Speaker 1:
Welcome back to the podcast. It's a pleasure to have a good friend of the Chamber, Mike Hummel, who was a chair at the Phoenix Chamber, and formerly the general manager and CEO of SRP. Welcome.
Mike Hummel:
Good morning. Great to be here. Thanks.
Speaker 1:
Good to see you, my friend. I think it's been a while. We had the of honor of working together, I think, right going into the pandemic when you took over as chair, and then, you really helped us get through that. For those people who don't maybe know you, talk to us a little bit about your background and maybe something about you that we wouldn't know. I mean, I know some good facts about you, but I'll let you fill in the blanks.
Mike Hummel:
Sure. Thanks. I'm actually a native Arizona. I grew up in Tucson and went to school down there, went to U of A and graduated in May of 1982 and started at SRP in June of 1982.
Speaker 1:
What was your degree in?
Mike Hummel:
It was an electrical engineering and never left. I was at SRP for just about 41 years and left a couple weeks ago, retired a couple weeks ago and started as an engineer. Kind of went through a number of different supervisory management, executive roles, and ultimately ended up in the CEO role for the last five years.
Speaker 1:
In terms of something that we might not know about you, I mean, obviously, people out there know you, but something that they might be surprised to learn.
Mike Hummel:
Gosh, there's not much about me, I think, that people don't know. Like I said, I did go to U of A, but I also went to ASU. I just don't tell many people that. My family, going back four generations, have gone to U of A. If everybody found out I went to ASU and got a degree, they might kick me out of the club.
Speaker 1:
Well, I also know you've quite an affinity for Jimmy Buffett.
Mike Hummel:
I do. Yeah. My wife and I, she was my girlfriend at the time, went to our first concert in 1978. We've been Parrot Heads for an awful lot of years, way before the term parrot head was around.
Speaker 1:
Before it was cool, you were a follower.
Mike Hummel:
Yeah.
Speaker 1:
Well, obviously, a lot of history here in the Valley and quite a history at SRP, and we'll get to that in a minute, but what are some of the big changes you've seen in Arizona in that time?
Mike Hummel:
Oh, man. It's tremendous. Obviously, the growth, I think, has to be the key of that, when you look at the size of the Valley, when you look at the size of the state, and the small number of people that really had big influence back in that time compared to now. Now, it takes an hour to drive across this Valley just about, assuming traffic's good and growth. It's been good for the state, and I think, the state's grown in a pretty smart way most of the time, but it's been a big change. That has, I think, brought a lot of different influences into this state.
At the same time, over that period of time, we lost a lot of homegrown companies in the state. From a business perspective, and I look at the number of companies in the state that have their headquarters here and have their homes here and really have a vested interest in the long-term health of Phoenix, of the Valley, and of Arizona, and that's gotten smaller and smaller over time.
Speaker 1:
It really has. I always think about everyone seems to turn to the utilities when their chips are down because you don't have a lot of companies that have a lot of time here. You compare different places like Chicago or maybe the south, long term, what do you think the impacts of that will be?
Mike Hummel:
As far as of?
Speaker 1:
The leadership, in terms of leadership.
Mike Hummel:
Leadership, I think people are going to have to step up and play a stronger role than they have before. Right now, it's a bit transitory the roles that they play. They play a positional role. When they're in a leadership role, they play a role in the community because they're expected to less because of the long-term care of SRP, I'm sorry, long-term care of SR, I say the same thing.
Speaker 1:
That's okay.
Mike Hummel:
Kind of the long-term care of the state, SRP on the brain for 41 years [inaudible 00:03:58], occupational hazard.
Speaker 1:
Of course. I mean, you can't. You just can't shake it.
Mike Hummel:
You mentioned utilities, I think, in a community like this, we serve an outsized role. You look at SRP, we've been around for over 100 years. We were around before it was a state. Our mission was, and still is, to make the community successful and make our customers successful. We have a role in how the state develops 100 years ago today and 100 years from now. I think, it puts ... and APS frankly is in about the same position and have been around just about as long.
Speaker 1:
Absolutely.
Mike Hummel:
We all have the same role in making this last and last a long time.
Speaker 1:
Well, and I think part of when I was thinking about this interview, I really did want to focus on leadership because you weren't afraid to lead. That means that not only the good times, but some of these tough decisions you have to make. With such a politically divided country and community, standing up for a position is tough.
Mike Hummel:
Mm-hmm.
Speaker 1:
Talk to us a little bit about that process and how should other leaders look at this, other leaders that are coming into the Valley thinking, I'm just going to keep my head down and hope it all works out.
Mike Hummel:
I had the benefit when I started at SRP, through my career of working for a lot of different people. I worked for a lot of leaders that were good and a lot of leaders that had some gaps. I got a chance to learn from a lot of people, and that was really positive for me. One of the things that I learned most was the things that you're thinking, the things you want to say, the things you want to make happen, there are others out there with those same ideas that just don't have the courage to express it and move forward.
What we don't need is a leadership group, a chamber, the other groups in the Valley who have people sitting back thinking about what's good for my company, not what's good for the state. We need leaders who are not afraid to do that. We need leaders with some courage. We need leaders who are going to say what they need to say and bring people along and have good reasons for the things that they're saying or nobody's going to step up. I think you've done a great job of that at the Chamber. You've been very successful in leading that group through it and we just need more of that.
Speaker 1:
Well, that's a function of having great folks with us. I think about some of the big things you did. I mean, I remember quite soon after you took over the role, you talked about zero emissions goal. I mean, some of these really big things you don't expect to hear from a utility. Certainly, there were the detractors there for business leaders that are thinking, "Man, if I want to do this, but I'm afraid of the blowback on social media, the blowback in the media." I mean, practically speaking, what advice do you have for those folks? You did it.
Mike Hummel:
Well, you have to lead with your heart as well as your mind. You're never going to lead well if you don't believe in what you're doing. I will tell you, you mentioned reducing carbon in the environment, I used to have a book on my desk years ago that said, global warming and other eco myths. We all lead depending on, based what we know at the time.
Speaker 1:
Sure.
Mike Hummel:
When I go back 20 years ago, my view was much different and our view as an industry was much different, but as we got to learn more and more and more, it became apparent that we have to do something or it's not going to happen. We have an obligation to the next generation of people. We have an obligation to this community to do something. If you don't speak up and say that it's going to be difficult to make progress.
Speaker 1:
Well-
Mike Hummel:
What I find out with regards to that, sorry, I interrupted...
Speaker 1:
No, no, no.
Mike Hummel:
... is that our company was eager for that. They were eager for somebody to stand up and say that because we have a very different demographic at a utility than we had 20 years ago. We had a lot of young people who were saying, "Hey, we're going to be around a long time. We want to do the right thing, and we want our leadership to do the right thing." I had some detractors not only in employees, but some of our board members, some of the community, but it's the right thing to do and absolutely believe it.
Speaker 1:
Well, and I think that's what made it so impressive because it was not the easy thing to do. It sounds like you were also saying that looking back at maybe a prior position that what you're saying is, I realized that I was wrong.
Mike Hummel:
Mm-hmm. Yeah.
Speaker 1:
Not a lot of leaders in the, well, especially the political space, but also in the business space, that will say that publicly.
Mike Hummel:
Yeah. Well, none of us are without mistakes, right? We only make decisions based on the information we have at the time. We've made decisions at a utility, at a bank, at an industry, pick your community you want to look at based on the information you have today. Tomorrow, it's going to be different. If you're not reevaluating that and looking at new information and making new judgements and new decisions, you're not going to go very far.
Speaker 1:
Absolutely.
Mike Hummel:
What we know now about carbon and what we know now about emissions is so much more than what we knew 20 years ago.
Speaker 1:
Well, and I think that that goes beyond obviously just the issue of emissions, but into everything...
Mike Hummel:
You bet. You bet.
Speaker 1:
... and certainly politics.
Mike Hummel:
Yeah.
Speaker 1:
Let's talk about consensus. I mean, that's another area of leadership that I think, and I go back to the political space, but one camp says they're 100% right, and the other camp says they're 100% and nobody wants to meet in the middle. I always wonder what they do with their spouse or their partner, how that works at home, but how do you find consensus as a leader?
Mike Hummel:
Boy, I think consensus is going to be a thing of the past pretty quick. I mean, I look at where we are right now, and I look not only at politics, but how that same approach has impacted groups of employees, how it's impacted boards of directors. It's hard to find consensus and it's hard to find people who agree on issues because everything is so ideologically-based instead of trying to seek that compromise. It's just challenging. It goes back to what we were talking about leadership.
I think the leaders today are going to have to be willing to step up and say things and take positions that they know some of the people aren't going to like. We're not talking 2% of the people. We might be talking 40, 50, 60% of the people, but you're going to have to take positions that aren't popular because we are not going to get consensus to today.
The way our political system is structured, you know far better than I, is, it is so challenging to take a consensus position and never win a primary in this state, in this country. Until that changes, it's going to be really hard, I think, to get people to move toward the middle.
Speaker 1:
People are sort of catering to the extremes during the primary.
Mike Hummel:
Yeah, and they have to win the primary. Most of the districts in this state, most of the seats in this country are determined in the primary, not in the general. It's in their self-interest to cater to the fringes each side of it.
Speaker 1:
Well, after graduation from U of A, a couple years later, we obviously had a very controversial governor, Evan Mecham, but we seem to, the pendulum kind of swung back, and now we've had another period of extreme. Do you see this as another peak period and it's going to come back to normalization or do you think that this is the trajectory we're on?
Mike Hummel:
Well, I think, we've always seen that pendulum swing when you look back over the years. Obviously, now, it swings a little more to the left than it did years ago in this state as we become more purple.
Speaker 1:
Correct.
Mike Hummel:
The pendulum has always gone back and forth. It's gone back and forth locally with our governor, and it's gone back and forth nationally with the president. The difference now is the pendulum's moving farther each time it moves. It's still going to come back, but it's just not as close to the middle as it used to be.
Speaker 1:
I think, also back in the day, there used to be a lot more business leaders that would go down to the legislature. Why don't we see that anymore, in your opinion?
Mike Hummel:
Well, I think, the dynamics that the legislature and dynamics in all of politics has changed a lot in the last 20 years. The money that's involved in that is so much more of an impact than the relationships anymore. You go back to the Phoenix 40 days or something that looked like that, and there could be a dozen business leaders who had a lot of influence with the governor.
That's not the case now. There's a lot of other moneyed interests in this state, some of it coming from out of the state that influenced the governor's decisions and what it's going to take for them to get reelected again going forward. I think that local interest is much, much smaller than it used to be.
Speaker 1:
Less of an area there for participation. Let's switch gears a little bit because I remember, I think it was March of 2020, we sat down and I said, "Mike, I think I'm going to have to close the doors and we're going to have to go virtual." You said, "You don't have a choice." Thankfully, I thank God that you said that because it was 100% correct. How did this COVID period impact the way that you lead and the way that we work, for instance, just at SRP?
Mike Hummel:
I think the thing with COVID is there was no playbook. There was no model. There was nobody to call there. Everybody was making different decisions. I don't know which ones were right and which ones were wrong. We were all kind of starting from scratch. We made a decision at SRP very, very early to send people home and we could see it coming. We made that call, sent people home.
I remember telling some of my staff at the time, I have no idea how we're going to send people home for two weeks and keep this place running. When I was going through my office retiring, I had that written down in my notes, in my COVID folder. In fact, it was over two years we sent people home. I was very, very surprised how well we were able to operate in that environment.
Speaker 1:
It was astounding.
Mike Hummel:
It was, yeah. SRPs not the only one. Many, many people...
Speaker 1:
Of course.
Mike Hummel:
... in the Chamber as well, operated very well. I think we learned a lot of things. One is it's far easier going into a crisis than coming out of it when you're leading because people are looking for somebody to be at the point. People are looking for some answer. It's easier to get people to follow you into that. Coming out of it, it's the challenge and that's where we are now.
You have people saying, "I still want to work hybrid. I still want to work remote." Everybody has a different opinion now whether that'll work or not. The fact is it does work different for different people. I think it's going to change a lot of things. One is the balance of power between employees and leadership certainly changed and what we saw during that period of time in a period of very low unemployment is employees had choices and they could exercise those choices and they could exercise the power with that.
They performed very well. They're coming back saying, "Well, wait a minute, maybe the whole paradigm's changed. You're stuck in how we used to do it. Why do we have to go back?" Some of those areas are right. We are going to have to look at it differently. I will be the first to say, I was never a fan of telecommuting, just didn't believe it.
Speaker 1:
Prior to COVID or-
Mike Hummel:
Prior to COVID.
Speaker 1:
Okay.
Mike Hummel:
This proved it can work. I am still not a believer that it can work full time. I don't think the mentoring takes place. I don't think the teamwork takes place. I don't think the relationships take place if people aren't together in the same place sometime. It may not have to be five days a week now...
Speaker 1:
Sure.
Mike Hummel:
... but it's not zero. I still think there's a hybrid area that works like that. I also think it's had an impact on relationships not just within the company but outside of it as well. I think about the Chamber is a good example. One of the big advantages of the Chamber was that board and the members getting together and exchanging ideas and developing relationships so you could pick up the phone and call people. That's so much more harder to do when it's on...
Speaker 1:
It is.
Mike Hummel:
... email, it's on phone. I think we've lost some of that and I don't think we've got it back yet in the community.
Speaker 1:
Do you get the sense, obviously not just SRP, but generally speaking, that we'll ever get back to five days a week like we used to have?
Mike Hummel:
I don't think so. There are people, I think, who want to do that. I think it's going to be challenging. Obviously, we had a third of our company who never left. They were there five, six days a week...
Speaker 1:
That's an important thing to remember.
Mike Hummel:
... for a long time and still are. Not everybody has that choice, but for those that do have that choice, I think they're going to have options and they're going to help drive an environment where some version of hybrid workforce is going to have to continue.
Speaker 1:
Well, and I think that brings up a good point. You're right, there's a big part of the workforce in Arizona nationally that doesn't have a choice.
Mike Hummel:
Right.
Speaker 1:
Thankfully, the folks that at SRP were showing up in March, in April. We didn't know. How did you manage that, just keeping people safe and keeping morale up, especially when the other part of the workforce is at home?
Mike Hummel:
It was really hard. I mean, initially, it was okay because we have people who really take pride in the fact that they're out there keeping customers in power and keeping them in service and doing that. They will do anything to make that happen. That's why you see such high performance during storms and things like that. They like that role, but that wears off after a while and then, pretty soon you end up into this kind of us versus them mentality within the company. It's a challenge to manage.
I think we had morale at a high level for the first year. After that, it's challenging to keep up. We tried to be sensitive about physical contact with people. I didn't go into our control center for two years because I didn't want to be the one who infected our operators.
Speaker 1:
Sure.
Mike Hummel:
If you can't go in there and have those discussions, it's hard to keep that morale. A lot of phone calls, a lot of emails, started doing a lot of videos...
Speaker 1:
I remember those.
Mike Hummel:
... to employees.
Speaker 1:
I thought those were fantastic.
Mike Hummel:
I would do two things, one is I would have basically an all comers Zoom meeting and anybody in the company could call in and we'd have discussions. I'd limit it to 30 people at a time, so they'd be conversational and not a presentation. That was a silver lining of COVID because I kept doing those unitl the day I retired. Then, I would do video updates as well and I'd do those first weekly, when it first started, and then as needed going forward after that.
We looked for every opportunity we could to communicate with employees and keep them informed about what was going on. There were bumps, vaccinations, for example, when you got to that, clearly a lot of different opinions about vaccinations. We had on management staff. We didn't know the answers either, so we had different opinions on do we require them, do we not require them? Then, politically, what does that mean and what are we going to be allowed to do with the state? The past administration had some strong views on that as well. There were some tough times [inaudible 00:19:14].
Speaker 1:
That's where the leadership came in.
Mike Hummel:
Yeah, I think, we weathered it really well...
Speaker 1:
I agree.
Mike Hummel:
... but it wasn't without a lot of loss of sleep by a lot of people.
Speaker 1:
Well, I think ironically, I think you were the first one, the face of events changed too. I think I saw you did an event where it was almost like where normally we'd be in the ballroom somewhere and you would get up and you'd make SRP's remarks and you might introduce somebody where you were actually doing, it was almost like a fireside chat, which I thought really was interesting and I thought was really impactful. So much more changed from that, so many different things changed. Maybe, also the nature of the office much more casual.
Mike Hummel:
Yeah.
Speaker 1:
Maybe SRP was casual before, but it's got a lot more casual.
Mike Hummel:
SRP was casual much more than it was 20 years ago. It's got a lot more casual and the community, as a whole, has gotten a lot more casual. I do think do dress for success is real. I think when people put on different clothes to come into the office, they operate differently than if they're at home.
Speaker 1:
Agreed.
Mike Hummel:
That's a balance for all of us.
Speaker 1:
It is. Obviously, I want to talk about energy. We look at, for instance, our neighbors to the west and everybody, Port California, everybody likes to make fun of, but they do suffer for some really significant challenges. One of those is they don't seem to have the right infrastructure or the right mix of energy sources in order to provide power on a consistent basis.
We, in the middle of summer, we don't think about that. That doesn't occur here. Not that they can't, but talk a little bit about why the difference. I mean, we're neighbors. They're far more powerful economically, but they don't seem to have their act together as far as it goes, as far as energy goes.
Mike Hummel:
I work closely with the utilities over there and they've got some great people running those organizations and great people leading them. From a regulatory standpoint and a political standpoint, they've been challenged with making the right additions to keep that system running. They have had renewable requirements that were far more aggressive than the rest of the countries for years.
They were prohibited from doing things like adding gas generation and they get a lot of blow back on adding transmission and facilities that keep that system running. All of that works well when you have a lot of reserve and a lot of excess capacity, including neighboring states that you can lean on. As time-
Speaker 1:
You provide power to California?
Mike Hummel:
We do, and we buy from California at times too. It's always been that way, but as the neighboring states have gotten leaner and their reserves have gone down because the challenges that we faced in putting in new generation, there's less to lean on. They have shut some of their plants down in California. It's just gotten tougher and tougher for them.
The fact is you know I'm a big believer in renewables and we pushed SRP very hard to towards some very aggressive targets, but you still need something behind that today. I mean, I don't know about you, but I want my air conditioner on in August at night when the sun's down too. Batteries make a difference in that, but batteries are very infant technology.
We have about 1,500 megawatts of batteries going in and that's one of the leaders in the Western United States. It's not nowhere near what it would take to keep the system running through the night. We've got to let technology catch up with us to get there. California has taken a bit more of a dogmatic approach to it and said, "Here's what we're going to do and we'll sort it out later." Right now, they're struggling sorting it out.
Speaker 1:
Probably, ironically, they're buying more from us in order to augment some of that?
Mike Hummel:
During some of the hours. Yeah. They've made, they've backed up on some decisions and basically, they were planning on shutting their nuclear plant down and decided to keep that open for five more years. They have reauthorized some gas plants to continue running past the point of when those were going to shut down as well.
Speaker 1:
It sounds like maybe the perfect being the enemy of the good.
Mike Hummel:
Mm-hmm. Yeah.
Speaker 1:
When we think about different types of renewables, and to your point, I mean, you made the commitment, wind energy, Arizona have any good wind energy? Do we have much wind in Arizona to speak of?
Mike Hummel:
Not a lot. There's a few hundred megawatts of wind in the state. It's not a great wind state. There's some small places that are pretty good [inaudible 00:23:42].
Speaker 1:
We're not Texas.
Mike Hummel:
We're not Texas. We're not Nebraska. We're not New Mexico. We can't make that happen as well. We can take advantage of it where it is, but we're called the Valley of the Sun for a reason. All right. Solar energy clearly dominates the renewable landscape here.
There are some others. There's some geothermal, very small scale geothermal, there's some biomass that we're taking advantage of right now. A lot of work going into hydrogen and looking at that as a future source, but that's a ways off too. Solar in the next 10 years is going to dominate the renewable energy.
Speaker 1:
I'm assuming part of it is the efficiency of the solar cells today. I'm assuming if you look back even just 10 years, those efficiency gains have gone, I'm sure, up quite substantially?
Mike Hummel:
Absolutely. Both the performance of them and the cost of them on a per unit basis is improved.
Speaker 1:
Because you've got to recover those costs somewhere. You did the repairs too.
Mike Hummel:
We did. We did.
Speaker 1:
You have to bear those costs?
Mike Hummel:
Right. If they're not getting enough megawatt hours out of them, it's harder to make work economically, you need capacity behind it to back it up when it's on cloudy days and all those kinds of things, but battery technology has just started within the last few years. When you go back and say, "Why didn't we go all solar 10 years ago or 20 years ago?" You're right. The efficiency wasn't there. The cost was too high and technically, it just wouldn't have worked. We're just moving into that time now where it can work well.
Speaker 1:
Interesting, you should talk about battery. Obviously, there were the Tesla walls and all other stuff.
Mike Hummel:
Mm-hmm.
Speaker 1:
Home systems, do they help or do they also cause some problems with the grid?
Mike Hummel:
It's a little bit of both. They can help. It depends on how an individual homeowner uses energy in their house. If somebody really wants to focus on it and manage it, they can manage their power wall very well. They can manage batteries very well. It doesn't mean they're not going to have to lean on the utility for service sometime, but they can take advantage of it and do it well, but you have to really be focused on it. I don't know about you, but most people think about their utility once a month.
Speaker 1:
Yes.
Mike Hummel:
When the bill comes and they don't think about it, it's a set it and forget it mentality and the batteries don't work well in that environment, don't work as well in that environment. We could get to the point where there is enough distributed storage that utilities could take advantage of that and management, the systems aren't there to do that yet. Whether the scale ever makes sense to do that, is questionable. It is far less expensive and more efficient to put it on a utility scale rather than an individual scale.
Speaker 1:
Thinking about that, we, obviously, have large scale utility plants, now, is it foreseeable that we would have smaller scale utility that's sort of distributed throughout the community or not?
Mike Hummel:
We do have some. We have some small batteries located in substations and things like that, but again, scale matters and size matters when you do that. If you're trying to do it at the lowest cost, you have to think about that scale...
Speaker 1:
Volume.
Mike Hummel:
... as well. If you could eliminate building transmission lines by doing that, you could save some cost, but to date, we haven't really been able to make a case to be able to do that.
Speaker 1:
One of the big complaints you see out there is like, well, I have my panels up and when I'm net metering, when I'm sending them back to the grid, why don't I get my full price back?
Mike Hummel:
Right.
Speaker 1:
What's the answer?
Mike Hummel:
Well, your full price that you pay on your bill, do you have solar in your house?
Speaker 1:
No.
Mike Hummel:
When you pay every kilowatt-hour, you pay only part of it is for the energy. You're also paying for transmission system. You're paying for distribution system. You're paying for meter. You're paying for things like that. Even if you have solar on your house, you still need the distribution, the transmission, the metering. You still need all of that and because there's going to be times when you need the utility. I don't know when you're going to need that. You have to pay for that on a monthly basis. That cost still exists. The net metering price you get is just that energy component, not the full...
Speaker 1:
You're paying for the energy.
Mike Hummel:
... price of that. Let me be clear about residential solar and battery, I think, anybody who wants it should have it. If you want to put solar on your house, I'm committed to make sure that SRP is our distribution systems ready. We're capable to do it. We have the processes in place to make that work for you. I absolutely want you to be able to do that. I want that to be a good experience for you.
Speaker 1:
Of course.
Mike Hummel:
I don't want your neighbors to pay for it.
Speaker 1:
Got it.
Mike Hummel:
I think you ought to bear the cost of that, but if you want it, you should. A lot of people do want it.
Speaker 1:
Well, I'm one of those guys that keeps thinking, well, the technology's not there yet, but it's close. Who knows...
Mike Hummel:
Yes.
Speaker 1:
... when I'll pull the trigger. My wife keeps nudging me about that. Look, I want to switch gears a little bit to water. I know we always relied on you to give us the straight news on water. Obviously, we're in a much different place than even just a few years ago. Where are we in terms of water?
Mike Hummel:
We've got some real issues we need to solve and frankly, we've had real issues we've needed to solve for a lot of years and haven't been as aggressive, I think, as a state in tackling some of those. Let's break water issues up into maybe three different buckets. One is the Colorado River, one is the Valley that's served by SRP and then groundwater and talk about those. SRP is very different than the Colorado basin. Our reservoirs and our watershed, both geographically, meteorologically are different. We are 100% full right now in our lakes.
Speaker 1:
If you go to the lakes today to go take your boat out, you're going to see a full reservoir.
Mike Hummel:
They're 100% full. In fact, we've been releasing water down the middle of the Salt River. You've seen that for...
Speaker 1:
Sure.
Mike Hummel:
... most of the summer so far. It's due to good snow pack and kind of the location of our reservoirs. It doesn't mean we don't have years that are challenging, but all of our studies suggests it's more resilient to some climate change than the Colorado. When you look at the Colorado, that river has been oversubscribed since it was subscribed.
Speaker 1:
Nothing new?
Mike Hummel:
Nothing new. The states have just grown into...
Speaker 1:
Sure.
Mike Hummel:
... the point now where they're using that allocation and there's not enough. You put that along with both natural weather cycles and climate change, and that portends a pretty big problem on the Colorado River. That's why you saw the grout plan five years ago to manage that. That's why I saw the agreements just recently to manage that. That helps us bridge a gap, but certainly, it doesn't solve the problem. This is the problem that's going to go on as long as we continue to grow in both the upper and lower basins.
Speaker 1:
We saw, obviously, to your point, a nice winter. End of the drought or a nice wet winter?
Mike Hummel:
Well, I think all we know right now is it was a nice, wet winter and end of a short term drought, but it's difficult right now to predict how long the drought's going to last. When we look back over several 100, you see natural 20-year cycles and there are people who think we're going to enter into this pluvial cycle right now. It's going to be wet. I hope it is, but history doesn't mean much.
Now, when you think about how the climate's changed that looking back 100 years doesn't mean what it used to. I'm not ready to say we're out of the drought. Certainly, not ready to say we're out of serious water issues in the state of Arizona. When I talk about water issues being serious, that doesn't mean there's not solutions.
Speaker 1:
You feel like there are solutions?
Mike Hummel:
I do, but we have to take it seriously to find those solutions.
Speaker 1:
Do you think we are?
Mike Hummel:
I think we're starting to. Yeah.
Speaker 1:
Okay.
Mike Hummel:
I think, I have to say the economic development community is loathed to say we have an issue, but like most problems, if you don't admit you have a problem, you can't solve it. The problem is we have a lot of people and not a lot of water. We need to find solutions for that. There are solutions. There are solutions from water augmentation. Desalinization, I think, is going to be part of a solution in the future.
Speaker 1:
For Arizona, you think?
Mike Hummel:
I think so.
Speaker 1:
Sure.
Mike Hummel:
I think it is. It's an expensive solution, but it's a solution that's out there, reuse water, reuse toilet to tap, not an attractive term, but we're going to see more and more of that. I think it's going to be necessary. I think there's going to be changes in agricultural methods over the years that maybe rely on, maybe see agriculture move toward less crops that use less water than what we have right now. I think there are solutions out there, but we have to admit we have an issue and go out there and take care of them.
Speaker 1:
Do you feel like we're urging people to conserve enough?
Mike Hummel:
Yeah, I do. I think, are we talking consumers?
Speaker 1:
Consumers, businesses.
Mike Hummel:
Yeah. I think we do. I think people do a good job of it. You can argue, do we get rid of swimming pools? Do we get rid of grass? All those are good arguments, but they don't make a huge difference compared to the agricultural use in this state and augmentation. I think we may see more of that, but we're not going to conserve our way out of this.
Speaker 1:
Water reuse, you mentioned that, I mean, I think psychologically that's a big barrier, but technologically, is that a tough one to do?
Mike Hummel:
We do it today in places. I mean, that takes place all over this world right now. I think it can be expensive to do, but that's relative depending on how much water you have. I think use of effluent, reuse of water, we're going to see much, much more of that and much better technology in the future to do that.
Speaker 1:
I think, maybe just as a society, we love silver bullets. We love those. What I'm hearing from you is no.
Mike Hummel:
This is hard work.
Speaker 1:
It's going to take a lot of different...
Mike Hummel:
We're past...
Speaker 1:
... approaches.
Mike Hummel:
... the silver bullet stage on this. That's made it so hard. That's where leadership is really required in this state. Really, when you look at some of the strong water leaders in this state, you have to look at SRP, you look at CAP and you look at DWR and we have three very, very good leaders that work very closely together in those right now. Leslie Meyers came to SRP a year ago or so to run our water group and could not have picked a better person. Brenda Berman is back in the state now running the CAP and she's terrific and she will do really good things there.
Speaker 1:
My time at the legislature, I think we all felt, as I did work on legislation, we all felt very comfortable in every part of policy except water. It's very difficult and terrifying for most people. I think from a policymaker perspective, same thing goes, obviously Jon Kyl was the giant.
Mike Hummel:
Yeah, right.
Speaker 1:
Do we have enough people that understand water at the national level, in the Arizona level that are policymakers that can help create some of these solutions?
Mike Hummel:
I think we're getting that. Like you mentioned, Jon Kyl, he was the water guy. Right now, we're starting to see our two senators step up and do a very good job for Arizona when it comes to water. Kyrsten Sinema, I think, has worked well with the water community, worked well with the tribes and looking for solutions. Senator Kelly has just done a terrific job lately of trying to understand very, very complicated issues and do the hard policy work to give SRP and the State of Arizona the resources to help with water issue.
Speaker 1:
A good glimmer of hope there?
Mike Hummel:
I think so. The water community is very small.
Speaker 1:
Yes.
Mike Hummel:
For some reason, historically, they've kept a wall around it and have not been very open about these issues and solutions to them. We need to socialize that a little bit more and bring some smart people into those discussions.
Speaker 1:
Most of us know enough just to be dangerous. We really don't have a good grasp of it, who the players are or how it all works.
Mike Hummel:
Right.
Speaker 1:
Let me switch gears really quickly since you're an engineer, I'm not afraid to ask you, AI, everyone's talking about AI. It seems to be everywhere, every day. From a utility perspective, AI, and maybe from a society perspective, where do you think this is going?
Mike Hummel:
I told my board my goal was to retire before I had to understand blockchain or AI. I might be getting out at the right time. I think it's going to have a huge consequence when I look at the industry and a positive one. I think something as simple as the interface with the customers when they call and solving issues and solving problems. We've always had voice interactions with customers in a lot of industries, but they've not been really intelligent. I think that will change.
Where the big change is going to come, I think is operating the electric system. Decisions have to be made these days on a much, much shorter timescale than they ever have before on how you dispatch equipment and how you dispatch resources. You have to be looking at the weather. You have to be looking at what the weather's going to be an hour from now. You're going to have to be looking at efficiencies of units on a second by second schedule, not an hour by hour schedule. I think AI is going to play a big, big role in how that happens going forward.
Speaker 1:
In giving the decision makers data to make decisions or in making the decisions?
Mike Hummel:
Well, I think, it's going to be in making decisions. I think it's going to be in making those decisions. There's not going to be time to give the decision makers the information to make that decision.
Speaker 1:
Of course, the question comes, what does that mean in terms of safety?
Mike Hummel:
Sure, sure. I mean, obviously, there's going to have to be rules and protocols around that. There's going to have to be feedback mechanisms to that to make sure that's working. It's not that it doesn't happen today, some of it does happen today. It's just going to get better. We're talking about automating processes that we've tried to automate already and just doing a better job of it.
Speaker 1:
Well, I'm sure, in the middle of summer trying to predict peak loads is probably very difficult. To be able to have that on a quicker basis would be really important.
Mike Hummel:
The electricity markets have changed. There used to be a kind of long term day ahead, hour ahead markets. Now, these markets have gone to five minutes and shrinking...
Speaker 1:
Incredible.
Mike Hummel:
... to where they're truly real time markets. Our system used to be based on big, large generators that spin. There's inertia. If something drops off for a second, you don't worry about it. It carries through. Now, they're electronic based inverters with renewables. When they drop off, they're off. You don't have five minutes to make a decision on that anymore.
Speaker 1:
You don't have time.
Mike Hummel:
Like I said, we do some of that now in an automated way and I just think it'll be much, much better and more informed than it has been before.
Speaker 1:
From a society perspective, you think good or bad? You think it'll be a plus?
Mike Hummel:
I hope so. I mean, we're all afraid of those kinds of changes when they come, right? Everybody thought calculators would cause people not to be able to do math anymore. Some people can't do math now.
Speaker 1:
Me.
Mike Hummel:
I think we can make it a good thing.
Speaker 1:
As we wrap up, what makes Arizona so special to you? Why is this a special place for you?
Mike Hummel:
Like I said, I was born here. This is home to me. In fact, we go back generations in this state. I think Arizona offers so much to its residents and visitors of this state. Clearly, geographically, we have more options than you can find in just about any state in this country, from the desert Florida to the high mountains. I think we are a state that's, we've had incredible growth, but it's going to continue to grow at an incredible pace. This is a state people want to come to.
Walked outside this morning, it's beautiful outside right now, and it's 1st of June. It's a great place for people to live. I think it's going to continue to grow. I think the political environment's going to continue to change, and I think we all have an opportunity to influence that, and to participate in that and grow that. I think we have some business leaders that are really sharp people in this state and will step up and continue to make this a really good place to live. I think it's a great place to prosper right now, both economic and culturally.
Speaker 1:
Just speaking of leadership for that person who just graduating from U of A degree or someone who's just taking over a role with their leading people, what's your advice in terms of leadership?
Mike Hummel:
What I'm envious of those people who are just graduating, starting out, because I think we're going to see such growth and such opportunity around here, my advice to them is to listen a lot. There's a lot of good mentors out here. As you get into leadership to recognize that diversity matters and I'm talking all kinds of diversity and as leaders, we always want to staff our staffs with people who act like us, but look for competing views, set up systems as a leader where people can challenge you, and make you defend your hard decisions. Just don't forget about the people that are working for you.
Speaker 1:
That's why you're such a great leader, Mike. I appreciate the time, but as we wrap up, I'm going to add, do a quick lightning round with you.
Mike Hummel:
Okay.
Speaker 1:
This is easy. First job, and it could be your job in high school, what was your first job?
Mike Hummel:
My first job in high school, I think, was stocking frozen foods at a grocery store.
Speaker 1:
What did you learn?
Mike Hummel:
It's a great place to be in the summer.
Speaker 1:
Good point. Now, that the world is your oyster, what dream job?
Mike Hummel:
Oh man, I just had it. When I was leaving, folks asked me if I was going to go work somewhere else and do something else. I said, "Man, if I wanted to work, I'd stay where I was." It was tremendous. I can't imagine a job better than that one.
Speaker 1:
I can't argue with that. Then, final question, next week when Ron Howard calls and says he wants to do the movie of your life, what's the title?
Mike Hummel:
What's the title of the movie of my life?
Speaker 1:
Yeah.
Mike Hummel:
I don't know. What do you think it'd be?
Speaker 1:
I think it would be extraordinary. I think it's an extraordinary life, a life where you can look back and be proud of it. I mean, I think it would be, everyone would agree on that one, but it's your story.
Mike Hummel:
I have-
Speaker 1:
Maybe or humble.
Mike Hummel:
I have-
Speaker 1:
Humble, would be there.
Mike Hummel:
I've had a blessed life. There is no doubt and humble beginnings and great family growing up with, great family now. Lots of tremendous friends, great career, good opportunities, blessed maybe the title.
Speaker 1:
Maybe humble beginnings and bless life is great. I'm sure Ron would be able to do something with the title. Thanks again. Thanks for being here with us, but also all the years of leadership and we're going to continue to look to you for some of these big questions and hopefully, we'll have an opportunity to talk to you again sometime soon.
Mike Hummel:
[inaudible 00:43:46], thanks for having me here today. It's great and I always like visiting with you and thanks for everything you do with the Chamber and with the Phoenix area.
Speaker 1:
Thank you.