICH CREATES CONSIDERABLE UNCERTAINTY WHICH MY MEMBERS DON'T LIKE. BUT IF THEY HAD TO PICK ONE THEY THOUGHT THEY COULD LIVE WITH THE MOST, IT'S PROBABLY ERCOT. AND IT'S AN ENERGYONLY SITUATION. IT'S MORE COMPLICATED BECAUSE UNLIKE NEW YORK, MASSACHUSETTS AND CALIFORNIA, TEXAS IS VERY BUSINESS FRIENDLY. AND THEY WELCOME HEAVY INDUSTRY. BILLIONS OF DOLLARS OF NEW INFRASTRUCTURING IN A FORM OF NEW MANUFACTURING FACILITIES ARE BEING CONSTRUCTED THERE, AND THE MARKET DOWN THERE DOES NOT GET IN THE WAY OF DOING THAT, VERY ENERGY INTENSIVE FACILITIES, THEY CONSUME A LOT OF NATURAL GAS AND ELECTRICITY. TEXAS AND THE ERCOT MARKET IS FRIENDLY WITH RESPECT TO GENERATION, A CRITICAL RESOURCE, YOU KNOW, FOR MANY OF THE MANUFACTURING SECTORS IN THE UNITED STATES. ESPECIALLY THOSE THAT ARE CAPABLE OF BENEFITING FROM THE FRACKING REVOLUTION. SO, YOU KNOW, I THINK THE ENERGY ONLY SPEAKS VOLUMES ABOUT WHAT THE  WHAT OUR OPINION WOULD BE ON MOPAR, ELCON HAS BEEN RECOGNIZED MORE YEARS NOT HAVING TO SAY ABOUT THE MARKETS, WE DON'T LIKE THE FACT THEY ARE REFERRED TO AS A MARKET, VERY FRANKENSTEINLIKE CONSTRUCTIONS OF ADMINISTRATIVE PROCEDURE, CONVOLUTED OLDFASHIONED REGULATION. I THINK IN SOME SENSE SOME PROBLEMS THAT ARE ON THE TABLE HERE WITH THE TWODAY CONFERENCE ARE CREATED BY THE FACT CAPACITY MARKETS, YOU KNOW, DON'T WORK, AND SO AS I STATED IN MY PREFILED STATEMENT THE COMMISSION HAS THE RESPONSIBLE FOR INQUIRY, THE RIGHT WAY TO DO IT, IF YOU CAN DO IT AT ALL. I ADD THE LAST STATEMENT TO THE EFFECT I THINK IT IS DANGEROUS TO GO DOWN THE PATH OF TRYING TO ACCOMMODATE STATE POLICY IN COMPETITIVE WHOLESALE MARKETS. THE COMPETITIVE WHOLE SALE MARKETS IF DESIGNED PROPERLY WILL BE AN EXCELLENT MECHANISM BY WAY STATES WITH IMPLEMENT POLICIES AND USE THAT. THEY NOT ONLY SHOULD BE ENCOURAGED TO DO SO, IF YOU HAVE THE COURAGE YOURSELF TO DESIGN THESE MARKETS PROPERLY YOU CAN INSIST THEY DO SO. BECAUSE OTHERWISE I THINK THEY ARE VIOLATING THE FEDERAL POWER ACT. SO THAT'S MY STATEMENT.

>> THANK YOU. MICHAEL AND THEN THAD.

>> I WOULD LIKE TO THANK COMMISSIONERS AND THE COMMISSION FOR INVITING ME TO BE HERE. I REPRESENT  I'M FOUNDER OF INVENERGY, 10 GIGAWATTS, WIND, 7 GIGAWATTS OF TURBO AND SOLAR AND STORAGE FACILITIES. I PERSONALLY HAVE OVER 40 YEARS EXPERIENCE IN POWER INDUSTRY. I WAS ONE OF THE FIRST INDEPENDENT POWER PRODUCERS IN THIS COUNTRY, BACK IN THE EARLY '80s, WITNESSING CREATING OF COMPANION MARKETS. AND OBVIOUSLY NOW I SEE COMPLETE DESTRUCTION OF THIS MARKET. I WASN'T HERE YESTERDAY. BUT OBSERVING WHAT'S GOING ON HERE WE KIND OF TRIED TO LUMP UP STATE POLICIES ALL TOGETHER AND TALK IN GENERALITIES WITH THIS AND THAT. I WOULD LIKE TO MENTION A COUPLE OF THINGS. ONE, WHEN WE CREATE MARKET, COSTBENEFIT ANALYSIS JOINING PJM I'M GOING TO SAVE A BILLION DOLLARS, GOOD FOR US, WE NEED ZERO MARGINS TO RELY ON THE LARGER POOL, PLENTY OF BENEFITS, THAT IT'S WHY WE JOINED THE MARKET. AFTER THEY JOINED THE MARKETS AFTER A FEW YEARS NOW EACH STATE STARTS TO COME IN AND SAY YOU KNOW WHAT, WE JOINED THE MARKET, WE HAVE THE BENEFITS, WE'RE NOT TALKING ABOUT THIS, AND STATES CAN DO A LOT OF THINGS. THEY CAN CREATE THEIR OWN TAX POLICIES. THEY CAN, YOU KNOW, DEAL WELL REAL ESTATE TAX AND SO ON BUT THEY CAN NOT DIRECTLY INTERFERE WITH THE MARKETS. AND WE DO LOT OF RENEWABLES, WE RELY ON THE COMPETITIVE PRODUCT, EVERYBODY COMPETES, YOU KNOW, FOR THE LOWEST COST, YOU KNOW, RENEWABLE ENERGY, FOR EXAMPLE. THIS IS AVAILABLE TO EVERYBODY, OKAY? THERE ARE STATE POLICIES AND SUBSIDIES, PARTICULARLY RELATED TO NUCLEAR WITH EXELON, GIVEN TO ONE COMPANY, TO ONE PLANT, SEVERAL PLANTS, AND ANTICOMPETITIVE. HOW WE CAN SIT HERE AND SAY STATES CAN DO THIS KIND OF STUFF IS ANTICOMPETITIVE, NOT IN ELECTRICITY MARKET, IN ANY MARKET. YOU CAN'T JUST SUBSIDIZE ONE PARTICULAR INDIVIDUAL COMPANY, YOU KNOW. BECAUSE THEY WANT TO BE IN BUSINESS. THEY WANT TO STAY IN THE MARKET. THIS IS JUST ANTICOMPETITIVE. AND WE HAVE TO DISTINGUISH THIS KIND OF ACTION FROM GENERIC STATE ACTIONS, OKAY? AND PARTICULARLY, YOU KNOW, NOBODY TALKS ABOUT, YOU KNOW, ZERO, YOU KNOW, ZECs VERSUS RACs. WE CAN'T LUMP THINGS TOGETHER. WE'VE GOT TO APPROACH THIS THING ON THE INDIVIDUAL BASIS. FOR EXAMPLE, RACs IS A COMPETITIVE PRODUCT, COMPETITIVELY BID. REDUCES COST. PRICES IN RENEWABLES IN EARLY 2000 PRICES NOW PROBABLY 20% OF WHAT IT USED TO BE BECAUSE OF INNOVATION BECAUSE OF COMPETITIVE NATURE. NUCLEAR IS GOING UP. NOW 40 YEARS LATER WE TALK ABOUT SUBSIDIZING. IF FERC WOULD NOT INTERFERE, WE HAVE NO MARKET. FOR US TO SAY THE HERE AND PREDICT HOW WE CAN AGREE, HOW CAN WE ACCOMMODATE CERTAIN STATE POLICIES, THERE ARE SOME STATE POLICIES, JUST WE CAN'T ACCOMMODATE. WE CAN'T ACCOMMODATE DUMPING POWER IN THE REGIONAL PLANT BECAUSE SOMEBODY WANTS TO PROTECT SEVERAL THOUSAND JOBS IN PARTICULAR STATES. THIS IS JUST ANTICOMPETITIVE, AS IT IS.

>> FOLLOWING UP ON THAT, GOING BACK TO ARNIE'S ORIGINAL FIVE POSSIBLE PATHS, IT SOUNDED TO ME LIKE THAT'S A HUGE SUPPORT THAT PASSED THREE, SOME THINGS WE SHOULD BE WILLING TO ACCOMMODATE AND OTHERS THAT WE SHOULD NOT, WHEN THERE WOULD BE DIFFERENT TOOLS WE COULD USE. AND I KNOW WE'LL BE TALKING MORE ABOUT THAT PATH IN SOME DETAIL. ONE QUESTION FOR YOU, IT SOUNDED LIKE THE DISTINCTION THAT YOU WOULD WANT TO DRAW THERE IS BETWEEN ANYTHING THAT IS COMPANY OR PLANT SPECIFIC IS UNREASONABLE, BUT SOMETHING THAT IS GENERIC WOULD BE OKAY, EVEN IF IT'S GENERIC IN A WAY THAT IS NARROWLY TO A CERTAIN FIELD AND THEREFORE IN SOME WAYS ARGUABLY DISCRIMINATORY, IS THAT A FAIR CHARACTERIZATION?

>> STATES ALWAYS HAVE CERTAIN RIGHTS. FOR EXAMPLE, THEY CAN EXEMPT POWER PLANTS FROM PLAYING REAL ESTATE TAX, IMPOSE SALES TAX. IN ONE STATE YOU PAY SALES TAX FOR EQUIPMENT, IN OTHER STATES YOU DON'T. THOSE ARE STATE POLICIES. BUT COMPLETELY SUBSIDIZED POWER IN KILOWATT HOUR, BASICALLY TO EXELON YOU SELL THE ELECTRICITY FOR WHATEVER PRICE, EVEN IF YOU LOSE MONEY, WE'LL PAY THE DIFFERENCE. TALK ABOUT CHINA DUMPING. WHAT MORE DUMPING CAN WE TALK ABOUT THAN THIS?

>> WHEN WE COME BACK TO THE THIRD OF THE PATHS TALKING ABOUT WAYS WE WOULD DISTINGUISH ABOUT WHAT KIND OF STATE POLICIES ARE LEGITIMATE AS THEY TALKED ABOUT YESTERDAY AND WHICH ARE NOT, MAYBE WE CAN COME BACK TO IN MORE DETAIL.

>> OKAY.

>> THAD, KATHLEEN, MARK.

>> MR. POLSKY MAKES A VERY GOOD POINT. WE'RE TREATING ALL STATE POLICIES AS EQUIVALENT IN THE DISCUSSION WE'RE HAVING AND THE FACT IS THEY ARE NOT. IF WE ACTUALLY DO PARSE THIS OUT THERE ARE ENVIRONMENTAL POLICIES AND OTHER POLICIES MEANT TO PROTECT JOBS. AND WE KNOW THAT THE NUCLEAR DISCUSSIONS, NEW YORK AND ILLINOIS AND CERTAINLY THE ONES THAT ARE UNDER WAY IN THE STATE HOUSES IN CONNECTICUT AND PENNSYLVANIA AND NEW JERSEY, ARE SUBJECT, THESE ARE PLANTS HAVE BEEN FULLY RECOVERED THEIR COST TWICE, ONCE DURING RESTRUCTURING, A SECOND TIME IN HIGH GAS PRICES, THEY ARE ASKING FOR FULL RECOVERY A THIRD TIME. MANY PLANTS ARE EVEN PROFITABLE. AND WE DON'T HAVE TO HAVE THAT DEBATE HERE, BUT CERTAINLY WE FEEL THAT'S THE CASE IN CONNECTICUT. AND THE EFFORT HERE IS ABOUT JOBS. THERE HAVE BEEN DISCUSSIONS ABOUT JOBS, AND WE CAN BE CLOAKED IN ENVIRONMENTAL BUT WE ALL KNOW AND I THINK THE RECORD WILL SHOW THAT THESE WERE ABOUT JOBS. IT DOESN'T SEEM THE BEST INTEREST OF COMPOSITION AND FERC AND THE COMMISSION HAVING TO THE RIGHT TO OVERSEE COMPETITIVE WHOLESALE MARKETS WHEN ONE STATE IS TRYING TO SUBSIDIZES FOR JOBS AND THAT KIND OF WAY IS ONE PLACE, ENVIRONMENTAL IS A DIFFERENT  ENVIRONMENTAL ATTRIBUTES ARE DIFFERENT. OUR POINT IN THAT, THIS GETS BACK TO YOUR QUESTIONS ABOUT THE HYBRID APPROACH, IS TO PRICE CARBON. MEAN, IT'S AN EXTERNALITY THAT WE'RE GOING FOR. STATES ARE PICKING WIND, OFFSHORE WIND, SO MUCH SOLAR WILL END UP IN A DIFFERENT PLACE. WE THINK THE BEST WAY IS TO PRICE CARBON, THERE'S AN OBJECTIVE TO STATE POLICY ENVIRONMENTALLY DRIVEN VERSUS JOBS WHICH DESERVE SOME GAME WITH THE STATES THAT SURROUND THEM AND I THINK THAT'S A DISTINCTION THAT HAS TO BE MADE HERE AND ALL STATE POLICIES EFFORTS ARE EQUAL.

>> THANK YOU. KATHLEEN?

>> WELL ... [LAUGHTER] FINALLY CALLED ON ME. I APPRECIATE THAT. THERE'S A LOT TO SAY. I'D LIKE TO GET BACK TO YOUR FIRST QUESTION, ARNIE, BUT JUST ON THE QUESTION OF ARE ALL STATE POLICIES CREATED EQUAL, YOU ALL KNOW THIS BUT OBVIOUSLY WE HAVE RECS, SREC, OREC, ZERO EMISSION PROGRAMS BECAUSE THEY HAD NO ALTERNATIVE, CHOOSING TECHNOLOGY AND DECIDING THAT'S THE TECHNOLOGY THEY THINK BECAUSE OF ZERO CARBON WILL DISPLACE EMITTING GENERATION AND DECARBONIZE. THAT'S THE GOAL OF ALL THESE PROGRAMS AND YOU CAN LOOK AT THEM OBJECTIVELY AND DECIDE FOR YOURSELF WHICH ONES ARE LOWER COST, AND WHICH ONES ARE HIGHER COST. BY ANY MEASURE, ZERO EMISSION CREDIT PROGRAMS IN NEW YORK AND ILLINOIS ARE THE LOWEST COST OPTION TO DECARBONIZE, STATES WOULD NOT HAVE TAKEN THE PATH HAD THAT NOT BEEN THE CASE. ASK CHAIRMAN SHEEHAN OR REPRESENTATIVES FROM NEW YORK, THEY HAD PLANTS TO RETIRE OVER TIME THEY HAVE NOT STEPPED IN TO SUPPORT, THOSE ARE EMITTING PLANTS, LET THEM RETIRE, STEPPED IN TO SUPPORT A NUMBER OF NUCLEAR STATIONS BECAUSE THEY WERE NOT SUFFERING A LITTLE BIT, THEY ARE AT RISK OF RETIREMENT. THEY HAD BEEN LOSING MONEY FOR YEARS, CASH FLOW NEGATIVE AND WERE GOING TO DISAPPEAR, THE STATE STEPPED IN BECAUSE IT WAS CHEAPER TO DO THAT THAN TO BRING ON NEW CLEAN GENERATION. THEY DIDN'T STOP. THEY ARE GOING TO PURSUE NEW CLEAN GENERATION THROUGH RPS PROGRAMS AND OTHER MECHANISMS. BUT WHAT THEY DID GOING BACK TO YOUR QUESTION, ARNIE, IS TAKE THE GUIDANCE FROM THIS COMMISSION. WE'RE IN PATH 1 RIGHT NOW. THE THING WE USE MOPAR TO ADDRESS ARE MARKET POWER. THAT'S NOT WHAT THE STATES DID HERE. AS I JUST DESCRIBED. SO WHAT THEY LOOKED AT AND AS YOU KNOW WE'VE BEEN HERE TALKING TO YOU ABOUT THE IMPACT OF STATE POLICIES, THAD MENTIONED WHAT'S BEEN GOING ON IN CALIFORNIA, AS A RESULT OF A NUMBER OF THINGS THAT HAVE HAPPENED IN STATE POLICY, AND THROUGH PRICE FORMATION. AND WHAT WE'VE GOTTEN IN TWO YEARS AGO WE HAD AN ORDER ON A COMPLAINT FILED ABOUT AN EMITTING PLANTS THAT GOT AN RMR BECAUSE IT WAS NEED THE SYSTEM BUT NOT PICKED UP IN THE MARKET. THE QUESTION WAS SHOULD THAT UNIT BE ABLE TO BID ITS COST INCLUDING THE RMR PAYMENTS INTO THE CAPACITY MARKET. AND THE COMMISSION, YOU KNOW, I DON'T THINK IT'S FAIR TO SAY THAT THE COMMISSION HAGS HAD NO ROLE. I THINK YOU'VE DONE WHAT YOU COULD. BUT IN THAT CASE YOU SAID THE MARKET WAS NOT PRICING THE THING THAT IT NEEDED THROUGH THE CAPACITY MARKET, THE RMR REPRESENTS SOMETHING OUTSIDE THE MARKET THAT IT WAS FAIR FOR THE GENERATOR TO REFLECT IN ITS BID. SIMILARLY, WITH AN ORDER YOU ISSUED IN THE CALIFORNIA ISO WHEN THEY ASKED TO DROP THE BID FROM $30 TO 150, THE COMMISSION SAID WE'RE GOING TO DO THAT. RENEWABLE UNITS IN THAT CASE HAVE LEGITIMATE OPPORTUNITY COSTS, THAT THEY SHOULD BE ALLOWED TO PUT IN THE BID. WHEN SOMETHING IS NOT PRICED IN THE MARKET, THAT IT'S FAIR AND ACTUALLY ECONOMICALLY EFFICIENT FOR A UNIT TO RECOGNIZE THOSE COSTS WHEN IT'S TAKING ITS BID TO THE MARKET. WE'RE AT PASS 1. THE STATES THAT I'VE REFERENCED EARLIER HAVE TAKEN YOUR GUIDANCE. THEY HAVE COME UP WITH A PROGRAM THAT IS NOT KEEPING US TRUE TO OUR COST. WE SHOULD TELL THE TRUTH HERE. THESE ARE ATTRIBUTE PAYMENTS IN THE CASE OF ILLINOIS, $11.50 A MEGAWATT HOUR, IF PRICES GO DOWN THE ZEC DOES NOT GO UP, IF OUR COSTS GO UP THE ZEC DOES NOT GO UP. IT'S A CAPPED PAYMENT BASED ON ENVIRONMENTAL VALUE THAT THE UNITS ARE PROVIDING TO THE STATES. THEY ARE FOLLOWING YOUR GUIDANCE DOING WHAT THEY COULD DO IN THE BE A ABSENCE OF PATH 4, AS WE DISCUSSED YESTERDAY AND YOU'RE HEARING FROM PANELISTS, THE PLACE WE SHOULD GO. WE SHOULD BE PRICING IN THE ATTRIBUTES. BUT YOU CAN'T CHANGE THE RULES ON THEM IN THE MIDDLE OF THE GAME UNTIL YOU'RE WILLING TO GO DOWN PATH 4. AND IF YOU DID GO DOWN PATH 4, PARENTHETICALLY, ALL THE UNITS WE'RE TALKING ABOUT HERE WOULD BE IN MONEY. SO IT'S NOT SKEWING THE MARKET TO KEEP THEM GOING WHILE YOU WORK ON PATH 4.

>> GOING BACK TO THE QUESTION, ON PATH 1 THOUGH, IN YOUR VIEW MARKETS STAY WHETHER THEY, ENERGY AND CAPACITY MARKETS WORK THE WAY THEY WORK, OR DO WE NEED TO MOVE TO ALONG PATH 1 RESIDUAL CAPACITY MARKET?

>> I DON'T THINK WE NEED TO CHANGE THE WAY WE DO ENERGY MARKETS, ALTHOUGH THERE ARE PROPOSALS TO ADDRESS THE NEGATIVE PRICING PHENOMENON. IN AMERICA YOU SHOULDN'T BE PAYING SOMEONE TO TAKE YOUR STUFF SO LET'S FIX THAT PROBLEM. IT'S A FAIR QUESTION. WOULD WE NEED CHANGES DOWN THE ROAD IN THE CAPACITY MARKET, WHETHER YOU HEARD TODAY OR OTHERS TO ADJUST WHAT WE DEFINE AS CAPACITY OR HOW MUCH CAPACITY WE'RE BUYING, THOSE ARE POTENTIAL CHANGES IF WE SOMETIME DOWN THE ROAD FIND PEOPLE UNWILLING TO INVEST AND LIKE NEW ENGLAND HAS DONE ADD SOME PRICE LOCK MECHANISM. THOSE ARE ALL THINGS THAT IF YOU STAY ON PATH 1, THAT THE RTOs  IF THERE'S NEW RESOURCE, RIGHT NOW WE'RE SEEING PEOPLE BELOW THE COST OF NEW ENTRY, SHOULD BE CONSIDERED AND THOSE WOULD HAVE TO  WE WOULD HAVE TO HAVE PROPOSALS COME FORWARD FROM THE RTO.

>> CHAIRMAN?

>> I WANT TO ASK THE QUESTION ABOUT SOMETHING YOU SAID WHICH DESCRIBED THE PROGRAM OF ZERO EMISSIONS CREDITS AS KIND OF A FORCING FUNCTION THAT THE STATES HAD TO DO BECAUSE THE MARKETS HADN'T DONE WHAT THEY WERE SUPPOSED TO DO WHICH WAS PRICE THE ATTRIBUTE, BECAUSE TODAY I'M VERY FOCUSED ON PROCESS. YOU KNOW, THERE'S ALL THESE IDEAS. HOW DO WE GET FROM HERE TO HERE? SO I GUESS IF THE FORCING FUNCTION IS IF THE STATE DOESN'T LIKE WHAT THE MARKET IS GIVING IT, IT CAN JUST START DOING THINGS BECAUSE  IT REALLY CARES AND IT REALLY DOESN'T LIKE WHAT THE MARKET IS GIVING IT, SO HOW WILL WE EVER GET ON A PATH TO PRESERVE THE MARKET, MAKE THE MARKET WORK FOR RELIABILITY, IF THAT'S WHAT WE WANT? I THINK THE MINIMUM OFFER PRICING RULE IS MISNAMED. IT'S REALLY A QUESTION OF IN THE MARKET, OUT OF THE MARKET, HOW WILL WE EVER GET  SHOULD THE FORCING FUNCTION BE THE OTHER WAY, ASSUMING WE HAVE A QUORUM, IF WE DID SOMETHING AND THEN BROUGHT PEOPLE TO THE TABLE TO REDESIGN THE MARKET. BECAUSE I'M JUST WONDERING HOW WILL YOU EVER REDESIGN THE MARKET. I THINK THE STATE HAVING THE FORCING POWER MIGHT JUST LEAD TO THE END OF THE MARKET, IS MY CONCERN. I MEAN, I  I'M JUST WORRIED HOW DO YOU GET FROM FROM THAT  HOW DO YOU GET IT BACK? DOES THAT MAKE SENSE?

>> IT'S HARD TO FACE THE MIC AND YOU AT THE SAME TIME. [LAUGHTER] IF PEOPLE CAN HEAR ME I CAN TRY TO SPEAK UP. WELL, I TRIED TO SIGNAL THIS YESTERDAY. I KNOW IT MAKES PEOPLE UNCOMFORTABLE. BUT I DON'T THINK WE RESTRUCTURED THE MARKETS OVERNIGHT WITHOUT A FAIR AMOUNT OF WORK GOING INTO A GIVE AND TAKE IN TERMS OF WHAT'S THE BENEFIT, WHAT'S THE COST. DIDN'T MOVE TO CAPACITY MARKETS WITHOUT A HUGE AMOUNT OF PAIN AND SUFFERING AND AMOUNT OF TIME THAT WENT BY. IN BOTH CASES, THE COMMISSION WAS INVOLVED TO SOME EXTENT. THAT'S DIFFERENT THAN WHAT WE'RE SEEING NOW IN THE PENDING MOPAR CASE WHERE SOMEONE DUMPED A COMPLAINT ON YOU AND YOU'RE SUPPOSED TO FIGURE OUT WHAT TO DO. IT OBVIOUSLY NEEDS TO BE MORE COMPREHENSIVE. THE LAST POINT IS YOU DON'T HAVE A CRISIS IN FRONT OF YOU. YOU'RE HEARING PEOPLE SAY WE'RE NOT GOING TO GET INVESTMENT. READ THE ANALYST REPORT ABOUT THE PJM AUCTION, EXPECTING 4 GIGAWATTS TO COME IN WITH THE ZEC BILL. TAKE YOUR TIME TO FIGURE OUT WHAT THAT PROCESS IS. DON'T FEEL LIKE YOU HAVE TO JUMP IN TO SOMETHING THAT'S GOING TO BE CHARACTERIZED WITH FORCE AND FUNCTION OR CHARACTERIZE IT AS CHANGING THE RULES IN THE MIDDLE OF THE GAME. BUT TAKE THE TIME TO FOLLOW THAT PROCESS. YOU HAD A LOT OF STATES HERE YESTERDAY TALKING WILLING TO SIT DOWN AND DO IT. I SAY TAKE THEM AT THEIR WORD.

>> JUST A COUPLE COMMENTS. IT MADE ME NERVOUS IN YOUR WRITTEN TESTIMONY AND WHAT YOU JUST SAID OF LIKE YOU DON'T HAVE A RELIABILITY PROBLEM SO WAIT UNTIL YOU DO, THEN DO SOMETHING BECAUSE I FEEL LIKE UNLESS  I DON'T WANT TO THROW THE RESOURCE ADEQUACY BALL. I I DON'T WANT TO BE TOM BRADY UNLESS I KNOW FOR SURE SOMEONE IS GOING TO CATCH THE PASS AND I'M NOT GOING TO THROW AN INTERCEPTION OR SOMETHING. I WANT TO MAKE SURE SOMEBODY TOOK IT, YOU KNOW. AND I ABSOLUTELY AGREE WITH ALL THE PEOPLE WHO SAID TALK TO THE STATES AND ALL THAT. I WORRY, I WORRIED YESTERDAY THIS WOULD BE A COLLABORATIVE. IT WOULD BE A SLOW PROCESS. I MEAN, I GUESS WE HAVE A DISAGREEMENT ON MAYBE ON THE URGENCY, BUT I'M JUST WORRIED ABOUT  I'LL SHUT UP AND LET YOU GET BACK TO THE QUESTIONS  HOW YOU GET FROM HERE TO SOMEWHERE.

>> WHAT ARE THE THINGS YOU'RE GOING TO WORRY ABOUT FIRST?

>> A QUORUM WOULD BE HIGH. [LAUGHTER]

>> AFTER THAT. NUMBER 2, YOU HAVE A SENSE OF URGENCY ON MY SIDE OF THE TABLE TOO, CHAIRMAN. WE WOULD NOT HAVE BEEN IN A PLACE IN ILLINOIS OR NEW YORK IF THERE WAS NOT A SENSE OF IMMINENT DANGER TO THE STATION SHUTTING DOWN QUITE OBVIOUSLY. THE STATES WOULD NOT HAVE TAKEN THE STEPS THEY HAD IF THEY NOT BELIEVE THAT WERE THROUGH AND THEY WOULD LOSE THE ZERO EMISSION BENEFIT. SO THE QUESTION IS SHOULD YOU STEP IN TO STOP THE STATES FROM HAVING DONE WHAT WE ALL AGREE WOULD BE THE ECONOMICALLY EFFICIENT THINGS TO DO, WHICH WILL HAVE THE CONSEQUENCE 

>> (INAUDIBLE).

>> I THINK IF YOU LOOK AT THE MASS, COST PER TON OF CARBON ABATED BY A NUCLEAR SUPPORT PROGRAM VERSUS A WIND, SOLAR, ROOFTOP SOLAR PROGRAM, ILLINOIS YOU'LL HAVE THE ANSWER TO THAT QUESTION. DO YOU WANT TO STOP THE STATES NOW WHICH WILL HAVE THE CONSEQUENCE OF HAVING THE STATIONS RETIRE WHEN YOU DON'T HAVE AN IMMINENT PROBLEM IN FRONT OF YOU. I'M NOT SUGGESTING THAT YOU WAIT UNTIL THE LIGHTS GO OUT. I'M SUGGESTING YOU LOOK FORWARD TO THE SIGNALS IN FRONT OF YOU. WITH THIS PROGRAM IN PLACE YOU'RE SEEING AND USE THE TIME THAT YOU HAVE NOT YEARS AND YEARS TO TAKE THE ACTION THE STATES ARE ASKING YOU TO TAKE. AND IF YOU'RE GOING TO TRY TO CHOOSE AMONG THE PROBLEMS IN FRONT OF YOU, DON'T CHOOSE TO MITIGATE THE ONE THAT'S THE LEAST COST ALTERNATIVE PERCUSS MER.

>> THANK YOU. THE ONLY VERB, WHAT I WANT TO DO, SOMETIMES WE HAVE TO DO THINGS WE HAVE TO DO. AND THAT'S WHY I'M HOPING TO GET GOOD PROPOSALS. I'LL SHUT UP FOR A WHILE.

>> I'VE GOT A FOLLOWUP QUESTION FOR KATHLEEN, IF I MAY. SITTING HERE LISTENING TO THE CONVERSATION IT SEEMS LIKE THERE'S SOME ANGST OVER HOW WE MANAGE THROUGH THE TRANSITION AND WHAT STEPS CAN BE TAKEN TO FOR MORE OF COMPREHENSIVE LOOK AT STATE INTERESTS. PRESIDENT MROZ MENTIONED YESTERDAY AT THE TIME OF INTEGRATED RESOURCE PLANNING, SIT DOWN, FIGURE OUT WHAT YOU NEED, IF THAT'S MISSING WE ALSO HEARD A LITTLE BIT YESTERDAY ABOUT PRINCIPLES AND HAVING SOME SORT OF IDEA OF WHERE WE WANT TO GO, SO I'M WONDERING, KATHLEEN, IF THERE'S AN OPPORTUNITY FOR COMMISSION STAFF TO WORK ON THE IDEA OF WHAT COMMON PRINCIPLES COULD BE WHETHER THAT WOULD BE HELPFUL FOR GETTING OUT  GETTING AHEAD OF COMMISSION HONORABLE FOR SOME STATEMENT OF THAT IF ANYTHING LIKE THAT WOULD HELP ADDRESS WHAT, AGAIN, THE TENSION I'M HEARING OF STATES WILL CONTINUE TO DO WHAT THEY NEED TO DO, GIVEN POLICY OBJECTIVES AND FERC WILL CONTINUE TO REACT UNLESS WE HAVE A WAY OF ADDRESSING BOTH THOSE THINGS.

>> IF YOUR QUESTION IS SHOULD WE WORK ON SOME PRINCIPLES, COLLABORATIVELY, TO GUIDE THE DIALOGUE AS WE GO FORWARD, I THINK THAT'S A GREAT IDEA. OBVIOUSLY THERE WILL BE DECISIONS THAT HAVE TO BE MADE DOWN THE ROAD BUT IF YOU CAN SORT OF PUT OUT SOME GUIDE POSTS ON THE FRONT END, I THINK THAT MAKES SENSE. I THINK THE PROBLEM OF COURSE IS GETTING SOME ALIGNMENT ON WHAT THE PRINCIPLES SHOULD BE. YOU LAID OUT SOME GOOD ONES YESTERDAY. ARE WE TAKING INTO ACCOUNT THE COST TO CUSTOMERS? ARE WE DEALING WITH THE SOLAR SUPPLY CAME UP YESTERDAY, ACTING IN A WAY ECONOMICALLY EFFICIENT, DISCRIMINATING WITH SOURCES OF ZERO EMISSION, YOU'LL HEAR OTHER SUGGESTIONS FROM MY COLLEAGUES IN TERMS OF WHAT PRINCIPLES SHOULD BE. BUT, YOU KNOW, I SEE NO REASON WE SHOULDN'T GO DOWN THAT PATH AND TRY TO WORK ON THAT.

>> WE'LL GET BACK TO THE LINEUP. CHAIRMAN?

>> I APPRECIATE THE OPPORTUNITY TO JOIN THE DISCUSSION AND APPRECIATE CONVENING THE TECHNICAL SESSION. I HAVE TO GO THROUGH A DISCLAIMER BRIEFLY. CHAIRMAN OF THE COMMISSION, MY VIEWS HERE ARE MY OWN, NOT THE VIEW OF ANY OF THE OTHER BOARDS OR AGENCIES THAT I SERVE WITH. I THINK IT'S HELPFUL IN HEARING THE DISCUSSIONS GOING AROUND THE TABLE RIGHT NOW, AND I DON'T WANT TO RETREAD YESTERDAY, BUT IN MAINE'S EXPERIENCE WE WENT THROUGH RESTRUCTURING, WE VERY MUCH SUPPORTED MARKETS, WE HAD A GOOD EXPERIENCE THERE GOING FORWARD WITH MARKETS. WE'RE GETTING GOOD RESULTS OUT OF MARKETS. I GO IN FRONT OF OUR LEGISLATURE EVERY YEAR, NEW SESSION, EVERY TWO YEARS, AND I GO THROUGH THIS CONVERSATION ON MARKETS AND THE IMPORTANCE OF MARKETS. AND AT THE END OF THE SESSION WE GET, YOU KNOW, WE USED TO DO INTEGRATIVE PLANNING, DON'T ANYMORE. THAT NOW HAPPENS AT STATE LEGISLATURES, AT THE END OF THE SESSION WE HAVE A LOT OF BILLS THAT RELATE TO THE OUT OF MARKET PURCHASES OF VARIOUS TYPES OF RESOURCES FOR A WHOLE VARIETY OF REASONS OTHER THAN JUST CARBON. I WANT TO MAKE THAT VERY CLEAR. A WHOLE LOT OF REASONS FOR THOSE OTHER THAN CARBON. WHEN WE TALK ABOUT THE NOMOPAR PATH GOING BACK TO THE QUESTION IN FRONT OF US HERE, I THINK THIS BECOMES INTEGRATED WITH HOW WE PROGRESSED INTO THE CAPACITY MARKETS. WE'VE TAKEN INCREMENTAL STEPS TO ACCOMMODATE. THERE WAS SOME LAUGHTER LINKING UP THE IDEA OF ENERGY ONLY MARKET BUT THERE ARE SOME PARALLELS HERE THAT I THINK ARE IMPORTANT BECAUSE WHEN YOU LOOK AT WHAT ISONEW ENGLAND HAS DONE WITH SCARCITY PRICING ONE OF THE REACTIONS WAS AGAINST SCARCITY PRICING BUT IF YOU COMBINE WHAT WE'RE DOING WITH SDM FACTORS, COMBINE IN RESERVES, COMBINE ALL OF THOSE WE'RE APPROACHING $9000 IN ISO NEW ENGLAND FOR SCARCITY PRICING. SO THERE'S AN OVERLAY THAT I THINK IS USEFUL TO THINK ABOUT BETWEEN WHAT WE'RE DOING IN A CAPACITY MARKET TO GET PRICE SIGNALS, TO GET PERFORMANCE, BECAUSE IT WAS DAMPENING PERFORMANCE, AND IT WAS DAMPENING PRICES. SO I DON'T  I THINK WE HAVE TO LOOK WHEN WE LOOK AT NO MOPAR, WE HAVE TO TAKE A DEEPER LOOK AT ALL OF THOSE RULES AND WHAT ASPECTS OF THAT WE CAN BRING FORWARD IN MARKET RULE CHANGES. IN THE FACE OF AN OVERLAY THAT WE'RE FACING OF LEGISLATIVE ACTION, AND LEGISLATIVE ACTION THAT'S LOOKING AT PPAs FOR A WHOLE VARIETY OF REASONS, WHEN YOU LOOK FORWARD TO WHAT THESE MARKETS ARE GOING TO LOOK LIKE, YOU KNOW, WE'VE DONE SOME STUDIES IN NEW ENGLAND, ONE OF THE STUDIES LOOKED AT CAPACITY MARKETS, YOU KNOW, RIGHT NOW WE'RE MAYBE 16 84 CAPACITY VERSUS ACKNOWLEDGER. ONE LOOKED AT 45, 55, 55 ENERGY, THAT'S JUST GOING TO BRING THIS WHOLE ISSUE OF HOW CAPACITY MARKETS WORK TO THE FOREFRONT AND WHERE THAT ISSUE BECOMES IMPORTANT IS WHEN YOU LOOK AT PRICE SIGNALS TO THE PLAYERS IN THE MARKET, AND ONGOING DISCUSSION BETWEEN STATES OF ADMINISTRATIVE SOCIALIZATION OF COSTS, WE GET INTO ALL KINDS OF COST QUESTIONS AMONG THE STATES, HOW WE'RE GOING TO DIVIDE UP THESE THINGS. I THINK IN THE CAPACITY MARKET FUTURE WHERE YOU SEE 40, 45% IN THAT, THOSE DISCUSSIONS ARE GOING TO BECOME EVEN MORE IMPORTANT AND SO MAYBE PART OF OUR DISCUSSION HERE SHOULD BE FOCUSING ON WHAT THAT FUTURE LOOKS LIKE WITH RESERVES, ANCILLARY SERVICES, AND MORE OF PRICE SIGNALS IN ENERGY MARKETS.

>> I JUST WANT TO SAY FOR THE RECORD I WASN'T LAUGHING AT ENERGYONLY MARKETS. I WAS LAUGHING WHEN SOMEBODY SAID WHAT'S A GOOD MARKET AND THEY CHOSE THE ONLY ONE WE DON'T REGULATE. I WAS MORE GROANING. [LAUGHTER]

>> AND I DID THAT, I WAS LAUGHING BECAUSE JOHN WOOD RAISED THE ONE WE HAVE NO JURISDICTION OVER. THE.

>> OTHER FOLKS HAVE COMMENTS, I'D LIKE TO MOVE ON JUST BECAUSE WE'VE GOT A BUNCH OF STUFF THAT WE'RE TRYING TO COVER TODAY. AND MOVE TO THE  WE'VE HEARD A LOT ABOUT KIND OF  ANY ACCOMMODATION IS BAD ACCOMMODATION. SO WE'LL GET TO THE OTHER PATH. BUT FOR THE NEXT STEP OVER, WHERE WE COULD ACCOMMODATE SOME STATE ACTIONS, WE FIND SOME WAY TO ACCOMMODATE SOME ACTIONS, BUT MY SENSE IS FROM PREFILED COMMENTS, FROM THE PROCESS FOLKS HAVE BEEN GOING THROUGH ALREADY, THAT SOME OF YOU THAT REALLY DON'T LIKE THE NO MOPAR PATH ARE A LITTLE MORE COMFORTABLE WITH THE LET'S FIND A WAY TO ACCOMMODATE, WHERE ACCOMMODATE AGAIN IS ALLOW RESOURCE TO GET A CAPACITY SUPPLY OBLIGATION SO THE CUSTOMERS GET THE BENEFIT OF THOSE STATESUPPORTED RESOURCE FOR THE PURPOSE OF CAPACITY. BUT WHEN YOU'RE SETTING THE PRICE, SET THE PRICE AS THOUGH THAT STATE SUPPORT DIDN'T OCCUR. OH WOULD LIKE TO EXPLORE THAT PATH A LITTLE BIT MORE. GET A SENSE FOR WHAT THAT ACCOMMODATE MARKET DESIGN LOOKS LIKE, AND IF YOU WEREN'T COMFORTABLE WITH MOPAR BUT ARE COMFORTABLE WITH THAT ACCOMMODATES PATH, WHAT MAKES YOU MORE COMFORTABLE, AND THEN AGAIN A LITTLE BIT ON WHETHER THAT'S A STOPPING POINT, WHETHER, YOU KNOW, ACCOMMODATE IS THE END OF THE PATH, OR THERE'S A NEED TO MOVE TO ANOTHER PATH EVENTUALLY. ABE?

>> YEAH, GREAT, THANK YOU. SO WE HAVE A FIVEPART POLICY PRESCRIPTION, PEOPLE PUT ANYTIME THREE, I'LL MAKE IT FIVE. THE FIRST IS ADMIT WE HAVE A PROBLEM. THIS GETS BACK TO THE JURISDICTIONAL ISSUE. I DISAGREE WITH KATHLEEN THAT NUCLEAR IS DE FACTO, THE CHEAPEST SOURCE OF CARBON ABATEMENT. I HAVE NUMBERS THAT SHOW YOU COULD REPLACE NUCLEAR IN NEW YORK AT HALF PRICE WITH RENEWABLES, 25,000MEGAWATT FOR THE SAME PRICE WITHOUT USING COMPETITIVE PROCESS OTHER TESTING AGAINST THE MARK. THE FIRST THING TO DO THOUGH IS TO PUT THAT QUESTION WHERE IT BELONGS, WHICH IS AT THE COMMISSION. YOU'LL PROBABLY BELIEVE HER, SHE PROBABLY KNOWS MORE. [LAUGHTER] BUT THE FIRST THING WE HAVE TO DO IS SAY THIS IS WITHIN FERC'S JURISDICTION SO WE CAN COME IN AND STEP UP AND SAY AND LOOK AT THESE PROGRAMS AND SAY ARE CAPTIVE RATE PAYERS GETTING ACCESS TO JUST AND REASONABLE RATES AND NONDISCRIMINATORY AND NOT PREFERENTIAL, THAT'S NOT AN OPTION. THAT'S THE DIRECTIVE, THE COMMISSION'S DUTY TO MAKE THAT ANALYSIS. THE FIRST THING IS LOOK TO THE SUPREME COURT AND SAY THE PROGRAMS LIKE THE NUCLEAR THAT TARGET OR AIM AT OR DIRECTLY AFFECT THE WHOLESALE MARKET ARE WITHIN FERC'S JURISDICTION. THAT'S STEP ONE. STEP TWO IS THAT WE NEED LIKE THE SIXMONTH TIME FRAME OR REALLY THE DAY AFTER WE GET QUORUM BACK TO STEP IN AND STAUNCH THE BLEEDING. THE COMMISSION NEEDS TO COME OUT VERY STRONGLY AND SAY THAT OUTOFMARKET ACTIONS WILL BE MOPARED. THAT'S NOT AN END. THAT'S A MIDDLE STEP. THAT'S THE "LET'S RESTORE JUST AND REASONABLE RATES AS QUICKLY AS WE CAN." I WAS SHOCKED TO HEAR THE PRESIDENT OF THE NEW YORK ISO SAY YESTERDAY HE DOESN'T THINK THE RATES ARE JUST AND REASONABLE BUT IT'S GOING WE HAVE THREE YEARS TO WORK OUT A SOLUTION. NO, THIS IS SOMETHING THAT NEEDS TO HAPPEN ALMOST IMMEDIATELY. WITHOUT THOSE ACTIONS WE'RE NOT MEETING OUR STATUTORY OBLIGATIONS. THE THIRD IS TO REALLY DIRECT THE ISOs TO BEGIN INCORPORATING THE STATE OBJECTIVES INTO THE WHOLESALE MARKETS. YOU'RE SICK OF HEARING US TALK ABOUT TWOTIER PRICING, THAT'S A WAY OF PROTECTING AND ENSURE INCUMBENTS GET JUST AND REASONABLE RATES AND ACCOMMODATING THE STATES BUT THAT'S NOT THE END OF THE ROAD. HOW DO WE USES COMPETITIVE MARKETINGS WITH FERC OVERSIGHT TO FACILITATE OBJECTIVES THE STATES WANT, BACK TO THE COOPERATIVE FEDERALISM ROLE WE TALKED ABOUT YESTERDAY. WE NEED THE STATES THOUGH TO COME TO THE TABLE AND SAY, HEY, WE DON'T JUST WANT THAT POWER PLANT; WE WANT THE ATTRIBUTES OF THAT POWER PLANT. ONCE WE'VE IDENTIFIED OR TRANSLATED THOSE STATUTORY GOALS INTO A MARKET PRODUCT, WE CAN REDESIGN THE FERC MARKET. SO THAT'S THE FOURTH STEP. AND THEN FIFTH STEP WHICH IS FUNNY IS THE ADAPT, TO A FUTURE, WHERE 50, 60, 70% OF THE WHOLESALE MARKETING IS A ZERO MARGINAL COST RESOURCE. WIND, SOLAR, NUCLEAR IS GOING TO BE ON THE MARGIN, QUITE A BIT, YOU KNOW, IF THE ENVIRONMENTAL GOALS GO THROUGH. SO THAT'S THE FIFTH STEP. SO IT'S NOT ONE OR THE OTHER. WE NEED TO MOVE THROUGH THAT LIST BUT WITH THE GOAL OF EVENTUALLY BRINGING IN THOSE STATE MANDATES, INCORPORATING THEM, PUTTING A PRICE ON THEM AND ALLOWING EVERYBODY TO COMPETE BECAUSE THAT'S WHAT WE NEED TO DO TO ATTRACT PRIVATE CAPITAL, TO AVOID PUTTING BURDENS ON RATE PAYERS AND HAVING THEM TAKE TECHNOLOGY RISKS, AND RISKING A GENERATION OF STRANDED COSTS. IT'S THE FIVEPART PROCESS WHICH THE IMMEDIATE ACCOMMODATION IS TO MOPAR THE NUCLEAR AND MOPAR OTHER RESOURCES LIKE DUNKIRK IN NEW YORK, A FOSSIL FUEL RESOURCE KEPT AROUND BY THE STATE WITH A CONTRACT FOR JOBS AND TAXES. AND IT IS APPROPRIATE FOR FERC TO COME IN. IN FACT I SAY IT IS MANDATORY UNDER THE FEDERAL POWER ACT TO SAY THAT THOSE RESOURCES ARE WITHIN YOUR JURISDICTION. IF YOU SAY IT'S NOT, I DON'T KNOW WHERE WE GO.

>> TO FOLLOW UP.

>> PLEASE.

>> ACCOMMODATE, WHAT I JUST HEARD YOU SAY ABOUT NUCLEAR AND YOUR OWN PLANT, BOTH OF THOSE ARE EXISTING PLANTS. DO YOU HAVE A DIFFERENT POINT OF VIEW ON WHETHER WE'RE ACCOMMODATING JUST NEW RESOURCES OR WE'RE ACCOMMODATING BOTH NEW RESOURCES AND EXISTING RESOURCES? MAYBE THIS GOES BACK TO THE DISCUSSION YESTERDAY WHAT ROLE WE NEED THE CAPACITY MARKET TO PLAY AND WHETHER THE PRIMARY OLD IS ORGANIZED EXIT OR WHETHER IT'S BRINGING NEW RESOURCES?

>> EXIT AND ENTRY ARE TWO SIDES OF THE SAME COIN. IT'S A CYCLE OF LIFE. BIRTH AND DEATH. YOU NEED THE TWO MARRIED TOGETHER AND TREAT THEM THE SAME. THIS IDEA SOMEHOW WE WANT TO GET AWAY FROM WHAT'S A LEGITIMATE STATE GOAL, I HATE THAT TERM. IT'S A BAD TERM. WHAT WE NEED TO DO IS COME IN AND SAY THAT EVERY STATE INITIATIVE HAS TO BE RUN THROUGH THE WHOLESALE MARKET IN A WAY THAT RESPECTS THE STATE'S GOAL BUT ALSO MEETS THE COMMISSION'S STATUTORY MANDATE TO ENSURE JUST AND REASONABLE RATES. WHAT DOES THAT MEAN FOR A PROJECT BEING KEPT AROUND FOR PRICE EXPRESSION OR JOB BENEFITS OR HAS A VENEER OF ENVIRONMENTAL, THAT NEEDS TO COME IN AND BE ACCOMMODATED IN A WAY THAT ENSURES JUST AND REASONABLE RATES FOR RATE PAYERS AND THE SUPPLIERS. AND UNLESS WE DO THAT, THAT'S GOING TO TAKE COMPREHENSIVE REFORM, BUT THAT'S EASY. THAT PART IS RELATIVELY STRAIGHTFORWARD. IN FACT THE COMPLAINTS HAVE BEEN FILED AT THE COMMISSION ASKING YOU TO DO THAT. AS SOON AS WE GET QUORUM BACK WE CAN DO THAT. IT'S THE NEXT STEP WHERE WE ACTUALLY INVITE THESE RESOURCES IN AND TRY TO MAKE THEM PART OF THE MARKET. AGAIN, THINK TWOTIER PRICING ALLOWS THE RESOURCE TO TAKE A CAPACITY SUPPLY OBLIGATION WITHOUT COMPLETELY CRATERING THE PRICE. WE GET THE BENEFITS OF COMPETITIVE MARKETS, IT'S TRUE, IT'S LESS LUCRATIVE FOR US, WE DON'T LIKE IT, BUT IT'S A MARRIAGE, A COOPERATIVE APPROACH. OTHERS THAT ISO NEW ENGLAND FLOATED, PJM SOMETHING SIMILAR. ONCE WE GET THAT SOLVED COOPTIMIZE FORWARD PROCUREMENT. I HOPE ROBERT WILL TALK MORE THIS AFTERNOON ABOUT INTEGRATED CAPACITY PROCUREMENT. IF WE COOPTIMIZE AND SECURE FOR ALL THE VARIOUS CONSTRAINTS THE STATES WANT I THINK THAT'S ULTIMATE PATH FORWARD BUT WE HAVE TO SAVE THE COMPETITIVE MARKETS FIRST OR ELSE WE'RE GOING TO LOSE BENEFITS AND LIKE THE NUCLEAR IT GOES AWAY, IT'S NOT COMING BACK. IF COMPETITIVE MARKETS GO AWAY, THEY ARE NOT COMING BACK EITHER.

>> THAD AND LISA, DO YOU HAVE COMMENTS ON OUR ACCOMMODATE PATH?

>> YES. AND I WILL. I'LL USE  I'LL COMMENT ON NEW ENGLAND AND DRAFT PROPOSAL BECAUSE THAT'S AN EXAMPLE OF ACCOMMODATIVE PATH, THE MOST TANGENT OUT THERE RIGHT NOW. BEFORE I DO THAT, I DO WANT TO ECHO ABE THOUGH. IT'S VERY CLEAR, YOU KNOW, $11 SUBSIDY TO ONE PLANT OVER ANOTHER PLANT, BY THE WAY WE'RE LOW CARBON TOO, MUCH LOWER CARBON THAN A BUNCH OF COAL PLANTS. AND SO BUT WE'RE NOT GETTING SUBSIDIES. IN OUR SECTOR, CAPITAL MARKETS ARE NOT ALLOWING ANY OF THE PUBLIC COMPANIES TO INVEST $1 IN THESE MARKETS BECAUSE OF WHERE WE ARE. SO I JUST WANT TO BE CLEAR THERE'S A LITTLE BIT OF CASE KATHLEEN MADE FOR, YOU KNOW, LET'S PUT IT IN PLACE, WE'LL HAVE TIME TO FIGURE IT OUT. THERE IS IRREPAIRABLE HARM, IT'S DIFFERENT WHERE YOU HAVE EXISTING RESOURCES UNDER THE SAME RULES THAN IT IS MARKETS WHERE THEY ARE NOT, JUST BECAUSE EXELON WAS MORE SUCCESSFUL IN ILLINOIS THAN AP OR FIRST ENERGY TRYING TO SAVE COAL PLANTS AND NUCLEAR PLANTS IN OHIO DOESN'T MAKE IT RIGHT. YOU ALL HAVE THE AUTHORITY AS FERC, IT IS YOUR JURISDICTION, AND PLEASE STEP IN. THIS IS NOT  THIS IS WHIMS OF WHO HAD POLITICAL POWER IN ONE STATE FOR AN EXISTING ASSET IS TO SAVE JOBS AND THREATEN JOBS. THIS IS NOT ABOUT ENVIRONMENTAL POLICY. LET ME TALK ABOUT THE NEW ENGLAND POLICY, WHAT THEY PROPOSE. WE THOUGHT IT WAS A REASONABLE STEP. AND, YOU KNOW, THE IDEA MY QUICK CHARACTERISTIC OF WHAT THEY WERE TRYING TO ACCOMPLISH IS AN ASSET THAT IS SUBSIDIZED, HAS TO MORE OR LESS BUY ITS WAY IN TO A CAPACITY MARKET, A COMMITMENT, SO YOU'VE GOT ASSETS THAT RETIRE, PUT IT IN PLACE, PREVENTS OVERBUILD IN THE MARKET AND PREVENTS NEGATIVE IMPACT IN EXISTING GENERATION UNLESS SOMEBODY WAS GOING TO LEAVE OTHERWISE. IT'S AN INTERESTING FIRST STEP TO BEGIN DIALOGUE. THERE ARE A COUPLE ISSUES I THINK WE SHOULD POINT OUT PRACTICALLY. FIRST OFF, THE CURRENT PROPOSAL DOES NOTHING TO PREVENT ENERGY MARKET PRICE DISCRIMINATION. SPECIFICALLY IF WE'RE TALKING ABOUT BRINGING A THOUSAND MEGAWATTS OF HYDRO IN FROM QUEBEC, 800 MEGAWATTS OF OFFSHORE WIND OR WHATEVER ELSE WE MIGHT BE TALKING ABOUT THERE, IT'S GOING TO HAMMER THE ENERGY PRICE AND THERE'S NO FEEDBACK. NOW, THIS GETS MORE DETAILED, YOU CAN ARGUING COMBINED CYCLE REFERENCE UNIT VERSUS CT THERE MAY BE A FEEDBACK LOOP, YOU CAN THINK ABOUT OTHER MARKET CORRECTIONS BUT YOU HAVE TO PROTECT THE ENERGY MARKET. THE OTHER PLACE SPECIFICALLY WHERE WE'RE CONCERNED ABOUT IT IS THAT IT CREATES A PROBLEM WHERE ONCE YOU ARE IN, YOU'RE ALWAYS GOING TO BE ZERO. IF YOU'RE A SUBSIDIZED ASSET. WE ACTUALLY THINK WITH THOSE TWO KIND OF POINTS OF WHAT WE THINK THERE NEEDS TO BE DO DIALOGUE AND WORK IT'S A REASONABLE FIRST STEP TO ACCOMMODATION, THE STATES ARE GOING TO DO WHAT THEY ARE GOING TO DO AND PROTECTS RELY BUILD AND GETS WITH MY CAVEATS IN PLACE, GETS YOU CLOSER TO JUST AND REASONABLE THAN JUST ACTUALLY GOING OUT AND EXERCISING BUYERS MARKET POWER AND TRASHING MARKETS TO OTHER ASSETS THAT INVESTED DIFFERENT. IT'S A PLACE TO START, FOR SURE.

>> THANK YOU. LISA?

>> THANK YOU. SO WHEN YOU'RE TALKING ABOUT ACCOMMODATING, THAT IS THE EASIER OF THE TWO. THAT'S COMPARED TO DOING SOMETHING FURTHER DOWN THE LINE. BUT WHAT YOU'RE ESSENTIALLY SAYING IS WE'RE GOING TO HAVE TO MAKE DETERMINATION ALSO ON WHAT IS A LEGITIMATE VERSUS ILLEGITIMATE STATE POLICY. I HEARD CHAIRMAN LAFLEUR SAY YESTERDAY SHE DIDN'T WANT TO BE IN THE GAME MAKING THOSE CALLS. THE OTHER STEP YOU HAVE TO DO IS THEN YOU HAVE TO CREATE A CONSTRUCT THAT DOES FOLD IN ALL OF THESE SPECIFIC THINGS THAT WE WANT, TWOTIER PRICING OR SOME OTHER MECHANISM, MAKING AN ALREADY COMPLICATED MARKET EVEN MORE COMPLEX. WHEN I THINK YOU HAVE AN OPPORTUNITY TO DO SOMETHING THAT IS VERY SIMPLE, AND THAT ALSO TARGETS, ALLOWS STATES TO SOLICIT TIMES OF RESOURCES THEY ARE LOOKING FOR SPECIFICALLY, MICHIGAN IS BILATERAL CONTRACTING, YOU'VE GOT A WILLING BUYER AND SELLER LOOKING FOR PARTICULAR ATTRIBUTES OF PARTICULAR RESOURCES, AND ALLOW THEM TO PURCHASE THAT BUT WE HEARD KATHLEEN SAY STATES ARE DOING THINGS BECAUSE THEY DON'T FEEL LIKE THEY HAVE A CHOICE AND I AGREE WITH HER. I THINK THE CURRENT CAPACITY CONSTRUCT HAS GOTTEN SO INFLEXIBLE THAT THEY ARE ONLY ROW LYING ON MARKET DESIGNER'S VISION. I THINK IT IS BUYER COLLABORATION TO GET THERE BUT I DON'T THINK WE SHOULD KEEP BUILDING ON THE DIFFERENT TWEAKS AND DIFFERENT FIXES TO MAKE AN EVEN MORE COMPLICATED MARKET WHEN WE HAVE OTHER ALTERNATIVES. WHEN WE'RE TALKING ABOUT BILATERAL CONTRACTING, THE COMMISSION SHOULD REALLY USE AS A BENCH MARK THE VALUE OF BILATERAL CONTRACTING, THAT IT WOULD BRING TO MARKET EFFICIENCY AND RELIABILITY AS OPPOSED TO IMPLICATIONS FOR EXISTING CAPACITY CONSTRUCT.

>> MICHAEL?

>> (INAUDIBLE).

>> MIC.

>> I'M SORRY. ECHO CHAIRMAN'S COMMENT ABOUT URGENCY BECAUSE WE, YOU KNOW, I'M A PRIVATE PRODUCER AND PRIVATE COMPANY, AND WE  I ALWAYS SAY WE HAVE TO EAT WHAT WE KILL. AND WHAT WE ARE WITNESSING NOW IS DESTRUCTION OF THE MARKET. I KNOW IT'S EASY TO SIT HERE IN THIS ROOM AND SAY WE HAVE YEAR TWO, THREE, TO DEAL WITH THIS BUT THERE ARE SPECIFIC ISSUES RIGHT HERE, I THINK OUR SPEAKER YESTERDAY I HEARD SAY YPP COMPANY NOW A FRACTION OF WHAT USED TO BE AND SOON IT MAY DISAPPEAR COMPLETELY. WE HAVE A LOT OF ISSUES RIGHT HERE, AND THERE ARE THINGS THAT ARE OBVIOUS, OKAY? WE DON'T NEED A BIG STUDY TO UNDERSTAND SUBSIDIZE A SINGLE PLANT IS JUST NOT RIGHT. IF THIS IS WHAT WE HAVE TO STOP TODAY, EXCELLENT REPRESENTATIVE SAID THE LOWEST COST, CO2 COMPLIANCE WITH NUCLEAR PLANTS, I'M IN THE RENEWABLE BUSINESS. IF IT'S LOWEST COST LET THEM BE. THEY RAN THROUGH LEGISLATION BECAUSE IT'S NOT THE LOWEST COST. IT COULD BE THE LOWEST COST, THEY WOULD BE OPEN TO OTHER SOURCES. ILLINOIS HAS 136 ZERO EMISSION FACILITIES, WHY OTHER PEOPLE CANNOT BID? ANOTHER THING, THERE ARE A LOT OF WIND FARMS, PEOPLE BUILD HISTORICALLY RELYING ON MARKET. A LOT OF WIND FARMS ARE UNECONOMICAL. WHAT HAPPENED IF THEY WOULD ALL COME TO THEIR STATE AND SAY WE NEED SUBSIDIES BECAUSE WE CAN'T RUN ANYMORE BECAUSE WE HAVE TO CLOSE FACILITIES, SO ARE WE GOING TO GIVE THEM SUBSIDIES, $11 A MEGAWATT HOUR BECAUSE THEY ARE THE CHEAPEST POSSIBLE SOURCE? THAT DOESN'T MAKE ANY SENSE. I WANT TO URGE THIS COMMISSION, THERE'S IS ABSOLUTE URGENCY RIGHT NOW TO DEAL WITH CERTAIN ISSUES TODAY, WHEN COMMISSION GETS QUORUM AND CERTAIN ISSUES MAYBE LATER BECAUSE I AGREE WITH SOME COMMENTS THAT WE DEAL WITH THE MARKET THAT IS NOT PROPERLY CONSTRUCTIVE IN GENERAL, WE HAVE ZERO MARGINAL COST RESOURCES THROWN IN TOGETHER WITH FOSSIL FUEL RESOURCES, IT DOESN'T WORK BECAUSE WE WILL SEE BASICALLY FUELBASED RESOURCES WOULD LOSE, THEY WILL DISAPPEAR. WE'VE GOT TO DEAL WITH THIS. BUT I WANT TO SAY THERE'S AN ABSOLUTE URGENCY RIGHT NOW TO DEAL WITH CERTAIN ISSUES TODAY BECAUSE IF WE DON'T RESTORE, MAYBE NEXT YEAR WE DON'T NEED THIS CONFERENCE ANYMORE BECAUSE MARKETS WILL NOT  WOULD NOT EXIST. THERE ARE CERTAIN ISSUES AND AGAIN I HEAR A LOT OF DISCUSSIONS ON LET'S LOOK AT THIS, LET'S LOOK AT THAT. YOU KNOW, WE HAVE TO LOOK AT THE ISSUE THAT IS IN FRONT OF US. CAN WE SUBSIDIZE SPECIFIC RESOURCE OR NOT. THE ISSUE IS CLEARLY NOT. YOU KNOW, SHOULD WE ACCOMMODATE SOME STATE POLICY? YEAH, WE HAVE TO STUDY, WE HAVE TO DEAL WITH THIS, OKAY? BUT AGAIN I WANT TO AGAIN ELEVATE THE SENSE OF URGENCY BECAUSE PRIVATE PEOPLE, COMPANIES HAVE THAT TO PAY EMPLOYEES CANNOT WAIT A YEAR, TWO YEARS, THREE YEARS FROM NOW SOMEBODY WILL COME AND SAVE THEM.

>> WE'LL LET KATHLEEN ANSWER THE QUESTION ABOUT THE LAST VERSION, I WOULD LOVE TO MOVE ON FROM THE CONVERSATION ABOUT WHETHER OR NOT THE PARTICULAR SUBSIDY FOR NUCLEAR IS GOOD OR BAD OR EFFICIENT OR WHATEVER. AT SOME POINT WE  I THINK WE HEAR IT. WE GET IT. FOR THE PARTICULAR PATH THAT THE ACCOMMODATE PATH WE'RE TALKING ABOUT I HEAR IS THAT A VERSION OF AN ANSWER TO THE THING THAT YOU'RE SAYING IS AN URGENT PROBLEM, AS A WIND DEVELOPER NEW ENGLAND HAS GOT A LIMITED, YOU KNOW, LIMITED EXEMPTION FOR RENEWABLE ENERGY, DOES ACCOMMODATE HELP YOU AS A DEVELOPER OF THAT RESOURCE, IS THAT A REASONABLE PATH FORWARD?

>> I FEEL CERTAIN STATE POLICY THAT TO RELY ON COMPETITIVE SUPPLY ALSO RELY ON MARKET TO MEET THOSE POLICIES ARE POLICIES THAT CAN BE ACCOMMODATED. THEY ARE POLICIES THAT RELY SIMPLY ON REGIONAL LOBBYING, REGIONAL COMPANY, THOSE ARE NOT THE RIGHT POLICIES, OKAY? SO IF IT'S A MARKETBASED POLICY, YES, THEY CAN BE ACCOMMODATED. WE RELY ALL THE TIME ON MARKETBASED POLICY EVEN IF IT'S SUBSIDIZED POLICY BUT IT'S MARKET BASED. YOU KNOW, PEOPLE HAVE TO COMPETE TO GET SOMETHING. NOT JUST GIVEN TO THEM ON A SILVER PLATE.

>> KATHLEEN, A BRIEF LAST WORD?

>> I'M GRATEFUL YOU'RE TAKING US BACK TO THE QUESTION. OBVIOUSLY IT'S HARD TO COMPETE WHEN THERE'S A FIXED NUMBER OF ASSETS ON SYSTEM TO PROVIDE EXISTING NUCLEAR POWER. WE'LL JUST LET THAT GO. YOU KNOW, IF YOU HAVE A CHEAP SOURCE OF DECARBONIZATION AND ONLY A CERTAIN NUMBER OF ASSETS, THE STATES DID WHAT THEY COULD TO PICK ONLY THE ONES THEY THOUGHT WERE AT RISK. MOVING ON FROM THAT POINT TO YOUR QUESTION ABOUT ACCOMMODATION, I AGREE WITH WHAT LISA SAID. I MEAN, THE WAY IT CAME ACROSS YESTERDAY IT SOUNDED LIKE IT WAS, OH, WE'LL JUST ACCOMMODATE AND THEN WE'LL BE DONE WITH THIS. NOT FROM YOU ALL BUT FROM SOME OF THE SPEAKERS. AND YOU STILL HAVE TO MAKE THE CHOICE OF WHICH SUBSIDIES, WHICH STATE POLICIES ARE GOING TO TRIGGER A RESETTING OF THE PRICE. YOU STILL HAVE A MINIMUM OFFER PRICE IN THE ACCOMMODATION PATHWAY BECAUSE YOU'RE RESETTING THE PATH OF SOME UNITS THAT YOU SAY YOU WILL HAVE TO DECIDE ARE GETTING SOME SORT OF OUTOFMARKET SUPPORT THAT MAKES THEM SUBJECT TO THAT POLICY, YOU HEARD YESTERDAY THERE'S A WHOLE BUNCH OF SUBSIDIES EXPLICIT AND IMPLICIT IN THE MARKET, FIGURING OUT WHICH ONES HAVE TO BE SUBJECT TO THIS POLICY, IT DOESN'T TAKE YOU OUT OF THAT BUCKET OF STILL HAVING TO MAKE THAT CHOICE. THERE ARE A COUPLE OF SOLUTIONS THAT HAVE BEEN OFFERED IN ANY VEIN. THEY HAVE THAT CHARACTERISTICS. SOME OF THEM DON'T GO AS FAR AS OTHERS. IN OTHER WORDS, SOME OF THEM WOULD JUST SAY I THINK THIS IS TRUE OF THE NEW ENGLAND PROPOSAL, ONLY RESOURCES THAT ARE GOING TO BE ABLE TO MATCH WITH AN EXITING RESOURCE WILL BE ABLE TO COME INTO THE MARKET SO IT'S STILL A LIMITER ON WHETHER THESE POLICIES CAN BE EFFECTUATED OR NOT. AND LAST POINT IS TO SAY THAT THE EXISTING EXEMPTION IS SMALL, I'M NOT SURE IS EXACTLY FAIR IN A SMALL MARKET LIKE NEW ENGLAND WHEN IT'S 200 MEGAWATTS GIVEN THE CAPACITY VALUE OF RENEWABLES THAT'S A PRETTY SIGNIFICANT OPENING THAT THE COMMISSION GAVE FOR THAT STATE POLICY, THOSE SETS OF STATE POLICIES TO BE EFFECTUATED. NOW THAT YOU'VE DONE THAT WHAT DO YOU DO NEXT?

>> I'M VERY INTERESTED TO HEAR THE PANELISTS' PERSPECTIVES REQUEST THE QUESTIONS ARNIE TEED UP. CHAIRMAN VANNOY COUPLED, THE STATE OF PLAY TODAY IS THAT STATE LEGISLATORS ARE MAKING THESE CALLS, WHETHER YOU LIKE IT OR NOT, WHETHER YOU THINK IT'S LEGITIMATE OR APPROPRIATE, IT'S HAPPENING. WHILE WE DON'T WANT TO BE IN A POSITION OF FERC AT SWATTING DOWN, THAT'S REALLY NOT A GOOD PLACE TO BE. I THINK THE WAY THAT WE'VE EMPLOYED MOPAR HAS NOT BEEN A WAY THAT PROVIDES CERTAINTY AND CONSISTENCY. IT SEEMS ARBITRARY. WE'RE AT A PATHWAY OR A FORK IN THE ROAD THAT HAS MANY FORKS MAYBE AND ARNIE TEED UP ONE, THE PATH 1, WHICH IS LIMITED USE OF MOPAR. MAYBE IN A WAY THAT WOULD BE CONSISTENT OBVIOUSLY WITH THE SUPREME COURT DECISIONS IN TALEN V. HUGHES OR EPSA CASE OR ACCOMMODATE AND WE HEARD THE EXAMPLE WITH THE ISO NEW ENGLAND PROPOSAL. I APPRECIATE THOSE WHO HAVE SPOKEN TO THAT. IF YOU AREN'T GOING TO SPEAK TO THAT TODAY, I WOULD URGE YOU IN YOUR POSTCONFERENCE COMMENTS TO ADDRESS THAT BECAUSE WE HAVE TO GO DOWN ONE OF THESE PATHWAYS. SO WE'RE EITHER GOING TO BE AT A PLACE WHERE WE APPLY MOPAR IN A LIMITED FASHION OR WE ATTEMPT TO ACCOMMODATE THE STATE POLICY THAT'S COMING DOWN, WHETHER YOU LIKE IT OR NOT, WHETHER YOU AGREE WIT OR NOT, WHETHER IT'S FOR ECONOMIC REASONS, WHETHER IT'S FOR MORE JOBS, WHETHER IT'S FOR MORE RENEWABLES, IT'S HAPPENING. OR WHETHER WE'RE GOING TO DUKE IT OUT LIKE WE'VE BEEN DOING AT FERC. I WANTED TO ASK MORE TIME. ARNIE HAS BEEN QUITE POLITE KEEPING US ON TRACK. SPEAK TO ACCOMMODATE. THIS IS YOUR TIME. WE DRESSED UP AND CAME TO THE PARTY. [LAUGHTER] OR FILE IT. THANK YOU.

>> THANKS, COMMISSIONER. ALL RIGHT. I THINK WE'VE GOT JOHN.

>> I'LL SPEAK ON ACCOMMODATION. IT WORKS TWO DIRECTIONS, EITHER FERC CAN ACCOMMODATE STATE POLICIES AND OPEN A PANDORA'S BOX OF ENDLESSLY TWEAKING MARKET DESIGN AND WHERE WE'LL HAVE MOPAR 1, MOPAR 2, MOPAR A, MOPAR B WITH UNKNOWN UNINTENDED CONSEQUENCES BUT IN THE END YOU PROBABLY HAVEN'T SOLVED THE PROBLEM BECAUSE STATES WON'T AGREE AND ONCE YOU ALLOW ONE STATE TO HAVE MOPAR B, OR SOMETHING ELSE, YOU KNOW, ANOTHER STATE'S GOING TO WANT SOMETHING THAT'S TOTALLY, YOU KNOW, CONTRADICTING WHAT YOU DID BEFORE. AND SO THAT JUST IS GOING TO LEAD YOU AGAIN TO A PANDOR'S A BOX. THE OTHER FORM OF ACCOMMODATION I SUPPORT STATES HAVE TO ACCOMMODATE THROUGH MARKET RULES ESTABLISHED BY THE FERC. AND THIS WILL ALLOW A SIMPLER MARKET DESIGN, I HOPE, THAT MAKES IT MORE OF AN HONEST COMPETITIVE MARKET RATHER THAN A AN ADMINISTRATIVELY DETERMINED ONE THAT WE HAD TODAY.

>> CHAIR SHEEHAN?

>> I DON'T WANT TO BELABOR BUT THERE HAVE BEEN CHARACTERIZATIONS, I WANT TO MAKE IT CLEAR FOR THE RECORD FROM THE STATE'S PERSPECTIVE THAT FEJA IS ABOUT ENERGY POLICY. AND THE STATE IS ACTING WELL WITHIN LEGAL AUTHORITY TO ADDRESS LEGITIMATE ENVIRONMENTAL ATTRIBUTES OF GENERATION. IN TERMS OF ACCOMMODATION, COMMISSIONER HONORABLE'S COMMENTS REALLY BEAR SOME CONSIDERATION. THE MARKETINGS DON'T EXIST BECAUSE, YOU KNOW, THEY HAVE SOME VALUE IN AND OF THEMSELVES. THEY EXIST BECAUSE THE STATES HAVE BOUGHT IN. AND TO THE EXTENT THAT THE MARKETS DON'T ACCOMMODATE THE STATES STRONGLY HELD POLICY VIEWS I THINK STATES WILL BEGIN TO MOVE AWAY. THAT'S AN IMPORTANT POINT THAT NEEDS TO BE KEPT IN MIND.

>> ABE AND 

>> ACCOMMODATE, ONE OF MY ABSOLUTE FAVORITE TOPICS BECAUSE WE DO NEED TO MOVE VERY QUICKLY. AND IF THERE'S ONE THING I WOULD URGE THE COMMISSION TO DO COMING OUT OF THIS CONFERENCE IS TELL THE ISOs, DIRECT THEM, AS SOON AS WE HAVE QUORUM IF NOT BEFORE, TO COME IN BY A DATE CERTAIN WITH A PLAN AND IT'S THE FIRST ITERATION OF THE PLAN, FIRST EVOLUTION OF CAPACITY MARKETS, DOESN'T HAVE TO RESOLVE EVERY PROBLEM. I REALLY LIKE THE TWOTIER PROGRAMS. I'M GLAD NEW ENGLAND PUT FORWARD THEIR PROPOSAL. PJM IS WORKING TO PUT FORWARD THEIR PROPOSAL, WORKING ON IT. I THINK THAT'S GREAT BECAUSE THAT'S A FIRST STEP. BUT WE REALLY HAVE A TIME CRUNCH, AND I WOULD VERY MUCH LIKE TO SEE THE COMMISSION COME OUT AND SAY, HEY, ISOs, WE WANT TO SEE YOU COME IN WITH  DO YOUR HOMEWORK BY NEXT WEEK, BY TWO WEEKS, YOU KNOW, SERIOUSLY BY THE END OF THE YEAR, COME UP WITH SOMETHING YOU CAN IMPLEMENT IN THE FIRST HALF OF 2018 FOR THE NEXT CAPACITY AUCTION. IF WE DON'T DO THAT WE REALLY DO RISK FALLING WAY, WAY BEHIND. AND YOU KNOW I LIKE THE ACCOMMODATION THAT ALLOWS THE STATE TO COME IN AND HAVE SUBSIDIZED RESOURCES THAT IT PICKS, TAKE ON A CAPACITY SUPPLY OBLIGATION, WHICH IS GREAT, THAT'S ONE OF THEIR MAJOR CONCERNS, BUT THEN RECOGNIZE THAT UNIT ISN'T RELYING ON THE MARKET FOR ITS FIXED COST RECOVERY. IT'S GETTING ITS FIXED COST RECOVERY SOMEWHERE ELSE AND THERE'S NOTHING INHERENTLY WRONG WITH THAT BUT WE NEED TO RECOGNIZE THE REST OF THE PLAYERS WHO ARE DEPLOYING SHAREHOLDER CAPITAL AS OPPOSED TO CAPTIVE RATE PAYER CAPITAL ARE RELYING ON THE MARKETS FOR THE JUST AND REASONABLE RATES. IF WE WANT TO DRIVE AN INVESTMENT AND WE NEED TO, WE ABSOLUTELY HAVE TO DRIVE INVESTMENT IF WE'RE GOING TO DECARBONIZE THE ECONOMY, IF WE'RE GOING TO TURN OVER THE EXISTING FLEET OF GENERATION IN THE NEXT DECADE WE NEED THAT SHAREHOLDER MONEY IN THE MARKET. IN ORDER TO ATTRACT THAT MONEY, WE HAVE TO PROTECT THE MARKET FROM, YOU KNOW, THOSE PEOPLE PLAYING IN THE MARKET FROM THE PERNICIOUS EFFECTS OF COMPETITION AGAINST RESOURCE GIVING IT AWAY. YOU JUST CAN'T COMPETE WITH FREE. SO, YOU KNOW, ONE OF THE THINGS I THE 200MEGAWATT EXEMPTION IN NEW ENGLAND IS RESPECTFUL A GREAT EXAMPLE OF WHAT NOT TO DO. WHAT IT DOES IS HARMS EVERY MARKET PARTICIPANTS AND PREVENTS EVERY OTHER RESOURCE FROM GETTING THE JUST AND REASONABLE MARKET RATE THEY ARE ENTITLED TO. IT DOESN'T MEAN RESOURCE SHOULDN'T BE ABLE TO COME INTO THE MARKET THROUGH SOME SORT OF TWOTIER PRICING BUT 200MEGAWATT EXEMPTION ACCOMMODATES THE STATES WITHOUT DOING ANYTHING TO PROTECT THE SUPPLIERS. AND SO I THINK THAT'S AN EXAMPLE OF WHERE NOT TO DO IT WHEREAS IF YOU HAD A TWOTIER PRICING SCHEME 200 MEGAWATTS STILL COMES INTO THE MARKET OVER THE LONG TERM BUT IT DOESN'T HARM THE PEOPLE WHO HAVE DEPLOYED CAPITAL, YOU KNOW, THAT HAS SHAREHOLDER DOLLARS AT RISK. AND IT'S JUST  YOU CAN'T HAVE THOSE TWO TRADE OFF AGAINST EACH OTHER OR IT WILL DRIVE CAPITAL AWAY AT THE VERY TIME WE NEED IT MOST.

>> I MEAN, AT SOME LEVEL SOME ARE BEING LITIGATED, WE HEAR FROM THE COURTS ON THESE. THE COURTS ARE GOING TO SAY WHAT THEY ARE GOING TO SAY. MEANTIME, THERE IS A SENSE OF URGENCY FOR FERC TO STEP IN AND FILL THE SPACE. LOOK, IN THE MULTISTATE ISOS, NEW ENGLAND OR PJM, IT'S IMPOSSIBLE, IT'S FOLLY TO THINK YOU'RE GOING TO COME UP WITH A PLAN THAT'S GOING TO ACCOMMODATE EVERY STATE'S INDIVIDUAL INTEREST. YOU'RE NOT GOING TO BE ABLE TO DO IT. YOU CAN MAKE CHANGES TO THE MARKET OR ACCOMMODATE GENERAL THEMES, BUT WHATEVER THAT IS IS GOING TO HAVE TO BE PRETTY FIRM, BECAUSE STATES ARE NEVER GOING TO BE HAPPY, I DON'T THINK GENERATORS WILL BE HAPPY. THERE HAS TO BE WILLINGNESS AT SOME POINT TO STEP IN PLACE AND ACCOMMODATE TO A DEGREE, STATES WILL HAVE TO ACCOMMODATE THE OTHER WAY AROUND. TWOTIER CAPACITY MARKET, WHAT NEW ENGLAND SAID THERE'S SOME INTERVIEW MARKET IDEAS OUT THERE. WHATEVER THEY ARE, ABE IS RIGHT. IF WE'RE GOING TO PUT MONEY TO WORK WE HAVE TO GET COMFORTABLE WE'RE GOING TO GET A FAIR SHAKE, IF SOMEBODY UP THE ROAD WORKS FOR A BIGGER COMPANY GETTING FREE MONEY FROM THE STATE WE CAN'T INVEST BUT I DO THINK IT'S FOR SURE THAT YOU'RE NOT GOING TO BE ABLE TO ACCOMMODATE ALL THE STATES, OTHERWISE SIX STATES IN NEW ENGLAND OR HOWEVER MANY STATES IN PJM, TEN, TWELVE?

>> THIRTEEN.

>> THIRTEEN PLUS DC, YOU'RE NOT GOING TO GET THERE, YOU HAVE TO PUT FORWARD A PLAN THAT WORKS. IF THE STATES DON'T LIKE IT THEY HAVE EVERY ABILITY TO STEP OUT OF THE MARKET AND NOT, YOU KNOW, NOT HAVE TO DEAL WITH A LOT OF THESE ISSUES AND WE REGULATE AND TAKE OUR RESOURCE ADEQUACY AND WE CAN TALK FOR THOSE WITH PLANTS IN THOSE STATES JUST AND REASONABLE AND RETROACTIVE RATE MAKING, THAT'S DOOR NUMBER 3. WE CAN'T STAND DOOR NUMBER 2, AND THE DISCUSSION NOW IS FIRMLY DOOR NUMBER 2. NUMBER 1 IS BETTER BUT YOU CAN'T ACCOMMODATE EVERYBODY.

>> YEAH, I FIGURED WE'RE CLOSE TO OUR BREAK AND TRYING TO DRAFT SOME CLOSURE AROUND THIS. I DON'T SEE ANY  EVERYBODY HERE THIS MORNING, I DON'T SEE ANY WAY AROUND  I MEAN JOHN'S POINT REGRETTABLY THAT THERE'S A PATH THAT DOESN'T TWEAK IT, TWEAK THE MARKETS. I THINK THAT'S INEVITABLE THAT WE'RE ON THAT PATH THAT YOU SEE WHAT'S COMING FROM STATE LEGISLATORS, SEE WHAT THEY LEGITIMATE AND I'M NOT DRAWING A DISTINCTION BETWEEN ILLEGITIMATE AND LEGITIMATE BUT THERE ARE LEGITIMATE CONCERNS FROM STATES, LEGITIMATE ATTRIBUTES TO MODIFY THE MARKET. NO WAY AROUND IT. I UNDERSTAND THE CAPACITY MARKET BY ITS NATURE IS COMPLEX TODAY AND IT'S ONLY GOING TO GET MORE COMPLEX. BUT I DON'T SEE THERE'S ANY WAY TO TURN THAT CLOCK BACK AND WE CAN GET TO YOUR POINT, TO THAD'S POINT, SORRY, WAY TOO MANY PEOPLE ON THE PANEL WITH NAMES, BUT THAT YOU CAN GET SORT OF GENERIC FIRST PRINCIPLES, YOU CAN SAY ALL RIGHT, YOU NEED, IF THERE'S A STATE ATTRIBUTE THAT'S COMING INTO THE MARKET WE'RE FACED WITH ALL RIGHT, CAN WE FIT THAT INTO A MARKET, CAN YOU PRICE IT IN THE MARKET? IF YOU CAN'T, MAYBE THAT'S THE ONLY POINT WHERE YOU SAY LOOK, YOU CAN'T, FERC DRAWS THE LINE, DUKE IT OUT, AS COMMISSIONER HONORABLE POINTED OUT. HOWEVER, OUTSIDE OF THAT IF YOU BOUND THAT POINT, BUT INSIDE EVERYTHING ELSE, I DON'T THINK THERE'S ANY WAY AROUND NOT TACKLING THIS IN A MORE COMPLEX ROLE IN THE ENERGY CAPACITY MARKET. I HOPE THAT'S HELPFUL IN A WAY. I VERY MUCH APPRECIATE ABE'S POINTS. YOU JUST HAVE TO GO THERE. THERE ARE MECHANISMS THAT YOU CAN DO THAT DON'T DISCRIMINATE AGAINST ONE GENERATION SOURCE OF ANOTHER.

>> I'LL BE REALLY QUICK. MARKETS AREN'T BROKEN BECAUSE THEY DON'T INTERNALIZE FOR CARBON. WE NEED TO ASK THE MARKETS TO DO THE RIGHT THING. THERE'S NOTHING MAGICAL ABOUT THE EXISTING STRUCTURE. IT'S AN ACCIDENT OF HISTORY, RIGHT? REGARDLESS, EVERYBODY AT THIS TABLE WOULD AGREE IT'S NOT THE COMPETITION, ISN'T THE BEST WAY FORWARD, IT'S A NATIONAL POLICY, POLICY OF THIS COMMISSION, EVERYONE. COMPETITION, WHO IS NOT FOR THAT? BUT IT'S THE QUESTION HOW DO WE DESIGN THE MARKET AND ASK THE MARKET TO SOLVE FOR A CHANGING SET OF DESIRES THAT USED TO BE LEAST COST AND RELIABILITY, NOW IT'S CARBON, OTHER STATES IT'S ATTRIBUTES. MARKETSES AREN'T BROKEN. WE NEED TO ASK THEM TO DO SOMETHING DIFFERENT.

>> BEFORE WE WRAP UP ON PATH 2 I WANT TO GO BACK TO ONE OF THE TOPICS WITH THE DISCUSSION OF LONGTERM CONTRACTING THIS IS NOT A PERFECT PARALLEL. THE TEN YEARS AGO THE COMMISSION DID SEVERAL ROUNDS OF COMMENTS WHAT EVENTUALLY LED TO ORDER 719 HAVING HEARD LOTS OF CONCERNS THAT THERE WASN'T SUFFICIENT OPPORTUNITY OR COMPLETION OF LONGTERM CONTRACTS. AFTER THOSE MANY ROUNDS OF COMMENTS THE BEST THING WE COULD COME UP WITH WAS TO SAY WHY DON'T WE HAVE EVERY RTO DO A POOL, WHERE PEOPLE CAN EXPRESS VIEWS AND HELP PEOPLE COME TOGETHER. THE FACT WE'RE HAVING  I HAVE EVERY REASON TO BELIEVE THE BULLETIN BOARD DOES NOT FULLY ADDRESS THAT PROBLEM. [LAUGHTER] NONETHELESS, SOME SPEAKERS TODAY I FEEL LIKE SAID IF ONLY THERE WAS AN OPPORTUNITY TO DO LONGTERM CONTRACTING, NOT CONSTRAINED BY CAPACITY MARKET EVERYTHING WOULD BE GREAT IMPLYING A DEGREE OF CONFIDENCE THE PROBLEM TEN YEARS AGO NO LONGER EXIST, HAVE BEEN MITIGATED. CAN WE TALK ABOUT WHY WE THINK LONG TERM CONTRACTING IF ONLY IT WAS PRESENT WOULD NOW BE THE SOLUTION.

>> SORRY, YOU KNOW, I DON'T THINK WE NEED LONGTERM CONTRACTS. I THINK YOU HAVE TO LOOK AT THE DATA. THERE HAVE BEEN TENS OF THOUSANDS OF MEGAWATTS IN GENERATION BUILT IN COMPETITIVE MARKETS, AGAIN REMEMBER WE HAVE ALLTIME LOW COST, NO RELIABILITY PROBLEM, AND TENS OF THOUSANDS OF MEGAWATTS SHOWING UP WITH NO LONGTERM CONTRACT. IN PLACES WITH FAITH IN THE MARKETS LIKE ERCOT GETTING RENEWABLES, WITHOUT LONGTERM CONTRACTS BECAUSE THE MATH WORKS AND THEY CAN COMPETE. SO I DON'T THINK WE NEED TO GO BACK TO LONGTERM CONTRACTS. IF YOU PRICE CARBON, AND IT HAPPENS TO WORK, WIND ASSETS WORK IN TEXAS, MARKET PRICE, IF YOU PRICE CARBON AND PRICE SIGNAL IS THERE LIKE NOBODY NEEDS CONTRACTS TO BUILD COMBINED CYCLES THE INVESTMENT WILL FOLLOW THAT. I THINK THE DATA OVER THE LAST TEN YEARS IS ABSOLUTELY CRYSTAL CLEAR ON THIS.

>> JOHN?

>> I ADMIT THE LOW PRICES RIGHT NOW HAVE SORT OF TAKEN INTEREST AWAY FROM LONGTERM CONTRACTS. BUT THEY MAY NOT STAY THAT LOW. WHO KNOWS, NEXT WEEK THERE ALREADY SOME ENVIRONMENTAL STUDY THAT KILLS THE FRACKING REVOLUTION, AND I HOPE THAT DOESN'T HAPPEN. BUT I THINK I REMEMBER LIKE THE OPTION FOR IT, WHERE THEY CAN EXERCISE THE OPTION THEY VIGOROUSLY DO SO. I WOULD ADD IF PRICES GO UP AGAIN AND I WOULD IMAGINE EXELON WOULD WANT TO TAKE THEIR UNITS AND PUT THEM BACK IN THE MARKET. .

>> LISA?

>> THANKS. SO RIGHT NOW PJM ACCOMMODATES BILATERAL CONTRACTING AS LONG AS IT'S FOR EXISTING UNITS. MORE NEW UNITS YOU GET MOPARED AND ARE AT RISK OF PAYING TWICE FOR CAPACITY. ONE PROBLEM RIGHT NOW RPM SUPPLIERS CAN ENTER INTO LONG TERM BILATERAL PROJECTS OR HOPE FOR INTERVENTION TO MAKE UP MISSING MONEY FOR MISSEN CONSTRUCTS, HAVING THAT CONSTRUCT THERE I THINK HAS DIMINISHED THE OPPORTUNITY FOR LONGTERM BILATERAL CONTRACTING. WE WOULD LOVE TO GO OUT AND DO BILATERAL CONTRACTS BUT THEY ARE NOT AVAILABLE NOW. IF YOU TAKE THAT AWAY, IT MAY BE THAT THEY COME BACK, AND THERE'S NO OPPORTUNITY TO DO THAT, THINK THAT WOULD BETTER ACCOMMODATE NEEDS OF BOTH PLAYERS.

>> WE WOULD BE MORE THAN HAPPY TO DO LONGTERM CONTRACTS, WE DO A LOT OF PUBLIC POWER LONGTERM CONTRACTS SO WE SHOULD TALK AFTERWARDS. [LAUGHTER]

>> SO CHAIR VANNOY, ABE AND KATHLEEN.

>> THANK YOU. RESPONDING ON LONGTERM CONTRACTING, MAINE'S EXPERIENCE HASN'T BEEN GOOD WITH LONGTERM CONTRACTING. WE'VE LOST A LOT OF MONEY OVER THE YEARS ON LONGTERM CONTRACTS. BUT I THINK AN INTERESTING POINT ON THAT WHEN I SAY WE LOST A LOT OF MONEY, TO WHAT? THE REFERENCE POINT IS THE MARKET. SO I THINK IN OUR DISCUSSIONS OF YOU LOOK IN NEW ENGLAND, MAYBE VERMONT FOR EXAMPLE I WON'T SPEAK FOR VERMONT BUT WHEN THEY LONGTERM CONTRACT THEY ARE LOOKING AT WHAT THE MARKET PRICE IS, WHETHER IT'S A GOOD DEAL OR NOT. JUST AS MORE RATES COME OUT OF THE MARKET PRICE, GO BACK TO DISCUSSION ON PRICING CARBON COMING FROM MY NEIGHBOR HERE. WE HAVE SAID UNEQUIVOCALLY IN NEW ENGLAND WE'RE IN THE INTERESTED IN PRICING CARBON. WE'RE CONTINUING WITH DISCUSSION, NOT ALONG A CARBON FRONT, BUT ALONG OTHER ATTRIBUTE LINES. SO I WANT TO MAKE THAT CLEAR. FINALLY TO CLEAR UP ON THE MOPAR EXEMPTION, MOPAR EXEMPTION WAS A COMPROMISE WHAT THE EXISTING MARKET CURVE WAS GOING TO LOOK LIKE, PART WAS THE MOPAR EXEMPTION.

>> ABE?

>> SO WE ACTUALLY AS A COMPANY LOVE BILATERAL LONGTERM CONTRACTS. WE'LL GET RIGHT BEHIND THAD AND TALK TO YOU. COMPETITION CAN WORK IN A BILATERAL MARKET. MY COMPANY HAS BEEN INCREDIBLY SUCCESSFUL WINNING LONGTERM CONTRACTS IN CALIFORNIA. THEY ARE MORE EXPENSIVE. THEY ARE PAYING MORE IN CALIFORNIA FOR THE SAME PRODUCT. IT'S NOT JUST THAT LIVING IN SAN FRANCISCO IS IT EXPENSIVE. THERE'S A BENEFIT TO THE COMPETITIVE MARKET THAT HAS DRIVEN DOWN PRICES FOR NEW GENERATION, BUT THAT SAID, IF YOU WANT TO PUT SOMETHING OUT FOR BID, YOU WANT, YOU KNOW, 2000 MEGAWATTS OF CARBONFREE GENERATION IN A STATE, FOR EXAMPLE, PUT IT OUT FOR BID. ONE OF THE THINGS THAT YOU FIND VERY FRUSTRATING FROM  IF YOU'RE WONDERING WHY WE'RE ALL UP ON KATHLEEN AS GENERATORS IT'S NOT JUST THAT THEY ARE GETTING MONEY AND BEING CARVED OUT OF THE MARKET NOT HAVING TO RIDE THROUGH A DOWN TURN CAUSED BY NATURAL GAS PRICES, COMPETITION AT WORK, BUT ALSO TENOR OF THE CONTRACT. WE WOULD LOVE TO GET CONTRACT FOR TEN YEARS, THAT WOULD BE WONDERFUL. THAT'S REALLY SOMETHING THAT'S NOT OUT THERE IN THE MARKET AVAILABLE TO US UNDER ANY WAY, SHAPE OR FORM. BUT WHEN WE THINK ABOUT 

>> REAL QUICK. JUST A TEN YEAR CONTRACT.

>> NOT ONE BACKED BY RATE PAYERS ACROSS AN ENTIRE STATE, NO.

>> IS A TEN YEAR CONTRACT AVAILABLE TO YOU?

>> DEPENDS ON THE MARKET. IN CALIFORNIA IT CERTAINLY IS. IN FACT THAT'S THE MAJORITY OF THE NEW POWER PLANTS WITH RENEWABLES HAVE A SLIGHTLY LONGER TENURE. PARTICULARLY RENEWABLES BUT OTHER RESOURCES WE DON'T NECESSARILY THINK PUTTING A PRICE ON CARBON DIRECTLY IN THE SENSE OF CARBON, YOU KNOW, TAX OR SOMETHING ELSE IS ACTUALLY THE BEST WAY TO INCENT RENEWABLES. WE THINK LONGTERM HAS BEEN SUCCESSFUL GETTING NEW RENEWABLES BUILT, SOMETHING WE'LL DO ALL DAY AND NIGHT. KEY POINT ABOUT BILATERAL CONTRACT WE HAVE TO MAKE A DECISION HOW TO INTEGRATE THEM INTO THE MARKET. THERE'S NOTHING WRONG WITH BRINGING BILATERAL CONTRACTS INTO PJM. IT COULD EXIST IN THE MARKET TODAY. THE BIGGEST PROBLEM IS SOMETHING YOU JUST SAID THOUGH. WHEN YOU HAVE A CONTRACT, YOU HAVE A MARKET THAT IS RELIANT ON BILATERAL CONTRACTS OR FOOTPRINT RELIANT ON BILATERAL CONTRACTS YOU NEED TO HAVE AN EFFECTIVE PRICE SIGNAL. I KNOW THIS CONFERENCE ABOUT MISO BUT THE BILATERAL CONTRACTS FOLLOW THAT DOWN. EVEN IF IT'S A RESIDUAL MARKET LIKE MISO YOU HAVE TO HAVE A PRICE BOGEY TO SHOOT AT AND PEOPLE CAN MAKE REASONABLE EXPERTS AND ENTER INTO LONGTERM CONTRACTS, THAT'S WHEN BILATERAL CONTRACTS WITH WORK.

>> KATHLEEN, MICHAEL, AND WE'LL TAKE A BREAK AND TALK ABOUT THE THE PATH.

>> A COMMENT BOTH JOHN AND ABE MADE ABOUT THE NATURE OF THE STATE SUPPORT PROGRAMS RELATED TO NUCLEAR. I THINK THE STATES INVOLVED WERE SMARTER THAN ME, SMARTER THAN JOHN, THEY ACCOUNTED FOR FUTURE PRICE INCREASES IN THEIR DESIGN, IN A WAY THAT THEY HAVE DEVELOPED THE PRICE SIGNAL FOR NUCLEAR IN THAT TO THE EXTENT MARKET PRICES GO UP THE PAYMENT FROM THE STATE GOES DOWN. THEY ALSO TARGETED, ONLY THE STATIONS THEY THOUGHT THEY NEEDED. IN THAT SENSE, THEY ARE TRYING TO DRAW THE PROGRAM AS NARROWLY AS POSSIBLE TO BE AS CONSISTENT WITH IMPROVING EFFICIENCY IN THE MARKETS AS THEY COULD BE, AND SO I THINK WE SHOULD GIVE THEM MORE CREDIT FOR DOING SOMETHING THAT'S EFFICIENCY ENHANCING THAN YOU MIGHT HAVE HEARD ALREADY. THEN THE LAST POINT ABE BROUGHT UP MISO. MISO IS NOT THE SUBJECT OF THE CONFERENCE BUT TWICE OVER THE LAST FEW DAYS WE'VE HEARD THIS INTENTION THE ILLINOIS PROGRAM IS AFFECTING THE OUTCOME, THERE WAS ALLUSION TO THE MISO THAT JUST OCCURRED. YOU DON'T NEED TO TAKE MY WORD FOR IT. LOOK AT THE CHART MISO RELEASED ANALYZING SUPPLY CURVE, LAST RESERVE AUCTION, WHERE THE PRICE CLEARED VERSUS WHERE IT WOULD HAVE CLEARED IF FOR EXAMPLE OUR QUINTON STATION WAS NOT IN THE MARKET, MIGHT HAVE GONE FROM $1.50 TO $5, WOULD NOT HAVE PICKED UP UNITS FROM COMPANIES COMPLAINING ABOUT IT TODAY AS HAVING AFFECT THE OUTCOME, IT'S JUST NOT TRUE.

>> MICHAEL AND LISA.

>> I JUST WANT TO COMMENT ON LONGTERM CONTRACTS. AS FAR AS RENEWABLE CONCERNS, SOMEBODY MENTIONED  ALL RENEWABLES BUILD LONGTERM CONTRACTS. PEOPLE BUILD RENEWABLES WITHOUT LONGTERM CONTRACTS, AND SOME YEARS AGO THEY ALL GOT KILLED. IN A WAY LONGTERM CONTRACTS FOR RENEWABLE ABSOLUTE MUST, TO ENTER THE MARKET, FOR NEW RENEWABLES. BUT I WANT TO SAY PEOPLE THINK LONGTERM CONTRACTS, YOU GO AND TALK TO PEOPLE AND THEY PAY YOU WHATEVER YOU WANT. IT'S A HIGHLY COMPETITIVE ENVIRONMENT. THIS IS WHAT I WANT TO STRESS HERE. IT'S A COMPETITION. YOU CAN'T JUST SAY I WENT TO SOMEBODY AND THEY SAID, OH, HE MANAGES A NICE COMPANY, LET'S SIGN A CONTRACT AT A NICE PRICE. IT'S A VERY HIGHLY COMPETITIVE FIELD. AND LONGTERM CONTRACTS NOW PROBABLY AT THE LOWER PRICE IN RENEWABLES AT LEAST THAT EVEN MARKET  PEOPLE DON'T SIGN LONGTERM CONTRACTS UNTIL IT BEATS FORWARD MARKET CURVE. SO IT'S LONGTERM CONTRACTS, IT'S NOT A PRESENT TO SOMEBODY, YOU KNOW, ABOUT MARKET PRICES. SO ALL THE CNIs, COMMERCIAL, INDUSTRIAL, THEY LOOK AT THE LONGTERM CONTRACTS AND LOOK AT THE FORWARD CURVE AND DECIDE. NOT WHAT KATHLEEN SAID, PAY THE PREMIUM, ENVIRONMENTAL, LONGTERM CONTRACTS, BELOW MARKET PRICE, OKAY? IT'S NOT REALLY  BUT THE KEY IS AGAIN TO DISTINGUISH IT'S A COMPETITIVE NATURE. NOBODY SIGNS LONGTERM CONTRACTS WITHOUT COMPETITION. SO THIS IS A KEY ISSUE HERE.

>> LISA, WE'LL WRAP UP WITH YOU.

>> THANK YOU. I AGREE, I'M NOT SAYING THAT LONGTERM CONTRACTING IS A GIFT. I THINK IT IS A COMPETITIVE ENVIRONMENT. I WANT TO RESPOND TO THE MARKET SIGNAL. I AGREE, EVERYBODY IS LOOKING AT THE FORWARD CURVE TO SIGN LONGTERM CONTRACTS BUT CURRENT CAPACITY CONSTRUCT IS A ONE YEAR PRICE SIGNAL THAT'S VARIABLE AND NOT USED AS BASIS FROM AMP'S PERSPECTIVE AND FOR ENTERING INTO LONGTERM DECISIONS, FOR EXAMPLE, INVESTING, YOU KNOW, NEARLY $3 BILLION IN 350 MEGAWATTS OF THE RIVER HYDRO WHICH WE DID. WE'VE INVESTED IN SOLAR, THAT JUST CAME ONLINE, THE LARGEST COMMERCIAL SOLAR OPERATION IN BOWLING GREEN, OHIO. WE MADE THOSE DECISIONS IN CONCERT WITH OUR LOCAL MUNICIPALITIES, ON THE BASIS OF HAVING A DIVERSE SUPPLY, AND ON OUR MEMBERS PREFERENCE AND TO AVOID VOLATILITY OF PRICING STRUCTURES WE'VE BEEN TALKING ABOUT TODAY.

>> IF WE COULD TAKE A 10MINUTE BREAK, BACK HERE BY FIVE MINUTES TILL AND WRAP UP WITH OUR WITHINMARKET SOLUTIONS. (RECESS)

>> ALL RIGHT. IF FOLKS COULD TAKE THEIR SEATS. THE NEXT HOUR IS GOING TO BE SUPER FUN. WE'RE GOING TO GET STARTED BECAUSE WE'VE GOT A LIMITED AMOUNT OF TIME AND DECENT AMOUNT OF GROUND TO COVER. I'D LIKE TO GET STARTED. I'M GOING TO START REGARDLESS OF WHETHER PEOPLE ARE SITTING DOWN.

>> GETTING FEISTY.

>> YEAH. I'LL REMIND THE PANELISTS IF YOU'RE NOT IN YOUR SEAT, THE OLD SAYING IF YOU'RE NOT AT THE TABLE YOU'RE ON THE MENU. [LAUGHTER] IT MIGHT BE APPROPRIATE FOR THE ONE SEAT THAT'S EMPTY. I HOPE NONE OF THIS IS BEING TRANSCRIBED. SO WHAT WE'VE GOT LEFT FOR THE LAST HOUR IS A DISCUSSION, I THINK WE'RE GOING TO SKIP OVER OUR MIDDLE PATH. YOU REMEMBER JUST THE FRAMING IS PATH NUMBER 1, LIMITED OR NO MOPAR, PATH NUMBER 2 ACCOMMODATE STATE POLICIES BY ALLOWING RESOURCES TO GET AT CAPACITY SUPPLY OBLIGATION. BUT SET THE PRICES THOUGH NO STATE SUPPORT EXISTED. PATH 3, YOU KNOW, WE TALKED ABOUT BEING KIND OF THE STATUS QUO. WE'VE GOT A GOOD SENSE OF WHAT THE STATUS QUO LOOKS LIKE. WE LIVE AND BREATHE OUR STATUS QUO SO WE WON'T SPEND TIME NOW ON THE STATUS QUO GIVEN WHERE WE ARE. PATH 4 AND PATH 5 ARE WHAT WE'D LIKE TO TALK ABOUT IN THE REMAINING HOUR. WE'D LIKE TO GIVE OUR COMMISSIONERS PLENTY OF TIME TO ASK QUESTIONS, SO WE'RE GOING TO SPEND 20 MINUTES EACH ON THOSE TWO PATHS. PATH 4 IS THE BRING IT INTO THE MARKET PATH. I THINK IN NEW ENGLAND THAT PATH WAS DESCRIBED AS ACHIEVE, AND WE HAD SOME DISCUSSION WITH PJM IN NEW YORK YESTERDAY SPECIFICALLY ABOUT A VERSION OF CARBON PRICING, THAT'S THE DISCUSSION ABOUT PATH 4. PATH 5 IS IT HAS TO BE IN THE MARKET AND IF IT'S NOT IN THE MARKET IT'S GOING TO GET VERY STRONG MINIMUM OFFER PRICE. BECAUSE WE'VE GOT SUCH A LIMITED AMOUNT OF TIME IT WOULD BE WONDERFUL TO SPEND ZERO WHETHER EXELON HAS A GOOD OR BAD DEAL FROM VARIOUS STATES. IF YOU PROMISE NOT TO CAST SHOTS AT KATHLEEN I WILL PROMISE NOT TO CALL ON KATHLEEN TO RESPOND. PATH 4, BRINGING THE STATE OBJECTIVES INTO THE MARKET TO THE MAXIMUM EXTENT POSSIBLE. WHAT WE'D LIKE TO TALK ABOUT IS WHAT IS IT, WHAT POLICY OBJECTIVES ARE WE ATTEMPTING TO BRING TO THE MARKET. WE'VE MOSTLY TALKED ABOUT ENVIRONMENTAL BENEFITS BUT IT WOULD BE GOOD IT ANOTHER IF WE'RE TALKING ABOUT OTHER THAN ENVIRONMENTAL BENEFITS TO PRICE INTO THE WHOLESALE MARKET. WE'D LIKE TO UNDERSTAND FROM THE STATE HOW THAT WORKS FROM YOUR PERSPECTIVE. WE HEARD FROM CHAIR VANNOY WHETHER THAT'S REALISTIC OR NOT, WE'D LIKE TO HEAR WHETHER THAT'S A REALISTIC PATH FORWARD. WE'D REALLY LIKE TO HEAR WHAT PEOPLE THINK WE'RE GOING WITH THE REST OF THE STATE POLICIES, THE STATE SUPPORT, THAT WE HAVEN'T BROUGHT INTO THE MARKET. ARE THOSE SUBJECT TO THE MOPAR, ARE THOSE THINGS SOMETHING THAT WE NO LONGER ATTEMPTED TO ADDRESS THROUGH THE MOPAR BECAUSE THEY ARE FAIRLY SMALL. THAT'S THE KIND OF PATH WE'D LIKE  THE TIME WE'D LIKE TO SPENT, THE NEXT 20 MINUTES. PRESIDENT MROZ?

>> YES, TO YOUR QUESTION. YOU KNOW FROM MY COMMENTS YESTERDAY FROM MY PREFILED COMMENTS THAT IT'S BEEN MY OPINION THAT THE STATE ISSUES, THE STATE ATTRIBUTES SHOULD BE BROUGHT INTO THE MARKETS. THERE'S BEEN A LOT OF DISCUSSION ABOUT THE STATE ATTRIBUTES BEING PARTICULARLY FOCUSED ON ENVIRONMENTAL ATTRIBUTES. THAT'S A POLICY DECISION MANY STATES HAVE MADE. I HAVE RAISED BOTH IN OUR STATE FOR DISCUSSION WITH MY COLLEAGUES IN OTHER STATES WITH THE FERC, WITH STAFF AND THE COMMISSIONERS, RAISED THIS WITH THE INDUSTRY THAT I DO BELIEVE THERE ARE ALSO OTHER FACTORS THAT GO TO RELIABILITY, THAT GO TO THE RELATED ISSUES AROUND INFRASTRUCTURE, I MENTIONED THIS YESTERDAY THAT COULD OTHERWISE, IF PARTICULARLY IN A STATE LIKE NEW JERSEY, IF NUCLEAR FACILITIES CLOSE THAT THERE ARE ASSETS THAT WILL BE IN MY WORDS STRANDED. THERE COULD BE OTHER COSTS ASSOCIATED WITH THE REPLACEMENT OF GENERATION. IT WOULD HAVE TO REPLACE THOSE UNITS THAT THEN FAIL. SO IN MY MIND, AND CHAIRMAN VANNOY MENTIONED THERE ARE ATTRIBUTES OTHER THAN ENVIRONMENTAL THAT NEED TO BE BROUGHT INTO THIS DISCUSSION. I BELIEVE THEY DO. AND AS I MENTIONED YESTERDAY I COMMEND PJM FOR THE EFFORT IT HAS STARTED TO UNDERTAKE TO TRY TO BEGIN AND ANTICIPATE WHAT THOSE RELATED COSTS ARE AND I DO BELIEVE THAT THAT IS A  THAT'S SOMETHING NOT FOCUSED MUCH ATTENTION ON IN THE LAST 24 HOURS BUT PART OF THE EQUATION. I THINK IT'S SOMETHING THAT SHOULD BE CONSIDERED, LEST WE HAVE GENERATION UNITS THAT FAIL AS I SAY ULTIMATELY THAT CONSUMERS WILL HAVE TO CONTINUE TO PAY FOR INFRASTRUCTURE THAT IS BEING BUILT NOW OR THAT WILL HAVE TO BE BUILT BEFORE THOSE UNITS CLOSE.

>> THANK YOU. MICHAEL.

>> WE USE THE WORD MARKET. WHAT MARKET MEANS WE HAVE TO DEFINE. IF THERE'S NO COMPETITION, THERE'S NO MARKET. THERE ARE CERTAIN STATE POLICIES LIKE ENVIRONMENTAL, SPECIFICALLY LIKE RPS FOR RENEWABLES, 30 STATES HAVE RPSs, THE WHOLE RENEWABLE INDUSTRY EXISTS BECAUSE OF STATE POLICIES ON RPSs. I WANT TO BE CLEAR WITH NO RPSs THERE WILL BE NO RENEWABLE IN THIS COUNTRY, OR VERY LITTLE. THE WHOLE TECHNICAL IMPROVEMENTS AND PRICE CURVES WE SEE BECAUSE OF THE AMOUNT OF DEPLOYMENT, BUT IT'S A MARKET COMPATIBLE STRATEGY. MARKET, FULFILL THIS POLICY. WHATEVER POLICY IS, IT HAS TO BE MARKET COMPATIBLE. WE CANNOT HAVE  IT'S NOT ABOUT KATHLEEN, BY THE WAY. IT'S HOW THE WORLD WORKS. WE HAVE TO HAVE A POLICY THAT'S MARKET COMPATIBLE. IF STATES HAVE ENVIRONMENTAL POLICY, FINE. HERE IS THE POLICY AND YOU, MARKET, GO TO FULFILL THIS POLICY. THAT'S WHAT, YOU KNOW, REGULATORS DO OR LEGISLATORS. THEY COME UP WITH A POLICY AND HAVE MARKET FULFILL. BUT THERE ARE CLEARLY NOT MARKET COMPATIBLE POLICIES. IF POLICY IS NOT MARKET COMPATIBLE, IT SHOULD NOT BE ALLOWED, NO MATTER WHAT, HOW YOU COLOR IT, OKAY? SO IF  SO THAT'S THE FUNDAMENTAL PRINCIPLE HERE, OKAY? IS THE POLICY MARKET COMPATIBLE? POLICIES MARKET DESTRUCTIVE, OKAY? I THINK THIS HAS TO BE A GUIDING PRINCIPLE HERE. HOW THIS POLICY  BUT DEFINITELY MY VIEW STATES HAVE TO HAVE ABILITY TO AFFECT POLICY. IF WE KNOW CLEARLY POLICIES TO SAVE JOBS, NOTHING TO DO WITH THE ENVIRONMENT, THEN IT'S NOT A POLICY. THIS IS NOT A POLICY. THIS IS JUST IN INDIVIDUAL ACTION THAT INTERFERES DIRECTLY WITH THE MARKET. LET ME TELL YOU ONE MORE THING, OKAY? WE AS AN INDEPENDENT PRODUCER, WE HAVE TO RELY ON MARKET SIGNALS TO DO BUSINESS. WE DON'T DO BUSINESS IN ISOLATION, JUST SAY I'M GOING TO BUILD SOLAR IN NEW JERSEY. WE HAVE TO RELY ON MARKET SIGNALS. THERE'S AN RPS, YOU KNOW, EVERYBODY KNOWS THERE IS AN RPS, WHAT DURATION, WHAT LENGTH, MARKET WILL FILL IT. IF POLICIES ARE KNOWN IT COULD CHANGE TOMORROW BECAUSE SOME STATES COME UP WITH A STRANGE POLICY TO SUPPORT SOMETHING AND THEN THERE IS A COMPLETE COLLAPSE OF THE PLANS THAT WE WERE PREPARING AND OTHER PEOPLE PREPARING TO DO. THIS IS JUST NOT MARKET COMPATIBLE POLICY. IN MY VIEW FERC HAS TO GIVE CLEAR SIGNALS. OTHERWISE REAL BE HERE EVERY YEAR AT THIS CONFERENCE, TODAY EXELON IS THE POSTER CHILD, TOMORROW SOMEBODY ELSE. WHAT IS MARKET COMPATIBLE POLICY, IT WAS CLEARLY NOT MARKET COMPATIBLE POLICY.

>> THANK YOU. LISA?

>> THANK YOU. GETTING BACK TO YOUR QUESTION ABOUT BRINGING ATTRIBUTES INTO THE MARKET, I THINK OF THE TWO WHOLESALE MARKETS, ENERGY MARKETS ARE BETTER ABLE TO VALUE OR SELECT ADDITIONAL ATTRIBUTES. AS A RESULT OF OUR LAST TECHNICAL CONFERENCE ON THIS ISSUE IN 2013 THE COMMISSION HAS DONE A VER ADMIRABLE JOB WORKING ON PRICE ISSUES, THAT'S A GOOD DIRECTION TO HEAD. AND THERE ARE GOING TO BE NEW TECHNOLOGIES, DIFFERENT OPERATING PARAMETERS AND CAPABILITIES THAT WE'RE GOING TO HAVE TO ADDRESS, DISTRIBUTED RESOURCES, ENERGY STORAGE. WE SHOULDN'T LOSE SIGHT OF IMPROVING THE CURRENT PRICE FORMATION PROCESSES REGARDING TRANSPARENCY OF OPERATOR DECISIONS, MODELING, ALL KNOWN CONSTRAINTS, AND MORE ACCURATE PRICE FORMATION RULES DURING PERIODS OF TRANSMISSION CONGESTION AND VOLATILE FUEL PRICES AND WE WOULD ALSO COMMEND PJM ON THEIR EFFORTS TO HELP COME UP WITH SOLUTIONS FOR THESE PROBLEMS AND WE LOOK FORWARD TO WORKING WITH THEM ON THIS.

>> THE QUESTION ABOUT THE  I'M SORRY, I'M HAVING A SENIOR MOMENT. MR. POLSKY AND ABE BOTH TALKED ABOUT HAVING AS A DISTINGUISHING WHEN WE LOOK AT STATE POLICIES WHETHER THEY ARE SET UP OPEN TO ALL, YOU KNOW, MARKET COMPETITIVE OR NOT, WHICH SOUNDS A LITTLE BIT LIKE THE CONCEPT OF WHEN WE TALKED ABOUT WHETHER YOU TAKE THE TAX CREDIT, IF IT'S OPEN TO EVERYONE IN TECHNOLOGY AS OPPOSED TO SPECIFIC WHETHER A GOOD RULE OR NOT IS THE RATIONALE ARE YOU SAYING THAT WOULD BE A DETERMINANT OF WHETHER SOMETHING GOT REPRISED LIKE AS LONG AS IT WAS DONE IN A COMPETITIVE BID IN SOME WAY WOULDN'T GET REPRICED BUT IT WOULD GET REPRICED IF IT DIDN'T? IS THAT THE PROPOSAL AND COULD YOU EXPAND ON HOW WE MIGHT DECIDE IF SOMETHING IS MARKET COMPETITIVE, BECAUSE THAT'S, DARE I SAY, A FRESH IDEA THAT CAME IN.

>> I'M NOT SURE IF I'M 100% CLEAR ON YOUR QUESTION, THE WORTH REPRICE. WHAT I WAS TRYING TO SAY THAT OBVIOUSLY WE HAVE TO BE REALISTIC. IS IT STATES HAVE CERTAIN RIGHT TO ACCOMMODATE CERTAIN POLICIES, LET'S ASSUME THAT, OKAY? BECAUSE IF WE ASSUME STATES HAVE NO RIGHTS FOR ANYTHING, THEN WE DON'T HAVE TO TALK ABOUT IT. BUT IF STATES HAVE CERTAIN POLICIES, LET'S SAY ENVIRONMENTAL POLICY, AS LONG AS THIS POLICY IS A CLEARLY DEFINED POLICY THAT FULFILLS THROUGH MARKET FORCE, OKAY, THEN IN MY VIEW THAT THIS POLICY MARKET COMPATIBLE COMPARED TO POLICY THAT IS SIMPLY I'M GOING TO GIVE HANDOUT TO THIS PARTICULAR MEMBER, YOU KNOW, BECAUSE OF WHATEVER REASONS ARE WHICH NOT FULFILLED THROUGH MARKET FORCES.

>> I'LL START WITH THE PREPOSITION STATES HAVE RIGHTS, ALL STATE LEGISLATION IS VALID, IT'S NOT MY PLACE TO SAY IT'S NOT. WHAT I HAVE TO DECIDE IS DOES IT AFFECT THE JUST AND REASONABLE PRICE OR NOT. THAT'S MY ONLY JOB, NOT TO BE A JUDGE OF THE STATES.

>> RIGHT.

>> SO I THOUGHT WHEN I HEARD, MAYBE WHEN ABE SAID IT BEFORE, IF IT'S THROUGH SOME KIND OF COMPETITION, BILATERAL OR RPS RENEWABLE PORTFOLIO STANDARD OR SOMETHING ELSE, EVERYONE WAS ELIGIBLE FOR, THAT'S A PROXY FOR JUST AND REASONABLE SO WE DON'T NEED TO REPRICE IT OR WHAT WE'RE USING. HOW WOULD YOU DO THAT?

>> MY VIEW, YES, IF IT WENT THROUGH COMPETITIVE PROCESS, OKAY? AND, YOU KNOW, GENERALLY COMPETITIVE PROCESS ALWAYS WORKS, OKAY? AND IN THIS PARTICULAR CASES IT WOULD NOT NEED TO BE REPRICED.

>> THERE'S A COUPLE WAYS TO SKIN THE CAT. CHRIS WILSON IS THE LEADING EXPERT ON EDGAR BUT THE COMMISSION HAS COME IN BEFORE AND TALKED REPEATEDLY WHETHER A SOLICITATION IS NONDISCRIMINATORY, SHOULD BE ALLOWED TO BE PASSED.

>> I DIDN'T HEAR THE WORD.

>> THE EDGAR.

>> OH, EDGAR, YEAH.

>> SO I THINK YOU COULD. IF THE COMMISSION WANTED TO, COULD GO IN THAT DIRECTION WHERE THEY COME IN AND SAY MAKE A CASE BY CASE DETERMINATION, IS THIS A COMPETITIVE PROCESS. I HAVE TO SAY, YOU KNOW, THE BEAUTY OF THE FEDERAL POWER ACT IS 99% OF TIME YOU KNOW IT WHEN YOU SEE IT AND CAN SPILL 300 PAGES OF TESTIMONY ON A COMPETITIVE PROPOSITION, OPEN TO ALL PARTIES, NEUTRAL PRODUCT, YES OR NO. YOU RECOGNIZE IT QUICKLY. THAT'S ONE WAY TO GO. ONE OF THE THINGS I REALLY LIKE ABOUT SOME OF THE TWOTIER PRICING SCHEMES OR THE NEW ENGLAND SCHEME THAT THEY HAVE TALKED ABOUT IS THAT THEY ARE ALMOST INDEPENDENT OF INTENT. SO WE CAN GET OUT OF THE BUSINESS OF POLICING WHETHER THE STATE ACTION IS LEGITIMATE OR WITHIN THEIR SPHERE AND WE PROTECT JUST AND REASONABLE RATES BOTH FOR THE SUPPLIERS AND ALSO FRANKLY FOR CUSTOMERS. BECAUSE, YOU KNOW, THEY ARE ABLE TO TAKE ON, RESOURCES ARE ABLE TO GET SOME MARKET REVENUE AGAINST THE FIXED COST THAT THE RATE PAYERS WOULD OTHERWISE BE PAYING AND USE THAT AS OFFSET. I LIKE IT BECAUSE IT DOES HAVE THAT, YOU KNOW, YOU TAKE INTENT OUT OF THE QUESTION ENTIRELY.

>> WE HAVE THAT AS MOPAR EXCEPTION IN PJM FOR A WHILE, EVERYONE WANTED IT CHANGED, LIKE IT STATES DID A COMPETITIVE BID IT DIDN'T FACE A MOPAR.

>> NO, I THINK WITH ALL DUE RESPECT TO MY COLLEAGUES WHO I GENERALLY AGREE WITH ALMOST EVERYTHING THEY SAID EARLIER THERE'S IS A CLEAR SUPREME COURT COURT 80 THIS IS NOT A CASE. STATE CAN DO A PROCESS, HOWEVER COMPETITIVE THE PROCESS, IF THE RESULT IS EXERCISING MARKET SIDE BUYER POWER, BUYER SIDE MARKET POWER, EXCUSE ME, WE HAVE AN 80 SUPREME COURT DECISION THAT'S NOT THE CASE. THERE'S A HIGHER STANDARD THAN IS IT COMPETITIVE, JUST AND REASONABLE TO THE OTHERS. THE STATE GOING OUT AND DOING RFP TO BRING IN A POWER PLANT WILL CRUSH PRICES.

>> HOW DOES THAT SCHEME, WHATEVER IT IS, NO MATTER HOW COMPETITIVE IT WAS, FIT INTO THE OTHER STATES THAT MIGHT HAVE NOT  MINE THAT'S WHAT YOU'RE WORRIED ABOUT, CRUSHING PRICES, QUOTE, FOR EVERYONE ELSE, THE PEOPLE THAT ARE PART OF THE SAY THE SAME SYSTEM.

>> THIS IS THE CONCEPT OF WHAT CAN YOU PRICE. THIS GETS TO ONE AND THE SAME THING THAT HASN'T BEEN MENTIONED, IT WAS MENTIONED YESTERDAY BY MR. OTT, IS THE ENERGY MARKET. WE CAN TALK ABOUT PRICING CARBON, RIGHT? ENVIRONMENTAL ATTRIBUTES. THE INTERVIEW MARKET IS BEING SUBJECT, ALMOST EVERY SINGLE MARKET TO MASSIVE IMPACTS BY OUT OF MARKET SUBSIDIZED RESOURCES. IT WASN'T AS CLEAR AS WHAT WAS GOING ON IN IN NEW JERSEY AND MARYLAND, ON THIS KIND OF IMPACT. THIS IS WHY EVERYBODY'S PICKING ON KATHLEEN, RESPONDING IN SOME WAYS. IT DOESN'T MEAN I'M NOT GOING TO PICK ON HER.

>> (INAUDIBLE).

>> NO, EXACTLY. I'M NOT. I'M NOT. SHE'S GOOD.

>> HAPPINESS.

>> HAPPINESS. BUT THE REALITY THERE ARE MAJOR DISTORTIONS TO THE ENERGY MARKET THAT ARE GOING TO DRIVE SOME BAT OUTCOMES AND WE HAVE TO RECOGNIZE WE NEED TO THINK ABOUT WHAT IT IS THAT WE CAN DO FOR THE ENERGY MARKET. BY THE WAY, WHEN PRICES ARE PRICING NEGATIVE, WHICH THEY DO SOMETIMES, THERE ARE A BUNCH OF RESOURCES ON THE GRID THAT ARE POSITIVE MARGINAL COST RESOURCES THAT HAVE TO BE THERE AND THEY HAVE HAVEN'T GOT LISTED. THEY ARE THERE. WE'RE JACKING THE PRICES NEGATIVE, IMPACTING FORWARD MARKETS, WE HAVE TO BUMP WIND DOWN AND THERE'S HURTING THE ABILITY OF TRANSPARENCY SO I WOULD ARGUE, YOU KNOW, CARBON WOULD BE A GOOD THING, INTERVIEW PRICE FORMATION I THINK IS PROBABLY FAILING US GENERALLY RIGHT NOW GIVEN ALL THESE DISTORTIONS AND THIS GETS A LITTLE BIT AT THE COMPETITIVE PROCESSES. YOU STILL HAVE TO BE CAREFUL OF THAT. THE THIRD ATTRIBUTE WHICH I DON'T THINK NEEDS TO BE PRICED, I'LL GO THE OTHER WAY TO ANSWER YOUR QUESTION THERE'S BEEN TALK OF RESILIENCY AND THERE'S BEEN TALK OF UNRELIABILITY AND TALK OF  I HAVEN'T HEARD IT TODAY, DIVERSITY OF RESOURCES. THAT JOB BELONGS TO THE RTO. REASON DEETRE. THAT'S ALL THE FRENCH I KNOW. THEIR REASON FOR BEING. THAT'S THE RTO JOB. IF THE STATES ACTUALLY THINK THEIR FAILING, THEY HAVE THE OPTION TO LEAVE BUT I DON'T THINK YOU CAN ACTUALLY  WE TALK ABOUT WHAT YOU'RE GOING TO  YIELD IS GOING TO GET CUT, TO USE THEIR TERM, DOOR NUMBER 1, WHATEVER YOU AGREE TO THE ATTRIBUTES SOME HYBRID APPROACH, I DON'T THINK THAT THAT'S GOT TO REMAIN WITH THE RTO, THEY ARE IN A FAR BETTER PLACE TO DECIDE IS THERE TOO MUCH GAS, WHAT DO THEY DO WHEN IT'S COLD. THE REST THE RTOs HAVE.

>> ISN'T THAT THE MARKET'S FIRST NAME, RELIABILITY? RELIABILITY PRICING MECHANISM?

>> I THINK I'VE GOT ABE, JOHN, CHAIR VANNOY, KATHLEEN.

>> I MOSTLY AGREE BUT WHEN WE TALK ABOUT WHETHER WE'RE GOING TO ACCOMMODATE RESOURCES I DO THINK THAT WE DO  SHOULD GET BEYOND THIS IDEA THAT A STATE IS RIGHT OR WRONG IN MOST CASES. THAT'S NOT TO SAY THERE'S NOT SPECTRUM. IF WE HAD A JOBS PROGRAM MASQUERADING AS ENERGY BILL THAT WOULD BE A PROBLEM. I THINK AS WE GET CLOSER AND CLOSER TO THE ENVIRONMENTAL ATTRIBUTES A STATE IS LOOKING FOR THEY HAVE A ROLE IN SETTING THOSE AND MARKET SHOULD ACCOMMODATE THEM. DUAL FEDERALISM VERSUS COOPERATIVE FEDERALISM, THE POWER ACT EVOLVED OVER TIME. WHEN WE LOOK AND SAY WHAT THE MARKETS SHOULD ACCOMMODATE, A STATE ENVIRONMENTAL PROGRAM, A STATE ENVIRONMENTAL GOAL, SHOULD BE FIRST ON THE LIST OF THINGS THAT THIS FEDERAL GOVERNMENT RECOGNIZES. THAT'S THE HEART OF IT. THAT'S TO THE HEART OF COOPERATIVE FEDERALISM BUT NEED TO MEET THE OTHER PARTS OF THE FEDERAL POWER ACT. IT'S A JURISDICTIONAL PRODUCT IN SOME CASES. NUCLEAR COMPRISES VIRTUALLY 100% OF THE SUPPLY STACK IN ILLINOIS, WOULD WE SAY THE STATE COULD COME IN, OR WIND, AND TAKE 100% OUT AND SAY IT DOESN'T AFFECT THE WHOLESALE MARKET? UNLESS YOU CAN SAY YES IT'S FERC JURISDICTIONAL. THE COMMISSION ROLE IS THE SAME REGARDLESS OF WHETHER THE STATE ATTRIBUTE IS ZERO CARBON OR SOME SORT OF LOWER EMISSION, IT NEEDS TO STEP UP AND PROVIDE THE PLATFORM FOR JUST AND REASONABLE RATES. AMAZON FOR CLEAN ENERGY, NOBODY WOULD SAY THAT GOING TO THE GROCERY STORE WHERE YOU HAVE ONE GROCERY STORE IN THE MIDDLE OF NOWHERE WITH NO COMPETITION IS GOING TO GET YOU A JUST AND REASONABLE PRICE FOR BROWNIES, RIGHT? YOU'RE GOING TO SHOP AT A SUPER STORE, GO ONLINE, COMPARE PRICES, I DON'T KNOW WHY BROWNIES, IT JUST IS. SO WHEN WE THINK ABOUT THESE PROGRAMS AND REALLY ONLY FERC CAN PLAY THIS ROLE. ONLY FERC CAN SET UP THE APPARATUS THAT ALLOWS US AS A SOCIETY TO GET THE BEST POSSIBLE COMPETITIVE PRICE FOR THE ENVIRONMENTAL ATTRIBUTES WE'RE LOOKING FOR, AND SO IF THE STATE COMES IN AND SAYS WE WANT A HARD CARBON TARGET, OF CERTAIN EMISSIONS, OR THEY SAY WE WANT 5000 MEGAWATTS OF CLEAN ENERGY OR THEY SAY ANY OTHER KIND OF COMPETITIVELY NEUTRAL GOAL I THINK IT IS INCUMBENT UPON THE COMMISSION TO GO IN WITH OVERSIGHT TO MAKE SURE THE RATES ARE JUST AND REASONABLE AND ACCOMMODATE THAT. IT'S SECURITY CONSTRAINED ECONOMIC CARBON DISPATCH, IF WE HAVE TO, CERTAINLY WE CAN DESIGN A CAPACITY MARKET THAT HAS VARIOUS, YOU KNOW, VARIOUS TRAUNCHES OF PRODUCTS. DON'T DESTROY THE COMPETITIVE MARKET. IF THE RESOURCES THAT ARE COUNTING ON THE COMPETITIVE MARKET 100% OF FIXED COST RECOVERY NEED TO BE TREATED AND GIVEN JUST AND REASONABLE RATES, IT'S NOT AN OPTION, THAT'S WHAT THE FEDERAL POWER ACT COMMANDS

>> THANK YOU. I LIKE MICHAEL'S DESCRIPTION OF MARKET COMPATIBILITY, MAYBE WE NEED A MARKET COMPATIBILITY TEST TO SCREEN ATTRIBUTES. I THINK ATTRIBUTES HAVE TO BE GERMANE TO THE WHOLESALE MARKETS. I GET NERVOUS WHEN WE TRY TO DRIVE IN ATTRIBUTES OUTSIDE THE MARKET. WE'RE GOING DOWN THE SLIPPERY SLOPE OF REALLY HEAVY DUTY COMMAND AND ROLE, REGULATION, BIG GOVERNMENT THAT I DON'T THINK PEOPLE BENEFIT FROM, NOT WITH STANDING THE INTENTIONS BEHIND THE POLITICIANS THAT WANT TO DO IT.

>> CHAIR VANNOY?

>> THANK YOU. I WANT TO TAKE THE DISCUSSION BACK TO THE ATTRIBUTES. AND I THINK AS WE MOVE DOWN THIS PATH THAT WE'RE ON, GO BACK TO AN EARLIER COMMENT WAS THAT ALL PUBLIC POLICIES ARE NOT CREATED EQUALLY. I THINK THE SAME CAN BE SAID ABOUT ELECTRON, ALL ELECTRONS ARE NOT CREATED EQUALLY. MARKET ROLES HAVE TO ADAPT TO PROVIDE RELIABLE SERVICE WE'RE ALL LOOKING FOR. PJM IS TAKING A SHOT IN GENERATOR RELIABILITY MATRIX, THEY ARE IMPORTANT ONES IS THAT WE SHOULD FOCUS ON. THE REALITY IS AS WE MOVE THROUGH MORE POWER ELECTRONICS, LESS INERTIA ON THE SYSTEM THEY ARE GOING TO AFFECT RELIABILITY. PHYSICS ARE NOT GOING TO FOLLOW A MARKET RULE WE'VE CREATED AND WE HAVE TO BE COGNIZANT OF THAT GOING FORWARD. WE WOULD ALL BENEFIT IN OUR ISOs FROM A REAL HONEST DISCUSSION ABOUT THE REAL TECHNICAL ISSUES AND TYPE OF ATTRIBUTES WE NEED TO ENSURE RELIABILITY. WHEN YOU LOOK AT CARBON'S BEEN TALKED ABOUT A LOT. I WANT TO RESPOND TO THAT VERY BRIEFLY. WHEN YOU LOOK AT ISO NEW ENGLAND AND CARBON, PRICING CARBON IN OUR MARKET, WE ARE ONE OF THE LOWEST CARBON INTENSIVE MARKETS IN THE COUNTRY. YET WHEN YOU LOOK AT ALLIN DELIVERED PRICES, TRANSMISSION, DISTRIBUTION, GENERATION, VARIOUS STATE POLICIES AND YOU LOOK AT AVERAGE PRICES ACROSS NEW ENGLAND, THEY ARE THE HIGHEST. SO WHEN YOU MOVE TO PUT LET'S CALL IT SAY A $10 PRICE ON CARBON IN THE MARKET, WHAT DOES THAT RESULT IN? WE HAVE A FLAT SUPPLY CURVE, NOT GOING TO CHANGE THE DISPATCH, BUT IT'S GOING TO INCREASE RATES TO CUSTOMERS BY HALF A BILLION DOLLARS. SO WE HAVE TO BE VERY CAREFUL ABOUT WHAT ATTRIBUTES WE'RE LOOKING AT TO GO BACK TO THE POINT OF RELIABILITY. AND ADDRESS THE POINT OF RELIABILITY IN THOSE ATTRIBUTES.

>> THANK YOU. VICE CHAIR PLACE?

>> THANK YOU. YEAH, I'M NOT SURE I'M NOT GOING WHERE CHAIRMAN VANNOY IS ON THE CARBON PRICE BUT IF YOU RETURN REVENUES BACK TO THE STATES IN A MECHANISM, I WOULD ARGUE FOR BENEFITING LOW INCOME SUPPORT, AVOID REGRETS AND SO ON, IT'S NOT IS A NET LOSS. BUT YES, I THINK YOU CAN AND SHOULD AND MUST OR HAVE TO OR IT'S ALREADY HAPPENED, INTEGRATE STATE POLICIES INTO THIS MARKET. BUT IF YOU CAN  IF IT'S A SORT  I MEAN THE RULE AS ABE WAS POINTING OUT IS IT DISTORTED OR NOT, YOU KNOW WHEN YOU SEE IT. YES, YOU'RE GOING TO INTRODUCE A MORE COMPLEXITY. HOWEVER IT'S NOT UNDOABLE, NOT UNMANAGEABLE. FROM MY PERSPECTIVE THINKING ABOUT THE CARBON ISSUE, YOU CAN'T INTEGRATE CARB INTO THAT IN A TECHNOLOGY NEUTRAL SOURCE NEUTRAL WAY THAT IS NOT DISTORTED TO THE MARKET AND BUT IF YOU DO HAVE POLICY, FLIP IT OVER TO THE QUESTION OF SIZE, I DON'T THINK IT MATTERS WHETHER IT'S SMALL OR LARGE. YOU JUST COME DOWN, IS IT DISTORTIVE OR NOT DISTORTIVE? SOME WAYS WE'VE ALREADY HAD THE  THE COW LEFT THE BARN, MILK ALREADY SPILLED, A LOT OF POLICIES IN THE MARKET, YOU CAN SAY TO DATE, AS MR. OTT SAID YESTERDAY UP IS NOT SUBSTANTIVE BUT WE'RE GETTING TO THE POINT IT IS SUBSTANTIVE. IF IT'S NONSUBSTANTIVE LET'S NOT ARGUE BUT BY AND LARGE MUCH IS SUBSTANTIVE AND JUST ENSURE THAT WE HAVE MECHANISMS WHETHER IT'S MOPAR OR TWOTIERED MARKET PRICE SIGNAL, YOU CAN GET THERE. YOU HAVE TO GET THERE. I THINK WE CAN DO IT IN A WAY THAT DOESN'T CRUSH THE MARKET.

>> KATHLEEN?

>> THANK YOU. PICK UP ON SOMETHING THAD SAID EARLIER ABOUT ENERGY MARKET PRICES FORMATION. BECAUSE OBVIOUSLY WE DECIDE WHICH MATTER TO US, WHICH DON'T. IT WAS STRIKING WHAT ANDY OTT SAID YESTERDAY WHEN HE WAS SPEAKING. HE WAS DESCRIBING THE PROBLEM OF NEGATIVE PRICING AND FACT INCONSISTENCY IN TERMS OF ENVIRONMENTAL POLICIES THROUGHOUT THE LARGE PJM FOOTPRINT THAT ARE DEVALUE NUCLEAR STATIONS. HE SAID WE TRIED TO POLITELY IGNORE THE PROBLEM BUTNO LONGER IGNORABLE. SO YOU SEE PJM COMING FORWARD WITH BOTH A PROPOSAL TO WORK ON CHANGING THE WAY WE'RE PRICING ENERGY, THAD WAS ALLUDING TO, AS WELL AS SHOULD WE TRY TO BE PRICING IN OTHER ATTRIBUTES INCLUDING CARBON WHICH CLEARLY PJM WOULD CHANGE THE DISPATCH, THAT'S WHY CALPINE HAS BEEN IN FAVOR OF CARBON PRICE BECAUSE IT HAS SUFFICIENT GAS PRICES THAT WOULD BENEFIT FROM THAT MODEL. BUT EITHER OF THOSE TWO TASKS, THE ONE NUCLEAR PLAN AT PJM THAT HAS AMOUNT OF STATE SUPPORT, IF IT GETS PICKED, WOULD BE ECONOMIC. SO THERE WAS A STATEMENT THAT ABE MADE BEFORE THE BREAK THAT, YOU KNOW, FERC SHOULD TAKE ACTION TO MITIGATE ALL STATE ACTIONS. WE DON'T WANT TO HAVE TO DETERMINE WHICH ONES ARE BAD AND GOOD. THE ONLY THING YOU HAVE IN FRONT OF YOU IS COMPLAINT THAT'S TARGETING AT THAT ONE NUCLEAR PLANT IN PJM THAT COULD GET A STATE SUPPORT PAYMENT SO YOU DON'T HAVE IN FRONT MUCH YOU SOMETHING TO DO, WHAT WE'VE BEEN TALKING ABOUT TODAY, I WANT TO KEEP THAT IN MIND. THE COMPLAINT CHOSE NOT TO DRAFT THIS BIGGER ISSUE, JUST TARGET THAT ONE STATION. AND I JUST WANTED TO MAKE SURE THAT, YOU KNOW, IF WE'RE GOING TO TAKE A STEP BACK WE REALLY DO TAKE A STEP BACK.

>> ARNIE, IF I COULD 

>> WE DO HAVE CASES IN FRONT OF US, MOPARS FOR EXISTING RESOURCES, THEY AREN'T ALL JUST COMPLAINTS.

>> I'M TALKING ABOUT PJM.

>> IF I MAY REAL QUICK, WHEN I SAID ALL RESOURCES I'M TALKING ABOUT IF WE HAVE A TWOTIER PRICING SCHEME TO ACCOMMODATE SUCH RESOURCE, I'M NOT TALKING ABOUT UNDER THE EXISTING STRUCTURE, SORRY IF I WAS UNCLEAR ABOUT THAT.

>> CHAIR VANNOY?

>> YES, THANK YOU. ONE OTHER AREA ON RELIABILITY, AND KIND OF THE URGENCY OF THE DISCUSSION THAT WE'RE HAVING HERE TODAY, WHEN YOU LOOK AT ISO NEW ENGLAND'S REGIONAL ENERGY OUTLOOK, THEY DIDN'T PUT THIS ISSUE AS THEIR NUMBER ONE ISSUE. THE NUMBER ONE ISSUE IN NEW ENGLAND IS FUEL SCARCITY, FUEL SUPPLY. FUEL SECURITY. THOSE QUESTIONS. SO WHEN WE LOOK AT ATTRIBUTES, MAYBE THAT'S ANOTHER ATTRIBUTE WE NEED TO BE LOOKING AT. AND, YOU KNOW, THE WAY WE'VE RESPONDED TO THAT RIGHT NOW IS WE'RE BURNING OIL, DURING WINTER RELIABILITY PROGRAMS, BUT THAT'S NOT EXACTLY WHERE WE WANT TO BE. SO WE OUGHT TO BE MOVING FORWARD IN THAT AREA OF FUEL SECURITY AND MAYBE THAT GETS WRAPPED INTO THESE DISCUSSIONS. AND WE'VE BEEN AT THIS FOR SOME TIME. GO BACK TO THE URGENCY QUESTION FROM OTHER PANELISTS HEARING THIS NEEDS TO BE SOLVED IMMEDIATELY. WE'RE MOVING FORWARD TAKING STEPS.

>> ONE PLANT IN ILLINOIS THAT KATHLEEN REFERENCED, THE MOPAR, GETTING A PLANT, IT'S DESTRUCTIVE, WHEN YOU'RE A PUBLIC COMPANY AND DEPEND ON PUBLIC INVESTORS TO INVEST YOUR MONEY, YOUR CALLS TO CAPITAL, EVEN ONE PLANT PEOPLE THINK IS A TREND IS UNBELIEVABLY DESTRUCTIVE. QUICKLY, ON THE  THIS IS TO THE ATTRIBUTES, FUEL SUPPLY OR DIVERSITY OF SUPPLY, I HOPE I WAS CLEAR ABOUT THIS, I THINK WHATEVER THE ISSUE IS THAT IT'S UP TO THE ISO. MY POINT WAS THEY DON'T NEED TO ACCOMMODATE STATES. THERE ARE ATTRIBUTES WHICH THE ISOs SHOULD TAKE INTO ACCOUNT, JUST WANT TO MAKE SURE THEY GET IT RIGHT. I DON'T THINK WHATEVER PATH OF THE STATE LEGISLATURE WHEN IT GETS TO RERELIABILITY IS IN THE ISO'S CAMP.

>> SOME ATTRIBUTES ARE UNDER THE PURSUE OF NERC, AND NERC HAS STANDARDS DEALING WITH SECURITY AND MANY VARIOUS FORMS. AND SO I THINK PART OF THIS DISCUSSION WE NEED TO LOOK AT APPROPRIATE FORUM FOR TRYING TO INTERNALIZE THESE ATTRIBUTES AND NOT ASSUME THAT IT'S ALWAYS GOING TO BE DONE BY TWEAKING THE ENERGY MARKET.

>> I JUST WANT TO SEE IF WE CAN SPEND A TINY BIT OF TIME ON PATH 5, BECAUSE I THINK WE'VE HEARD FOLKS ASK US TO KIND OF PUSH TO AN EXTREME THAT SAYS ESSENTIALLY IF IT'S NOT IN THE MARKET, IF IT CAN'T BE BROUGHT INTO THE MARKET, WHATEVER THE ATTRIBUTE IS, RELIABILITY ATTRIBUTE, ENVIRONMENTAL, SOMETHING ELSE, THEN THAT RESOURCE, THAT SUPPORT IS SUBJECT TO A VERY STRICT MINIMUM OFFER PRICE RULE. THE RESOURCES REPRICE AS IT ENTERS INTO THE MARKET, IF IT DOESN'T CLEAR THE CAPACITY MARKET, THAT'S JUST THE DEAL. AND SO I'D LIKE TO SEE WHETHER I COULD GET ANY OF YOU TO TAKE THE BAIT ON WHETHER THAT'S A GOOD PATH FORWARD, THAT'S A SUSTAINABLE PATH FORWARD, IF THAT PATH, YOU KNOW, LANDS AT A PLACE WHERE WE STILL HAVE A SET OF STATES THAT ARE WILLING TO HAVE THE UTILITIES PARTICIPATE IN THE WHOLESALE ENERGY MARKETS, OR NOT. AND ESPECIALLY FROM OUR STATE REPRESENTATIVE, WHETHER THAT PATH IS A PATH. JOHN?

>> AGAIN, QUICKLY, IF IT PRESERVES COMPETITION AND RESULTS IN THE LOWEST POSSIBLE RATES TO CUSTOMERS, DO IT.

>> MICHAEL?

>> (INAUDIBLE).

>> WHEN WE CREATED COMPETITIVE MARKETS, ALL STATES, THEY THOUGHT THEY ARE DOING EXACTLY WHAT YOU JUST SAID THEY WOULD BE DOING. THEY THOUGHT THEY JOINED THE MARKETS AND THEY WILL INCREASE THE MARKETS, A LOT OF THINGS THEY WERE DOING AS STATES, OKAY? ONLY AFTER THAT THEY START TESTING THINGS THAT TRY TO SEE HOW MUCH THEY CAN GET AWAY WITH AND THAT'S WHY WE'RE SITTING HERE, OKAY? PEOPLE ALREADY FORGOT WHY THEY JOINED THE MARKET. IN REALITY MY VIEW THAT WAS THE INTENT AND THAT'S WHY STATES JOINED THE MARKETS BECAUSE THEY THOUGHT THAT MARKETS NOW WILL PLAY THAT ROLE AND STATES WOULD ONLY DEAL WITH ISSUES THAT REALLY PREROGATIVE OF THE STATE ITSELF. SO I THINK UNFORTUNATELY THAT'S KIND OF HAPPENED HISTORICALLY. PEOPLE TRIED TO GET AWAY AS MUCH AS THEY GET AWAY WITH, AND NOBODY IN THEIR RIGHT MIND, IN EARLY 2000, WOULD HAVE THOUGHT THE STATES COULD SUPPORT THIS PLAN OR THAT PLAN. IT WAS NOT EVEN THINKABLE. NOW WE'RE SITTING WITH ISSUES 15 YEARS LATER, PRESUMABLY THINKING WE'RE A FREE MARKET COUNTRY, YOU KNOW, TRY TO SUPPORT INDIVIDUAL UNITS, OKAY? I'M NOT TALKING EXELON.

>> MICHAEL, I APOLOGIZE INTERRUPTING, THE TIME IS TIGHT AND IT'S CLOSE TO THE SAME CONVERSATION, I'M GOING TO CUT THAT OFF AND FOCUS MORE SPECIFICALLY ON THE QUESTION ABOUT THE IMPLICATION OF IF WE'RE NOT TALKING ABOUT THAT SPECIFIC EXAMPLE, A BROADER RANGE OF STATE POLICIES THAT WOULD ALL BE SUBJECT TO THE MOPAR, WHAT DOES THAT DO FOR COMPETITION AND AS ARNIE ALLUDED TO FROM THE STATE'S PERSPECTIVE WE HAD SEVERAL PEOPLE RESERVE STATES HAVE THE ABILITY TO DIRECT UTILITIES TO LEAVE THE RTO, TO LEAVE THE MARKET. IS IT A LONGTERM SUSTAINABLE PATH, IF FERC IS GOING TO MOPAR ALL STATE POLICIES FROM THE STATE'S PERSPECTIVE?

>> ARE YOU ASKING ME?

>> PROBABLY THE STATE FOLKS BUT IF OTHER PEOPLE WANT TO WEIGH IN.

>> I WOULD JUST SAY WHETHER IT'S THE RPS, I THOUGHT IT WAS INTERESTING TO HEAR ANDY YESTERDAY TALK ABOUT THE FACT THAT IT JUST IS NOT SIGNIFICANT ENOUGH FOR THEM. KATHLEEN MENTIONED IT AGAIN, VICE CHAIR PLACE TOUCHED ON THAT. WE'RE ENGAGED IN ILLINOIS IN OUR UTILITY OF THE FUTURE DISCUSSION NEXT GRID WHERE WE'RE GOING TO TAKE THIS ON, THERE'S A LOT OF MOMENTUM IN ILLINOIS TO HAVE A VERY AGGRESSIVE RPS. AND SO VERY QUICKLY, YOU KNOW, THOSE ENVIRONMENTAL ATTRIBUTES IN PARTICULAR ARE GOING TO HAVE AN IMPACT ON THE MARKETS, AND TO THE EXTENT THAT THE MARKETS DON'T RESPOND TO STATE PRIORITIES, I THINK THE DOOR THAT STATES WILL HEAD FOR HAS THE WORD EXIT OVER IT.

>> CHAIR VANNOY?

>> THANK YOU. I THINK THE KEY HERE IS CONFIDENCE IN THE MARKETS ON BOTH SIDES. AND I THINK AS YOU WALK DOWN ONE PATH WHERE YOU MOPAR EVERYTHING OUT, YOU'RE GOING TO SEE STATES THAT DON'T HAVE CONFIDENCE IN THE OUTCOMES BECAUSE WE HAVE THIS IN NEW ENGLAND WHERE STATES ARE PURCHASING LONGTERM CONTRACTS, THEY ARE GOING TO HAVE EXCESS CAPACITY THAT CONSUMERS ARE PAYING TWICE FOR, SHOWS UP IN RETAIL RATES, NOT A GOOD SITUATION. ON THE OTHER HAND YOU HAVE OTHER STATES WHO ARE CONCERNED ABOUT THE SOCIALIZATION OF THE COST OF OTHER POLICIES. SO THERE'S A CONFLICT THERE THAT IS BREWING. SO THAT TAKES US BACK TO ACCOMMODATION TYPE THINGS. WHEN YOU LOOK AT WHAT NEW ENGLAND DID IN THE MOPAR EXEMPTION, WE LOOKED AT WHAT THE RPS WAS ACROSS THE STATES, WE HAD A VERY TAILORED AND VERY RESTRICTIVE APPROACH TO THAT MOPAR EXEMPTION. THAT'S WORKING FOR US NOW. IT TOOK A NUMBER OF YEARS, WE'RE NOW INTO THE IMAPP PROCESS, WORKING THROUGH THE DETAILS. WE'LL CONTINUE TO WORK ON IT.

>> THIS PATH 5 WHICH IS MOPAR EVERYTHING, IS THERE A DIFFERENCE BETWEEN THINGS STATES ARE DOING TO BRING IN NEW RESOURCES WHERE WE HAVE THE NEW ENGLAND PLAN, MAYBE WHAT THE STATES WANT ABOVE ALL TO GET ACAPACITY AWARD, IT'S GETTING REVENUES ANYWAY, OR THINGS DONE TO SUPPORT EXISTING RESOURCES, THEY SEEM TO BE TWO BUCKETS, AND I WELCOME ANY COMMENT ON THAT. I'M NOT TRYING TO GET INTO WHAT WE'RE NOT TALKING ABOUT BUT IN TERMS OF STRUCTURAL, IS THAT THE SAME THING OR 

>> DO YOU MIND IF I TAKE THAT? YOU KNOW, NO, I DON'T THINK THEY ARE THE SAME THING. I THINK THE COMMISSION SHOULD BE VERY HIGHLY SKEPTICAL WHEN A STATE STEPS IN TO PREVENT EFFICIENT ENTRY. I DON'T THINK THE COMMISSION SHOULD EVER RULE OUT ANY POSSIBILITY THAT THERE IS A COMPETITIVELY NEUTRAL REASON, I THINK THE COMMISSION SHOULD PUT ON ITS READING GLASSES WHEN IT SEES A CASE LIKE THAT AND BE HIGHLY SKEPTICAL WHEREAS NEW ENTRY IS DIFFERENT.

>> YOU SAID TWO SIDES OF THE SAME COIN. SO THE STATE'S BRINGING SOMETHING IN THAT WOULDN'T HAVE BEEN IN, ISN'T THAT A LITTLE BIT ALIKE?

>> IT IS A LITTLE BIT OF THE SAME COIN BUT ALSO DIFFERENT. [LAUGHTER] HEAR ME OUT. I'LL TRY TO WALK THROUGH THIS MINE FIELD. I THINK YOU HAVE TO RECOGNIZE THAT THERE ARE, YOU KNOW, VERY REASONABLE  A LOT OF REASONS WHY A STATE WANTS TO BRING IN NEW ENTRANTS. I THINK ENVIRONMENTAL, WE HAVE A PRESSING ENVIRONMENTAL PROBLEM THAT WE HAVE TO ADDRESS. AND SO IF WE SORT OF PUT IT IN THE FACE OF DO WE WANT TO PREVENT STATES FROM BRINGING IN AND SOLVING ENVIRONMENTAL PROBLEMS, IN A WAY THAT IS NOT LEAST COST FOR CONSUMERS, IN A WAY THAT REQUIRES A STATE TO COME IN AND PURCHASE 100% OF ITS ENVIRONMENTAL ATTRIBUTES OUTSIDE THE MARKET, PAY TWICE, I DON'T THINK THAT'S POLITICALLY SUSTAINABLE OR JUST AND REASONABLE. THE MUCH BETTER QUESTION TO ASK IS HOW DO WE FACILITATE AND USE THE POWER OF COMPETITION OVERSEEN BY FERC TO PROCURE WHAT THE STATE IS LOOKING TO PROCURE AT THE LEAST POSSIBLE PRICE? AND, AGAIN, YOU KNOW, ECONOMIC ENTRY VERSUS UNECONOMIC RETENTION HAVE THE SAME IMPACT ON THE MARKET IN SOME WAYS BUT THIS IS ONE OF THOSE PLACES THE COMMISSION WILL HAVE TO MAKE A CALL AND SAY UNECONOMIC RETENTION IS PROBABLY A BAD THING AND PROBABLY NEEDS TO BE MOPARED BECAUSE IT IS SUCH AN EASY AND DIRECT WAY TO ADVERSELY AFFECT AND REALLY CRATER THE WHOLESALE MARKET. I DON'T KNOW IF I THREADED THAT NEEDLE OR NOT.

>> I'M NOT SURE YOU THREADED THE NEEDLE ON THAT ONE. I APPRECIATE THE EFFORT. BUT I JUST CAN'T DRAW A DISTINCTION BETWEEN NEW AND EXISTING AND SAY THAT'S A HARD LINE. IF YOU CARE ABOUT, AGAIN, THAT'S WHY I COME BACK TO THE SUFFICIENCY AND ELEGANCE OF CARBON PRICE, THEN YOU'RE SAYING THAT'S AN ATTRIBUTE WE WANT, WHETHER IT COMES FROM KATHLEEN OUT HERE, A NUCLEAR PLANT, OR OFFSHORE WIND TURBINES IN LAKE ERIE, I'M AGNOSTIC AND I'M NOT SURE I COULD SAY THIS IS THIS AND THIS IS THAT. I THINK THEY ARE BOTH SIDES OF THE SAME COIN. THANK YOU.

>> DO YOU HAVE A RESPONSE?

>> I DO. THANK YOU. I THINK WE'RE NOT IN FAVOR OF BROAD APPLICATION OF MOPAR, PERIOD. BUT I THINK YOU CAN DRAW A DISTINCTION BETWEEN NEW AND EXISTING FOR AT LEAST WHAT PJM'S MOPAR WAS INITIALLY BASED ON, TO PREVENT MARKET POWER TARGETED TO NATURAL GAS UNITS CONSTRUCTED WITHIN TIME FRAME AND SPECIFIED THAT THEY COULD ENTER THE MARKET WITHIN THAT 3YEAR WINDOW AND ACTUALLY HAVE MARKET POWER. AND I THINK LONG TERM IF YOU'RE GOING TO DO BROAD APPLICATION OF MOPAR, WHAT YOU'RE GOING TO DO IS INTRODUCE A LOT MORE UNCERTAINTY INTO THE MARKET BECAUSE RESOURCES ARE NOT GOING TO KNOW WHETHER THEY ARE GOING TO CLEAR OR NOT OR IF THEY ARE GOING TO GET MOPARED. I THINK THAT'S VERY DAMAGING TO THE COMPETITIVE MARKET. I WANT TO BE CLEAR WE'RE IN FAVOR OF COMPETITIVE MARKETS. WE'RE BETTER OFF SINCE ORDER 888. IT'S LEGITIMATE FOR CUSTOMERS TO WANT WHAT THEY WANT, THE MARKET SHOULD ACCOMMODATE THAT. IT SHOULDN'T SAY WE'RE GOING TO CHOOSE FOR YOU, NOT BECAUSE WE KNOW WHAT'S BETTER FOR YOU BUT BECAUSE WE HAVE SUCH A FRAGILE CONSTRUCT THAT WE CAN'T ACCOMMODATE ANYTHING ELSE.

>> THAD?

>> I SAID SOMETHING A FEW MINUTES AGO, AND I'M SCARED OF BEING INCONSISTENT. I SAID THAT WE WERE BEFORE THE BREAK WERE SUPPORTIVE AND FELT THE NEW ENGLAND IDEA WAS A STEP IN THE RIGHT DIRECTION. THE REASON WE SAID THAT, I WILL SAY THE MARKETS ARE DIFFERENT ON WHAT THE REALITIES ON THE GROUND ARE. IN NEW ENGLAND THE THREAT TO PRICE FORMATION AND RELIABILITY, IF WE'RE ALLOWED TO GO THROUGH DOOR NUMBER 2 IS NEW ENTRY. YES, THERE'S THE DOMINION PLANT IN CONNECTICUT BUT EVERYBODY IN THIS ROOM KNOWS THEY ARE MAKING MONEY AND NOT GOING TO RETIRE REGARDLESS OF WHAT HAPPENS IN CONNECTICUT PROBABLY. AND PJM THE THREAT ISN'T AS MUCH NEW ENTRY AS LEAVING, SO WHILE I THINK THEY ARE EXACTLY THE SAME THING, THE FACT THAT THE NEW ENGLAND POLICY DEALS WITH ONE AND WE MAY WORK AS A MATTER OF ACCOMMODATION, ECONOMICALLY IT'S THE EXACT SAME THING AND I THINK THE POLICY OUTSIDE OF REGIONAL PRACTICALITY NEEDS TO BE TREATED THE SAME AND I WOULD SAY BY FAR THE MOST SERIOUS ISSUE OUT THERE WHICH EVER THESE OPTIONS IS THROUGH DOOR NUMBER 2, IF YOU'RE ACTUALLY GOING TO SUBSIDIZE RESOURCES AND NOT HAVE DEFENSE OF PRICE FORMATION WITH REMAINING ASSETS, SUBSIDIZE ANOTHER LAYER AND ANOTHER, WE WANT CAN'T GO DOWN THAT ROAD.

>> COMMISSIONERS, I TURN IT OVER TO QUESTIONS FROM YOU.

>> THANK YOU ALL. THIS HAS BEEN AN EXCELLENT PANEL. I DON'T KNOW WHERE TO BEGIN. WE'VE ASKED A NUMBER OF QUESTIONS THROUGHOUT. LET ME ASK YOU THIS BECAUSE YOU'VE REALLY TRIED HARD, AT FIRST YOU DIDN'T TRY VERY HARD BUT ONCE WE CORNERED YOU, YOU STARTED TRYING TO TAKE ON SOME OF THESE PATHS. NOW I WANT TO ASK YOU TO GO EVEN DEEPER NOW BECAUSE, AND I APPRECIATE YOUR CANDOR, AND I THINK THROUGH IT WE ARE REALLY TRYING TO CRYSTALLIZE AND SYNTHESIZE AND TAKING INTO ACCOUNT REALITY OF STATE ACTION. SO IT SEEMS THROUGH OUR DISCUSSION WE PROBABLY, AND I WANT YOU TO CHALLENGE ME IF YOU DON'T AGREE. I KNOW ABE WILL. WE'RE PROBABLY NOT HEADED DOWN A PATH 1. PROBABLY I'M THINKING ABOUT THE CONSENSUS HERE THAT I'M HEARING TODAY. PROBABLY NOT PATH 4 OR 5. NOW, I'M GOING TO TELL YOU WHY I'M UNDERGOING THIS EXERCISE. YOU'RE SCARING ME A LITTLE BIT BECAUSE YOU'RE EITHER TALKING ABOUT PAST 2, THAT'S FINE, IT WOULD ENCOMPASS A TWOTIER PROCESS LIKE ISO NEW ENGLAND SUBSTITUTION AUCTION EFFORT BUT WHAT'S SCARING ME IS SOME OF ARE YOU STILL TALKING ABOUT PATH 3, WHICH I THINK IS WHERE WE ARE TODAY IN MANY RESPECTS. SO TELL ME NOW, AM I DRAWING THIS TOO NARROWLY TO CONSTRAIN IT TO PATHS 2 AND 3? I WANT TO WALK AWAY FROM THIS AND FEEL LIKE WE'VE GOTTEN SOMETHING DONE. AND I NEED YOU TO TELL ME IF I'M WRONG TO THINK THAT THE CONSENSUS OR GROUND SWELL, MAYBE CONSENSUS IS TOO STRONG A WORD, IS FOCUSED TOO NARROWLY ON PATH 2 AND 3 OR IF THAT'S WHAT YOU HEARD AS WELL, VICE CHAIR PLACE?

>> THANK YOU. OH, I'M SORRY. I THOUGHT YOU HAD YOUR TENT CARD UP. IT WAS MR. POLSKY'S TENT CARD UP.

>> COMMISSIONER, I FEEL PATH 3, DO NOTHING, IS (INAUDIBLE) I MEAN EITHER COMPLETE MARKET DISINTEGRATION OR MASSIVE BANKRUPTCY, IF ANYBODY IN THIS ROOM FEELS THAT THIS IS A SUSTAINABLE PATH, THEY JUST PLAYED WITH FIRE BECAUSE WHATEVER ACTIONS WE SEE TODAY THERE WOULD BE MORE ACTIONS, NOT LIKE WE'LL STOP OKAY, OKAY, THIS IS THE STOP, WE'LL SEE NO MORE ACTION, NO INTERFERENCE. SO TO ME PATH 3 IS JUST ACADEMIC EXERCISE TO SEE HOW LONG WE'LL STAND UP BEFORE WE FALL DOWN. SO TO ME, THAT'S  NOW PATH 2 THE REALITY I KIND OF AGREE WITH YOU THAT  AND WE WENT THROUGH THIS AND SORRY I'VE TAKEN A COUPLE, WHEN STATES WENT THROUGH DEREGULATION, THEY RECOGNIZED THAT PLANTS ARE ECONOMICAL AND RATE PAYERS EXELON RECOVERED BILLIONS OF STRANDED COSTS FOR NUCLEAR PLANTS, A LOT OF PLANTS IN NEW ENGLAND RECOVERED, SO STATES RECOGNIZED THEY ARE NOT COMPETITIVE RESOURCES SO THEREFORE LET'S PUT THEM THERE, LET'S RECOVER THE COST, LET THEM DEAL WITH THE COMPETITIVE MARKET. NOW WE COME BACK AND WE TRY TO FORGET WHAT WE'VE DONE BEFORE, AND GO NEXT ROUND ON THIS SAME THING. SO THIS IS TO ME KIND OF REPEAT OF THE SAME.

>> LIKE INSANITY.

>> WITH APOLOGIES WE'RE ANSWERING THE COMMISSIONER WE'RE NOT HAVING MORE CONVERSATIONS ABOUT THE EXELON NUCLEAR PLANT. THANK YOU.

>> NO, NO.

>> BUT LET ME SAY THIS. I AGREE WITH YOU, DOING THE SAME THING OVER AND OVER AND EXPECTING A DIFFERENT RESULT IS INSANITY. AND PATH 3 COULD BE STATUS QUO WHICH I HEAR SO MANY OF YOU SAYING IS UNACCEPTABLE. BUT THEN THE REASON WHY SOME OF THE DISCUSSION IS MAKING ME A LITTLE UNSETTLED IS BECAUSE YOU ARE ALSO ATTEMPTING TO PASS JUDGMENT ON WHETHER CERTAIN STATE POLICIES ARE LEGITIMATE, WHETHER THEY SHOULD BE INCLUDED, WHETHER IT'S A JOBS PLAN MASSING AS ENERGY PLAN, I HEARD MY FRIEND AT THE END OF THE ROW SAY. SO WE'RE GOING TO HAVE TO GET ON THE SAME PAGE. BUT I AGREE WITH YOUR POINT. AND I WANT TO GO ON TO ABE.

>> YEAH, I HAVE A SLIGHTLY DIFFERENT VIEW THE PATH 3. TO ME, PATH 2 IS THE SIX MONTH TO A YEAR TIME FRAME WHERE WE BEGIN TO ACCOMMODATE STATES EFFORTS TO COME INTO THE MARKET. I THINK WHAT EXACTLY THAT LOOKS LIKE IS DIFFERENT IN EVERY MARKET. SUBSTITUTION IN NEW ENGLAND IS A GREAT FIRST STEP. I LIKE THE TWOTEAR PRICING SCHEME, PJM HAS ANOTHER VARIANT. EACH MARKET REALLY THINK IF THEY ARE NOT DOING IT WITH EXPEDITION, THEY NEED TO DO IT, I WOULD LOVE TO SEE A STATEMENT OUT OF STAFF OR INDIVIDUAL CHAIR AND COMMISSIONERS, CHAIRMEN, THANK YOU, SAYING THAT WE ALL EXPECT THE ISOs TO COME IN WITH A BAKED PROPOSAL, YOU KNOW, THE DAY WE GET QUORUM BACK TO ADDRESS INCREDIBLY IMPORTANT ISSUES AND IT HAS TO BE NOW. NOW, LONGER TERM, I SEE THEM AS STEPS, RIGHT? WE HAVE THE STAUNCH THE BLEEDING MOPAR STUFF WHICH IS PENDING, ISOs OUT THERE TRYING TO DEVELOP ACCOMMODATION FOR STATES, JUST AND REASONABLE RATES, LOAD, THE NEXT EVOLUTION. BUT THEN THE THIRD EVOLUTION WHICH IS HOW I SEE PATH 3 IS IDENTIFYING THE MARKET ATTRIBUTES AND THEN HAVING THE COMMISSION  I THINK THAT'S THE ULTIMATE END GOAL, STEP 4 WHERE WE IDENTIFY MARKET ATTRIBUTES AND BRING THEM INTO THE MARKET SO AGAIN WE'RE DOING IT, YOU KNOW, BUYING THINGS IN BULK IS ALWAYS CHEAPER, BUYING THEM WHERE WE HAVE A COMPETITIVE MARKET IS ALWAYS GOING TO BE THE RIGHT WAY TO GO. AGAIN, THERE'S THAT PATH WE'RE ON NOW THAT IS MORE OF AN ACCOMMODATE BUT THE LONGER TERMS THAT TO BE THROUGH FACILITATION OF BUYING THINGS CHEAPER.

>> THANK YOU.

>> YEAH, I WAS JUST GOING TO JUMP IN AND THE SENSE OF PATH 4, AS I COUNT THE HEADS ON THIS TABLE I THINK YOU HAVE MAJORITY OF PEOPLE INCLUDING STATE COMMISSIONERS, INCLUDING IMPORTANTLY STATES THAT HAVE NOT TAKEN ACTION YET, ASKING YOU TO TAKE PATH 4 OR TO CONSIDER PATH 4.

>> DO YOU ALL AGREE WITH THAT BY NODS OF HEADS? OKAY, VERY GOOD.

>> WILLINGNESS TO WORK ON PATH 4. SO I DON'T KNOW WHY THE SUGGESTION IS THAT PATH 4 NEEDS TO BE THE DOWN THE ROAD IN FIVE YEARS WHEN WE FIGURE IT OUT KIND OF PATH, WHY WE DON'T HAVE THE URGENCY ABOUT PATH 4 WHEN WE ALL KNOW WE'VE BEEN FACING THESE PROBLEMS AT LEAST FROM THE PERSPECTIVE OF OUR FLEET FOR YEARS. WE'VE BEEN LOSING MONEY FOR YEARS. LET'S PUT A TIME CLOCK ON THAT, LET'S WORK ON THAT. THAT WAS IN PJM'S PREFILED COMMENTS, WITH THE SAME TO AP PRY TO THESE OTHER THINGS.

>> WELL, I WAS GOING TO ECHO THAT. PATH 4, IT MAY BE THE ARMY OF ONE, COMMISSION OF ONE.

>> IT MIGHT BE.

>> THERE WILL BE A  YOU ARE FERC. AND YOU DO HAVE THE ABILITY TO REGULATE.

>> (INAUDIBLE).

>> YEAH. AND PATH 4 IS WHAT WE SHOULD ALL ASPIRE TO I THINK, COMPETITIVE MARKETS WORK, AND AS ABE SAID LET'S PRICE THE THING. NOW IF STATES ARE GOING TO DO THINGS OUTSIDE OF THIS AND THE COURTS LET THEM, THEN YOU SHOULDN'T LET IT IMPACT PRICE. RIGHT? THAT'S WITHIN YOUR CONTROL AS WELL. WHICH IS MAYBE THAT'S A HYBRID OF 4 TO 2, ASPIRATION SHOULD BE PRICE WHAT'S VALUABLE AND THE MARKET WORKS.

>> THANK YOU. THAT'S VERY HELPFUL. AND WHAT I HEAR YOU SAYING IS WE'RE NOT PICKING ONE PATH AND IT'S THAT PATH ALONE. WE CAN WORK ON THINGS SIMULTANEOUSLY, WE CAN HAVE ASPIRATIONAL GOALS, AND THEN BRING ABE AND KATHLEEN ON THE SAME PAGE MAYBE.

>> COMMISSIONER HONORABLE, I WOULD AGREE, THE STATUS QUO IS NOT SUSTAINABLE. I THINK THAT, AND COMMENTERS MENTIONED THIS YESTERDAY, YOU'VE GOT THE INDUSTRY AND THE MARKETS, POTENTIALLY NOW CHASING THE NEXT SUBSIDY THAT COMES FROM A STATE. THE CONCERN IS IT WILL CONTINUE TO DESTABILIZE THE MARKET. THAT'S NOT GOOD FOR ANYONE. AND IT'S NO THE GOOD FOR REGULATORS OR THE INDUSTRY CERTAINLY. I'M STRUCK BY READING THE ANALYST REPORTS WEEKLY, IT SEEMS LIKE THEY PAY MORE ATTENTION TO WHAT ANY PARTICULAR STATE IS DOING, WHAT A PARTICULAR LEGISLATURE IS CONSIDERING MORE THAN THEY ARE LOOKING AT THE UNDERLYING FUNDAMENTALS OF THE COMPANY. SO IT'S THAT WHICH IF YOU TAKE ACTION WHICH I THINK THIS CONFERENCE HAS SHOWN THERE'S A WILLINGNESS TO DO SOMETHING, WILL BE RECEIVED VERY WELL ACROSS THE BOARD FROM INDUSTRY, FROM THE REGULATORS, AND AS I'VE SAID, WE WOULD LOOK FORWARD TO WORKING WITH THE ISO, WITH OUR COLLEAGUES IN THE OTHER STATES AND THE INDUSTRY TO TRY AND WORK THROUGH A SOLUTION, IN ONE OF THESE THAT DOES BUILD THESE ATTRIBUTES, ALL OF THEM, HOPEFULLY, INTO THE MARKET.

>> THANK YOU. I'M NOT SURE THAT OUR PROPOSAL FITS NEATLY INTO ANY OF THE FIVE BUCKETS BUT WE NEED TO DO WHAT WE CAN THROUGH ENERGY MARKETS AND COMPLEMENT WITH CAPACITY CONSTRUCT THAT SUPPORTS AND ENCOURAGES USE OF BILATERAL CONTRACTS FOR THOSE ATTRIBUTES THAT CANNOT BE PRICED INTO THE ENERGY MARKETS.

>> THANK YOU.

>> MORE OF A COMMENT AND PEOPLE CAN REPLY IN THEIR WRITTEN COMMENTS BECAUSE I KNOW WE'RE TRYING TO GET TO LUNCH ALTHOUGH IF I SEE CARDS POP UP RIGHT AWAY. IF COLETTE IS ONLY A LITTLE BIT UNCOMFORTABLE SHE'S WAY LESS UNCOMFORTABLE THAN ME.

>> NO, I'M BEING CAREFUL ABOUT THE FACT I DON'T WANT TO SCARE PEOPLE.

>> I WAS JUST KIDDING BUT IT IS  WE'RE IN AN UNCOMFORTABLE PLACE. SO I'M JUST TRYING TO THINK THROUGH NOT WHAT PATHS I WOULD GO ON IF I WERE  IF I SAW PROFESSOR HOGAN COMING, I WAS WRITING AN ARTICLE, THIS IS WHAT WE SHOULD DO, I'M ASSUMING WE'VE GOT A QUORUM, WHAT WE CAN DO. AND THE REREGULATOR CHANGE THE THE REGULATORY COMPACT, I DON'T THINK IT'S SOMETHING WE CAN DO UNLESS THE STATE WANTS TO TAKE IT. THAT'S TOM BRADY THROWING, YOU KNOW, THE INCOMPLETE PASS. SOMEBODY HAS TO CATCH IT. I HAVEN'T HEARD ANYONE YET SAY I MEAN THAT THEY WANTED TO. SO THAT MEANS WE STILL HAVE THE RESPONSIBILITY UNDER THE FEDERAL POWER ACT TO MAKE SURE THERE'S WHOLESALE PRICE IN MARKETS EVEN IF WE DON'T LIKE THE STATUS QUO, ARE THE STATUS QUO. SO THINKING OF WHAT FERC CAN DO AS A FORCING FUNCTION BEYOND RULE ON THE COMPLAINTS WHICH COULD PUSH THE BALL BUT I DON'T THINK ANYONE THINKS, OKAY, THAT WE'RE DONE, EVERYTHING'S GOOD NOW, PEOPLE ARE HAPPY, IT SEEMS TO ME IF YOU MAKE US MAKE UP A THING, IT'S GOING TO PROBABLY BE AN ACCOMMODATE BECAUSE WE CANNOT TELL THE STATES WHAT WE WANT THEM TO ACHIEVE. WE HEARD FROM NEW ENGLAND LOUD AND CLEAR, DON'T SET GOALS FOR US, FERC. WE'RE ON A PATH, WE'RE WORKING ON SOMETHING. DON'T MAKE UP WHAT YOU WANT US TO DO. AND IT'S POSSIBLE WE WOULD LOOK OUT AT DIFFERENT STATES AND CRAFT SOMETHING BRILLIANT BUT IT'S REALLY IF WE'RE TRYING TO ACHIEVE SOMETHING, IF WE'RE TRYING TO ACHIEVE STATE POLICY, WE NEED THE STATES TO TELL US WHAT THAT POLICY IS. SO IN TERMS OF WHAT'S ACTUALLY BEFORE US AND WHAT WE CAN DO, OTHER THAN ORDER SOMEBODY ELSE, PLEASE WORK ON THIS, IT'S REALLY THINK RIGHT NOW IN THE HANDS OF THE STATES IF WE'RE GOING TO GET TO AN ACHIEVE TO DEFINE WHAT IT IS WE'RE TRYING TO ACHIEVE, FOR STATES TO AGREE THERE'S AN ENVIRONMENTAL ATTRIBUTE AND ONCE YOU AGREE, YOU CAN PRICE IT. IF IT'S RESILIENCE, ENVIRONMENT, IT MIGHT NOT BE PERFECT BUT MARKETS WORK IF YOU SET THE PARAMETER BUT I DON'T THINK WE, FERC, UNLESS I'M MISTAKING SOMETHING, CAN MAKE UP AN ACHIEVED SOLUTION THAT IS LIKELY TO BE SUSTAINABLE IN THESE BIG MULTISTATE MARKETS. SO WE'RE GOING TO HAVE TO ACT, ONCE WE HAVE A QUORUM, BUT I THINK WE'RE GOING TO NEED PROPOSALS COMING IN IF WE'RE GOING TO GET OUT OF THE ACCOMMODATE PATH BECAUSE I JUST DON'T SEE A LOT OF OTHER  I JUST  UNLESS SOMEBODY CAN TELL ME SOMETHING EASY, THAT'S JUST WHAT I'VE HEARD, THE LAST DAY AND A HALF. SO I THINK WE HAVE TO DO WHAT WE HAVE TO DO. WE HAVE DOCKETS PENDING, WE HAVE TO DECIDE THEM AND DO THINGS BUT IF WE'RE GOING TO GET TO SOME NEW PLACE, IT'S GOING TO TAKE OTHER PEOPLE TO TELL US WHERE THEY ARE TRYING TO GET. AM I WRONG? OR DOES ANYONE WANT US TO DESIGN AND ACHIEVE? YOU KNOW.

>> HEARD YOU LOUD AND CLEAR, I KNOW SOMEONE MENTIONED YESTERDAY YOU DON'T WANT A TOPDOWN APPROACH. YOU DON'T WANT US TO TRY TO FIGURE THIS THING OUT. AND IT WILL HAVE GREATER BUYIN AND GREATER SUCCESS IF IT'S DEVELOPED AND COMING UP.

>> MATT WHITE HAD HIS CARD OFF, MAYBE GO TO MATT.

>> YOU'RE VERY KIND. I WANTED TO OFFER A CLARIFYING OBSERVATION, DOVETAILS ON YOUR MOST RECENT COMMENT, CHAIR LAFLEUR, REGARDING THE PATH 4, THE INCORPORATE ATTRIBUTES, SO CALLED ACHIEVE NEW ENGLAND, MORE SO THAN ANY OF THE OTHER PATHS THAT YOU'VE PUT ON THE TABLE, COMMISSION STAFF, IN OUR EXPERIENCE IN NEW ENGLAND THIS PATH INCORPORATES VIEWS AND PERSPECTIVES THAT ARE SO DIVERGENT THEY ARE ALMOST IMPOSSIBLE TO CALL THE SAME PATH. MANY PEOPLE AS YOU'VE HEARD IN THE LAST TWO DAYS IN NEW ENGLAND HAVE VIEWED THAT REAL AS SOME FORM OF CARBON PRICING, WHATEVER IT IS, CAP AND TRADE, WHATEVER. OTHERS VIEW THAT AS NOT WHAT THEY VIEW AS PART 4, NOT ON THE TABLE AS YOU HEARD FROM CHAIR VANNOY BUT ARTICULATED VISIONS PATH 4 WOULD BE ISOs ADMINISTRATE TO WITH MORE AN RFP, IN AMOUNTS AND QUANTITIES BY STATE WITH PERFORMANCE STANDARDS SELECTED BY OTHER THAN THE ISO, ISO BECOMES ADMINISTRATIVE. I DON'T WANT TO TAKE A POSITION ON EITHER OF THOSE TWO. AS AN ECONOMIST I HAVE MY VIEWS BUT IN THE VEIN OF THE POWER PLANT COMMENTS, TO POINT OUT AGREEMENT YOU MAY HERE AMONG STAKEHOLDERS THAT INCORPORATING THE ATTRIBUTES IS A DESIRABLE PATH MAY MASK SUBSTANTIAL DIFFERENCES IN WHAT THEY ACTUALLY ENVISION, MUCH MORE SO THAN ANY OTHER PATHS WE'VE SEEN, THAT DIVERGENCE OF VIEWS BECAUSE MAY SURFACE LATER MAY MAKE MOVING DOWN THIS PATH A MUCH LONGER AND MORE DIFFICULT PROCESS. THAT'S AT LEAST A REFLECTION, MY PERSONAL VIEW OF ONE OF THE THINGS WE HAVE LEARNED AS ISO OBSERVING THE PROCESS.

>> THANK YOU MORE MODERATING MY MOMENTARY OPTIMISM WITH REALITY. [LAUGHTER]

>> (INAUDIBLE).

>> I GUESS WE'LL PROBABLY JUST WRAP UP FOR LUNCH THEN. I WANT TO THANK YOU FOR  TO THE PANELISTS FOR THE THREEHOUR JUGGERNAUT.

>> WE HAVE A GUEST AT 1:00 SO WE'LL BE BACK STRAIGHT AT ONE.

>> VERY, VERY HARD START AT 1:00 WITH PEOPLE IN THEIR SEATS (LUNCH RECESS) (LUNCH RECESS) (THE MEETING WILL RESUME AT 1:00).

>> WE'RE HONORED TO HAVE WITH US THIS AFTERNOON CONGRESSMAN JOSEPH KENNEDY FROM MASSACHUSETTS, MY CONGRESSMAN BUT THAT'S NOT WHY HE'S HERE. HE VOLUNTEERED TO COME AND SPEAK WITH US ABOUT THE CAPACITY MARKET AS YOU MAY OR MAY NOT KNOW, CONGRESSMAN KENNEDY AND HIS ENERGY ADVISOR COULD UNDOUBTEDLY ACE A QUIZ OF EVERYONE ON CAPITOL HILL ABOUT HOW THE ISO NEW ENGLAND MARKETS WORK.

>> IT'S AN IMPORTANT CAVEAT WHEN COMPARING TO EVERYONE ELSE ON CAPITOL HILL.

>> I WON'T SAY HOW HE CAME TO KNOW THAT, IT WASN'T ALL GREAT EXPERIENCE. HE WAS ELECTED IN 2012, THIRD TERM, MEMBER OF THE ENERGY COMMITTEE AND SUBCOMMITTEE, WE'RE HAPPY TO HAVE HIM IN THAT ROLE. HELP ME WELCOME HIM TO THE COMMISSION. THANK YOU. [APPLAUSE]

>> MADAM CHAIRMAN, THANK YOU FOR THE INTRODUCTION AND ALLOWING ME TO STOP BY, ANY POTHOLE REQUESTS OR TRASH OR SNOW REMOVAL, I WILL PASS ALONG TO THE MAYOR MOST RAPIDLY. COMMISSIONER HONORABLE, THANK YOU BOTH FOR HOSTING AN IMPORTANT TECHNICAL CONFERENCE, AND FOR YOUR SERVICE AT FERC. YOU HAVE BOTH BEEN A CONSTANT SORT OF GUIDANCE AS I'VE TRIED TO FOCUS ON ENERGY ISSUES IN CONGRESS AND I APPRECIATE YOUR RESPONSIVENESS AND YOUR SUPPORT. I ALSO WANT TO THANK DIRECTOR QUINN AS WELL FOR THE OPPORTUNITY TO SPEAK AT THE CONFERENCE BRIEFLY BEFORE I HAVE TO RUN OFF TO VOTE. TO THE OTHER PARTICIPANTS HERE, I COMMEND YOU FOR BEING HERE IN THE TECHNICAL CONFERENCE TO REVIEW THE PLAY BETWEEN ORGANIZED MARKETS AND STATE LEVEL POLICIES BY PROVIDING CRITICAL OVERSIGHT OF ISO AND RTO STRUCTURES, YOU CAN IDENTIFY INFLUENCE IN SHAPING AND MEETING OBJECTIVES, MORE THAN THAT YOU BROADEN THE DEBATE TO ENSURE MARKETS ARE BENEFITING GENERATORS AND CONSUMERS AS WELL. AS THE CHAIRMAN MENTIONED, A FEW YEARS AGO A POWER PLANT IN MY DISTRICT ABRUPTLY CLOSED LEADING TO DRAMATIC INCREASE IN CAPACITY RATE PRICES IN NEW ENGLAND. THE YEAR SINCE THAT ANNOUNCEMENT, I'VE MET WITH MANY OF YOU AND MANY STAKEHOLDERS BACK HOME IN MASSACHUSETTS TO ANALYZE OUR REGIONAL ENERGY MARKETS AND TRY TO UNDERSTAND THE PROCESS BY WHICH RATES CONSUMERS SEE ON MONTHLY BILLS COME TO PASS. I'VE BECOME DEEPLY CONCERNED ABOUT THAT PROCESS. IF THERE'S ONE THING THAT I HAVE LEARNED IN CONGRESS, IT IS THAT THE MORE COMPLEX A SYSTEM BECOMES, THE MORE LIKELY SOMEONE IS BEING SHORTCHANGED. I FEAR THAT IS THE REALITY FACING US TODAY. EVERYONE IN THIS ROOM WOULD AGREE OVERSIGHT OF ENERGY MARKETS IS A CHALLENGE. HIGHLY TECHNICAL RULES AND ECONOMIC THEORIES THAT UNDERPIN ARE DIFFICULT FOR PARTICIPANTS TO UNDERSTAND LET ALONE MEMBERS OF CONGRESS OR THE GENERAL PUBLIC. ANOTHER CHALLENGE IS THE RELATIONSHIP RTOs HAVE TO THE FEDERAL GOVERNMENT. THEIR ACTIONS EFFECTIVELY CARRY THE WEIGHT OF FEDERAL PREEMPTION. TO ASSURE WELL FUNCTIONING MARKETS I BELIEVE HOWEVER THAT IN RECENT YEARS THE DEBATE HAS FOCUSED ON MARKET PARTICIPANTS AT THE EXPENSE OF THE CONSUMERS WHO ARE LEFT TO FOOT THE BILL. I'M ASKING YOU TO BROADEN FOCUS BEYOND TWEAKING THE MARKET RULES AND INSTEAD LEVERAGE YOUR UNIQUE EXPERIENCE AND EXPERTISE INTO THE DEEPER REFORMS I BELIEVE ARE NECESSARY. ONE THE PURPOSES OF THIS CONFERENCE IS TO DETERMINE WHETHER STATE OBJECTIVES AND POLICIES CAN BE ACHIEVED THROUGH EXISTING MARKET MECHANISMS. FROM MY FIRST DAY IN CONGRESS I'VE SHARED FRUSTRATION WITH OUR COUNTRY'S LACK OF COHESIVE ENERGY POLICY THAT FAILS AT THE REGIONAL, STATE AND LOCAL LEVEL, DECISION MAKERS MUST TAKE INTO CONSIDERATION ISSUES FROM RELIABILITY, CAPACITY AND GENERATION. BUT GOING EVEN FURTHER, DECISIONS MUST FACTOR IN RESOURCE DIVERSITY, ENVIRONMENTAL IMPACT, JOBS AND MOST IMPORTANTLY COST TO CONSUMERS. DEBATE OVER MARKET STRUCTURES IS ONLY ONE PIECE OF THE PUZZLE AND NOT THE ONLY WAY TO MEET THESE GOALS. THE QUESTION OF ACCOUNTABILITY AND OVERSIGHT IS IMPORTANT TO ANSWER AND CONGRESS WE'RE TRYING TO ADDRESS THIS PIECE BY PIECE. THE SECOND YEAR THE HOUSE PASSED A BILL I WROTE TO ENSURE JUDICIAL REVIEW OF RATES WHETHER THEY ARE DEADLOCKED LIKE THESE ARE YEARS AGO OR CANNOT ACT DUE TO A QUORUM LIKE THE UNFORTUNATELY SITUATION WE FIND OURSELVES IN TODAY. I'VE PRESSED BOTH LAST ADMINISTRATION AND THE CURRENT ONE TO TAKE ACTION SO WE HAVE A FULLY FUNCTIONING COMMISSION. MORE TO THE POINT, THIS IS WHERE I WOULD ASK ALL OF YOU TO COME IN, WE CANNOT AFFORD TO DELAY THESE EFFORTS ANY LONGER. WE CANNOT CONTINUE TO MAKE THIS SYSTEM MORE COMPLEX, WITHOUT SOLVING UNDERLYING PROBLEMS OF COST, RESOURCE DIVERSITY, LIABILITY, INFRASTRUCTURE, AND OUR ENVIRONMENTAL RESPONSIBILITIES. I URGE YOU TO THINK BIG AND LOOK FORWARD TO WORKING WITH YOU ALL ON THE PATH AHEAD. IN ADDITION TO PREPARED REMARKS, THIS IS ONE OF THE MOST COMPLEX AREAS OF REGULATION THAT I HAVE CERTAINLY DEALT WITH IN MY FOURPLUS YEARS IN WASHINGTON. MADAM CHAIRMAN, YOU WERE KIND TO SAY I UNDERSTAND IT. THE BEST THING I CAN DO IS HIRE PEOPLE THAT ACTUALLY DO, LUCKILY I HIRED ONE THAT DID. AND HE DIVED INTO THE ISSUES WITH AN AWFUL LOT OF YOUR HELP. CONGRESS' ROLE IN SOME OF THE OVERSIGHT OF THIS AREA CAN GET CONFUSING AND CHALLENGING EVEN AMONGST MY COLLEAGUES. AGAIN, I WOULD DOUBLE DOWN ON THAT ASK FOR ALL OF YOU HERE, THE ORGANIZATIONS, THE COMPANIES AND ENTITIES THAT YOU REPRESENT TO TRY TO HELP US UNDERSTAND HOW WE WORK OUR WAY THROUGH SOME OF THESE CHALLENGES, BECAUSE AN EXAMPLE OF MY HOME STATE OF MASSACHUSETTS, THE DISCUSSION WE HAVE ON OUR ENERGY INFRASTRUCTURE AND DEBATES THERE I THINK COULD USE MORE FULL FLEDGED UNDERSTANDING OF THE BENEFITS AND DRAWBACKS. YES, WE WOULD ALL  IN THE WORDS OF MY COLLEAGUES, LOVE TO BE IN A WORLD WHERE ENERGY IS CLEAN, RENEWABLE, IT IS CHEAP AND IT IS FAR AWAY. [LAUGHTER] WE'RE NOT QUITE THERE YET. AND UNTIL WE DO, THERE ARE TRADEOFFS WE NEED TO MAKE. I'D ASK YOUR SUGGESTIONS AND YOUR SUPPORT AND YOUR VOICES TO HELP MAKE SURE OUR PUBLIC HAS AN INFORMED DEBATE AS TO THESE TRADEOFFS AS WELL, BECAUSE AT THIS POINT I WILL TELL YOU WE DON'T. AND WE'LL KEEP TRYING TO DO WHAT WE CAN, BUT WE NEED YOUR HELP. THANKS VERY MUCH. [APPLAUSE]

>> WELL, THANK YOU SO MUCH FOR REMINDING US OF THAT. THAT WILL SET US IN THE RIGHT DIRECTION. THANK YOU.

>> ALL RIGHT. WELCOME BACK FROM LUNCH. I APPRECIATE ALL OF YOU TAKING THE TIME TO COME AND MEET WITH US AND TALK ABOUT THE ISSUES THAT WE HAVE AS FAR AS THIS TECHNICAL CONFERENCE. I WILL MAKE SURE I INTRODUCE THE PANELISTS. WE HAVE CLIFF HAMAL, MANAGING DIRECTORY AT NAVIGANT. WILLIAM HOGAN HARVARD KENNEDY SCHOOL OF GOVERNMENT. LAWRENCE MARKOWITZ OF IHS MARKIT, SAM NEWELL, FROM THE BRATTLE GROUP. ROY SHANKER INDEPENDENT CONSULTANT. ROBERT STODDARD AND SUSAN TIERNEY, SENIOR ADVISER, ANALYSIS GROUP. WELCOME ALL OF YOU. AGAIN, THANK YOU FOR JOINING US. THE PURPOSE OF THIS PANEL IS TO DISCUSS POTENTIAL SOLUTIONS FOR SUSTAINABLE WHOLESALE MARKET DESIGNS THAT BOTH PRESERVE THE BENEFITS OF REGIONAL MARKETS AND RESPECT STATE POLICIES. I THINK I STOLE THAT LANGUAGE DIRECTLY FROM THE NOTICE. WE DON'T EXPECT THE PANELISTS TO GIVE US DETAILED MARKET DESIGN, BUT WOULD RATHER LIKE TO FOCUS MORE ON THE PRINCIPLES AND OBJECTIVES ONE WOULD FOLLOW IN DESIGNING THOSE MARKETS, TO ADDRESS THE CENTRAL QUESTION IN FRONT OF US, HOW WE RECONCILE STATE PUBLIC POLICY WITH WELLFUNCTIONING WHOLESALE MARKETS. AGAIN, I THINK JUST TO SET THE STAGE AND PROVIDE A LITTLE BIT OF CONTEXT FOR ALL OF YOU, THE MORNING CONVERSATION WAS VERY MUCH FOCUSED ON US HAVING A COMPLETE UNDERSTANDING OF THE POTENTIAL PATHS FORWARD. WE HAD OUR FIVE PATHS THAT TRANSLATE INTO THREE DOORS. [LAUGHTER] IN CHOOSING AMONGST THE FIVE PATHS OR THE THREE DOORS, WE'RE GOING TO HAVE TO USE SOME SET OF PRINCIPLES AND OBJECTIVES. AND ONE OF THOSE THINGS THAT I THINK WE'VE HEARD THROUGHOUT THE CONFERENCE IS THAT ONE OF THE THINGS THE COMMISSION COULD DO IS ARTICULATE THAT SET OF PRINCIPLES OR THAT SET OF OBJECTIVES. I THINK THAT WOULD VERY MUCH BE SOMETHING WE WOULD LIKE TO GET OUT OF THIS IS YOUR POINT OF VIEW ON ALL THOSE THINGS. APPRECIATE THAT THAT IS COMPLICATED BY THE FACT THAT FOR MOST ECONOMISTS IF THERE'S ONE PRINCIPLE, ECONOMIC EFFICIENCY, NOW WE'RE DONE, WE'VE WRITTEN DOWN OUR PRINCIPLE AND SHOULD WALK AWAY. WE MIGHT NOT HAVE THAT OPTION AVAILABLE. TO THE EXTENT THE OPTION THAT ALL OF YOU WOULD THINK IS THE OBVIOUS ECONOMICALLY EFFICIENT ANSWER, TO THE EXTENT THAT IT'S POLITICALLY DIFFICULT TO GET THERE, WE WILL NEED A SET OF COMPLEMENTARY OBJECTIVES. SO I WOULD ENCOURAGE YOU TO KIND OF ENGAGE IN THE QUESTIONS ON THAT BASIS AS WELL. I THINK WE'D LIKE TO START THOUGH TO KIND OF NOT BACKTRACK BUT ADDRESS ONE QUESTION THAT CAME UP AT THE END OF THE LAST PANEL, AS WE TALKED ABOUT OUR FOUR OR FIVE PATHS, PATH NUMBER 4 WAS THE LET'S TRY TO INTEGRATE AS MANY OF THE OBJECTIVES AND POLICIES THE STATES ARE ATTEMPTING TO ACHIEVE THROUGH PART OF MARKET ACTION INTO THE WHOLESALE MARKETS. AND WE HAD SOME DISCUSSION ABOUT WHAT IT IS, A REALISTIC EXPECTATION THAT COULD BE BROUGHT INTO THE MARKETS. I THINK WE'D LIKE TO START WITH ALL OF YOU ON THAT QUESTION BEFORE WE JUMP TO PRINCIPLES AND TRADEOFFS AND OBJECTIVES. DO YOU HAVE AN OPINION ON WHAT SHOULD, CAN BE BROUGHT INTO THE MARKETS. YEAH, RULES TODAY WILL BE YOU GOT SOMETHING TO PAY PUT UP YOUR TENT. I'LL TRY TO KEEP TRACK OF WHO ASKED TO GO FIRST. ROY?

>> I THINK MR. WHITE'S COMMENT FROM  IS IT NEW ENGLAND? IT SOUNDS GREAT UNTIL EVERYONE WRITE DOWN THEIR LIST AND THEN YOU FIND THEY MUTUALLY INFEASIBLE SET OF CONDITIONS, AND I THINK IT'S MISLEADING AND WOULD BE A MISTAKE TO TRY AND GENERICICALLY SUGGEST THAT WE FOLLOW THAT IN TERMS OF GUIDANCE FROM THE COMMISSION BECAUSE I THINK TO SOME EXTENT YOU'VE HEARD TIME IS OF THE ESSENCE FOR A LOT OF PEOPLE AND SORTING THAT OUT TO COME TO THAT CONCLUSION PARTICULARLY FOR THOSE WHOSE STAKEHOLDER PROCESS IS A YEAR, MAYBE A LITTLE BIT MORE. NUMBER 5 WAS THE ONE I WAS PERSONALLY MORE INTERESTED IN BECAUSE IN PART I WOULD ANSWER IN FIVE IS IN A WAY IN RESPONSE TO YOUR REQUEST ABOUT WHAT TO DO. I THINK IT'S WITHIN THE COMMISSION'S JURISDICTION, THAT'S ME, BUT I THINK YOU HAVE THE CAPABILITY TO TAKE ACTIONS TO ENSURE MUCH OF WHAT WE WERE TALKING ABOUT, PARTICULARLY IN TERMS OF WHAT I WOULD THINK ARE THE MOST OBVIOUS AND TRANSPARENT, EXTERNALITIES WE'VE BEEN TALKING ABOUT WITH RESPECT DECARBONIZING. WE HAD AN INTERESTING DISCUSSION WHAT'S THE RIGHT VALUE, BUT THAT THERE SHOULD BE A VALUE IS ALMOST A CREDIBILITY TEST AND LEGITIMACY OF A LOT OF ACTIONS YOU'RE SEEING. AND A REASONABLE EFFORT I'D RATHER SEE THE EFFORT GO INTO THREE MONTHS OF FIGHTING ABOUT WHAT IS THAT NUMBER AND HOW TO DO IT, STAYING WITH A FROM TAXATION, WE KNOW HOW TO DESIGN AND WE'LL HAVE SURPLUS FUNDS AND USUAL ARGUMENT WHO GETS THOSE, BUT WE WILL PASS THROUGH JUST AS YOU SAID A HIGH DEGREE OF EFFICIENCY AND DO AWAY WITH HOPEFULLY ALMOST ALL OF THE LEGITIMATE CONCERNS THAT YOU'VE SEEN EXPRESSED. I THINK WITH THAT, YOU'RE SOON GOING TO HAVE TO HAVE THE ABILITY TO SORT SOME OF THE MORE QUESTIONABLE ASPECTS, AND SO A MOPARTYPE MECHANISM DOES COME IN. I WOULD HOPE IF EVERYBODY WAS BEING STRAIGHTFORWARD, DECARBONIZING WE PUT IN AN ADDER, WE'RE DONE, THE OTHER WOULD GO AWAY BUT THIS IS LIKE A SAFETY NET AND I DON'T THINK YOU CAN AVOID IT. AND I KNOW THAT WE HEARD EXPRESSED BY THE COMMISSIONER FROM MAINE THAT NO WAY CARBON OR MAYBE WILL LEAVE, AND FROM MY PERSPECTIVE, AND THIS IS, AGAIN, ME SPEAKING SOLELY FOR MYSELF, IS IF SOMEONE WANTS TO LEAVE OR ISOLATE THEMSELVES FROM THE MARKET, YOU KNOW, WHICH IS ANOTHER ALTERNATIVE, THEY SHOULD DO THAT. AND IT SHOULDN'T BE PERCEIVED AS A THREAT. I TESTIFIED IN MAINE WHEN THEY CONSIDERED LEAVING ISO NEW ENGLAND AND DID THE BALANCING AND SAID, GEE, ARE WE REALLY WILLING TO GIVE UP ALL THE GOOD THINGS TO HAVE MORE INDEPENDENCE ABOUT STATE POLICY AND WEIGHT TRANSMISSION WAS BEING ALLOCATED, I THINK EVERY STATE CAN MAKE THAT DECISION. THE LEGAL PLAY THAT GOES WITH THAT DECISION, I DON'T KNOW THAT I KNOW EXACTLY THE DETAILS OF HOW IT WOULD WORK. CERTAINLY SOMETHING LIKE AN FRR ALTERNATIVE THAN PJAM IS VIABLE AND SO YEAH, I THINK YOU CAN HAVE A HARD CRITERIA AND I ALSO THINK IT SETS OUT THE OUTLINE FOR WHAT I WOULD RECOMMEND WOULD BE MY RECOMMENDATION ON HOW YOU WOULD PROCEED.

>> A FOLLOWUP QUESTION ON THAT, TO YOUR QUESTION WHAT YOU WOULD HAVE TO DEAL WITH MINIMUM OFFER PRICE RULES FOR THE OTHER THINGS, I THINK SOME OF THE DISCUSSIONS WE'VE HEARD IS THAT FOR CARBON PRICING FOR SOME LEVELS OF CARBON PRICING YOU WILL GET A CERTAIN SET OF CARBONFREE RESOURCES THAT ARE SUPPORTED BY, YOU KNOW, SOMETHING THAT IS A PRICE AROUND THE SOCIAL COST OF CARBON, $40 IS THE POINT. BUT THERE ARE ANOTHER SET OF RESOURCES THAT ARE ALSO CARBON EMISSION FREE THAT YOU WOULD NEED A MUCH HIGHER CARBON PRICE FOR. YOU KNOW, TO THE EXTENT THAT YOU MARKET DECIDE TO HAVE A CARBON PRICE OR CARBON ADDER BUT THERE SOME CARBON EMISSION FREE RESOURCES THAT WERE STILL NOT ECONOMIC ON THAT, BASED ON THAT PRICE, WOULD YOU SUGGEST THAT THOSE RESOURCES CONTINUE TO BE SUBJECT TO A MINIMUM OFFER PRICE, WOULD YOU TRY TO ACCOMMODATE THOSE RESOURCES IN KIND OF THE WAY ISO NEW ENGLAND IS TALKING ABOUT ACCOMMODATING OTHER STATE POLICIES OR YOU DO THINK ONCE YOU'VE IDENTIFIED THE ENVIRONMENTAL ATTRIBUTE YOU PRICE THAT AND ANY ACTION THAT FOCUSES ON RESOURCES THAT WOULD FALL INTO THAT CATEGORY SHOULD BE SUBJECT TO A 

>> IF I UNDERSTAND, I THINK IT'S THE LATTER. THE ARGUMENT PRESUMABLY WOULD FALL OUT OF THE PRICE IS TOO LOW. INSTEAD OF $40, IT SHOULD BE $60. IF THAT DOESN'T SATISFY THE REQUIREMENT FOR THE RESOURCE WE SORT OF AGREED IF IT'S TOO EXPENSIVE, THEN IT'S TOO EXPENSIVE. AND DE FACTO IS SOMEBODY WAS CIRCUMVENTING WITH A SIDE PAYMENT YOU'RE IN THE LAND OF MOPARS THAT PRESUMABLY PART OF THE DEBATE SETTING THAT NUMBER IS TO MAKE PEOPLE HAPPY WE'RE GETTING THE RIGHT BALANCE OF THE RESOURCES.

>> BOB?

>> THANKS. MY FRIENDS CALL ME ROBERT, BY THE WAY. [LAUGHTER] LET ME START WITH A PRAGMATIC POINT, WE NEED TO MOVE FAST. AND THAT BY DEFINITION MEANS WE NEED TO HAVE CONSENSUS. IF WE END UP WITH HALF THE STATES IN NEW ENGLAND DISAGREEING ABOUT WHAT WE'VE DONE, IT'S A VERY LONG ROAD TO THE SUPREME COURT. THAT'S WHERE IT'S GOING TO GO. SO OUR GOAL HAS BEEN AS A PRAGMATIC POINT OF VIEW OF HOW TO MOVE FORWARD QUICKLY, IS TO TRY TO GET A BROAD CONSENSUS AMONGST THE STATES THAT WHAT WE'RE PUTTING ON THE TABLE, WHAT THE POLICIES WE'RE RESPONDING TO ARE THE POLICIES THEY HAVE IMPLEMENTED. OR AT LEAST THE REASONS WHY THEY IMPLEMENTED POLICIES. AS I SAID IN MY PREFILED COMMENTS, MOST OF THE PARTICULAR DECISIONS GETTING MADE IN LAW ARE THE RESULT OF AN OVERARCHING GOAL, CLEAREST IN MASSACHUSETTS, THEY SAY WE WANT TO ACHIEVE A CERTAIN CARBON REDUCTION, OH AND BY THE WAY SINCE THERE'S NO MECHANISM OUTSIDE OF MASSACHUSETTS TO ACHIEVE THAT, WE'RE GOING TO MAKE UP OUR OWN MECHANISM AND WE'RE GOING TO DO THIS ACTION AND THIS ACTION AND THIS ACTION IN SUPPORT OF THE BIG ACTION. AND AS ABE SILVERMAN SAID THIS MORNING, ULTIMATELY WE HAVE TO SET UP THE MARKETS TO ACHIEVE THE POLICY GOALS, IN WHICH CASE HOPEFULLY THE POLICYMAKERS WILL SET THE POLICY GOALS, BUT NOT FRET ABOUT THE IMPLEMENTATION. THEY WILL HAVE CONFIDENCE THAT THE MARKETS THAT ISOs ARE SETTING UP CAN MEET THOSE GOALS. SO I THINK THE ANSWER TO THE QUESTION OF WHAT SHOULD THE POLICIES BE THAT THE MARKETS FORCE ARE THE POLICIES THE STATE REQUESTS. NOW, AT LEAST IN NEW ENGLAND, ALMOST ALL OF THESE HAVE AT THEIR ROOT ENVIRONMENTAL PROTECTION. AND SO I THINK THE CARBON ATTRIBUTE IS IMPORTANT, OR SOME OTHER MEASURE OF THE CARBON ATTRIBUTE, IN MY PREFILED COMMENTS I LAY OUT A PARTICULAR MECHANISM. THE KEY ABOUT THAT MECHANISM IS IT ANSWERS THE LAST FOLLOWON QUESTION YOU GAVE TO ROY WHICH IS WHAT IF THE PRICE WE SET ISN'T HIGH ENOUGH. THE POINT OF USING MARKETS IS WE DON'T SET THE PRICE. WE HAVE SUPPLIERS WHO OFFER RESOURCES THEY CAN FIT IN. WE HAVE DEMANDERS, STATES, ENTITIES, UTILITIES, SAYING HERE IS WHAT WE WANT AND HERE IS HOW MUCH WE'RE WILLING TO PAY. THAT CREATES A DEMAND CURVE AGAINST WHICH THERE'S A SUPPLY CURVE AND THE MARKET TELLS US WHAT THE PRICE IS. IT'S A WAY IMPLICITLY A PRICE OF CARBON ABATEMENT IN EACH MARKET DEPENDING ON SOLUTIONS TECHNOLOGICALLY AND THE APPETITE OF THE STATES TO BUY THAT. THAT'S THE GREAT ADVANTAGE OF USING MARKETUP. AS A SIDE NOTE AND I'LL TURN IT OVER TO THE NEXT SPEAKER, WE KEEP FOCUSING ON CAPACITY MARKET WHERE THINGS ARE BROKEN, WHERE THERE COULD BE PROBLEMS. THE ENERGY MARKETS ARE REALLY WHERE WE SHOULD BE VERY, VERY CONCERNED. ALL THESE OUTOFMARKET LONGTERM CONTRACTS, NOT ONLY AFFECT CAPACITY PRICES, BUT THEY ALSO RENDER HUGE SWATHS OF THE MARKET INSENSITIVE TO THE LNPs COMING OUT OF ISO NEW ENGLAND, AND THEY ARE SUPPOSED TO DRIVE SUFFICIENCY OF DISPATCH, TELL PEOPLE WHEN THERE'S NOT ENOUGH OR MORE POWER IS NEED AND PROVIDE RESOURCES TO CHOOSE WHAT THEY ARE, WHEN THEY OPERATE AND WHAT THE MAINTENANCE SCHEDULE IS. SO WE'RE REALLY DEFENDING THE ENERGY MARKET, AND THE CAPACITY MARKET WHICH IS ALWAYS INTENDED TO BE A FOLLOWON RESIDUAL MARKET TO THAT IS A NATURAL FOLLOWON TO IT.

>> THANK YOU.

>> THANK YOU, ARNIE AND FERC STAFF AND TO THE COMMISSIONERS FOR HAVING US HERE. ARNIE, YOU ASKED ABOUT PATH 4, INTEGRATING AS MANY OF THE OBJECTIVES AS POSSIBLE INTO THE MARKETS. I LIKE THAT PATH BECAUSE WE'VE SEEN CENTRALIZED MARKETS HAVE WORKED VERY WELL TO MEET THE NEEDS THEY WERE DESIGNED TO MEET AT LOWER THAN EXPECTED COST, SPURRING COMPETITION AND INNOVATION. AND IT WOULD BE NICE TO CONTINUE TO RELY OH THAT AND GET THOSE BENEFITS GOING FORWARD. NOW, WHEN YOU ASKED ABOUT AS MANY OBJECTIVES AS POSSIBLE, THE STATES HAVE A LOT OF OBJECTIVES. THERE IS ONE THAT STANDS OUT, AS BY FAR THE MOST TRANSFORMATIVE FOR THE RELATIVE TO THE CURRENT FLEET AND RELATIVE TO THE CURRENT MARKET DESIGN. AND THAT IS THE DECARBONIZATION. THAT IS WITH SOME STATES AIMING FOR 80% DECARBONIZATION WITHIN ONE INVESTMENT CYCLE FROM WHERE WE ARE TODAY. TO ME, THAT IS THE ONE TO FOCUS ON THE MOST. AND IT IS ALSO THE ONE THAT I THINK IS MOST READILY INTEGRATED INTO THE WHOLESALE MARKETS. AND WE'VE SEEN THERE ARE SEVERAL APPROACHES SOME OF WHICH HAVE ALREADY BEEN TRIED AND SUCCEEDED IN OTHER FORMS. WE'VE TALKED ABOUT CARBON PRICING. AND THAT IS THE MOST MARKETBASED WITH THE, YOU KNOW, SHARPEST LOCATIONAL SIGNALS, GIVING RISE TO BROADEST COMPETITION, I THINK THE ECONOMISTS TEND TO LIKE THAT ONE THE MOST. I THINK IT'S PRACTICAL. OUR PRELIMINARY WORK WITH NEW YORK ISO SHOWS THAT TO BE VERY PROMISING. AND ANOTHER APPROACH IS WITH CLEAN ENERGY MARKETS, SOMETHING LIKE RPS BUT HOPEFULLY BROADER BASED, TECHNOLOGY NEUTRAL. AND PERHAPS WITH ENHANCED PRODUCT DEFINITIONS LIKE THE ONES THAT ROBERT DESCRIBED IN HIS PREFILED TESTIMONY. SO NOW YOU ASKED ALSO WHETHER THERE'S A NEED FOR MOPAR. I MEAN, SUPPOSE NOT EVERYTHING FALLS UNDER THAT. YOU KNOW, IF IT'S ALL WITHIN MARKETS YOU DON'T HAVE TO WORRY ABOUT MOPAR. WHAT IF SOME FALLS OUTSIDE OF THAT, YOU KNOW, HIGHER IMPLIED COST OF CARBON ABATEMENT. I DO THINK YOU STILL NEED SOME KIND OF MOPAR, BUT I'D RATHER SEE SOMETHING MORE IN THE DIRECTION THAT ISO NEW ENGLAND PROPOSED THAT DOESN'T OUTRIGHT EXCLUDE OR PREVENT THOSE RESOURCES AREN'T THERE. SO THAT'S WHAT I LIKE ABOUT THEIR APPROACH.

>> THANK YOU. CLIFF?

>> THANK YOU. AND I REALLY APPRECIATE THE OPPORTUNITY TO BE HERE TODAY. IT'S QUITE AN HONOR. YOUR QUESTION ABOUT INTEGRATED FOR THE MARKETS EMBEDS A QUESTION OF WHAT'S THE MARKET. IS THE MARKET THE FERC JURISDICTIONAL RTORUN MARKETS OR IS IT OTHER THINGS LIKE RGGI AND RENEWABLE ENERGY CREDITS AND OTHER THINGS THAT GO OUTSIDE? I BELIEVE PEOPLE RESPOND TO ALL INCENTIVES, MARKET IS ANYWHERE MONEY IS CHANGING HANDS, CREATING INCENTIVES. WE NEED TO BE CLEAR WHAT WE'RE TRYING TO ACCOMPLISH AND WHERE IT FALLS, I'LL GET BACK TO WHETHER I THINK IT NEEDS TO BE FERC JURISDICTION OR NOT INVOLVED IN ISOs. I'M A FAN OF CARBON TAXES. THEY WOULD BE AN EFFICIENT WAY TO ACCOMPLISH GOOD. THE PRICE IS HIGH. $40, WHEN YOU MULTIPLY, WHERE THE REVENUES GO, THIS IS GOING TO BE QUITE THE FOOD BITE WITH A LOT MORE PEOPLE INVOLVED THAN WE HAVE HERE CURRENTLY. SO IT SOUNDS GREAT AND ECONOMISTS AND I'M ON BOARD, IT'S A GREAT WAY TO GO, BUT THERE'S A LOT AT STAKE IF YOU START DOING THAT. CAP AND TRADE CAN WORK, IT'S GOT OTHER PROBLEMS. I DON'T THINK IT WORKS AS EFFICIENTLY. BUT I DON'T THINK IT ACCOMPLISHES EVERYTHING THE STATES WANT TO DO. I THINK IT'S REALLY CLEAR THAT THE STATES WANT TO PROMOTE CARBONFREE BUT THEY ARE ALSO WANT TO PROMOTE INNOVATION AND TECHNOLOGY. NO ONE'S BUILDING OFFSHORE WIND BECAUSE THEY THINK THAT'S THE CHEAPEST PLACE TO BUILD OFFSHORE WIND. ARGUABLY THEY ARE DOING US A FAVOR BY DEVELOPING A NEW TECHNOLOGY WHICH SHOWS GREAT PROMISE DOWN THE ROAD. THIS INDUSTRY HAD A HUGE HISTORY OF THAT. IT'S ALSO HAD A HUGE HISTORY OF FAILURE IN THAT REGARD. IT'S A MIXED BAG. BUT THAT'S PART OF WHAT THE STATE'S OBJECTIVE IS TRYING TO ACCOMPLISH. I DON'T THINK MERELY PUTTING A PRICE ON IT WILL GET THERE. IF WE TRY TO BRING IT INTO JURISDICTIONAL MARKETS, CLEARED BY THE RTOs, I THINK IT'S GOING TO BE REALLY COMPLICATED. YOU KNOW, I JUST THINK WE HAVE  I'M NOT A  I HAVE GREAT DOUBTS ABOUT THE CAPACITY MARKETS. TRYING TO DETERMINE MULTIYEAR ELEMENTS, LOCATIONAL ISSUES, IT'S A COMPLICATING FACTOR WHICH IS GOING TO LEAD TO A LOT MORE HEARINGS AND DISRUPTION AND CONTINUED PROCESS WITH THAT. LAST THING, THE QUESTION ABOUT MOPAR, I'M NOT A FAN OF MOPAR EITHER, BUT IF YOU THINK OF MOPAR AS A WAY TO KEEP PRICES UP FOR THE REST OF GENERATION IT DOESN'T MATTER IF WE GOT THERE THROUGH A CARBON PRICE OR SOMETHING MOTIVATE NEW GENERATION OR NOT. WE'LL HAVE THE SAME PROBLEM. WE HAVE TO DECIDE WHAT THAT'S ABOUT IF WE WANT TO HAVE JUST MARKETS CLEAR AND LET THE PRICES GO DOWN BECAUSE WE GET REALLY AGGRESSIVE ON CARBON, OR NOT. AND I THINK IT'S A STRUGGLE WHEN YOU DO THE MULTIPLICATION.

>> THANKS.

>> YOUR QUESTION HAS TO DO WITH TRYING TO PRICE THINGS LIKE FLEXIBILITY AND THE CO2 PROFILES OF GENERATING RESOURCES AND THINGS LIKE RESILIENCY. AND I THINK, YOU KNOW, ALL OF THIS IS POINTING TO THE FUNDAMENTAL ROOT PROBLEM HERE IS THAT WE'VE GOT STATE INTERVENTIONS THAT ARE DISTORTING THE MARKET PRICES, BOTH CAPACITY AND ENERGY, AND TO THE EXTENT THAT OUR MARKET OUTCOMES ARE MOVING FURTHER AND FURTHER AWAY FROM WHAT EFFICIENT WELLSTRUCTURED MARKET OUTCOME WOULD LOOK LIKE THEN YOU'RE GOING TO HAVE TO START TO RESPOND AND TRY TO PRICE THINGS YOU WOULD HAVE HAD IN A WELLFUNCTIONING POWER MARKET OUTCOME. SO IF WE DIDN'T HAVE THESE DISTORTIONS, I THINK WHAT YOU WOULD FIND IS THAT BETWEEN THE CAPACITY AND ENERGY PRICES, YOU WOULD GET A NICE MIX OF FUELS AND TECHNOLOGIES AND A RESILIENT POWER SUPPLY PORTFOLIO. A COMPETITIVE MARKET DOES DELIVER FLEXIBILITY IN THE INVESTMENT PROFILE. BUT TO THE EXTENT THAT THE DISTORTIONS ARE MOVING US OFF OF THAT, WE'RE GOING TO HAVE TO START TO COMPENSATE BY PRICING TO THE THINGS WE KNOW OUGHT TO BE THERE AND THE PROBLEM IS THAT THESE DISTORTIONS ARE GOING TO GET BIGGER AND IT'S GOING TO BE MORE AND MORE DIFFICULT TO PROPERLY PRICE MORE AND MORE OF THESE ATTRIBUTES THAT WE'RE LOSING.

>> A FOLLOWUP REAL QUICK. I THINK THE DEGREE TO WHICH THERE'S A DISTORTION OR THAT WE'RE CREATING A NEED FOR A  A SYSTEM NEED BASED ON DISTORTION MIGHT GO TO ONE OF PERSPECTIVE. IS WHAT YOU'RE SAYING THAT TRYING TO VERIFY THAT TO THE EXTENT THAT WE JUST HAVE A STATE POLICY, RENEWABLE PORTFOLIO STANDARD THAT WORKS OUTSIDE THE MARKET, BUT BRINGS ON A SET OF RESOURCES WITH A CERTAIN OPERATIONAL CHARACTERISTIC, THAT  REGARDLESS OF WHAT WE DO, THAT NEED EXISTS, SO WE'RE GOING TO HAVE TO PRICE THAT FLEXIBILITY OR RAMPING OR WHATEVER IT IS. ARE YOU SUGGESTING THAT WE WOULDN'T HAVE THAT NEED IF WE COULD JUST STOP THE POLICY ON THE FRONT END? YOU KNOW, I GUESS THAT'S THE  ULTIMATELY IS THAT THE GOAL, IS TO KIND OF PREVENT THINGS FROM HAPPENING SO THAT WE DON'T HAVE ASSOCIATED NEEDS THAT HAVE TO BE PRICED?

>> RIGHT. SO THE EXAMPLE BEING WE HAVE STATE INTERVENTIONS TO MANDATE SUBSIDIZED WIND AND SOLAR. AND THE INTENT THERE IS TO REDUCE THE CO2 PROFILE OF THE POWER SUPPLY. THE CONSEQUENCE OF THIS THOUGH IS TO SUPPRESS WHOLESALE PRICES. AND TO DISPROPORTIONATELY REDUCE THE CASH FLOWS TO BASE LOAD GENERATION. SO THE CONSEQUENCE OF THIS STATE INTERVENTION IS TO LEAD TO THE CLOSURE OF PREMATURE UNECONOMIC CLOSURE BASE LOAD POWER PLANTS WHEN THOSE HAPPEN TO BE NUCLEAR, YOU END UP WITH THE PERVERSE RESULT OF YOU'RE NOT MAKING A TRADEOFF BETWEEN THE STATE OBJECTIVE OF REDUCING CO2 AND HAVING A LESS EFFICIENT MARKET. YOU'VE GOT BOTH BAD OUTCOMES. THE MARKET IS LESS EFFICIENT, WITH THE CLOSURE OF THE NUCLEAR UNIT YOU'RE NOT REDUCING CO2, WHICH IS THEN CREATING THE RATIONALE FOR IN A WELLFUNCTIONING MARKETPLACE THAT DOES INTERNALIZE A CO2 EMISSION CHARGE, THOSE NUCLEAR PLANTS WOULD BE ECONOMIC AND RUN AND HAVING DONE ANALYSIS OF THIS I CAN TELL YOU THAT IF NEW YORK WERE TO MOVE FORWARD WITH A PRICE ON CO2 EMISSIONS AND NO SUBSIDIES, WE WOULDN'T BE TALKING ABOUT THE NEED TO PAY NUCLEAR UNITS TO KEEP RUNNING. THE MARKET PRICES WOULD KEEP THEM RUNNING. SO YOU END UP MOVING DOWN THIS SLIPPERY SLOPE OF, AS THE BILL HOGAN SAID IF HIS FILED TESTIMONY, SUBSIDIES BEGET SUBSIDIES AND THE SUBSIDIES TO KEEP THE NUCLEAR PLANTS RUNNING ARE THE RESULT OF THE DISLOCATIONS WE'VE CREATED IN MARKETS FROM SUBSIDIES ON RENEWABLES.

>> THAT'S HELPFUL.

>> WELL, FIRST OF ALL, I WANT TO JUST PAY HOMAGE TO THE FACT I BET THIS IS THE ONLY FEDERAL BUILDING IN WASHINGTON, D.C. WHERE THERE IS A DISCUSSION OF CARBON PRICING. [LAUGHTER] AND DEEP DECARBONIZATION. SO VERY GOOD, FERC. WE LIKE IT. I WANT TO AGREE WITH A COUPLE OF STATEMENTS THAT I'VE HEARD AND THEN PLANT A FLAG IN DISAGREEMENT ON SOME OTHERS. WHERE I AGREE IS THAT I DO THINK THAT THE ISSUE IS URGENT OF ADDRESSING THE WHAT I CALL THE NIBBLING AWAY OF THE MARKETS BY A LOT OF DIFFERENT PIECES SUCH THAT THOSE PLAYERS WHO DON'T GET TO PARTICIPATE IN ONE OF THE SPECIAL DEALS, ASPECTS OF THE MARKET, IS ONE IN WHICH I JUST DON'T THINK IT'S SUSTAINABLE FINANCIALLY, AND YOU HEARD THAT. I THINK THAT ALL OF THE MARKETS DO NEED ATTENTION. EVEN THOUGH IT'S AN URGENT ISSUE. I DO THINK ALL OF THE MARKETS NEED ATTENTION. THAT IS NOT A FAST THING. BY THAT I SIMPLY MEAN CERTAINLY PRICE FORMATION AND ENERGY MARKETS CONTINUES TO BE NOT PERFECT FOR MANY REASONS THAT HAVE BEEN SAID OVER THE COURSE OF THE TWO DAYS. CAPACITY MARKETS ARE ADMINISTRATIVELY DETERMINED REALLY, AND THEY ARE SUFFERING FROM THE PROBLEMS. AND EVEN ANCILLARY SERVICES ARE PROBABLY INCOMPLETE IN TERMS OF THE PRODUCT CATEGORIES THAT WE NEED IN A CHANGING WORLD. SO I DO THINK THE URGENCY OF THE PROBLEM IS MISMATCHED WITH THE COMPLEXITY OF THE TASK. SPECIFIC TO YOUR QUESTION, ARNIE, ABOUT WHETHER THERE ARE PREFERENCES FROM A PRINCIPLED POINT OF VIEW BETWEEN NUMBER 2 AND NUMBER 4, MY PERSONAL PREFERENCE IS NUMBER 4 IS MORE ELEGANT. IT ALLOWS FOR PRICING TO PLAY THEIR ROLE IN MARKETS, IT ALLOWS FOR A DOVETAILING IN THE WAY THAT CERTAIN THINGS LIKE THE RGGI PROGRAM TODAY DOVETAILS WITH FEDERAL AUTHORIZED MARKETS. I DO THINK EVEN IF THIS PARTICULAR GROUP IS TALKING ABOUT CARBON AND I'M THE FIRST AMONG THEM TO TALK ABOUT THE NEED FOR MARKETS TO REFLECT THE IMPACTS OF CARBON ON THE ECONOMY, I THINK THAT IT IS A VERY SLIPPERY SLOPE WHERE YOU'RE GOING TO SET THE LINE ABOUT ATTRIBUTES. IF SOME  YOU KNOW, THERMAL PLANTS NEED WATER. SOME STATES MIGHT HAVE A FREE WATER SUPPLY. EVERY PLANT NEEDS LAND. WHETHER IT'S ROOFTOP OR OTHER REAL ESTATE. SO WE ALL KNOW LOTS OF STATES AND LOCALITIES USE LAND AS BARGAINING CHIPS FOR ECONOMIC DEVELOPMENT. SO I COULD SEE THAT EVEN THOUGH THAT'S A VERY ELEGANT SOLUTION AND WE MIGHT VOTE TO START WITH AN URGENT BIG ONE SOON, I THINK THERE ARE LIKELY PRACTICAL PROBLEMS ASSOCIATED WITH DEFINING THE ATTRIBUTES. AND THAT OF COURSE PRESUMES THAT PUSH COME TO SHOVE AND THE STATES CAN'T AGREE IN A MULTISTATE RTO THAT THE RTO WOULD FILE SOMETHING AFFIRMATIVELY, UNDER ITS OWN POWERS TO DO SO. SO ALTHOUGH I LOVE THAT ONE, IT STRIKES ME THAT NUMBER 2 MAY BE THE PRACTICAL PLACE WHERE FERC ENDS UP. THE CHAIR, THE ACTING CHAIR, BEFORE EVER CHAIR HAD TWO CHAIRMANSHIPS OVER HER CAREER, HER SUGGESTION THAT THAT NUMBER 2 MIGHT BE A PLACE WHERE FERC ENDS UP BECAUSE OF THE DIFFICULTIES OF HAVING A FEDERAL PREFERENCE FORCED ON A REGION, I THINK THAT THAT'S PROBABLY TRUE. SO I THINK THAT'S  I THINK THAT'S WHERE WE END UP. I THINK THAT NUMBER 5, I ACTUALLY THOUGHT ROY DESCRIBED NUMBER 5 AS ACTUALLY NUMBER 4, SO I'M A LITTLE CONFUSED ABOUT WHAT NUMBER 5 IS ANYMORE. BUT NUMBER 5 I THINK WILL SURELY LEAD TO STATES OPTING OUT. I ABSOLUTELY BELIEVE THAT THAT'S THE CASE. NUMBER 1 IS JUST NOT GOING TO HAPPEN, FOR GOOD REASONS. AND NUMBER 3 IS DEATH. DEATH BY LITTLE SHARK BITES. I THINK NUMBER 2 IS WHERE YOU NEED TO GO. AND THEN TO POTENTIALLY USE THE FORCING FUNCTION OF ASKING EACH RTO TO COME IN TO HOW THEY WOULD ADDRESS A PARTICULAR  THIS PROBLEM OF NIBBLING AWAY AT THE MARKET.

>> THANK YOU. ROY?

>> YEAH, ONE CLARIFICATION, I THINK A COUPLE THINGS GOT  MAY HAVE GOTTEN PARTIALLY JUMBLED, LISTENING TO CLIFF'S COMMENTS, I'M SORRY. I THINK UNIFORMLY WE TALKED ABOUT SOME SORT OF AN ADDER, WE'VE BEEN TALKING ABOUT IT, BASED ON RELATIVE CARBON INTENSITY AND THE ENERGY MARKETS. THE REFERENCE, SUBSEQUENT REFERENCE AT LEAST ON MY PART TO WHETHER THERE WAS A MOPAR, WASN'T THAT THE IMPLEMENTATION OF WHAT WE WERE TALKING ABOUT WAS IN THE CAPACITY MARKET. IT'S THAT THE LIKELY MANIFESTATION OF SOMEBODY TRYING TO SNEAK AROUND WOULD BE CAPTURED IN THE CAPACITY MARKET'S CONSTRUCT SO THAT'S A SAFETY NET AND I THINK THAT  I GOT THE IMPRESSION WE WERE TALKING ABOUT  I THOUGHT THAT WASN'T CLEAR TO CLIFF. THE SECOND THING IS COME BACK TO SUE'S COMMENT. IF NUMBER 2  IF THERE'S A COMMISSION MANDATE, PUT IT THAT WAY, AND THAT'S THE STARTING ACTION, AND THE DIFFERENCE BETWEEN WHAT I WAS THINKING WAS 5, MAYBE I'M MISNUMBERING, IS THAT I'M SUGGESTING THAT A COMMISSION COME FORWARD WITH A MANDATE THAT'S BROAD, UNIFORM, AS BROAD A FOOTPRINT AS MAYBE ALL THE RTOs, AND THE DIFFERENCE BETWEEN THAT AND WHAT SUE WAS SAYING, EACH OF THE RTOs HAS COME FORWARD UNDER A COMMISSION MANDATE AND TELL ME WHAT YOU ARE GOING TO DO. I DON'T KNOW THAT IT'S THAT BIG OF A DIFFERENCE WHERE THE PLACE WHERE I WOULD BECOME WORRIED TO THE EXTENT THAT THERE WAS A DIFFERENCE IS THE TAR BABY OF THE STAKEHOLDER SIDE. I THINK, AGAIN, WEARING MY CONSULTANT HAT, NOT LEGAL HAT, I THINK YOU HAVE AUTHORITY TO MANDATE BOTH. I DON'T THINK THAT'S IN DOUBT. THERE ARE PARALLEL TYPE ATTRIBUTES AND EVEN FINANCIAL ACTION ASSOCIATED WITH ATTRIBUTES UNDER DIFFERENT CONDITIONS, IN THE EXISTING, THAT DON'T LOOK DIFFERENT  THEY FUNCTION DIFFERENTLY BUT ENCOMPASS THE SAME REGULATORY REACH I THINK AS AN ADDER. SO I THINK YOU CAN DO IT. AND IF YOU DID IT AND SAID COME BACK AS A COMPLIANCE FILING, THEN MAYBE I WOULDN'T SEE A REAL BIG DIFFERENCE BETWEEN SOMEBODY ELSE DOES THIS WAY VERSUS THAT WAY. IF THE MANDATE IS LET'S BE CONGENIAL ABOUT THIS AND HAVE A YEARANDAHALF OF EVERYBODY PREPOSITIONING THEIR LITIGATION, TWO YEARS OF THEIR LITIGATION POSITIONS IN THE STAKEHOLDER PROCESS THEN I WANT NUMBER 5 AS A MANDATE. THAT'S WHAT I WAS TRYING TO GET TO.

>> THANKS. BILL AND CLIFF.

>> SO POLITICALLY PRAGMATIC, ARNIE QUINN  (INAUDIBLE)  WHEN HE STARTED BY SAYING I COULDN'T APPEAL TO EFFICIENT MARKETS BECAUSE THAT'S COMPLETELY OFF THE TABLE. I'VE BEEN SORT OF RECOVERING FROM THAT FOR THE LAST  [LAUGHTER] AND IT REMINDS ME I WOULD THINK I WAS SITTING WHERE SAM WAS SITTING ABOUT A DOZEN YEARS AGO, IF I RECALL. AND I WENT THROUGH A DIAGNOSIS AND I SAID THE PROBLEM WAS FUNDAMENTALLY YOU DON'T HAVE A EFFICIENT MARKETS BECAUSE YOU DON'T HAVE APPROPRIATE SCARCITY PRICING AND REALTIME MARKETS, THAT'S CAUSING THE OTHER THINGS TO HAPPEN AND YOU OUGHT TO FIX THAT FIRST. THAT'S THE MOST IMPORTANT THING. AND THERE WAS A LOT OF CONVERSATION. AND THE RESPONSE, ACTUALLY FROM ANDY OTT AT THE TIME, THIS IS A REALLY GOOD IDEA. THIS REALLY MAKES A LOT OF SENSE. BUT WE'RE REALLY BUSY. AND AS SOON AS WE FIX THE CAPACITY MARKETS, WE'RE GOING TO TAKE THIS UP. NOW, ONE OF THE REGRETS I HAVE OVER THE LAST MANY YEARS IS I HAVEN'T BEEN MORE AGGRESSIVE ABOUT SAYING THIS IS REALLY A DERELICTION OF DUTY ON BEHALF OF THE FEDERAL ENERGY REGULATORY COMMISSION. IF YOU DON'T GET THE REALTIME MARKETS TO BE EFFICIENTLY DESIGNED AND HAVE APPROPRIATE SCARCITY PRICING AND QUIT SOCIALIZING THE COST OF COMPONENTS THAT GO INTO IT, THIS IS THE PROBLEM YOU CREATED FOR YOURSELF. THAT IS WHAT I THINK THE MOST IMPORTANT THING IS. THAT WILL NOT SOLVE THE PROBLEMS YOU'RE TALKING ABOUT HERE TODAY. BUT IT'S A BIG JOB. SO IT'S NOT LIKE THAT'S AN EASY THING TO DO, AS EVIDENCE BY THE FACT WE'RE STILL HAVING THIS CONVERSATION AND I'M REMINDING OF WHAT I SAID 12 YEARS AGO. THAT'S A DIFFICULT THING TO DO. BUT IT WOULD WORK IN THE RIGHT DIRECTION. AND IT WOULD GET YOU GOING SO THAT SOME OF THE THINGS THAT ARE GOING ON HERE WOULD BE EITHER NOT A PROBLEM OR LESS PROBLEMATIC. NOW, IT WON'T SOLVE THE PROBLEM OF PEOPLE WHO WANT TO DO THINGS WHICH ARE FUNDAMENTALLY INCONSISTENT WITH EFFICIENT MARKET AND INSIST ON DOING IT AND HAVE CAPABILITY TO DO IT. BUT AT LEAST IF YOU HAD AN EFFICIENT MARKET AND THINGS PRICED PROPERLY AND GOT RID OF SOME SOCIALIZATION THE PEOPLE WHO WERE MAKING DECISIONS WOULD BE BEARING MOST OR ALL OF THE COST ASSOCIATED WITH DOING THAT. IF THEY CHOOSE TO DO SOMETHING, WHICH IS IN MY VIEW NOT IN THEIR INTEREST, THEY ARE ABSORBING THE COST IT'S MUCH LESS OF A PROBLEM THAN IF THEY ARE DOING AND FOBBING THE COST ON EVERYONE ELSE AND COST SOCIALIZATION PROBLEMS. I LISTED SPECIFICS IN MY PRIOR COMMENTS BUT I REALLY DO THINK THAT IF THE CONSTRAINT HERE IS THAT WE HAVE TO ACCOMMODATE ALL STATES AND MAKE EVERYBODY HAPPY WE HAVE MAKE CAPACITY MARKETS WORK, WE DON'T HAVE THE TIME OR THE ATTENTION TO FOCUS ON THE THINGS THAT MAKE EFFICIENT MARKETS THE FUNDAMENTALS OF EFFICIENT MARKETS IF WE'RE GOING TO HAVE CONSIDERATION OF REINTRODUCING CONTRACT PATHS AND BILATERAL CON GROUPS ACTION ALL THE STUFF WE SPENT ALMOST TWO DECADES EXPLAINING WHY THAT DOESN'T WORK AND PROVING IT IN PRACTICE THAT IT DOESN'T WORK, IF WE'RE NOT GOING TO DO THAT I DON'T KNOW WHAT TO DO. I MEAN, THIS IS JUST  YOU CAN'T SOLVE ALL THE PROBLEMS OF THE COUNTRY. I'M IN FAVOR OF CARBON BANANA, IS THAT WHAT IT IS? I CAN'T USE THE WORD, THE T WORD, BUT I'M IN FAVOR OF A CARBON BANANA. AND IF WE CAN DO THAT 

>> ADDER.

>> THANK YOU. I STAND BY MY CHOICE OF WORDS. [LAUGHTER] BUT THAT SEEMS TO ME TO BE ARGUABLY NOT UNDER FERC'S JURISDICTION. IF YOU CAN YOU PULL IT OFF I'LL BE THERE. BUT I DO THINK THERE ARE THINGS UNDER FERC'S JURISDICTION THAT I'VE DISCUSSED IN WRITTEN COMMENTS AN WE'VE TALKED ABOUT BEFORE. I'M NOT SMART ENOUGH TO FIGURE OUT HOW TO MAKE CAPACITY MARKETS WORK WITHOUT PEOPLE. SO I DON'T KNOW HOW TO DO IT. SO MY GOAL IS TO MAKE THEM IRRELEVANT AND I THINK THAT SHOULD BE YOUR GOAL TOO.

>> CHAIRMAN?

>> DR. HOGAN, I WANTED TO ASK A CLARIFYING QUESTION. FIRST OF ALL, I SAID I WAS DEPRESSED YESTERDAY BASED ON SUE'S TESTIMONY THERE WAS SOMETHING WE NEGLECTED FOR THREE YEARS BUT NOW YOU BROUGHT UP SOMETHING YOU TESTIFIED TO 12 YEARS AGO, I UNDERSTAND WHY FIXING SCARCITY PRICING, WE TRIES TO DO SOME THINGS ON PRICE FORMATION, OBVIOUSLY NOT ENOUGH FROM WHAT I SAID, I UNDERSTAND WHY THAT'S IMPORTANT BUT I THINK I WANT TO UNDERSTAND, YOU SAID IF WE GOT THAT RIGHT, THEN IF PEOPLE MADE UNECONOMIC DECISIONS IN THE MARKET, THEY COULDN'T PUT THE MONEY ON OTHER PEOPLE. I KNOW THEY WOULDN'T HAVE UPLIFT SOCIALIZE BUT HOW WOULD THAT HELP WITH SOMEBODY WHO WANTS TO BUY OFFSHORE WIND IF THE MARKET ISN'T CALLING FOR  I DON'T THINK I UNDERSTOOD YOUR COMMENT.

>> I'M NOT SAYING IS EVERYBODY IS GOING TO BE HAPPY, OUTSIDE OF WHOEVER IS DOING THIS. SO IF YOU'RE SUBSIDIZING UNECONOMIC RESOURCES AND DUMPING INTO THE MARKET, THE PEOPLE WON'T BE HAPPY BUT THE LOADS WHO ARE OUTSIDE THAT REGION ARE GOING TO BE DELIGHTED. PRICES WILL COME DOWN BECAUSE OF WHAT THE SUBSIDIES ARE TAKING PLACE AND CAUSING THOSE THINGS. AND AT LEAST YOU WOULD WANT THAT TO PASS THE TEST THAT IF SOMEBODY IN A STATE DOES SOMETHING WHICH INCREASES OVERALL COST OF THE SYSTEM THAT THEY INCUR AT LEAST THAT MUCH COST THEMSELVES. IF THEY WANT TO AND THEY ARE PREPARED TO DO IT, NOBODY'S PAYING ATTENTION, I DON'T KNOW HOW YOU CAN STOP THAT. I MEAN IF THEY WERE PREPARED TO ABSORB COSTS. WHAT WE HAVE IS BUILD INTO THE SYSTEM, SUBSIDY MECHANISMS THEY ARE SHIFTING THE COST TO OTHER PEOPLE. I LISTED SOME. WE CAN TALK ABOUT MORE, WHAT THEY ARE OUT THERE, AND I THINK IF YOU CAN FIX THE PROBLEM SO AT LEAST YOU GOT IN THE IDEALIZED MARKET CASE, EFFICIENT PRICING, THE OLD JOKE WHERE IS THE BEST PLACE TO HAVE YOUR  COULD BE CONSUMER, RIGHT ON THE EDGE OF AN RTO, BUT ON THE OTHER SIDE. YOU GET ALL THE BENEFITS BUT DON'T HAVE TO PAY THE COSTS. AND I THINK WHAT YOU DO IS STRUCTURE IT SO PEOPLE WANT TO TAKE ADVANTAGE OF THINGS, THEN THEY GET TO ABSORB THOSE COSTS. SHOULD SUBSIDIZED RESOURCES BE PARTICIPATING IN THE CAPACITY MARKET AND NOT GETTING DOUBLE PAYMENT PROBLEM? NO. WHY DO WE HAVE CAPACITY MARKETS? TRYING TO CORRECT A DEFECT IN THE ENERGY MARKET BECAUSE WE DON'T HAVE ENOUGH PRICES, NOW SHOULD WE PAY PEOPLE MAKING THE PROBLEM WORSE TO GET THEM IN ON THE DEAL TOO? THE ANSWER IS NO. I WOULD ALSO GET RID OF THE CAPACITY MARKET BUT THAT'S ANOTHER CONVERSATION. I THINK THAT'S THE THING TO FOCUS ON. AND DESPITE THE POLITICALLY PRAGMATIC AND FOOL  IMPRAGMATIC AND PIE IN THE SKY VIOLATION OF THESE INSTRUCTIONS I THINK THAT'S WHERE YOU SHOULD BE CONCENTRATING YOUR ATTENTION, AND IT CAN BE DONE, AND I DESCRIBED THAT ELSEWHERE AND I'M HAPPY TO TALK MORE ABOUT MY LIST AND ADDING TO THE LIST OF THINGS THAT YOU SHOULD DO. BUT THAT'S WHERE I WOULD FOCUS.

>> CLIFF, DID YOU HAVE ANYTHING?

>> I'LL PASS. ROY MENTIONED MY  THAT SEEMED SO LONG AGO. [LAUGHTER]

>> SUE AND ROY.

>> I REALLY HESITATED TO PUT UP MY CARD BECAUSE I RESPECT PROFESSOR HOGAN SO MUCH AS ONE OF THE BIGGEST BRAINS I'VE EVER MET, AND THAT WAS ACTUALLY HONEST. BUT 12 YEARS AGO I WROTE A PIECE IN WHICH I SAID IT IS REALLY A THEORETICAL  THEORETICALLY DESIRABLE PLACE FOR ELECTRICITY MARKETS TO MOVE TOWARDS SCARCITY PRICING, FOR ALL THE REASONS THAT BILL HAS SO WISELY WRITTEN ABOUT. BUT AT THAT TIME, I WROTE AND I FEEL EVEN MORE STRONGLY NOW THAT THOSE  I DON'T UNDERSTAND HOW THEY HAVE BEEN POLITICALLY SUSTAINABLW IN TEXAS, I SUPPOSED BECAUSE THEY HAVE NOT HAD THE PATTERN OF SCARCITY PRICING THAT CAUSED THE GOVERNOR TO CALL THE COMMISSION TO SAY CUT IT OUT. SCARCITY PRICING WE SEE  SYMPTOMS OR EXPRESSIONS OF SCARCITY PRICING WHEN FOR EXAMPLE IN NEW ENGLAND GAS, NATURAL GAS BECOMES UNAVAILABLE AND PRICES SPIKE THROUGH THE MARKET PLACE, AND EVERY GOVERNOR SENDS THEIR COMMISSIONERS TO THE LEGISLATURE TO TALK ABOUT HOW THEY ARE GOING TO FIX THAT PARTICULAR PROBLEM THAT'S JUST BEEN ENCOUNTERED IN THE MARKETPLACE. AS MUCH AS I THINK IT'S MY RIGHT BRAIN IS SUPPOSEDLY THE LOGICAL ONE, I DON'T KNOW, THAT LOGICAL SIDE OF MY BRAIN SAYS ABSOLUTELY THAT'S THE RIGHT WAY TO GO, I THINK WE WILL FIND OURSELVES HERE ADDRESSING THE FALLOUT OF SCARCITY PRICING IF YOU SPEND A TON OF TIME ON THAT AND NOT ADDRESSING SOME OF THESE OTHER ISSUES. THAT IS NOT A FAST EXERCISE. AND I AM NOT SMART ENOUGH TO FIGURE OUT HOW WE ARE EMBARKING ON A WORLD THAT WILL BE I EXPECT MUCH LOWER CARBON THAT INCLUDES RESOURCES WITH HIGH FIXED COSTS AND ALMOST NO VARIABLE COSTS. SO SCARCITY PRICING IN THAT KIND OF WORLD AND LEAD TIMES FOR, EXCUSE ME, GETTING RESOURCES INTO THE MARKET IS CAUSING MY BRAIN TO PRESS OUT.

>> ROY AND LAWRENCE AND MOVE TO TALKING ABOUT PRINCIPLES AND OBJECTIVES.

>> CAPACITY SCARCITY AND ENERGY ONLY, THIS IS ONE OF THE FEW AREAS I SORT OF DISAGREE WITH BILL. THE STARTING POINT IS RELIABILITY AND INPUT AND OUTPUT. ASK THAT QUESTION. AND IF YOU SAY THAT IT'S AN INPUT YOU HAVE A CAPACITY MARKET. YOU MAY NOT KNOW THAT YOU HAVE IT AND YOU MAY NOT REALIZE THAT YOU HAVE IT, BUT EVEN IN TEXAS THERE WILL BE A POINT AT WHICH THINGS RATTLE, A GOOD EXAMPLE, SOMEBODY CONTINUALLY TAKES A LOOK AT ADEQUATE ENTRY AS THE PENALTY PACT HIGH ENOUGH, IF NOT WE ADJUST IT, BECAUSE IF IT'S NOT HIGH ENOUGH AND WE'RE NOT GETTING ENTRY WE'RE CONCERNED ABOUT RELIABILITY, AND THAT'S BECAUSE RELIABILITY IS AN INPUT. AND WHEN FORMED DIRECTLY OR INDIRECTLY YOU HAVE CAPACITY MARKET. IF YOU SAY IT'S OUTPUT YOU PASSION BASED ON PRICE AND WE DON'T WORRY ABOUT ANY OF THIS. I DON'T KNOW A MARKET THAT HAS THOSE PROPERTIES. THE DISTINCTION IS HOW FINE IS THE DETAIL IN WHICH WE ARE RESOLVING HOW EFFICIENT IN TERMS OF THE ARGUMENT I THINK BOTH SUE AND BILL MAKE THAT THE SAME ARGUMENT CAN COME OUT ON A DIFFERENT PLACE. THE MORE DETAILED THE FINER THE RESOLUTION IS, THE HIGHER THE EFFICIENCY BUT THERE SHOULDN'T BE PERCEPTION THERE'S NOT A CAPACITY MARKET. THERE IS. THE SECOND THING, AGAIN, I'LL STRETCH WHEN BILL SUGGESTED THAT THE CARBON ADDER AND I REALLY MEAN ADDER BECAUSE I'M LOOKING AT THIS IN THE CONTEXT OF A MECHANISM THAT CREATES A SURPLUS BECAUSE OF THE WAY CHARGES ARE APPLIED AND MONEY GOES BACK OUT, I DON'T SEE ANY REASON THAT WE CANNOT DIFFERENTIATE BETWEEN UNITS LIKE PJM VERSUS NEW ENGLAND 4D VERSUS ICAP, DIFFERENTIATE AND COMPENSATE UNITS DIFFERENTLY BASED ON STARTUP, MINIMUM RUN TIME, COOLDOWN, DIFFERENTIATION WHEN THEY ARE FAST OR SLOW RAMPING TO GIVE THEM DIFFERENT REGULATION SIGNALS, PJM HAS ADDERS IN A DIFFERENT WAY, JUST TO BE CLEAR, I'M NOT SAYING THEY ARE THE SAME, BASED ON MISSIONLIMITED RESOURCES, THEY GET AN OPPORTUNITY COST ADDING TO RATION THEIR OUTPUT. I'M NOT SURE WHERE AN ATTRIBUTE DISTINCTION THAT CAN BE MONETIZED IS CLEARLY ONCE WE AGREE ON THE PRICE, ON THE INTENSIVENESS OF CARBON, DOESN'T FALL  LOOKS LIKE ALL THE OTHER THINGS. I WOULDN'T SEE THAT. AND I WOULD ENCOURAGE  I'M SURE YOU'RE GOING TO GET LOTS OF COMMENTS AND WE HAVE NO LOSS FOR LEGAL ADVICE HERE, BUT I WOULD ENCOURAGE YOU TO PURSUE THAT, TO PIN IT DOWN BECAUSE IT'S SO POWERFUL THAT TO NOT BE A HUNDRED PERCENT CONVINCED YOU COULDN'T DO IT WOULD BE A BIG ERROR. I BELIEVE YOU CAN. I DON'T THINK THERE'S ANY PROBLEM AT ALL.

>> THANK YOU. LAWRENCE?

>> I THINK THERE'S A COUPLE OF PRINCIPLES HERE THAT IF THEY ARE FOCUSING ON, THE FIRST ONE IS I THINK THERE'S GENERAL AGREEMENT THAT IF YOU'VE GOT ELECTRICITY MARKETS AND YOU'RE TRYING TO INCORPORATE STATE POLICY OBJECTIVES OF REDUCING CO2, THAT THE PROPER WAY TO DO THAT, THE MOST EFFICIENT WAY TO DO THAT IS TO USE CAP AND TRADE OR TO SET A PRICE, APPROPRIATE PRICE ON CO2 EMISSION. THAT WILL ALTER THE MARKET PLAGUES PLACE BUT NOT DISTORT IT. I THINK IT'S IMPORTANT TO ANTICIPATE WHETHER YOU THINK THE PROPER MARKET STRUCTURE, WELLSTRUCTURED POWER MARKET IS AN ENERGY MARKET WITH THE OPERATING RESERVE DEMAND CURVE, WHETHER IT'S AN ENERGY MARKET WITH AN ASSOCIATED CAPACITY MARKET, EITHER WAY, IF YOU HAVE AS A BENCHMARK WHAT THAT OUTCOME IS GOING TO LOOK LIKE WITH AN EFFICIENT CARBON PRICE, THEN YOU'VE GOT A BASIS TO MAKE SOME JUDGMENT WHEN YOU'VE GOT PEOPLE COMING TO YOU BECAUSE YOU KNOW YOU'VE GOT DISTORTIONS CREATING IN EITHER OF THOSE CASES EPISODES OF INCREASING DURATION OF NEGATIVE PRICES BECAUSE YOU'VE GOT THESE POLICIES THAT ARE DISTORTING THINGS SO I THINK WHICH EVER MARKETPLACE YOU THINK IS WELL STRUCTURED, ANALYZING THAT WITH AN APPROPRIATE CO2 PRICE HAS GOT TO GIVE YOU THE PROPER GROUNDING TO MAKE A LOT OF THE DECISIONS THAT YOU'VE GOT AHEAD OF YOU.

>> THANK YOU. I WANT TO MOVE ON TO THE DISCUSSION ABOUT PRINCIPLES OR OBJECTIVES THAT WE WOULD USE. POTENTIALLY CHOOSING AMONGST THE VARIOUS PATHS WE COULD GO MIGHT ALSO BE THAT IT'S IMPORTANT AS WE TALK ABOUT THE PROPOSALS THAT WE'VE HEARD FROM ACCOMMODATING STATES, SO IF WE ACCEPT THAT IT'S GOING TO BE DIFFICULT TO ACHIEVE WITHIN OUR MARKETS, WE'RE GOING TO GIVE UP ON ROY'S ADMONITION THAT WE FIGURE OUT FOR SURE WE CAN'T DO IT, BUT IF WE ACCEPT THAT WE'RE TRYING TO ACCOMMODATE STATE POLICIES WITH, YOU KNOW, SOME MANNER OF LETTING THEM GET A CAPACITY SUPPLY OBLIGATION BUT THEN SETTING A PRICE SO THAT YOU ALMOST IGNORE THAT STATE SUPPORT, OR SOME OTHER FORM OF ACCOMMODATION, WHAT KIND OF PRINCIPLES WOULD WE USE IN THINKING THROUGH PROPOSALS LIKE THAT? JUST TO PROVIDE SOME BASIS, WE HAD A COUPLE IN PREFILED COMMENTS SETS OF PRINCIPLES WE HEARD FROM VARIOUS FOLKS. DAVID PATTON SET OUT A COUPLE PRINCIPLES. I THINK PREMISED ON THE LEAVE ESPECIALLY ISO NEW ENGLAND MOST ENTRY WOULD COME FROM STATESUPPORTED RESOURCES, PRINCIPLES WERE THINGS LIKE PREVENT THE CREDIBILITY OF THE MARKET BY  PROTECT THE CREDIBILITY BY MINIMIZING PART OFFICIAL SURPLUSES, AND MINIMIZE EXCESS COST TO BE BORNE BY RTO CUSTOMERS, NRG HAD A COUPLE PRINCIPLES, I'LL READ THEM OUT. THIS IS JUST MOSTLY TO GROUND THE DISCUSSION, ALLOW STATEBACKED RESOURCES TO TAKE OBLIGATIONS IN THE CAPACITY MARKET CONSISTENT WITH ABILITY TO SUPPORT RESOURC ADEQUACY, ENSURE RESOURCE ARE ABLE TO MAINTAIN RELIABILITY AND CONTRACTS, AND ENSURE ALL RESOURCES BEING COUNTED FOR RESOURCED A QUESTIONS HAVE COMPARABLE IF NOT IDENTICAL PERFORMANCE OBLIGATIONS, INCREASE FINANCIAL CAPACITY MARKET STRUCTURE THAT CONTINUES WHEN NEEDED TO SUPPORTED A QUESTIONS AS STATESPONSORED RESOURCES DELIBERATE. OUR QUESTION TO YOU IS DO YOU HAVE A SIMILAR SET OF PRINCIPLES THAT ONE COMMISSION COULD USE AS WE EVALUATE DIFFERENT PROPOSALS AND INCLUDING PROPOSALS IT WOULD ASK US TO ACCOMMODATE STATE POLICIES IF THEY ARE NOT INCORPORATED INTO THE MARKET.

>> YOU'RE NOT GOING TO BE HAPPY WITH ME. WE'RE HERE BECAUSE THOSE QUESTIONS WERE ASKED REPEATED LID, PJM NOW 11 OR 12 YEARS AGO, SAME IN ISO NEW ENGLAND, SAME TIME FRAME FROM THE CAPACITY MARKET, EACH MARKET CAME OUT OF THE ADMINISTRATIVE LAW JUDGE DECISION STAGE WITH I5 EXCELLENT ORDERS, EACH WAS DIRECT THE INTO SETTLEMENT, EACH WENT THROUGH A SEPTEMBERS. PROCESS WHERE THE TYPES OF QUESTIONS YOU'RE ASKING WERE ADDRESSED, EACH WAS WATERED DOWN AND DISTORTED, BIASED, DAMAGED ENORMOUSLY BY THE COMPROMISES. I HAVE TO SAY WE WOULD STILL BE HERE ON THE ENVIRONMENTAL RPS TYPE OF DISTORTION, REGARDLESS, BUT WE WOULD HAVE BEEN HERE WITH AN INDUSTRY THAT WAS FINANCIALLY MUCH, MUCH SOUNDER, MORE WILLING TO ADOPT, ADAPT ITSELF. THE NUMBER OF TRANSFER, CLOSE TO JOE'S AREA, THE CASES I'M REFERRING TO, BETWEEN 50 AND $100 BILLION OTHER THE LAST TEN YEARS THAT GOT TRANSFERRED BETWEEN SUPPLIERS AND THAT'S A LOT OF MONEY. AND IT WOULD HAVE CHANGED THE ENTIRE FACE OF THE INDUSTRY, WOULD HAVE CHANGED IN TERMS OF REGULATING, FIGHTS OVER EXIT, ABILITIES TO ADAPT TO ENVIRONMENTAL CONTROLS, THE HEART WAS A HUGE SET OF BAD COMPROMISES. DR. BOWRING TALKS ABOUT UNDERPAYMENT IN HIS COMMENT ALSO. YOU'VE ALL READ THEM. IT'S WORTH GOING BACK IN THE STATE OF THE MARKET REPORTS, NUMBERS LINKED TO GENERAL STATEMENT AND IN PRETTY MUCH EACH CASE YOU CAN LINK TO A COMPROMISE. AND SO THE GENERAL PRINCIPLES, I SAID BEFORE, THE ONES I'D STICK WITH, AND I KNOW THIS IS SO POLITICALLY INCORRECT, TO STAND IN FRONT OF THE COMMISSION AND I KNOW THE CHAIRMAN IS PROBABLY  BUT THE REALITY IS YOU'RE HERE TO ME MAKING HARD DECISIONS NOW. AND WHETHER YOU AGREE WITH ME OR NOT, TRYING TO PUNT TO ACCOMMODATE WHICH IS WHAT WE CALLED THE ALTERNATIVE IN THE FACE OF A LOT OF THINGS WE UNDERSTAND AND KNOW, NOT TO BE CORRECT, OR IF WE HAD OUR DRUTHERS WE WOULD NOT DO THE BIG MISTAKE.

>> BILL?

>> WHEN THE CLEAN POWER PLAN WAS FIRST PUBLISHED, REMEMBER THE CLEAN POWER PLAN. WHEN IT WAS FIRST PUBLISHED, I WROTE A PAPER WHICH WAS IN THE ELECTRICITY JOURNAL, I'LL SUBMIT FOR THE RECORD IF NECESSARY, BUT THE PURPOSE WAS TO ADDRESS THE QUESTION ABOUT HOW TO DEAL WITH CARBON AND THESE ORGANIZED MARKETS AND MISTAKES YOU COULD MAKE, WHAT TO DO AND WHAT NOT TO DO. IT LAID OUT CARBON TAX AS THE CANONICAL EFFICIENT WAY TO DO IT, IT WOULD BE TERRIFIC AND WORK FINE. IT WENT THROUGH A SERIES OF ALTERNATIVES, APPROXIMATIONS FROM THE GOOD, BAD, TO UGLY AND THEN DOWN INTO THE LAST ONE ON THE LIST, I RECALL, WAS ENVIRONMENTAL DISPATCH WHERE YOU CHANGE OBJECTIVE FUNCTION FROM COST TO CO 2 EMISSIONS. THAT CREATES HAVOC IN THE SYSTEM. SO I THINK THERE ARE A LOT OF THINGS LIKE THAT WHERE IT'S UNDERSTANDING HOW THE SYSTEM ACTUALLY WORKS AND MAKING SURE WHEN PEOPLE PROPOSE THINGS YOU COMPARE IT AND THE MESSAGE HERE IS TO COMPARE IT AGAINST THE CANONICAL THING THAT WORKS WHICH IS THE CARBON TAX IDEA. AND THEN IF YOU'RE GOING TO DO SOMETHING NOT THAT BUT APPROXIMATELY, YOU HAVE TO CHECK TO SEE HOW CLOSE AND HOW FAR AWAY YOU ARE AND WHAT SOME OF THE PROBLEMS ARE GOING TO BE.

>> AWESOME HAVING YOU HERE, BY THE WAY. I WANT TO ASK A SOMEWHAT PROVOCATIVE QUESTION PROVOKED BY SOMETHING ROY SAID. I MEAN, AND SUE AS WELL. OBVIOUSLY WE DON'T LIVE IN A POLITICSFREE WORLD. PART OF THE REASON REPRESENTATIVE KENNEDY BECAME SO INTERESTED IN THIS ISSUE WAS BECAUSE OF A SPIKEUP IN CAPACITY MARKET THAT AFFECT THE HIS CONSTITUENTS. THERE'S REFERENCE IN PREFILED TESTIMONIES IS A DESIGN MARKET MECHANISM, IS THERE SOMETHING WE CAN OR DO DIFFERENTLY? WE ASSUMED THIS IS THE WAY IT HAS TO BE AND I DON'T MEAN BY THAT CHERYL LAFLEUR DESIGNS A MARKED, I'M NOT CAPABLE. BUT SOME OTHER METHOD. IT'S A QUESTION, HONESTLY.

>> CHERYL, ON THAT ISLAND ALONE, BY MY COMMENTS I'VE MADE CLEAR OVER THE COURSE OF YESTERDAY AND TODAY THAT I THINK IN THE SHORT TERM THE PATH 2 IS THE CORRECT ONE SO I TAKE TO HEART YOUR COMMENTS, ROY, AND SUE, AND I THINK IN A UTOPIC WORLD 4 WOULD BE A PATH THAT WOULD BE A VIABLE ONE IF THERE COULD BE CONSENSUS, MY COMMENTS MADE THAT CLEAR BUT I DON'T WANT TO BE CHERYL ON AN ISLAND ALONE. WE HAVE TO FIND A PRAGMATIC PATHWAY FORWARD, AND WE APPRECIATE YOUR EXPERTISE IN HELPING US CARVE THAT OUT IN A WAY THAT DEMONSTRATES OUR POLITICAL COURAGE.

>> WELL, ACTUALLY IN ANSWERING THE QUESTION THAT YOU'VE BOTH POSED, YOU DO HAVE I THINK A FUNDAMENTAL PRINCIPLE WHICH IS THAT COMPROMISE AND NEGOTIATION AMONG STAKEHOLDERS NOW IS GOING TO GIVE YOU THE BEST ANSWER. AND SO FERC NEEDS TO BE A CHECK ON THAT, AND IN PARTICULAR I THINK TO ARNIE'S QUESTION ABOUT WHAT IS THE PRINCIPLE, THE PRINCIPLES IS YOU WANT TO KEEP MARKETS DEMANDDRIVEN. WHAT I MEAN BY THAT IS YOU OUGHT TO KEEP IN MIND THE PRINCIPLE, THE OBJECTIVE OF USING MARKETINGS IN ELECTRICITY SECTOR IS TO MINIMIZE THE COST OF GIVING PEOPLE THE ELECTRICITY THEY WANT WHEN THEY WANT IT, INTERNALIZING A CO2 COST, AND MAINTAINING GRID SECURITY. NOW, EVERYBODY MIGHT NOT ACCEPT THAT BUT WE DO HAVE A THREAT HERE WHERE WE'RE GOING TO VIOLATE THIS PRINCIPLE BECAUSE WHEN WE HAVE STATES THAT ARE MANDATING 50 OR 80% RENEWABLES, AND THEY ARE STARTING TO USE THE MARKET INSTEAD OF IT BEING CUSTOMER DRIVEN, IT'S NOW SUPPLY DRIVEN, THAT WE'RE GOING TO BE USING MARKET FORCES TO SET PRICES TO EEQUILIBRATE INEFFICIENT ELECTRICITY PRODUCTION THAT'S NOT GIVING US THE POWER WHEN CUSTOMERS WANT IT AND USE PRICES TO RESHAPE CUSTOMER DEMAND IN ORDER TO ALIGN, IF WE LOSE SIGHT OF THE FUNDAMENTAL PRINCIPLE THESE MARKETS NEED TO BE DEMAND DRIVEN WE'RE GOING TO UNDERMINE SUPPORT OF THE MARKETS BECAUSE IT'S NOT IDEOLOGICAL, IT'S VERY PRACTICAL.

>> THANKS. CLIFF?

>> THANK YOU. I'D LIKE TO ADDRESS THE COMMISSIONER'S QUESTIONS AND RETURN BACK WHERE WE WERE WITH THE QUESTION WE HAD. WITH RESPECT TO HOW WE DEVELOP OPTIONS, I STRUGGLE WITH THAT. I PERSONALLY BELIEVE WE SHOULD MOVE MUCH MORE TOWARD A BILATERAL MARKET AND ALLOW PEOPLE TO CONTRACT FOR INDIVIDUAL ATTRIBUTES AND CAPACITY THAT MATCHES WHAT THEY NEED THAT HAS CHARACTERISTICS INCLUDING DURATION TO GET WHAT THEY WANT TO ACCOMPLISH. IT'S A BIG COMPLICATED THING. I'M NOT GOING TO TRY TO EXPLAIN THAT HERE. BUT I'VE TALKED TO A LOT OF PEOPLE ABOUT IT. IN AN INDIVIDUAL BASIS YOU COULD GET UNDERSTANDING BUT WHEN YOU ENTER INTO A STAKEHOLDER AGREEMENT, I'VE BEEN INVOLVED WITH PJM, NEW ENGLAND, EVERYONE IS AROUND A TABLE LARGER THAN THIS, POLITELY TALKING ACROSS A VERY LARGE ROOM. INTERESTED IN MOVING INCREMENTALLY FORWARD. IT'S HARD TO ADDRESS THE KIND OF SWEEPING CHANGE COMMISSIONER HONORABLE WAS MENTIONING AT THE OPENING OF THIS HEARING HOW DO WE GET SOMETHING DIFFERENT, AND YOU POSED AN INTERESTING QUESTION I HADN'T PLANNED ON ADDRESSING. IF THE COMMISSION ESTABLISHED WAYS FOR PEOPLE TO DEBATE REALLY TRULY DIFFERENT OPTIONS AND BRING THEM FORWARD WITHOUT COMMISSION ENDORSEMENT, I'D LIKE TO SEE MY IDEAS BUT THERE ARE OTHERS, TO ARTICULATE, TO DEVELOP THEM, MAY BE A WAY TO GET OUT YOU WOULDN'T GET FROM A STAKEHOLDER BUT THAT'S ONE SUGGESTION I HAVE. THE QUESTION WE STARTED OFF WITH WAS ABOUT THE OBJECTIVES. AND THE PRINCIPLES THAT WE WOULD HAVE FOR DEVELOPING A MARKET GOING FORWARD. I START WITH PRESUMPTION, ASSUMING WE'RE IN THE WORLD WE ARE TODAY, STATES AND FEDERAL, STATES HAVE OBJECTIVES THAT ARE LEGITIMATE, FLY OUTSIDE OF WHAT THE COMMISSION CAN DEAL WITH BUT WE'RE TRYING TO INCORPORATE THEM INTO THE MARKET. MOST OF THOSE ARE ENVIRONMENTAL. THOSE WE'VE BEEN TALKING ABOUT ALL THE TIME. IT'S INTERESTING ABOUT ENVIRONMENTAL OBJECTIVES IN THIS CASE THE BENEFITS GO BEYOND THE STATE BOUNDARIES. ARGUABLY THEY GO ALL OVER THE WORLD. THEY ARE PARTING CREATING MOMENTUM TO GET PEOPLE TO MAKE CHANGES YOU DON'T EVEN KNOW HOW TO GET TO. BUT WHAT WE REALLY HAVE AN INTERESTING THAT SOMEONE IS WILLING TO STEP FORWARD TO TAKE CHANGE, TO DEAL WITH ADDITIONAL COSTS, FOR A BETTER WORLD, FOR ENVIRONMENTAL BENEFIT. I THINK ONE OBJECTION SHOULD BE THAT WE SHOULDN'T IN THE FEDERAL MARKET, IN THE WHOLESALE MARKETS, DO THINGS THAT PENALIZE THOSE ENTITIES, THE CUSTOMERS THAT ARE GOING OUT OF THEIR WAY TO BEGIN WITH TO TAKE EXTRA COST ACTIONS TO TRY TO CREATE THESE ENVIRONMENTAL BENEFITS. WE SHOULDN'T PENALIZE THEM. THAT'S WHAT WE'RE DOING. I MEAN, I JUST FIND IT REALLY FRUSTRATING. WE IN NEW ENGLAND, AS I UNDERSTAND IT, I'M NOT INVOLVED IN NEW ENGLAND PROCESS, BUT WE  THEY ARE GOING TO SPEND EXTRA COST, BUY THEIR WAY OUT THROUGH A SECONDARY MARKET, THE SECOND TIME THEY HAVE TO PAY. AS A RESULT THEY WILL GET EXTRA RETIREMENT SO THE PRICES GO UP OVERALL, THEY PAY THREE TIMES. I DON'T THINK WE SHOULD MAKE IT MORE EXPENSIVE TO TAKE ENVIRONMENTAL DECISIONS AND STRATEGIES THAT SOME STATES WANT TO TAKE.

>> THANK YOU. ROBERT AND THEN SAM.

>> THANKS. AS TO STAKEHOLDER PROFITS I WISH I HAD THE MAGIC ANSWER TO THAT BUT I DON'T. I THINK THE CHALLENGE OF COURSE IS FUNDAMENTALLY EVERYONES RIGHT TO APPEAL TO THE COURTS AND SO GETTING THEIR BUYIN TO A DESIGN BEFORE IT COMES TO THE COMMISSION, AND THEN AGAIN I THINK THE COMMISSION'S EXPERT REVIEW AND IMPROVEMENT OF FINAL TARIFFS A HARD LOOK AT THE FINAL TARIFFS TO MAKE SURE WHAT IS THERE IS JUST AND REASONABLE AND NOT UNDULY DISCRIMINATORY IS THE LAST CHECK. BUT STAKEHOLDERS WILL ALWAYS BE WITH US. TO RETURN TO THE QUESTION FROM DIRECTOR QUINN THOUGH, HOW SHOULD WE ACCOMMODATE, I'M GOING TO GIVE THE HARD ANSWER. MINIMALLY. STATES HAVE TAKEN SOME ACTIONS THAT ARE ON THE BOOKS ALREADY. WE HAVE TO RECOGNIZE THEY ARE THERE. SO WE SHOULD DO WHAT WE CAN TO MAKE SURE THOSE DISRUPT THE MARKET IN AS SMALL A WAY, AND I WOULD JOIN WITH PEOPLE FROM THIS MORNING SAYING THAT THE COMMISSION SHOULD REQUIRE EVERY RTO TO FILE IN SHORT ORDER A PLAN TO DO THAT. BUT IF WE HAVE TO MOVE PAST THAT, IF WE BUILD IN PERMANENT ACCOMMODATIONS THEN WE'RE GOING TO HAVE A DEATH BY A THOUSAND CUTS, AS DR. TIERNEY DESCRIBED. WE'RE GOING TO EVENTUALLY BE REUNSTRUCTURING THE MARKET. AND HAVING MORE OR LESS EVERYTHING PROCURED THROUGH  BY RATE PAYERS THROUGH DESIGN, AND LOSE ALL THE BENEFITS OF COMPETITION WE'VE HAD WITH THE RTO MARKETS WOULD BECOME RESIDUAL MARGINAL TRADING OPERATION. AND THAT'S NOT GOING TO ACHIEVE THE BENEFITS THAT ORDER 888 AND SUBSEQUENT ORDERS ANTICIPATED. I THINK WHAT YOU SHOULD BE FOCUSED ON AFTER YOU ACCOMMODATE EXISTING ACTIONING IS GIVING THE STATES THE MARKETBASED TOOLS TO ACHIEVE THEIR POLICY GOALS WITHIN BROADER MARKETS. I DON'T THINK THEY HAVE TO BE FERC JURISDICTIONAL MARKETS, FOR INSTANCE I THINK IT WOULD BE POSSIBLE TO BUILD ON RGGI AS A WAY OF ESTABLISHED CARBON PRICING WHEN THE CHAIRMAN SAID THAT, MAINE ALREADY HAS CARBON PRICING. IT MAY BE POSSIBLE FOR REGIONS TO WORK COLLABORATIVE IF THEY DON'T LIKE FEDERAL JURISDICTION OVER THEIR POLICIES BUT LET'S GIVE THE STATES MARKETBASED TOOLS THAT CAN BE RECOGNIZED AS PART OF THE MARKET AND NOT DISTORT THE OUTCOME. LET ME LEAVE IT THERE.

>> I'LL ASK A FOLLOWUP ON THAT. IS THAT PARTLY ADVICE TO CALL THE BLUFF? I THINK WHAT WE HEARD IN THE MORNING PANEL WAS THE HARDER WE PUSH TO SAY YOU CAN DO IT WITHIN MARKETS, MARKETS WE REGULATE, OR SOME OTHER MARKETS BUT IF YOU DON'T DO IT THAT WAY WE'RE NOT ACCOMMODATING THE THE MORE STATES BELIEVE POLICIES AND OBJECTIVES THEY ARE PURSUING ARE INTEGRAL TO THEIR MANDATE, THEN WE START TO ASK THEM TO TAKE  TO MAKE A DECISION. DO YOU CONTINUE TO PURSUE YOUR POLICIES THAT YOU BELIEVE STRONGLY IN, CORE PART OF YOUR MANDATE, AND WE HEARD YESTERDAY KINDS OF REMINDER OFTEN STATE POLICIES ARE COMING FROM THE LEGISLATURE, ARE WE ASKING TO CHOOSE BETWEEN THAT AND THE WHOLESALE MARKET, OR IS YOUR BELIEF THAT FACED WITH THAT CHOICE THEY WILL CHOOSE THE WHOLESALE MARKET BECAUSE IT PROVIDES SO MANY COST SAVINGS WE CAN CALL THEIR BLUFF AND THEY WILL COME OUR WAY?

>> FIRST LET ME DISTINGUISH AS I DID IN MY FIRST ROUND OF COMMENTS THERE'S A DIFFERENCE BETWEEN THE POLICIES OF THE STATE, WE WANT TO DECARBONIZE, AND IMPLEMENTATION METHODS TO ACHIEVE THOSE POLICIES. WHAT I MEANT IN MY STATEMENT WAS THAT IT BEARS  A METHOD, YOU KNOW, 2020 PROCESS IS UNDERWAY, TRISTATE RFP IS UNDERWAY. WE HAVE TO FIGURE OUT HOW TO PUT THOSE INTO THE MARKETS IN THE LEAST DAMAGING WAY. IF WE GAVE STATES THE  MARKETBASED MECHANISM TO ACHIEVE THE BIGGER POLICY GOAL OF CARBON REDUCTION MANY NEW ENGLAND STATES HAVE OR RPS STANDARDS THAT ALL THE NEW ENGLAND STATES HAVE, THEN WHAT WE'VE HEARD IN PRIVATE DISCUSSIONS WITH REGULATORS AND LEGISLATORS, THEY WOULD BE HAPPY NOT TO HAVE TO ADMINISTER COMPLEX RFPs AND DEVELOP RULES AROUND THAT. THAT'S PUTTING A COOKIE JAR OUT LEGISLATORS ARE HAPPY TO START, YOU KNOW, MOVING PARTICULAR FUNDS AROUND. LET'S GIVE THEM AN EFFICIENT MECHANISM TO ACHIEVE THE GOALS. THAT'S MY POSITION. I THINK IT'S CALLING THE BLUFF MAY BE OVERLY HARSH. HAVING SAYS THAT LIKE DR. SHANKER I WAS TESTIFYING IN FRONT OF MAINE ABOUT THE DECISION WHETHER TO LEAVE ISO NEW ENGLAND, AND ALTERNATIVES ARE REALLY HARD. YOU HAVE TO PULL BACK THE ENTIRE RESTRUCTURING INCLUDING PUTTING EVERYTHING BACK IN RATE BASED, EVERYTHING BACK IN RATE BASED, NOW NEGOTIATING GETTING MERCHANTS BACK, A LONG AND HARD DISCUSSION. HAVING A MARKET AND QUASIMARKETING IS ONE OF THE RTOs COMMENTED YESTERDAY, MARKET'S A BETTER OPTION BUT NOW WE NEED TO MAKE SURE WHAT'S HAPPENING IN THOSE MARKETS DOES RESULT IN DISCRIMINATORY RATES AND ACHIEVES STATE POLICY GOALS. BY AND LARGE THOSE ARE THE SYSTEM.

>> THANKS FOR THE CLARIFICATION. SAM?

>> THANKS, ARNIE. SO FIRST I'D LIKE TO ADDRESS CHAIR LAFLEUR'S QUESTION ABOUT THE STAKEHOLDER PROCESS. I HAVE TO TELL YOU HOW IMPRESSED I'VE BEEN BY THE STAKEHOLDER PROCESS AS A MODEL OF DEMOCRACY AND HOW MUCH WE DEBATE THESE SMALL POINTS THAT DON'T SEEM TO BE DEBATED OVER MUCH LARGER POLICIES. DEMOCRACY IS HARD. I DON'T MEAN WITHIN FERC, I MEAN NATIONALLY. DEMOCRACY IS HARD AND INEFFICIENT, BUT I THINK IT'S THE BEST. AND I ACTUALLY THINK THIS DIALOGUE HAS ALREADY DONE QUITE A BIT OF GOOD. I'M HEARING, HAVING ALL PARTIES START TO RECOGNIZE NEEDS OF THE OTHER SIDE, I'M HEARING SUPPLIERS THAT RECOGNIZE THE REALITY OF THE STATE NEEDS AND THE FUTURE WILL LOOK VERY DIFFERENT FROM THE PRESENT AND NRG'S FILING THAT HAD THE PICTURE THAT LOOKS VERY DIFFERENT FROM TODAY OF A CLEAN ENERGY FUTURE. I THINK I'M HEARING STATES START TO MOVE TOWARDS UNDERSTANDING, MAYBE THIS IS HOPEFUL THINKING, THAT THE MARKET ALREADY DOES SOLVE WHAT SOME OF THEIR OBJECTIVES ARE, AND AS FOR THE OTHER OBJECTIVES LIKE DECARBONIZATION THEY HAVE TO DO A BETTER JOB SO MAYBE A MARKET APPROACH COULD HEAR THEM. MAYBE YOU NEED SOMETHING MORE TO COMPEL THAT DIRECTION. I DON'T KNOW ABOUT THAT BUT I JUST URGE NOT TOO MUCH FRUSTRATION WITH THIS STAKEHOLDER PROCESS JUST BECAUSE IT'S SOMEWHAT SLOW AND I HEAR A LOT OF WORDS THAT IT'S DIRE. I AGREE IT'S VERY IMPORTANT WITH THE CHALLENGES THAT WE FACE TO SET UP SOMETHING THAT WORKS BETTER.

>> I WASN'T REALLY WORRIED THAT IT WAS SLOW. I THINK THAT'S INEVITABLE WITH THE NUMBER OF PARTIES. IT WAS THE COMMENTS MADE BY A COUPLE OF YOUR BRETHREN AND SISTERS THAT THE COMPROMISES THEN GET BUILT  SOME COMPROMISES MAKE ECONOMIC TRADEOFFS BUILT IN AND IT WAS A  PROBLEMS EXPRESS IT'S WITH WHAT COMES OUT OF THE PROCESS IN TERMS OF, YOU KNOW, WHATEVER CHOOSE YOUR CLICHÉ, CAMEL IS A HORSE FROM THE COMMITTEE, WHATEVER. IT'S NOT THE SLOWNESS. I CAN ACCEPT THAT PROCESSES ARE SLOW.

>> I TOO DON'T HAVE A SILVER BULLET FOR YOU ON THOSE BUT I WOULD LIKE TO COME BACK TO ARNIE'S PRIOR QUESTION ON SOME PRINCIPLES AROUND ACCOMMODATE. THE FIRST THING I WOULD SAY, AGAIN, REEMPHASIZE THAT THE SORT OF ACHIEVE IDEA AND BRINGING SOME OF THESE OBJECTIVES INTO MARKETS IS BEST AND I HOPE WHERE WE'RE HEADED LONG TERM BUT IN THE MEANTIME THOSE TAKE LONGER TO PUT IN PLACE SO WE HAVE  WE'LL PROBABLY CONTINUE TO HAVE PROCUREMENTS AND FINANCIAL SUPPORTS THAT ARE OUTSIDE OF THE MARKET AND WHAT DO YOU DO ABOUT THAT AND I THINK THAT'S WHAT YOU'RE ASKING, THE PRINCIPLES FOR THAT. THE FIRST THING IS TO RECOGNIZE ALL THE VALUES THAT THOSE RESOURCES PROVIDE SO IF THEY PROVIDE, YOU KNOW, RECOGNIZING THE REC VALUE AND RECOGNIZING THE ZEC VALUE OR SOME OTHER EQUIVALENT BECAUSE WITH THAT IN MIND AGAINST LARRY'S BENCH MARK OF A CARBON PRICE THEY MAY BE ECONOMIC. THE SECOND IS TO  YOU KNOW, THERE MAY BE RESOURCES THAT DON'T PASS THAT TEST BUT EVEN THEN NOT TO IGNORE THE VALUE OF CAPACITY THAT THEY INCIDENTALLY PROVIDE, AND THEREFORE OVERBUILD, I JUST THINK THAT'S WASTEFUL AND IT'S NOT SUSTAINABLE. SO TO THE EXTENT THAT WE HAVE A LOT OF INVESTMENT IN CLEAN ENERGY RESOURCES, YOU NEED LESS, OTHER RESOURCES. THERE WAS A VERY IMPORTANT QUESTION THAT CHAIR LAFLEUR ASKED YESTERDAY, IS THERE GOING TO BE SO MUCH INVESTMENT IN CLEAN ENERGY AND SPECIAL RESOURCES THAT THERE'S JUST NOT A NEED ANYMORE FOR ANY  I DON'T REMEMBER IF YOU CALLED IT INMARKET INVESTMENT BUT SOMETHING TO THAT EFFECT.

>> (INAUDIBLE).

>> OKAY. I THINK THAT'S A KEY QUESTION. I THINK THE ANSWER TO THAT IS THERE WILL STILL BE A NEED. I'M QUITE SURE. AND SO FOR THAT REASON IT'S VERY IMPORTANT THAT YOU HAVE GOOD PRICE FORMATION, AND THAT'S NOT JUST  THAT'S IN CAPACITY, ENERGY MARKETS, ANCILLARIES, THAT'S REALLY IMPORTANT. I THINK ABOUT REGULATORY RISK THAT INVESTORS PERCEIVE IF, YOU KNOW, IF THESE OTHER RESOURCES ARE ABLE TO COME IN, YOU KNOW, NOT JUST PART OF A LONG WELLDEFINED PATH TOWARDS DECARBONIZATION BUT HAPHAZARDLY CREATES ENERGY THAT MIGHT REDUCE THE PRICE, IT'S JUST YOU CANNOT PREDICT THE FUTURE PRICE BASED ON FUNDAMENTALS SO I DO THINK YOU NEED SOME MECHANISM IN PLACE BUT AGAIN I HOPE FOR A FUTURE WHERE WE MOVE MORE TOWARDS THE INMARKET APPROACHES AND THAT BECOMES LESS IMPORTANT.

>> THANK YOU. WE HAVE ROY AND THEN SUE AND THEN WE'LL 

>> YEAH, SO I WANTED TO RESPOND TO THE CHAIRMAN'S QUESTION. OVER 22 YEARS I PROBABLY HAVE AVERAGED ABOUT TWO STAKEHOLDERS MEETINGS A WEEK, ASIDE FROM HAVING A REAL JOB. AND SO IT'S A GIVEN WHAT YOU SAID ABOUT TIME, BUT IT DOESN'T HAVE TO BE. AND IT SHOULD BE OF SOME CONCERN BECAUSE FOLLY IS A BUSINESS TACTIC IN THE STAKEHOLDER PROCESS, IT DOES NOT EXIST  IF YOU SAID YOU HAD TO DO A,B, C,D AND THAT WAS IT AND YOU KNEW IT ALWAYS WAS LIKE THAT, I WOULD AGREE WITH YOU, GEE, THAT'S LIFE. BUT IT ISN'T. IT'S ABLE TO BE MANIPULATED FOR BETTER OR FOR WORSE. THE ABILITY TO ACTUALLY DO SOMETHING CONSTRUCTIVE WHEN THERE'S A WINNER OR A LOSER OR A TRANSFER OF FUNDS, ZERO SUM GAME, ALMOST IMPOSSIBLE. THE VOTING STRUCTURES ARE STRANGE. AND I THINK YOU MAY HAVE EVEN HAD ISSUES BROUGHT FORWARD TO YOU ABOUT VOTING STRUCTURES. I DON'T WANT TO GET INTO THAT KIND OF LEVEL OF ISSUE. AND THEN THERE ARE  THERE'S DIFFERENT  THERE'S PROCEDURAL OBJECTIVE FUNCTIONS ON THE PARTS OF THE RTOs, CLOSE SOME THINGS OUT. YOU KNOW, I'VE BEEN AMAZED BETWEEN THIS IS RIGHT AND THIS IS WRONG, AND THE RTO AT LEAST IN MY VIEW IN GENERAL HAVE COME DOWN ON THE RIGHT SIDE, NOT ALWAYS, AND SAID I'M PRETTY INTRACTABLE AND WE'RE GOING TO MOVE FORWARD. PJM HAS PROBABLY MORE OF A VOTING PROCESS THAT PREVENTS THAT FROM ELSEWHERE BUT I'VE ALSO BEEN AMAZED THAT THERE IS ALSO AN INSTITUTIONAL SCORE CARD, PROBABLY MAYBE EVEN DOWN TO HOW WELL YOU'VE DONE AS A COORDINATOR OR COMMITTEE AS TO WHETHER SOMETHING GETS DONE WHICH MAY LEAD TO COMPROMISES IN AND OF ITSELF THAT ARE BACK. AND IT'S ALL OVER THE PARK. THE SPECTRUM IS IT SHOCKING WHEN YOU LOOK BACK OVER TIME FOR ABOUT AND BAD. I DON'T KNOW IF I COULD EXPLAIN EACH PIECE. I KNOW PJM, IS VINCE STILL HERE? ED TATUM IS WHO I KNOW, ONE OF THE RESIDENT EXPERTS, REVIEWING THE ENHANCED LIAISON PROCESS AGAIN UP FOR CONSIDERATION, THAT'S FASTER TO GO FORWARD WITH THE PROCESS ROBERTS DESCRIBED, THAT WOULD BE A GOOD THING.

>> DO YOU THINK WE SHOULD SET TIGHTER DEAD LINES FOR THINGS?

>> YES, UNAMBIGUOUSLY. THAT'S A NOBRAINER.

>> ALL RIGHT. SUE?

>> FIRST, COMMENTS ON THE STAKEHOLDER PROCESS. IT SHOULDN'T BE A SURPRISE WE HAVE MARKET RULES THAT ARE NOT PERFECTLY ECONOMICALLY EFFICIENT BECAUSE WE USE LEGISLATURES TO COME UP WITH DESIGNS, BY THAT I MEAN STAKEHOLDER PROCESSES ARE WEIGHTED, VOTING LEGISLATURES. OF COURSE THE RTO CAN AT THE END OF THE DAY PUT IN THEIR OWN FILING AND IGNORE SO TO SPEAK SOME THINGS THAT COMES OUT OF THE STAKEHOLDER PROCESS BUT I DON'T KNOW THAT YOU HAVE A CHOICE BECAUSE FOR ALL THE REASONS THAT PEOPLE HAVE SAID. IT'S AN IMPERFECT SYSTEM. SETTING DEADLINES WOULD BE HELPFUL. I HAVE OFTEN ADMIRED THE STP STAKEHOLDER PROCESS THAT CARVES OUT CERTAIN ASPECTS OF DEFERENCE TO STATES ON THINGS THAT ARE POLITICAL DECISIONS. AND THEY SAY, OKAY, THESE ARE REALLY ALLOCATION OF GOOD IN THE SYSTEM AND SO THEY DON'T HAVE OTHER WEIGHTED VOTINGS ON THERE. THERE COULD BE SOME PROCESS DESIGN, BUT I THINK YOU HAVE TO HAVE IT. A TIGHTER PROCESS WOULD BE HELPFUL BECAUSE THEN PEOPLE HAVE TO GET OFF THE CAN. ON THE PRINCIPLES POINT, I GUESS I WOULD SAY A COUPLE THINGS. LET ME JUST START BY RECALLING THAT WE OFTEN TALK ABOUT WHETHER THE STATES ARE GOING TO LEAVE THE WHOLESALE MARKETS, BUT I THINK THERE'S AN IMPORTANT DISTINCTION BETWEEN LEAVING THE RESOURCE ADEQUACY PORTION OF THE WHOLESALE MARKET AND THE REST OF THE MARKET. AND WE KNOW THAT EVERY OTHER RTO DEALS WITH RESOURCE ADEQUACY DIFFERENTLY THAN THESE THREE RTOs. SO WHEN WE THINK ABOUT WHETHER STATES MIGHT GET SO FED UP WITH ONE OR ANOTHER OF THESE PATHS THEY WOULD LEAVE THINK ABOUT WHETHER OR NOT THEY ARE LEAVING RESOURCE ADEQUACY OR COMPLETELY LEAVING THE WHOLESALE MARKET AND GOING BACK TO FULL REGULATION. CALIFORNIA'S VIRTUALLY A CONTRACT MARKET NOW. AND CERTAINLY THE STATE HAS RESOURCE ADEQUACY, BUT THEY OPERATE A SECURITY CONSTRAINED ECONOMIC DISPATCH. AND SO MAYBE, I'M ASSUMING THAT WHEN STATES TALK ABOUT WHAT THEY LIKE ABOUT WHOLESALE MARKETS, IT'S THAT, THE OPERATION ISSUES. AND LESS EXCITEMENT ABOUT THE RESOURCE ADEQUACY PIECE. AND IF THAT'S THE CASE, THEN I WONDER IF YOU COULD THINK ABOUT IF STATES ARE GOING TO LEAVE, THEN IF THEY WANT THE BENEFITS OF THE ECONOMIC EFFICIENCY, SECURITYCONSTRAINED ECONOMIC DISPATCH, THEN THEY ARE EITHER ALL IN OR ALL OUT. I DON'T KNOW IF YOU CAN DO THAT. BUT BECAUSE OTHERWISE THEY ARE PICKING AND CHOOSING THINGS, WHICH THEY CAN DO. WHICH I THINK THEY CAN DO. SO ON THE PRINCIPLES, I DEFINITELY THINK THAT YOU WOULD WANT TO HAVE CONSISTENT PERFORMANCE OBLIGATIONS THAT ARE TECHNOLOGY NEUTRAL, THAT YOU JUST INSIST ON THAT SO THAT IF SOMEBODY HAS TO MEET THE TEST OF BEING AVAILABLE ON CALL OR WHATEVER IT IS THAT YOU DON'T CARE WHETHER IT'S RENEWABLES OR NUKE OR ANYTHING ELSE. I WOULD REALLY TRY HARD TO ADDRESS THIS PROBLEM OF MINIMIZING ARTIFICIAL SURPLUSES. I THINK THAT WE REALLY SEE THAT PROFOUNDLY WITH MANY OF THE STATE BILATERAL CONTRACTS, AND I THINK THE ISO NEW ENGLAND IS TRYING HARD TO FIGURE OUT A WAY TO MAKE IT MORE ORDERLY, TO ADDRESS THAT PROBLEM, BUT I ALSO THINK THAT THE WAY IT'S PROPOSED, AT LEAST MY UNDERSTANDING TO DATE, IT COULD DEFINITELY INVITE  IT WILL SURPRISE ME IF STATE LEGISLATORS AND REGULATORS WILL BE PATIENT FOR ORDERLY PORTION OF THAT. THAT NEEDS MORE WORK TO FIGURE OUT HOW TO DOVETAIL THAT WITH STATES IMPERATIVE FROM THEIR POLITICAL POINT OF VIEW AND I THOROUGHLY BELIEVE PRINCIPLE OF ALLOWING EFFICIENT PRICE FORMATION IN THE MARKETS WHERE THERE ARE MARKET PARTICIPANTS WITHOUT A STATEBACKED CONTRACT OR STATE ORDERED CONTRACT IS REALLY IMPORTANT.

>> THANK YOU. I THINK I WANT TO MOVE TO ONE LAST QUESTION BEFORE WE TURN IT OVER TO THE COMMISSIONERS. I THINK IT FOLLOWS UP ON THE QUESTION THAT ACTING CHAIRMAN LAFLEUR ASKED ABOUT PROCESS AND USING THE STAKEHOLDER PROCESS, AND I THINK SOME OF YOU TALKED ABOUT A LITTLE BIT ABOUT THE TIME THAT IT TAKES, A NUMBER OF OTHER PANELS HAVE TALKED ABOUT HOW URGENT IT IS THAT THE COMMISSION PROVIDE GUIDANCE OR TAKE ACTION OR GIVE  YOU KNOW WHAT DEADLINE WE SET FOR THE STAKEHOLDER PROCESS. I THINK WE'VE HEARD A VARIETY OF ANSWERS, IT'S ALL GOING PRETTY WELL, YOU KNOW, WE'LL GET TO IT WHEN WE GET TO IT, TO THE TOWN IS BURNING DOWN AND YOU'RE A COUPLE MINUTES LATE. SO WE'D LOVE TO GET YOUR PERSPECTIVE ON HOW MUCH TIME WE'VE GOT. IS THE MARKET BURNING DOWN? OR DO WE HAVE A LITTLE TIME? MAYBE A LITTLE BIT TO SOME DISCUSSION ABOUT ACCOMMODATE VERSUS MOVE THINGS WITHIN THE MARKET IF THE DOWN IS BURNING DOWN, ACCOMMODATE BECOMES A MORE ACTIVE PRIORITY, IF WE'VE GOT PLENTY OF TIME WE CAN SPEND THAT TIME TO FIND WITHINMARKET SOLUTIONS. SO, AGAIN, APPRECIATING THIS MIGHT NOT BE THE SAME ANSWER IN ALL THREE OTHERS REASONS WE'RE ADDRESSING THIS CONFERENCE WOULD LOVE TO GET YOUR PERSPECTIVE HOW FAST THE COMMISSION OR ISOs NEED TO MOVE. ROY?

>> I'LL TRY A COUPLE THINGS FOR PJM. I THINK ANDY SPOKE YESTERDAY ABOUT 10,000 EXITED, 10,000 ENTRY WHICH MIGHT SOUND HEALTHY BUT DISTORTIONS, STATUS QUO WOULD HAVE BEEN GOOD ENOUGH, WE CHURNED $10 BILLION OF CAPITAL FOR NO REASON. I THINK PART OF LARRY'S COMMENT ABOUT, WELL, YOU KNOW, WE HEARD A LOT OF COMMENT ABOUT EXELON AND PAYMENT AND EXECS, WE WON'T GO INTO DETAILS BUT MY OBSERVATION IS THE SAME AS HIS, WITH A RATIONAL CARBON PRICING THE ISSUE WOULD GO AWAY. SO HOWEVER THAT PLAYS ITSELF OUT, THOSE UNITS WOULD BE ECONOMIC IS WHAT I'M SAYING. WE'RE SWINGING EITHER WHAT MAY BE BILLIONS OF DOLLARS OF SUBSIDY OR INAPPROPRIATE BILLIONS OF DOLLARS IN NEW CAPITAL, THE SYSTEM'S GOING TO BALANCE OUT. SOMEBODY'S GOING TO TAKE SOME ACTION AND DON'T  WHAT I'M TRYING TO ENCOURAGE YOU IS TO NOT LOOK AT POWER BALANCE PER SE, BUT LOOK AT EFFICIENCY OF CAPITAL FORMATION AND WHETHER OR NOT SOME OF THE JOE BOWRING'S COMMENTS, UNDERCOMPENSATION, RETIREMENT OF PLANTS, DOESN'T MEAN THERE'S NO NEW ENTRY PARTICULARLY WITH THE SAY WE SET UP INCENTIVES EVEN IF THEY ARE NOT EXACTLY RIGHT. EVEN IF YOU SEARCH THROUGH TESTIMONY I'VE GIVEN, WE ARE ARTIFICIALLY CHURNING CAPITAL ENORMOUSLY, AND TO ME THAT'S AS BIG OR BIGGER A CONCERN OF REPLACEMENT. THE OTHER THING THAT'S A SLIGHT DISTORTION, I'LL MENTION FOR PJM, IS GAS SUPPLY SITUATION IS PROBABLY BEARING A MULTITUDE OF SINS. I GET TO SEE LET'S SAY A DOZEN NEW PLANTS. I HAVE A NICE  BECAUSE I'M BY MYSELF I'M SORT OF NEUTRAL SO I GET TO SEE WHAT OTHER PEOPLE HAVE DONE TO ADVISE THEM. OBVIOUSLY I CAN'T TALK ABOUT NUMBERS PER SE. BUT, YOU KNOW, THERE'S A LOT OF GAS OUT THERE AND THERE'S SOME VERY ATTRACTIVE PROJECTS THAT ARE PROBABLY COMING TO THE MARKET. I DON'T KNOW THAT THERE'S ANYTHING WRONG WITH IT BUT THE TIMING VERSUS ALL THIS OTHER DISTORTION IS SOMETHING THAT YOU SHOULDN'T TAKE FOR GRANTED WILL ALWAYS BE THERE. AND YOU'RE ALREADY STARTING TO SEE THAT GO AWAY.

>> THANK YOU. LARRY AND WE'LL DO SUE.

>> ON THIS QUESTION OF STAKEHOLDERS, I THINK THAT YOU HAVE TO RECOGNIZE THE FACT THAT THEY TEND TO BE VERY REACTIVE, NOT PROACTIVE, SO THAT WHEN PROBLEMS ARE CROPPING UP IN THE POWER MARKETS, THEY ARE NOT LIKELY TO BE AGGRESSIVE AND TRYING TO SOLVE THINGS. IT TAKES CRISIS TO ACTUALLY FORCE SOME MOVEMENT. I THINK THE EXAMPLE IS YOU THINK OF A PJM WENT THROUGH A COUPLE DIFFERENT DESIGNS ON ITS CAPACITY MARKET BUT IT TOOK THE POLAR VORTEX TO FORCE THEM TO FINALLY DEFINE WHAT EXACTLY DO THEY MEAN BY CAPACITY, EVEN THOUGH THEY HAD HAD A MARKET TRADING IT FOR OVER TEN YEARS. THAT'S AN EXAMPLE OF THE STAKEHOLDER PROCESS BEING REACTIVE AND WITH ACCOMMODATION I THINK RIGHT NOW IT'S TEMPTING TO THINK THAT YOU CAN ACCOMMODATE PARTICULARLY BY PRICING RESILIENCY OR PRICING FLEXIBILITIES AND SO FORTH BUT THAD HILL SAID CALIFORNIA IN HIS OPINION IS A MARKET THAT HAS FAILED, AND WHEN YOU LOOK AT CALIFORNIA, WE'RE TALKING ABOUT A MARKETPLACE WHERE THE SUBSIDIZED WIND AND SOLAR MAKE UP ABOUT 12 TO 15% OF ANNUAL SUPPLY. AND YOU'VE ALREADY GOT A MARKET WITH THE DUCK CURVE AND SO FORTH THAT'S SHOWING TREMENDOUS STRESS TO FUNCTION AND TO FORM PRICES THAT ARE EFFICIENT. AND IF WE'VE GOT THIS KIND OF PROBLEM AT 12 OR 15%, THEN WE'RE GOING TO HAVE ENORMOUS PROBLEMS WHEN YOU'VE GOT MARKETS LIKE NEW YORK SAYING WE'RE GOING TO GET TO 50% BY 2030. AND SO IT MAY SEEM THAT YOU CAN ACCOMMODATE NOW WHEN THESE PROBLEMS WITH SMALL BUT THEY ARE GOING TO RAPIDLY EXPAND, AND IF THE SOLUTIONS DON'T GET OUT IN FRONT OF THIS I THINK IT'S GOING TO BE VERY HARD TO BE EFFECTIVE IN A REACTIVE MODE.

>> THANK YOU. SUE?

>> ON THIS QUESTION OF THE TRADEOFF OF TIME, I REALLY AGREE WITH ROY. I THINK THAT THE INSIGHTS ABOUT WHETHER THE LIGHTS ARE GOING TO STAY ON IS NOT THE PROBLEM. IT'S REALLY ABOUT WHETHER OR NOT QUARTERLY REPORTS OF PUBLICLY OWNED FIRMS WILL CAUSE THEM TO MAKE DECISIONS ABOUT WHETHER OR NOT TO LEAVE OR TO INVEST. MAKE THAT BECOMES A LIGHTS IS ON PROBLEM EVENTUALLY BUT I DON'T THINK THAT IS KEEPING THE LIGHTS IS NOT YET URGENT SO ADDRESSING THE FINANCIAL CONSIDERATIONS IN THE MARKET IS A BIGGER DRIVER.

>> A QUICK FOLLOWUP.

>> I THINK IT'S ALSO CRITICAL TO REALIZE THE MARKETS ARE ALREADY LOOKING WAY FORWARD. WE ARE IN THE CAPACITY MARKETS PROCURING THREE YEARS AHEAD OF NEED. SO ANY CHANGES WE MAKE TODAY ARE REALLY NOT FULLY AFFECTING THE MARKETS UNTIL THE EARLY 2020. AND A LOT OF STATES HAVE A LOT OF RENEWABLE GOALS AND OTHER POLICY GOALS TO ACHIEVE IN THAT TIME FRAME. SO I THINK THE URGENCY OF PUTTING IN FRONT OF PEOPLE A CLEAR PATH TO DO SOMETHING OTHER THAN MASSIVE POLICY STATEDIRECTED BILLS IS QUITE HIGH. TO SECOND LAWRENCE'S POINT, IT DOESN'T TAKE MUCH TO TIP THIS OVER. WE LOOK AT THE NEW STUFF COMING ON BOARD, THERE'S VERY LITTLE EXCEPT RENEWABLES GETTING BUILD AND VIRTUALLY ALL RENEWABLES ARE NOW COMING IN WITH SOME SORT OF BAKED IN CONTRACT WHICH IMMUNIZES THEM FROM THE ISO MARKETS. ENERGY, ANCILLARY SERVICES, AND SO FORTH.

>> THANK YOU. CLIFF?

>> I GUESS IN TERMS OF URGENCY I SEE TWO KINDS OF ISSUES. ONE HAS TO DO WITH NUCLEAR UNITS. WE TALKED A LOT ABOUT THAT THIS MORNING. I SEE VALUE IN HAVING ZERO CARBONBASE LOAD GENERATION NOT VALUED BY THE MARKETPLACE. IT'S A BIG DEAL. I KNOW A LOT ABOUT NUCLEAR POWER PLANTS, THEY ARE NOT REPLACEABLE, WE'RE SEEING EVIDENCE OF PEOPLE TRYING TO DO THAT. IT'S A ONEOFAKIND CIRCUMSTANCES THAT DESERVES ATTENTION BEFORE BAD DECISIONS ARE MADE, WITHOUT HAVING LOOKED AT THE NUMBERS AND NOT TRYING TO PASS JUDGMENT ON WHO IS PAYING FOR THAT AND WHAT THE COST MIGHT BE BUT I DO THINK THOSE ARE UNIQUE RESOURCES. WITH RESPECT TO THE REST OF THE MARKETPLACE, YOU KNOW, PJM WITH RESERVED MARGINS OF 22% I THINK OF YOGI BERRA, MY FAVORITE ECONOMIST. WE'VE GOT SO MUCH CAPACITY WE'RE GOING TO RUN OUT. [LAUGHTER] AND I THINK THAT GIVES US A LITTLE BIT OF TIME ABOUT DEALING WITH THE REST OF IT. WE NEED A LONGTERM STRATEGY TO INCORPORATE ISSUES, AND DURING THE END I WANT TO MAKE ONE LAST PAUSE, NOT DIRECTLY ON YOUR POINT, AS WE LOOK AT THAT, LOOK AT THAT LONGTERM OPTION, COMPETITION IS GREAT. WE NEED COMPETITION. WE DON'T HAVE PERFECTLY COMPETITIVE MARKETS. THE MERE FACT THIS PRODUCT UNLIKE ANY OTHER PRODUCT IN HISTORY OF THE WORLD NEEDS TO HAVE A CENTRALIZED CONSTRUCT TO CREATE ENOUGH BEING BUILT TO KEEP IT AROUND IS PROOF THIS IS NOT A NORMAL EFFICIENT MARKET WITH BUYERS AND SELLERS ACT IT ON IT. WHEN YOU LOOK AT OPTIONS, WE TRY TO VALUE WHAT WE'RE GOING TO DO OVER THE LONG TERM, YOU CAN'T SAY THIS LOOKS MORE COMPETITIVE. THIS IS THE LAND OF SECOND BEST. YOU HAVE TO LOOK AT THE OVERALL IMPLICATIONS, LOOK AT COMPETITION, AT ENTRY, THOUGHTFULLY COME UP WITH SOMETHING THAT WILL WORK LONG TERM FOR ALL THE GOALS WE HAVE, BUT NOT USE, YOU KNOW, WE HAVE TO ADOPT THIS BECAUSE IT'S THE ONLY COMPETITIVE SOLUTION. WE LEFT THAT WHEN WE ADOPTED CAPACITY MARKETS IN THE FIRST PLACE TYING BACK TO BIG HOLE AN'S COMMENT.

>> THANK YOU. SAM?

>> THANKS, ARNIE. I AGREE WITH YOU, SUE, THAT THE LIGHTS AREN'T ABOUT TO GO OUT. IT'S NOT URGENT IN THAT SENSE. AND I ALSO THINK SOME OF THE URGENCY IS OVERPLAYED BY PEOPLE DEMONIZING RENEWABLES AS IF THAT WERE THE ENTIRE CAUSE, POLICIES AROUND RENEWABLES WERE THE ENTIRE CAUSE OF OTHER RESOURCES EARNING LOW REVENUES. AND IT'S NOT. YOU KNOW, SO THERE'S URGENCY ABOUT WE'VE GOT TO STOP THIS OR CHANGE HOW THEY ARE TREATED IN THE MARKET. THE FACT IS THAT, YOU KNOW, LOW ENERGY PRICES ARE MUCH, MUCH MORE BECAUSE OF FUNDAMENTALS, GAS PRICES ARE LOW. YOU KNOW, IN MOST PLACES WE DON'T SEE THE NEGATIVE PRICES VERY OFTEN. THAT IS A BIG CONSIDERATION FOR THE FUTURE, WHETHER WE'RE GETTING THINGS RIGHT THERE. WITH CAPACITY, THERE TOO IT'S MOSTLY FUNDAMENTAL, LOW LOAD GROWTH, I CAN'T BELIEVE HOW MUCH LOW COST ENTRY THERE'S BEEN. SO REALLY THE DISCUSSION AND SENSE OF URGENCY I THINK HAS BEEN SOMEWHAT MISPLACED. I DO THINK THERE ARE A COUPLE OF DECISIONS, A COUPLE OF ELEMENTS HERE THAT ARE IMMINENT AND DO NEED TO BE ADDRESSED. SO ONE IS THE NUCLEAR PLANTS. AND, YOU KNOW, WHEN A NUCLEAR PLANT RETIRES, YOU LOSE THE OPTION VALUE ON YEARS OF GENERATING VAST AMOUNTS OF CLEAN ENERGY. NOW IN SOME CASES, MAYBE NOT ALL, IN SOME CASES THAT MAY BE AT A RELATIVELY LOW COST OF CARBON ABATEMENT. AND AGAIN I LIKE THE BENCHMARK YOU SUGGESTED, LARRY. YOU KNOW, THEY WOULD BE IN THE MILE IF YOU HAD A MARKED WITH A CARBON PRICE. ONE NEW ENGLAND STATE IS ABOUT TO EMBARK WITH HIGHER CAPACITY VALUE, AND SO THERE TOO I THINK HOW TO ACCOMMODATE THE CAPACITY MARKET BECOMES, YOU KNOW, FAIRLY, YOU KNOW, FAIRLY URGENT. THAT NEEDS TO BE ADDRESSED PRETTY SOON.

>> THANKS. LARRY? JUST A QUICK CLARIFICATION ON THE QUESTION OF WHAT'S REALLY GOING ON RIGHT NOW, THERE ARE A LOT OF PEOPLE THAT THINK THAT LOW NATURAL GAS PRICES ARE THE REASON WHY NUCLEAR PLANTS FOR EXAMPLE AREN'T ABLE TO MAKE IT IN THE MARKETPLACE. A LOT OF PEOPLE THINK THIS IS A CREATIVE DESTRUCTION IN THE MARKETPLACE, PEOPLE USE THE TERM, UNECONOMIC, I WOULD AGREE IF I SAW EVIDENCE THAT WITH LOW NATURAL GAS PRICES THE NATURAL GASFIRED GENERATORS WERE MAKING GREAT PROFIT. BECAUSE THIS UNANTICIPATED SHALE GAS REVOLUTION PUT THESE PEOPLE IN A REALLY COMPETITIVE ADVANTAGE POSITION AND NOW THEY ARE ABLE TO BECOME REALLY PROFITABLE. AND WHAT YOU SEE IS EVEN WHEN GAS PRICES WERE HITTING THEIR HISTORIC LOWS OVER THE PAST YEAR, IF YOU LOOK AT THE TIER GROUP OF NATURAL GAS FIRED GENERATORS, NRG AND CALPINE LOST 40% OF MARKET VALUATION ACROSS THE PAST YEAR. YOU LOOK AT THE MARKET REPORT FROM PJM AND THEY ARE TELLING YOU MOST OF THE GASFIRED MERCHANTS ARE NOT PROFIT AND AND LOOK OVER THE LONG 7YEAR TIME FRAME AND SAID YOU'RE NOT MAKING IT ON YOUR BASIC ECONOMICS, WITH THE GASFIRED GENERATOR SO I THINK IT IS TRUE THAT NATURAL GAS PRICES HAVE FALLEN DRAMATICALLY BUT IT'S CREATED A MISSING MONEY PROBLEM THAT WAS CONCENTRATED IN GASFIRED COMPETITIVE GENERATORS AND NOW IT'S EXPANDED AT THE REST OF THE MARKETPLACE SO THERE'S A DANGER IN CONCLUDING THAT NATURAL GAS PRICES ARE CREATING THIS CREATIVE DESTRUCTION WE SEE WITH THESE PLANT CLOSURES BECAUSE I THINK INSTEAD WE'RE SEEING A DISTORTED UNECONOMIC SET OF RETIREMENT.

>> I SEE THAT BUT I WANT TO MAKE SURE I GET TO THE COMMISSIONERS SO COMMISSIONERS, QUESTIONS?

>> THANK YOU. I WANT TO TAKE THE CONVERSATION A LITTLE FARTHER OUT IN TIME AND BROADER WHILE I HAVE MY GENIUS BAR HERE. BECAUSE I HAVE TO SAY I'VE BEEN VERY FOCUSED IN THE LAST DAY AND A HALF AND IN THE LAST SINCE FEBRUARY 4 ON THE SHORT TERM. YOU KNOW, WHAT DO I DO THE DAY WE GET QUORUM? WHAT ABOUT THE HUNDREDS OF BACKED UP ORDERS? WHAT ABOUT DOZENS OF RULE MAKINGS, WHAT DO WE DO? DECISIONS WILL HAVE LONG TAILS. I WANT TO MAKE SURE THAT IF WE LAUNCH THE RTOs AND STAKEHOLDERS ON A PROCESS WE THINK BIG ENOUGH. A COUPLE THINGS SWIRLING AROUND MY MIND JUST TO SAID UP THE QUESTION, THE FIRST IS THAT ALL OF THE NEW ENGLAND STATES, NEW YORK AND FOURPJM STATES HAVE CARBON GOALS, 80% BY 2050 COULD MAKE A LONGTERM CHANGE IN THE PROFILE. WE'RE TALKING ABOUT GAS OR NUCLEAR WHATEVER BUT THERE'S OTHER TYPES OF TECHNOLOGIES HERE. I'M TRYING TO FIGURE OUT IF THE REASON WE HEAR ABOUT THE RENEWABLES NEEDING LONGTERM CONTRACTS, IS THAT BECAUSE THEY ARE NO AND FLEDGLING OR JUST SOMETHING DIFFERENT ABOUT THE WHOLE WAY THEIR STRUCTURE OF WHEN YOU SPEND THE MONEY YOU SPEND IT UP FRONT AND DON'T HAVE FUEL, DO WE HAVE TO DO SOMETHING DIFFERENT WITH THE WAY MARKETS ATTRACT CAPITAL? CALIFORNIA, WE MOVED PAST WORRYING ABOUT NUKES, WHICH OBVIOUSLY THEY AREN'T, THE GAS PLANTS ARE LOSING MONEY BECAUSE OF THE DUCK CURVE, THE DUCK IS GETTING DEEPER, SO I WANT TO BE SURE WE DON'T SOLVE TODAY'S PROBLEM HERE IN TIME FOR PUSHING FORWARD ANOTHER PROBLEM. YOU ALL KNOW THE TRAJECTORY OF HOW WE GOT HERE. WHAT KIND OF CHALLENGES SHOULD WE BE GIVING TO THE MARKETS FOR THAT LONGER TERM AND I WANT TO SAY FROM THE START I KNOW THAT PRICING CARBON MAKES SENSE. I PESTERED ON RGGI YESTERDAY AND HAD VERY LITTLE UPTAKE ON WANTING TO USE THAT TO SOLVE PROBLEMS FOR STATE REASONS THAT ARE VERY REAL AND I  BEYOND JUST PRICING CARBON EVEN THOUGH THAT MIGHT BE THE RIGHT THING ARE THERE OTHER ACCOMMODATIONS WE SHOULD BE MAKING IN MARKET CAPACITY, ENERGY, ANCILLARY SERVICE TO START NOW TO GET TO THE FUTURE?

>> RIGHT. ACTUALLY THIS SORT OF MESSES WITH THE LAST 

>> (INAUDIBLE).

>> YEAH. WHAT I WAS GOING TO FOLLOW UP WITH BEFORE IS ON LARRY'S COMMENT, IT'S WORTH LOOKING AT ALL OF THE MARKET MONITORS, A GOOD DISPLAY OF USING LEVELLIZED ENTRY COST OF RELATIVE MARGIN REVENUE ANALYSES AND I DON'T WANT TO SAY ANYONE IS ROLLING IN MONEY, WE'RE SEEING GAS UNITS FINALLY EXCEEDING IN THE AUCTION REVENUES AND NET ENERGY MARGINS, THE LEVELLIZED COST OF ENTRY. THIS HAS CREPT UP. IT USED TO BE IMPOSSIBLE. IF YOU DO INDEED TAKE 10 OR 15 YEAR VIEW IT'S DISMAL, THE LAST THREE OR FOUR YEARS THE MARGINS ARE THERE EVEN WITH THE LOWER GAS PRICES. PART OF THE  THE LEADIN, THAT IS A LEADIN. PART OF THE SECURITY AS A PROXY FOR A PLANT IS THE INVESTMENT COMMUNITY TO SOME EXTENT, CHANGE IS NOT UNIFORM, I'M SURE YOU FIND PEOPLE THAT WOULD DISAGREE WITH THIS, BUT THE INSTITUTIONAL STABILITY OF THE MARKET DESIGN IS PART OF THE ASSETS BEING INVESTED. AND IF IT'S UNPREDICTABLE, IF IT'S BEING ABLE TO BE MANIPULATED, TO BE BIASED, TO BE OVERTURNED BY STATE ACTIONS, PRICED OUT BY A WHOLE VARIETY OF THINGS, THEN CONTRACTS PROBABLY ARE THE ONLY WAY. IF YOU FIX THOSE THINGS, PART OF IT IS THE CARBON, PART OF IT IS SANCTITY OF LAW IN THE RULES, STABILITY OF THE RULES, THEN WHAT PEOPLE ARE BUYING AND WE'RE STARTING TO SEE A LITTLE OF THAT, WE SAW THAT AND I THINK IT'S ACTUALLY GONE UP AND DOWN JUST IN THE THREE OR FOURYEAR WINDOW AROUND GAS, THEN YOU MAY SEE REAL MERCHANT ACTIVITY AND YOU MAY SEE IT IN THE CLEAN ENERGY AREA, PARTICULARLY GIVEN THE INCENTIVES WE HAVE.

>> I MEAN, I CONCEPTUALLY THINK SO BUT I DON'T KNOW.

>> WELL, IT DEPENDS  YOU KNOW, IF IT'S A BILATERAL CONTRACT THAT SAYS YOU'RE NEW AND YOU HAVE TO CLEAR THE MARKET, AND YOU HAVE TO HAVE THESE ATTRIBUTES, AND THEN WE'RE BACK TO MISSOURI AND SOLOMON TYPE ISSUES AND GIVING THOSE ATTRIBUTES. IF YOU'RE SAYING SOMEBODY SAYS I WANT TO BUY X MEGAWATTS OF THE CHEAPEST POWER I CAN GET, CHEAPEST CLEAN POWER I CAN GET, BUT IT'S NOT PULLING ON EXTERNAL, IT'S MEETING OUR QUALIFICATIONS, THEN THERE'S NO REASON IT WOULDN'T OCCUR. BUT THE BASIC SUPPORT MECHANISM IS THAT THE DESIGN ITSELF IS REASONABLE, STABLE AND COMPENSATORY. AND WE'RE STARTING TO SEE THAT, BUT FOR THE ENVIRONMENTAL, WE'RE STARTING TO SEE SOME OF THAT COME INTO PLAY WITHIN PJM.

>> (INAUDIBLE).

>> WELL, NO. I THINK IT'S THE ENVIRONMENTAL IS BEGINNING TO CATCH UP.

>> OKAY.

>> WE'LL GO INTO  I'LL GIVE YOU A SIDE STORY ABOUT CALIFORNIA PRICING AND MY HOME GENERATOR LATER, IT WILL EMPHASIZE WHY YOU DON'T WANTS TO USE THOSE THINGS.

>> LET'S GO DOWN THE ROW. START WITH SUE.

>> I DO HAVE TO SAY ANOTHER JOKE. IF YOU HAD HOPED THAT YOU WOULD GET THE VACANCIES FILLED ON THIS COMMISSION YOU BETTER HOPE NOBODY IS WATCHING THAT. BECAUSE THEY ARE GOING TO GET SCARED OFF ABOUT TAKING THIS JOB. [LAUGHTER] OKAY. JUST ROLL BACK THOSE TAPES. A COUPLE THINGS. I BELIEVE EVERYTHING I'VE SEEN ABOUT RENEWABLES COMING IN THROUGH BILATERAL CONTRACTS, CONSISTENT WITH WHAT MICHAEL POLSKY SAID. YOU SEE THAT AT VARIOUS SCALES OF RENEWABLES, THAT'S THE CASE, AND IN LARGE PART THAT'S BECAUSE FINANCERS DON'T PROVIDE MONETARY VALUE IN THE DEAL FOR RECS. SO IF YOU'RE BASING ON LONGTERM ENERGY PRICES THEY MAY NOT SUPPORT THE INITIAL CAPITAL INVESTMENT. SO THERE'S A LOT OF SOUND REASON WHY RENEWABLES EXCEPT IN THE LARGE COMPANY WITH A VERY LARGE BALANCE SHEET IS GOING TO BE BUILDING OUT SOME MERCHANT ONE. AND I THINK SO FAST FORWARD, HOW MANY YEARS DO WE WANT TO GO OUT? TWENTY? SURE, LET'S GO 20 YEARS.

>> THESE RESOURCES WE'RE TRYING TO ATTRACT CAPITAL FOR ARE GOING TO BE AROUND LONGER THAN ME, FOR SURE. I MEAN, DECADES.

>> LONGER THAN ME FOR SURE THEN. [LAUGHTER] SO 10 TO 20 YEARS, YOU SEE IF STATES STAY ON THE PATH THAT THEY HAVE ADOPTED, AND IF WE BELIEVE THAT CLIMATE CHANGE IS ACTUALLY REAL, WHICH I DO, THEN WE ARE LIKELY TO SEE IN THIS 10 TO 20 YEARS OUT NOT VERY MANY CARBON CAPTURE AND SEQUESTRATION PROJECTS, NOT VERY MANY ADVANCE NEWS, HOWEVER IMPROVED THEY MAY BECOME WITH DIFFERENT BUSINESS MODELS AND OTHER THINGS SO I'M JUST IN THAT TIME FRAME, IT'S UNLIKELY FROM WHAT I READ. AND THAT WORLD WILL REQUIRE A LOT OF CAPITAL INTENSIVE FACILITIES, STORAGE, RENEWABLE ENERGY, ZERO VARIABLE COST, FOR THE MOST PART. GRID TO MOVE DELIVERY SYSTEMS AS WELL AS LONG DISTANCE TRANSMISSION SO IT'S CAPITAL COST, NO VARIABLE COST ASSOCIATED WITH GRID IMPROVEMENTS, AND NATURAL GAS PLANTS THAT WILL HAVE LOW CAPACITY FACTORS, BECAUSE OF INTEGRATING RENEWABLES, AND SO KEEPING THOSE PLANTS ONLINE WITHOUT A LOT OF REVENUE FLOWS FROM ENERGY MARKETS TO ME THEN LEADS ME TO THINK THEY ARE EVENTUALLY GOING TO NEED LONGTERM  SOME YEAR CONTRACTS TO STAY ONLINE WHEN THEY MIGHT OTHERWISE, DISCUSS ME, AND I STILL HAVE THIS WATER HERE.

>> PRICING IN THE MARKETING LIKE WE DO WITH TELECOM?

>> YES, ESPECIALLY FOCUSED ON WE'RE RENTING YOU RIGHT NOW TO STAY AROUND SO YES. AND I'LL STOP THERE.

>> LET ME PICK UP. I AGREE WHOLEHEARTEDLY, PUT SOME FOCUS ON THAT. AND I'LL TAKE A PAGE OUT OF PROFESSOR HOGAN. THIS IS ABOUT GETTING PRICING RIGHT IN THE ENERGY MARKET. WE'VE GOT DO THAT THAT, WE'RE MOVING INTO A FUTURE ON A TYPICAL HOUR WE'LL HAVE NOTHING SETTING THE CLEARING PRICE ABOVE ZERO. WE WILL HAVE A LOT OF RENEWABLE ENERGY, MAYBE SOME NUKES STILL LEFT, OR A FEW NEW ONES GETTING BUILD IN SOME REGIONS, AND SO WE HAVE TO HAVE REALLY GOOD PRICING SO THAT STORAGE UNITS ARE ABLE TO KNOW WHEN TO ABSORB ENERGY AND WHEN TO PUT IT BACK IN. WE NEED TO HAVE GOOD PRICING SO THAT DEMAND SIDE CAN BECOME AN ACTIVE PARTICIPANTS. THIS IS A WEIRD MARKET ONE OF THE FEW IN THE WORLD WE TAKE DEMAND AS GIVEN THAT IT'S GOING TO BE PRICE RESPONSIVE. THAT'S NOT HOW MARKETS WORK. WE'LL DO BETTER BY HAVING GOOD PRICING AND LETTING THAT GET IN THE RETAIL RATES WORKING WITH BRETHREN AT STATES SO MORE CUSTOMERS CAN USE THE INTERNET OF THINGS SO THAT SMART ELECTRIC VEHICLE CHANGING AND OTHER CHANGES CAN ADAPT TO INTEGRATE RENEWABLES AND IMPROVE GRID RELIABILITY. THAT WILL SOLVE THE DUCK CURVE. THE DUCK CURVE IS A SIGN OF PRICING FAILURE IN CALIFORNIA. IT OUGHT NOT TO BE THERE ARE PEOPLE, ROOMS FULL OF PEOPLE AT CALPINE TRYING TO FIGURE OUT HOW TO WASTE ELECTRICITY. THAT IS  THERE OUGHT TO BE A WAY OF STORING OR SHIFTING DEMANDS TO USE MORE PRODUCTIVELY IN THE MIDDLE OF THE DAY. THE CONTRACTS ARE AS CORRECTLY DIAGNOSED SYMPTOM OF LACK OF INSTITUTIONAL CONFIDENCE. IT'S ALSO IN MANY STATES A LACK OF BILATERAL CONTRACT PARTY. RESTRUCTURED STATES, MOST OF THE LOAD SERVED BY STANDARD OFFER WHICH IS SIX MONTHS, ONE YEAR, SOMETIMES THREEYEAR PRODUCT. THESE PEOPLE CANNOT WRITE CONTRACTS THAT WILL CAUSE A PLANT TO COME ONLINE. IN NEW ENGLAND IT'S BUILD WITH A LONG TERM CONTRACT IMPLICIT TO STAND IN FOR THE FACT THE NEW ENGLAND STATES WITH THE EXCEPTION OF VERMONT HAVE ALL RESTRUCTURED AND THE UTILITIES WHO MIGHT FIGHT CONTRACTS DON'T HAVE A LOAD SERVING OBLIGATION ANY LONGER.

>> I VERY, VERY MUCH AGREE IN THE LONG TERM WHEN YOU GET TO VERY HIGH LEVELS OF RENEWABLE PENETRATION THE NORTHEAST MARKET IT'S REALLY ARE NOT CLOSE TO, THE PRICE FORMATION IS THE MOST IMPORTANT FOR ALL THE REASONS THAT ROBERT DESCRIBED AND I'M SURE BILL WILL TELL YOU. AS FOR YOUR SPECIFIC QUESTION ABOUT WHAT'S DIFFERENT ABOUT RENEWABLES, SO THEY ARE DIFFERENT. I MEAN, THE NATURE OF THEIR COST, IT'S ALL CAPITAL. SO COMPARED TO A GAS PLANT THAT'S EVEN IF IT HAS SIMILAR, YOU KNOW, LEVELLIZED COST OF ENERGY, SMALLER AMOUNT IS CAPITAL, A LOT IS VARIABLE CORRELATED WITH THE MARKET PRICES SO THAT MAKES IT LESS RISKY. SO THAT'S ONE. THE OTHER IS AS YOU MENTIONED, ROBERT, WITH LACK OF INSTITUTIONAL CONFIDENCE, SO IF A LARGE AMOUNT OF VALUE IS CAPTURED FROM CLEAN ENERGY ATTRIBUTES, SO FOR EXAMPLE IF THEY HAVE A $20 REC THAT MIGHT BE A THIRD OF THEIR ALLIN REVENUES, OR MORE, AND THERE'S GOING TO BE PERCEIVED A HUGE AMOUNT OF REGULATORY RISK AROUND THAT.

>> BUT I MEAN IF THEY DON'T MAKE A LOT OF  IF THEY DON'T HAVE A LOT OF VARIABLE COSTS, BECAUSE THE ENERGY MARKET I MEAN A LOT OF MARKETS WERE DESIGNED AROUND THAT GAS PLANT ON THE MARGIN, IF THEY DON'T HAVE VARIABLE COST IT'S ALL UP FRONT DOESN'T THAT MEAN YOU EITHER NEED A REALLY GOOD CAPACITY MARKET THAT'S GOING TO PAY THEM OR CONTRACT? I MEAN.

>> (INAUDIBLE).

>> I'LL BE BRIEF ON THIS BECAUSE I'M SURE BILL CAN SAY IT BETTER, BUT IT'S NOT GOING TO BE TRUE THE PRICE IS ZERO ALL THE TIME. IF YOU REALLY HAVE PRICE FORMATION, BOTH FOR ENERGY AND ALL THE OTHER SERVICES, MAYBE YOU NEED A RAMPING PRODUCT, THERE WILL BE A LOT OF OTHER NONZERO VALUES. AND ESPECIALLY AGAIN IF STORAGE AND DEMAND ARE IN PLACE. AGAIN, THAT BECOMES AN ISSUE WHEN YOU'RE MUCH HIGHER LEVELS OF PENETRATION. CALIFORNIA IS ALREADY THERE BUT I DON'T THINK THE NORTHEAST IS THAT CLOSE TO THAT BEING FUNDAMENTALLY THE ISSUE. I DO THINK  BUT BACK TO WHY RENEWABLES ARE DIFFERENT IN TERMS OF INVESTING, YOU MENTIONED LONGTERM CONTRACTS, THAT OF COURSE IS A WAY TO DEAL WITH REGULATORY STABILITY BUT I URGE THINKING ABOUT, WELL, STABILITY IS IMPORTANT BUT ALSO THINKING ABOUT THE PRODUCT DEFINITION AND MARKET SO YOU DON'T NECESSARILY HAVE TO HAVE A LONGTERM CONTRACT, PPA FOR THE ENTIRE OUTPUT. IT COULD BE LIKE IN NEW YORK IT'S THE RECS, IF YOU HAD SOME WAY OF LOCKING IN CARBON PRICE THEY GET THE VALUE OF. AND NOT NECESSARILY LONGTERM CONTRACTS, YOU COULD HAVE MULTILATERAL PRODUCTS. THERE'S A LOT OF POSSIBLE WAYS.

>> TO ANSWER THE QUESTION ABOUT HOW STATES TACKLE THIS CHALLENGE OF MEETING 40% REDUCTION LIKE SOMEBODY SAID ABOUT NEW YORK BY 2030 OR GREATER TARGET I THINK IF THE MARKET PRICES ARE CORRECT, I THINK THAT  AND THAT'S THE IMPORTANCE OF GETTING GOOD SENSE FOR WHAT WOULD BE THE LEAST COST PATHWAY IF YOU HAD A CHARGE ON CO2 EMISSIONS AND DID AWAY WITH ALL THESE SUBSIDIES AND MANDATES AND WHAT YOU WOULD FIND FROM THE RESEARCH I'VE DONE IS THAT A LARGE PART OF GETTING THERE WOULD INVOLVE AN INCREASE IN CONSUMPTION EFFICIENCY PRIMARILY BY INCORPORATING THAT CO2 CHARGE IN THE RETAIL PRICE AND LESS SO FROM RATE PAYER FUNDED EFFICIENCY PROGRAMS, THAT YOU WOULD GET THE INCENTIVE TO CONTINUE TO RUN THE NUCLEAR PLANTS TO MAINTAIN A FAIRLY LARGE BASE LOAD OF NONCO2 EMITTING AND HYDRO. THERE'S A MARKET MUCH RENEWABLES THAT COME ABOUT AND THE PRICE SIGNALS WILL TELL YOU IF RENEWABLES MAKE MONEY OR NOT. THERE IS STILL ROOM AND NECESSITY FOR SOME FOSSIL FUEL TO GIVE YOU THE LOWFOLLOWING CAPABILITY TO INTEGRATE RENEWABLES AND THERE WOULD BE ACTUALLY FAIRLY LITTLE STORAGE GIVEN THE COST AND PERFORMANCE OF EXISTING STORAGE BUT, AGAIN, IF STORAGE IS GOING TO MAKE IN THE MARKETPLACE IT HAS TO BEATS THE UPS AND DOWNS OF LOADS, IT'S NOT GOING TO BE ECONOMIC TO INCORPORATE INTO THE MARKETPLACE. AND SO THE PRICE SIGNALS ARE THERE. THE SAME PRICE SIGNALS THAT WILL PAY FOR FLEX BUILD ON LOAD FOLLOWING UNITS ARE THE PRICE SIGNALS THAT WILL GET YOU AN EFFICIENT AMOUNT OF STORAGE WITH THE ONLY OBSERVATION THAT IF STORAGE DOES BECOME VERY ECONOMIC, IT ACTUALLY ADVANTAGES HIGH UTILIZATION OF POWER PLANTS, MORE SO THAN LOW UTILIZATION INTERMITTENT TECHNOLOGIES, OPTIMIZING THE WHOLE SYSTEM. HAVING A SENSE OF WHAT THAT LOOKS LIKE IS GOING TO TIP YOU OFF WHEN YOU SEE STATE POLICIES TRYING TO ACHIEVE REDUCTIONS HAVE A DIFFERENT PRESCRIPTION THAT'S WHERE YOU'RE GOING TO HAVE A LOT OF MARKET DISTORTION.

>> THE LONG RUN AND THE REALLY LONG RUN. THE ONE THING WE KNOW ABOUT THE LONG, LONG RUN IS THE SUFFICIENT SOLUTION IN THEORY AND WE'LL HAVE A COMMON PRICE OF CARBON ON THE GLOBE. THAT'S THE ULTIMATE PROBLEM. AND THE QUANTITY REDUCTION AND EVERY CONTINENT, NATION, STATE, COUNTY, CITY, WILL BE DIFFERENT, RIGHT? SO THAT'S JUST CHARACTERIZING IT. SO IT CAN'T BE TRUE THAT THE RIGHT WAY TO FORMULATE THE PROBLEM IS 50% REDUCTION OR 80% REDUCTION UNLESS YOU GO ALL THE WAY TO 100% AND GET AN ENDPOINT, THAT KIND OF STORY. SO AS SOON AS PEOPLE START COMING ALONG AND PROPOSING THINGS YOU SHOULD ALWAYS BE TRANSLATING THIS BACK INTO WHAT DOES THIS MEAN IN TERMS OF COST OF CARBON AND IS THIS PROPOSAL MAKING SENSE IN THAT CONTEXT OR IS IT SOME ABERRATION THAT'S GOING TO GO AWAY. IN CALIFORNIA, WE HAVE NOW SIMULTANEOUSLY REGULATIONS, CAN WE TALK ABOUT CALIFORNIA? IS THAT LEGAL HERE? OKAY. WE HAVE REGULATIONS IN CALIFORNIA FOR THE CLEAN FUEL STANDARD WHERE THEY ACTUALLY HAVE A TRADEABLE ITEM THAT YOU CAN GO LOOK UP THE PRICE OF CARBON, THE PRICE OF CARBON DIOXIDE IS OVER $100 A TON THE LAST TIME I LOOKED. WHICH WAS A COUPLE WEEKS AGO. THEY HAVE OTHER CAP AND TRADE PROGRAM WAS PRICE OF CARBON AT $12 PER TON. THIS CAN'T MAKE SENSE, RIGHT? SIMULTANEOUSLY THAT WE'RE DOING THIS KIND OF THING. SO YOU SHOULD BE EVALUATING ALWAYS IN TERMS OF THAT AND PUTTING THESE THINGS INTO THE FRAMEWORK AND THEN WHEN PEOPLE WANT YOU TO ACCOMMODATE IF THE ANSWER IS MAKE THE MARKET MORE EFFICIENT AND GET THE PRICING TO REFLECT THE COST SO THIS BECOMES ECONOMIC, IN A WAY THAT'S CONSISTENT WITH THAT, THAT'S A GOOD IDEA. IF THE REQUEST IS ACCOMMODATE BY DOING SOMETHING WHICH DECREASES SUFFICIENCY BY HAVING RESPONSIBILITY TO MAKE YOU HAPPY, THAT'S A BAD IDEA. AND SO YOU SHOULD SAY NO. AND THE BENCHMARK WOULD ALWAYS BE SOCIAL COST OF CARBON AND AS I UNDERSTAND THE ADMINISTRATION'S POSITION IS THAT THIS IS NOW YOUR RESPONSIBILITY TO FIGURE THIS OUT BECAUSE THEY JUST GOT RID OF THE INTERAGENCY WORKING GROUP RESPONSIBLE FOR DOING THIS. BUT THEIR WORK WAS QUITE GOOD. ROUND NUMBERS, YOU REQUEST USE THAT. THE AGENCIES ARE SUPPOSED TO FIGURE OUT THIS THEMSELVES, YOU SHOULD ACCEPT THIS OPPORTUNITY. [LAUGHTER] AND USE THAT AS YOUR STANDARD. PEOPLE CAME IN TO DO THINGS, LIKE THE CLEAN FUEL STANDARD IN CALIFORNIA, WE'RE NOT GOING TO ACCOMMODATE. IF YOU WANT TO DO THAT I CAN'T STOP YOU. YOU SHOULD VERY ENCOURAGING OF THINGS CONSISTENT WITH THE SOCIAL COST OF CARBON YOU'RE NOW RESPONSIBLE FOR ESTIMATING.

>> I ALWAYS ENJOY FOLLOWING YOU, BILL. THANK YOU. I'M NOT GOING TO LOOK THAT FAR OUT INTO THE FUTURE. I'D LIKE TO LOOK TO 2021. AT THE THIRD QUADRENNIAL CAPACITY MARKET TECHNICAL CONFERENCE. [LAUGHTER]

>> THERE STILL WILL BE NO QUORUM.

>> AND THERE IS A QUORUM. I REMEMBER 

>> (INAUDIBLE) [LAUGHTER]

>> I REMEMBER COMMISSIONER CLARK TALK BECOME HOW HE SAID HE SPENT A QUARTER OF HIS TIME ON THIS ISSUE. AND I THINK THAT'S GOING TO CONTINUE. I MEAN NOT FOR HIM, OBVIOUSLY, BUT I THINK THAT I DON'T HEAR A FUNDAMENTAL DRIVER TO AN EFFICIENT PRICE COMING OUT OF THIS MARKET THAT'S COMPETITIVE THAT WE CAN STEP BACK FROM THE RULE. I THINK THIS PROCESS IT SELF IS ENTIRELY DEPENDENT ON DECISIONS MADE AT THIS COMMISSION TO DO TWEAKS NECESSARY TO GET WHAT WE WANT. WE KNOW WHAT WE WANT. WE HAVE TO KEEP TWEAKING TO GET THERE. I THINK AS LONG AS WE CONTINUE WITH THIS MARKET, THIS MARKET PROCESS, THAT'S WHERE WE'RE GOING TO BE FOR THE NEXT FOUR YEARS. HOPEFULLY THERE'S SOME CHANGES. HOPEFULLY, BILL HOGAN IS NOT HERE AND HOPEFULLY IT'S BECAUSE  [LAUGHTER] IT'S LATE IN THE DAY. HOPEFULLY IT'S BECAUSE WE'VE ACCEPTED HIS PROPOSALS AND SUGGESTION TO PRICE ENERGY MORE EFFICIENTLY. SCARCITY PRICING. I THINK I'M TOTALLY ON BOARD WITH THAT. I I DON'T THINK HE NEEDS TO BE HONORED WITH MY SUPPORT BUT THAT MAKES A LOT OF SENSE. I DON'T THINK THAT GETS US ALL THE WAY THERE. AS WE THINK ABOUT A MARKET THAT'S GOING TO BE INCREASINGLY ZERO COST RESOURCES, THINGS ALONG THOSE LINES, STRESS BUILT ON, WE'RE HAVING MULTIPLE PROBLEMS COMING UP. THE JOB, MAINTAINING RELIABLE MARKETS, GETTING MORE COMPLICATED BECAUSE WE JUST CAN'T KEEP BUILDING PEAKERS TO TAKE CARE OF WHATEVER WE NEED IN TERMS OF RESPONSIVENESS AND RAMPABILITY AND ADD CAPACITY WE WANT. I THINK WE'RE GOING TO SEE THIS COMMISSION STRUGGLE WITH HOW DO YOU PRICE STORAGE AND VARIABILITY AND THINGS LIKE THAT, AND I DON'T HAVE AN ANSWER FOR ALL THOSE PIECES BUT I THINK ONE THING THAT MAKES SENSE TO ME IN THE COMMON SENSE STANDPOINT IS YOU DON'T LAY AROUND A LAYER OF ENVIRONMENTAL RULES THAT ARE RUN BY THESE SAME MARKETS AT THE SAME TIME. PEOPLE WANT TO PRICE CARBON, WHICH WOULD BE GREAT, PRICE CARBON LIKE RGGI OUTSIDE THE MARKETS. STATES WANT DECISIONS TO DO THINGS ALONG THE LINES WE'VE BEEN TALKING ABOUT. YOU DON'T COMPLICATE THE MARKETS THEMSELVES. YOU TAKE WHAT'S LEFT, TURN CAPACITY MARKETS, ENERGY MARKETS, MAKE THEM EFFICIENT. CAPACITY MARKETS WERE ORIGINALLY DESIGNED, ROY'S PHRASE, IT'S MISSING MONEY, WHAT'S LEFT AFTER EVERYTHING ELSE IS TAKEN CARE OF. WE DON'T NEED HIGHER PRICES IF WE HAVE ENOUGH CAPACITY. WE NEED IT ONLY WHEN WE NEED THAT CAPACITY. THE OTHER THING I'D LIKE TO SEE FOUR YEARS FROM NOW IS SOME STATE OR TWO STEP UP AND SAY WHAT WE NEED TO DO IS INTEGRATE ALL THESE CHOICES INTO A MORE BILATERAL FRAMEWORK AND WHAT WE NEED TO DO TO DO THAT RIGHT IS CREATE COMPETITION ON THE BUY SIDE. WHAT ELEMENT CAN WE DO TO CREATE BUYERS WITHIN OUR STATES WHO BUY THIS PURE CAPACITY PRODUCT, WHO COULD THINK ABOUT CARBON EMISSIONS, INVESTMENTS, TECHNOLOGY, RELIABILITY ISSUES IN CERTAIN AREAS PERHAPS BUT NOT BEING SERVED BY THE MARKET THEMSELVES AND CREATE FROM THE STATES, I DON'T THINK YOU CAN DO THIS HERE, I THINK THE STATES COULD ADOPT THAT AND THEN WITH THIS COMMISSION WILL DEAL WITH STATES WHO DECIDED TO TAKE RELIABILITY TARGETS TO DELIVER THOSE IN A BILATERAL MANNER SO IN 2021 WE CAN GET THAT ADOPTED TO HE WE'RE NOT HERE AGAIN IN 2025.

>> EITHER THE TOWN IS BURNING OR THE TOWN IS SIMMERING OR ELEMENTS, SO THERE ARE FASTER THINGS BUT IT'S GOOD TO HAVE A SENSE OF LONG TERM, THAT WAS THOUGHT PROVOKING. THANK YOU.

>> GENIUS BAR, IT'S BEEN GREAT TO BE INFORMED BY YOU. MORE IMPORTANTLY, I THINK IN SOME WAYS WE SHOULD HAVE VISITED WITH YOU ALL FIRST BECAUSE YOU'VE REALLY HELPED US GET BACK TO THE BASICS. I THINK OVER THE LAST COURSE OF THIS TECHNICAL CONFERENCE WE'VE BEEN REALLY LOOKING AT WHERE WE ARE AND HOW WE NEED TO GET TO THE NEXT PLACE AND WE PROBABLY NEED TO STEP BACK FURTHER AND THINK ABOUT HOW MARKETS OPERATE IN THE PUREST SENSE TO HONOR CORE PRINCIPLES AND I WANT TO THANK YOU FOR HELPING US RECALL THOSE. AND YOU MAY HAVE LISTENED IN ON THE LAST SESSION, SESSION 4, WHERE WE TALKED A LOT ABOUT THE PATHS AND TALKED ABOUT ATTRIBUTES THAT SOME THOUGHT MAY OR MAY NOT OR SHOULD OR SHOULD NOT BE FACTORED INTO MARKETS IN TERMS OF PRICING. I THOUGHT IT WAS AN INTERESTING DISCUSSION BECAUSE IN ADDITION TO CARBON PRICING I ALSO HEARD SOMEONE SAY THEY THOUGHT THAT MAYBE WE SHOULD BE TAKING INTO ACCOUNT RELIABILITY, RESILIENCE, DIVERSITY AND I HEARD SOMEONE SAY NO, THE MARKET SHOULD ALREADY BE DOING THAT. SO WHILE WE HAVE YOU ALL IN YOUR FREE HERE FOR THE MOMENT I WANT TO ASK YOUR THOUGHTS ABOUT THAT. IT SEEMS LIKE A FUNDAMENTAL QUESTION TO SOME, YOU MAY HAVE DIFFERENCES OF OPINION BUT THAT'S MORE THAN TO ME AS A REGULATOR, AS LONG AS I AM HERE WITH CHERYL, BUT MORE IMPORTANTLY WE'RE BUILDING A RECORD UPON WHICH OUR QUORUM CAN CONSIDER THIS ISSUE AND YOUR OPINIONS WILL BE HELPFUL. THAT'S QUESTION ONE. AND THEN I HAVE ANOTHER. MR. STODDARD, I HAVE ONE FOR YOU AFTER WE GET DONE WITH THIS ONE.

>> VERY NARROWLY GO TO RELIABILITY ATTRIBUTES. ANDY OTT'S ANSWER WAS CORRECT. IT'S THE SECURITY CONSTRAIN DISPATCH AND COMMITMENT, WE START  THOSE ARE CONSTRAINTS. ONE OF THE THINGS THAT'S COMICAL THAT MAYBE POINTS THIS OUT, WE'LL BUILD MORE TRANSMISSION TO BECOME MORE RELIABLE. THAT ISN'T WHAT HAPPENS. IT EXPANDS CAPACITY OF THE SYSTEM, RUNS IN THE SAME RELIABILITY STANDARD WHAT I THINK ANDY WAS TRYING TO EXPLAIN, WE HAVE MORE CAPACITY TO MOVE BUT MOVE THEM TO THE LIMIT AND WE BELIEVE THE LIMIT IS APPROPRIATE. YOU MAY ARGUE THAT THE WAY WE SET THE END LINE IS ONE MINUS ONE OR VARIOUS CONTINGENCIES, THEY NEED TO BE MORE CONSERVATIVE, BUT GIVEN THOSE RELIABILITY ATTRIBUTES, EVERYTHING WE DO IS AN ADJUSTMENT TO ACCOMMODATE OR STAY WITHIN CONSTRAINTS, SO HIS EXAMPLE, MAYBE CALIFORNIA'S EXAMPLE HERE, CALIFORNIA NEEDS MORE RAMPING, AND THAT'S ONE OF THE FLEXIBLE CAPACITY ISSUES THAT HAVE BEEN BEFORE THE COMMISSION. YOU DON'T NOT HAVE IT AND BE UNRELIABLE. YOU KNOW THAT THAT'S GOING TO BE A CONSTRAINT THAT YOU HAVE TO KEEP THE REGULATION WITHIN CERTAIN BOUNDS. AND SO THAT WILL COMMIT MORE RESOURCES. THAT MAY MEAN THEY BUY THEM ELSEWHERE OR THEY ADJUST OTHER OPERATING PROCEDURES OR OVERCOMMIT, HAVE MORE UNITS, AT MINIMUM CAPACITY, GIVE THEMSELVES MORE UPSIDE RAMP. BUT THEY DO IT BECAUSE THEY ARE STRUCTURED AS CONSTRAINTS.

>> ROBERT?

>> SO RECOGNIZING WE'RE HERE TO TALK ABOUT INTEGRATING STATE POLICY, CHALLENGE I HAVE WITH RESILIENCY OR OTHER SECURITY GOALS I DON'T THINK PROPERLY AT LEAST IN THE MULTISTATE RTOs STATES OUGHT TO BE FOCUSED ON THOSE THINGS, THOSE ARE THE PROPER PURSUE OF RTO, STAKEHOLDER PROCESS. REVIEW BY TECHNICAL FOLK. WHEN I SEE STATES WITHIN THESE MULTISTATE RTOs TALKING ABOUT FUEL DIVERSITY OR ET CETERA, IT'S TYPICALLY THE JOBS PROGRAM WHERE THEY HAVE A PARTICULAR GOAL, A PARTICULAR PLANT OR SOMETHING THEY WANT IN THEIR STATE AND SO THEY ARE GOING TO PUSH THAT. I PUT ON MY READING GLASSES, AND WONDER WHETHER THE CLAIM OF RESILIENCY AT STATE LEVEL IS ACTUALLY A LEGITIMATE POLICY GOAL.

>> I DISAGREE WITH WHAT MY COLLEAGUES HAVE SAID. RESILIENCY IS DIFFERENT THAN RELIABILITY, IN MY VIEW, AND I'M INFORMED IN MAKING THESE REMARKS JUST NOW BY MANY TOO MANY HOURS SPENT ON THE NATIONAL ACADEMY OF SCIENCES PANEL ON RESILIENCY OF THE GRID. WE WILL BE FINALIZING OUR REPORT SO YOU'LL GET TO READ ALL ABOUT IT. RESILIENCY IS REALLY BEING READY FOR AN EVENT, YOU KNOW, MUTUALLY ASSISTANCE AGREEMENT, MAKING SURE THAT YOU'VE GOT THE HARDWARE AND SOFTWARE TO IDENTIFY WHERE THERE'S AN OUTAGE. EVENTS WOULD BE IN THIS CASE A TERROR ATTACK, A PHYSICAL HARDWARE HIT, CYBERATTACK. EXTREME WEATHER EVENT. SO BEFORE THE EVENT DO YOU HAVE THE CAPABILITIES TO ADDRESS IT? DURING THE EVENT ARE YOU MANAGING THROUGH IT IN A SAFE WAY? IS YOUR SYSTEM GOING TO BE OKAY? AND THEN AFTER THE EVENT ARE YOU RECOVERING THE OPERATION OF THE SYSTEM AS FAST AS YOU CAN, TO PROVIDE ACCESS TO SERVICE? STATES ARE EXTREMELY CONCERNED ABOUT THE ASSURANCE OF CRITICAL SERVICES, HOSPITALS, SEWAGE, WATER TREATMENT, A VARIETY OF OTHER THINGS DURING EVENTS LIKE HURRICANE SANDY, KATRINA. AND THOSE STATES INDEED ARE WORKING A LOT ON RESILIENCY ISSUES BECAUSE OF THIS PROBLEM OF ASSURING THAT PEOPLE DON'T DIE AND ARE NOT HARMED DURING ALL OF THAT. SO I DO THINK THAT THERE IS GOING TO BE INCREASING ATTENTION BECAUSE OF CYBER, BECAUSE OF EXTREME WEATHER EVENTS, BUT I DON'T KNOW HOW YOU MONETIZE THOSE THINGS AND I SAY THAT AFTER SPENDING ALL OF THOSE HOURS AROUND THE TABLE ON THAT. I DON'T THINK WE HAVE  WE'RE JUST AT THE CUSP OF DOING METRICS TO IDENTIFY WHAT IS RESILIENT SYSTEM. THAT'S DIFFERENT THAN, YOU KNOW, ALL THE RELIABILITY, RETAIL RELIABILITY THINGS WE HAVE ABOUT OUTAGE, FREQUENCY, THESE ARE DIFFERENT THINGS. IT WOULD SURPRISE ME IF YOU SEE MARKETS FOR RESILIENCY BUT I THINK WE'RE GOING TO SEE A LOT OF RESILIENCY BUT THAT WILL BE, YOU KNOW, THAT MAY INVOLVE A STATE ORDERING A MICROGRID AND TURBINE AND VARIETY OF OTHER THINGS IN A PARTICULAR PLACE AND IT'S OUT OF MARKET. AND FOR REASONS THAT THEY WANT FOR THIS, AND SO I THINK IT DOES COME UP AS AN ISSUE THAT YOU'LL NEED TO THINK ABOUT.

>> THANK YOU. LARRY AND THEN CLIFF.

>> YEAH, SUSAN MAKES A GOOD POINT ABOUT DEFINING RESILIENCY BECAUSE IT'S A COMPLEX ISSUE. BUT TO COLETTE'S POINT WE'VE GOT MARKET DISTORTIONS NOW REDUCING DIVERSITY IN OUR SUPPLY PORTFOLIO. THE MARKET TENDS TO PRODUCE A NICE MIX OF FUELS AND TECHNOLOGIES, AND WE'VE GOT A DISTORTION THAT SEEMS TO BE MORING TO TOO MANY CTs, NOT ENOUGH BASE LOAD AND INCREASING RELIANCE ON NATURAL GAS, THAT'S WHAT GOT PEOPLE CONCERNED. NATURAL GAS IS A FUEL THAT TENDS TO HAVE MULTIYEAR CYCLES, PERIODIC EXTREME VOLATILITY, AND SOME DELIVERABILITY PROBLEMS WHEN YOU HAVE SOME WEATHER EVENTS LIKE THE POLAR VORTEX. WE HAVE TO WORRY ABOUT THINGS LIKE HURRICANES AND CYBERATTACKS AND PHYSICAL ATTACKS ON THE GAS INFRASTRUCTURE AND IF WE GET DISTURBING SEISMIC ACTIVITY IN OKLAHOMA THAT LED TO A YEAR LONG MORATORIUM ON FRACKING YOU CAN HAVE A PINCH POINT ON FUEL SUPPLY TO THE POWER SECTOR SO THE RESILIENCY ISSUE IS BIG, PEOPLE GETTING NERVOUS WE SEEM TO HAVE OUR EGGS IN ONE BASKET WHICH IS NATURAL GAS.

>> I THOUGHT I HEARD A DIFFERENT QUESTION. MAYBE I GOT THAT WRONG, WHETHER WE SHOULD CREATE A DIFFERENT PRODUCT WITH DIFFERENT ATTRIBUTE. RESILIENCY MIGHT MEAN RAMPING OR SOME OTHER QUICK START CAPABILITY, SOMETHING LIKE THAT. I DON'T HAVE A FULL ANSWER. I'D LIKE TO PUT MY THUMB ON THE SCALE. COMPETITION IS GREAT. I THINK THAT WE SHOULDN'T RUSH TO CREATE A COMPETITIVE MARKET IN SOMETHING NEW WE HAVEN'T NEEDED UP TILL NOW. I THINK IF NEEDED, THE COST OF SERVICE PARADIGM IS A WAY TO GET IT BUILT AND RUNNING UNTIL WE HAVE ENOUGH UNDERSTANDING OF VIBRANCY OF EXTRA ATTRIBUTE. I ALSO THINK THAT GIVEN THE KIND OF STUFF WE TALKED ABOUT FOR TWO DAYS NOW SHOWING THE DIFFERENT DYNAMICS THAT'S TAKING PLACE IN THIS MARKET GIVES A LITTLE BIT EXTRA COVER FOR COST OF SERVICES, THERE'S A LOT GOING ON HERE DRIVEN BY DIFFERENT FACTORS. WHICH WOULD LEAN AWAY FROM TRYING TO CREATE A SPECIAL PHYSICAL CHARACTERISTIC MARKET.

>> THANKS. SO I'LL SKIP SOME ONES ATTRIBUTES OTHERS DISCUSSED BUT ONE OBVIOUS ONE IS RESOURCE ADEQUACY ASPECT OF RELIABILITY, VERY MUCH ALREADY COVERED BY THE MARKET, LOCATIONALLY, AND LET'S SEE. FLEXIBILITY. WE MAY NEED NEW KINDS OF FLEXIBILITY BUT THAT IS VERY MUCH A CHALLENGE FOR MARKET DESIGN. THE BRATTLE GROUP, WE TALK ABOUT DEVELOPING, WHAT IS MARKET DESIGN 3.0 GOING TO LOOK LIKE FOR A FUTURE THAT DOES HAVE ALL THE ZERO VARIABLE COSTS AND INTERMITTENT RESOURCES ONLINE. AND YOU MAY NEED NEW PRICE. THAT'S A MARKET DESIGN QUESTION. NOT A STATE PLANNING QUESTION. THEY CAN'T FIGURE IT OUT OR DO IT AS EFFICIENTLY. AS FOR WE'RE HEARING ABOUT BASE LOAD LATELY, THAT'S NOT AN INTRINSIC VALUE. THE ENERGIES MARKET SORTS OUT HOW MUCH YOU NEED BASE LOAD VERSUS PEAK. SURE, I'LL AGREE THERE ARE SOME DISTORTIONS TO THE PRICE FOR A LOT OF REASONS, NOT JUST FROM RENEWABLES, IT'S NOT LIKE THAT'S PERFECT BUT THE ENERGY MARKET IS THE PLACE TO SORT THAT OUT, NOT WITH A DIFFERENT PRODUCT. AND FUEL DIVERSITY TOO, I HEAR THAT FROM STATES. THAT MATTERS BUT IT'S ALMOST NEVER VERY WELL DEFINED AND SO SOMETIMES I WONDER IF IT'S BEING USED AS PROXY FOR OTHER OBJECTIVES. YOU HEAR THIS IN PLACES WHERE FUEL DIVERSITY IS IMPROVING. AND BY THE WAY I'VE WORKED FOR GENERATORS A LOT ON EVALUATING INVESTMENTS OR ASPECTS OF PORTFOLIO. WHEN YOU LOOK AT A NONGAS GENERATOR THEY THINK ABOUT POSSIBLE VALUE IF GAS PRICES SO UP SO ECONOMICALLY THE CONTRARYIAN POSITION IS REAL. THE MARKET DOES ADDRESS FUEL DIVERSITY AND FROM RELIABILITY STANDPOINT AS WELL BECAUSE THE MARKETINGS HAVE THE RIGHT SCARS SCARCITY PRICING AND/OR CAPACITY PERFORMANCE WHICH PUTS ECONOMIC STAKES ON THE RESOURCE SUPPLIER, YOU SEE FOR EXAMPLE A LOT OF BACKUP OIL GENERATION.

>> NOT SURE IF THIS FITS INTO THE PARADIGM WE'VE BEEN USING SO FAR ON ATTRIBUTES. EXCUSE ME, I TAKE MEDICATION (INDISCERNIBLE) BUT THERE'S AN INFORMATION TRANSFER ON PRICING THAT IS UNDERNEATH SOME OF  AND BILL GOES TO GET THE PRICE RIGHT. ASSUME WE HAVE THE PRICE RIGHT IN THE WHOLESALE MARKET, WE FOE THERE'S A COMMUNICATION PROBLEM AT RETAIL. THAT LACK OF COMMUNICATION IS CREATING THE DEMAND FOR SOME OF THESE ATTRIBUTES. IT'S MISMATCH OF NOW YOU CAN TALK ABOUT MY SILLY TARIFF IN CALIFORNIA. I'M ON SMART RATE, A MISNOMER. [LAUGHTER] AT THE LOW POINT OF THE DUCK CURVE, LAST YEAR I WAS LMPs AROUND $60, NOW INTO THE NEGATIVE, I'LL SEE A THOUSAND DOLLAR RETAIL RATE. I HAVE A VERY INEFFICIENT GENERATOR, 13,000, AND I CAN RUN $20 RETAIL GAS AND MAKE $260 POWER AT HOME. AND IT'S DIRTY, YOU KNOW. IT'S NOT THAT DIRTY BUT IT'S A GAS GENERATOR. AND I'M MESSING UP THE NET LOAD, MAKING IT WORSE. SO FROM THE ISO VIEW I'M MAKING THE DUCK CURVE WORSE. AND SO I DON'T KNOW WHAT THE ATTRIBUTE, GETTING PRICES RIGHT, BUT IT'S THE COMMUNICATIONS AND I'VE NEVER REALLY THOUGHT ABOUT IT UNTIL THIS DISCUSSION OF HOW TO  IS THERE AN ATTRIBUTE THAT WE CONSIDER AT FERC THAT PUSHES THAT CREATIVE MANDATE BECAUSE THAT MISMATCH IS HORRENDOUS. GENERATING $260 POWER MARGINAL COST, VERY LOAD NEGATIVE AND RETAIL AT A THOUSAND TELLS YOU THAT YOU'RE GOING TO FORCE OPERATING COSTS, JUST THE EXACT KIND OF CONFIGURATION OF BAD PRICE INFORMATION THAT LEADS TO BAD DISPATCH AND OPERATION. SOME OF THESE LITTLE OPERATING ATTRIBUTES YOU'RE CONCERNED ABOUT ARE DERIVATIVE OF THE COMMUNICATIONS AND PRICING. AS BILL SAID, THE PRICE IS RIGHT. THIS IS A REALLY MACRO ONE BECAUSE IT'S AN ISSUE THAT'S COMING BEFORE YOU IN TERMS OF THINGS LIKE FLEXIBILITY. PRICING WAS BETTER IN THIS CONTEXT, FLEXIBILITY WOULD BE WAY LOWER, I MEAN MUCH LOWER. IF CARBON PRICING WAS TRANSPARENT, THE LEVEL  RATHER BILL'S COMMENT, I DON'T NEED 80%, I DON'T NEED 50% OR 100%, I JUST NEED TO SEE THE PRICING ON THE CARBON ATTRIBUTES AND MAYBE THE CURVE WON'T LOOK LIKE THAT. WE MAY NEED ANOTHER NAME FOR IT, SOMEBODY ELSE CAN SUGGEST IT. BUT THAT INFORMATION GAP IS AN ATTRIBUTE RENEED TO FIX MORE THAN THIS BEING TRANSPARENT WHOLESALE PRICES. IT'S THE COMMUNICATION AND PUSHING IT THROUGH THE SYSTEM BETTER.

>> THANK YOU FOR MENTIONING THAT BECAUSE THAT ISN'T SOMETHING WE'VE TOUCHED UPON AND IT COULD ALSO FACTOR IN AN IMPORTANT LEVEL OF COORDINATION THAT IS NECESSARY BETWEEN THE WHOLESALE AND RETAIL. WE SOMETIMES DO A BIT OF FINGER POINTING BUT MAYBE IF WE WERE WORKING MORE IN TANDEM I UNDERSTAND THE POINT YOU'RE TRYING TO MAKE. IN THE INTEREST OF TIME I KNOW EVERYONE NEEDS A BREAK AND I DO TOO. BUT I WANTED TO ASK MR. STODDARD BECAUSE IN YOUR PREFILED COMMENTS YOU TALKED ABOUT FORWARD MARKETS AND CLICKER APPROACH, SOMEONE ELSE MENTIONED IT IN THE COURSE OF OUR PRESENTATIONS, AND ALSO I RECALL THAT NATIONAL GRID REFERENCE REPRESENTS FORWARD CLEAN ENERGY MARKET AND AS WE'RE THINKING BROADLY ABOUT POTENTIAL SOLUTIONS AND MAYBE WHAT SOME KEYS MIGHT BE I WANTED TO ASK YOU TO SHED LIGHT ON THAT FOR THE RECORD AND IF ANYONE HAD TALKED ABOUT IT. YOU'RE STANDING BETWEEN MR. STODDARD AND ME AND A BREAK. NOW IS THE TIME. THANK YOU.

>> I'LL TRY TO BE BRIEF BUT PERSUASIVE. WE'VE SPENT A LOT OF TIME IN NEW ENGLAND IN THE IMAPP PROCESS, AND QUESTIONS HAVE SURFACED THERE, USEFUL THINKING GOING ON. I ORIGINALLY WALKED IN WITH THE IDEA WE OUGHT TO PUT CARBON IN DISPATCH, THAT WAS ALL WE NEEDED. AS I WORKED WITH STAKEHOLDERS AND STATES AND MANY CONVERSATIONS WITH LOTS OF PEOPLE, BECAME CLEAR THAT THERE'S SOME FLAWS IN TRYING TO IMPLEMENT THE CARBON, NOT LEAST OF WHICH IS THE STATE'S STRONG RESISTANCE TO HAVING A FEDERAL THUMB ON THE SCALE OF CARBON. BUT THERE WAS A REAL NEED FOR SOMETHING. SO THE OTHER CHALLENGE AGAIN FROM THE STATES IS A VERY CLEAR COST CAUSATION LINKAGE, TO MAKE SURE IF NEW HAMPSHIRE DOESN'T WANT TO PURCHASE MORE RENEWABLES, THEY ARE NOT GETTING ANY COST SOCIALIZATION. NOW, THERE'S AN ARGUMENT THAT SAYS THEY OUGHT TO BE BEARING IT BECAUSE THEY ARE GETTING BENEFITS BUT FOR THE SAKE OF TRYING TO GET SOMETHING PASSED THROUGH STAKEHOLDER PROCESS LOOKING OF WAYS TO HAVE A CLEAN ONETOONE ALLOCATION. YOU WANTED TO BUY A PRODUCT, THEN WE FIGURED OUT WHAT THE COST OF THAT PRODUCT IS, AND CHARGE IT TO YOU AND SO THE PRODUCT WE DEVELOPED OVER TIME AND WE I SHOULD MENTION IS THE CORE OF THE IDEA CAME FROM TWO BRATTLE ECONOMISTS, KATHLEEN AND JUDY, I'VE BEEN WORKING ON THE EDGES TO REFINE IT AND I TOOK PERHAPS THE OPPORTUNITY PREMATURELY TO NAME IT, IT NEEDED A NAME. BUT CLIPPER IS A GOOD OLD YANKEE TERM. SOMETHING THAT MIMICS A CARBON ADDER BUT ONLY FOR THE UNITS THAT HAVE IT. NOW, THAT PRODUCES ITS OWN INEFFICIENCY THAT WE DON'T GET BENEFITS OF DISPATCH BUT IN ISO NEW ENGLAND THERE'S VERY ALSO REORDERING OF DISPATCH THAT WILL OCCUR, MOSTLY GAS STATE. THE KEY PROPERTY IS THAT IT'S MUCH LIKE A REC. BUT THAT THE VALUE IN ANY HOUR IS NOT FIXED AND FLAT BUT DEPENDS ON MARGINAL CARBON INTENSITY IN THE HOUR. SO WHEN THE MARGINAL CAPACITY MARKET CARBON INTENSITY IS ZERO IT'S WORTHLESS. IF YOU'RE RUNNING YOUR WINDMILL, NOT OFFSETTING CARBON, YOU'RE NOT GETTING PAID. LIKEWISE IF YOU'RE A STORAGE UNIT YOU HAVE THE OPPORTUNITY OF PICKING UP THOSE FREE INCENTIVES OVERNIGHT WITH THEIR ENERGY AND DEPLOYING THEM IN THE MIDDLE OF THE DAY WHEN THE CARBON OFFSET IS VERY HIGH. SO THIS CREATES REAL VALUE FOR STORAGE OR FOR HYDRO THAT CAN CHOOSE VARIOUS DISPATCH. IT CREATES A CARBONLIKE PRICE BUT PARTICULARLY FOR UNITS THAT ARE ABLE TO RESPOND TO CARBON AND HELPS SORT OUT WHICH UNITS ARE ACTUALLY DOING THE BEST IN TERMS OF OFFSETTING. WE TEND TO THINK OF MEGAWATT HOUR FROM WIND FARM IN MAINE EQUIVALENT TO A MEGAWATT HOUR FROM A WIND FARM OFF NANTUCKET, OR SOLAR PANEL IN HARTFORD. AND THEY ARE NOT. IN TERMS OF THE ACTUAL CARBON OFFSET THERE'S A REAL DIFFERENCE. AND THAT GETS PRICED INTO THIS CLIPPER PROBLEM. SO IT HAS SOME OF THE DESIRABLE ATTRIBUTES OF CARBON MATTER. BUT BECAUSE THE DEMAND FOR THESE IS SET BY STATE POLICIES, STATES DID IN A QUALITY PRICE PAIR, ISO IS ACTING AS AN AUCTIONEER, TO CALCULATE THE COST AND ASSIGNED COST BACK TO THE PEOPLE WHO DID CLEAR SO IT KEEPS A VERY TIGHT LINK BETWEEN COST CAUSATION AND COST ALLOCATION, IT ACHIEVES MANY BENEFITS OF THE CARBON MATTER IN DISPATCH, PARTICULARLY FOR UNITS THAT ARE ABLE TO DO IT AND HELPS SORT RENEWABLES INTO A SENSIBLE METRIC, A CARBON OFFSET RATHER THAN JUST A MEGAWATT HOUR.

>> ALL RIGHT. THIS HAS BEEN GREAT CONVERSATION. I APPRECIATE ALL THE PANELISTS. WE'LL TAKE A 10MINUTE BREAK AND BE BACK BY EIGHT MINUTES TOO. THANK YOU ALL. (RECESS).

>> WE'D LIKE TO GET GOING. WE'VE GOT TIME CONSTRAINTS FOR THE END OF THE DAY. LISTEN ACTIVELY, WE MIGHT ASK ABOUT WHAT YOU HEARD.

>> FOLLOWING THE GENIUS BAR.

>> THAT'S RIGHT. THINK HOW SMART YOU MUST BE THAT YOU'RE GOING AFTER THE GENIUS BAR. SO VERY MUCH APPRECIATE ALL OF YOU STAYING THE WHOLE TIME, APPRECIATE THE FOLKS STILL WATCHING AND FOR STAYING ENGAGED AS LONG. WE'RE AT OUR LAST SESSION, LAST PANEL OF THE DAY, PLEASED TO WELCOME JEFFREY BENTZ, DIRECTOR OF ANALYSIS FOR THE NEW ENGLAND STATES COMMITTEE ON ELECTRICITY. STU BRESLER, SENIOR VICE PRESIDENT PJM. RANA MUKERJI, SCOTT WEINER, MATTHEW WHITE AND ANDREW PLACE FROM THE PUBLIC UTILITIES COMMISSION. WE PREPARED QUESTIONS AND DETAILED QUESTIONS BUT WE'VE HAD A LOT OF DISCUSSION AND THOUGHT IT MIGHT BE PRODUCTIVE TO ASK YOU ALL WE'RE TALKING TO OUR MARKET OPERATORS TO GET A SENSE OF WHAT YOU HEARD. ONE OR TWO TAKEAWAYS FOR YOU, THINGS THAT YOU HEARD AND WANT TO MAKE SURE WE HEARD, ANOTHER GO AT TIMING, HOW EITHER WHAT IS YOUR TIMING, OR WHAT SHOULD OUR TIMING BE AND LAST ANYTHING WE CAN DO TO HELP, I'LL REFERENCE RONALD REAGAN, WE'RE FROM THE GOVERNMENT AND WE'RE HERE TO HELP. WHAT CAN WE DO FOR YOU. SCOTT, YOU'RE READY TO GO FIRST.

>> THANK YOU FOR THE OPPORTUNITY TO PARTICIPATE. THIS HAS BEEN A VERY IMPORTANT AND VERY INTERESTING COUPLE DAYS. LET ME FIRST RESPOND TO THE QUESTION OF TIMING, GO BACK TO THE CONSTRUCT OF LOOKING FOR A COUPLE PRINCIPLES AND PROVIDE SOME THOUGHTS AROUND THAT AND LITERALLY JUST A COUPLE OR THREE PRINCIPLES AND ANSWER THE QUESTION OF HOW I THINK YOU MIGHT BE ABLE TO HELP. WE APPRECIATE THE OPPORTUNITY TO REPEAT. IN TERMS OF TIMING WE ALL RECOGNIZE, THE PANELS RECOGNIZE, YOU ALL RECOGNIZE THAT THINGS ARE HAPPENING AS WE SPEAK. AND THAT'S PARTICULARLY THE CASE IN NEW YORK. AND IN NEW YORK, WE IN FACT NOT ONLY BELIEVE BUT THINK WE'VE DEMONSTRATED WE'RE ADDRESSING A NUMBER OF ISSUES DISCUSSED TODAY AND YESTERDAY, PARTICULARLY TODAY, REV REPRESENTS ONE ITERATION OF WHAT THE FUTURE PARADIGM IS GOING TO LOOK LIKE. MANY STATES ARE RESPONDING DIFFERENTLY, BUT CHANGE OCCURS QUICKER THAN WE THINK IT'S GOING TO. AND THAT IS A CUSTOMER FOCUSED POLICY, NUMBER ONE. NUMBER TWO, CONCERN ABOUT SYSTEM EFFICIENCY AND IMPROVING SYSTEM EFFICIENCY, AND THE THIRD ENABLING ASPECT OF EMERGING TECHNOLOGY. THOSE THINGS BRING US EVERYTHING THAT ALLOWED US THREE OR FOUR YEARS TO START THE REV INITIATIVE. WE'RE LOOKING AT A SYSTEM TAKING STEPS TO IMPLEMENT A SYSTEM THAT HAS A NEW UTILITY BUSINESS MODEL, DIFFERENT ROLE FOR LSE IN GENERAL. IT ACTIVATES LOAD AS A RESOURCE, BUILDING OUT A GRID TO COME INTO THE OPERATION OF THE MARKETPLACE AS WE'VE THOUGHT ABOUT IT IN NEW YORK AND MY COLLEAGUE RANA WILL TALK ABOUT THAT. PRINCIPLE NUMBER ONE, IT'S NOT THE SAME OLD GRID. I USED A PHRASE YESTERDAY, ANYTHING WE DO, ANYTHING WITH COMMISSION, DIRECTS THE RTO/ISO, WE'RE LOOKING TO THE FUTURE NOT JUST BECAUSE OF LIFE OF AS SETS BUT LOCAL MARKET DESIGN AND STATE POLICY TAKING PLACE TODAY. AND THOSE WILL BE THERE FOR THE FUTURE. NUMBER TWO, I WANT TO ECHO CLIFF'S POINT ABOUT THE MULTIPLICITY OF MARKETS, SOMETIMES THE LANGUAGE THAT WE ALL USE TENDS TO CONFLATE CONCEPTS SO THE TERM MARKET CAN SIMULTANEOUSLY MEAN THE FEDERALLY FERC ADMINISTERED MARKETS, AS A WHOLE THERE'S MULTIPLICITY, STATE LEVEL INCLUDES RRPS PROCUREMENT, COMPETITIVE PROCUREMENT. IT'S GOING TO INVOLVE A DISTRIBUTION LEVEL MARKET. I MENTIONED YESTERDAY THE COMMISSION ADOPTED A NEW METHODOLOGY GROUP PLACE NET METERING IN A HAS ALREADY STARTED VALUING AND COMPENSATING VER ON A MUCH DIFFERENT BASIS, CENTERED ON THE FOCUS OF ACCURACY. AND ACCURATE PRICING, TO THE POINT TO BE ABLE TO GET THE BUILDOUT. IT'S GOING TO CHANGE THE OPERATION OF THE GRID. IT'S GOING TO CHANGE PLANNING. IT'S SOMETHING  IT'S GOING TO BE ITS OWN MARKET. WE'LL TALK MORE ABOUT THAT. SO PRINCIPLE TWO, I'M SWIMMING UPSTREAM BUT WANT TO AGAIN SUGGEST AND I UNDERSTAND WHERE THE WORD ACCOMMODATE COMES FROM, I UNDERSTAND IT'S BEEN INSTITUTIONALIZED, SOME OF THE NEW ENGLAND ACTIVITIES BUT I WANT TO SUGGEST THAT THE MORE EFFECTIVE WORD IS HARMONIZE. FRANKLY, I'LL SAY THIS WITH MY TONGUE IN CHEEK, NEW YORK'S NOT INTERESTED IN BEING ACCOMMODATED. WE'RE INTERESTED IN WORKING TOGETHER AS PARTNERS TO HARMONIZE THE MARKET RESPONSIBILITIES. AND I THINK IT'S WORDS CAN MATTER AND WE CHANGE THE TERMINOLOGY FROM ACCOMMODATE TO HARMONIZE. THAT WOULD BE VERY IMPORTANT IN TERMS OF SETTING THE TONE. SO NUMBER THREE, WHEN THINKING ABOUT STATE POLICY, THIS IS ONE OF THE POINTS I WANT TO UNDERSCORE THAT CAME OUT IN THE PAST FEW DAYS, STATE POLICIES ARE MULTIFACETED. THEY ARE INTERCONNECTED. IN NEW YORK, FOR EXAMPLE, WHEN WE THINK ABOUT CARBON, CARBON IS NOT ZEC. CARBON IS MUCH MORE THAN THAT. CARBON AND OUR STRATEGY TOWARDS CARBON, POINTED OUT YESTERDAY, STARTS AT THE STATE ENERGY PLANT. IT INVOLVES CLEAN ENERGY STANDARD, CLEAN ENERGY FUND, VALUE OF DISTRIBUTED ENERGY RESOURCES ALL THOSE THINGS. AS WE COMMENCE LATER THIS WEEK, OUR COLLECTIVE WORK WITH THE NYISO TO LOOK AT THE PLAN THEY ARE DEVELOPING WE'RE DOING IT COLLECTIVELY, COLLABORATIVELY IN THE CONTEXT OF THE STATE'S ENTIRE CARBON PROGRAM. AND AGAIN TO SEE HOW DO WE HARMONIZE, WE NEED TO UNDERSTAND HOW THESE DIFFERENT PROGRAMS, DIFFERENT POLICIES, AND THESE DIFFERENT MARKETS ARE GOING TO OPERATE. RIGHT NOW DER INCLUDING STORAGE IN NEW YORK IS GOING TO BE COMPENSATED THROUGH A VALUE STACK. AND ONE ELEMENT IN THAT VALUE STACK IS AN e VALUE, THAT e VALUE RIGHT NOW IS THE PRICE OF THE REC IN NEW YORK, THE LAST PUBLISHED PRICE OF A REC IN NEW YORK. SO THERE'S INTERWEAVING. INTERCONNECTED. THAT DOESN'T MEAN WE CAN'T DO THINGS. WE HAVE TO BE CAUTIOUS AND SOMETIMES THE FOCUS ON ONE ASPECT CAN LOSE A BIGGER PICTURE. NUMBER 4 IS FEDERALISM, THERE'S BEEN A LOT OF TALK, COOPERATIVE FEDERALISM, I RAISE IT AS A STATE OFFICIAL TO SAY OUT LOUD WE RECOGNIZE THERE ARE BOUNDARIES. WE RECOGNIZE THERE'S EXCLUSIVE JURISDICTION FOR THIS COMMISSION, IT'S IMPORTANT AND HAS TO BE RECOGNIZED AND HONORED. WE TOO, IN MY EARLIER COMMENTS, HAVE OUR JURISDICTIONAL, AND IF WE COME TOGETHER TO HARMONIZE AND THERE MAY BE SOME ACCOMMODATIONS, COMPROMISE ALONG THE WAY BUT IT'S AN IMPORTANT DISTINCTION AND THAT LEADS INTO SORT OF A RELATED  NUMBER 5 OR NUMBER 4A, BUT I CAN'T PASS UP THE OPPORTUNITY TO HAVE THE MICROPHONE EVEN AT THIS LATE HOUR AND SAY ONE OF THE PRINCIPLES WE ARGUE IS TO CHANGE PRESUMPTION AROUND ON THE APPLICATION OF THE MOPAR. DON'T ASSUME AND PUT THE BURDEN ON STATE POLICY TO PROVE WHAT IT'S NOT DOING. IF THERE'S A CONCERN STATE POLICY A VIOLATING THAT BOUNDARY, I WON'T PRETEND TO DEFINED IT RIGHT NOW BUT WHERE THE BOUNDARY EXISTS THEN ESTABLISH IT. SHOW IT. I SAT HERE TODAY AND I HEARD LOTS OF PEOPLE TALK ABOUT WHAT NEW YORK'S POLICIES WERE, WHAT OUR POLICY INTENTIONS WERE WITH CLEAN ENERGY STANDARD. FOR THE MOST PART EVERYBODY WAS WRONG. THAT MANY MATTERS IN LITIGATION. ANYBODY THAT WANTS TO KNOW THE FACT AS WE ASSERT THEM CAN TAKE A LOOK AT THE PLEADINGS. BUT I THINK THAT THIS CHANGE OF ASSUMPTION BECOMES VERY IMPORTANT AND CERTAINLY SOMETHING TO CONSIDER. FINALLY, IN TERMS OF PRINCIPLES, I WOULD ASK YOU TO CONSIDER TAKING AN APPROACH THAT WE TOOK IN OUR ANALYSIS OF VALUING DER AND SAY WHAT'S AT ISSUE AGAIN IS ACCURATE PRICING. AND I THINK THERE IS SOMETIMES A CONVERGENCE BETWEEN WHAT A PRODUCT IS AND WHAT A MARKET IS. THERE IS LOTS OF VALUE THAT'S BEING BROUGHT BY GENERATORS INTO THE MARKETPLACE. MUCH OF THAT VALUE IS RECOGNIZED IN ONE WAY OR ANOTHER. SOME OF IT'S NOT RECOGNIZED YET. SOME OF IT IT MAY NOT BE KNOWN YET. IF IT'S KNOWN WE MAY NOT HAVE THE TOOLS TO CALCULATE YET COMMITMENT WILL SOLVE ISSUES THE LAST PANEL WAS TALKING ABOUT. LASTLY, IN TERMS OF WHAT THE COMMISSION DOES NOW I'D LIKE TO RENEW MY SUGGESTION THAT THE STAFF CONVENE AND ONGOING DISCUSSION, NOT ONCE EVERY THREE YEARS, NOT ONCE EVERY YEARANDAHALF, BUT YOU'RE ALWAYS WELCOME TO COME BACK TO BROADWAY. BUT TO CONVENE A DISCUSSION AMONG YOURSELVES, AMONG POLICYMAKERS IN THE STATE, LEADERSHIP OF THE RTOs AND ISOs, AND LET'S BEGIN TO TALK ABOUT WHAT ARE THE PRINCIPLES. UNDOUBTEDLY THE DECISIONS THAT ARE MADE IN NEW YORK WILL LOOK DIFFERENT THAN THE OTHER REGIONAL MARKETS. AND WE HAVE THE ADVANTAGE WE'VE TALKED ABOUT BEING A SINGLE STATE ISO. BUT THERE WILL BE ENORMOUS VALUE IF WE CAN BEGIN TO TALK AND UNDERSTAND THE IMPLICATIONS OF POLICIES JUST BY HAMMERING OUT THE COMMON PRINCIPLES, THAT WILL BE APPLIED THROUGHOUT THE THREE REGIONAL MARKETS. THAT WE SHOULD BE ABLE TO DO AND CAN DO ON OUR OWN TODAY.

>> THANKS. IT'S A GOOD IDEA TO STAY IN NEW YORK, RONA.

>> GOOD. THANK YOU.

>> THANKS FOR HAVING ME. THANKS, COMMISSIONERS. I THINK ONE OF  NEW YORK IS IN THE FOREFRONT OF DECARBONIZING THE GRIT AND TRANSITION TO DISTRIBUTED FUTURE, DISTRIBUTED RESOURCES, ANIMATED DEMAND. WHOLESALE MARKETS IS INTEGRAL PART OF ACHIEVING BOTH THOSE GOALS. PRESERVING THE REVENUE ADEQUACY RESOURCES CAPITAL AT RISK AND WHOLESALE MARKETS IS A VERY IMPORTANT PRINCIPLE WE MUST STRIVE FOR. FOR THE STATE TO REACH 50% BY 2030, WE BELIEVE, WE'VE CALCULATED IT'S APPROXIMATELY 9000 MEGAWATTS OF SOLAR AND 5000 MEGAWATTS OF WIND WHICH HAS TO BE  WHICH HAS TO COME ONLINE BETWEEN NOW AND 2030. WE HAVE TO STRATEGIC A SIGNIFICANT AMOUNT OF CONVENTIONAL RESOURCE. IT'S NO NOT ONE FOR ONE. WIND HAS 25% CONTRIBUTION TO CAPACITY, SOLAR 30 TO 40. IF YOU HAVE 15,000 MEGAWATTS, YOU ASSUME CONTRIBUTION TO PEAK IS 5000, 5000 OR SOME AMOUNTS OF CONVENTIONAL RESOURCES SHOULD AND NEED TO RETIRE BUT STILL WOULD HAVE 30,000 MEGAWATTS OF CONVENTIONAL RESOURCES WHICH HAVE CAPITAL AT RISK, PEAK LOAD AROUND 35,000, DEPENDS ON THE MARKET OR MARKET SIGNALS. WE HAVE TO PRESERVE REVENUE ADEQUACY OF CONVENTIONAL RESOURCES. HOW WE PLAN TO DO THAT AGAIN RECOGNIZING THE FACT LOW GAS PRICES ARE DRIVING DOWN MARGINAL REVENUES AND INTERMITTENT RESOURCES HAVE ZERO MARGINAL COST YOU HAVE TO LOOK AT BILL HOGAN'S SCARCITY PRICING, RAMPING, STARTUP, LOAD FOLLOWING, WE HAVE TO ALSO LOOK AT PERFORMANCE COMPONENTS IN THE CAPACITY MARKET. SO WE'RE GOING TO LOOK AT REVENUE ADEQUACY OF THE CONVENTIONAL FLEET WHICH HAS CAPITAL AT RISK. THAT IS ALMOST LIKE A PREREQUISITE TO REACH THE DECARBONIZATION GOAL. IT'S NOT GOOD ENOUGH BECAUSE NEW YORK OWNS 50% OF ENERGY THROUGH RENEWABLE RESOURCES. IF WE WOULD LIKE TO ASPIRE MARKETS TO NOT BE 50% MARKET BUT 100% MARKET, THE MARKET SHOULD DRIVE RESOURCE ADDITIONS WHICH ARE FOR ALL OF THE RESOURCES, EVEN RENEWABLE ONES, THAT'S WHAT WE'RE WORKING WITH THE STATE TO HARMONIZE, IF YOU CAN COMPLEMENT THE  THIS IS THE STUDY THAT WE'VE ASKED BRATTLE TO HELP US WITH, WHICH ESSENTIALLY LOOKS AT PUTTING THE SOCIAL COST OF CARBON IN THE OFFER STACK AND IT LOOKS PROMISING IN TERMS OF PROVIDING INTRAMODULAR REVENUE TO RESOURCES, GIVING A FLEETWIDE SIGNAL, GIVING SIGNALS TO EVEN CONVENTIONAL RESOURCES HAVE A BETTER CARBON FOOTPRINT TO PERFORM BETTER, BETTER LOCATIONAL SIGNALS, AND WE HAVE DEFINED CRITICAL WAY OF RETURNING REVENUES FROM TAKING PENALTIES, CARBON PENALTIES BACK. IT'S A STATE POLICY WE'RE LIMITING SO WE HAVE TO WORK IN PARTNERSHIP WITH THE STATE AND WE'VE TRIED TO FIND A WAY TO HARMONIZE WHAT OUR PROGRAM IS WITH THE STATE IS. ONE OF THE THINGS I WANT TO STRESS IS THAT WHAT WE'VE ASKED BRATTLE TO LOOK AT IS NOT INSTEAD OF WHAT THE STATE PROGRAMS ARE DOING. IT'S IN ADDITION TO. SO IF YOU PUT  IF YOU INVESTIGATE A SOCIAL COST OF CARBON BUT WE'RE NOT SAYING THEN WE WOULD HAVE TO HAVE LESS MONEY FROM RECs OR ZECs OR WHATEVER WAY, IF SOCIAL COST OF CARBON DEPENDS ON INLAND WIND AND STATE THROUGH POLICY OBJECTIVES WANT TO BUILD OFFSHORE WIND, WE HAVE TO ONLY PAY THAT PREMIUM. IF YOU'RE NOT QUESTIONING, YOU KNOW, LEGITIMACY OF THE POLICY BUT THIS IS A WAY TO HARMONIZE THE DECARBONIZATION GOALS. WE WANT TO PRESERVE REVENUE ADEQUACY OF RESOURCES WHICH HAVE PUT CAPITAL AT RISK. WE DON'T WANT TO RUN A 50% MARKET, WE WANT TO BE THE MARKET ALL RESOURCES DEPEND ON MARKET SIGNALS FOR ENTRY DECISION. AND WE WILL WORK WITH THE STATE TO ACHIEVE THOSE GOALS.

>> IS THERE ANYTHING THE COMMISSION CAN DO TO KIND OF HELP MAKE THAT PROCESS MORE PRODUCTIVE?

>> ABSOLUTELY. YOU'VE ALREADY STARTED THE PRICE FORMATION, WE NEED GUIDANCE AND HELPS. STAKEHOLDER PROCESS AS EVERYBODY NOTED IS LONG AND CONSCIENTIOUS, HAVING DEADLINES WORKS MIRACLES, AND SO THAT WOULD  HAVING CLEAR DIRECTIVES THIS IS WHAT YOU WANT US TO WORK ON WOULD HELP. ONE OTHER THING WE'RE WORKING WITH PRICE FORMATION WHICH IS CRITICAL, LIKE THE REV RESOURCES, NEED LOCATIONAL PRICES TO ACTUALLY FUNCTION TO GET THE PRICES FOR STORAGE AND REV RESOURCES. THE STATE APPLAUD OUR EFFORTS TO GET THE RIGHT PRICES

>> THANK YOU. CHUCK?

>> THANK YOU. JEFF BENTZ, NESCOE, I WANT TO CLARIFY SOMETHING ROY SHANKER SAID ABOUT CHAIR VANNOY, HE EXPRESSED OPPOSITION TO CARBON MATTER, DID NOT EXPRESS LEAVING ISO NEW ENGLAND. YOU HEARD PEOPLE TALK ABOUT MAINE OPPOSING IT. THAT WAS A SIXSTATE COLLECTIVE LISTED IN OUR APRIL 7 MEMO TO NEPOOL, WE LISTED ABOUT 8 DIFFERENT REASONS WHY THE STATES HAD CONCERNS FOR CARBON ADDER, I DON'T WANT THE PRESSURE GOING ON POOR MAINE. ALL SIX STATES STAND BY THOSE STATEMENTS ABOUT CARBON ADDER. ON URGENCY ISSUE, YOU KNOW, WE SEE THIS ISSUE COMING. IN NEW ENGLAND I'LL SAY FIVE YEARS AGO I WAS HERE TALKING ABOUT RENEWABLES. WE SAW THIS PROBLEM COMING FROM WHEN THE MOPAR WAS PASSED. WE TAILORED, NARROWLY TAILORED A EMITTING PLANTS THAT COULD ACCOMMODATE, WE WENT THROUGH A STAKEHOLDER PROCESSE ISO, NEPOOL SUPPORTED, IT WAS PART OF A COMPROMISE DEAL, STILL WILL ACCOMMODATE STATE POLICIES INTO COMPETITIVE MARKETS. WE CAN READ ALL THE PLEADINGS WHY WE THINK IT DOESN'T HARM THE MARKET OVER THE LONG TERM, ET CETERA. BUT I DID WANT TO POINT OUT THAT WAS AN AGREEDGROUP STAKEHOLDER EFFORT WHICH SPEAKS WELL TO THE STAKEHOLDER EFFORT. WE'VE BEEN ABLE TO RECENTLY WORKING TO COME TO AN AGREEMENT ON NEW DEMAND CURVE SO TALK ABOUT THE STAKEHOLDER PROCESS, I THINK AT TIMES IT CAN DRIVE YOU CRAZY AND GET YOU FRUSTRATED AND GET YOU MAD AT THE FOLKS ON THE OTHER SIDE OF THE ROOM BUT GENERALLY IF YOU LOOK AT THE IMAPP PROCESS NEPOOL TOOK THAT ON, SAW THE STATE PROBLEM COMING. WE'VE HAD A LOT OF TALK ABOUT CARBON PRICING. WE HAVE GOTTEN A LOT OF EDUCATION ABOUT DIFFERENT PROPOSALS. ISO NEW ENGLAND LATCHED ON TO ONE OF THOSE. ORIGINALLY PAIRED RETIREMENT FROM FIRST LIGHT, KNOW PART OF THEIR CASPR PROGRAM. SO I THINK THE STAKEHOLDER PROCESS AND ESPECIALLY IMAPP PROCESS HAS GIVEN A LOT OF DISCUSSION AND I KNOW WE AT THE STATES JUST BOTH NESCOE COLLECTIVELY AND INDIVIDUAL STATES HAVE SPENT A LOT OF TIME WITH INDIVIDUAL PARTICIPANTS, IN FACT WE'RE MEETING WITH ROBERT NEXT WEEK TO HEAR MORE ABOUT THE PROGRAM. THIS IS NOT AN EASY ANSWER. THIS IS NOT AN EASY PROBLEM. I THINK THAT COLLABORATION IS PROBABLY POSITIVE. SO WHEN I GO TO THE URGENCY I DON'T THINK THE TOWN IS BURNING DOWN AROUND US, RENEWABLE EXEMPTION HAS BEEN IN PLACE FOR THREE OPTIONS NOW. PROCUREMENTS TAKING PLACE HAVE BEEN KNOWN. THREESTATE RFP WAS THREEYEAR PROCESS, TRANSPARENT. PARTICIPANTS COULD SEE PROCUREMENTS AHEAD TIME AND KNEW WHAT THEY COULD BE. THEY TURNED OUT TO BE LOWER. CONNECTICUT PROCUREMENT, THEY WERE A YEARLONGPLUS PROCESS, NOW IN THE CONTRACTING PHASE WHICH IS GOING TO BE ANOTHER YEAR, SO WHEN I HEAR THE TOWN IS BURNING DOWN, IT WAS TAILORED TO THESE PROCUREMENTS HAPPENING NOW AND YET IN THE LAST THREE YEARS WE'VE HAD GOOD RESPONSES TO OUR OPTIONS IN NEW ENGLAND, WE'VE HAD NEW RESOURCES CLEARED, IN EVERY OPTION, WE'RE LONG IN NEW ENGLAND, EVEN WITH THIS RENEWABLE EXEMPTION AND PEOPLE KNOWING THAT THESE PROCUREMENTS WERE COMING UP. WE TAKE A LITTLE BIT OF GRAIN OF SALT WHEN WE HEAR URGENCY. WE DON'T AGREE, THIS IS WHY WE'VE BEEN ACTIVE IN THE IMAPP PROCESS WITH NEW STATE LAWS CHANGING, MASSACHUSETTS. MAYBE BIGGER PROBLEMS COMING THAN WHAT WE ORIGINALLY SAW BUT THE TOWN IS NOT BURNING DOWN AT LEAST FROM OUR PERSPECTIVE. AND THEN AS TO PATH 4, I THINK PATH 4 IS AN EXCELLENT PATH FOR US TO TRY TO GO DOWN. AGAIN, IF YOU LOOK IN OUR APRIL 7th LETTER TO NEPOOL, STATES ARE SUPPORTIVE OF A FORWARD MARKET DESIGN. WE RECOGNIZE IN OUR LETTER AND I'LL SAY HERE THE STATES HAVE SOME WORK TO DO, WE'VE GOTTEN SOME GREAT INFORMATION FROM THE IMAPP PROCESS, WE'RE TAKING IT BACK, DIGESTING IT, WE UNDERSTAND. WE NEED TO SAY WHAT DO WE WANT TO BUY AND WHEN DO WE THINK WE WANT TO BUY IT. THAT THE WILL HELP IN THE FORWARD MARKET DESIGN. AS FAR AS PRINCIPLES AND GOALS WE PUT A GOAL POST EVENT EIGHT MONTHS AGO, GO ONLINE ON THE NESCOE OR IMAPP WEBSITE TO SET UP PRINCIPLES AND PRIORITIES WE THOUGHT FORWARD MARKET DESIGN SHOULD BE SHAPED AROUND. I THINK THAT'S MY RESPONSE THAT I'VE HEARD THE LAST DAY.

>> THANK YOU. WE'LL STAY IN NEW ENGLAND, MATT.

>> GOOD AFTERNOON. LET ME SECOND MY PANELISTS THANKS TO THE COMMISSION AND COMMISSION STAFF FOR SPENDING TWO IT FEELS TO ME VERY LONG DAYS WITH I'M SURE A LOT OF ATTENTION TO NUANCE AND CODE WITH WHICH WE SPEAK AMONGST EACH OTHER CERTAINLY VERY THOUGHTFUL QUESTIONS FROM ALL OF YOU TO UNPACK IT ALL ARE VERY HELPFUL. DR. QUINN, I'D LIKE TO MAKE A FEW POINTS RESPONDING TO YOUR REQUEST ABOUT TAKEAWAY TIMING AND WHAT CAN FERC DO TO HELP, BROADER THEMES I'VE HEARD. FIRST AS JEFF BENTZ ALLUDED WE'VE BEEN AT THIS STUFF IN NEW ENGLAND FOR SOME TIME. HOPE THAT COMES THROUGH CLEARLY IN THE CONVERSATION LAST DAY AND A HALF. WE STARTED THE FORMAL INTEGRATING MARKETINGS IN PUBLIC POLICY PROCESS NEARLY A YEAR AGO NOW. THAT HAS DEVELOPED MANY PROPOSALS WHICH WE CHARACTERIZE BROADLY AS FALLING INTO THE ACHIEVE CATEGORY, THAT'S OUR TERM. OR PATH 4 IN THE NEW FERC WORD WE HAVE TO LEARN. OTHERS FALL IN THE ACCOMMODATE, OR HARMONIZE. IT'S PATH 2 IN THE FERC LEXICON. FROM OUR EXPERIENCE IN NEW ENGLAND AND I THINK I WOULD SUGGEST AS CONSISTENT WITH WHAT YOU HEARD IN AT LEAST THE NEW ENGLAND PANEL YESTERDAY AND MANY COMMENTS IN THIS MORNING'S PANEL, THERE IS A COMMON VIEW, THOUGH CAVEATED IS NOT A CONSENSUS, BUT IT'S IMPORTANT TO MOVE FORWARD DILIGENTLY ON AN ACCOMMODATING TRACK THAT MAKES SENSE THAT IS SUSTAINABLE THAT HAS WELL DESIGN. THE HOUSE IS NOT BURNING DOWN SO FAST THAT WE MUST MAKE AN EXOGENT CIRCUMSTANCE IN A WEEK. YOU WILL NOT BE TWEAKING AGAIN AND AGAIN IS WORTH SIX TO NINE MONTHS OF OUR TIME. I THINK THERE'S ALSO RATHER I THINK THERE'S NOT A COMMON VIEW ON WHETHER OR HOW ISO SHOULD TAKE RESPONSIBILITY OR HAVE AN ACTIVE ROLE IN IMPLEMENTING ACHIEVE TYPE OBJECTIVES WHERE STATES ARTICULATE SPECIFIC OBJECTIVES, LOOK TO ISO TO IMPLEMENT THEM. NOT TO SAY THAT CAN'T BE DONE BUT RATHER THERE'S REALLY NOT YET A CLEAR STATEMENT ON WHAT THE SPECIFIC OBJECTIVES WOULD BE, WHAT SHOULD BE ACHIEVED AND HOW SO. THAT'S SOMETHING THAT WILL TAKE A MUCH LONGER PERIOD OF TIME TO REACH SOME SORT OF CONSENSUS IN THE REGION. SECOND POINT IN TERMS OF WHAT THE ISO THINKS IS MOST PRODUCTIVE AS NEXT STEPS, HERE I MEAN TO POINT OUT THAT BEING CONCRETE MATTERS, BECAUSE IN MARKET DESIGN THE DETAILS MATTER. WE HAVE LISTENED CAREFULLY TO THE PROPOSAL AND AS JEFF ALLUDED TO TOOK WHAT WE THOUGHT WERE THE MOST PROMISING IDEAS AND DEVELOPED A 35PAGE ROUGHLY PAPER GOING THROUGH MANY DETAILS AND WAS PLEASED TO BE ABLE TO PUT IN LOTS OF DIFFERENT SUPPLY AND DEMAND DIAGRAMS FOR EVERYONE WHO IS INTERESTED. RATHER THAN GO THROUGH THE DETAILS, ON THE WEB I'LL NOTE WE THINK THIS IS A PRODUCTIVE WAY TO COORDINATE CAPACITY AUCTIONS WITH SUBSIDIZED POLICY RESOURCES. WE THINK IT'S BASED ON SOUND PRINCIPLES. IT'S SUSTAINABLE, FUNDAMENTALS MARKET CHANGE OVER TIME, SOLVE TWO CORE PROBLEMS THAT CAME THROUGH ALL THE DISCUSSIONS IN THE LAST TWO DAYS, ONE IS POSSIBILITY IF YOU DO NOTHING YOU CAN GREATLY DEPRESS CAPACITY PRICES IMPAIRING MARKETS FUNCTION IF WE DO NOTHING IN NEW ENGLAND THE WAY THE MOPAR WORKS WE'RE QUICKLY ON A PATH TO HAVING FAR MORE CAPACITY THAN WE NEED TO RELIABLY STRAND POINT, IN THE WORDS OF THE ECONOMISTS, NOT IDEAL, TO SAY THE LEAST. I HAVE TO TAKE JUST A MOMENT HERE SINCE THIS PANEL WAS TITLED OPPORTUNITIES FOR RESPONSES TO NOTE TWO THINGS THAT CAME UP EARLIER NOT QUITE CORRECT, A COMMENT WHICH I NOTED FROM CLIFF HAMAL HE WAS CONCERNED THESE TYPES OF IDEAS EMERGING IN NEW ENGLAND MIGHT COST CONSUMERS MORE, PAY IT THREE TIMES WAS THE PHRASE USED. THAT'S NOT A CORRECT READING OF THE ISO OR STAKEHOLDER  STATES ARE LOOKING TO DO. IT'S TO QUITE DO THE OPPOSITE. STATUS QUO IS WE WILL SEND UP BUYING WHAT WE NEED TO MAINTAIN RESOURCE ADEQUACY FOR CAPACITY MARKET AND MOST OF THE RESOURCES THE STATES WANT TO BRING ON WILL NOT CLEAR BECAUSE OF MOPAR, COSTS ARE TOO HIGH, THOSE WILL GET IN ADDITION BUT PAID THROUGH THE STATES, THOSE ARE EXPENSIVE BY DEFINITION. IF WE DON'T FIND A WAY TO TAKE STATE RESOURCES, STATE SPONSORED RESOURCES, MANY WILL HAVE HIGH CAPACITY, GIVE THEM CREDIT FOR THAT, THE PROCESS WILL COST CONSUMERS TOO MUCH. WE'RE TRYING TO OF COURSE NOT HAVE SUCH A COSTLY SOLUTION. AND INEFFICIENT. IT WILL TAKE TIME FOR THE REGION TO UNDERSTAND THESE DETAILS AND IMPLICATIONS AND WANT TO SET THAT STRAIGHT. THERE WAS A COMMENT THAT DOESN'T THIS SET THE REGION OF NEW ENGLAND ON A PATH TOWARDS THE STATES REALLY TAKING ON RESOURCE ADEQUACY AND I HOPE WHAT CAME THROUGH YESTERDAY WE DON'T PERCEIVE THAT TO BE THE CASE IN NEW ENGLAND. TO PUT NUMBERS ON A COMMENT JEFF BENTZ ALLUDED TO THE SUM OF THE PROCUREMENTS PENDING UNDER THE MASSACHUSETTS LEGISLATION THAT MAY PROCURE HYDRO, NGO CONOR NOTED YESTERDAY, MIGHT ADD UP TO AS MUCH AS MAYBE 6% OF TOTAL CAPACITY ON A CAPACITY VALUE. NOTING THINGS LIKE WIND HAVE LOW CAPACITY, 6%, 94% IS STUFF NOT STATE SUBSIDIZED DIRECTLY. WE DO NOT SEE THIS AS LIKE HONOR A SLIPPERY SLOPE. MAYBE AFTER 2050, BY THEN THERE WILL BE A NEW COMMISSION, SOLVE THAT PROBLEM. LAST LET ME NOTE ON TIMINGI, THIS IS BACK TO THE GREAT COMMUNICATOR'S ADMONITION, BE CAREFUL WHEN YOU ASK THE GOVERNMENT TO HELP, I'LL DIFFER FROM WHAT YOU HEARD FROM THE LAST PANEL YESTERDAY AND COMMENTS FROM SOME LEADERSHIP IN OTHER REGIONS. THIS SYNCHRONIZES WITH WHAT YOU HEARD FROM JEFF. IN NEW ENGLAND WE HAVE A VERY ACTIVE STAKEHOLDER PROCESS DEEPLY ENGAGED ON THESE ISSUES. WE HAVE ARTICULATED TO STAKEHOLDERS TIMING THAT WE THINK IS APPROPRIATE. WE HAVE INDICATED, TO BRING SOMETHING TO YOU BY LATE THIS YEAR OR EARLY THE NEXT. WE HAVE INDICATED THE DRIVERS IS DRIVEN BY THE TIMING OF THE POTENTIAL PROCUREMENTS IN THE REGION, YOU MAY NOT CALL THAT AN ECONOMIC FUNDAMENTAL, A BIG ECONOMIC EFFECT. I'M POINTING OUT I THINK FOR NEW ENGLAND AS A REGION HAVING A FERC DEADLINE TO DELIVER SOMETHING BY TANGIBLE DATE IS NOT PRODUCTIVE FOR OUR REGION. THE STAKEHOLDER PROCESS IS ON A GOOD COURSE, ACTIVELY ENGAGED IN ISSUES. AT BEST SUCH A DEADLINE WOULD NOT BE HELPFUL BECAUSE YOU'RE GOING TO GET US SOMETHING, THE GOVERNANCE PROCESS IN NEW ENGLAND IS NOT THE SAME AS OTHER REGIONS. IN ADDITION IF THE FUNDAMENTALS WERE TO CHANGE, THE REGION MAY WANT THE FLEXIBILITY TO ADAPT THE TIMING ACCORDINGLY IN AN ARTIFICIAL DEADLINE TO BRING A FILING BY A SPECIFIC DATE MAY NOT GIVE US THE FLEXIBILITIES TO DEAL WITH CHANGES IN THE TIMING OF SOME OF THOSE POTENTIAL PROCUREMENTS. THAT MAY MAKE THE REGION WANT TO TAKE MORE TIME. THIS IS TO HIGHLIGHT A BROAD THEME, THE BEST STEPS FORWARD IN THE NEAR TERM MAY DIFFER SLIGHTLY ACROSS REGIONS. WE'RE ALL IN SLIGHTLY DIFFERENT PLACES IN NEW ENGLAND, THE PRIMARY ISSUE WE'RE CONCERNED WITH IS OUT OF MARKET PAYMENTS TO NEW RESOURCES, VERY DIFFERENT ISSUE THAN THE ISSUE UP FRONT AND CENTER IN ILLINOIS. ACCORDINGLY THE NEAR TERM SOLUTIONS MAY BE SOMEWHAT DIFFERENT IN THE TWO REGIONS. THE REGION IS NEW ENGLAND IS ON A GOOD PATH TO RESOLUTION, A GREAT DEAL OF WORK TO BE DONE AHEAD BUT WE LOOK FORWARD TO THE OPPORTUNITY AND TO THE COMMISSION'S SUPPORT AND WHAT I LOOK FORWARD TO MOSTLY WHEN WE BRING YOU TO A FILING AND YOU HAVE A QUORUM, AND YOU HAVE BY MY ESTIMATION PROBABLY A BACKLOG BY THEN OF SOME 800 TO 1000 CASES NEEDING APPROVAL, THAT YOU WILL HUMBLY VIEW  JUST DOING THE MATH. YOU WILL HUMBLY VIEW BASED ON URGENCY OF EVERYTHING THAT CAME UP ON THE PROPOSAL WE BRING TO YOU SHOULD BE PLACED  (INAUDIBLE). [LAUGHTER]

>> I GUESS WE'LL MOVE OVER TO PJM. DO YOU WANT TO GO FIRST?

>> SURE. THANKS, ARNIE. THANK YOU CHAIRMAN LAFLEUR, COMMISSIONER HONORABLE AND THE STAFF FOR HAVING US THESE TWO DAYS. I AGREE WITH THE OTHER PANELISTS IT'S BEEN A REALLY, REALLY FANTASTIC SESSION, LOTS OF GREAT INFORMATION AND DIALOGUE AND IDEAS SO KUDOS ON PUTTING THIS TOGETHER AND LEADING IT. I FIGURE PROBABLY A REALLY GOOD WAY TO REPEAT SOMETHING BACK THE CHAIRMAN SAID EARLIER. SO GIVING WHAT WE'RE HERE TO EXAMINE, INTERACTION OF STATE PUBLIC POLICY AND WHOLESALE MARKETS, I WOULD AGREE WHOLEHEARTEDLY IT DOESN'T MAKE SENSE TO TRY TO JUDGE OR EVALUATE THE LEGITIMACY OF STATE ACTIONS IN ANY WAY, SHAPE OR FORM. SECOND BEST WAY TO START YOUR COMMENTS, REPEAT SOMETHING YOUR CEO SAID. LITIGATION IS NOT A VIABLE STRATEGY. SO FIGHTING THESE THINGS AS THEY COME UP WE DON'T BELIEVE IS A GOOD LONGTERM POSITION FOR US TO BE IN. STATES HAVE THE RIGHTS TO DO THINGS. AND SOONER OR LATER THAT WAY WILL BE IN A MANNER THAT SURVIVES SCRUTINY UNDER THE FPA, WE NEED TO FIGURE OUT A WAY TO HARMONIZE AND WORK THROUGH THE THINGS WITH OUR STATE, THE POSITION WE FIND OURSELVES IN. I THINK THIS CAME THROUGH IN THE LAST PANEL, WE REALLY THINK THAT A MULTIFACETED OR MULTIPRONGED APPROACH HERE IS REQUIRED. AND I DON'T THINK THAT THOSE FACETS NEED TO BE ACCOMPLISHED SEQUENTIALLY. THESE THINGS CAN MOVE FORWARD IN PARALLEL. BUT I THINK THERE'S SEVERAL THINGS THAT WE NEED TO DO AND JUST TO TICK THROUGH THEM BRIEFLY, WE NEED TO OFFER OUR STATES A MECHANISM THROUGH WHICH THEIR DESIRE TO PRICE ATTRIBUTES CAN FLOW THROUGH THE MARKET. AND WE NEED TO DO THAT IN A WAY I THINK WHERE IT'S POSSIBLE FOR NOT ALL OF OUR STATES IN THE ENTIRE FOOTPRINT, NOT ALL OUR JURISDICTIONS, NECESSARILY NEED TO COME TOGETHER ON THAT, RATHER A WAY TO WORK SUBREGIONALLY. CARBON I THINK IS THE MOST OBVIOUS, POSTER CHILD IF YOU WILL OF THOSE ATTRIBUTES THAT COULD BE PRICED. THERE MAY BE OTHERS POSSIBLE AS WELL, WE HAVEN'T BEEN ABLE TO THINK THROUGH HOW ANY OTHERS WOULD WORK BUT CERTAINLY WE NEED TO LEAVE POSSIBILITY OPEN. EARLIER TODAY WE ACTUALLY POSTED ON THE WEBSITE A BRIEF DOCUMENT, INTENDED TO GET THAT CONVERSATION STARTED. AND WE SINCERELY HOPE AT LEAST SOME OF OUR STATES OR JURISDICTIONS WILL COME TO US AND BE WILLING TO AGAIN ENGAGE IN THAT DISCUSSION HOW THAT COULD ACTUALLY BE DONE. THE SECOND THING I HEARD FAIRLY DIRECTLY DURING THE LAST TWO DAYS AND MATT REINFORCED FOR YEN AS WELL IS WE NEED TO DESIGN A MECHANISM BY WHICH WE REQUEST HARMONIZE THE STATE ACTIONS WITH OPERATION OF IN PARTICULAR CAPACITY MARKETS. AND THAT NEEDS TO BE DONE IN A WAY THAT DOES NOT REQUIRE LOAD TO PAY TWICE FOR CAPACITY, AND ALSO MAINTAINS ESTABLISHMENT OF COMPETITIVE PRICING THAT ARE SO CRITICAL TO THESE MARKETS BEING ABLE TO PERFORM THEIR LONGTERM FUNCTION. WHICH IS TO DRIVER RELIABLE AND EFFICIENT OPERATION AND ENTRY AND EXIT OF RESOURCES. I THINK WE CAN DO THAT. WE POSTED ANOTHER DOCUMENT EARLIER TODAY THAT ACTUALLY IS AN UPDATE OF AN EARLIER ONE WHICH WAS A STRAW SORT OF IDEA OR PROPOSAL PUT FORTH ALONG SIMILAR LINES TO PROPOSED IN NEW ENGLAND, A TWOTIER OR REPRISING APPROACH TO CAPACITY MARKET INTENDED AGAIN TO ACHIEVE THOSE GOALS. I CERTAINLY HEARD CONCERN ON THE LAST PANEL THAT THE GENIUS PANEL, IF YOU WILL, ABOUT HEADING TOO FAR DOWN THAT PATH AND THE TRADEOFFS, IF YOU WILL, AND I WOULD CERTAINLY CONCEDE ANY KIND OF APPROACH ALONG THOSE LINES IS INTENDED TO COUNTERACT AN EXTERNAL INTERVENTION INTO THE MARKETS AND I THINK THEREFORE ALMOST BY DEFINITION WILL HAVE TRADEOFFS, WILL HAVE WARTS ON THEM BUT THAT DOESN'T MEAN IT'S NOT SOMETHING WE SHOULD EVALUATE AND PURSUE AND SO I THINK THAT'S A SECOND THING WE NEED TO DO. AND AS WAS ALSO NOTED ON YOUR LAST PANEL WE ALREADY HAVE A STAKEHOLDER PROCESS ENGAGED AT THE BEGINNING OF WALKING ON THAT PATH AND I'LL GET BACK TO THAT LATER. I WOULD ALSO POINT OUT THAT ANY KIND OF PROPOSAL LIKE THAT DOES REQUIRE DEFINITION OF WHAT AMOUNTS TO A SUBSIDY, WHAT AMOUNTS TO AN EXTERNAL INTERVENTION THAT NEEDS TO BE ADDRESSED. WE DON'T QUITE HAVE SOMETHING WE CAN PUT OUT PUBLICLY YET BUT WE'RE SOMEWHAT CLOSE. AND WE WILL BE RELEASING SOMEWHAT IN THE NEAR FUTURE ANYWAY OUR THOUGHTS ON HOW WE MIGHT BE ABLE TO MAKE THAT DETERMINATION AGAIN WITH THE IDEA OF INITIATING THAT DISCUSSION, REALLY CONTINUING IT AGAIN THROUGH THE STAKEHOLDER PROCESS WE'RE ALREADY HAVE UNDERWAY IN PJM. THAT'S THE CAPACITY MARKET SIDE. THE FIRST ONE I TOUCHED ON WITH THE PRICING ATTRIBUTES AGAIN IS AN ENERGY MARKET ISSUE, WE NEED TO REALIZE WHILE WE START WITH CAPACITY MARKET I THINK THE IMPLICATIONS ARE MORE SIGNIFICANT FOR ENERGY MARKETINGS THAN FOR THE CAPACITY MARKETS SO I NEED TO COME BACK THERE BECAUSE I THINK THE THIRD THING THAT WE NEED TO DO, THIS IS PROBABLY WHERE WE COULD USE COMMISSION GUIDANCE AND HELP THE MOST IS WE NEED TO IMPLEMENT ENERGY MARKET PRICING REFORM. I THINK I'D LIKE TO REFER TO IT AS YOUR FATHER'S ENERGY MARKET DESIGN BUT I WAS THERE THE FIRST TIME SO I CAN'T DO THAT. THERE ARE SOME COMPONENTS THAT NEED TO BE LOOKED AT. THE NEGATIVE OFFERS ANDY MENTIONED ON HIS PANEL, THE ELIGIBILITY OF RESOURCES TO SET ENERGY MARKET PRICES, EXPANSION OF WHAT WAS IN THE COMMISSION NOPR. WE INCLUDE THIS IN NOPR COMMENTS, IT'S IMPERATIVE IS WHAT GOES AWRONG IS A MECHANISM TO PROVIDE NECESSARY INCENTIVES TO FOLLOW ISO DISPATCH IN THE ENERGY MARKET. TO THE EXTENT WE CAN INCREASE INCENTIVES WE'VE SEEN MULTIPLE EXAMPLES OF HOW THEY LEAD TO INNOVATION AND MORE EFFICIENT PROVISION OF THOSE TYPES OF SERVICES. THE LAST ITEM I'LL NOTE BROUGHT UP ON MULTIPLE PANELS, IT BEARS BEING REINFORCED, THIS ONE I THINK IS REALLY INCUMBENT UPON THE RTO AS THE PRIMARY ENTITY RESPONSE FOR ENSURING RELIABLE GRID OPERATION, WE NEED TO WORK RESILIENCE IN THE CONCEPT INTO THE OPERATIONS, TO THE EXTENT WE DO SO IN A WAY THAT FLOWS THROUGH THE MARKETS BUT AGAIN THERE IS OPPORTUNITY FOR COMPETITION TO PROVIDE WHAT'S NECESSARY TO MAINTAIN SYSTEM RESILIENCE AND WE'VE SEEN THE BENEFITS FROM THE STAND POINT OF INNOVATION AND ENTRANCE INTO THE MARKET. THOSE ARE THE THINGS WE NEED TO ADDRESS. LET ME CIRCLE BACK TO STAKEHOLDER PROCESS BECAUSE I DID HEAR DISCUSSION ABOUT STAKEHOLDER PROCESS AND I JOKE AND PARAPHRASE CHURCHILL WITH RESPECT TO THE STAKEHOLDER PROCESS. IT'S THE WORST FORM OF RTO GOVERNANCE WITH THE EXCEPTION OF EVERY OTHER FORM OF RTO GOVERNANCE, IT'S ABSOLUTELY NECESSARY. YES THERE ARE COMPROMISE THAT CAN LEAD TO SUBOPTIMAL APPROACH BUT WITHOUT RESERVATION ALMOST UNIVERSALLY WHAT COMES OUT OF A DETAILED STAKEHOLDER VETTING OF AN ISSUE IS BETTER THAN WHAT WENT INTO IT FROM THE STANDPOINT OF PROPOSAL. STAKEHOLDER PROCESS IS INVALUABLE TO WHAT WE DO AS ISO AND RTOS. I WILL AGREE WITH MY COLLEAGUE TO MY LEFT DEADLINES AND GUIDANCE FROM THE COMMISSION ARE ALWAYS HELPFUL WITH RESPECT TO EFFICIENCY OF HOW THAT STAKEHOLDER PROCESS WORKS IN GETTING THROUGH ISSUES IN A TIMELY MANNER. I HOPE THAT ANSWERS YOUR QUESTION AS FAR AS WHAT WOULD BE HELPFUL AND WHERE I THINK WE NEED TO GO. AGAIN, THANK YOU VERY MUCH FOR THE OPPORTUNITY TO BE HERE. I'LL WIND UP THERE.

>> THANK YOU. VICE CHAIR, THE LAST WORD.

>> WELL, THANK YOU. THAT PUTS A HEAVY BURDEN. I DID WANT TO AGAIN AS EVERYONE MENTIONED HERE, GREAT GRATITUDE FOR THIS SESSION, THE LAST TWO DAYS, HUGE DEDICATION FROM ALL OF YOU. HOW MUCH HAS GONE INTO THE FORETHOUGHT, THE QUESTIONS BEING ASKED, DIGESTION OF MATERIAL, I SPEAK FOR EVERYONE IN THE ROOM, ENORMOUS GRATITUDE. I MAY AS WELL QUOTE CHURCHILL SINCE IT CAME UP, BUT MY FAVORITE QUOTE, IT'S NOT THE END NOR THE BEGINNING OF THE END, BUT THE END OF THE BEGINNING. MAYBE THAT'S NOT RELEVANT BUT IT'S ENTERTAINING TO SAY. [LAUGHTER] AND I NOTE MY THIRD MAYBE NONSENSICAL RATIONALE HERE IS WISER FOLKS THAN ME HAVE SAID A LOT OF WORDS TODAY. I DON'T WANT TO KEEP ANYBODY FROM A BEAUTIFUL SPRING AFTERNOON BY BEING REPETITIVE. THAT SAID, WHAT I'VE HEARD HERE I COULD NOT DISAGREE WITH. A BROAD CONSENSUS ON ISSUES BEFORE US, CHALLENGES BEFORE US, URGENCY POINTS, MAYBE SOME SLIGHT DIFFERENCES OF OPINION BUT GENERAL CONSENSUS THERE'S A STARK NEED FOR ADDRESSING THE QUESTIONS HERE. HETEROGENEITY POINT THAT NOT ONLY BETWEEN ISOs, RESTRUCTURED, REGULATED, WHETHER IT'S FERC OR ITOs, OR ISOs AND WHAT'S HAPPENING WITH STATES, GREAT NEED FOR INTERNALIZING THE HETEROGENEITY EXISTS AND LIKELY TO EXIST IN THE SOLUTIONS COME UP WITH. I DO HAVE CONCERNS ABOUT THE ACCOMMODATION ROUTES. IT ALWAYS SEEMS A BIT LIKE THE SQUARE PEG IN THE ROUND HOLE, IT CAME UP YESTERDAY, THAT SAID, WE CAN SPILL THE MILK, THE COW IS OUT OF THE BARN, WHATEVER METAPHOR YOU WANT. BUT AS SAID IN THE LAST PANEL WE'RE LIVING IN THE LAND OF SECOND BEST. AND PERHAPS THAT'S GOOD TO KEEP IN MIND. WE'RE NOT GOING TO BE LOOKING FOR THE PERFECT. A GOOD FRIEND OF MINE IN GRADUATE SCHOOL SAID DON'T LET THE PERFECT GET IN THE WAY OF THE GOOD. CAPACITY MARKET, NEED TO BE ATTENTIVE TO TOOLS AND MECHANISMS, FERC CAN BE HELPFUL WITH IN THIS COLLABORATIVE PROCESS ENSURING THAT AS ALL COMPLEXITY COMES IN FROM SO MANY DIRECTIONS, WE'RE ATTENTIVE TO HOW WE MITIGATE THAT AND COLLABORATE INNOVATIVE AND SUPPORTIVE WAYS, PENNSYLVANIA IS NOT FACING THE ISSUES THAT NEW ENGLAND AND NEW YORK ARE FACING IN MANY WAYS. YOU'RE AHEAD OF US. BUT I DON'T BEGRUDGE YOU THE EFFORTS TO MAKE THOSE WORK WITHIN THE COMPETITIVE SETTING. I MEANT TO NOTE NUMBER ONE TO MYSELF, TO NOTE THE VALUE OF THE MARKET. THAT THIS IS AN EXTRAORDINARY VALUABLE PIECE AND WE WOULD BE REMISS FIVE YEARS FROM NOW, WE MAY BE REGRETFUL OF RESOURCES THAT HAVE LEFT THE MARKET PERHAPS BUT I THINK WE WOULD BE ULTIMATELY REGRETFUL IF WE LOSE SIGHT OF THE VALUE THAT MARKET BRINGS TO US. THE ONLY OTHER PART I MAKE, STU MENTIONED, IT'S BEEN NOTED SEVERAL TIMES, AGNOSTIC TO LEGITIMACY OR ILLLEGITIMACY. I CAME IN TWO DAYS AGO THINKING I COULD THREAD THAT NEEDLE BETWEEN THOSE TWO BUT I THINK THAT'S AN IMPOSSIBLEITIY AND NOT A NECESSITY. AS LONG AS WE'RE ATTENTIVE TO MITIGATING ATTEMPTS OR LITIGATING CHALLENGES THAT CANNOT BE MITIGATED, I DON'T SEE ANY VALUE IN BEING MORALISTIC IN WHAT LEGISLATURES BRING BEFORE US IN ANY JURISDICTIONS. AND FINALLY, PERHAPS THE CARBON QUESTION, THAT'S GOING TO BE CHALLENGING FOR ANY OF US IN ANY SETTINGS AND THE WORK WE CAN DO COLLABORATIVELY TO SEE IF EMBEDDING CARBON PRICE IN THE ENERGY MARKET CAN MEDIATE A LOT OF THE CONCERNS WE HAVE IN OUR INDIVIDUAL CASES TO ME WOULD BE FRUITFUL WORK AHEAD OF US. WITH THAT I'LL CLOSE. THANK YOU.

>> THANK YOU VERY MUCH. COMMISSIONERS, DO YOU HAVE ANY COMMENTS?

>> THANK YOU. I'LL SEE IF I CAN READ THESE NOTES WHICH I'VE BEEN SCRIBBLING ON FOR THE LAST COUPLE HOURS. I WANT TO START BY THANKING THE TEAM OF FOLKS AT FERC WHO PULLED TOGETHER THE LAST TWO DAYS. CERTAINLY ARNIE, JAMIE, DAVID AND AMER, BUT EVERYBODY ON THE LARGE TEAM WHO WORKED ON THIS FOR THE LAST COUPLE MONTHS OR HOWEVER LONG TO MAKE IT VALUABLE AND PARTICULARLY THE FOLKS IN THE OFFICE OF EXTERNAL AFFAIRS AND ALL THE FOLKS IN THE OFFICE OF THE EXECUTIVE DIRECTOR WHO WORKED ON LOGISTICS AND SECURITY AND THANK MY TEAM FOR LEADING THE EFFORT. I WANT TO THANK THE PANELISTS WHO CAME ON A SUNDAY AND HUNG IN WITH US FOR THE LAST COUPLE DAYS. AND ALL THE FOLKS WHO HAVE BEEN PARTICIPATING IN THE ROOM, IN THE OVERFLOW ROOMS, OR WATCHING ONLINE FOR YOUR INTEREST IN THE TOPIC. WE REALLY APPRECIATE THE LEVEL OF INTEREST WE HAD AND HOW ONEST AND STRAIGHTFORWARD EVERYBODY WAS WHICH I THINK MADE IT A VERY GOOD DISCUSSION. ESPECIALLY I APPRECIATE HOW MANY STATE COLLEAGUES CAME. YOU CAN'T HAVE A DISCUSSION OF STATE POLICIES WITHOUT STATES, THAT WOULD HAVE MADE IT USELESS. I ALSO WANT TO THANK COLETTE AND HER TEAM FOR ALL YOUR HELP, ALL YOU CONTRIBUTED THE LAST COUPLE DAYS LEADING THIS AND I KNOW THIS ISN'T GOODBYE, I HOPE IT'S NOT GOODBYE, BUT I'M DEEPLY APPRECIATIVE OF THE OPPORTUNITY TO WORK WITH YOU NOT JUST THE LAST TWO DAYS BUT THE LAST TWO YEARS. SO WHAT I THOUGHT I WOULD TRY TO DO IS REFLECT BACK WHAT I THOUGHT I HEARD. JUST LIKE YOU ALL DID. AND SOME OF THE LESSONS I THOUGHT I LEARNED. SO THE FIRST THING WE DEFINITELY THOUGHT IS THAT THERE'S A COMMITMENT ON THE PART OF VERY MANY PEOPLE WHO ARE ON ALL SIDES OF THIS ISSUE TO GIVING YOU THE CONCENTRATED THOUGHT AND ATTENTION. NOBODY POOH POOHED AS AN ISSUE AND I THINK THAT'S VERY IMPORTANT. DEFINITELY HEARD LOUD AND CLEAR DIFFERENT REGIONS ARE IN DIFFERENT PLACES FOR VARIOUS REASONS BUT THEY ARE ALL COMMITTED TO IT FOR THEIR OWN UNIQUE REASONS. I WANT TO SAY THAT I DON'T WANT TO SPEND THE NEXT 2 1/2 YEARS OF MY TERM DEFENDING MY COMMENT ON THE STAKEHOLDER PROCESS. I VALUE THE STAKEHOLDER PROCESS. BUT I DID  I THINK THINGS LIKE THIS ARE AN OPPORTUNITY TO ASK A QUESTION AND WHERE THAT CAME UP PUTS A HEAVY BURDEN ON US, WHATEVER GENIUS SAID IT'S GOOD AS LONG AS YOU CORRECT WHAT COMES UP. I'LL PUT ON MY 20/20 PERFECT VISION AND CORRECT THAT. WE HAVE OUR PROCESS ON THE FLOOR WHEN WE HAVE OTHER COMMISSIONERS. IN TERMS OF THE THREE DOORS THAT I STARTED WITH, WE'LL GO BACKWARDS ORDER, THIRD DOOR WAS REREGULATION, I THINK THE TWO MOST SCARY  THE MOST SCARY WORD OVER THE WHOLE DAY WAS UNRESTRUCTURING, WHAT A THOUGHT. BUT NOBODY SAID THEY WANTED REREGULATION OR TAKING BACK OF RESOURCE ADEQUACY. I WOULD SAY NEW YORK WITH IT'S ONE STATE ISO CAME THE CLOSEST SAYING IT DEPENDS. BUT THERE DOES SEEM TO BE A COMMITMENT TO CONTINUE TO USE THE WHOLESALE MARKETS FOR AT LEAST A PIECE OF RESOURCE PROCUREMENT. IN TERMS OF THE NUMBER TWO DOOR, LITIGATION, MUCH AS NOBODY'S FAVORITE STRATEGY, LITIGATION IS HAPPENING. IT WILL BE DECIDED INCLUDING LITIGATION BEFORE THE COMMISSION IS A PART OF THIS. I JUST DON'T THINK THAT WILL LEAVE US WITH SOME KIND OF LIKE, OH, EVERYTHING'S FINE NOW. IT'S ALL OVER. THAT'S JUST A STEP ON THE PATH. SO THAT BRINGS US TO A DESIGN SOLUTION. AND SO STARTING WITH ISO NEW ENGLAND, AS I KNEW COMING IN AND AS WAS CLEAR OVER THE LAST TWO DAYS, BECAUSE THEY HAVE BEEN AS THE STAKEHOLDER PROCESS SINCE LAST SUMMER ISO NEW ENGLAND IS THE FARTHEST ALONG AND WITH THE ISO NEW ENGLAND PROPOSAL, BECAUSE THE SITUATION IN ISO NEW ENGLAND, THE PRIMARY PROBLEM YOU SEEM TO BE SOLVING IS THE STATE'S DESIRE TO BUY THEIR OWN NEW RESOURCES, THAT MAKES THE ACCOMMODATE OR HARMONIZE SOLUTION YOU PUT FORWARD THAT KIND OF FEATHERS THAT IN. ADAPTED TO NEW RESOURCES. TO THE EXTENT PEOPLE COME AND WANT TO CHOOSE EXISTING RESOURCES TO PAY DIFFERENTLY THAN IN THE MARKET, THAT WOULD GIVE A DIFFERENT PROBLEM BUT THAT HAS NOT YET HAPPENED. AND I MUST HAVE SAID 100 TIMES IN THE LAST SEVERAL MONTHS, NEW ENGLAND IS NOT EX PARTE, I CAN TALK ABOUT NEW ENGLAND AND I'M HAPPY FOR THAT. ISO NEW YORK WE HEARD PRELIMINARY A LOT FROM BRAD JONES TALKING ABOUT IT IN TERMS OF WHERE YOU ARE IN THE PROCESS BUT I HAVE A FAIR DEGREE OF CONFIDENCE THAT A ONE STATE ISO AND A STATE CAN WORK OUT POLICY, WE'LL STILL HAVE TO FULFILL OUR RESPONSIBILITIES ON THE WHOLESALE MARKET AS THAT GOES FORWARD. IN PJM I THINK I APPRECIATE THE PROPOSALS THAT WERE CIRCULATED LAST NIGHT AND TODAY. I THINK THE PROBLEM IN PJM ARE A LITTLE MORE THORNY. ACCOMMODATION OR HARMONIZATION STRATEGY IF IT INVOLVES REPRICING RESOURCES I DON'T WANT TO DISTANCE MYSELF FROM THE MINIMUM OFFER PRICING RULE. I BELIEVE IT'S AN IMPORTANT PART OF THE MARKET TO MAKE SURE NOT JUST FOR MARKET POWER BUT TO MAKE SURE THAT YOU'RE SETTING A MARKET PRICE THAT REPRESENTS MARKET FUNDAMENTALS. BUT IF WHAT YOU'RE DOING IS REPRICING RESOURCES THAT A STATE REPRICED AND YOU'RE REPRICING IT'S NOT ACCOMMODATING NOR WILL IT LEAD TO HARM ANY. IT MIGHT BE NECESSARY BUT NOT A HARMONIOUS SOLUTION. WHICH MEANS I THINK FOR PJM IF THAT'S THE PROBLEM YOU'RE TRYING TO SOLVE, ACHIEVED STRATEGY OF DECIDING WHAT YOU WANT THE MARKET TO BUY IS MORE LIKELY TO RESULT IN A  SOUNDS LIKE MORE LIKELY TO RESULT IN AN ACTUAL RESOLUTION, YOU KNOW, AND THAT IS HARDER I KNOW BUT THAT'S WHAT I HEARD IN THE SESSIONS I HEARD THAT IN TERMS OF WHAT PEOPLE ARE LOOKING FOR IN PJM. LONGER TERMS, WE GOT A CLEAR MESSAGE WE HAVE TO LONG BEYOND CAPACITY MARKET, THAT PRICE FORMATION AS WE DEFINED IT IN OUR DOCKETS, OTHER FORMS OF PRICING REFORM, NEW ANCILLARY PRODUCTS ARE VERY IMPORTANT. I DON'T THINK THE CAPACITY MARKET IS GOING TO SOLVE EVERYTHING. I NEVER HAVE. AS DO YOU GET LOW OR ZERO MARGINAL COST GENERATION SOME OF THE NONZERO COST TRADITIONAL RESOURCES CONVENTIONAL RESOURCES ARE GOING TO NEED REVENUES FROM SOMEWHERE AND IT MIGHT BE MORE FROM THE CAPACITY MARKET THAN BEFORE. A HIGHER PERCENTAGE OF THEIR REVENUES. UNLESS WE REALLY DO SOMETHING DIFFERENT WITH RESERVES OR ANCILLARY SERVICES SO I DON'T THINK IT'S LIKE THIS TO GO AWAY WITHOUT FUNDAMENTAL MARKET REDEFINITION. THERE'S A COUPLE WORK STREAMS. AT FERC WHEN WE GET BACK OUR QUORUM, I THINK THERE WILL BE A LOT TO DO. I MEAN WE HEARD FROM SEVERAL PEOPLE, AND MYSELF, THAT FERC HAS A ROLE TO PLAY HERE. EITHER AS A FORCING FUNCTION WITH DEADLINES, RESOLVING THINGS THAT ARE BEFORE US, SUGGESTING CHANGES IN THE MARKET, WHATEVER THAT MAY BE. I'M EXTREMELY AWARE THAT I DON'T SPEAK FOR THE THREE OR MAYBE FOUR NEW COMMISSIONERS WE'RE GOING TO GET. I'M PROBABLY NOT GOING TO BE CHAIRMAN. I GUESS I'M DEFINITELY NOT GOING TO BE CHAIRMAN. AND SO I CERTAINLY DON'T LIGHTLY ASSUME THEY WILL ALL SEE THE WORLD AS I DO. I'M NOT SURE THAT I'LL SEE THE WORLD EXACTLY AS I DO. BUT I KNOW THEY WON'T BECAUSE EVERYONE IS DIFFERENT. I WILL WORK AS HARD AS I CAN WITH OUR STAFF TO FRAME TRANSPARENT OPTIONS SO WHEN THE PEOPLE COME IN AS WITH ALL THE OTHER ISSUES BEFORE THE FERC IT WILL BE LAID BEFORE THEM AS WELL WE CAN. IN THE MEANTIME THOUGH YOU ALL HAVE A QUORUM. AND OUR LACK OF QUORUM SHOULD NOT KEEP THE WORK FROM GOING FORWARD WHERE THESE PROGRAMS ARE REALLY BEING DEVELOPED. THERE'S THINGS WE CAN DO AS INDIVIDUALS TO HELP, I WOULD CERTAINLY PLEDGE MY COMMITMENT TO DO THAT WHILE WE WORK HOWEVER LONG THIS PERIOD IS. AND THANK YOU VERY MUCH.

>> I'LL BE LIMITED BY THE CLOCK. BY FIVE I WILL HAVE SAID EVERYTHING. I WANT TO BEGIN BY THANKING OUR VERY CAPABLE AND VERY EXPERIENCED SENIOR STAFF, YOU CAN SEE IT WASN'T JUST IN THEORY. THEY ABSOLUTELY HAVE LED THIS EFFORT. IT WAS ABSOLUTELY A STAFFLED TECHNICAL CONFERENCE. AS I SHARED WITH YOU IN STAKEHOLDER MEETINGS PRIOR TO THE TECH CONFERENCE, WE'RE IN THE VERY BEST HANDS AND YOU SAW THAT OVER THE LAST TWO DAYS AND I WANT TO COMPLIMENT THEM ALONG WITH  THERE HE IS, AND THE ENTIRE TEAM, WE'VE MET WITH LITERALLY DOZENS OVER MONTHS. I THANK CHERYL AND HER TEAM. WE DID HORSE TRADING WITH SUGGESTIONS TO STREAMLINE AS BEST WE COULD. YOU REALLY COULDN'T IMAGINE HOW MANY OF YOU OFFERED TO PARTICIPATE AND WHO WE WANTED TO PARTICIPATE AND IT WAS ALMOST AN UNWIELDY ISSUE SO I'M VERY PLEASED WITH HOW WELL IT WAS EXECUTEDDED AND THAT WE REALLY DID ACCOMPLISH THE GOALS WE SET OUT TO DO. WE WANTED TO HEAR ABOUT THE STATE OF PLAY IN THE MARKETS IN THE NORTHEAST, WHERE WE'RE HEADED AND WHO TO GET THERE. THANK YOU TO STATE COLLEAGUES AND TO THE ISO STAFF AND LEADERSHIP, AND TO ALL OF YOU WHO WORK IN STAKEHOLDER PROCESSES EACH AND EVERY DAY. I SHOULD ALSO ADD WHEN I WAS STAFF TO THANK MY PERMANENT STAFF, AND THE STAFF AT FERC MORE BROADLY. AND I CAN'T LEAVE OUT MARK REDLINSKI AND THE SECURITY TEAM. I DON'T RECALL THE LAST TIME WE MET FOR TWO WHOLE DAYS, THANK YOU, GENTLEMEN, AND HAD THE LUXURY OF DOING SO. THANK YOU FOR YOUR SERVICE. I WANT TO THANK YOU FOR YOUR CANDOR, AND YOUR COOPERATIVE SPIRIT, EVEN AS WE'VE SEEN DIFFERENCES AMONG YOU, AND GOING FORWARD YOUR COMMITMENT BECAUSE IT'S GOING TO TAKE ALL OF THAT IN ORDER FOR US TO MOVE FORWARD AND TO HELP OUR ENERGY AND CAPACITY MARKETS BECOME WHAT THEY NEED TO BE. AND IT'S VERY CLEAR THAT WE ARE ALL INVESTED IN THAT CAUSE. I DO SEE LIGHT AT THE END OF THE TUNNEL. CERTAINLY IN NEW YORK WITH YOUR WORK, THANK YOU FOR SITTING BACK AT THE TABLE AFTER TWO VERY LONG DAYS. BRAD'S PROPOSAL, I WISH YOU WELL WITH THAT. IT DOES SEEM HOPEFUL. AND ISO NEW ENGLAND WITH YOUR SUBSTITUTION OPTION AND YES EVEN WITH PJM WITH YOUR RECENT PROPOSALS AND YOUR ABILITY TO REALLY HARNESS THE POTENTIAL IN A DIVERSE REGION. I'M GRATEFUL. I WANT TO ASK YOU IN YOUR POST TECHNICAL CONFERENCE COMMENTS ALONG WITH THE DIRECTION YOU'LL GET FROM OUR STAFF TO CONSIDER A COUPLE OF POINTS. I'D LIKE TO HEAR YOUR THOUGHTS ABOUT THESE PATHWAYS, PATHWAY 2, ACCOMMODATE, AND PATHWAY 4, THE ACHIEVE PATHWAY. SOME OF YOU HAVE SAID YOU'RE ON BOARD WITH ONE AND NOT THE OTHER. SOME OF YOU SAID WE CAN DO BOTH. I'D LIKE TO HEAR YOUR THOUGHTS ABOUT THAT. I'D LIKE TO HEAR FROM THE STATES ESPECIALLY AND JEFFREY I WAS PLEASED TO HEAR YOU MENTION YOU'RE GOING TO VISIT WITH ROBERT ABOUT THE CLIPPER CONCEPT. I WANTED TO HIGHLIGHT THAT IN THE RECORD BECAUSE WE'RE VERY RESPECTFUL OF THE STATES, I COME FROM THE STATES, IN UNDERSTANDING THE JURISDICTIONAL BOUNDARIES AND SKEPTICISM ABOUT GIVING FERC THE ABILITY TO SAY GRACE OR BLESS YOUR WORK, BUT I SEE THAT AS A GLIMMER OF HOPE TOO, A WAY TO MOVE FORWARD TO AID AND SOMETHING I'VE HEARD SO MANY OF YOU TALK ABOUT, THE WAY THAT WE CAN INCORPORATE CARBON PRICING AND THE FACT WE REALLY THINK IT'S THE KEY THAT PRACTICALLY IS IT ACHIEVABLE. I LOOK FORWARD TO HEARING FROM YOU WHEN THE TIME IS RIGHT ABOUT YOUR THOUGHTS, STATES, ABOUT FORWARD MARKET CONCEPT. PARDON ME. AND I TOO WOULD LIKE TO HEAR FROM YOU. A NUMBER OF YOU SAID YOU NEED GUIDANCE, EXCEPT FOR ONE OF YOU. I THINK ISO NEW ENGLAND. I MEANING MATT SAID, NO, WE DON'T NEED ANY DEADLINES. WE DON'T NEED YOUR HELP. YOU SAID A NUMBER OF TIMES WHAT IS IT YOU NEED TO HEAR FROM US, AGAIN WE'RE CREATING A RECORD, WHAT IS IT THE GUIDANCE THAT YOU NEED? HOW LONG DO YOU NEED TO ACT? WE HEARD THAT THREE YEARS IS TOO LONG. SO WITH THAT, AND IF I MIGHT TAKE A POINT OF PERSONAL PRIVILEGE TO THANK EACH OF YOU, BEEN AN ENERGY REGULATOR NOW ALMOST TEN YEARS, I'M LONG IN THE TOOTH FOR AN ENERGY REGULATOR BUT I LOVED EVERY MINUTE AND HOPE YOU SENSED I'VE COME EACH AND EVERY DAY TO WORK AS HARD AS I COULD FOR THE WORK WE UNDERTAKE. I THANK CHERYL, A TRUE COLLEAGUE LONG BEFORE I CAME TO FERC, AND HER TEAM, A NUMBER HAVE POPPED IN AND OUT OVER THE YEARS, KURT WHO IS KIND OF ONE OF MY FIRST ADVISORS ALONG WITH JEFF, CHERYL LET ME KIND OF USE THEM UNTIL I STOOD UP MY STAFF. THERE ARE SO MANY.

>> (INAUDIBLE).

>> ARE THEY? THERE ARE SO MANY BEAUTIFUL THINGS THAT YOU DON'T SEE ABOUT THIS AGENCY THAT REALLY LEND TO HOW WONDERFUL IT IS TO BE PART OF THIS PLACE, MORE THAN THE RANKINGS AND SURVEY RESULTS, IT'S THE PEOPLE AND HOW COMMITTED THEY ARE. ON A PERSONAL NOTE I THANK YOU FOR INDULGING ME AND IT'S BEEN AN INCREDIBLE OPPORTUNITY AND I'M NOT GOING ANYWHERE. SO I HOPE TO BE HERE WHEN THE POST TECH CONFERENCE COMMENTS ARE FILED AND THANK YOU AGAIN TO OUR STAFF.

>> TWO OR THREE LOGISTICAL COMMENTS BEFORE WE SAY GOODBYE. AS THE COMMISSIONERS HAVE NOTED, STAFF WILL BE ISSUING A NOTICE REQUESTING POST TECHNICAL CONFERENCE COMMENTS. ALONG THE WAY WE'VE BEEN TALKING ABOUT THE PRETECHNICAL CONFERENCE STATEMENTS. SOME FOLKS HAVE MENTIONED THOSE ARE NOT ALL ENTIRELY ON ELIBRARY BUT SHOULD BE ON THE CALENDAR PAGE. IF YOU HEARD SOMETHING PARTICULARLY INTERESTING AND CAN'T FIND IT START LOOKING AT THE CALENDAR PAGE, THAT WILL GET THROUGH eLIBRARY. FINALLY OUR SECURITY STAFF ASKED THAT I REMIND YOU ALL TO TURN IN YOUR SECURITY BADGE ON THE WAY OUT THE DOOR. THAT HELPS THEM GREATLY AND SO THEY HAVE BEEN A GREAT HELP HERE SO I WOULD ASK YOU COULD BE A GREAT HELP ON THE WAY OUT. WITH THAT I'LL THANK YOU ALL AND CLOSE THE CONFERENCE.