WEBVTT 00:00:00.000 --> 00:00:01.485 align:middle line:90% [SQUEAKING] 00:00:01.485 --> 00:00:02.970 align:middle line:90% [RUSTLING] 00:00:02.970 --> 00:00:04.950 align:middle line:90% [CLICKING] 00:00:04.950 --> 00:00:11.390 align:middle line:90% 00:00:11.390 --> 00:00:13.130 align:middle line:90% SPEAKER: Very, very happy. 00:00:13.130 --> 00:00:17.180 align:middle line:84% Actually transitions beautifully to Don Lessard's conversation 00:00:17.180 --> 00:00:21.170 align:middle line:84% on business models for deploying and how to get that upfront cost 00:00:21.170 --> 00:00:22.350 align:middle line:90% spread out. 00:00:22.350 --> 00:00:28.190 align:middle line:84% And, Don, as I've done all day, you 00:00:28.190 --> 00:00:31.070 align:middle line:84% are much better off introducing yourself and all of your history 00:00:31.070 --> 00:00:31.922 align:middle line:90% than I. 00:00:31.922 --> 00:00:33.630 align:middle line:84% DON LESSARD: I'll be brief on my history. 00:00:33.630 --> 00:00:34.740 align:middle line:90% I'm Don Lessard. 00:00:34.740 --> 00:00:38.420 align:middle line:84% I'm an extinguished professor at MIT. 00:00:38.420 --> 00:00:40.790 align:middle line:90% 51 years in the Sloan School. 00:00:40.790 --> 00:00:42.950 align:middle line:84% My claim to fame, I guess here, I 00:00:42.950 --> 00:00:44.600 align:middle line:84% was one of the two faculty leaders 00:00:44.600 --> 00:00:46.700 align:middle line:84% on the energy minor that we built across all five 00:00:46.700 --> 00:00:49.640 align:middle line:84% schools, which was really, really one of the most fun 00:00:49.640 --> 00:00:52.280 align:middle line:90% experiences at MIT. 00:00:52.280 --> 00:00:54.990 align:middle line:84% I also, once upon a time, I taught finance, 00:00:54.990 --> 00:00:57.020 align:middle line:84% and I came to realize this is largely 00:00:57.020 --> 00:00:58.950 align:middle line:84% about financial engineering-- not largely, 00:00:58.950 --> 00:01:02.460 align:middle line:84% but financial engineering is overwhelmingly important here. 00:01:02.460 --> 00:01:05.850 align:middle line:84% OK, I'm going to take just a little tiny slice 00:01:05.850 --> 00:01:08.590 align:middle line:84% of Nikki's presentation, which is fantastic. 00:01:08.590 --> 00:01:10.500 align:middle line:84% Determining appropriate pricing that 00:01:10.500 --> 00:01:13.660 align:middle line:84% balances utility investments with customer usage. 00:01:13.660 --> 00:01:15.533 align:middle line:84% So to me, that's the business model. 00:01:15.533 --> 00:01:16.950 align:middle line:84% All this other stuff is everything 00:01:16.950 --> 00:01:18.220 align:middle line:90% you need to do to get there. 00:01:18.220 --> 00:01:22.090 align:middle line:84% It's terribly-- even that piece is complicated enough, 00:01:22.090 --> 00:01:25.320 align:middle line:90% so let's just focus on that one. 00:01:25.320 --> 00:01:29.820 align:middle line:84% Problem-- high capital cost, but your all-in monthly costs 00:01:29.820 --> 00:01:32.550 align:middle line:84% has to come out about the same as the current all-in monthly 00:01:32.550 --> 00:01:34.240 align:middle line:90% cost of gas plus electricity. 00:01:34.240 --> 00:01:36.180 align:middle line:84% Otherwise, it's dead in the water. 00:01:36.180 --> 00:01:41.340 align:middle line:84% If you run current costs of geothermal like even your second 00:01:41.340 --> 00:01:44.320 align:middle line:84% stage of your pilot through current utility models, 00:01:44.320 --> 00:01:46.980 align:middle line:90% it costs 2x at least. 00:01:46.980 --> 00:01:49.410 align:middle line:84% So it's 2 to 3 times as expensive 00:01:49.410 --> 00:01:52.140 align:middle line:84% as it needs to be to meet the cost, right? 00:01:52.140 --> 00:01:53.980 align:middle line:90% Now, how do we get there? 00:01:53.980 --> 00:01:56.170 align:middle line:84% Well, this is my whole presentation. 00:01:56.170 --> 00:02:00.510 align:middle line:84% I have 17 more slides, but this is the whole presentation. 00:02:00.510 --> 00:02:01.510 align:middle line:90% Let's see. 00:02:01.510 --> 00:02:04.090 align:middle line:84% So high capital costs, that's our issue. 00:02:04.090 --> 00:02:08.930 align:middle line:84% We are replacing iceboxes with refrigerators. 00:02:08.930 --> 00:02:10.800 align:middle line:84% We don't have to buy the ice every day, 00:02:10.800 --> 00:02:12.960 align:middle line:84% but the refrigerator costs a lot. 00:02:12.960 --> 00:02:14.905 align:middle line:84% And when I hear discussions of pricing, 00:02:14.905 --> 00:02:16.280 align:middle line:84% it seems to me we're still trying 00:02:16.280 --> 00:02:20.390 align:middle line:84% to price it as if we're pricing ice, whereas, in fact, we're 00:02:20.390 --> 00:02:21.810 align:middle line:90% renting a refrigerator. 00:02:21.810 --> 00:02:24.450 align:middle line:84% So if you think of it as renting a refrigerator, 00:02:24.450 --> 00:02:29.330 align:middle line:84% that's the analogy we want, as opposed to we're buying ice. 00:02:29.330 --> 00:02:33.200 align:middle line:84% So one third boreholes, one third system, one third customer 00:02:33.200 --> 00:02:34.890 align:middle line:90% and system and conversion. 00:02:34.890 --> 00:02:36.560 align:middle line:90% I thought I'd corrected that. 00:02:36.560 --> 00:02:38.190 align:middle line:90% How do we solve the problem? 00:02:38.190 --> 00:02:40.985 align:middle line:90% Because this is now 2x. 00:02:40.985 --> 00:02:42.860 align:middle line:84% We need to get monthly costs to the homeowner 00:02:42.860 --> 00:02:44.940 align:middle line:84% near current electrical and gas bill. 00:02:44.940 --> 00:02:46.130 align:middle line:90% That's what we have to do. 00:02:46.130 --> 00:02:47.880 align:middle line:90% 2x, how do we get there? 00:02:47.880 --> 00:02:50.100 align:middle line:84% Well, we've got to reduce the capital costs. 00:02:50.100 --> 00:02:51.720 align:middle line:84% So you've got to work like crazy. 00:02:51.720 --> 00:02:53.215 align:middle line:84% The unions have to work like crazy. 00:02:53.215 --> 00:02:54.840 align:middle line:84% We have to get down the learning curve. 00:02:54.840 --> 00:02:56.215 align:middle line:84% We really have to do this, right? 00:02:56.215 --> 00:02:59.210 align:middle line:90% The capital cost must come down. 00:02:59.210 --> 00:03:01.590 align:middle line:84% We have to allocate-- at the moment, 00:03:01.590 --> 00:03:03.570 align:middle line:84% we're overbuilding these systems. 00:03:03.570 --> 00:03:08.690 align:middle line:84% Loop one, 425 tons against 275 tons actually used. 00:03:08.690 --> 00:03:10.440 align:middle line:84% You overbuild the system-- or whatever 00:03:10.440 --> 00:03:13.330 align:middle line:84% the number are-- overbuild the system by a massive amount. 00:03:13.330 --> 00:03:16.630 align:middle line:84% Somehow or another, the excess capacity has to get banked, 00:03:16.630 --> 00:03:18.540 align:middle line:84% and the customers only have to get charged 00:03:18.540 --> 00:03:20.530 align:middle line:90% for the actual used capacity. 00:03:20.530 --> 00:03:24.010 align:middle line:84% Third, this is a lot of the discussion. 00:03:24.010 --> 00:03:26.020 align:middle line:84% How do we monetize some of these other benefits? 00:03:26.020 --> 00:03:27.790 align:middle line:90% How do we get a heat-pump tax? 00:03:27.790 --> 00:03:29.470 align:middle line:84% How do we get an investment tax credit? 00:03:29.470 --> 00:03:33.040 align:middle line:84% How do we get some payment for the avoided utility investments? 00:03:33.040 --> 00:03:35.820 align:middle line:90% Those are huge. 00:03:35.820 --> 00:03:38.570 align:middle line:84% Monetize other benefits and apply. 00:03:38.570 --> 00:03:41.280 align:middle line:84% And then the financial-engineering part 00:03:41.280 --> 00:03:43.230 align:middle line:84% is, how do we spread the recovery 00:03:43.230 --> 00:03:47.470 align:middle line:84% of the capital over 30 years in constant terms, 00:03:47.470 --> 00:03:51.180 align:middle line:84% inflation-adjusted terms, real terms? 00:03:51.180 --> 00:03:53.770 align:middle line:84% If we run it through the current utility model, 00:03:53.770 --> 00:03:56.110 align:middle line:84% it looks like this in real terms. 00:03:56.110 --> 00:03:57.250 align:middle line:90% It's big in the first year. 00:03:57.250 --> 00:03:58.720 align:middle line:90% It gets smaller over time. 00:03:58.720 --> 00:04:03.030 align:middle line:84% It's twice as high as it ought to be because we're not even 00:04:03.030 --> 00:04:05.640 align:middle line:84% using a nominal-level payment mortgage. 00:04:05.640 --> 00:04:10.660 align:middle line:84% We're using rate of return plus depreciation, right? 00:04:10.660 --> 00:04:14.510 align:middle line:84% Well, 30 years ago, we invented a level payment novel mortgage. 00:04:14.510 --> 00:04:17.420 align:middle line:84% How do we spread the cost of capital 00:04:17.420 --> 00:04:20.519 align:middle line:90% equally in real terms over time? 00:04:20.519 --> 00:04:23.930 align:middle line:84% If we could do all of those things, we'd be there. 00:04:23.930 --> 00:04:25.830 align:middle line:84% So you do your job in getting the cost down. 00:04:25.830 --> 00:04:27.470 align:middle line:90% Really build it neat. 00:04:27.470 --> 00:04:30.020 align:middle line:84% We find a way to bring in some of the other grants and tax 00:04:30.020 --> 00:04:31.460 align:middle line:90% incentives. 00:04:31.460 --> 00:04:34.550 align:middle line:84% We grab back some of the avoided costs 00:04:34.550 --> 00:04:36.000 align:middle line:90% out of the electrical system. 00:04:36.000 --> 00:04:39.300 align:middle line:84% Ideally, we'd get some carbon credits for the carbon saved, 00:04:39.300 --> 00:04:41.820 align:middle line:84% and then we'd spread the capital cost evenly. 00:04:41.820 --> 00:04:43.490 align:middle line:84% And then people say, gee, this is 00:04:43.490 --> 00:04:47.180 align:middle line:84% more economical than the existing system, 00:04:47.180 --> 00:04:48.400 align:middle line:90% and it's better for our kids. 00:04:48.400 --> 00:04:49.650 align:middle line:90% It's better for our community. 00:04:49.650 --> 00:04:50.700 align:middle line:90% We avoid the heat islands. 00:04:50.700 --> 00:04:51.908 align:middle line:90% We avoid all the other stuff. 00:04:51.908 --> 00:04:54.640 align:middle line:84% So we get all these other bennies for free, in a sense. 00:04:54.640 --> 00:04:57.380 align:middle line:90% 00:04:57.380 --> 00:05:01.340 align:middle line:84% Learning curve-- so learning curve, right? 00:05:01.340 --> 00:05:02.910 align:middle line:84% There are learning curves out there. 00:05:02.910 --> 00:05:04.080 align:middle line:90% There's evidence out there. 00:05:04.080 --> 00:05:07.220 align:middle line:84% It looks like you've got 50% from one to two, 00:05:07.220 --> 00:05:10.550 align:middle line:84% but, probably, this is going to be an 11% or 12% 00:05:10.550 --> 00:05:12.360 align:middle line:90% learning curve over time. 00:05:12.360 --> 00:05:14.550 align:middle line:84% There's a lot of evidence on this. 00:05:14.550 --> 00:05:18.120 align:middle line:84% So to the rate-based folk, we'd say 00:05:18.120 --> 00:05:20.340 align:middle line:84% you've got to be willing to eat some of it 00:05:20.340 --> 00:05:23.100 align:middle line:84% because you're investing against the learning curve, 00:05:23.100 --> 00:05:25.390 align:middle line:84% and there's an investment in the learning curve. 00:05:25.390 --> 00:05:27.510 align:middle line:84% And so you can't load all of the current costs 00:05:27.510 --> 00:05:30.750 align:middle line:84% onto the current customers because part of the current cost 00:05:30.750 --> 00:05:33.360 align:middle line:84% is a public benefit of the learning curve 00:05:33.360 --> 00:05:35.230 align:middle line:90% that everyone else will gain. 00:05:35.230 --> 00:05:39.750 align:middle line:84% And so this has to be built into the thinking. 00:05:39.750 --> 00:05:42.990 align:middle line:84% Excess capacity-- well, let's allocate only the capacity 00:05:42.990 --> 00:05:44.260 align:middle line:90% used, right? 00:05:44.260 --> 00:05:47.640 align:middle line:84% And the excess capacity is banked. 00:05:47.640 --> 00:05:49.900 align:middle line:90% Mechanisms to monetize benefit-- 00:05:49.900 --> 00:05:53.200 align:middle line:84% so assignment of carbon tax or renewable energy, 00:05:53.200 --> 00:05:55.870 align:middle line:84% linkage of various incentive systems, 00:05:55.870 --> 00:05:57.910 align:middle line:84% assignment of avoided cost credits. 00:05:57.910 --> 00:06:00.815 align:middle line:84% I mean complicated, really complicated and hard to do, 00:06:00.815 --> 00:06:02.940 align:middle line:84% but we've got to get our act together and make this 00:06:02.940 --> 00:06:05.130 align:middle line:90% all in one place. 00:06:05.130 --> 00:06:08.850 align:middle line:84% Capital recovery model-- and I don't expect everybody to follow 00:06:08.850 --> 00:06:12.340 align:middle line:90% this at 3:30 in the afternoon. 00:06:12.340 --> 00:06:16.490 align:middle line:84% But if you take cost of capital times 00:06:16.490 --> 00:06:18.990 align:middle line:84% unamortized capital plus depreciation 00:06:18.990 --> 00:06:23.120 align:middle line:84% and you look at your annual charge, it starts on a 50-- 00:06:23.120 --> 00:06:26.000 align:middle line:84% it starts high, and it comes down over time. 00:06:26.000 --> 00:06:29.430 align:middle line:84% If you have a level nominal charge, it's like that. 00:06:29.430 --> 00:06:33.050 align:middle line:84% A level real charge would be rising over time with inflation. 00:06:33.050 --> 00:06:35.360 align:middle line:90% Short story. 00:06:35.360 --> 00:06:39.800 align:middle line:84% If you had a payment that looked like an index 00:06:39.800 --> 00:06:43.130 align:middle line:84% Treasury and you could tell people 00:06:43.130 --> 00:06:46.610 align:middle line:84% that looks like Social Security because Social Security 00:06:46.610 --> 00:06:48.620 align:middle line:90% is indexed to inflation-- 00:06:48.620 --> 00:06:51.720 align:middle line:84% if you have a payment that's indexed to Social Security, 00:06:51.720 --> 00:06:56.190 align:middle line:84% it can start at 1/2 the level of a fixed nominal payment, 00:06:56.190 --> 00:06:59.430 align:middle line:84% and it will grow at Social Security over time, 00:06:59.430 --> 00:07:03.050 align:middle line:84% and it will give the utility the rate of return that 00:07:03.050 --> 00:07:07.096 align:middle line:84% they're allowed full recovery of capital. 00:07:07.096 --> 00:07:10.770 align:middle line:84% Yeah, it's fairly straightforward. 00:07:10.770 --> 00:07:12.120 align:middle line:90% You just have to do it. 00:07:12.120 --> 00:07:15.520 align:middle line:84% So constant real capital recovery, 00:07:15.520 --> 00:07:16.810 align:middle line:90% there are ways to do this. 00:07:16.810 --> 00:07:20.460 align:middle line:84% I wrote it up in 1975 for totally different reasons. 00:07:20.460 --> 00:07:22.350 align:middle line:90% It's all in there. 00:07:22.350 --> 00:07:25.950 align:middle line:84% OK, now, alternative pricing models. 00:07:25.950 --> 00:07:29.400 align:middle line:84% We could consumer purchase in-home 00:07:29.400 --> 00:07:32.820 align:middle line:84% and the utility supplies the common stuff or the utility 00:07:32.820 --> 00:07:33.870 align:middle line:90% supplies everything. 00:07:33.870 --> 00:07:35.530 align:middle line:90% Those would be the two choices. 00:07:35.530 --> 00:07:37.710 align:middle line:84% And you could chart for thermal usage, 00:07:37.710 --> 00:07:39.820 align:middle line:84% or you could charge for capacity. 00:07:39.820 --> 00:07:42.130 align:middle line:84% I personally like charging for capacity. 00:07:42.130 --> 00:07:43.860 align:middle line:90% I'm being told five minutes. 00:07:43.860 --> 00:07:46.140 align:middle line:84% I think thermal usage is a little bit like charging 00:07:46.140 --> 00:07:48.210 align:middle line:90% for ice in the ice box. 00:07:48.210 --> 00:07:49.720 align:middle line:90% I'd like capacities. 00:07:49.720 --> 00:07:51.760 align:middle line:90% These are fixed-cost systems. 00:07:51.760 --> 00:07:54.340 align:middle line:84% You're largely talking about recovering capital costs. 00:07:54.340 --> 00:07:56.170 align:middle line:90% But one, two, three, or four. 00:07:56.170 --> 00:07:59.670 align:middle line:90% But now let's get simple. 00:07:59.670 --> 00:08:03.100 align:middle line:84% Path forward, stage one, pilot stage. 00:08:03.100 --> 00:08:05.020 align:middle line:90% Stage two, rollout stage. 00:08:05.020 --> 00:08:06.700 align:middle line:90% Stage three, steady state. 00:08:06.700 --> 00:08:10.450 align:middle line:84% In pilot stage, there are only very few systems. 00:08:10.450 --> 00:08:11.470 align:middle line:90% They're incomplete. 00:08:11.470 --> 00:08:12.450 align:middle line:90% There's no market. 00:08:12.450 --> 00:08:14.400 align:middle line:90% There's no thermal market. 00:08:14.400 --> 00:08:18.050 align:middle line:84% And the vintage for the technical types, the vintage 00:08:18.050 --> 00:08:19.530 align:middle line:90% of capital is too young. 00:08:19.530 --> 00:08:20.490 align:middle line:90% It's all new. 00:08:20.490 --> 00:08:22.740 align:middle line:84% And so if you have standard rate recovery, 00:08:22.740 --> 00:08:25.260 align:middle line:84% you're going to be recovering way too high rates. 00:08:25.260 --> 00:08:28.560 align:middle line:84% What would I do if I were in Jamie's position? 00:08:28.560 --> 00:08:31.670 align:middle line:84% I'd say in the short run, we fix the cost 00:08:31.670 --> 00:08:37.669 align:middle line:84% equal to the current charge per unit of capacity, period. 00:08:37.669 --> 00:08:41.070 align:middle line:84% And we charge the customer with that amount, 00:08:41.070 --> 00:08:42.830 align:middle line:90% and the difference-- 00:08:42.830 --> 00:08:46.400 align:middle line:84% 80% of the difference we stick on rate base. 00:08:46.400 --> 00:08:48.660 align:middle line:84% 20% of the difference we give to Nikki 00:08:48.660 --> 00:08:51.690 align:middle line:84% so she has an incentive to bring the difference down. 00:08:51.690 --> 00:08:55.280 align:middle line:84% We say, basically, we're going to price it off current gas plus 00:08:55.280 --> 00:08:58.380 align:middle line:84% electricity, and we're going to stick the rest of it-- 00:08:58.380 --> 00:09:00.470 align:middle line:84% the rate base for learning curve, for learning, 00:09:00.470 --> 00:09:02.570 align:middle line:84% for all of these other benefits-- 00:09:02.570 --> 00:09:05.760 align:middle line:84% in the first-- and you might, to protect yourself, 00:09:05.760 --> 00:09:10.393 align:middle line:84% you might say for up to 3% of the installed base or up to 5% 00:09:10.393 --> 00:09:11.310 align:middle line:90% of the installed base. 00:09:11.310 --> 00:09:12.706 align:middle line:90% This is a learning investment. 00:09:12.706 --> 00:09:16.580 align:middle line:90% It just matches the old one. 00:09:16.580 --> 00:09:17.990 align:middle line:84% Rollout stage, you're still going 00:09:17.990 --> 00:09:20.760 align:middle line:84% to have relatively few systems, but you 00:09:20.760 --> 00:09:23.470 align:middle line:84% can do a cost-of-capital recovery on those systems, 00:09:23.470 --> 00:09:27.210 align:middle line:84% as long as it's level and real, as opposed to nominal 00:09:27.210 --> 00:09:28.083 align:middle line:90% and declining. 00:09:28.083 --> 00:09:30.000 align:middle line:84% Steady state, it doesn't matter because you're 00:09:30.000 --> 00:09:32.170 align:middle line:84% going to have investments of all vintages, 00:09:32.170 --> 00:09:34.510 align:middle line:84% and it's going to look like the existing system. 00:09:34.510 --> 00:09:36.630 align:middle line:84% And you could go back to the existing system 00:09:36.630 --> 00:09:39.390 align:middle line:84% if you wanted to, but by then, you 00:09:39.390 --> 00:09:40.930 align:middle line:90% would have devised a new system. 00:09:40.930 --> 00:09:42.600 align:middle line:84% And remember, this is the problem 00:09:42.600 --> 00:09:44.410 align:middle line:90% for utilities in general. 00:09:44.410 --> 00:09:47.080 align:middle line:84% We're going from operating costs to capital costs. 00:09:47.080 --> 00:09:48.813 align:middle line:90% Renewables are capital costs. 00:09:48.813 --> 00:09:50.230 align:middle line:84% We're getting rid of fossil fuels, 00:09:50.230 --> 00:09:51.850 align:middle line:90% which are operating costs. 00:09:51.850 --> 00:09:57.240 align:middle line:84% So this helps us actually move from a volumetric to a capacity 00:09:57.240 --> 00:09:58.240 align:middle line:90% charging system. 00:09:58.240 --> 00:10:00.840 align:middle line:90% OK, I've got two more minutes. 00:10:00.840 --> 00:10:03.310 align:middle line:84% Consideration for low-income, low-wealth households, 00:10:03.310 --> 00:10:04.780 align:middle line:84% I think this would be a great area. 00:10:04.780 --> 00:10:08.350 align:middle line:84% Take the one third that is the retrofit in the internal system. 00:10:08.350 --> 00:10:10.450 align:middle line:84% Get the Boston Foundation to work with you. 00:10:10.450 --> 00:10:12.870 align:middle line:84% Get them to buy down the cost of the household 00:10:12.870 --> 00:10:15.480 align:middle line:90% part for low-income households. 00:10:15.480 --> 00:10:17.700 align:middle line:90% Don't throw it at the utility. 00:10:17.700 --> 00:10:20.440 align:middle line:84% Say 2/3 of it is a standard rate, 00:10:20.440 --> 00:10:24.150 align:middle line:84% and if you qualify low income, we'll buy down the other third. 00:10:24.150 --> 00:10:26.420 align:middle line:84% And that will help us get all of the 20 houses 00:10:26.420 --> 00:10:29.360 align:middle line:84% around the cul-de-sac to convert. 00:10:29.360 --> 00:10:30.510 align:middle line:90% Then there are appendices. 00:10:30.510 --> 00:10:32.498 align:middle line:90% So that's it. 00:10:32.498 --> 00:10:35.781 align:middle line:90% [APPLAUSE] 00:10:35.781 --> 00:10:36.719 align:middle line:90% 00:10:36.719 --> 00:10:39.900 align:middle line:90% SPEAKER: So thank you, Don. 00:10:39.900 --> 00:10:42.010 align:middle line:84% So Don is a neighbor, and I went for a walk. 00:10:42.010 --> 00:10:42.510 align:middle line:90% And I said, 00:10:42.510 --> 00:10:42.620 align:middle line:90% DON LESSARD: We are neighbors. 00:10:42.620 --> 00:10:44.745 align:middle line:84% SPEAKER: --well, here's where we are with the cost. 00:10:44.745 --> 00:10:48.675 align:middle line:84% Can you figure out some solutions? 00:10:48.675 --> 00:10:53.660 align:middle line:84% And if you didn't catch that in the deluge of information 00:10:53.660 --> 00:10:56.930 align:middle line:84% and ideas, he's putting out a whole bunch 00:10:56.930 --> 00:10:59.030 align:middle line:84% of series of solutions to deal with the cost 00:10:59.030 --> 00:11:01.890 align:middle line:84% as it is today with the first projects. 00:11:01.890 --> 00:11:04.610 align:middle line:84% And one of the things I want to flag on that 00:11:04.610 --> 00:11:07.700 align:middle line:84% is that that cost today with these first projects 00:11:07.700 --> 00:11:12.300 align:middle line:84% includes the entire cost of the building transition, which, 00:11:12.300 --> 00:11:18.780 align:middle line:84% incidentally, also includes all of the challenges of our aging-- 00:11:18.780 --> 00:11:20.820 align:middle line:84% I think someone said crappy buildings. 00:11:20.820 --> 00:11:22.980 align:middle line:84% Yeah, we have crappy buildings here. 00:11:22.980 --> 00:11:24.010 align:middle line:90% Just saying it. 00:11:24.010 --> 00:11:28.260 align:middle line:84% And all of those problems that are from a hundred years 00:11:28.260 --> 00:11:29.140 align:middle line:90% of neglect-- 00:11:29.140 --> 00:11:31.330 align:middle line:84% the asbestos, the mold, the faulty wiring, 00:11:31.330 --> 00:11:33.990 align:middle line:84% the code violations-- they are a part 00:11:33.990 --> 00:11:36.673 align:middle line:84% of the challenge of decarbonizing our buildings 00:11:36.673 --> 00:11:39.340 align:middle line:84% because you cross the threshold, and you have to deal with them. 00:11:39.340 --> 00:11:45.030 align:middle line:84% And so that cost is baked into that total sum. 00:11:45.030 --> 00:11:49.540 align:middle line:84% Part of what Nikki was referring to is going into new builds, 00:11:49.540 --> 00:11:51.250 align:middle line:90% you don't deal with that at all. 00:11:51.250 --> 00:11:56.610 align:middle line:84% And even today, those pipes and boreholes 00:11:56.610 --> 00:12:02.130 align:middle line:84% can actually balance out for the energy supply in a kind of more 00:12:02.130 --> 00:12:04.360 align:middle line:90% classic gas utility approach. 00:12:04.360 --> 00:12:07.560 align:middle line:84% So the incredible news is that we 00:12:07.560 --> 00:12:12.030 align:middle line:84% might have tools to remove the cost of all of our building 00:12:12.030 --> 00:12:14.490 align:middle line:84% upgrades, which has all these other incredible benefits 00:12:14.490 --> 00:12:17.370 align:middle line:84% like health and well-being and comfort. 00:12:17.370 --> 00:12:21.500 align:middle line:84% So I just wanted to clarify that distinction. 00:12:21.500 --> 00:12:27.000 align:middle line:90%