Moody's Talks - Inside Economics - Jigowatts and EV Jitters

Episode Date: November 24, 2023

Inside Economics considers the economy’s performance and prospects through the prism of the electric utility industry with the Chief Economist of American Electric Power, Dan White.  It was great to catch up with Dan, a former colleague, and get his insight on how American households and businesses are doing. He also ponders the transition to green energy. Follow Mark Zandi @MarkZandi, Cris deRitis @MiddleWayEcon, and Marisa DiNatale on LinkedIn for additional insight. Questions or Comments, please email us at [e-mail]. We would love to hear from you.  To stay informed and follow the insights of Moody's Analytics economists, visit Economic View. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Inside Economics. I'm Mark Sandy, the chief economist of Moody's Analytics, and I'm joined by my two trusted co-host, Mr. DeRis, Dr. DeRides, Ms. D. D. Nataleigh, how guys? Hi, Mark. And this is a special podcast. We've got an old friend, Dan White. Dan, how are you? I'm well, Mark. Yeah, you, yeah. When? So for podcast listeners, you know that Dan was, uh, was, uh, you're, you're, you, yeah, when? So, for podcast listeners, you know that Dan was, uh, working with us for, I don't know, how many years did you work at Moody's Analytics, Dan? 13. 13 years. And you moved over to AEP, the electric utility in headquartered in Ohio.

When did you do that? We moved over in March. In March. And how's it going? You miss us? I miss you guys terribly. I love working here at AEP, but I miss the people at Moody's terribly. You guys are awesome.

Yeah, we miss you too. We miss you a lot. And you are the chief economist of AEP, right? I am. I'm the chief economist managing. It's a mouthful of the title, Managing Director of Economics and Supply Forecasting. Oh, very cool. And you have a team of folks there, a number of economists statisticians, or who? We do. We've got three teams of economists and data scientists who do a number of directors who do a number of different forecasts. So one team forecasts on our folks on load forecasting. So how much electricity are we our clients or our customers are going to need and where are they going to need it? We have another team that focuses on supply forecasting. So how much is it going to cost to produce a kilowatt of electricity, you know, all the different ways, you know, coal, gas,

nuclear renewables? We forecast that across the whole country too to kind of see how we should be planning for the future to provide the electricity we need to every. everybody. And then I've got a third team who is really amazing because they can translate what those two teams put together into common English so that our executives and our stakeholders and investors can understand all of it. Yeah, I don't think people appreciate how complex a electric utility is. You know, the, just the engineering and the science. I mean, the whole shoot, just the process itself, it's an incredibly massive. massive and complex system. Yeah, I certainly didn't. There's a lot that goes on to make sure that the lights come on when you hit the switch. The guys here, I've got a bunch of engineers that work for me now,

and they're very gracious with me in terms of dealing with teaching me remedial chemistry and physics and things that I never thought I would know again. So I'm kind to them when it comes to financial modeling, and they're kind to me when it comes to physics, and we give each other grace. Got comparative advantages. You can teach them that. There you go. And AEP, tell us about AAP.

That's a very large utility in the middle of the country. Yeah, we're, so American Electric Power. We own and operate regulated utilities across 11 states from Michigan all the way down to Texas. So let's see if I can remember. Michigan, Indiana, Ohio, West Virginia, Virginia, Kentucky, Tennessee, Oklahoma, Louisiana, Arkansas, and Texas. Okay, so your footprint is really a big chunk of America. It is. It's a very diverse kind of chunk of the middle of the country. We are in a number of different states.

We're usually the second largest provider in each one of those states. And we have a lot of rural areas, but we also have some big major metropolitan areas like Columbus, which I'm looking out at through my window here, and Tulsa and Corpus Christi and a number of those kind of mid-tier in terms of size metro areas. But some metro areas that really do hit above their weight when you look at their economic output. So I thought it would be wonderful to have you on just because I miss you and it's good to have you back on. And, you know, when you were at Moody's Analytics, you were really focused on federal and state and local policy, government policy. And I want to come back to that at some point.

And I promise, I'm not going to ask you who's going to win the presidential election. I knew you would. I don't have to do an election model anymore. Yeah, we just dusted that off today, by the way. I had a meeting with Brendan, Lucerta, and Justin Begley, and we just dusted that off. So as I recall, and don't correct me if I'm wrong, but as I recall, my model was better than your model in predicting. As I recall, I was the first person in the history of Moody's analytics to get it wrong running the model. That's quite the distinction.

Hold it. The first one, not the only one, but the first one to get it wrong. Get it wrong? In 2016, I got it wrong. Oh, that's right. We got, oh, that's the Clinton-Trump election. We got that badly wrong. Yeah, I happened to be running the model the first time it was wrong.

Yeah, and for the folks out there that don't understand what the hell we're talking about, we have this election model. Electoral College level, we predict who's going to win. each state and based on that determine who's going to win the presidential election. We've been doing this for, I guess it's 25 years, some long period of time. I think Gus Foshea did the first one in 2004 a million years ago. Chief economist of PNC used to be at Moodie's Analytics as well. And so the last go-around when we had Bernard, Yaros, kind of managing things.

we really extended out the modeling that we did. And we came down to three models to predict who's going to win the election at the electoral college level. And one was called the pocketbook model. One was called, I think the unemployment model. I can't right now I can't remember. I blacked it out because we were all right, but yours is more accurate than mine. So I kind of blacked out.

Yeah, yeah. Okay. Well, anyway, we just tested that off. And maybe we'll come back and talk about, we won't talk about who's going to win the presidency. but maybe we can talk about policy in the context of all the things that you're dealing with with regard to climate and the green transition and that kind of stuff. But anyway, so going back to the economy, just let me frame how I think about the economy. And maybe, Chris and Marissa, you can correct me or adjust what I say. But it's turning out that the economy is doing pretty darn well.

I mean, 2023, calendar year 2020, even if the fourth quarter is soft, you know, no, very little growth, we're going to get GDP growth of about two and a half percent, which is pretty good. I mean, you know, most people would say, most economies, we would say that the economy's potential rate of growth, that rate of growth consistent with stable unemployment's around two, two and a half percent is pretty good. And despite that solid growth, well, we've got a lot of jobs, three million jobs are going to be created. this year, despite all that, unemployment is low. It's, you know, below, you know, remains very low. It's pushed up a little bit, but it remains very low around 4%. And I said, that's, that's, I should say, despite all of that, inflation is moderating. Inflation seems to be coming in.

So, you know, you kind of add it all up and I'll stop there for just a second. Chris, would you characterize the economy differently than I just characterized it in 2023? No, it certainly was, uh, Well, for many, it was a bit of upside or surprise, right? I think even the optimists are surprised the upside. So, yeah, much more resilient than we anticipated. Right.

Mercer, would you disagree with that character? No, I mean, I think it looks like growth is going to come in at least half a percentage point than even we were predicting at this time a year ago. Right. So we were always on the optimistic avoid recession side, but it's even better than we've thought. Right. Right. So that's kind of the history. Is that consistent with what you're observing in your business, Dan, in terms of demand for electricity?

We're definitely seeing the economy much stronger than we expected it to be. It's proven to be much more resilient to high interest rates. I didn't think we could handle interest rates as high as they've been for as long as they've been as gracefully as we have, certainly. When we look at our load, our load is growing, but our load is growing because of some kind of abnormal gains in commercial. growth. If you look at the underlying industrial growth and the residential growth, which is really more closely connected than the underlying economy, we're still seeing an economy that's growing, but it's slowing pretty significantly. And that might be to some of the things that I've seen you write about, actually, I think all three of you write about it sometime or others, that

a lot of our customers are in that bottom, you know, two quintiles of the income distribution. And so we're seeing things slow much more quickly for them than we are for kind of the economy as a whole. One of the things we saw, we've seen a lot is our load per residential customer, so usage is down. So the amount of electricity that individual households are using has been down pretty considerably over the last year. Some of that is secular, like people going back to the office, and so maybe they were working from home five days a week, and maybe now they're going in the office three days to their electricity usage is going down. But we've seen And this has been something that surprised me.

We've seen much bigger reaction to changes in underlying prices and underlying incomes in terms of electricity usage than I would have thought. You go to school and you see electricity is like the definition of an inelastic good. You don't expect much change. But we've seen a much more elastic response in terms of usage, especially in those of our customers who are in the lower end of the income spectrum to higher prices and slower growing incomes than we expected to see for sure. Oh, that's interesting. And kind of the way you framed it, I think, is how most utilities think about demand for electricity. They break it down into residential. So that's you and I as households and the electricity we consume at home.

Commercial, industrial, that would be manufacturing activity. I guess maybe construction as well. Yeah, the good way to think about it is commercials, almost all your services in terms of Makes goats and industrials most of your goods producers. Got it. Not exactly, but close. Got it. And so if you look at the residential, what you're saying is sales, the demand for electricity has been on the softish side.

And that, particularly among low-income households, and you're saying they're almost all utilities, certainly nationwide, jacked up their prices for electricity, particularly in 20, end of 21, into 2022 going to the higher cost of of energy you know natural gas and yeah well yeah there's two components right so there's the fuel and then there's the non-fuel so the fuel electric utilities they just pass along whatever the fuel price is so yeah fuel price goes up we just we we don't make any money off fuel we just pass along whatever the cost is to customers so non-fuel revenues where though we recover the cost of all the the capital in structure infrastructure investment that we've made. And so, you know, the underlying fuel costs have gone up, which isn't really a

price. It's for us. It's not the price of electricity. It's a price of fuel. But, you know, there are, because the cost of infrastructure has gone up so much with inflation, with all the steel and some of those things that have gone the last couple of years, there are some parts of the country that have seen electricity rates increase pretty considerably in the last two, three years. Yeah. And you're saying the folks in the bottom part of the income distribution, You mentioned the bottom two quintile. So the bottom, 40%. Yeah, those are households making less than like $55,000 a year.

Right. They're very sensitive to that price and to any fluctuation in their income. And they've been very cautious and judicious in their use of electricity. Yeah, much more so than I would have expected looking at it. So we look at the amount of customers and then we look at usage. per customer. And we're fortunate in our footprint, you know, we've got some really fast-growing areas, especially Ohio and Indiana and Texas.

So our customer counts are up pretty significantly year over year. Our usage per customer is falling so much that our overall residential load is actually declining this year relative to a year ago. So how do people conserve? Do they keep the temperature down lower in the winter and? Most of it's, yeah, thermostat, that kind of stuff. You know, it could be not putting up Christmas lights. It could be a number of different things that they can kind of pull back.

But it's been significant. At one point this year, our usage per residential customer was down almost 3%, which, you know, in such an inelastic good is electricity. That's really considerable. Yeah. Interesting. Do you control for, is that controlled for the temperature? Yeah.

So we weather normalize all of our data. So it's all based on weather normalization. But again, a lot of it is those lower income customers. And even though, you know, wage growth is still pretty healthy and prices are coming down, one of the things that we've been looking at really closely, and I'd be curious, I think I stole it. It's a chart I stole from you probably, Chris, the amount of cash that people have in their bank accounts from the New York Fed. When we look at that, adjusted for inflation by income quintile, which is why I keep talking about those, is how we look at it.

The two lowest quintiles, they're below. low where they were in 2019. So they've taken all that pandemic stimulus money and they've spent it. It's gone. But the folks who are in the top two, you know, three-fifths of the income distribution, they're either at or above. So I think they're really driving a lot of the economy and there's some parts of the economy that are really getting left behind. And those are our customers. And so our focus has to be on our customers and making sure that they're able to afford the electric bills that we're giving them. And you can see the folks in the top part of the distribution or the middle top part of the distribution, they're still using electricity like they typically do.

They've not pulled back in any significant degree. Yeah, it's tough to track one for one, but when we look at some of the counties that have higher average incomes and lower average incomes, we can see a dispersion in terms of their usage for sure. What about efficiency? I think overall the economy has gotten much more efficient. with electricity usage? Oh, sure. Is that a factor here? There's some secular trends too.

So like the return to work is kind of a trend that we're seeing. Most of that's played out because if you're going to go back to the office, you've probably already gone back to the office. But everything is getting more efficient. So as, you know, we see, you know, all the appliances in people's homes are getting more efficient as we start to see turnover in appliances. That happens for sure. So there's definitely a secular decoy in usage.

but we have seen some cyclical declines as well. So we got it really started, you know, in earnest last August, really, when we look at our data, which is kind of when inflation, a couple months after inflation kind of peaked out in the summer of 2022. So because that's when we saw it and we've also slowly seen the cash to kind of disappear from, from bank accounts in those lower income households, you know, people don't feel as is as wealthy as they did. and inflation is still pretty high. It's causing people to pull back where they can't. So that's the residential piece.

Now, how about the industrial piece? How is that faring? The industrial piece is doing better than residential, but it is definitely softened pretty considerably over the last six months. When we look at some of our large industrial customers, they're not running at peak loads the same way that they were a year ago or even two years ago. So they're still running, and it's not like we're seeing a huge pullback in industrial growth,

but they're not running at full capacity compared to even just maybe six, nine months ago. Hmm. And I assume in your footprint that the vehicle industry is a pretty significant customer, I would think, right? Yeah, for Indiana, Michigan, Ohio, especially. In the UAW strike probably would have an impact, wouldn't it? Because it affected production. It did.

It had a very small impact, though. I mean, because we've been through this before, and so we can go back and compare to previous instances of UAW labor stoppages. I think the way that they handled the UAW strike this year really limited the impacts, both economically and certainly on our load, because they were very targeted and which plants that they were stopping work at, as opposed to just a mass walk out of all the UAW facilities. And so I think it certainly seemed to be very effective for the UAW, but it also seemed to be very effective in terms of limiting the impact and kind of spreading the impact out.

So it wasn't just Indiana, Michigan that got hit. It was kind of plants all over the country. So the UAW strike had an impact, but a really modest one. Can you tell from your data if the softness in industrial is broad-based? or whether it's a sector or two? It's pretty broad-based, but I'd be curious to hear what you guys think. So a couple of the areas where we've seen the biggest pullback,

and we have some theories of ours, but I'm curious what we think. Chemical production, rubbers, and plastics manufacturing have really pulled back more than usual. And, you know, our footprint is kind of unique, but I'm curious if that's something you guys are seeing nationally, or if that's, we have a couple of theories about why it might be happening in our area, but I'm curious if it's...

But I'm just... Not something I thought about at all, but that doesn't stop me. I want to catch you... That doesn't stop me at all from telling you what I think. Or at least throw out a theory. I know. I know it wouldn't. That's why I want to hear you.

Yeah, yeah, okay. Could it be just that their cost structure is a lot higher? I mean, those are very energy-intensive industries, right? I mean, rely on oil, natural gas. and I guess electricity, and the price for all energy rose very sharply, obviously, in the wake of the Russian invasion of Ukraine. We saw oil over 100 bucks a barrel. We saw natural gas. I can't even remember how I got the seven bucks per million BTU, I think, at one point.

Yeah, it was, yeah, almost seven bucks middle of last year. Yeah, right. We're back down below three, but, you know, that. So maybe just the margins just aren't there. Right. And that is crimped, you know, production. I don't know. Does that resonate at all? Is that a possibility? You could a little bit. The only thing that makes me worry by that is that, you know, petroleum in particular oil has come down. Yeah. And so the theory that some of our guys had, especially our guys down in Texas, was that a lot of those industries tend to be exporters for the U.S.

Oh, the strong dollar. The U.S. dollar has been so strong. That makes more sense. Yeah, you were setting me up. You should have just said that. No, I was hoping you were going to tell me something. I was hoping you could take back to them. The U.S. dollar, because the U.S. dollar is not going to reverse anytime soon.

And if not, then we're not going to see those guys pick it up. Yeah, no, that makes sense. That does make a lot of sense. Chris, Marissa, any other theories? This is what we do for a living, right? I mean, we try to explain these economic phenomena. I don't know, Chris, Marissa, any other theories as to what's going on there? I thought about higher oil prices and petrochemical inputs into these sectors.

I mean, could it be possible that they're buying oil, you know, they're locked into longer-term contracts? And, you know, they bought it a high price and it just hasn't trickled down yet. Yeah. I don't know. That special shout out to Chad Burnett from our Texas office who came up with the dollar theory. That's good theory. Well, you know, I'm I'm always leery of answering a question like that because I My brother did that to me once

He threw up this chart as Carl my brother worked with us and he threw it He started the data group now manages the business our business but he threw up this chart And you know the chart was going this and that and this and that and I'm sitting there Explaining why it was going up here and going down here going up here going down there. He goes oh shoot I forgot to multiply by negative one. So the whole chart went in the other direction. And of course, I'm pretty good at going with the flow. Of course, that's right.

That's even better. It's even better. This works even better. It's very funny. Probably that on purpose. You know, it's so funny, he didn't. He actually didn't do it. It was just so hilarious, so hilarious.

Anyway, so, okay, so, residential is kind of weakish, particularly for low-income households. Okay. Industrial is kind of softish. As you point out, you're starting to see some softness and chemicals and rubber and plastics. What about commercial? Are you seeing your life there? Commercial is going gangbusters.

Gangbusters, but only one specific part of commercial loan. And I'll let you guess what it is. Data centers. Data centers. Crypto. It's crypto. It's not all crypt. AI and crypto. But there is crypto in there. Yeah. But it's data centers. And it's not just, you know, the fly-by-night guides. It's Amazon and Microsoft and Google and all these guys just cannot build them fast enough. And we've been very fortunate because we, you know, we're prescient enough to invest in some really stout and robust transmission. infrastructure in Ohio and Indiana and Michigan in Texas that the data centers want to be in our service territory because there's that huge transmission infrastructure there. They can get turned on much quicker than they can in some other parts of the country. So we're up. I think our overall load will probably finish a year somewhere up just north at 2%.

But our commercial load is up almost 8%. And if we took data centers out of our commercial load, our commercial load would be flat. And I guess data centers would also be, I think, where AI would show up, artificial intelligence? So AI, all the server farms, things like that. Right. In some crypto, in Ohio, in the Northeast, we don't see much crypto. It's all, you know, data centers, especially hyperscalers. Most of our crypto seems to be in Texas.

Okay. And it's hard to gauge where they are or what they're doing because a lot of them are behind the meter. So they'll build a big wind farm and they'll build the crypto servers behind the wind farm. And so they'll use the wind farm to feed the data centers and only pull from the system if they need it kind of thing. Interesting. I was reading this New York Times piece that Chinese crypto firms are building these kind of huge facilities very close to generation plants. Yeah. That sounds a little scary.

I don't know. There's a lot of things that are that we need to know a lot more of with load. Right. So, okay, so you add it all up in what's your takeaway that the economy is kind of making its way through, but just not powering through, feels like. Yeah, I think the main takeaway is that the economy is definitely slowing. It's not slowing, it's not slowing, but it's slowing for sure. Yeah.

It makes me wonder if we don't go into next year. I mean, I think your guys' forecast is for it to slow pretty considerably going in the next year. I think it's one of those situations where, you know, once we get to, especially going into the election, you're going to have people coming out of the woodwork arguing, are we in a recession, are we not in a recession? And we're probably not, certainly not by the traditional two consecutive quarters of GDP, but it might be kind of like 2001 where you go from this four and a half percent growth

down to a 1% growth and, you know, unemployment's increasing and people just feel a lot worse than it really is, you know. Mm-hmm. Mm-hmm. You know, I was looking at a chart of, speaking of charts, of electricity production, industrial production electric utilities, which I guess is, do you look at that as well? Is that a pretty good, this is the Federal Reserve data, good, reasonably good measure output, you know, production?

It's okay. Yeah, it's not as granular. We'd like to see it, so we have our own data that we look at. But in terms of top line numbers, it's not bad. Okay, so if you look at that, you know, if you go back in a few decades ago, like certainly in the 50s, the 60s, the 70s, the 80s, I guess even into the 90s, it looked like the increase in production was very steady, you know, very consistent with growth in the economy, and really showed no very little cyclicality.

I mean, even in recessions, it looked like it kind of managed through without, you know, much of a slowdown. But in the last, I'd say, 25 years, I want to say, is gone completely flat. There's been no appreciable change, one way or the other in industrial production. Excuse me, of electricity. So I guess that just reflects the, to what Chris was saying earlier, that we're all just getting better at, we're becoming less electricity, electric intensive, or at least we had been up to this point in time, and we're getting more efficient in our use of electricity? Is that what that, right? Because it's no longer kind of a barometer of,

if you look at that data, you'd say it's no longer a barometer of, you know, general economic conditions. I think in part, yeah. So, I mean, we've gotten a much more energy efficient in the last 25, 30 years, and we're becoming more energy efficient. But, you know, that, could also be continued in some of the demographic trends. We see the U.S. population slowed pretty considerably over that time. We don't have that same household growth that we had before. We don't have as much industry coming online in the United States that would, at least over the last 20, 30 years. We haven't had as much industry come online that would rely on that electricity. But I would suggest that that's going to change in the next couple decades because of the electrification of, you know, the U.S. economy.

even as we get more energy efficient, there's just more things that run on electricity now. And with the data centers and all the dependence on AI and all that kind of stuff, that's going to need more electricity to be able to produce. And even some of the new ways that we're producing electricity, you need electricity to create some of those fuels like hydrogen. You need a lot of electricity to create hydrogen,

depending on how you're doing it. And so there's just going to be, a huge increase in demand for electricity over the next 10, 20 years. It's a really fascinating time to be a part of the industry. One of the things I, you know, when I came in, all these people keep telling me, you know, you're lucky you're here because this is not how it normally looks. This is not normal what we're seeing in terms of demand and all the changes that are going on because I keep saying, you know, I don't have the industry experience that you have. What should we be seeing here? And they said, you don't need the industry experience because I've never seen this

before. I've been here. Oh, interesting. So it's a really interesting. And you didn't You didn't even mention the electric vehicles in that list of things that would power. You didn't even mention that. Yeah. Well, electric vehicles are out there, but I think they're going to be much slower than we thought. I actually have a good, I have a good statistic about electric vehicles. Okay. We'll save it.

Save it because we're going to play the stats game, right? And I got a great story on EV, so maybe we'll come back to the transition to green a little bit later. But I did want to move on to energy prices because the electric utility industry is a large consumer of natural gas in particular. Sure. A little bit of oil, coal, you know, obviously nuclear, but it's mostly about natural gas. And I'm sure you follow the oil markets, you know, carefully. One big surprise recently has been how oil prices have fallen. And, you know, we were, if you go back a few weeks ago, certainly a couple months ago, we were over $90 a barrel.

And it felt like oil prices were going to go a lot higher. I mean, we had Israel and Hamas and, you know, Russian sanctions and Chinese demand and Saudi cutbacks and it just felt like it was going higher. But prices have come in. And if you look at natural gas, that also is, you know, it's kind of been more stable. But it remains pretty low. I mentioned $3 per million BTU. That's kind of the benchmark I've had in my mind. If it's below, if it's at or below $3, that's pretty low by historical standards.

Above three, then it's starting to get a little higher. So is that surprised you that energy prices have come in like it surprised us, that we've seen that kind of softness in energy prices? Or is that something you expected? I didn't expect them to spike up too high, but I thought they'd spike up at least a little bit because of what's going on in the Middle East. I was really surprised if they didn't, you know, I thought we'd be, at least for a couple weeks talking about $100 oil and everybody'd be freaking out.

So the fact that they've come down is a bit of a surprise. I think, I can't remember. I don't listen to the podcast as regularly as I should, Mark, but I went back and I checked the last couple weeks just to make sure that I was up to date on things. I think, Marissa, you said something the other week about how the growth in China, when that really bad economic data came in from China, that's when oil prices started to level off of it, right? So it might be just a global demand issue or global demand impact.

Is that right? And supplies up in the U. for sure. There's more production, especially in the U.S. Yeah. Mark, you were talking about us being the marginal producer for a long time, right? I mean, those shale guys, they can turn this pick it on pretty quick. Yeah.

Interestingly enough, we had a webinar today on oil and energy natural gas markets. And one thing that came out of it was one of the big surprises was how much increased, how big the increase in production was in oil here in the oil. United States. And we're now producing a record amount of oil. I think it's 13 million barrels a day, an all-time high. Wow. Yeah. And it's at the same time that the number of oil rigs has kind of been flat to down. And it goes to, I'm spouting back everything I just learned earlier today. It goes to these so-called unfinished wells. There's a lot of wells that are Oh, the duck wells?

Duck wells. The so-called duck is an acronym for something. I can't. Drilled or uncompleted. Yeah, that's what it is. Drilled and uncompleted. And apparently it's a lot less costly to pull oil out of those wells than to go drill a new well, which makes sense, I guess. And so the oil producers here have been kind of using their inventory of uncompleted wells to increase production.

They can't do that forever. or they got to start investing, but that's been a key part of the story, which was, you know, very, very interesting. So is, in terms of the energy sources for AEPs, electricity, is it mostly natural gas that you use? We have really in all of the above strategy here because, you know, we're committed to, you know, reducing our carbon footprint and trying to be as sustainable as possible. But at the end of the day, you know, we want to make sure when our customers hit the light switch, something comes on and so for reliability purposes we have to really go to everything and so in our our northeastern area so PJM the RTO which is face which is you guys in most of the Midwest

we have mostly natural gas but we also have a pretty good coal footprint and a couple of renewables but it's mostly coal nuclear and natural gas and in the west we call our western companies. We know they're not really western for everybody else, but, you know, Oklahoma. Right. Those guys. There's a lot of wind that's on there. Wind and wind and coal and some natural gas that they supplement that with it. Right. We expect that over the next five, ten years that coal's going to go away slowly and more of that natural gas is going to come on. But it's kind of interesting. You were talking, Mark, about the green energy transition. We're going to kind of hit a wall here in a bit. It was a lot of that coal nationally, not just AP, but everywhere, that coal is falling

off. And when you replace the coal with natural gas, the natural gas is more clean burning than coal. So you see a decline in emissions. But eventually, you know, even if you replaced all the coal, which you can't really do yet, if you replace all that coal, then you kind of flatline in terms of your emissions. And so getting that natural gas off into other cleaner burning sources is where, you know, the really hard work comes in in terms of the energy transition. Like solar. Oh, sorry. Sorry, Chris.

No solar. Well, solar and wind, you know, the sun doesn't always shine and the wind doesn't always blow. So you need something you can turn on and turn off. Sure, sure. It's got to be right now when we do our modeling, our guys do our modeling, it looks like the most economical alternative is going to be a hybrid of natural gas and hydrogen being burned together will be cleaner.

I think if you look at the EPA's 111B stuff that they've got coming out, they're trying to incentivize more people to burn a mixture of natural gas and hydrogen together and eventually moving the technology to the more of that mix is hydrogen instead of natural gas in order to bring that down. But there's a long way to go technologically before we're there for that. Yeah, the one thing that's affecting natural gas prices, and again, I want to come back the green transition is the high prices,

the very high prices for natural gas in Europe related to the sanctions on Russian natural gas, particularly Germany. And so that's created this opportunity to ship a lot of U.S. natural gas to Europe via LNG, liquefied natural gas. And that's expanding

out pretty rapidly. And that has put upward pressure. Natural gas prices are still very low here by most historical standards, but they have pushed higher, and it feels like they're going to push even higher going forward just because natural gas producers can make a lot of money, even with the shipping costs in Europe. And so that means somewhat higher natural gas prices going forward. Is that kind of consistent with your thinking? So we do see exports playing a bigger role.

We don't see, you know, we were talking to Chris Lafackas the other day. we don't see natural gas prices climbing quite as high as he does. I see. Mostly because, I mean, there are costs associated with it that maybe the cost on the European side. He might be underestimating a little bit in terms of how expensive that's going to be. But nonetheless, exports are going to make up a much bigger share of that. Natural gas used to be a very domestic thing to forecast. it was you only had to worry about production and demand on our side of the ocean.

But now it's much more global than we ever had before. And so you have to take in some of the more global trade flows much more akin to oil than we had in the past. So it's a bit of a paradigm shift in terms of how we think about forecasting it. Yeah, more of a global market. It used to be just a domestic market now a little bit more global. And it will be increasingly so, just given the pipeline. for new construction of LNG facilities going forward. But interesting.

Yeah, it's going to take some time. Yeah. Yeah, Europe's also tapping some other countries for natural gas, right? Algeria is supplying a lot and they're looking to the east. Right. U.S. will be a bit of there, but there are some other players coming online too. That could keep prices from rising too much. Yeah.

Yeah. Okay, let's play the games. stats game. And Dan, I don't know if you remember this, but we each put forward a statistic. The rest of the group tries to figure that out with clues and deductive reasoning and questions. And the best stat is one that's not so easy. You get it immediately, not so hard we never get it.

And if it's consistent with the topic at hand, all the better. And Marissa really wants to go first. here. So, Marissa, you ready? Yes, but I always go first. I know, you always go first. You always go first. Yeah, that's tradition. And we're not going to break that. Certainly not today. So, fire away. All right. And Dan, you're going to play, right? You said you were going to play. I mean, I may not get any of them correct, but I'm going to try.

Somehow I feel like he's going to get them all. So go ahead. Fire away. Uh, 1.15 million. Okay. Is it, um, something related to the energy industry? Yes. Electric utility industry. Tangentially.

Oh, okay. Energy more broadly. Is that the number of, uh, charging stations nationwide? No. Did I, am I in the ballpark? Having to do with natural gas inventories. Mark is more in the ballpark. Okay.

It's something like that. I knew she was going to go there. $1.5 million? Yeah. Ev related. It is EV related. Okay. A one point.

Sales of EVs. Ah, that makes sense. That's it. Yeah. So it's, it's. For what month? That's a different number that I heard last. This is through October.

This is from the Argonne National Lab data. This is sales in 2023 through the end of October of plug-in, either battery or hybrid EVs. So 1.15 million, that makes up 9% of all light-duty cars and trucks sold so far this year. And this is the first year, it's breached a million. So last year in 2022, 931,000-ish EVs were sold. Again, this is just plug-in EVs, right? and the share of all sales was 6.8%. So the share rose from about a little under 7% to 9% so far through 2023 over the prior year. Is that hybrid as well or just purely?

Yeah, it's plug in. So either plug in all battery or plug in hybrid. So not like a Prius, but like one that you've got to plug in. Right, right. Should I tell you my EV story? This is a good time to tell you? great time. Yeah.

Okay. So I fly into Orlando Airport this a couple of weeks ago, going to Moody's offsite in Florida. And, you know, we have Avis run a car, and I go, and I'm preferred. So I go, you know, you go right to your car. I go up right up to my car. I get in. And also immediately, I'm totally confused. It didn't look like a car.

But it was, you know, within five seconds, I realized, okay, this is an EV. I'm thinking, okay, I should know how to do this. You know, this is a good thing to learn to drive an EV. But I don't really want to do it now, please. So I go back to the Avis desk, you know, they have a desk. And I said, can I just switch this out for a, I said a normal car, meaning an internal combustion car? And they go, oh, yeah, sure, no problem. But, you know, it may take two to three hours for you to get.

So I said, oh, okay, all right, how hard can this be? So I get into the EV and by the way. Do you want to say what it was? Yeah, it was a key, because I loved it. It was a Kia Nero. Yeah, okay. And I go, this is great. You know, no sound, drives well, really well.

The pickup is amazing. You know, you could get on the highway, you know, very quickly, no problem. I'm driving along. I'm going to, you know, to my home in Vero. So that's like a, I don't know. It's an hour and a half, an hour, 45 minute drive. And I'm looking down and I see, you know, these miles coming, these numbers coming down from 225 to 224, 223.

And they're coming down pretty damn fast. It's, you know, it's tons on me, but that's how many more miles I got to go. So then I'm like on the map quest. How many miles do I have, you know, do I need to get the Vero Beach? And I had plenty. You know, I got the Vero. I probably had 50 miles left or something. And by the way, I learned that, you know, by trial and error, if I had the air conditioning

on and I'm blasting music, that's a problem. The miles are coming down fast, you know, especially in hot Florida. And so anyway, I get the Vero. And that next stop is Fort Lauderdale. So that's another, you know, track. And there's no way I'm going to get from Vero to Fort Lauderdale without your. charging this up. I have to charge it. And I go, I have no idea how to charge this thing. So I go back to the Avis place in Vero and I said, I just, please, let me just get a normal.

I called it a normal car. You know what? They would not give it to me. They would not give it to me. They said, you have to charge the car. I go, I don't know how to charge the car. I don't even know where to go to charge the car. It's strange that they didn't tell you that when you rented it. I know, right? I know. I know. Anyway, so, okay, they're not going to relent. And I, you know, I used my Zandi persuasion on them. They ignore me. No, not happening. So I go, okay. All right, I got to go charge it. I go find, they tell me, oh, the nearest place is a Wawa. Wawa. Thank you, Wawa. They're in Florida. Florida. Florida. That's awesome. And they have chargers. So I go to the Wawa. It's 20 minutes away near 95. I pull in and there's two chargers and there's two cars getting charged and I'm looking at this and I go, I have, I don't have a clue, you know what to do.

So I'm, you Googling, how do you charge a car? And then fortunately there was this couple that was charging their car, they're having lunch. I know this is a long story. Is this, should I stop? No, no, no. Okay, okay. I know, we're invested. You get up now.

I know. I want to know what happens. So the couple, the fella, was so nice, really nice. And this is the best thing about an EV. You make friends. You make friends. You have to make friends to survive.

Yeah. So he spends, I don't know, 20 minutes with me telling me, you know, pull down the app. Here's how you do the app. Here's the charger you use. And, okay, fine. Okay. Then I'm still waiting for these two cars to finish. he finishes but you know he says I need to charge it a little bit he went to 80% or something and he was going to take it to 90 and it slows down something the car next to him was completely charged but the people were out having lunch or something and didn't come back so I had to wait another in total I probably waited 45 minutes to get the charger I get the charger and then it takes me 10 minutes to figure out how to open the charger because I'm thinking I never thought it was a manual open I thought you's got to be some button inside the car that

opens a charger, but no, this is a manual open. So I finally figure that out. And then it takes 45 minutes to charge. No lie. I'm not making this up. It took me three hours from start to finish to charge this car. But you got some while, well, coffee in the meantime. And you made a friend. I made two friends. Okay. I made two friends, but I won't tell you this about the second friend. That's just too much, too much information. Two, two friends. But here's the next, here's the thing. Now I'm driving to Fort Lauderdale and I'm sweating bullets the entire time. Am I going to make it to Fort Lauderdale? You know, because I can't quite, I don't quite know exactly.

I guess there's something in the, someone told me later, the car will tell you if you can make it to Fort Lauderdale. But I couldn't quite figure out how to do that. So I turned off all the air. I turned off all the music. I didn't even, it was raining. I didn't turn on the whiper because I was too scared. Sounds awful. It's crazy. It's crazy.

Is it just me? Is this just me? Or am I like, do I represent? No, I mean, well, I don't have experience driving an EV, but I mean, I've been reading quite a bit about experiences and listen to a podcast the other day. Actually, it was a New York Times podcast about the Biden infrastructure bill. And it was talking about EV sales. and it said, you know, the number one reason why people say that they don't buy them is because they have this so-called range anxiety.

They're afraid of running out of battery when they're driving. And it's really preventing higher sales. That's what I had. Bad case. Bad case of that. Yeah. So, Dan, you were telling us folks in your footprint are pretty skeptical about EVs too, I guess. Yeah, this isn't my statistic, but a good statistic is so naturally, Marissa, you were staying

there's what a million more than a million vehicles that have been sold so far here today one point two percent of all vehicles in the u.s are e vs or phevs so only one point two so even though it's 9 percent of new sales only one right cars on the road in our footprint which again is michigan down to texas three-tenths of a percentage point is the or EV. And it's because they're too expensive. For most of our customers, just simply can't afford them. But it's also range anxiety and the infrastructure.

It's kind of a chicken and the egg thing. People don't want to build chargers because there's no EVs and people don't want to buy EVs because there's no chargers. But then third is the preferences, right? You know, the most popular vehicle in our footprint is a Chevy Silverado. And I know that there are a couple of pickup trucks that are EVs now, there's the F-150 and there's the Rivian thing, but they just don't have the capabilities that an ice internal combustion engine pickup truck has, they don't have the towing

capacity, they don't have the range. And so people just don't, our customers are telling us that they just don't want them. Now, there are pockets within our area where they make total sense. So in our area around Columbus is probably the most concentrated area of EVs within our whole footprint and there's EVs all over the place. But they're, you know, they're all sedans, they're all people who are driving to work. They're not people who are driving to a ranch or people who need to tow something or things like that. So until those technological capabilities can come online and they can bring the prices down and they can build up more EV charging infrastructure, we just don't see it, at least within our footprint is being. Pitching on. Yeah.

So you made it, Mark. Oh, yeah, and I'm sure I'm just being a big baby, you know, so, but, you know. Change is hard, Mark. Change is hard. Yeah, yeah, absolutely. Dan, what's your, do you want to go next? Do you want to do your statistic? Sure.

My statistic is 3.4 megawatt hours. Megawatt hours. The time it takes to charge an electric vehicle? Right. No. That's a lot of, that's a lot of kilowatt hours. 3.4. It is 3,400 kilowatt hours.

3,400 kilowatt hours. Is it the amount? 4.3-4 gigawatt hours. By the way, the first thing I learned when I moved to electric utility is that Doc Brown from Back to Future is full of it. He doesn't know what he's talking about. Oh, really? Boy, that's disappointing.

1.21 gigawatts. It's not a thing. It's 1.21 gigawatts. Oh, yeah. He said jigawatts. You're right. Yeah. Yeah.

So be the new guy who comes into an electric utility and says gigawatts on the first day. Yeah, how popularity you. Right. Who are you again? That's funny. Okay. Is that the amount of electricity used by something? It is.

Okay. And we got to figure out what that something is. That would be helpful, yeah. Okay. Is that national or regional level? It's a per unit kind of thing. unit kind of thing. Yeah, it's a per unit kind of thing.

In your footprint? Nationally. Yeah. Oh, okay. Nationally. Nationally. Okay. That was.

And I don't really have a concept of how much 30, what is it, 3,400 kilowatt hours? That could be hit. So 3.4 megawatt hour, 3,400 kilowatt hours, depending on how you do it, is about enough electricity to run two refrigerators for a year. Okay. A year. Oh, okay. Okay. iPhone charging an iPhone for a year?

No. No. Because I use a lot of electricity charging an iPhone. Well, your iPhone might be that much more. I don't think the average iPhone is that. Actually, my iPhone gets very hot regularly, so I'm sure I'm, yeah, I'm using a lot of like, like, is it something in the house? Is it that kind of statistic, like a utility, like a appliance? or something.

Yep. And I'll give you a hit. It's something we've been talking about a lot on the podcast so far. EV? An EV, yeah. Oh, it's an EV?

Okay. The average EV takes, uses about 3.4 megawatts, megawatt hours of electricity over the course of the year. So in other words,

if you bought an EV and you were charging at your house, it would be the same in terms of your electric bill. It would be the same as buying two new full refrigerators

and running them. Yeah. Yeah, that's a good one. Yeah, I mean, that's the advantage of an EV. It does save money, right? Because I did notice when you charge, it's a lot cheaper, obviously, than filling up your gas tank. Yeah, and if you've got a home charger, it's really not a big deal at all.

Yeah, exactly, right. And you're not traveling long distance. Yeah, to our point of view, especially in our footprint where we've got a very slow pickup in EVs, it is not a game changer in terms of load, right? Our residential load is not going to be double in 10 years because of EVs. it's going to take a long time for that load to pick back up. Right, right. That's a good one.

Okay. Chris, do you want to go next? Sure. I've got three numbers. You always have to. 16.9 cents. Stop.

Everyone stop. I know exactly what it is, and I want full credit for this. You know the other two numbers, too. The other two numbers. Oh, careful. This is like the guy jumping the gun on Jeopardy, Mark. and then let's hear it. Okay, go ahead. Go ahead.

12.6. What is it? 12.6 cents. Okay. And 47.5 cents. Oh, okay. Now it's more complicated. What's the 16.9? 16.9 is the cost of a kilowatt hour of electricity nationwide as of the month of September. October. The only reason I know this is because that's my statistic. Oh. Ding, ding, ding, ding. Ding ding.

It looked like a genius, but not really. No. Yeah. Is it 12.4? What were the other numbers? 12.6 and 47.5. 12. Those might be the different cost by class.

Nope. Oh, boy. That would really be. That's, that's, that's, that's, that's what it was pre-pandemic or something. No, the price. It's the same release. It's the same month. Oh, same month.

Okay. Oh, um, I'll BLS data, CPI. Okay, uh, 12.6 cents. Uh, and then 47 something. 47.5. It's got to be related to electricity. It is. Yeah.

They're all related to electricity. They are. Yeah. Okay. They are. Yeah. Is that the, is that a seasonal difference in price? Nope.

Oh. Oh, I thought. Dan would be all over this. Well, no, the cost per kilowatt hour made sense, but I'm trying to think of what else comes out in that report. They're all costs per kilowatt hour. Oh, they are all cost per hour. These are the high and low.

Is it peak and off peak? Oh, it's different states. One state is, one state's Texas, Louisiana, different cities. Oh, different cities. One's New Orleans. No, no, let me give it. But you know what I'm saying, right? No, exactly.

Cheyenne, Wyoming. And one's Hawaii or something. No, Shian. Hawaii is a good. And one is Los Angeles. That's a good guess. It's not, it's not Hawaii, but it's. Hawaiian like.

Hawaiian like. Don't tell us. Too far from you, Marissa. Is it L.A.? Nope. A little further south. San Diego. There you go.

I thought you were going to say Guam. I thought you were going to tell us to Guam or something. Yeah. And the other one is St. Louis. Oh, that's hard to believe. That's the low. Yeah. Hard to believe, right?

I thought Dan could enlighten us with the... Yeah, what's going on? Differences, yeah. What's got to be on? Is it regulation? I don't know if I'm familiar with that BLS, for that part of the BLS release, because we look at our own prices

and we look at the national spot prices for electricity. But are those non-fuel rates, or are those all in? These are all, this is to the consumer. This is the average. This is the price to the consumer. It's probably, it's got to be the fuel price has got to be the difference.

Cost of fuel in those areas and... Taxes, though? Yeah, taxes probably. Yeah. But the riders that are included on it as well, there's a ton of different reasons why those could all be different. Yeah. Huh.

That was a good one, Chris. I only got to the top line number. I didn't get to the regional detail. So St. Louis and San Diego was the highest? San Diego was the highest. Yes. The 47 cents sounds like a lot. It is a lot.

It's also the fuel mix, right? So one of the reasons that it's different, it's got to be, there's probably a lot more renewables going into San Diego. Yeah, probably, for sure. Yeah. St. Louis is probably all natural gas and coal, which is super cheap. Yeah. Hey, let's move forward.

Since he took my statistic, I don't have a statistic. So the game over. but I thought that was very instructive, particularly because I had an opportunity to tell you my story about EV. That was a good story. It was quite therapeutic. I feel better now that I told you. You're not alone. I don't think you're alone, Mark.

Okay. That's the key here. I don't want to be like, I was a weirdo. Anyway, I am a weirdo, but I didn't want to feel like a weirdo. Not for this reason. Not for this reason. Not in this way. Mark, can I ask you, speaking of you being a weirdo, can I?

I asked one very serious question of you and Chris. I know that you guys were in Chicago a couple weeks ago for the conference, and I felt bad. I was going to go and kind of heckling you guys from the back. That would have been great. And we were all there, too. Yeah, Marissa was there. Yeah. When you went, did you finally make Mark eat a Chicago-style hot dog?

No. No one, what's that all about? No one told me about no. The last time I was on the podcast, you were telling me about I didn't even know that that was a thing. Oh, that's right. That's right. I forgot all about that. Yeah.

Ryan almost fell out of his chair, I think, when you said that. Right. That's true. That's true. I forgot all about that. No, no, no. They didn't, they didn't. I had a nice steak, as I recall.

No hot dogs were provided. No hot dogs provided. All right. Well, let's, we're getting, gee, an hour has passed. Is that possible? Oh, my gosh. Okay. I do want to talk about one last thing.

and that is around the policy to facilitate the transition to green energy and the Inflation Reduction Act. Do you have a sense of that legislation and how well it's going and how well you think it will go? Any perspective on the IRA? It's definitely being effective at incentivizing folks to switch to lower carbon forms of fuel and electricity production. The PTCs and the ITCs in particular are definitely incentivizing folks to do more in terms of wind and solar. The tax credits, the production tax credit. Yeah, that's a tax credit, production tax credit.

I think it's a dual policy measure, right? So the IRA is definitely the carrot to incentivize folks to try and do more. The next thing that's coming and that we're all kind of trying to plan around is the stick that might come from the EPA, which is a 111D rule, which would give explicit penalties to folks who are burning certain types of fuel if they're not doing it the way that the EPA lays out. And so I think that rule, it's been under discussion for a couple months now, and it probably wouldn't go into effect until next year. But going to your point earlier about the election, it's a very difficult time to try and put any sticks out there, especially, you know, three months before an election.

I think it's going to come. But how, whether it comes to its current form or not, give you some sense of what that is, it basically incentivizes. is folks to burn more hydrogen along with natural gas. So it gets that next step I talked earlier about switching from coal to natural gas. It's fairly straightforward, especially with the new IRA provisions. But switching from natural gas to a new technology that's less of a carbon footprint than natural gas, that's where things really get hardened. So you can't do it all on solar and wind alone.

and something has to be able to turn something on and off. And so building out new technologies around hydrogen is huge, but we don't produce enough hydrogen in the United States to be able to even come close to producing enough to do that yet. We also don't know how we're going to get the hydrogen to all the different places that we would need to do it or how we're going to produce the hydrogen. One of the cool things,

this is where they were explaining engineering to me the other day and trying not to make me feel like an idiot. Did you know that there's like a legend? different types of hydrogen based on how they produce it and they all have a color. Oh, I thought hydrogen was just H. No? That's what I thought, but, you know, I've been wrong about lesser things. So there's a whole rainbow of colors.

Oh, rainbow of H's. Okay, didn't know that, no. Green hydrogen. And, you know, green and blue are the two that they're most focusing on. Blue hydrogen is hydrogen that's made from electricity, but it's electricity that's produced by natural gas. So you're using natural gas to produce hydrogen to burn with natural gas to make electricity. So kind of a roundabout way of doing things. And then green hydrogen. Does that reduce emissions, Dan, doing that? Is that, or it doesn't sound like it would? I need to have my engineers with me

to tell me. Yeah. Okay. Okay. Just curious. The other one that a lot of people are looking at more is green hydrogen, which is where you create, you use electrolysis to create hydrogen using green forms of electricity so solar or wind. And so you would basically have a solar or a wind farm to create hydrogen and then you would use the hydrogen to burn it large scale for more electricity. That is very low emission, but again, the reliability issues around wind and solar

are just not there yet. And so from an engineering standpoint, there's some really fascinating problems that need to be solved over the next five or 10 years. I think the policies that they're putting forward are trying to get people to think about that. But if they don't think about those policies with the end customers in mind, it could be a very expensive time for folks as all the utilities across the country

try and get these regulations under control. Yeah, I might put you in a bit of an awkward position. You can just tell me, Mark, you're putting me in an awkward position. But, you know, my sense of climate policy is that the IRA is all about, providing carrots to transition. You mentioned the various tax credits. There's, you know, subsidies. Taxpayers are paying money to incent you and I as consumers and utilities and businesses

to move over to cleaner technologies. That can only take you so far. It's very costly. And, you know, to the government, particularly given now that the federal government has these pretty serious fiscal issues. I mean, you know, deficits, debt, now high interest rates, it's not sustainable. So it doesn't feel like we can double down on carrots to make us, you know, move to something that is cleaner, lower CO2 emissions and more helps out the environment. It feels like we're going to have to go to a stick at some point. And, you know, the economist's favorite stick

when it comes to this is just tax the carbon, you know, please, you know, put a tax on the carbon. Once you put the tax on the carbon, things happen pretty fast because people don't want to pay the tax, so they figure out technologies to do things without creating carbon. And that way you could also generate some revenue. I mean, obviously there's issues with it regard to the regressivity of it or, you know, that it makes you in a less competitive against foreign producers that don't have the same carbon tax to pay. But there's clear ways of addressing those issues. So I don't know.

It just feels like whether you think it is a good idea or bad, it just feels like we've got to get there at some point in time. There's just no way to do what we need to do with regard to reducing emissions to, you know, address climate risk without that. So I'm on my soapbox and I don't, again, I don't necessarily mean for you to respond to, that but if you want to feel free yeah i won't i won't respond to whether or not we should have a carbon tax because i think you're you're right in that we're going to have a stick whether we think it's we should or not yeah coming and but what we're most focused on as our customers and what i'm worried about some of the regressivity that you talked about carbon tax would be very regressive for a lot of folks across the country and it's you know if we put too much of a stick in place where the cost of

electricity kilowatt hour cost that Chris is talking about. If that goes up, you know, that's passed along to our customers. And some of our customers, especially those folks at the lower end of the income spectrum, you know, they could have real issues being able to afford their electricity if we're not careful in terms of how we design those policies to be in place. And so whatever comes, we want to make sure that our customers are first and foremost on our minds, but also on the utility commissioner's minds and on the federal policymakers' minds as they go about their policymaking.

Yeah, totally. I agree with you about the regressivity. I mean, what I do is I take the carbon tax. You generate revenue, I cut everybody a check. You know, and everybody gets a check for, I'm making it up, $1,000. Whether you make $50,000 a year or $5 million a year, you still get $1,000.

So that helps to address the regressivity. But nonetheless, so let's, we're running out of time, but I do want to end with a quick conversation around a listener question that we punted on. You might have heard the question, Dan, if you were listening in. The question is, what economic statistic would you want if you could have it that you don't have right now? Did I say that right, Marissa? Yeah. Yeah.

Okay. And it could be anything, right? Could be anything. Could be some big data source or... government collected statistic, anything. Okay. So I'm going to, Marissa, you're always first. Okay.

I'm going to start with you. I mean, I think it would be, and again, this is very pie in the sky. This doesn't necessarily mean this is a realistic thing to collect or have, but something that would be useful to have would be more timely measures of productivity, I think. So, you know, like we spend a lot of time pondering if various things are adding or detracting from productivity, right? AI, work from home, flexible work, all these things. And I think it would be really interesting to get, somehow get data on that that is not six months old by the time we get it and quarterly. So I don't know what it is or how you'd get it.

But it would be really cool to have a more timely measure work or productivity. And probably just a better one, right? Because the way it's calculated is kind of a bit convoluted and gets revised a lot. Yeah. But that's such a key statistic because at the end of the day, our living standards are tied to our productivity growth. So that's a good one. Chris, do you have one? Sure.

I guess in general, I would say you probably have all the right statistics. we just need better quality, higher frequency. But if I had to choose one, it would be income. Right. Coming from our credit modeling background, income was always the holy grail. I'd accurately measure a person's income. The problem is, like, guys like you with crypto winnings

and, you know, bank accounts and Bermuda and what do we do with you? I mean, how are we going to measure your income? Look, Dan, look how well he's dressed. Can you imagine, you know? He didn't dress. that nicely when I left. I don't know what happened. Exactly. My point. Exactly my point. Yeah. All right. I hear you. That's a good one, though. Yeah, you're right. Income is a real, it sounds easy to measure, but it's really difficult to measure. I mean, it's kind of like the

productivity thing, right? Like, we get measures of income, but it's very lagged and it's, yeah, it gets majorly revised. Exactly. Yeah. Yeah, that's a good one. Dan, do you have one you want? I'm kind of putting you on the spot. I would kind of echo Chris. And I think we've got what I would like to have. I just would like to have it more often. And I would like to have it at a lower frequency. So one of the things that's been frustrating about working here is that our footprint doesn't

fit any, you know, specific metro areas or states perfectly. So we have to aggregate up a bunch of county level data. And that data just takes forever to update. And so like when we're back testing doing things like that, it's difficult to tell whether the underlying economic data was correct in the first place because it's so lagged. So I would love for that granular of geography to be available more often. And at a lower frequency, you would love, Steve Cochran would be having a ball with some of our guys. We do a new spatial load model where we take the load and we...

He's a colleague who's been with us forever, yeah. Yeah, we forecast it at a circuit level. So it's like a neighborhood. There's like 2,000 customers or so on a circuit. And so being able to say, not just how many EVs do we have, but how much EVs do we have on that circuit in northwest Columbus, which is these three neighborhoods, being able to have something of that granularity so that we can drive those forecasts would be, you know, the Holy Grail to Chris's point. You know what? That sounds like a business opportunity to me. I'm just saying, guys, I don't know, feels like that.

Yeah, I was thinking we can aggregate. We can do that. I think we can do that. I think we can do that. Anyway, I want better immigration statistics. That's so key to everything. Population growth, household formations, obviously by extension housing activity, labor force growth, unemployment, how tight is the labor market.

There's a lot of evidence that there's a lot more. undocumented work of immigrants coming into the country than has been the case historically. In fact, I think when we get the data, you know, historically we've kind of, the assumption is about a half a million undocumented come in every year. I think it's going to be two, two and a half million, something like that. And I think it goes a long way to explaining why we can grow two and a half percent GDP, which is where we started the conversation with inflation, not an issue. coming in, wage growth, moderating labor markets is easing up because we've got a lot more

labor force out there than we think. And by the way, that goes to your productivity point. Measuring the productivity of those immigrants, really important to try and understand what that means in terms of their income, their output, which goes to the fiscal situation and everything else. So, you know, if you can't count the number of people in, you know, an economy, it's pretty difficult to get the economy right, you know, particularly if that's changing a lot. So just give me that. way, that's a reasonable ask. He says, say, is it doable, not doable? That one is doable.

We should definitely do that. Anyway, that was a great, that was a great question from the listener. And if the listener is listening, we'd be very happy to send you a cowbell in honor of the question, a really good question. So, you know, email us, let us know, and we'll send you a cowbell. And, Dan, that was so good to see you. You look like you're doing really well. You still have a full head of hair, you know, look like Sansom over there.

I mean, they're not working you hard enough is all I have to say, you know, not like Moody's analytics. You know, we work to death. Although I have to say, look at Chris and Marissa. They look, you know. They look awesome, Mark. They look awesome. It's the Zoom filter here.

It's the touch up my appearance button. It's the AI. Of course it's the AI. But Dan also has, I can see. a hard hat on his desk. Does he? Oh, yeah, he does. Wow.

Yes. I got to go visit one of our power plants the other day. And I only hit my head once. So thank God for hard hats. Very cool. Well, thanks, Dan. I was really good to chat with you. Hopefully we can get you back on?

Hey, can I ask you a favor? If your business starts turning south or north in a meaningful way, could you just send off a flare so we can talk about it? We will let you know. Let me know. Let me know. Let us know. and well thank you and with that dear listener we're going to call this a podcast take care now