Ep. 25 - The Energy Grid: Why Your Lights Stay On

The electric grid is so reliable that we treat it like background noise, until a heat wave hits and your phone flashes a conservation alert. Pat O’Brien sits down with Gary Moody, vice chair of Arkansas Advanced Energy, to break the system down in plain language: how we generate electricity, why transmission lines are the interstate highways for electrons, and how distribution delivers the last mile to your panel. Once you hear how supply and demand must match every second of the day, it’s honestly surprising the whole thing works as well as it does. 

We also get into what’s changing fast: load growth is back after decades of near-flat demand, extreme weather is pushing equipment to its limits, and integrating renewable energy like wind and solar introduces new operational constraints even as those resources become some of the lowest-cost power available. Gary explains peak demand in a way that sticks, including why the system is built for a few brutal hours each year and how “peaker plants” can sit idle most of the time but still shape your costs. We talk about electricity pricing, why residential customers rarely see real-time price signals, what smart meters enable, and how demand response can pay big customers to ramp down instead of turning on expensive generation. 

Finally, we zoom out to the regional picture, including MISO and Southwest Power Pool, and why transmission planning and permitting timelines are now a bottleneck. Gary makes the case for a Dwight Eisenhower-style high-voltage buildout and uses Winter Storm Uri to illustrate the stakes, especially when a grid can’t import power from outside the storm zone. If you care about grid reliability, energy policy, renewable integration, or what the future of the U.S. power grid looks like, this conversation will sharpen your mental model. 

If you got value from this, subscribe, share it with a friend who argues about energy, and leave a review so more people can find the show. What’s the one grid myth you want us to tackle next?

Transcript

Welcome And Guest Background

SPEAKER_00 0:07

Welcome back, everybody, to the Radical Moderate Podcast. I am your host, Pat O'Brien, and today I am joined by Gary Moody, who is the vice chair of the Arkansas Advanced Energy. Welcome to the show, Gary.

SPEAKER_01 0:22

Thanks, Pat.

SPEAKER_00 0:23

Good to see you. So before we get started, tell the audience a little bit uh what is the Advanced Energy Association in Arkansas? What does that mean? What do you do?

SPEAKER_01 0:36

Yeah, no, thanks. Thanks for that. Um, the Advanced Energy Association in Arkansas represents a variety of um new energy technology companies. It's everything from wind, solar, battery storage, uh wood pellet production, geothermal, energy efficiency, um uh sort of the whole gamut of advanced energy solutions, and particularly my expertise uh in area in that um is on the the grid side, the transmission grid side. So there's a lot of um newer technologies that can strengthen our grid uh as well that fall into that bucket of advanced energy solutions.

SPEAKER_00 1:20

And and how long have you been kind of around the energy sector working in various roles?

SPEAKER_01 1:27

Um about 15 years uh in various roles and and started my career from um the environmental angle. Um actually, my very first brush against it was trying to help some clients um get their products uh listed for energy efficiency rebates in Arkansas, um, which is a pretty arcane uh process, but um making sure they met the qualification standards. But then uh uh joined Audubon Arkansas as their policy lead, uh worked in and around that office for about a decade and eventually was over 31 states uh energy policy for Audubon uh when I left there a couple of years ago and then joined a grid-focused um philanthropy organization where I am now.

Generation Transmission Distribution Explained

SPEAKER_00 2:16

Well, let me just say it's probably by a factor of 10x how much more that you know about energy than I do. So let me let me go with a baseline question here. If you had to explain to a smart but not technical audience how the US energy system actually works. And I'm talking from generation to transmission to plugging something in the wall, how would you describe that?

SPEAKER_01 2:45

Yeah, dude, that's a great question. Um, first of all, it once you understand it, it's amazing that it does work, right? It's it's literally the world's biggest machine. Um, there's three main components. There's generation, how we actually make the electrons, whether that's coal plants, gas plants, nuclear, nuclear energy plants, or or solar or wind, but that's the generation uh piece of it. How do we actually physically make the electrons? Uh transmission is, I think, the interstate highway of the grid system. It's the big power lines that that move power long distances. Um, there's not as much of that as you might think. Uh, because our utility system was created as a bunch of sort of islanded fiefdoms, right? Uh, and you probably know this from your lived experience. When you move, oftentimes you get what? A new energy company, right? Uh, when you move that uh up up to Faye Valley, you got a new energy company, right? Uh, because you you crossed an invisible seam that like none of us really know exists. Almost like political boundary maps, utilities have boundary maps, right? They have service territories. Um, and in most states, not all, but in most states, um the customer base is captive, meaning where you live determines who your electricity provider is. Uh, that's how it is here in Arkansas. Uh, and so um in that mix, you have some that are vertically integrated, meaning they control generation, the transmission, and the distribution, which is the last piece of that. So I talked about the generation and the transmission earlier. The distribution is the last mile. It's the wires that actually go from the substation and connect to each and every home uh or business in the state and provide power specifically to your fuse panel. That's the distribution network. Um, and all in all, these things have to balance 100% of the time, meaning the amount of it uh energy that we are producing has to equal in real time the amount of energy that we are using. So every time when you come home from work and you flip on your lights, maybe you start the dishwasher or whatever, out there somewhere, there's a grid operator who is looking at that load change and having to respond in real time by ramping up or ramping down generation. Um, so when you put it like that, it's amazing to me that it works.

Why Reliability Is So High

SPEAKER_00 5:08

No, I I think that's a great comment. And for people who've seen movies or traveled extensively, I know one time I went on a mission trip to Honduras, and the issue wasn't reliable electricity. The issue was they didn't have electricity in most of the villages that I was visiting and helping with. Uh, so we're I I'm sure we're we're lucky in that regard. And it's probably not luck, it's probably hard work and smart people doing things. So let me ask this question: what would you say works better than probably people realize about our current system?

New Pressures: Load Weather Renewables

SPEAKER_01 5:44

Um, the amount of times that you come home and flip the switch and the lights come on. Uh, the US has really, really high reliability scores, meaning you know, 99 point you know uh plus reliability scores, right? Meaning we're just we take it for granted, right? Like that when you come home, your power is going to be on. Um and so that is a credit to the folks who work very hard to make sure that happens, right? And to make sure that happens, we built safeguards into the system. We have what they call reserve margins, we have um plenty of safeguards in the system, redundancies built in, right? Um, so that if uh one power plant has to go down for unexpected maintenance, there are others that can fill that void, right? Um now that impacts costs, right? Because we will we live in a world where supply and demand are real things, even in that space, right? So if this if the supply goes down and demand is high, the costs go up. Uh but a lot of that's coming into tension right now, and people are starting to tune in, I think, more to the electricity system because there's we're in a very unique time uh where the the grid is facing pressures at a level that it hasn't faced in a long time. Uh for the last 35 years, load growth has been essentially flat, meaning the same, right? Because yeah, we were growing, but those gains were being offset by things like LED light bulbs, more efficient appliances, right? And so overall, the total net load was staying roughly flat. Um, that's not the case now. Now we're forecasting a period over the next 10 years of pretty consistent load growth, right? Which means we've got to grow the system in order to meet that need. Uh, so that's one pressure. The other pressure is is more extreme weather, right? Whether it's wildfires out on the West Coast um or uh storms like winter storm Uri, uh, which devastated the electrical grid in Texas. Uh and so we can get into why that happened there. And even though we were sub-freezing here, we didn't experience that because I think there's a lesson to be learned there in that. Um, but we're seeing those more extremes, and those put a lot more pressure on the grid. And then, you know, variable renewable resource integration is becoming more of a thing, right? So we are going from a time where um almost 100% of the generation was you flip a switch, either it's on or off, right? Uh, and you can ramp up a natural gas plant, like you can turn up the dial on your natural gas stove at home and get a bigger flame. You can do that to a degree in a natural gas plant. Like you can't make the wind blow harder when you want it to, right? Uh, you can't make the sun shine brighter when you want it to, right? Um, now those resources when they're working are the cheapest resources available. Uh, and that's important to note because that wasn't always the case. It's only been the case for like the last, you know, three, four years that you can say that consistently uh that when those resources are available, they provide the lowest cost energy, right? So we want to maximize our ability to use those while also making sure that we maintain the level of reliability that Americans are accustomed to.

Aging Infrastructure And Reserve Margins

SPEAKER_00 8:54

Well, and you you touched on a lot of things there, and I think one of the things it was going to be my next question, but I think you already answered it is you know, what's fragile about our system that people don't realize? And I think you you pretty much address that. So let me let me move on.

SPEAKER_01 9:09

I think there's one more unique thing I didn't get too fat that I want to make sure we also flag is that most of our grid was built in the 50s and 60s, right? During during the the think of like the time as uh of the TVA, rural electrification, and then and then the last big grid expansion time was the 50s and 60s, right? So that's important because the average lifespan that we we assign to grid assets when we put them in the field is 50 years, right? Well, 76 was 50 years ago, right? So so we've got a lot of assets that um the past generation built and put in the field that are now at the end of their useful life, right? And they're starting to fail. So that's another sort of fragility that we're up against.

SPEAKER_00 9:52

So within that that context, would it is it a fair statement to say that from a production, from a generation standpoint of electricity, we can produce more than we can efficiently move through the grid, or is it in parity? Are is the grid actually up to snuff at the moment?

Peak Demand And Peaker Plants

SPEAKER_01 10:12

No, it I mean, at the moment, yes, it's it's up to snuff. Now, what we are seeing is we're seeing those reserve margins being are dwindling. Um and we we call them peak times in the industry. So they're peak times, right? And it's the maybe the best metaphor I've heard for this is like um the size of the pipe, right? So if you got a water pipe coming into your house, right? Um the diameter of that pipe determines how much water you can get in your house at any given time. And that's kind of what we need the grid to do, right? So the size of the pipe isn't growing as fast as we need it to, right? Um, because we have to be able to meet that peak when on the hottest day of the year, when everybody's turning on their air conditioning to stay cool, right? The grid still has to work, right? On the coldest day of the year, when everybody's turning on their heat, right, and and doing all that, the grid still has to work. Uh, and that's what I think a lot of people don't understand is that we have to build the system for those peak moments, right? Um, and and oftentimes it's those peaks that drive the bulk of the cost, right? Because you've got to build power plants. There's a lot of power plants out in this country, people don't realize this. Uh, we call them peaker plants. Maybe they only operate for 15 minutes a day for two or three days a year, right? But if the alternative was you had to, you know, turn people off, right? Right. Um so so we have a lot of that uh built into the system. You have you have to be able to meet those peak times. I think that's something that a lot of people don't fathom, right? Um, because unlike a lot of countries in the world, we don't for ease, we opted to treat every kilowatt hour of power the same from a pricing standpoint, from a market, like right, we don't communicate to the consumer that the kilowatt hour that you burn at from 5 to 6 p.m. when you get home cost five times as much as the kilowatt hour that you burn at 11 p.m. Right? Because we charge you the same, right?

Flat Pricing Demand Charges Smart Meters

SPEAKER_00 12:18

Right. Well, and so there's a couple things I wanted to uh go on with that, because I love talking about capitalism and markets, and I think that the because I'm a huge capitalist, but I would but I tell people it matters what the rules of that are and and what that market rule is. And I think what you're saying is that there's kind of a socialization of the cost. You know, I think they call it leveling on my on your build, and I don't do it, but I have the option of doing it. But are you basically saying the choice we've made as a country is to socialize that cost so that it because some people might say, I don't, I want to just not use it at peak time and pay a lower bill, but that's not really an option. Is that what you're saying?

SPEAKER_01 13:08

Not for residential um customers. Now we do have that available in the commercial and industrial space uh because those customers pay a thing called demand charges, uh, which is a are a bigger component of their bill. And that demand is like, are you using at the peak time? What is your maximum usage at any given time? And a portion of their bill is related to that so that so that rewards you if you can more evenly spread your use and keep it keep it relatively even. Um, so we do have some mechanisms for that, but um the thinking early on was that residential customers weren't sophisticated enough as consumers to be able to respond to real-time price signals. And the technology, before, I mean, now we almost all have smart meters on our home, and we don't even probably realize that the utility companies have switched them out, right, and gone from an analog meter to a smart meter, but they have in almost all of Arkansas. Um, and so now for the first time we do have access to that very granular real-time data of how much energy any given home is using at any given moment. Um, but that's again a relatively new occurrence, right? And um utilities and utility regulators are still filling figuring out like what are the best ways to to make use of that data, right? Uh, so that we can we can evolve the system. But yeah, right now we we've gone with a flat fee for residential. You pay 10 or 11 cents a kilowatt hour, period, right? Like, um, regardless of when you use it. And frankly, like regardless of how expensive you are to serve, right? Rural customers that live in the middle of nowhere, they cost a lot more to serve than the customer that lives uh in a dense urban area. Um, but we have made the policy decision to charge them roughly the same, right? Um, so that yeah, there are a lot of sort of uh smoothing out of the system for for ease.

SPEAKER_00 15:06

One of the things that I'm gonna take away from this uh podcast is the term peaker plant. I just had no idea. And and and it makes perfect sense. And just how many ballpark, how many of these peaker plants they're only operating in very, very limited hours in a year, would you say there are?

SPEAKER_01 15:27

Um I don't know that I have a good ballpark. I mean, it's it is, you know, I would say nationally, probably in around a thousand. It's definitely in the high hundreds, right?

SPEAKER_00 15:41

Um and they just sit dormant, is what you're saying, like 90 to 95 percent of the year, and then they ramp up at certain times when they're needed.

SPEAKER_01 15:51

That's right. That's right. Yeah, that's their whole purpose, right? Um is is to serve that peak. Um, and it's only pretty recently that we've gotten sophisticated enough that we've realized it's actually in a lot of cases, it's cheaper to pay a large industrial customer to ramp down um than it than it is to fire up, right? So we do those are called demand side resources. So it's actually we've now started thinking about that as a resource, right? Where we actually just pay, maybe we pay the paper mill in Pine Bluff, right, to to ramp down or or or large manufacturer um as opposed to turning on a very expensive uh generator.

Conservation Alerts And Demand Response

SPEAKER_00 16:33

Well, I want to I want to come back to the grid in a second, but I think the analogies we're using, you were using Picker Plan or a lot of the things that are in place to just make sure, as you said, that when we flip the light switch, it comes on. It made me think of I drive quite a bit uh for work and things, and many times I'm crossing the Mississippi River or I'm in the Delta flatlands and that sort of thing. And so you see these massive levees, the these massive levees, and on a dry day, you look at them and like, why do we have that? Now I know why we have it, it's because there's a few times where they're needed, and if the levee breaks, if the levee's not dry, then the levee breaks, it's a massive, really catastrophic problem for people. And and so, yeah, we need levees in the in the grid system. And then one more thought I had was I think we've all been in that situation, at least if you live in the south, it's July or probably more likely August, and it's three o'clock in the afternoon, and now it's on our smartphones, you get a you get a thing that's like, please don't use any more air conditioning or whatever, you know, like because you're just gonna break the system. That's right, you know, like if you if if one more person plugs in their poster, the whole thing's gonna fall to the ground. And I think intuitively we kind of get it and say, you know, we need to act as a group, right? Like we're individualists and that sort of thing. But here, without knowing all the backstory, we kind of intuitively say, I'm sure these people are right because I it makes sense. On a moment like that, though, Gary, what is actually happening? Like what is going on behind the scenes?

How MISO And SPP Share Power

SPEAKER_01 18:22

Yeah, so what what's happening is they do that as they see the reserve margin dwindling, right? And so um sending out a conservation order is is something that a utility doesn't want to do, right? And and frankly, there is a policy debate about whether they work anyway, particularly at the uh uh particularly at the at the residential level, because you you would think we all want to work together, but um, there's at least some evidence that people get a conservation order and they go, oh man, the power might go out. I'm gonna I'm gonna crank my AC up and make sure my house is nice and cool now, right? So they're like pre-cooling, you know. So in some cases, it's actually been shown to have the the opposite effect, right? Um uh at least in the in the short term. Um now it does work well uh when we found in the commercial industrial world when you compare it with a financial incentive, right? Then you align financial incentives, those folks respond. Uh and that has been proven to work. But what they're seeing is that if you go to a point where you have more um more demand, right? Like more people have things turned on than you can physically serve, then that's when you start getting brownouts and blackouts. That's when the grid starts to fail, right? Is it it literally doesn't have enough power to serve, and that starts tripping fuses and and the and the the the safety guards we put in the system, that's when the power goes out, right? And so that that's that's the issue uh at hand, and that's part of why I'm such a big proponent of building out our transmission grid in a way that we haven't. Is I told you we've got all these like isolated fiefdoms, right? Um and it's interesting, a bunch of folks have voluntarily banded together. Arkansas is part of two what we call regional transmission organizations, right? So we have the MISO, which is the mid-intercontinent system operator. Uh, and MISO spans from Manitoba, Canada, all the way down into Louisiana. Um, and they operate the transmission grid for that whole region, right? Uh, they've got three control centers, and one of them happens to be in Little Rock. Uh, so they've got one in Little Rock, one in one in Indiana, uh, and one in Egan, uh, Minnesota, um where grid operators monitor, and they're like the track air traffic controllers, right? They're the traffic cops of the grid, they're monitoring their flows, they're moving. So, what that allows, though, uh in that footprint is for all of those individual utilities, right? For entergy and uh even the electric cooperatives, um, but all those utilities can then share power resources with one another. They can share their generation assets. Um, and specifically the way they do that is they bid it into a day-ahead market. They take all their generators and they say, tomorrow we'll be able to generate power at this cost, right? And then Myso starts stacking them up, right? And when they have to turn on, they turn on the next most expensive. And when they have to turn off, they turn off the most expensive one to make sure that we are economically maximizing the opportunity, right? Uh, and then West Arkansas, where you are in Fayetteville uh or in northwest Arkansas, is in um Southwest Power Pool. Uh, it's a whole different 14-state regional grid operator. Um, Arkansas actually is on a scene um where uh Myso and SPP butt up against each other, um, somewhere around Dardanelle is typically is where that line is, right? Um so like Sweptco is in SPP. Uh SPP's main headquarters is also in Little Rock, Arkansas. Arkansas. So like a lot of you don't realize Little Rock is a major electric grid hub in the United States controlling about half of the state's grid uh uh is tied to to control centers here in Little Rock. So that's kind of a neat fun fact.

SPEAKER_00 22:16

Um There's two questions I want to get to uh to make sure I I I get the foundation of all this. Because we've been talking about the grid. Let me make sure I know the definition. Is the grid when we when the term grid is used, is that infrastructure and technology and people, or do you mean more specifically just the infrastructure?

A 50-Year Plan For Transmission

SPEAKER_01 22:43

Usually when we say grid writ large, we mean the three components the the transmission, the generation, uh, and the distribution. Collectively, I often refer to those as the grid. I you could lump in like the controllers into that as well, like the control centers and the and the command control. Uh, but but usually I'm talking about like the physical apparatus, right? Um and then we'll specify, like if I'm talking about transmission, I'll say trans, you know, transmission or you know.

SPEAKER_00 23:16

I got you. Well, so first question related to that. If Gary Moody was put in charge as the czar of the grid with an unlimited budget, and just said, Gary, we need a 50-year plan and it's on you, buddy. Where would you start? Like what what would be the things that you would immediately don't have to go to Congress, you don't have to talk to anyone. Everybody works for Gary Moody. Where what would you start? What would you do?

Three U.S. Grids And Texas Risk

SPEAKER_01 23:46

Yeah, no, that's a great question. Um, there's a lot of things, right? Uh, we think of the areas that need improvement. I call them uh oftentimes we refer to them as the three Ps planning, um, permitting, and paying, right? Those are the three Ps of the grid. Um so our planning has to get better. Um often the planning for the grid is done in silos. The RTOs do a good job, but you have to keep in mind that RTO regional transmission organization membership is voluntary, right? Um, it's just a collection of utilities who've chosen to work together um for economic efficiency purposes, right? So those memberships are voluntary. Um, and they try to coordinate planning, but our planning writ large in some areas it's great. Some areas, like in the southeast, there's not an RTO, like in Georgia, North Carolina, South Carolina, right? Um, and all that planning happens in silos, and oftentimes um the planning window is simply too small. They're not looking far enough in the future, right? What people don't understand about transmission in particular is it takes on average in the United States 10 to 15 years to build a transmission line and put it in service because of our permitting regime and just the amount of time it takes to plan and study and actually get steel on the ground and electrons flowing across those wires, right? So that means our planning has to look at least that far into the future, or you're oh right, or you're just perpetually behind because by the time a need shows up, it takes so long to fill it by building new transmission. That's increasingly problematic now when a new data center can come in and have a energy demand that's roughly the size of the city of Conway, right? Like I don't think people understand the size of power requirements for a lot of these things, but that's roughly the size of demand for an average uh data center, is the whole everything else in the city of Conway combined, right? Um if if that's so you can build a city's worth of demand in 18 months, right? You can build generation pretty quick, um, assuming all the supply chains and all of that works out, but you can build that in say 24 months to 36 months, right? Two to three years. But if you've got 10 to 15 years to build the big power lines to connect it, right? Um, what happens is you get an incredibly inefficient system because everybody's got to build their own thing. And so if I was the czar, I think it's time for a Dwight Eisenhower um US highway plan for the grid, right? I think that there is a certain public good uh of like these super high voltage interstate lines um to be able to move power from the west coast to the east coast and vice versa, right? Um, which we can't even do in this country right now. Well, we I call it the grid. We actually have three grids in the U.S. right now. We have the Eastern Interconnection, which Arkansas is a part of, um, that goes from the East Coast to the Rocky Mountains. You have the Western Interconnection, which is was built all on the west side of the Rocky Mountains, um, and then you have Texas.

SPEAKER_00 27:05

Um seriously, well, of course, I mean everything is everything's got to be independent in Texas, they can't participate with the other grids.

Winter Storm Uri Lessons And Wrap

SPEAKER_01 27:14

And Texas, they did. They made the proactive decision years ago to not connect to the other states' grids because they didn't want FERC, the Federal Energy Regulatory Commission, to have jurisdiction over them, right? And the only way they could they could stay without FERC jurisdiction was to not connect. And so if I I mentioned Winterstorm Ure earlier, right? That has a real impact here that I think is worth looking at because we had similar temperatures and similar freezes, right? In Winterstorm Ure as Texas had. The impacts were completely different, right? In Arkansas, most Arkansans lost power for less than three hours during Winterstorm Ure, if they lost power at all, right? Why? Because we are connected to a grid that was bigger than the storm, right? We were able to import power from Ohio, from power plants in Ohio, carry those electrons over the wires here to keep us up and running, right? Um, because the local power plants here, a lot of them, the coal piles were frozen, right? So you couldn't, you literally we couldn't get the coal into the into the coal pile power plants fast enough to keep to keep up, right? Uh or to get them running at maximum efficiency. Uh a lot of the gas well heads were frozen, right? So the gas delivery system for gas power plants was interrupted. Um so by being able to bring power in from an area that wasn't impacted by the storm, we were able to quickly restore power when we lost it. In Texas, they had folks without power for two weeks. People died. I heard a story just yesterday uh of someone who said, Yeah, I had a colleague in Texas that was literally burning their furniture for warmth. Right? Oh wow. Um, because if you think about your life and how quickly, right, like being out of power for an hour or two is a nuisance, right? Being out of power for four to eight hours, like you start worrying about like your food spoiling, things going bad, the temperature in your home becomes quite uncomfortable, right? Batteries on electronic devices start to dwindle, right? But as you go forward, those problems just compound and compound, and it doesn't take very long for it to, particularly if it's sub Arctic freezing temperatures outside, for it to become life threatening. And in fact, in Uri in Texas, people did die, right? Uh, because of the lack of power.

SPEAKER_00 29:37

Um, and well, and let me say I I should have given you a warning. We we're coming to the end of this episode, but uh here's what we're gonna do. Uh you'll be back for part two next week. We're gonna broaden the discussion. But I what I I had some big takeaways this week from Picker Plants and understanding the grid at a much higher and and deeper contextual level. And uh my biggest takeaway is we need to make make Gary Moody the czar of the grid and just get out of his way and and let him do his thing. So for for those uh who are listening today, appreciate it. Hope you learned something, and that is the POV of POB.