"Building The Grid We’ll Leave For Our Grandchildren" Featuring Jim Robb, North American Electric Reliability Corporation

C.O.B. Tuesday

We have been paying a lot of attention to and thinking a lot about power, power costs, power reliability, power systems, access to power, etc., and have focused a number of episodes on these issues. Earlier this June, we had a great conversation with John Bear, CEO of MISO (episode linked here) and in that discussion, we asked John what the country could be doing to better understand the system and reliability issues as a whole. John informed us that there was indeed such an organization dedicated to those issues and that we needed to connect with Jim Robb, President and CEO of the North American Electric Reliability Corporation (NERC). At John’s suggestion, we reached out and are thrilled to host Jim for today’s COBT episode.
Jim joined NERC in 2018 and has over 35 years of experience in the power and energy sectors across engineering, consulting, and senior leadership roles at Western Electricity Coordinating Council, Northeast Utilities, Reliant Energy, and McKinsey. NERC is a non-profit regulatory authority whose mission is to assure the reliability and security of the North American bulk power system including the continental United States, Canada, and the northern portion of Baja California, Mexico. A detailed overview of NERC’s history is linked here. We were excited to visit with Jim and hear his valuable insights into the evolving and complex nature of the power grid.
Jim first provides background on the structure and mission of NERC and the growth in electricity usage driven by economic and technological developments and changing consumer habits. We then delve into the need for improved infrastructure development, supply chain issues, especially in securing transformers, and the importance of prioritizing transmission development as a vital part of the energy transition. Jim further describes the interaction between NERC and various entities including ISOs, market designers, and PUCs, as well as NERC’s oversight of grid operation entities and their collaborative approach in setting and enforcing standards. We also discuss NERC’s standards, and as you’ll hear, Jim describes them as guidelines for preserving the collective performance of the entire system. In our conversation, we also touch on the challenges and opportunities with new battery technologies, the integration of renewables into the grid, the importance of natural gas for maintaining stability, implications of increasing demand and the need for long-duration energy storage technologies, the likelihood that the cost of electricity increases in the coming years due to the transformation of the grid, and much more. We walked away with a greater appreciation for the work Jim and the team at NERC are doing and appreciate Jim sharing his time and perspective with us today.
Mike Bradley kicked us off by highlighting that equity markets have had a substantial rally over the last week, attributed to lower bond yields and interest rates. He pointed out the significant drop in WTI crude price this week to $77.50/bbl. and emphasized the importance of WTI maintaining this technical trading level, or risk downside to trading support levels of $72-$73/bbl. He highlighted the plunge in crude oil time spreads due to recent weak Chinese economic data and Mideast turmoil that still seems to be contained. Additionally, he emphasized the significance of the upcoming OPEC meeting on November 26 for crude oil. He highlighted recent datapoints from electric utility Q3 conference calls and noted that a leading Southeastern electric utility was going to be increasing their electricity sales growth over the next five years from prior levels of 0-1% up to mid-high single digits. He further noted that this type of electricity sales uplift is unprecedented and that several other utilities are al