YouSaid · the spoken record

Travis Kavulla

lines on the record: 43
first: 2025-12-01
most recent: 2025-12-01
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Spectrum and the deregulation of the airline industry that tries to allocate the capacity on the grid to the highest value, the people who are actually willing to pay the most for it. And those payments, which would likely exceed the incremental cost of serving them, could then actually be a revenue source back to consumers that helps on the affordability side. So it's almost a call to your listeners that if you're doing a mundane corporate job and want to do something completely different, consider becoming a utility regulator and applying some market-based principles to help solve some of these problems. Because really when you think about it, utility regulation, they need to be an agent of capital formation here in the sector and to clarify this moment in terms of demand uncertainty. And that is the kind of challenge.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“It could be a substantial one. I mean, I think that AI demand growth for electricity consumption is real. I also think that growth needs to pony up financial commitments to engender capital investments in the power sector that it intends to rely upon. I think those will be the table stakes of their social license to operate in a grid that even where competition has been introduced remains pretty heavily regulated. So I think we're going to get there. I do think that in terms of the regulatory policy that I deal with, there's too much small ball thinking on this and there's too much trust in the way we've always done things. It's probably a time to really have kind of regulatory policy innovations like we've seen with the FCC regulating.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Seem to be occurring in the small modular space come to fruition. I just so far I don't see a lot of people laying down serious capital on that from a commercial perspective. But I do see people laying down money on storage.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, I'm going to make a lot of my friends unhappy with this one, but I'd probably go batteries and storage. I think there are some natural economic advantages and wide swaths of the country for relatively affordable, even without subsidies, solar production in particular, and batteries seem like a pretty good natural match to that. It really has been in the kind of Texas story to date, the pairing of batteries and solar together with natural gas additions that have supported really the only electricity market that has been growing without data centers. So I would take that as the leading indicator. That's not to speak ill of my friends in the nuclear bro community. I hope that the technology advances that”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“About the operational posture and need for reliable resources on the grid. And so there were a variety of regulatory changes that were made that had net of net the effect to tighten up the understanding of what generating capacity was available in the system relative to a base of demand that really didn't change. But suddenly because of all of the retirements that had happened of coal and older gas due to economics as well as environmental regulation, we suddenly found ourselves pretty tight. And then this demand growth started to happen. So we were not particularly well positioned for the present moment of demand growth. We'd already driven the system to, you know, some might call it a tight and efficient system. If you had demand growth, that was level, but it was not well situated to pick up tens and tens of new gigawatts of demand.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“In how they set up these markets, which meant effectively a sort of administrative withdrawal of supply from some of these markets. Similar to that renewables were seen not as a one-to-one replacement for reliable generation in the parts of the country, the middle of the country especially where they were heavily invested in, but they were really being leaned on as an effective substitute for more dispatchable power. And I think everyone in the back of their head knew that wasn't the case, but only recently as things have gotten tight have people begun to do a lot of hard math around it. And then finally, you know, we've just seen a few really traumatic winter storms in particular, one in the east and one in Texas that have sort of reshaped the way in which the people who have responsibility to operate the grid think”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, so far load growth is really not the contributor to what has happened here. It is almost an awakening to the fact that we had already, without any more load growth, a less reliable system than we thought we did. And that's due to a variety of reasons. You know, we retired a lot of coal, which had a lot of emissions, but we replaced it with a bunch of natural gas that created a sort of more of a dependency on an interrelated network system, the gas supply and pipeline system, which, while usually very robust and very economically efficient, in winter conditions where there's a lot of residential heating drawn, that system can show frailties. And so market operators in these electricity markets sort of derated the value of that capacity.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Versus the United States, which is kind of stuck in this sort of supply does something to demand framework of industry. So that's definitely on my, like it's always on the top of my homework list, if only because I think a lot of people are thinking about solving this problem highly conventionally with supply additions, which is going to be really important, but that demand flexibility component is actually essential to get to a market that looks like every other efficient and competitive market in the world, which has two sides to it.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Electricity to end use consumers to be settled on the basis of that advanced metering infrastructure's actual meter reads. So on a time interval basis. And finally, because you shouldn't have to think about when you're going to blow dry your hair, you have a significant amount of device automation in the form of smart thermostats, battery storage, electric vehicles, manufacturing and industrial processes, which can be sort of a set it and forget it to automatically respond to high prices, to try to increase the system's load factor and avoid using electricity at very high cost times. So that is just starting to happen in the American electricity sector. I would tend to look to the UK and Australia as places that have gone a bit ways further in trying to solve that problem and embrace the inherent flexibility of the system.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, man, I love that question. I mean, I will say one of the real flaws in the US electricity system is that it is not as robustly a two-sided market as you would hope for. It still demand just exist on the system. It's coming onto the system based on people's on the supply side guesses about what will happen. And then the supply side is expected to solve all of it. There's very little in the way of demand elasticity. And that's been for a variety of historical reasons. I mean, first and most obvious one is that you didn't even have the technology in the form of advanced metering infrastructure to understand when people were actually using the power in relation to a highly time variable set of upstream costs. Now you do have that. You are also increasingly having the software that allows financial settlements on the part of the people retailing.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Legacy customers, but again, the devil's in the details, and I have a problem with some of the math that's being done in those regulatory approaches. So it's not as if this problem is invisible to the people who are economically regulating this industry, but they are trying in a very real way. They are trying to figure it out in real time. And I'll be the first to say their solution set is far from perfect”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Course, the other side of the industry, the competitive industry, you know, it's companies like mine and data centers that enter into commercial agreements for the purchase and sale of power, and neither those parties have recourse to a captive base of customers. So they could go bust, we could go bust. It's not going to be skin off the teeth of a set of quote unquote ratepayers. Again, on the grid costs, it's about whether or not state commissions, and in this case a federal regulator, the federal energy regulatory commission are going to style taker-pay contractual agreements to require large data centers that come onto the grid to essentially collateralize a revenue stream associated with the incremental costs of developing the grid to serve them. And so far, there seems to be relative unanimity that that is the right way to go in order to”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so commissions at the state level have dealt with this in a very different way. Some of them have candidly and regulated utilities themselves have said, we want no part of this risk. Like we're a small mid-cap utility and someone is knocking at our door asking us to invest in power generation that would be like a third of our total existing balance sheet that's remained stable for decades. We're just not doing it. You can get on our grid and you can pay the cost to get on our grid, but in terms of power generation, you've got to bring your own project. We're not involved in that. Other utilities that have larger balance sheets, the southeastern utilities are using their regulated balance sheets to build out generation and supply data center customers, devils in the details on those heavily redacted commercial agreements that I would desperately love to see about the degree to which they protect consumers.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Some development in that market. I will say, I think what people are waiting for, you know, everyone looks around the supply chain and is reasonably asking, well, who's got the deep pockets here? And then everyone turns to big tech. Big tech, obviously, if they signed a power purchase agreement for 15 years or even less to take power at a certain price, some of this supply chain would fall into place pretty readily, I would say. And so people are kind of waiting in a sense for big tech to make those big bilateral contracting moves that would serve to propagate rationality around response to the perceived demand up and down the supply chain. And I think that's kind of the leading indicator to watch for in the sector how many of those contracts are actually being signed.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“My impression is yes. I mean, you've seen public announcements from the largest gas turbine manufacturer, GE Vernova, about new manufacturing base additions, you know, some of the transformer equipment as well. I think you're seeing some incremental investment in. You're certainly seeing power generators like NRG take positions in lining up their optionality to have power projects that can be deployable to either the Texas market or the mid-Atlantic market, depending on where consumer demand actually arises.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, you absolutely could. And in fact, I mean, I know of at least one example, you know, North Dakota is actually a good example of this, a place that doesn't have a lot of robust transmission infrastructure does have a lot of renewable resources that cause and those renewables are almost kind of dumping on the market in a way that causes the energy price to go down and even negative at times in North Dakota. And some of the first data centers that we've seen in this wave of expansion chose to locate in North Dakota because they had access to wholesale prices that were low or negative. They were just following the price signal. And so there's certain data centers out there that are literally being paid to consume electricity because there's such an oversupply and so little transmission into the area.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“To simulate a kind of flow of electrons on a system constrained basis. And then it provides valuable information too, because if you continue to see locational marginal prices in one place that are very high and 20 miles away, they're very low, that's a signal to the people who plan the transmission grid that, hey, we should probably build a transmission line here because the addition of the transmission line will be the thing that flattens out that price differential and creates a market that looks more like a copper plate rather than two separate swimming pools.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it is important that you have nodal pricing in the system only because it sends a powerful price signal for the accurate location of necessary power generation. There are certain markets, I'm thinking of Alberta, some of the European markets that actually do establish a zonal price across their entire market. But there you end up with power plant developers who develop wind in a particular area far away from demand to capture the average price, but then that energy ends up being undeliverable because there are transmission system constraints and congestions. So the nodal pricing formulation is intended to reflect a market that, unlike the stock exchange, isn't just trading bits of data to represent kind of paper securities, it in a very real way as”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“A node usually would be a place like a substation. It is the place on the physical grid at which electricity is bought and sold. It's a physical destination on the grid. When we say nodal markets, which is a way to describe electricity markets, we're referring to markets where electricity is priced on a so-called locational marginal price basis. And the LMPs, as they're called, are based on physical destinations on the grid called nodes. I'm just, you know, estimated guess here, but a market like Texas will have a few thousand nodes at which electricity is traded on an individuated price basis.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Some policy interventions that people have contemplated is usually we would let these markets kind of equilibrate on their own.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so we go back to the kind of segmentation between the regulated grid costs and the commodity costs in answer to that question on the commodity side, you know, this tends to be a marginal cost pricing environment where if you have demand growth outstripping supply additions, the system becomes tighter. supply curve moves up for the kind of last unit that's necessary to serve demand and its marginal costs in a very real way establish the clearing price that all demand has to pay unless and to the extent to they are bilaterally contracted with some kind of hedging instruments which everyone should be no one should be in an ideal market exposed to that spot price but we find that many people are for a variety of reasons so so”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Where load factors continue to be 50, 60, 70 percent. So there's a lot of headroom during certain hours and very little headroom during other hours. So the kind of the primary question in terms of the network economics is if you end up with a bunch of high load factor data center customers, the type that can't be interrupted, how do you get them online without tripping into a bunch of necessary capital investments to serve that last few percent of hours where their demand needs to be served and firm? Or can you source flexibility out of the system somewhere else, like from residential air conditioning or something like that? That's a question again that's very important to figure out. People have kind of issue spotted it, but we've really yet to solve in any meaningful way. The markets like Texas are kind of geared towards solving it in more of a free enterprise premise. Other markets seem to be struggling with it.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Consistent basis, and of course they need to be highly reliable. They can't really be interrupted without having Cloudfare or AWS interruption style problems. So very different. And you can look back to analogs of other industrial customers, aluminum smelters, high load factor when they were doing the batching of smelting couldn't be interrupted. Paper mills, maybe you could interrupt them. So the industry has some like kind of learnings from this. And there have been markets designed around the flexibility of demand to try to do for the power sector what previously happened to say the airline sector, which had used to have very low load factor. And then after restructuring and deregulation in the 70s, suddenly everyone's, you know, everyone's airplanes ended up full, you know, and too full in some cases where people get bumped and compensated for it. So we've yet to achieve that, though, in the power sector.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I mean, the first experience at any scale that anyone seemed to have with computing technologies were kind of cloud-based servers. And then really on the other side, like crypto mining facilities. And both of them data centers, but the two could not be more different, right? I mean, crypto can, it becomes uneconomic at a certain strike price for cryptocurrency to continue mining. And so it's a highly flexible load that drops off the system when conditions become tight in an electricity market. And we see that all the time in Texas. On the other hand, for cloud services that are providing kind of real-time instantaneous hosting capabilities, you know, they kind of need, they have a very high, what's called a load factor of their power consumption. They're drawing from the system on a relatively”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Order for something like a generator step up transformer pre COVID, it would have been maybe like 12 to 18 months. Now we're talking about three to four years for a bespoke piece of equipment whose specifications are only available to me after the local utility, the Poles and Wires Company, tells me what my interconnection study looks like in terms of grid availability in our connection to the system.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it's, I mean, it's a little bit of everything from stuff that isn't on the power sector side of the fence line in terms of actually being able to construct data centers and their chips and the fiber optics that would back them up. And then on our side of the fence, you're right, getting access to the grid through interconnection, getting all the equipment that you would need to tap into the grid. We're talking about, you know, kind of grid step up, generator step-up transformers and stuff like that. Joe, I know that's a topic near and dear to you from listening to the pod over the years. And then it is the power equipment in terms of like gas turbine availability, solar panels probably aren't going to do it for you given the demand for kind of consistent power production off these data centers, but they are helpful. So it's just the magnitude there is a dilemma. And, you know, right now, if I were to place”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Really, the fundamental question that policymakers, utilities, and competitive providers like us are trying to deal with.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“In the Mid Atlantic that I was referring to, it's currently about 160,000 megawatt market. It's projecting to add 40,000 megawatts by 2030. The ERCOT, Texas market, you know, about 85,000 megawatts right now. Its latest projection is up to nearly 140,000 megawatts by 2030. Now, that's like adding a California to Texas in terms of electricity demand in five years. And that's not going to happen because it can't. It just, I mean, literally could not occur. But therein lies the problem is like, what are we actually investing toward and what are the regulatory policies that can essentially help call the question on the amount of offtake that will actually materialize from AI so that then capital investments can propagate throughout the supply chain to end up serving them?”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“even in terms of generation capacity additions. And then in terms of like, shouldn't they be celebrating? Yes, definitely. Everyone in the sector, my business, and the regulated utilities are excited about the prospect of growth. They're also nervous about whether or not this growth is real and to what magnitude. Part of what makes it a little worrying is that ordinarily electricity demand growth would be a composite of growing demand from many different end-use applications that would kind of diversify the risk of betting on growth. Here it's like a one or a zero. If you take out the data centers, the sector is actually, you know, pretty stable in terms of electricity demand. If you add the data centers, the sector is really poised to grow a heck of a lot. And when you look at the projections of the grid operators, I mean, just to put some numbers on this, the market PJ.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Generally, yes. And it's true that for most electricity markets in the United States, it's been fairly flat. In the PJM, the Pennsylvania, New Jersey, Maryland market that stretches from Washington, D.C. to Chicago, they last recorded a record peak demand in 2006. They'll, in all likelihood, set a new demand next year, 20 years later in 2026. Some markets like Texas's ERCOT market have been growing, but it is definitely the exception to the rule. Most of these people last set. A record demand before the period of offshoring and deindustrialization of industries that use a lot of electricity. And that actually facilitated the kind of turnover of capital from coal gas and to renewables a little bit as well in a lot of these places. But net of net, you know, that was kind of neutral or even a little bit negative in terms of the total installed generation capacity was kind of managing to.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, number one, you're absolutely correct about the incentives at play. Under the style of economic regulation that is widely used really without exception.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“About what the demand is going to be and try to voluntarily sign up customers to voluntarily contract with us to produce revenue for the power generation we might invest in. And for the rest of the country, it still works by people like me wearing my former hat as the chairman of a utility commission, like guessing what the future is going to be and charging off the cost of those guesses to a monopolized customer base.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Regulated utilities were adding handsomely to the numerator, the denominator wasn't propping up that. And the result was that division problem spitting out a price that was escalating higher and higher. Some utilities at that point, their state regulators said you've been imprudent. We're going to not allow you cost recovery because you've been imprudent. They went bankrupt. But that was the exception to the rule. Most of them allowed those costs to be recovered from a captive customer base. But some of those states also passed laws that said, let's never do this again. There's no reason why we shouldn't have power generation invested in to meet the levels of demand needed on the system be a function of investors competitive bets in the market. And so in about, you know, call it a third of the states, but accounting for more than half of the power sold, that's now the business model where companies like mine have to make”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, it's kind of haunting. It's funny you should ask that question because the problem it was meant to address is that regulated utilities, which used to own this whole chain of links on a consolidated vertically integrated basis bet wrong very badly on the amount of demand growth in the sector. And they put themselves out there building power plants that were intended to be included in what's called their rate base on which they earn a return and are able to charge off those costs to a captive set of customers when they bet wrong on the demand that would ultimately materialize on the system. They found themselves well over their skis in the amount of power generation that they either had built or were in the process of building at the heart of regulated utility economics is this division problem where kind of a total system of fixed costs is the numerator divided by the denominator of throughput.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Sell back to the grid, help manage your costs upstream to stabilize pricing. But that's the paradigm of competition in this space. It's a regulated system in the middle with competition on the edges.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Supply of goods, and then use the regulated poles and wires and pay regulated rates to deliver that commodity to you at your home. So some of the value proposition of what you're experiencing as a potential retail customer in a competitive market is your product selection. I mean, to give an example, a retailer came to me and marketed me a five-year fixed price for electricity last year. I bought it, I locked in a rate, I'm insulated from upstream changes in wholesale market volatility as a result. That's generally the value proposition of competitive retail, though in places like Texas, you're also seeing product differentiation that has a ring of telecommunications and data competition, sort of like more apps as part of your retail electric supply service, people selling you smart thermostats or residential batteries that can be packaged onto your retail electricity supply plan to”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so think of the electricity system as sort of a chain of links. Upstream, you've got the power generators. And then after that, you've got the high voltage transmission system. It patches into a substation that steps down the voltage to a lower level. That's what we would call the distribution system. And then there's a meter hanging on the side of your home. And beyond that meter, you are the consumer of electricity. The most upstream, the generation and the most downstream retailing have been opened in some states to competition. And I think it's fairly intuitive what that means for generation power plants are owned by private investors who make investments in them. Those power plants compete against one another in auctions for electricity and to sell their power to wholesale off-takers. Some of those off-takers then are the retailers of electricity who sort of buy an upstream”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Idiosyncratic, and it's funny because at the same time, restructuring and competition was introduced into this industry, it was also occurring in things like telecom. Telecom, you know, was substantially deregulated and federalized at the same time. States, however, were left to make their own decisions about the power sector. And as a result, you really have a huge patchwork quilt of state and federal regulation and different industry models. It's true.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Super cycle. People can have the sense that, oh, wow, someone just ratcheted up the heat on this pot. But both of those are contributing factors, and they require sort of different structural approaches in order to reckon with them.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Relatively rapidly and then an oversupply that occurs when the market is moving back toward equilibrium will drive prices down rapidly. Whereas those regulated set of costs that attach to the transmission and distribution systems, those are still cost plus regulated industries. And they have a funny way of working monodirectionally up over the course of time. But these two things trade off against one another. You need to invest in transmission in order to facilitate the efficient delivery of electricity. You need to invest in it in order to open up regions for a low-cost renewable energy production. So they do have an interactive effect, but they're regulated in a very different way. And both of those land on consumers' bills. I think the easiest way to understand this is that consumers, in a sense, had maybe been as a result of the regulated charges, the proverbial frog and gradually warming water. And then when you finally enter a commodity.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it's kind of the scope of time that you choose to evaluate, but just to give you kind of a benchmarking, if you looked at, say, the New England power market over the last 20 years, which sort of is the beginning point of the restructuring of the industry and the introduction of competition in a place like New England, the actual commodity cost would have fallen by about 50% on an inflation adjusted basis. Whereas on the same basis, transmission costs would have increased something like 900%. Now, from a very low level to a much more substantial level, but then if you drew that comparison in another market, say the mid-Atlantic, over a shorter period of time, like year over year, you know, the grid costs would not have risen substantially in a year, but power prices would have. And that's really just because the commodity works on more fundamental kind of supply and demand balance, you know, scarcity will drive up prices relatively.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“People's bills, the commodity, and the regulated grid charges that get the commodity to you. And both of those are subject to some form of regulation in this industry.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source
“So I spend my time on regulatory affairs at a company NRG where a big producer of power, we sell power to end-use customers where that's permitted by law, where competition exists in the power and gas markets. So we've got about 8 million end-use customers. And previously, I was head of the Montana Public Service Commission, the rate-setting body for regulated utilities in the state. I headed up an organization that represents state utility commissions at the national level called NARUC. And I teach a little bit on the side at University of Chicago's Harris School of Public Policy, a course on utility regulation and electricity markets. So I spend my time thinking a lot about what goes into customer bills, both the stuff that we can control being a company that is a provider and also stuff that are sort of upstream costs of goods sold that appear on my company's bills, the sort of polls and wires charges that go into people's bills. So basically, you know, there's two parts.”
2025-12-01 · Odd Lots · Travis Kavulla Explains Why Electric Bills Shot Up · IDENTIFIED FROM THE TRANSCRIPT · source