Energy Capital Podcast

For the inaugural episode of the Energy Capital Podcast, I spoke to Will McAdams, the former Commissioner of the Public Utility Commission of Texas (PUC) who left the Commission just a few weeks ago.We spoke about his appointment to the PUC in the immediate aftermath of Winter Storm Uri and the challenges he faced during that tumultuous period. He told me what he was proudest of from his time on the Commission, including his efforts to wintererize power plants and “hold the line” to ensure a stringent standard was adopted, a stance that likely paid big dividends over the last few days during Winter Storm Heather. We had a great conversation about distributed energy resources (DERs) and how they are likely a major part of the future of the grid. Commissioner McAdams led the effort to create a Virtual Power Plant pilot, allowing small customers to get paid for injecting storage to the grid and, eventually, for reducing their use.He talked about the difficulties in the first few months on the job, after all three commissioners had resigned following Uri. He also reflected on his own possible responsibility for Uri, something I’ve rarely heard in the last three years.We went in-depth into the evolution of energy markets and how they might need to change to provide higher reliability at lower cost. That discussion included his views on the energy-only market, the large volume of ancillary services in recent years, and the controversial Performance Credit Mechanism (PCM). We also talked, of course, about energy efficiency, renewable energy, battery storage, demand response, and much, much more. (We discussed IRA incentives, if you’re interested in learning about which incentives you can access to upgrade your home, see this calculator. If you don’t qualify for tax credits, see this article for information on when additional incentives may become available, hopefully later this year.)Time stamps and a transcript are below. Thank you for being a subscriber. Please consider becoming a paid subscriber. I’ll have a subscriber-only chat during the upcoming PUC meeting this Thursday and you’ll have full access to the archives as well as subscriber-only events. And some podcast episodes will be for paid subscribers only.If you like the episode, and I think you will, please don’t forget to recommend, like, and share the Texas Energy and Power Newsletter.I look forward to your feedback on the episode.Time stamps:2:30: McAdams’ background and path to being a Commissioner6:00: The first days and months at the Commission after Winter Storm Uri10:38: Diagnosing why Uri happened14:50: What McAdams is most proud of from his time at the Commission: strong winterization standards for power plants18:00: What he wishes he had more time to work on: cost allocation for distribution infrastructure costs23:10: The need for distribution resource planning and the potential for a Distribution System Operator (DSO) model; discussion of the PUC’s award-winning virtual power plant (VPP) pilot30:25 Deeper dive into the VPP pilot and the Aggregated Distributed Energy Resource (ADER) Task Force, and the potential for Texans to earn revenue for their DERs36:00: Potential of demand reductions to contribute to VPPs40:25: Are conservation calls inevitable?45:15: The challenge of winter reliability and how energy efficiency can help51:15: The potential of energy efficiency funds from the Inflation Reduction Act, and the need for better education and incentives for HVAC equipment58:15 McAdams’ views on the evolution of energy markets1:02:01: Are capacity markets the answer, and McAdams’ view on the Performance Credit Mechanism (PCM)1:05:30: Do we need all the ancillary services we have? Will we need them if PCM is implemented?1:08:00 Comparison of PCM with McAdams’ idea for Dispatchable Energy Credits (DECs)1:14:30: The criticality of load forecasting, and how bad load forecasts were for Winter Storm Elliott1:17:15: Is Texas a good destination for clean energy investors?1:21:54: What are the 2-3 energy policies McAdams thinks will have the biggest impact on increasing reliability1:25:20: What will the grid of the future look like for consumers?TranscriptDoug LewinWill McAdams, welcome to Energy Capital.Will McAdamsHey, thanks, Doug. Glad to be here.Doug LewinSo excited to talk to you, obviously a whole lot to talk about, but let's just start with your background. What was your path to being a Public Utility Commissioner?Will McAdamsYeah, no, so I landed in Austin around 2009. I was fresh out of the U.S. Army, and I went to work as a sort of jack-of-all-trades legislative aid staffer, policy analyst to a state senator, and that senator happened to be Troy Frazier. And Troy Frazier was a pallet manufacturer from West Texas who was a long-serving legislator. And as a part of being a manufacturer, his number one cost of doing business was electricity. And so he always had a passion for energy, electricity, industrial policy, and was actually one of the co