Committee of Chief Risk Officers 8000 Research Forest Dr. info@ccro.org STE 115 #278 http://ccro.org The Woodlands, TX 77380 12 Advancing Our Energy Industry’s Risk &Compliance Best Practices Andy Roehr: So historically, the feds have between administrations generally not pulled the plug on a credit or something like that once it's been implemented. Now they may let it run to end of life, which is kind of where we were heading with some of these tax credits anyway. They'll probably let it run out. But if you thought you had a 10-year horizon, I wouldn't plan a anything for year 11. Who knows where we'll be by then. I do think you'd be betting against the house to assume that somebody's going to come in and kill it. CCRO Member: At the end of the day, you're asking households that make 50 grand a year to pay for the transmission &grid upgrades. They don't want a $20 to change in their bill, much less a hundred dollars change in their bill. I think we're going to skip a step anyway, and just eventually go off the grid. Andy Roehr: What we're talking about here is at some point, as the price of some of this stuff comes down with some of the tax credits, et cetera, you're going to get the “frees” effect. You'll get early adopters and then you’ll get the move-ons. What I fear is you're going to end up with a, a regime that says, “I still have to provide power to every street address, right?” So, the utility has a big set of fixed costs for the grid, and at the same time it has a declining number of kilowatt hours running across it. So, what’s it to do? It’s going to back itself into something that economically is going to be untenable. Unfortunately, the people who really get whipsawed in this scenario aren't going to be the folks who can buy the Generac. Right? It's going to be the folks down here in Houston who are sitting around after a hurricane, and they have no power. The power doesn't exist because the storm just took out every one of the floating wind turbines out in the Gulf. I think there's a huge problem coming. But I do think a lot of it's going to go distributed. You know, who tells the utilities and the ISOs to get out of the way? But, you know, PJM already came back and said, “we're happy to do that. Can you talk to us in four years?” So, lots of rules, lots of stuff coming for the risk professional to consider. Anderson: You know what, I think I'll suggest we keep it going over at Morton's over a drink. CCRO Member: After listening to this. I need a drink. Laugh