LPPC CEOs Present at the Public Power Community Forum
At the historic Harvard Club of New York City, the chief executives of seventeen of the largest public power utilities in the U.S. gathered in September to discuss their strategic and financial futures. The Large Public Power Council and S&P Global hosted the conference that was filled with leaders from the financial community, Wells Fargo, Goldman Sachs, Citi, etc., plus Public Utilities Fortnightly.
PUF managed to corral chief execs for two roundtables on where their utilities and public power generally are heading. In one of these roundtables, PUF moderated a conversation with Justin Driscoll, Debra Smith, Jay Stowe, and Rich Wallen. They lead the New York Power Authority, Seattle City Light, Jacksonville Electric Authority, and Grant Public Utility District respectively.
In the other roundtable, PUF moderated a conversation with John Di Stasio, Tom Falcone, and Dan Sullivan. Di Stasio leads the Large Public Power Council and before that led Sacramento Municipal Utility District. The latter two gentlemen lead the Long Island Power Authority and Grand River Dam Authority.
LPPC CEOs Roundtable 1
A roundtable with NYPA CEO Justin Driscoll, Seattle City Light CEO Debra Smith, JEA CEO Jay Stowe, Grant PUD CEO Rich Wallen.
PUF's Steve Mitnick: Rich, that was a great panel. Let's start with workforce and labor issues. What was your takeaway?
Rich Wallen: Our vacancy rate today is around three percent. That's traditionally what we've observed.
We don't have a lot of turnover. But we are starting to see some specialty positions becoming more difficult to retain. That's specifically in the enterprise technology cybersecurity front, because being public power, we're having a tough time competing with some of the salaries offered. Also, with the one hundred percent remote work capabilities.
On the bargaining unit, skill craft, apprenticeable craft, we are feeling pressures. How do we continue to manage that through a new contract negotiation with the existing compression we have with first line leadership and managers?
Why come out of the union if I'm going to take a thirty thousand dollar a year pay cut to come into leadership? I'm trying to manage that as we navigate through this with the overall budget impacts and associated downstream effects.
PUF: Debra, you talked about how unionized your utility is, and how contractors can't work unless they're vaccinated. Talk about what you said during that panel, and takeaways from other panelists.
Debra Smith: My most important takeaway from the panel is I'm glad I'm not Jay Stowe dealing with natural gas fuel costs. I'm on the APPA Climate Change Task Force and feel blessed to live in the northwest and be running a utility with hydropower as a baseload resource.
In terms of labor, the way the city vaccine mandate was defined was you can't work on city assets or property unless vaccinated — and the right-of-way is a city asset — so I can't bring in a non-vaccinated contractor. There was a brief period where we were doing rewinds at our boundary facility and I had to send folks home because I had a contractor on site, that had come from across country, mobilized at my facility, and didn't have adequate folks who could sign the attestation.
In the Puget Sound area, what is unique is you have one investor-owned utility, Puget Sound Energy, and then you have Snohomish, Tacoma, and Seattle, all publicly-owned utilities. You have four utilities serving this population-dense area, and Seattle City Light is the only one of those with a vaccine mandate.
On the skilled trades side of the utility, we've seen folks leave because they easily could. In the last part of the presentation, I commented that most of my employees cannot afford to live in Seattle proper, so many employees were driving forty-five minutes or an hour to work. If they can relocate to Snohomish or Tacoma, not need a vaccine, and live closer to home, that's an attractive offer. We've seen a lot of folks do that.
Debra Smith: My most important takeaway from the panel is I'm glad I'm not Jay Stowe dealing with natural gas fuel costs. I'm on the APPA Climate Change Task Force and feel blessed to live in the northwest and be running a utility with hydropower as a baseload resource.
In terms of labor, the way the city vaccine mandate was defined was you can't work on city assets or property unless vaccinated — and the right-of-way is a city asset — so I can't bring in a non-vaccinated contractor. There was a brief period where we were doing rewinds at our boundary facility and I had to send folks home because I had a contractor on site, that had come from across country, mobilized at my facility, and didn't have adequate folks who could sign the attestation.
In the Puget Sound area, what is unique is you have one investor-owned
PUF: Jay, everybody wants to live in Jacksonville, so talk about the labor situation, your workforce, and culture.
Jay Stowe: Right now, we are having success in getting a hands-on workforce. When we were looking for line workers, last year, we had fourteen hundred people come out to the agilities test for twenty-five jobs.
We are having a harder time retaining the technical skills of engineers, accountants, tech services, IT-type pros, and we're figuring out how to do that. About seventy percent of our workforce is unionized and about thirty to thirty-five percent of our workforce is taking advantage of our policy to work from wherever you work best.
We're not requiring people to come back to the office, we're not planning on doing that for people who can work remotely, and we have people working remotely outside of Jacksonville, which is different from a typical and historical public utility.
We've got people supporting us and they're in other states, and that has supported a culture of flexibility. Our culture is stronger than it was a couple of years ago, in part because we've learned from COVID that we can work a bit differently than in the past.
PUF: Justin, how's the culture and workforce at New York Power Authority?
Justin Driscoll: We're in the midst of the largest transformation and rebuild of the transmission system in more than forty years. Our workforce is motivated because they know they're having an impact on our state's decarbonization efforts.
Because we're doing so much work, we've got a significant capital program and it's hard to keep up and spend against it because of some of the supply chain issues. We all have the same workforce issues, so we try to lean on third-party contractors to help us, but it's a challenge to spend our capital program in this environment, particularly given all the work we're planning to do.
PUF: Rich, the word transformer came up a few times during your panel, which is a concern around the country. Talk about supply chain.
Rich Wallen: We've been part of our Design-Build 2 process, which is ten new substations on our system, as well as this Quincy Transmission Expansion Project. A lot of it we staged early and had orders in, but overnight it went from fifty-two-week lead times to one hundred four, if you could get a commitment to a lead time in some instances, especially for larger transformers.
We're looking at how to reanalyze our capital improvement plan and how to stage. How can we best meet customer needs, as well as generate revenue, and rethink how we're implementing some of these projects, and can we partner with some of our larger industrial customers to see how they can help expedite some of those processes?
Because typically we'd get hung up on permitting, it was never a supply chain issue for us. It was always how long is it going to take to engage with stakeholders and move through the permitting process. We're looking for partnerships and opportunities.
I know we have unique strengths to share concerning our distribution and transmission systems. It's crossing that boundary and having conversations with the investor-owned side on spare parts and inventory warehousing, so we don't have all those carrying costs or risk exposure.
PUF: Anybody else having supply chain issues with transformers?
Jay Stowe: Yes. It's a national problem. We have the honor to serve on the Electricity Subsector Coordinating Council, and we have a small group working on this transformer issue with the investor-owned, co-ops, and public power. It is the same problem across all of the trade associations.
Getting large transformers has extended into taking two and a half, three years. They always had long lead times, but not to this extent.
Our problem is at the smaller distribution level, as Jacksonville continues to be one of the top five, six, or seven fastest-growing places in the country. We've got lots of growth needs and have zero 50 kVA pad mount transformers. Those are the workhorses of our system.
We've had a supply that was supposed to come in, then another, and now another. We have eight hundred fifty 50 kVA pad mount transformers on order that we're being told are going to come in November. That's not likely if they don't already have them, so we're getting closer to a bigger problem.
Everything is tight right now. We had the discussion about the possibility of a rail strike. If that happens, it would affect transformers, which are a proxy for all items, such as brackets, parts and components, light duty trucks, heavy duty trucks, and other equipment. All are becoming harder to get.
I'm concerned because at some point we will not be able to turn peoples' utilities on, and that's our job. Our foundational core job is to supply the economic development for our communities, and if we can't supply utilities — for us it's water, wastewater or electric — we have big problems.
Debra Smith: I want to go in a slightly different direction. I am concerned about the lack of alignment between all these dollars we're told are coming our way, and our ability to use them within required timeframes.
I'll say two things about that. It's not the topic of this meeting, but we talk a lot in our industry about the need for additional transmission, so part of our resource adequacy play as a country is increasing the connectivity between the east and west and finding ways to take advantage of geographical diversity with respect to renewable energy.
That requires new transmission. The federal government has done a great job, and the Infrastructure and Investment Jobs Act includes a lot of money for transmission programs.
But on that front, we have not done the work as a country to map out where we most need that transmission, so what's going to happen is utilities will make decisions about what they need. For example, NYPA has a lot of transmission in New York state. You'll decide what you need, Justin, and that may or may not be what's best for the northeast, and the same is going to play out in the northwest and elsewhere, and that worries me.
That's one point of alignment because in some cases, we haven't even done regional transmission planning the way we should have. We haven't done interregional transmission planning or national transmission planning appropriately. We know there is a shortage across the country, maybe approaching forty percent is what I've heard.
The other alignment issue is particularly with IIJA, we have funding streams set by statute to be six-year streams, yet we have supply chain disruptions, and there are requirements to spend those monies in defined chunks before you're eligible for another chunk.
Will we be able to spend at the prescribed pace? Has the federal government looked at whether it needs to modify timing requirements because of supply chain disruptions?
Those are two issues I worry about most, as there is a lack of alignment. Will we be able to stop, pause, and correct?
PUF: Justin, what are some exciting things going on in New York?
Justin Driscoll: In the context of offshore wind, we all saw the incredible prices the offshore land leases went for, so the willingness of the private sector from all over the world to come in and pay significant prices tells you this is going to happen here.
You don't have companies coming from Europe to bid — one was over one billion for their location — that kind of money if there's any questions about whether this is going to happen. In New York we're planning nine gigawatts of offshore wind by 2035.
We'll ultimately have more coming off the New York coast, and New England and New Jersey have offshore wind initiatives, so we're excited. We're trying to figure out the role that NYPA will play.
We have a couple of potential roles. One is transmission upgrades to facilitate the delivery of offshore wind onto Long Island to make sure it can get into the city, and also for grid stability so we can get that power off Long Island to upstate.
The good news is we have a 345-kV underwater cable that goes from Westchester County to Long Island. It can be bidirectional in nature.
We're also partnering with a group of transmission owners called Transco. It's a partnership between transmission owners and we're working together on an Order 1000 solicitation underway in New York to come up with a solution for that problem.
We have six proposals in. We understand that by the end of this year, early next, the New York Independent System Operator, the NYISO, will decide on who to award those projects too, so NYPA may play a role on that onshore piece of offshore wind.
We have energy infrastructure around New York City in favorable locations for interconnection even if we're not involved in the project. We're looking to transition some of our peaker plants into some sort of hybrid storage, and potentially couple that with offshore wind delivery.
Rich Wallen: We're continuing our exploration of the small modular reactors and have decided to move forward with continued evaluation of X-energy and pebble bed technology. It's asking, what does Grant PUD look like fifty years from now? It's all of the above.
For all of the above, we're focused on carbon-free generation, and there doesn't have to be winners and losers. It could be hydrogen, offshore, wind, or traditional renewables, but all can play a part in integrating intermittency, providing firm, dependable capacity.
The good news with the SMR technology that we like so far, is it exhibits a good turn down ratio, meaning we have some integration capabilities, maybe not to ramp rates exactly like hydro but close to hydro, and are able to run these down at a small load to help offset intermittency.
Grant PUD fifty years from now may look completely different, and we don't need to be afraid of that. We need to embrace that way of thinking.
PUF: Jay, what are some great things happening in Jacksonville?
Jay Stowe: The most important is, while we point out all the problems happening in the industry and the pressures we have from the outside, all of us at this conference have the greatest jobs in the world, because we are foundational to the community.
When we do our jobs well, everyone else can do their jobs well, which makes it fun. At JEA, we've got two thousand employees focused on doing the right thing.
Times are positive now at JEA. We've got a culture focused on how we can do the job safely, with integrity and respect, and everything we do is through the lens of those values. People, the employees, and the community, understand we're all aligned.
While there are some hard issues with supply chain, and products might be more expensive, at the end, it's what we do every day. Don't misinterpret the frustrations of high fuel prices or how we are going to get the right integrated resource plan in place. What we are supposed to be doing is figuring out hard things, and we've got great teams of people doing it.
PUF: Debra, what are you excited about at Seattle City Light?
Debra Smith: I'm an accidental employee in this industry. I got my first job in the electric industry at EWEB without knowing anything about the utility or the services they provided.
I do not have what I would call the typical public power views of investor-owned utilities. I do know that if I was running an investor-owned utility I'd make a whole lot more money than I make right now. That's one difference, and I'm proud to work for public power.
That said, ninety-five percent of the employees who work at our utilities would do the same work and have the same commitment to customers and to their community if they worked at an investor-owned utility or any type of public power entity.
Folks who get up in the middle of the night to turn the lights back on, do that regardless of where they work. I'm not convinced it's helpful to have this line in the sand around public versus investor-owned utilities.
I've worked for two municipals and a PUD, and I see the advantages of various governance structures. I have not worked for an investor-owned utility, but I've often said I could have just as easily walked in for an interview at an IOU and things would have gone differently, or they might have gone the same.
What we all have in common is this deep commitment to customers for whom we provide services that people's lives depend upon, so there isn't a lot of room for error. When we have a customer flagged with a life support issue, you don't want to mess that up.
Those are real situations we all deal with, and if we had a group of investor-owned utility CEOs in the room, I bet they'd say they're dealing with the same issues. It is an honor and privilege to work in this industry.
PUF: Think back over the last year of one memorable happening at the utility that you'll take with you for a while, something inspiring or meaningful.
Justin Driscoll: It's the way our workforce has hung in there during an uncertain work environment. Fundamentally, there've been so many stops and starts of going back to the office, working remotely, and somehow, we got all the work done.
It's not one particular thing. Generally, across the enterprise, the commitment of our workforce in these difficult, uncertain, ground-shifting times was most remarkable.
Rich Wallen: We had a recent incident with an employee. His daughter had an asthma attack and ended up going on life support. Unfortunately, his daughter passed away, but just seeing how in the organization where you work, that people truly care.
Seeing how they rallied around him. That's the benefit of a smaller public power organization. I used to work for Dominion, and we had fifteen thousand people, so it's a different feel.
Our mission and vision, it's seeing that in action, people caring about one another, because that transcends onto the job as well.
Jay Stowe: We've been working to rebuild the team in Jacksonville, so during the last year, our leadership has come together and helped to set the beginnings of the course going forward.
Our employees are every day responding to emergencies. Sometimes it's for each other, sometimes for a customer. The support systems by the teams serving water and electricity in Jacksonville and northeast Florida are inspiring.
People don't understand what it takes to keep this system running. It's the idea that we are transporting water, gas and electric, as well as treating wastewater, and doing that every day all around the country as safely as we do, for frankly an inexpensive cost for the value we provide.
Debra Smith: I lost my mother in March of 2020. She didn't die from COVID, but her ashes still sit because I've never known what to do with her. It was before people were doing Zoom funerals, and I've seen so many colleagues go through similar losses.
One day it became clear to me that people can be both resilient and broken at the same time. That's true of our infrastructure as well. Our systems are resilient despite their weaknesses, and so are people; that helps me every day.
Recently, we had a young apprentice in a truck with a colleague and they went to check on something at South Lake Union in Seattle, Amazon land. The apprentice saw a kid in the water struggling.
Mom was standing there, but mom may have had a vision issue and couldn't see her child. The apprentice dove in with all his clothes on and pulled this kid out of the water and delivered him safely to mom. Those are the kinds of things our employees will do without skipping a beat. It's amazing.
LPPC CEOs Roundtable 2
A roundtable with LPPC President John Di Stasio, LIPA CEO Tom Falcone, GRDA CEO Dan Sullivan.
PUF's Steve Mitnick: Why are you here attending this event?
John Di Stasio: The Public Power Community Conference is a signature LPPC event that we co-host with S&P Global bi-annually. It's an opportunity for LPPC members to meet with members of the investment and banking community and share what's going on in our industry.
There's a lot of diversity among LPPC's membership. Members are tackling similar issues, but how they are approaching them and the tools they're working with vary. Having these conversations and educating the financial community is a way to showcase the sophistication and planning that goes into running large public power systems.
Tom Falcone: Number one, it's as John said, we're trying to educate the financial community. Also, it's good to see colleagues. It's good staff development. We have a lot of our CFOs here. We learn from each other. We meet three times a year or so. We talk to each other.
This is how to get ideas from other places. I talked this morning about time-of-day rates and coming back to the Long Island Power Authority and saying, it'll be okay. We're going to change a million people's rates. We're going to do it. Other public power utilities have done it.
This is where we learn from each other, and it's a good conference.
I go to a lot of conferences. I'm located here in New York, and it is only twenty-two miles to New York City, so I get invited to many. This one's special because of the quality of the members. Because the CEOs are here, the conversation is more in depth than at most other places.
Dan Sullivan: LPPC in general is an opportunity to meet with peers and have discussions you can't have with staff back at home. But this conference is nice because our ability and need to go to the financial markets to get the resources to fund capital programs is the lifeblood of a utility.
Those relationships, people feeling comfortable, and knowing what's going on in your utility is a big part of that. The ratings agencies spend a lot of time and effort keeping up with the utilities they follow. But for the investors, the investment bankers, and all the other folks involved in this, it takes a team to make those bond issuances happen.
Having constant and regular communication is important and it helps us understand what their concerns are, as well. Maybe we can alleviate that concern because it's not that much of an issue, but someone sitting at a desk far away may think it's an issue for us.
PUF: What do you think will be your takeaway or two from this conference?
John Di Stasio: The purpose of this conference is to discuss the opportunities and challenges facing public power. Everybody understands that our industry is in the middle of a historic transition, but what many in the banking and investment community are unaware of are the nuanced approaches systems are taking based on where they are located, what their resource mix is, and their market environment.
It is clear to me that everybody has a strategy to deal with the threats of cyber. Everybody's engaging in the clean-energy transition. Everybody's looking at resilience and how that manifests itself wherever they are located throughout the country.
It's great that we have nineteen public power CEOs and twenty of twenty-seven LPPC member systems represented here in New York. They're feeling good about where they're at, and it doesn't mean there aren't some significant challenges or surprises on the horizon. But most everybody's got a handle on where they're going and how they're going to get there.
The other take-away for me is if you just walked in off the street and you listened to any panel, you see the deep connection that our systems have with their customers and communities. The public power ethic comes through.
The last take-away is there're a lot of things going into planning. Everybody seems like they've got a handle on how to manage affordability and the investments they're going to make. Financially this group is sound and well managed.
Tom Falcone: I have a similar theme, which is if you read the media, you'd think the world's always going to a bad place. Even when I'm on Long Island, people ask about the clean-energy transition, and it always seems like it's something that's far off.
You come here and have a room of twenty-seven utilities, and every one of these utilities is planning for cleaner energy, reliability, resiliency, and affordability. It works, we have a resilient system in the United States, and here are twenty-seven well-managed companies thinking about the future, laying out their plans. That's hopeful and refreshing. We're going to get there.
Dan Sullivan: It's resilience and planning, because if you look at the speakers we've had as a representation of the organizations that are part of LPPC, we're all resilient, it just looks different depending on where you are located.
If you're on Long Island and have the threat of hurricanes, your resilience looks different than ours in Oklahoma, where we have tornadoes or other challenges. If you're a heavy retail residential utility, you've got different challenges.
But everyone has a plan of how to deal with them, which is the beauty of LPPC. We have different challenges in planning, but also in politics and the breadth of where we operate.
Oklahoma and New York don't have a lot in common politically. However, we have a lot in common in how we approach the challenges that we have as a utility.
PUF: It is impactful how you are all thinking about the Inflation Reduction Act.
John Di Stasio: We recently achieved one of our highest priorities as an organization with the inclusion of direct pay tax credits for public power utilities as a comparable incentive to those delivered to private companies through the tax code.
Historically, as nontaxpaying entities, public power utilities have had to enter into agreements with counterparties who can directly access the tax credits, diluting the values of the credit that would flow to the customers and communities served by public power. The other option was to simply enter into a purchased power agreement, again limiting operational and financial flexibility.
We fought for several years to get a direct pay option, where we get a level playing field with private developers and investor-owned utilities relative to our ability to invest in new technologies. While the Inflation Reduction Act was the vehicle, it didn't start there. This is something we've worked on for many years with multiple administrations. To get it done was terrific.
We also fought to ensure these tax credits became sequestration proof. If there's future sequestration, these credits won't take a haircut, unlike the Build America Bonds, which were affected by sequestration after they were issued, devaluing the benefit.
Tom Falcone: There're a lot of things in the Inflation Reduction Act. There are many incentives and comparable incentives for public power are certainly key because it'll change how we do resources. This is good for the federal taxpayer and our customers.
A lot of the benefit that Congress intended to go to consumers who were making the clean-energy transition that dealt with inefficiencies were being siphoned off by the complexity of these transactions. Now that goes right to the consumer rather than intermediaries.
That's good for congress, the federal government, taxpayers, and our consumers. It's why we focused on it so much. Without LPPC that would not have happened.
There's lots in this Act. There are sections on keeping nuclear units running. There're lots of new programs in their infancy, with both the Inflation Reduction Act and the prior Bipartisan Infrastructure Act. There're items for transmission build and for hydrogen.
It'll take time to see where some of those go. All those themes came up in the conference, but all are headed in the right direction. We all agree these are things that need to get done.
Dan Sullivan: Kudos to John Di Stasio and our consultants we have working with LPPC, who have been toiling a long time, trying to get these comparable incentives because it's important to realize that we do not have a national energy policy, but we have a tax code.
The tax code is what drives renewable investments. Whether it's a production tax credit for wind, if it's investment tax credits for solar, as non-taxable entities we do not benefit from traditional tax credits. If we don't have a tax liability, a tax credit does us no good.
We had to use power purchase agreements and other arrangements to work around and let somebody else strip out the tax benefit. Every person that's involved in that commercial chain increased the cost. We believe this will be a better cost mechanism for our customers to be able to own renewable facilities.
PUF: What's the most rewarding about what you do?
John Di Stasio: I loved running SMUD when I was CEO. I found running the business and managing employees extremely gratifying. As a CEO, I found LPPC a valuable forum to interact with my CEO colleagues, which is important.
In my current role representing twenty-seven of the largest public power companies in the nation, I work for all the CEOs. Staying connected in the industry and to my former colleagues, has been great.
I've also had the privilege of advocating for public power communities in Washington D.C. There's nothing better than seeing priorities like the direct pay, which will benefit public power customers immensely, get across the finish line. I've enjoyed it very much.
Tom Falcone: The most rewarding for me is when I can deliver for customers and for community. I live on Long Island, and my kids go to school on the Island. Delivering heat pumps can cut a consumer's carbon emissions, but also their heat bills in half.
Heat pumps can meet state goals for carbon reduction. They can cut customers' electric bills. We have programs to help customers, and now the Inflation Reduction Act has new incentives for heat pumps.
When you deliver something like that for your community, that's rewarding. LIPA has a good sense of mission, as all utilities do. They're here to serve.
Dan Sullivan: I've thought about this a lot. We produce electricity, and that makes a difference in people's lives every day. If you don't believe it, turn it off. But we do it for altruistic goals, in that we're keeping the customer in mind in making decisions.
I came from a legal background. I practiced law for twenty-three years before I came to Grand River Dam Authority, and you have winners and losers in the litigation field.
Here, we look for the win-win solutions and it took me awhile to change my thinking of how to enter negotiations with our customers, because I'm not trying to get an advantage. I'm trying to come up with a solution that meets their needs and the needs of GRDA in serving them. That makes it rewarding to wake up in the morning and think about what we can do to make a difference.
