[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]


 
     GET SMART ON THE SMART GRID: HOW TECHNOLOGY CAN REVOLUTIONIZE 
                   EFFICIENCY AND RENEWABLE SOLUTIONS

=======================================================================

                                HEARING

                               before the
                          SELECT COMMITTEE ON
                          ENERGY INDEPENDENCE
                           AND GLOBAL WARMING
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 25, 2009

                               __________

                            Serial No. 111-3


             Printed for the use of the Select Committee on
                 Energy Independence and Global Warming

                        globalwarming.house.gov



                  U.S. GOVERNMENT PRINTING OFFICE
62-185                    WASHINGTON : 2010
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing Office, 
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202ï¿½09512ï¿½091800, or 866ï¿½09512ï¿½091800 (toll-free). E-mail, [email protected].  

                SELECT COMMITTEE ON ENERGY INDEPENDENCE
                           AND GLOBAL WARMING

               EDWARD J. MARKEY, Massachusetts, Chairman
EARL BLUMENAUER, Oregon              F. JAMES SENSENBRENNER, Jr., 
JAY INSLEE, Washington                   Wisconsin
JOHN B. LARSON, Connecticut            Ranking Member
HILDA L. SOLIS, California           JOHN B. SHADEGG, Arizona
STEPHANIE HERSETH SANDLIN,           GREG WALDEN, Oregon
  South Dakota                       CANDICE S. MILLER, Michigan
EMANUEL CLEAVER, Missouri            JOHN SULLIVAN, Oklahoma
JOHN J. HALL, New York               MARSHA BLACKBURN, Tennessee
JERRY McNERNEY, California
                                 ------                                

                           Professional Staff

                   Gerard J. Waldron, Staff Director
                       Aliya Brodsky, Chief Clerk
                 Thomas Weimer, Minority Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Edward J. Markey, a Representative in Congress from the 
  Commonwealth of Massachusetts, opening statement...............     1
    Prepared statement...........................................     3
Hon. F. James Sensenbrenner, Jr., a Representative in Congress 
  from the State of Wisconsin, opening statement.................     6
Hon. Earl Blumenauer, a Representative in Congress from the State 
  of Oregon, opening statement...................................     7
Hon. Jay Inslee, a Representative in Congress from the State of 
  Washington, opening statement..................................     7
Hon. John Hall, a Representative in Congress from the State of 
  New York, opening statement....................................     8
Hon. Ben Ray Lujan, a Representative in Congress from the State 
  of New Mexico, opening statement...............................     9
Hon. Ron Klein, a Representative in Congress from the State of 
  Florida, introduction of witness Shirley Coates Brostmeyer.....    71

                               Witnesses

Tom Casey, CEO, CURRENT Group, LLC...............................    11
    Prepared Statement...........................................    15
    Answers to submitted questions...............................   137
Robert Gilligan, Vice President, General Electric................    28
    Prepared Statement...........................................    30
Allan Schurr, Vice President, IBM................................    44
    Prepared Statement...........................................    46
Charles Zimmerman, Vice President, Wal-Mart......................    62
    Prepared Statement...........................................    64
    Answers to submitted questions...............................   159
Shirley Coates Brostmeyer, CEO, Florida Turbine Technologies, Inc    71
    Prepared Statement and PowerPoint attachments................    74
    Answers to submitted questions...............................   165
Mr. James Hoecker, Hoecker Energy Law & Policy...................    95
    Prepared Statement...........................................    97


      HEARING ON GET SMART ON THE SMART GRID: HOW TECHNOLOGY CAN 
            REVOLUTIONIZE EFFICIENCY AND RENEWABLE SOLUTIONS

                              ----------                              


                      WEDNESDAY, FEBRUARY 25, 2009

                  House of Representatives,
            Select Committee on Energy Independence
                                        and Global Warming,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 9:30 a.m., in room 
2247 Rayburn House Office Building, Hon. Edward Markey 
(chairman of the Committee) presiding.
    Present: Representatives Markey, Blumenauer, Inslee, Hall, 
Sensenbrenner, Sullivan and Capito.
    Staff present: Jonathan Phillips.
    The Chairman. Over the past two years this Committee has 
explored key elements of our low-carbon energy future: 
renewable energy sources and improving efficiency. Today we 
focus on the next critical component: how the Internet and 
information technologies unleashed by the 1996 
Telecommunications Act can enable us to take full advantage of 
renewable energy sources and efficiency. I think of this as the 
energy internet.
    Today we will explore how the Internet can revolutionize 
the energy sector, just as it has transformed so many other 
parts of our economy. We all recognize that the energy backbone 
infrastructure needed to integrate wind and solar resources is 
an issue that needs to be addressed as we move away from 
carbon-producing fossil fuels towards new, clean, cost-
effective renewable resources.
    But the backbone infrastructure needed for renewables 
requires more than tall towers and wide rights-of-way. To do it 
right, it also requires smart grid internet protocol 
communications networks, open protocol smart meters, backbone 
sensors connected to radio spectrum, and sophisticated 
interactive control technologies.
    The U.S. electric grid has been called the most significant 
engineering achievement of the Twentieth Century. It is the 
largest, most complex machine on the planet, with over a 
million megawatts of generating capacity and 300,000 miles of 
transmission lines ready for just-in-time delivery of energy to 
heat our homes and light our world almost wherever it is 
needed. However, this grid was designed for a different era.
    Historically, environmentally unfriendly coal, natural gas, 
and nuclear generators have delivered electricity to passive 
consumers. These customers, both large industrial users and 
average consumers, lacked the information and incentives to 
change their consumption. Utilities also had limited 
information on grid conditions and limited ability to control 
and monitor demand-side resources or respond to changing grid 
conditions.
    In the era when we have gone from black rotary phones to 
BlackBerries, from three TV stations on the large appliance in 
your living room to YouTube on the tiny device in your pocket, 
we need to do better.
    The technology is available in 2009 to develop an energy 
internet and a smart grid. And today we will explore some of 
the potential technologies to accomplish that goal.
    Smart grid technologies can alter the way we use 
electricity, allow distributed generation to be sold to the 
grid, help utilities to integrate intermittent renewable 
resources, allow us to reduce carbon emissions, and allow self-
healing of the grid when the system goes awry. This is not just 
the right thing to do. Smart grid technologies also can save 
consumers money.
    In discussing climate change legislation, we focus on the 
importance of putting a price on carbon to send price signals 
to businesses and consumers. On the electricity side, we need 
to ensure consumers, large and small, have good information to 
make wise decisions.
    Home-level smart grid technologies allow consumers to 
reduce demand and see their carbon footprint through the use of 
advanced meters. Smart meters, such as those placed on 
thermostats, washer/dryers, and refrigerators, allow consumers 
to respond dynamically to prices by turning down appliances and 
thereby reducing consumption.
    These end-user smart grid devices also can be adopted by 
utilities to control numerous electricity usages from street 
lighting to industrial customers willing to reduce consumption.
    I am pleased that we have a panel of experts to explain the 
benefits and challenges facing us in the development of smart 
grid technologies and promoting an energy internet. I thank you 
all for being here.
    That completes the opening statement of the Chair. We now 
turn to recognize the Ranking Member of the Committee, the 
gentleman from Wisconsin, Mr. Sensenbrenner.
    [The prepared statement of Mr. Markey follows:]

    [GRAPHIC] [TIFF OMITTED] T2185A.001
    
    [GRAPHIC] [TIFF OMITTED] T2185A.002
    
    [GRAPHIC] [TIFF OMITTED] T2185A.003
    
    Mr. Sensenbrenner. Thank you very much. Thank you. Thank 
you very much. Thank you very much. [Laughter.]
    Okay. Reset the clock, please. Thank you very much, Mr. 
Chairman.
     The Chairman. We have no clock. So we will be putting 
pieces of paper in front of people when there are 30 seconds.
    Mr. Sensenbrenner. Okay. Well, thank you very much, Mr. 
Chairman. I look forward to hearing about the advantage of 
smart grid technology and the need to update our national 
transmission system.
    Technology and costs are not the only hurdles that we have 
to clear. Last week the Fourth Circuit ruled that the Federal 
Energy Regulatory Commission, FERC for short, lacked authority 
to locate high-voltage transmission lines. If we can't 
streamline the regulatory issues for siting new transmission 
lines, we will be doomed to legal battles and the same outdated 
grid.
    In his written testimony, James Hoecker, counsel to the 
Working Group on Investment in Reliable and Economic Electric 
Systems, says that much of the infrastructure needed to 
increase our electrical transmission network will stretch over 
state lines.
    Indeed, much of the nation's wind, solar, and geothermal 
resources are located in the interior of the country while many 
people who need that electricity live near the coasts. This 
will require new transmission lines, not just upgrades to the 
existing grid.
    The states and the federal government must develop a 
streamlined system of approving rights-of-way for new 
electrical transmission lines. Since many of these lines will 
cross several states, the federal government must lead.
    With regional electricity transmission networks serving 
numerous states, states will surely argue over the costs of 
these vital upgrades. Smart grid technology will encounter the 
same cost allocation and recovery problems that the 
transmission network now faces.
    I am interested in hearing today about new electrical 
transmission technology that can make the network more 
efficient, but I am also interested in hearing about what new 
transmission is required and how we can improve the regulatory 
system that oversees this expanded network.
    The states, the federal government, shareholders, 
consumers, and other stakeholders will all play a role in 
upgrading our energy infrastructure. These stakeholders must 
work together to ensure that this network can be built in a 
timely manner without unnecessary regulatory hold-ups.
    Now, let me say that earlier this week energy/environment 
czar, poobah, or whatever she is in the White House, Carol 
Browner, talked about the need to upgrade the regulatory 
process in siting and building transmission lines.
    I think that this is one issue where Republicans and the 
White House can agree. And I am looking forward to working to 
get together a piece of legislation that will update at least 
that part of the FERC law that gives FERC some power to deal 
with this issue.
    I noticed in reading the newspaper last August that a 
utility in Indiana wished to build a 240-mile transmission line 
solely within that state and not crossing any state lines. They 
said in order to surmount the regulatory and litigation 
hurdles, they would not be able to begin construction until the 
year 2014.
    Now, obviously that is unacceptable. And we in Congress are 
going to have to look at the FERC laws very closely to see what 
can be done to streamline the approval process for siting and 
construction of new transmission lines as well as upgrading the 
capacity of the grid. This is going to be a challenge with many 
conflicting stakeholders involved, but it is something that in 
my opinion has to be done.
    So we can't let disputes between regulators and other 
stakeholders block better transmission and improve technologies 
that help address the energy challenges that we face. This 
hearing will deal with about half the issues. We had better be 
dealing with the other half to make sure that the package is 
complete.
    Thank you.
     The Chairman. The gentleman's time has expired. The Chair 
recognizes the gentleman from Oregon, Mr. Blumenauer.
    Mr. Blumenauer. Thank you. Thank you for sharing your 
microphone, Mr. Chairman.
    I find myself in substantial agreement with both statements 
from the ranking member and the chair. So I would like to 
forego an opening statement and add it to my question period if 
that is all right.
     The Chairman. Excellent. The Chair----
    Mr. Blumenauer. My apologies to the witness. Actually, Mr. 
Markey's influence is being felt in my Ways and Means 
Committee. We are having a hearing on global warming. I am just 
going to check in, tell them I am alive, and come right back.
     The Chairman. Excellent. Thank you.
    The Chair recognizes the gentleman from Washington State, 
Mr. Inslee.
    Mr. Inslee. I just want to make three quick points. First, 
you know, we have had a start on the smart grid, which was last 
Tuesday, when President Obama signed the economic recovery 
plan, which made very substantial investments in smart grid 
technology.
    This is not an abstract exercise. We started last week 
creating green collar jobs associated with the smart grid with 
the signing of the economic recovery package.
    I may note, too, that that package included what you might 
think of as the old-fashioned grid improvements as well. In my 
neck of the woods, the Northwest, it included $3.5 billion for 
laying wire with the Bonneville Power Administration. So the 
old backbone counts, too.
    So, number one, we have made the first step down this road. 
Number two, we know that this works. One of the first 
experiments on consumer acceptance of smart grid technology 
with demand management so we can manage the amount of demand to 
level out peaks to reduce some of the stresses on the grid 
system was in Olympic Peninsula out in western Washington.
    What the Pacific Northwest labs found is very high consumer 
acceptance on some strategies to reduce the demand in peak load 
periods, where consumers had the ability to determine when to 
do their drying and when to do their washing and when to do 
some of their thermostat and heating of their hot water 
systems, very, very high consumer acceptance to find a way to 
do that demand management. We know this works.
    And, third, we do know that we have to improve our siting, 
planning, and financing of grid improvements in general. I will 
be introducing in the next couple of weeks a bill that will 
make substantial improvements that will engage the offices of 
the federal government for siting, planning, and financing the 
very, very large improvements we need to the grid system, both 
as to timing, permitting, and a way to finance this plan.
    I think the conditions are right for progress on this. I 
just note that the utility commissioners as recently as last 
week were moving forward to accept some more national effort in 
this regard. This is a very, very positive sign that the states 
are recognizing the necessity for a national movement in this 
regard. That is not always easy to do. And I think we should 
feel comforted that the states want to be partners with us in 
this effort. We even have the chamber on the other side of the 
U.S. Senate moving on these issues.
    So it is time for action. And thanks for this hearing, Mr. 
Chair.
     The Chairman. The gentleman's time has expired. The Chair 
recognizes the gentle lady from West Virginia, Mrs. Capito.
    Mrs. Capito. Thank you, Mr. Chairman. I have no opening 
statement. I just want to say I am pleased. This is my first 
hearing as a new member of this Committee. And I am very 
honored.
    I represent West Virginia, which obviously has a great 
interest in the direction that we are going to go as a nation. 
We have two. The TrAIL and the PATH are grids that are going 
right through our state right now and are trying to be sited. 
So I again appreciate the courtesy. And I will defer to the 
witnesses.
     The Chairman. Great. The Chair recognizes the gentleman 
from New York State, Mr. Hall, for an opening statement.
    Mr. Hall. Thank you, Mr. Chairman, for holding today's 
hearing. And thank you also to the distinguished panel of 
witnesses, whose testimony I look forward to.
    I have long believed that modernizing our electric grid is 
critical, not only to achieving energy independence but also to 
coping with the looming climate crisis. So it is altogether 
appropriate for this Committee to be holding this hearing 
today.
    As the testimony you have submitted indicates, due to the 
structure of the current grid, there are significant barriers 
to widespread use of renewable power, something that I think 
many of us here, if not most of us, would acknowledge as a 
worthwhile policy goal.
    We need to have a grid that is flexible to accept power 
from a variety of intermittent sources, a grid that can handle 
power flowing in two directions, a grid that anticipates the 
widespread use of plug-in hybrid electric vehicles and electric 
cars, a grid that may be made of materials that are not 100-
year-old technology but more modern technology that does not 
lose so much power in transmission due to the resistance, 
modern network that can carry the voltage without unduly 
marring our landscapes and harming local ecosystems.
    Without those pieces in place, the investments we are 
making in renewable power, advanced battery technology, and 
electric cars will be for naught. But if we make the right 
decisions, we use wisely the resources provided by this 
Congress, then not only will we modernize our grid, but we will 
create good-paying jobs here at home.
    There is a new growth industry in smart grid technology 
that is just beginning to develop. Before us today are some of 
the first of what I hope will be many smart grid technology 
companies, who not only find a market but also a workforce.
    I have said before the only thing more foolish than 
continuing to import more oil from the Saudis would be to 
import more solar panels from the Chinese. Well, the same could 
be said for smart grid technology.
    We cannot let the opportunity pass us by to harness the 
American and, indeed, the global market for this technology and 
create the industries and the jobs right here at home.
    Now more than ever this is critical. Thanks to the economic 
recovery package signed by the President last week, the 
resources to begin work on the smart grid are available today. 
It is up to us here in this Congress and on this Committee to 
make sure that the resources are used wisely to create jobs and 
solve our energy and climate crises.
    Again, thank you, Mr. Chairman, for holding the hearing. 
And I look forward to the testimony of our witnesses.
     The Chairman. Great. I thank the gentleman. The 
gentleman's time has expired.
    The Chair now with the permission of the other members will 
recognize the gentleman from New Mexico, Mr. Lujan. He is a new 
member from the State of New Mexico and is an expert, actually, 
on these issues. And, without objection, I will recognize him 
to make an opening statement if he would like to do so.
    Welcome.
    Mr. Lujan. Thank you, Mr. Chairman. Thank you, Mr. Chairman 
and members of the Committee. I am honored to be part of this 
very important discussion today.
    As our country moves forward toward creating a green 
economy and reducing our dependence on foreign oil, it is 
imperative that we not only prepare students for the jobs of 
the future. And in a growing renewable energy industry, we must 
build transmission that includes smart grid technology that 
will be critical for our future.
    New Mexico has always been the leader in energy. And in my 
state, like many around the country, we have an enormous 
potential to grow renewable generation, like solar and wind.
    While traveling to my district last week, I had the 
opportunity to visit the North American Wind Research and 
Training Center and Mesalands Community College in Tucumcari, 
New Mexico. There we also have the Northern New Mexico Solar 
Energy Research Park and Academy, which is growing every day. 
Students at the center train for the jobs of tomorrow, learn 
the mechanics of the wind turbines, the importance of solar 
generation, and have planned their skills on full-size 
generation built right on the campus.
    As we train and prepare our young people for the jobs of 
the future and make investments of renewable energy, we are 
faced with the challenge that trends to minimize the gains we 
have made preparing our workforce for a clean energy economy.
    We all know our current electric grid design does not 
accommodate new renewable energy resources. We are charged with 
the task of building new transmission while incorporating new 
technologies that will improve efficiency.
    We must continue with fundamental research and development. 
And areas such as energy storage and solar generation have 
already taken place across the country in facilities like Los 
Alamos National Laboratories. We must develop technologies that 
have the ability to store millions of watts of electric energy 
that can be released back into our electric grid so we can take 
full advantage of the abundant renewable potential United 
States.
    Smart grid is a complex system. And we need to accelerate 
the use of computer simulation and modeling to build an ideal 
electric grid, a grid that will support energy efficiency, 
reduce our use of fossil fuels, lower consumer energy costs, 
and support our growing renewable energy industry as it creates 
jobs for the future.
    At Los Alamos National Laboratories, scientists are 
exploring the next generation of technologies needed to 
implement smart grid. Los Alamos has adapted the tools we use 
today for national security to analyze and develop solutions, 
as an example, resulting from renewable generation, from large-
scale renewable facilities, and from distributed generation in 
homes or businesses.
    To get these solutions into the workplace, we need to grow 
new partnerships between research and development 
organizations, like our national laboratories, our utilities, 
and industry aimed at accelerating the pace of discovery and 
commercialization.
    As a former public utility commissioner with the New Mexico 
Public Regulation Commission, I understand the importance and 
the urgency and the need to improve our existing infrastructure 
and build a new, more efficient smart grid that will allow for 
the deliverability of new renewable generation and improve the 
reliability and security of our nation's power.
    Deployment of smart grid technologies will create new jobs, 
facilitate a green economy, and change the way we generate and 
deliver power across America and around the world.
    Investments in the modernization of our electric grid is 
the next critical step towards a clean energy future. And I 
look forward to working with my fellow members to develop and 
implement the smart grid systems of today and tomorrow.
    Thank you, Mr. Chairman, the Committee, for allowing me the 
time to be able to be here today.
    The Chairman. Thank you, Mr. Lujan. Thank you for being 
here.
    Now we are going to turn to our witnesses. Our first 
witness is a very distinguished one, Mr. Tom Casey. He is the 
CEO of CURRENT Group. He previously worked on 
telecommunications and global communications with Merrill Lynch 
and Skadden Arps. He was also the chief counsel of the Federal 
Communications Commission back in the 1970s, long ago and far 
away for both of us, Tom.
    We welcome you. And whenever you are ready, please begin.
    Mr. Casey. Thank you, Mr. Chairman, Representative 
Sensenbrenner, members of the Committee.

STATEMENT OF TOM CASEY, CEO, CURRENT GROUP, LLC; ALLAN SCHURR, 
 VICE PRESIDENT, IBM; ROBERT GILLIGAN, VICE PRESIDENT, GENERAL 
ELECTRIC; CHARLES ZIMMERMAN, VICE PRESIDENT, WAL-MART; SHIRLEY 
COATES BROSTMEYER, CEO, FLORIDA TURBINE AND TECHNOLOGIES, INC.; 
         AND JAMES HOECKER, HOECKER ENERGY LAW & POLICY

                     STATEMENT OF TOM CASEY

    Mr. Casey. I am here, obviously, to talk about smart grid 
and to talk to explain the impact of a smart grid can do for 
energy efficiency, for energy independence, and for emission 
reduction.
    As the Chairman mentioned, we can think about a smart grid 
as though it was an electric internet or the internet of the 
electricity. I completely agree with that analogy because it is 
a network that must be organized, monitored, managed for the 
distribution of electrons, as opposed to bits.
    But the challenges and the operational considerations that 
go into running the grid are very similar to the considerations 
that go into running the internet or telecommunications 
networks generally.
    And, in fact, much of the value of the internet, as with 
much of the value of the smart grid, will come from not only 
the performance and the efficiencies it creates itself but the 
fact that it enables other devices to attach to it and then to 
perform services on it; for example, computers on the internet, 
telephones on the telephone network.
    We don't know what the iPod or Google of the electric 
sector will be, but if we have a true smart grid, we can have a 
great deal of confidence that there will be an iPod of 
electricity, there will be a Google of electricity, that 
consumers will be taking electricity as a service. And these 
changes are very, very significant.
    If I could--and I know the Committee is well-aware of this, 
but, just for the record, I would put out some statistics on 
the stakes of what we are talking about today. The Department 
of Energy has estimated that 40 percent of all of the 
greenhouse gases emitted in the country are emitted from the 
electric sector, from the power sector.
    EPRI, in turn, has forecast that if a smart grid were 
deployed, 25 percent of those emissions could be avoided or 10 
percent of total greenhouse gas emissions globally could be 
avoided.
    The Climate Group, a well-populated group filled with 
international companies, conducted a study by McKinsey. And 
they concluded that 2 gigatons a year of carbon dioxide or its 
equivalents could be avoided by the deployment of a smart grid. 
McKinsey said that the deployment of a smart grid is the 
largest single global technology contribution possible to 
reducing climate change.
    So the stakes are very high. And the smart grid is an 
essential element to accomplishing those benefits. So let's 
talk about, then, what a smart grid is.
    There has been a lot of discussion about smart grid. It is 
something of a generic term encompassing very large amounts of 
different technologies, different functions, different 
services. I would like to be a little bit more precise.
    I believe that a smart grid is an electric grid; that is, 
the set of wires that distributes electricity that has had 
applied to it technology to do several specific things: first, 
to sense information on the performance and the operation of 
the grid. That is, is the electricity running on these wires? 
Is it at the proper voltage? Is it at the proper current? Is it 
in balance, all those sorts of operational things?
    Once that information is discovered, it must be 
communicated somewhere for somebody to do something with it. So 
there needs to be a communications channel created. That 
communications channel delivers the information to some 
analysis capability, so a software system.
    The software looks at the data that it has received and 
decides what is going on. Is this a problem? Is it normal? Do I 
have to do something? Do I have to change? Do I have to turn 
the power on or off, up or down? And then it concludes that an 
action should be taken.
    It sends an instruction to take that action, either to a 
person or in sort of the next generation of smart grid to a 
device that is on the grid itself. And that device controls the 
various pieces of equipment that are on the grid to turn off or 
up or down or go on another path or whatever.
    This sounds complicated, but this is what happens every 
minute of every day in the telecom world. Every network is 
managed in this way. The internet is managed in this way. The 
equipment exists to do it. The software exists to do it. And as 
consumers of telephony and as internet consumers, we don't even 
know that this is happening.
    But the network itself is very dynamic. Messages are moving 
in various ways along various paths. And the network itself is 
organizing that. We believe that that is what a smart grid is.
    I would say also that smart grid consists of many elements, 
as I said. It will have thermostats in it. Eventually 
appliances will have chips in them. And the appliance itself 
may be communicated with directly. The meter is going to be a 
part of the smart grid, as will the substation as will the 
renewable generation, as will the solar panel on our roofs or 
the windmill on our chimney.
    All of these devices are elements of a smart grid, but they 
are not the smart grid itself, just like telephones and 
computers are elements of telecommunications or of the 
internet, but they are not the internet. The internet is the 
network of networks. And a smart grid is the underlying network 
that enables all these other devices to perform to their 
optimal potential.
    I would say also smart grids are available today. CURRENT 
is a small company. We are headquartered in Germantown, 
Maryland, just outside of Washington. But we have smart grids 
operating in Dallas, Texas with Encore Electric and in Boulder, 
Colorado with Xcel Energy. These are fully equipped, operating 
commercially, functioning smart grid networks that work.
    So this is not a concept. This is not a vision necessarily. 
It is a vision in the sense that the rest of the country and 
the rest of the world, in fact, needs to adopt a smart grid 
technology, needs to deploy it, which is a complex and an 
expensive undertaking that will be helped, we hoped, by the 
stimulus package that the member just referred to.
    I would say the important point here is that smart grid 
exists today. It is commercial operation. And the effects that 
we have seen from smart grid operation we can categorize into 
four general categories.
    System optimization. Electricity grid is a system. It 
starts at the generation. There are long distance lines, which 
are called transmission lines. Then there are local 
distribution lines, which are called distribution grid. Then 
there is the consumer.
    All right. All of this network can be optimized. And by 
``optimized,'' we mean that the electricity that is traveling 
over it is the least that is necessary to perform the functions 
of the users at the end of the grid.
    Your appliances in your home and in factories and in 
offices have certain requirements to have electricity of 
certain parameters: 120 volts. If the electricity is moving 
above or below 120 volts by too much or too little, it can have 
an effect.
    An optimized network will make sure that the electricity 
flows exactly where it is needed or at least as close to where 
it is needed as possible, which will save generation because if 
we are not buying or generating energy that we are not using at 
the end of the day, then we are not emitting carbon 
equivalents. We are not spending money on generating plants. We 
are not siting them. We are not having any of those 
consequences.
    The second and equally important contribution of a smart 
grid is it enables renewables and distributed generation. 
Renewables have certain characteristics. They are basically 
clean, which is why we as a nation are committed to trying to 
increase the deployment and the use of renewable energy, but 
they are also intermittent.
    They have variability to their production of electricity. 
And that poses certain challenges for the grid because the grid 
right now is operated on the premise that there will be 
constancy of the electrons.
    Electrons are produced at the coal plant or the natural gas 
plant or the nuclear plant, and they flow in one direction 
until they end up in your refrigerator or in your television. 
And that is it. There is no complexity to that.
    Renewable, the sun doesn't always shine. The wind doesn't 
always blow. Clouds can come over. They are inherently 
variable. They are inherently intermittent. And, therefore, 
they are inconsistent with the way that the grid is designed to 
be operated now.
    That inconsistency or that intermittency has to be dealt 
with. And it can be dealt with. One of the ways to deal with it 
is by making the grid smart so the grid can manage the ebbs and 
flows of the source by managing the ebbs and flows of demand, 
either on the grid itself or through end user equipment.
    Another attribute of renewables, particularly on the 
distributed generation side, is if I have a solar panel on my 
rooftop or if I have a windmill or if I have some other form of 
distributed generation, the electric company doesn't know that 
I have that, I am producing that electricity.
    And so several consequences occur from that. One, if they 
think the electricity is off on my line because a transformer 
has blown up and I am, in fact, generating electricity from my 
solar panel and they send a technician out to check, that 
technician thinks there is no electricity there. But there is 
because I am generating it. So that is obviously a safety 
issue.
    If the substation has been designed or if all the equipment 
along the grid has been designed to receive certain amounts of 
energy coming from the generator and the utility knows how much 
energy that is but I am adding energy to it and the utility 
doesn't know that, then all their calculations are about 
balance and about loading and about all of the technical 
parameters of moving the electricity are wrong. And, therefore, 
that will affect performance.
    These are problems that can be resolved, but they need to 
be resolved by having the technology that allows the utility to 
know what is going on on their grid and to manage it more 
accurately.
    The Chairman. Mr. Casey, if I could? Because I think this 
is a great primer for all of the members, and I think they are 
all enjoying it a lot. But you have exceeded the five minutes. 
And if you could just make a kind of more cursory reference to 
points three and four, we will go to the other witnesses. Then 
we will come back to you during the question period if 
possible.
    Mr. Casey. Yes, Mr. Chairman. I am sorry about that.
    The Chairman. Everyone is really benefitting from this 
overview.
    Mr. Casey. I would say, one, I made the point, just to 
close out, that the smart grid consists of multiple networks, 
some of which are in the home and some of which are on the 
grid.
    There have been studies. The Climate Group in this McKinsey 
study I referred to estimated that 85 percent of the carbon 
emission reductions from a smart grid come from the network, 
the part I was talking about. And 15 percent of the carbon 
reduction, carbon emission reductions, can come from in-home 
energy management systems.
    So we believe it is important when we talk about smart grid 
to actually have a set of priorities that allow change to be 
taken where it might have the most impact.
    Thank you, Mr. Chairman.
    [The prepared statement of Tom Casey follows:]

    [GRAPHIC] [TIFF OMITTED] T2185A.004
    
    [GRAPHIC] [TIFF OMITTED] T2185A.005
    
    [GRAPHIC] [TIFF OMITTED] T2185A.006
    
    [GRAPHIC] [TIFF OMITTED] T2185A.007
    
    [GRAPHIC] [TIFF OMITTED] T2185A.008
    
    [GRAPHIC] [TIFF OMITTED] T2185A.009
    
    [GRAPHIC] [TIFF OMITTED] T2185A.010
    
    [GRAPHIC] [TIFF OMITTED] T2185A.011
    
    [GRAPHIC] [TIFF OMITTED] T2185A.012
    
    [GRAPHIC] [TIFF OMITTED] T2185A.013
    
    [GRAPHIC] [TIFF OMITTED] T2185A.014
    
    [GRAPHIC] [TIFF OMITTED] T2185A.015
    
    [GRAPHIC] [TIFF OMITTED] T2185A.016
    
    The Chairman. Thank you, Mr. Casey, very much.
    Our next witness, Mr. Robert Gilligan, is the Vice 
President and corporate officer for GE Energy transmission and 
distribution business. We welcome you, sir. Whenever you are 
ready, please begin.
    Mr. Gilligan. Thank you very much.

                  STATEMENT OF ROBERT GILLIGAN

    Mr. Gilligan. Good morning, Mr. Chairman and members of the 
Committee. Thank you for the invitation to testify on the smart 
grid and the tremendous opportunities it presents for our 
nation. Smart grid is essentially the marriage of information 
technology and process automation technology with our existing 
electrical infrastructure. It is the energy internet, as the 
Chairman referenced, delivering real-time energy information 
and knowledge to grid operators and to consumers, enabling 
smarter energy choices.
    As you know, the energy challenges that we face are 
significant. Transmission and distribution have been under-
invested in comparison with new generation in this country for 
more than 25 years, resulting in an aging and stressed 
infrastructure. By 2030, it is estimated that U.S. electrical 
consumption will increase at least 30 percent, putting more 
stress on this aged infrastructure.
    Power outage and power disturbances in the grid are 
estimated to cost the U.S. economy over $100 billion a year. 
And the reliability of the grid is deteriorating.
    America spends more than $200,000 per minute importing 
foreign oil, putting our energy security in jeopardy. And, as 
was referenced by Mr. Casey, climate change has become a major 
concern in this country and around the world. And 40 percent of 
the U.S. carbon footprint is related to power generation.
    Considering these factors, we must find a way to support 
greener sources of energy, improved efficiency, and enable 
conservation. These are the three primary objectives of a 
smarter grid: first, to enable the integration and optimization 
of more renewable sources of energy and eventually plug in 
hybrid electric vehicles; second, to drive significant 
increases in the efficiency and reliability of our network; 
and, third, to empower consumers to manage their energy usage 
and save money without compromising their lifestyles. These key 
benefits are clearly deliverable today and are shovel-ready to 
help foster energy independence and lower carbon emissions.
    We need to drive delivery optimization, increasing grid 
efficiency through network intelligence and more sophisticated 
controls of our transmission and distribution system.
    We need to drive demand optimization, empowering consumers 
with information to manage their usage and save up to 10 
percent on their power bills by cutting their peak usage by 15 
percent and their total usage by up to 8 percent. This has been 
demonstrated in studies conducted by the Department of Energy.
    Renewable integration, reducing our nation's dependence on 
foreign oil by enabling seamless integration of greener, 
cleaner energy technology into our network, being able to deal 
with the complexity of intermittent power-generating sources, 
and enabling plug-in hybrid electric vehicles to be of benefit 
to the grid, as opposed to an additional burden on the grid.
    In addition to giving consumers power and choice, perhaps 
one of the most critical deliverables of the smart grid is the 
optimization and integration of renewable energy. GE is 
actively engaged with Maui Electric Power Company and the 
Department of Energy to solve the challenge of integrating very 
high penetrations of renewable energy, particularly variable 
sources of energy, like wind and solar.
    A smarter grid provides utilities with levers they can pull 
to address changes in renewable energy production. For example, 
if the wind suddenly drops, utilities can quickly compensate 
for this variability by shedding load or finding other sources 
of energy that they can bring on the grid in time to maintain 
that support.
    Stimulus funding dedicated to smart grid gives us the 
opportunity to transform today's grid into a smarter automated 
system so we can start realizing many benefits that we have 
talked about. This technology is available now.
    We believe it is in the long-term national interest to take 
a broad, all-encompassing view of the smart grid. To realize 
full benefits, funding must be focused on demonstrating 
solutions, not just spent on infrastructure. The inclusion of 
software solutions alongside infrastructure will be critical to 
delivering the ultimate promise of a smarter grid.
    A logical approach might be funding full-scale, city-scale 
smart grid solutions, including back office solutions, where 
advanced metering infrastructure deployments have been 
independently funded and approved.
    In addition to the efficiency, environmental, and 
productivity benefits delivered by smarter grid, large-scale 
investment will also result in jobs. In a study done by KEMA, 
an energy consulting company, for the Department of Energy, the 
stimulus is believed to create over 150,000 new jobs within the 
first year and over 250,000 jobs over the next several years 
alone. These jobs will span factories to utilities to 
construction to engineering firms.
    By using the funding to demonstrate real benefits, we can 
ensure that the investment will continue after the stimulus 
money is spent. This will ensure that these jobs continue into 
the future.
    The Chairman. If you could summarize, sir?
    Mr. Gilligan. Another great benefit of the stimulus is that 
it creates the opportunity for the U.S. to lead and to create a 
market for these sophisticated and advanced solutions globally. 
We have the opportunity to be a leader in smart grid 
technology, just as we did for the internet.
    Thank you.
    [The prepared statement of Robert Gilligan follows:]

    [GRAPHIC] [TIFF OMITTED] T2185A.017
    
    [GRAPHIC] [TIFF OMITTED] T2185A.018
    
    [GRAPHIC] [TIFF OMITTED] T2185A.019
    
    [GRAPHIC] [TIFF OMITTED] T2185A.020
    
    [GRAPHIC] [TIFF OMITTED] T2185A.021
    
    [GRAPHIC] [TIFF OMITTED] T2185A.022
    
    [GRAPHIC] [TIFF OMITTED] T2185A.023
    
    [GRAPHIC] [TIFF OMITTED] T2185A.024
    
    [GRAPHIC] [TIFF OMITTED] T2185A.025
    
    [GRAPHIC] [TIFF OMITTED] T2185A.026
    
    [GRAPHIC] [TIFF OMITTED] T2185A.027
    
    [GRAPHIC] [TIFF OMITTED] T2185A.028
    
    [GRAPHIC] [TIFF OMITTED] T2185A.029
    
    [GRAPHIC] [TIFF OMITTED] T2185A.030
    
    The Chairman. Thank you, Mr. Gilligan.
    Our next witness is Mr. Allan Schurr. He is the Vice 
President of Strategy and Development for IBM Global Energy and 
Utilities Industry. We welcome you, sir.

                   STATEMENT OF ALLAN SCHURR

    Mr. Schurr. Mr. Chairman and members of the Committee, 
thank you for this opportunity to testify before you today 
about how a smart grid can enable a sustainable energy system 
with greater energy efficiency, improved reliability, and 
enhanced energy security.
    I am Allan Schurr, and I am Vice President of Strategy and 
Development, as the Chairman mentioned. And IBM is proud of its 
global leadership role in smart grids as it reflects IBM's 
commitment to a smarter planet that is more instrumented, 
interconnected, and intelligent in diverse areas such as 
transportation systems; water supplies; health care; and, of 
course, energy.
    We believe that the application of advanced information 
technology and communications technology to an already 
digitizing equipment domain in the energy field will 
revolutionize the way electricity is generated, delivered, and 
consumed across all sectors of the economy.
    There are four key benefit areas for smart grids: more 
efficient use of energy by consumers, lower cost application of 
renewable energy supplies, operational and asset efficiency by 
utilities, and improved reliability and quality of electrical 
service. As requested by the Committee, I am going to focus on 
the first two mostly: consumer energy efficiency and 
renewables.
    As I mentioned, smart grids encompass a mix of 
instrumentation, interconnectedness, and intelligence and are 
key to ensuring we meet our environmental and energy security 
goals and do so cost-effectively. Let me describe some examples 
where smart grids help achieve energy efficiency and 
incorporate renewables at the lowest possible cost.
    Energy efficiency is widely viewed as the lowest impact and 
most cost-effective resource. Many large enterprises, like IBM, 
have made substantial progress in reducing energy consumed per 
unit of output over the past 30 years.
    These enterprises had the scale to support detailed 
engineering analysis needed to identify waste in their 
operations and equipment, and they made investments accordingly 
to improve efficiency.
    But consumers and small businesses have not had the same 
opportunity. Smart grid technologies will allow improvements 
for all customer classes. Smart grid technologies can help 
track, analyze, and control energy consumption at the whole 
premise level and on specific appliances, such as connected 
thermostats for a home air conditioner. Think of this as an 
intelligent home automation system but utilizing internet 
technology and in some cases utility-scale economies to 
dramatically reduce the cost and effectiveness.
    Next, renewable energy technology is a growing part of a 
generating portfolio that can reduce environmental impacts. 
Whether in a utility-scale configuration or in wholly 
distributed installations, the integration of renewables with 
traditional grid operations requires special consideration. And 
smart grids can reduce this cost of assimilation.
    For example, smart grid technologies can simplify the 
interconnection process of distributed renewables through 
business process automation, communication standards, and 
system discovery and monitoring, just like the way the internet 
itself manages devices that are constantly connected and 
disconnected.
    The variability of renewable energy output is often cited 
as a significant objection to growing the portion of renewable 
energy sources. And smart grid can address this supply/demand 
imbalance by connecting the current and forecasted renewable 
output to dispatchable load.
    Just today IBM announced that we are undertaking related 
efforts to integrate wind generation to the smart charging of 
plug-in vehicles so that on-board battery storage can absorb 
excess wind energy during controlled charge cycles.
    All of this is possible with the smart grid, even without 
new inventions. We do require new thinking, new business 
models, new regulatory approaches, and new applications. For us 
to get there, we firstly need scale deployments. They depend on 
both solid program management and on technology blueprints that 
leverage standards and interoperability for the lowest total 
cost.
    Interoperability is a necessary foundation for smart grid. 
And good progress is being made there. Within the electric 
system, interoperability means the seamless end-to-end 
connectivity of hardware and software from customers' appliance 
domain all the way up through the transmission distribution 
system to the power supply domain, enhancing the coordination 
of energy flows with real-time flows of information and 
analysis.
    The markets driving toward interoperability in many states 
accurately see this issue as a means to ensure lower-risk 
technology investments, but there are challenges that need to 
be addressed, including current business model challenges in 
the utility industry, a lack of a coherent national smart grid 
strategy, and the lack of smart rate-making, all of which 
result in the fact that while there have been many pre-
deployment pilots, there have been few full-scale projects.
    The Chairman. Could you please summarize, Mr. Schurr?
    Mr. Schurr. Smart grid has become a topic of keen interest 
to parties across the technology, energy, and regulatory 
spectrum. And its benefits to energy efficiency and renewables 
are well-documented alongside reliability and operating 
efficiencies. But the hurdles really are the institutional 
inertia of the existing regulatory models and utility 
businesses. Necessary technologies and solutions are available, 
awaiting only the orders for scale deployments to drive costs 
out and benefits up.
    Thank you very much. I look forward to answering your 
questions.
    [The prepared statement of Allan Schurr follows:]

    [GRAPHIC] [TIFF OMITTED] T2185A.031
    
    [GRAPHIC] [TIFF OMITTED] T2185A.032
    
    [GRAPHIC] [TIFF OMITTED] T2185A.033
    
    [GRAPHIC] [TIFF OMITTED] T2185A.034
    
    [GRAPHIC] [TIFF OMITTED] T2185A.035
    
    [GRAPHIC] [TIFF OMITTED] T2185A.036
    
    [GRAPHIC] [TIFF OMITTED] T2185A.037
    
    [GRAPHIC] [TIFF OMITTED] T2185A.038
    
    [GRAPHIC] [TIFF OMITTED] T2185A.039
    
    [GRAPHIC] [TIFF OMITTED] T2185A.040
    
    [GRAPHIC] [TIFF OMITTED] T2185A.041
    
    [GRAPHIC] [TIFF OMITTED] T2185A.042
    
    [GRAPHIC] [TIFF OMITTED] T2185A.043
    
    [GRAPHIC] [TIFF OMITTED] T2185A.044
    
    [GRAPHIC] [TIFF OMITTED] T2185A.045
    
    [GRAPHIC] [TIFF OMITTED] T2185A.046
    
     The Chairman. Thank you, Mr. Schurr, very much.
    Our next witness is Mr. Charles Zimmerman. He is the Vice 
President of Design and Construction for the International 
Division of Wal-Mart. Welcome, sir.
    Mr. Zimmerman. Thank you.

                 STATEMENT OF CHARLES ZIMMERMAN

    Mr. Zimmerman. Chairman Markey, Ranking Member 
Sensenbrenner, and distinguished members of the Committee, my 
name is Charles Zimmerman. I am the Vice President of 
International Design and Construction for Wal-Mart Stores, 
Incorporated. In my current role, I am responsible for 
coordinating the architectural and engineering system design 
for all of our international retail facilities.
    Prior to joining Wal-Mart's International Division earlier 
this month, I was the U.S. Vice President of New Prototype 
Development and the captain of the sustainable buildings 
network. Here I oversaw our company's efforts to make our 
buildings more energy and water-efficient and lower their 
overall environmental impact.
    On behalf of Wal-Mart and our 2.2 million associates around 
the world, I would like to thank the Committee for its work on 
this important issue and for holding this hearing today and for 
inviting us to appear. While I will focus primarily on our 
energy efficiency efforts, I will also explain the role smart 
grid plays in those efforts.
    Our company holds the unique position in the world of 
energy. While there are no firm statistics, it is widely 
understood that Wal-Mart is one of the largest private 
purchasers of electricity in the world. In fact, the only 
entity thought to purchase more energy in the U.S. is the U.S. 
government.
    Since energy is also Wal-Mart's second largest operating 
expense, it should be no surprise that we have been focused on 
energy efficiency and control technologies practically since 
the day we were founded. We have always recognized what many 
others have not, and that is that energy truly is a 
controllable expense.
    Because nearly one-third of Wal-Mart's energy consumption 
is in the form of lighting, we have developed one of the most 
efficient lighting systems in the world. In fact, the installed 
lighting load in one of our newer stores is nearly 50 percent 
less than the baseline requirements established in the Energy 
Policy Act of 2005.
    This truly innovative system results in the fact that 
during daylight hours, our sales floor lighting is either off 
or significantly dimmed. This is possible thanks to a 
sophisticated daylight harvesting system comprised of hundreds 
of skylights per store that are connected to sensors and state-
of-the-art control technologies. This allows our sales floor 
lighting system to continually modulate the amount of energy 
needed based on the natural light available. This system is so 
dynamic that it even gradually ramps the light levels up and 
down as clouds pass over the store.
    In our non-sales floor areas, such as offices, break rooms, 
and restrooms, lighting is controlled by occupancy sensors that 
turn off lights when no one is in the space. Even our freezer 
case lighting has now evolved to display an advanced digital 
technology as it is now comprised of LEDs, or light-emitting 
diodes.
    The result is a building where most of the lighting is 
dynamic and only on to the degree conditions warrant. And this 
is just lighting. Similar efforts are underway with HVAC and 
refrigeration.
    Recently, at the request of Wal-Mart, Lennox International 
has developed a new rooftop heating and air conditioning unit 
that it has marketed as being--and I quote--``the most 
efficient unit of its kind.'' Lennox also states that this 
equipment is up to 66 percent more efficient than U.S. 
Department of Energy regulations.
    Today every rooftop unit purchased in the U.S. and Canada 
for all of our new stores and retrofits is this Lennox super 
high efficiency unit. This has been one of our many investments 
in green jobs.
    Of course, as efficient as all of this equipment is, 
without proper control technology, it will never meet 
expectations. That is why every Wal-Mart store in the U.S. 
includes a sophisticated energy management system that allows 
us to monitor and control the lighting, temperature, humidity, 
and refrigeration in each and every one of our stores from our 
home office in Bentonville, Arkansas. Mr. Chairman, this is our 
version of a smart grid, simply awaiting arrival of a true 
smart grid described by Mr. Casey and others today.
    If an associate in Sacramento leaves the door to a walk-in 
Coke cooler open, we know it in Arkansas. If a store manager in 
Chicago overrides their daylight harvesting system, we know it 
in Arkansas. And if a freezer in Miami is icing up and needs to 
be defrosted, we know it in Arkansas. And, in fact, we can 
correct the situation from Arkansas.
    In 2001, when Governor Davis asked for all businesses to 
curtail lighting energy use during the 2001 brownouts, we were 
able to do that from Bentonville, Arkansas.
    As efficient----
    The Chairman. Do you think you could summarize, please?
    Mr. Zimmerman. As proud as we are of these accomplishments 
and innovations, we are even more proud to share what we are 
learning with everyone, including our competitors.
    We at Wal-Mart applaud Congress in its efforts to 
communicate the necessity and the benefits of energy 
efficiency. Thank you for your time in allowing me to speak on 
behalf of Wal-Mart on this very important topic. We look 
forward to working with you to effectively and constructively 
address these issues. Thank you.
    [The prepared statement of Charles Zimmerman follows:]

    [GRAPHIC] [TIFF OMITTED] T2185A.047
    
    [GRAPHIC] [TIFF OMITTED] T2185A.048
    
    [GRAPHIC] [TIFF OMITTED] T2185A.049
    
    [GRAPHIC] [TIFF OMITTED] T2185A.050
    
    [GRAPHIC] [TIFF OMITTED] T2185A.051
    
    [GRAPHIC] [TIFF OMITTED] T2185A.052
    
    [GRAPHIC] [TIFF OMITTED] T2185A.053
    
    The Chairman. Thank you, Mr. Zimmerman, very much.
    You sound like my mother used to say, ``If you ride your 
bicycle outside your zone, your mother will know.'' [Laughter.]
    I remember that lecture, but now it is coming from Wal-
Mart.
    We have another special guest today, Congressman Ron Klein 
from the State of Florida, who is also not a member of this 
Committee. This is a very special morning here for us in the 
Committee. We have so many members not on the Committee who are 
interested in the subject.
    We welcome you, sir. Whenever you are ready, please begin.
    Mr. Klein. Thank you, Mr. Chairman. And thank you, all of 
you on this Committee, for holding this and for the 
participants today.
    This is something that many of us have been interested in 
for a very, very long time. It isn't just about energy 
alternatives. It is also about conservation and so many other 
things. So I appreciate your leadership.
    Mr. Chairman, I have the opportunity today to introduce 
Shirley Brostmeyer. Shirley is CEO of Florida Turbine 
Technologies. She is a constituent.
    In these difficult economic times, she is a great example 
of leadership in our business community in understanding the 
importance of how energy conservation can lead to great-paying 
jobs.
    She employs over 185 well-paid employees at her company 
that work on the development, manufacturing, and testing of 
turbo machinery components and systems for aircraft engines, 
space propulsion, and industrial gas turbines. It sounds like a 
big, complicated thing, but, actually, it is an incredibly 
important part of our whole energy conservation that we are 
having.
    When we think of energy independence, we always think about 
those alternative energies, which I know Mr. Hall and many 
others have been leading the fight on. But it is equally 
important to focus on energy conservation, something Ms. 
Brostmeyer and her company have been working on for many years.
    I think you will be very impressed with the specifics that 
she is going to give us this morning. And don't let her be 
bashful because over the last ten years, her company is very 
proud of the fact that their improvements to aircraft, 
industrial turbines have led to 25,000 gigawatts of green 
energy, which is equivalent to all of the wind turbine farms in 
the United States.
    Thank you for being here, Shirley. We appreciate your 
leadership in the community and nationally in your bringing 
this important advancement to the Committee.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Welcome, Ms. Brostmeyer. Whenever you are ready, please 
begin.
    Ms. Brostmeyer. Thank you.

                STATEMENT OF SHIRLEY BROSTMEYER

    Ms. Brostmeyer. Mr. Chairman and members of the Committee, 
thank you for this opportunity to address you today. As you 
heard, I am Shirley Brostmeyer, CEO of Florida Turbine 
Technologies, a 185-person small business in Jupiter, Florida.
    We develop next-generation turbine technologies for the Air 
Force, the Department of Energy, and aircraft and industrial 
engine manufacturers. We are fortunate enough to employ many of 
the world's foremost experts in turbine technology.
    While my topic is not specific to transmission today, 
turbine efficiency technologies should be an integral part of 
the discussion regarding how technology can revolutionize 
efficiency.
    In the ten years that FTT has been in business, we have 
already had a huge beneficial impact on the environment, 
eliminating the equivalent of emissions from 8 coal-fired 
plants, or 30 million tons, of carbon dioxide annually. Such a 
huge environmental impact was possible because turbines provide 
97 percent of the electric power generated in our country.
    We hear lots of talk today about improving the efficiency 
on the consumption side of electricity, such as our 
dishwashers, our clothes dryers, but just as important are 
changes that can be made on the production side of electricity 
or improving the efficiency of turbines.
    I am here to tell you that turbine efficiency technology is 
the most cost-effective and near-term means to increase our 
energy independence and reduce CO2 emissions.
    I have a figure here on the wall if you can see that that 
shows the sources and uses of electric power in our country. I 
think it is probably difficult to see, but you should have it 
in your packet as well.
    On the left, you can see that fossil fuels make up a large 
portion of our electric power generation. Renewable energy, 
which is small down there--this is a few years old--it will 
increase. It is increasing. But since demand is also 
increasing, fossil fuels will, by necessarily, remain a 
significant part of our energy picture for many years to come.
    Why are high-efficiency turbines important? High-efficiency 
is important because more power can be generated with the same 
existing equipment because less fuel is needed to generate the 
same amount of power and because fewer carbon dioxide emissions 
result because less fuel has been burned.
    I should start by saying that we have focused our 
efficiency advancements on natural gas-fired combined cycle 
plants since they are the most efficient way to make power with 
fossil fuels. Their efficiency is close to 60 percent. And they 
produce approximately one-third of the carbon dioxide for the 
same amount of power relative to a coal plant. And also because 
they are available 24/7, they make an excellent complement to 
most renewable sources.
    My company has developed an exciting new technology called 
Spar-Shell Blade for combined cycle power plants. This next 
figure shows a schematic of how such a blade would be 
constructed.
    Most turbine blades have to spray cooling air out from the 
inside of them to keep them from melting in their hot 
environment. That cooling air creates efficiency losses.
    Spar-shell technology allows one to reduce that cooling 
flow by 75 percent. That savings in cooling air leads to a 
three and a half percent efficiency improvement for the plant.
    Some other promising technologies to improve combined cycle 
efficiency are reducing the clearances between the rotating and 
the non-rotating parts or reducing the cooling leakage air. And 
these can be combined with Spar-Shell technology to make an 
upgrade kit that can be retrofit into today's turbines. This 
retrofitting would eliminate 60 tons of carbon dioxide every 
year.
    Okay. We can go to the next. The final chart shows the 
effect of incorporating this Spar-Shell upgrade kit into half 
of today's combined cycle plants, or about 60 gigawatts worth 
of power, in the United States.
    With the addition of these upgrade kits, we would end up 
with nine gigawatts of additional power. Three of those would 
be completely fuel-free and carbon dioxide-free.
    With worldwide application, this additional power could 
reach 36 gigawatts and remove the equivalent emissions of 16 
coal-fired plants. And my assumption is that we would only put 
these upgrade kits in about half of our existing power today.
    The Spar-Shell kit would cost approximately $400 a 
kilowatt, which is half the price of putting in new combined 
cycle plants and one-quarter of the price of any other 
alternative.
    The Chairman. If you could try to summarize, Ms. 
Brostmeyer, please?
    Ms. Brostmeyer. Okay. One additional point is that because 
it allows higher temperatures, Spar-Shell technology is an 
enabler for efficient, clean coal cycles. And the clean coal 
initiative at the Department of Energy is currently funding 
this.
    So I would like to thank you, Mr. Chairman and members of 
the Committee, for taking time to hear about turbine efficiency 
technologies. And I encourage you to include power plant 
efficiency improvements as part of your energy independence 
plan.
    The Chairman. Thank you.
    Ms. Brostmeyer. Thanks.
    [The prepared statement of Shirley Brostmeyer follows:]

    [GRAPHIC] [TIFF OMITTED] T2185A.054
    
    [GRAPHIC] [TIFF OMITTED] T2185A.055
    
    [GRAPHIC] [TIFF OMITTED] T2185A.056
    
    [GRAPHIC] [TIFF OMITTED] T2185A.057
    
    [GRAPHIC] [TIFF OMITTED] T2185A.058
    
    [GRAPHIC] [TIFF OMITTED] T2185A.059
    
    [GRAPHIC] [TIFF OMITTED] T2185A.060
    
    [GRAPHIC] [TIFF OMITTED] T2185A.061
    
    [GRAPHIC] [TIFF OMITTED] T2185A.062
    
    [GRAPHIC] [TIFF OMITTED] T2185A.063
    
    [GRAPHIC] [TIFF OMITTED] T2185A.064
    
    [GRAPHIC] [TIFF OMITTED] T2185A.065
    
    [GRAPHIC] [TIFF OMITTED] T2185A.066
    
    [GRAPHIC] [TIFF OMITTED] T2185A.067
    
    [GRAPHIC] [TIFF OMITTED] T2185A.068
    
    [GRAPHIC] [TIFF OMITTED] T2185A.069
    
    [GRAPHIC] [TIFF OMITTED] T2185A.070
    
    [GRAPHIC] [TIFF OMITTED] T2185A.071
    
    [GRAPHIC] [TIFF OMITTED] T2185A.072
    
    [GRAPHIC] [TIFF OMITTED] T2185A.073
    
    [GRAPHIC] [TIFF OMITTED] T2185A.074
    
    The Chairman. Thank you, Ms. Brostmeyer. Thank you for your 
very important contribution to this whole discussion here this 
morning.
    Our final witness is Mr. Jim Hoecker. Mr. Hoecker is the 
founder and the principal of Hoecker Energy Law Policy, but 
most importantly for the purposes of our hearing here today, 
Mr. Hoecker and I go back a long, long time. Mr. Hoecker was 
the Chairman of the Federal Energy Regulatory Commission, to 
name just a few of his achievements.
    So it is good to see you again. We welcome you back. And we 
are sorry the table is just a little bit smaller than we had 
anticipated today. We have saved you for last because of your--
we started off with the Federal Communications Commission over 
here, and we end with the Federal Energy Regulatory Commission. 
I think there is a good reason why we should start and end with 
these two subjects. So whenever you are ready, please begin.
    Mr. Hoecker. Thank you very, very much, Mr. Chairman. I 
appreciate your welcome.

                   STATEMENT OF JAMES HOECKER

    Mr. Hoecker. Good morning, Mr. Chairman, Congressman 
Sensenbrenner, and members of the Committee. It is a pleasure 
to be here. I come here today as the representative of WIRES, 
as their outside counsel.
    WIRES, for your information, is a nonprofit trade group 
made up of transmission providers, operators, customers, 
technology companies. And we advocate for transmission 
investment.
    Last night our President made it clear that we must pursue 
a transformational energy agenda in pursuit of alternative 
energy, energy independence, curbs on emissions that contribute 
to global warming.
    Today's panel is about a key piece of that agenda. As a 
recovering regulator, I stand in awe of the technologists at 
this table and what they are seeking to achieve. And I want to 
associate myself with their testimony with respect to the 
importance of digital technologies in making our electricity 
system cleaner, more efficient, and responsive to consumer 
demand.
    I also want to acknowledge Mr. Hall's remarks about the 
technology that applies, perhaps not digital but composite 
technologies, that improve the transmission system itself, 
including superconductivity and such new innovations.
    The Wall Street Journal recently wrote about the popularity 
of small smart roads, smart bridges, smart grids. Today I want 
to impress upon the Committee that we need roads before we can 
have smart roads. We need bridges before we can have smart 
bridges. And we need an adequate transmission infrastructure as 
we apply the new technologies to help deliver reliable energy 
to market.
    The North American electricity grid is the largest machine 
on the planet. It is also, unfortunately, a hodgepodge of 
individual and regional systems, much of it edging and 
congested, plan by an array of entities with different agendas, 
using different criteria, regulated by scores of agencies that 
use long lead times and unable to connect to places where 
renewable power supplies are plentiful.
    The industry has, nevertheless, made huge advances in 
coordinating large transmission systems. And there are now 
scores of proposals on the table that, if developed, would 
bring clean energy supplies to market.
    Whether public policy favors renewables, nuclear power, 
advanced coal, natural gas, all of the above, a transmission 
system that integrates and interconnects these new resources is 
essential.
    A stronger transmission system is not the answer to all our 
energy challenges, but the solutions that we and the President 
are talking about cannot be implemented without it. Smart grid 
doesn't obviate the need for transmission, but it certainly 
complements it.
    Policymakers and private companies can debate what shape 
this new grid should take and whether specific facilities 
should be built at all. But we need some basic reforms to get 
there, more effective and consequential planning and 
understanding about who will pay for these investments, 
predictable cost recovery, and efficient siting procedures.
    We at WIRES propose to tackle some of these subjects in the 
Cannon House Office Building on Friday morning for those of you 
who are interested.
    Mr. Chairman, I come here today in full support of what has 
been said and would like to add the interest of the 
transmission infrastructure to that chorus. Thank you for the 
invitation.
    [The prepared statement of James Hoecker follows:]

    [GRAPHIC] [TIFF OMITTED] T2185A.075
    
    [GRAPHIC] [TIFF OMITTED] T2185A.076
    
    [GRAPHIC] [TIFF OMITTED] T2185A.077
    
    [GRAPHIC] [TIFF OMITTED] T2185A.078
    
    [GRAPHIC] [TIFF OMITTED] T2185A.079
    
    [GRAPHIC] [TIFF OMITTED] T2185A.080
    
    [GRAPHIC] [TIFF OMITTED] T2185A.081
    
    [GRAPHIC] [TIFF OMITTED] T2185A.082
    
    [GRAPHIC] [TIFF OMITTED] T2185A.083
    
    [GRAPHIC] [TIFF OMITTED] T2185A.084
    
    [GRAPHIC] [TIFF OMITTED] T2185A.085
    
    [GRAPHIC] [TIFF OMITTED] T2185A.086
    
    [GRAPHIC] [TIFF OMITTED] T2185A.087
    
    [GRAPHIC] [TIFF OMITTED] T2185A.088
    
    [GRAPHIC] [TIFF OMITTED] T2185A.089
    
    [GRAPHIC] [TIFF OMITTED] T2185A.090
    
    [GRAPHIC] [TIFF OMITTED] T2185A.091
    
    [GRAPHIC] [TIFF OMITTED] T2185A.092
    
    [GRAPHIC] [TIFF OMITTED] T2185A.093
    
    [GRAPHIC] [TIFF OMITTED] T2185A.094
    
    [GRAPHIC] [TIFF OMITTED] T2185A.095
    
    [GRAPHIC] [TIFF OMITTED] T2185A.096
    
    [GRAPHIC] [TIFF OMITTED] T2185A.097
    
    The Chairman. Thank you, Mr. Hoecker, very much.
    So that completes the time for opening statements. We will 
now turn to questions from the Select Committee. The Chair will 
recognize himself for a round of questions.
    Mr. Casey, let me come to you. You were pointing out 80 
percent of the benefits come from one side of the equation and 
20 percent come from the other. Can you expand upon that, 
explain to us exactly what it takes? Let's just go to the 80 
percent. What does it take to gain 80 percent of the benefits?
    Mr. Casey. Yes, Mr. Chairman. The 80 percent in this study 
comes from approximately half from system optimization, which 
is the various functions that make the electricity flow more 
efficiently across the grid.
    So that is energy efficiency or grid efficiency, making 
sure that the voltage is proper, making sure the current is 
proper, making sure the balance between the channels is all 
appropriate, making sure that when there is a transformer that 
is degrading, it is recognized and either fixed or electricity 
is routed around it in the case of an outage and so on. So that 
is system optimization. That is about half of that 80 to 85 
percent.
    The other half of the 80 to 85 percent is that the 
renewables cannot really reach their full potential without 
having more intelligence in the grid to allow them to be 
managed and dispatched, as we talked about before.
    So half of it is from the grid wires itself, and half of it 
is from what a smart grid will do for renewables.
     The Chairman. And how much of that, Mr. Casey, do you 
think is going to be as a result of public monies having to be 
spent or just a different regulatory framework in which the 
marketplace is responding, as it did in the telecommunications 
field after the changes that were made that made it possible 
for MCI and Sprint--that is when you and I were working 
together in the 1970s--to be able now to gain better access to 
the network? How would you divide that question? And how much 
money do you ultimately think comes out of the public sector 
and how much out of the private sector?
    Mr. Casey. I think that the money in the stimulus package 
will determine the answer to that question. I believe that the 
approximately $11 billion that is set aside in the stimulus 
package for smart grid or energy efficiency measures is now 
sitting at the DOE. And the DOE is going to have to decide how 
to allocate that.
    If they allocate it in ways that allow, as Mr. Gilligan 
said, solutions to be adopted at scale that can actually show 
the benefits of these various technologies that we are talking 
about, then I think the market itself will take off. And you 
won't need any more public money.
    It will have to be, as several people on the panel have 
mentioned, there have to be regulatory changes because, as you 
remember from those days, Mr. Chairman, regulated rate-based 
monopolists don't have a lot of incentive to be efficient.
    The Chairman. I think I remember that.
    Mr. Casey. And in telecom, what happened was technology 
developed. And new entrants came in. The new entrants were MCI, 
Sprint, and all of these people.
    There is no competing long distance set of carriers. There 
is no cable television industry that can offer VOIP channels to 
consumers to give them a choice. There is no wireless 
alternative to give them a choice. So the economic structure of 
the electricity industry I think is different.
    But if the regulatory regime allows them to make money by 
investing capital in technology that will produce efficiencies, 
then I think they will do it. And consumers will save money. 
And the society will be better off because we will be much 
greener.
    The Chairman. All right. And then expand upon that. Talk a 
little bit about, then, the ability if we get this right to use 
renewable energy electric generation as part of the electric 
vehicle revolution.
    Mr. Casey. I think there will be an electric vehicle 
revolution, in fact. And I think it will happen faster than 
other people think it will happen. I think solar and wind and 
distributed generation at homes and in backyards, I think that 
is going to happen.
    All of that needs a couple of things. The economics of the 
electric industry right now is very, very simple. They invest 
money. They get a return on it. They make the return by 
charging number of kilowatt hours sold times pennies per 
kilowatt hour.
    So if we conserve as consumers or if government wants a 
conservation policy, what that means to an electric company is 
they get less revenue, but they don't have a corresponding 
amount of costs. As an investor-owned utility, they can't 
possibly do that. It is not right.
    So the energy, the way they make money has to be altered. 
And that is complicated because their regulation is basically 
on the state level, which was another problem in telecom. And 
it was resolved in that sector.
    The Chairman. My time has expired. I will just make this 
point that in the 1970s, there was just this confluence where I 
was a graduate of Boston College, Mr. Casey was a graduate of 
Boston College, three of the FCC commissioners were graduates 
of Boston College. And we all agreed.
    Mr. Blumenauer. It was a conspiracy.
    The Chairman. And, by the way, there was no course at 
Boston College on this subject. But we all agreed that it 
wasn't a good idea for our mothers to have to rent a phone for 
three bucks a month and to have everyone every time there is a 
long distance call to yell, ``Grandma is on the phone long 
distance. Run to the phone.''
    Why is that the case? Because one company, one utility had 
1.2 million employees, AT&T, and these little companies, MCI 
and Sprint, wanted to get into the business. So we changed the 
rules. And that was the rules. We changed the dynamic for the 
deployment of this telecommunications network, Mr. Casey.
    Mr. Casey. And we were all very concerned that our mothers 
would know that we were allowing that to continue, too.
    The Chairman. It is exactly right. It was all driven by the 
same kind of guilt that Mr. Zimmerman is now inducing in people 
at Wal-Mart. Okay? [Laughter.]
    And that is always the most powerful admonition that grips 
your brain.
    Let me turn now and recognize the gentleman from Oregon, 
Mr. Blumenauer.
    Mr. Blumenauer. Thank you, Mr. Chairman. I would like to 
just pick up where you left off because for me, that is the 
single most important element that is woven through the 
testimony here today.
    I have no doubt that there are tremendous potential 
efficiencies to be wrung out of the existing system, whether it 
is design of turbines or just figuring out for people who don't 
have the benefit of scale of a Wal-Mart, say, and don't have 
the focus as well to be able to take advantage of it.
    The colloquy between you, Mr. Chairman, and Mr. Casey, 
about what we do with the regulatory system because ultimately 
we need to incent the billions of decisions that are made every 
day by American consumers and the businesses that serve them 
and, dare I say, government itself, to be able to respond to 
the potential benefits, I was struck by what we have heard from 
GE and have been impressed with people from your organization. 
The IBM story I think is stunning in terms of your 45 percent 
reduction, Wal-Mart, the benefits of scale and focus. One of 
the things that is an unsung success story, you have done it in 
transportation, what you have done in energy consumption.
    I wonder if our panelists, particularly those from these 
three major institutions, could follow up on the conversation, 
Mr. Chairman, between you and Mr. Casey to talk about the 
regulatory incentives that you could envision that would help 
change those billions of individual decisions.
    Can you see a large organization like a GE or a Wal-Mart 
being empowered to negotiate an energy conservation tariff to 
be able to get even deeper greener? Can you foresee a 
differential rate of return for a private utility and their 
customers for investments that will save energy over time so 
maybe we incent that, so they invest capital in time and energy 
and the customers are motivated, not bey altruism, not by rules 
and regulations, although we think that people will be 
motivated by what is good for the planet and there is a role 
for appropriate rules and regulations? But can you talk about 
regulatory carrots that would make a difference to your three 
institutions?
    Mr. Gilligan. I will start if that is okay. I think that 
there are demonstrated models in the utility sector today that 
do encourage investment in efficiency.
    If you look at the State of California, where there is 
decoupling, there is encouragement for investment in 
efficiency. And because of that, we have seen the rate of 
growth in per capita electric use at about 50 percent. 
California is running at about 50 percent the rate of growth of 
the rest of the nation. So the decoupling process has been 
effective.
    In some way, we need to encourage driving efficiency and 
incent utilities to invest in efficiency as if they were 
investing in new generation. Decoupling is one mechanism. I 
think there is a second challenge, though.
    My experience around this industry is it is a conservative 
industry. And regulators are very conservative about spending 
people's money on new technology. So we need to think about, 
how do you encourage a given utility to be one of the first to 
adopt new technology?
    Mr. Blumenauer. And I am mindful. I want to be short 
because I think my other colleagues want to speak. And so I 
won't flog this, even though I had a couple of extra minutes in 
my questioning. So what I would like to do is just follow up 
with each of you in terms of having something in writing.
    But, Mr. Gilligan, what I am interested in--I want to be 
clear, and my friend Mr. Inslee has been a leader in his 
committee pushing decoupling. We have done this with 
legislation that I have been working on. But, rather than 
thinking of it as new generation, I am wondering if we can 
think of it as new lines of business for the 4,000 power, gas, 
sewer, and water utilities across the country, that they can 
think about the partnership with you incented by appropriate 
regulation as actually a new line of business that could be 
developed.
    I will yield back, Mr. Chairman, but I would be keenly 
interested in following up with each of our three witnesses for 
them to respond with the smart people they work with on how we 
deal with this interesting avenue that you and Mr. Casey opened 
up.
    Thank you, sir.
    The Chairman. Thank the gentleman. And if you would respond 
in writing, then we will make sure that each of the members 
receives those responses.
    The Chair recognizes the gentleman from Washington, Mr. 
Inslee.
    Mr. Inslee. Thank you. Thank you.
    Mr. Hoecker, I wanted to ask about the need for additional 
federal action and/or state action on siting, planning, and 
financing grid improvements. I just would like you to address 
the urgency of that, which is kind of a rhetorical question, 
but I would like you to talk to us about why quick action is 
appropriate if you believe it is; and, two, how you would 
fashion the federal-state relationship in that regard.
    Mr. Hoecker. Well, thank you, Congressman. I appreciate 
that softball. And we could talk quite a while about this. It 
is widely acknowledged that the existing transmission system is 
aging in many respects, that it doesn't reach areas where 
renewable energy is plentiful, that it is under a good deal of 
stress, and that we are looking at an increase in electricity 
demand of up to 30 percent over the next 20 years or so.
    Now, a lot of the technologies we have been talking about 
will be able to help manage that load and perhaps reduce it, 
make it more efficient. But the electric transmission system is 
an enabler, not only of these technologies but our access to 
renewable energy and service reliability that will enable our 
economy to recover.
    I think we are looking at a pivotal moment in the history 
of the grid. We are moving to new technologies, where we are 
putting more demands on this network infrastructure. And we 
need to think about it holistically.
    The history of this industry is rooted in the early part of 
the last century in very discrete systems, where generators 
were built close to load and the only transmission was to 
interconnect it to over relatively short distances.
    Now we have an emerging, highly integrated bulk power 
system. And it is being asked to do things that it wasn't 
designed to do. So in order to expand that system, make it 
smarter, employ new technologies, we need a larger regional 
planning either institutions or procedures. We need to take a 
hard look at the siting of transmission, which happens on a 
state-by-state basis right now. And WIRES is not advocating 
that states be excluded from that.
    But when we look at whether particular transmission 
facilities, especially extra high voltage facilities that are 
345, 500 kV and above, that have regional impacts and perhaps 
even cross state lines, it makes no rational sense for the 
developer of those facilities to have to engage in procedure 
after procedure after procedure in multiple states in order to 
get authorization or recognition that the facility is needed.
    So we need to step back and take a look at this large 
machine and plan it on a regional basis, site it in a more 
efficient fashion, and allocate the costs in recognition of the 
fact that the high voltage transmission system has regional 
beneficiaries, not just local beneficiaries.
    Mr. Inslee. So we are going to have a draft of a bill I 
would appreciate your input on here in the next few days. I 
hope that you will help us take a look at that.
    Mr. Hoecker. I would be delighted.
    Mr. Inslee. Thank you.
    Can the panel address this issue of electrifying our 
transportation system? I think we are moving substantially in 
that direction. I saw, I think it was, Battelle Research that 
showed we could essentially power our transportation fleet or 
85 or 90 percent of it without additional generating capacity. 
You could essentially use existing generating capacity at 
night, if you will, to charge our autos.
    Is that accurate? And what does the electrification of the 
auto industry portend what we need to do in the grid in 
general?
    Mr. Schurr. If I could take a stab at that? We have done 
quite a bit of looking at the electric transportation impacts 
on the electric grid. EPRI's studies support what you described 
and that there is substantial off-peak capacity that would 
support large-scale conversion of passenger vehicles to 
electric transportation, whether they be plug-in hybrids or 
battery electric vehicles.
    One of the challenges is that there is not enough garage 
capacity for everybody to park at night. Only about one in five 
cars parks in a residential garage that they own overnight. And 
so we think that there is also a challenge of public charging, 
which will not always be between the hours of--you pick it--
10:00 p.m.-6:00 a.m., when there is a lot of both generation 
capacity and transmission and distribution capacity.
    So ultimately electric transportation is going to require 
smart grid intervention in order to manage charging in public 
situations and particularly during the daytime, where it is not 
just a matter of the bulk system having enough capacity but 
even lots of clustering of vehicles which might occur at a 
transit station or a place of employment. It will be critical 
that smart charging is part of and pricing signals are part of 
the ultimate scale-up of electric transportation.
    I mentioned today that we are working on a project where we 
are integrating wind with that smart charging to really create 
the ultimate in clean recharging.
    Mr. Inslee. Thank you.
    The Chairman. The gentleman's time has expired.
    Here is where we are. We have three roll calls on the 
floor. We have approximately seven and a half minutes left to 
go, which will allow me to recognize Mr. Hall for all of his 
questions. We will then recess the hearing and then reconvene 
in approximately 20 minutes and then have approximately a 20-
minute conclusion to the hearing--okay?--so everyone knows that 
there will be an opportunity for more questions and for 
Congresswoman Speier to also ask her questions.
    Congressman Hall.
    Mr. Hall. Thank you, Mr. Chairman. I will just ask one 
question of Mr. Hoecker, if I may. And thank you all for your 
testimony. It was very interesting.
    Mr. Schurr, your company is the largest employer in my 
district. Although you are not based there, I am happy to say 
that IBM is a strong presence in New York's 19th District.
    Mr. Hoecker, if superconductor technology is viable, is it 
viable? And if so, why would we consider building new 
transmission lines out of anything else, particularly copper 
line technology that is 50 to 100 years old, as some of you 
said?
    Put another way, why go to the trouble of building a new 
Twenty-First Century smart grid with essentially a Nineteenth 
Century backbone?
    Mr. Hoecker. Thank you, Mr. Hall.
    I guess I would characterize superconductive research, such 
as that done by American Superconductor, as in the 
demonstration stage. This is very leading-edge technology. 
There aren't many facilities to produce it. And its response if 
installed in large quantities is not entirely clear yet.
    They are about this big. You can bury them in the ground. 
It is super-cooled with liquid nitrogen. It is impressive. It 
has got enormous potential because you can deliver massive 
amounts of power in a relatively short space. That at least is 
the concept.
    I think we will find in the coming years ways to prove this 
technology and to begin to install it, but this is a process.
    And right now undergrounding any transmission in these 
kinds of facilities, in particular, is very expensive. And so I 
think we are looking at some long-term goals for installing 
some very, very beneficial technology, but I think we are at 
the beginning of that process, not at the end of it.
    Mr. Hall. Thank you. Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Well, Congresswoman Speier, we could recognize you for 
three minutes right now if you would like.
    Ms. Speier. Thank you, Mr. Chairman.
    I had just visited, just last week, a new company in my 
district called Green Box. They are actually creating the 
software to allow the homeowner, the consumer to assess all of 
their electrical equipment in their homes and make 
determinations on whether or not they should be taking it, 
unplugging them or not.
    So my question is it sounds like we already have the 
technology. We have the smart grid technology. We have the 
technology to be put in our homes in the form of software to 
really change behavior in a dramatic way. So what is preventing 
us from getting there?
    Mr. Zimmerman. Speaking from someone who has to pay for 
everything that we do, it is first cost. I mean, it is a hard 
struggle for consumers, for other businesses to look at all the 
life-cycle costs and savings associated with these investments 
and in today's environment, making that significant first cost 
is just extremely difficult for people.
    Ms. Speier. But if the smart meters indeed over 20 years 
pay for themselves by virtue of just the manpower you don't 
have coming out to read the meters, if the software is readily 
available and is going to save people money from day one 
literally, to me, it----
    Mr. Zimmerman. Right. It is positive cash flow from day 
one. All of the initiatives that we have employed the last few 
years, we are typically seeing two to three-year paybacks. So 
it is not a hard decision if you look at those costs.
    I can't speak for other companies, but it must just simply 
be the availability of that capital right now in these times of 
the incentives.
    The Chairman. I apologize, but there are now only two 
minutes left to go to walk about a quarter of a mile, which 
would be a good task. But if the gentle lady would like to 
return, we will have more questions in approximately 20 
minutes.
    And, by the way, this is Congresswoman Speier's first 
hearing. She is the newest member of the Select Committee on 
Global Warming and Energy Independence. And she has an 
outstanding record on these issues in California. And we are 
looking forward to her participation on this incredible 
adventure we are on this term.
    So we stand in recess for approximately 20 minutes.
    [Brief recess.]
    The Chairman. We welcome you all back to the Select 
Committee on Global Warming and Energy Independence. We just 
had a brief interlude while the members could cast their votes 
on three different issues out on the House floor. We have got a 
brief period of time here where we can continue the question 
and answer period.
    I would like to ask Ms. Brostmeyer, if you could, to relate 
what you are saying to what Mr. Casey is saying about the 
network and how what you are testifying about is related to 
this larger revolution.
    Ms. Brostmeyer. Okay.
    The Chairman. If you could, please turn on the microphone.
    Ms. Brostmeyer. I would be glad to do that. Thank you.
    Yes. The chart that I showed--and I did take the liberty to 
put that up there--shows that 65 percent of the energy is lost 
in inefficiencies. This is actually in the power plant itself. 
There is also a value here for transmission and distribution 
losses on the same chart. So you can see that that is also a 
loss.
    So we are both talking about losses, inefficiency, which 
can be helped. If those losses are reduced, then we will be 
able to deliver more power with our existing infrastructure.
    So I think we are the same in that regard. And we also are 
the same in that we feel there is some technology that needs to 
be accomplished here. In our case, we feel that technology to 
create retrofitable kits is a very relevant part of our energy 
solution or must be. And in that case also I believe that are 
some technologies. And I don't know a lot about the subject, 
but it sounds like an investment is really required to optimize 
the grid.
    The Chairman. Okay. Thank you.
    Back to you, Mr. Casey. You were talking in terms--I think 
Mr. Gilligan as well made reference to the stimulus package and 
how the use of that money might demonstrate how this would 
work, although you made earlier reference to the fact that in 
Boulder, Colorado and other locations, it is already happening.
    What can we learn from what is already occurring in these 
communities? And what more could we learn from investments made 
by the stimulus package?
    Mr. Casey. The two deployments that are in commercial 
operation in the United States, one in Dallas and one in the 
smart grid city in Boulder, are relatively small.
    The Chairman. When you say, ``relatively small,'' what do 
you mean?
    Mr. Casey. Dallas, the network covers 125,000 homes. In 
Boulder, we are in the middle of building it. We are at 
probably 25,000 now and heading to 50,000 just within the City 
of Boulder itself.
    Those two networks are showing us that the conservation 
benefits that we talked about and the efficiency benefits that 
we talked about are real, that they are achievable.
    What the stimulus funding will do is it will overcome for 
other utilities the regulatory impediments to them making the 
same decision to start deploying in their territory.
    The Chairman. May I ask you, what level of satisfaction do 
Dallas and Boulder have in their experiment thus far?
    Mr. Casey. Obviously I don't want to put words in their 
mouth, but the CEO of the Dallas utility wrote a letter to the 
chairman of the Texas Public Service Commission when we gave 
him our early reports, saying, ``We have just experienced a 
Neil Armstrong moment in electricity.''
    The Chairman. And this is in Dallas?
    Mr. Casey. In Dallas.
    The Chairman. Talking about something that happened in 
Houston? That's a big moment.
    Mr. Casey. In Dallas, yes.
    The Chairman. That is what I am saying.
    Mr. Casey. Right.
    The Chairman. That is a big moment. That is a huge----
    Mr. Casey. That is right, exactly.
    The Chairman [continuing]. Analogy concession, yes. Are 
they expanding upon that? In other words, is the success in 
Dallas and Boulder being built upon in Dallas?
    Mr. Casey. In Dallas, while we were building the 100,000, 
the Texas Public Service Commission issued an order requiring 
that all of the utilities within the State of Texas enable all 
homes within their service territory with smart meters that had 
direct connect/disconnect capability. And that was going to 
cost some hundreds of dollars per home times some millions of 
homes. And so----
    The Chairman. And that would be made, then, part of the 
rate base?
    Mr. Casey. Yes, that would be made part of the rate base. 
In fact, they were allowed to charge a premium, a surcharge, to 
recover that investment. And so Encore basically stopped the 
125,000 homes and said, ``Look, we have to go do this now. And 
so then we will come back.''
    In Boulder, they are working on it. And they have the same 
issue that they have committed to do 50,000 homes in Boulder. 
But then they intend to stop to assess whether the benefits 
were what they had hoped they would be. And so far they have 
been. But then they have to go to their regulators and ask for 
rate recovery for the investment because they can't risk so 
much capital without some regulatory approval.
    The Chairman. So as you and I remember, back in the 1970s, 
U.S.Tel--a lot of these companies came out of Dallas----
    Mr. Casey. Right.
    The Chairman [continuing]. The competitive 
telecommunications companies that were stymied. Is that a 
phenomenon that we are seeing in Texas right now, that this 
experiment in Dallas is now being embraced by the state PUC and 
is now something that we can expect other states to look at?
    In other words, what are we learning from Texas in terms of 
that being the laboratory? We are passing a federal stimulus 
for these kinds of experiments, but it seems as though Texas 
had already been moving, notwithstanding the stimulus package.
    Mr. Casey. They did, but the business structure in Texas 
was very different from any other business structure. In Texas, 
we built the network ourselves. We paid for the manufacturing 
of the equipment. We paid to have it installed. And we were 
going to offer broadband internet access to consumers, plus 
sell smart grid services to the electric utility.
    So it cost them nothing to do it. And we were going to make 
our money back by selling broadband. DirecTV was actually our 
partner in Dallas marketing broadband internet access to 
consumers.
    The Chairman. I see.
    Mr. Casey. So as long as they had no risk and no financial, 
you know, they could take a chance. But even at that time, they 
stopped when the commission told them to install meters. They 
stopped this market deployment because they had to go to 
install the meters.
    In Boulder, Xcel Energy is funding part of it, but their 
willingness to risk funding is limited. And so when they hit 
that limit, they will stop until they get regulatory approval.
    The Chairman. So the stimulus is needed, then?
    Mr. Casey. I believe until these are established, it 
absolutely is essential to get these other utilities to start 
the process where they become familiar with the benefits 
themselves. They can then take the data from those experiments 
and show it to the regulators. And then the regulators can move 
forward with the structure.
    The Chairman. So you think that once the individual 
utilities and individual PUC members become familiar with these 
concepts, then they embrace it and begin to implement it as a 
state strategy as well?
    Mr. Casey. I think they will when they see the benefits, 
yes. I think the relative benefits of meter-only 
installations--and I will take two examples from the State of 
California. San Diego Gas and Electric received authority to 
invest $650 million in meters and proposed a $692 million 
benefit. The net value difference between the cost and the 
benefits was $40 million.
    I think SoCal Edison in California has regulatory approval 
to invest almost $2 billion in meters. And the value, the net 
value of that investment, is $9 million.
    We have a study that Booz Allen and KEMA and other utility 
executives have done with us where the benefits of a smart grid 
are $3 billion. The net present benefits of a smart grid are 
$800 million.
    When regulators see that and see the benefits that are that 
significant, I think they will be willing to create structures 
to make it happen. But right now it is an argument. And they 
need to see it.
    The Chairman. Just an argument. Well, we do have kind of an 
eastern United States grid and a western United States grid and 
a Texas grid.
    Mr. Casey. Right.
    The Chairman. And Texas likes it that way. They see 
themselves as the lone star grid. So we are getting some of the 
benefits here of this experimentation which is going on there.
    Mr. Gilligan, could you comment here on what Mr. Casey is 
saying in terms of how you view this? Are you familiar with 
this Dallas experiment and Boulder?
    Mr. Gilligan. We are familiar with both. We are not 
participating in either one of those today. We are working with 
other utilities in other areas.
    What we see is very similar. The return on investment for 
meter reading alone is insufficient to justify the investment. 
You need to get the benefits----
    The Chairman. Can you say that again? That is a very 
important sentence for everyone to hear.
    Mr. Gilligan. Yes. The infrastructure investment to put in 
place advanced meter infrastructure, the benefits for meter 
reading alone is insufficient to justify that investment.
    The Chairman. What would make it sufficient, Mr. Gilligan?
    Mr. Gilligan. You have to use that infrastructure to do 
demand response, so be able to send pricing signals to the 
consumer that allows the consumer to shed power, shed load, and 
get rewarded for doing that, for using the devices in off-peak 
power times. We also need to use that communication --
    The Chairman. Shed load in off-peak power time. Now, can 
you try again to put that into English so that your mother 
would understand what you are working on every day?
    Mr. Gilligan. Okay.
    The Chairman. Can you do it for her?
    Mr. Gilligan. Yes.
    The Chairman. Okay.
    Mr. Gilligan. So how do we levelize the use of power 
across----
    The Chairman. You would use that word with your mother? 
Really? [Laughter.]
    Mr. Gilligan. Sure. Sure.
    The Chairman. Come on. No. Try again. Try again. You are 
talking to your mother. ``What are you doing? What do you doing 
today?''
    Mr. Gilligan. We are working to get a more efficient 
system.
    The Chairman. Okay.
    Mr. Gilligan. Okay?
    The Chairman. ``How does that help me?''
    Mr. Gilligan. By allowing you to share in the benefits of 
that efficiency. So use power when it is cheaper.
    The Chairman. Where are you from?
    Mr. Gilligan. From Atlanta.
    The Chairman. How does it help me in Atlanta?
    Mr. Gilligan. If I can use power when it is cheaper in 
Atlanta, I will do that. But I need the utility to be able to 
tell me when the power is expensive and when it is cheap so 
that I can act appropriately. So the demand response is part of 
that opportunity.
    The Chairman. I know. But your mother is saying, ``Bobby, 
Bobby.'' [Laughter.]
    Mr. Gilligan. She hasn't called me that in a long time.
    The Chairman. I know she hasn't. She is watching right now 
on C-SPAN. They are broadcasting this. And she can have a copy 
of it. So what exactly are you asking for this utility? What 
utility is she using right now?
    Mr. Gilligan. I have no idea.
    The Chairman. Oh, she doesn't live in Atlanta.
    Mr. Gilligan. No, she doesn't.
    The Chairman. That is right. There are not many Gilligans 
down there. No.
    Mr. Gilligan. No. They are up in the Northeast.
    The Chairman. Where are the Gilligans living?
    Mr. Gilligan. They are in Massachusetts.
    The Chairman. There you go. [Laughter.]
    I don't know why I thought that might be the case. We have 
the Caseys and the Gilligans and the Markeys all having a 
conversation here.
    So explain it in Massachusetts terms to her. What community 
are you from in Massachusetts?
    Mr. Gilligan. They are from outside of Boston.
    The Chairman. Which is?
    Mr. Gilligan. Cape Cod.
    The Chairman. Cape Cod?
    Mr. Gilligan. Yes.
    The Chairman. What high school did you go to?
    Mr. Gilligan. No. I didn't go to school there.
    The Chairman. Oh, you did not?
    Mr. Gilligan. No, I didn't.
    The Chairman. So they moved there for the weather? 
[Laughter.]
    Mr. Gilligan. Oh, yes. It is beautiful there.
    The Chairman. Okay. So I will go to Mr. Casey. Then I am 
going to come back to you. Mr. Casey, can you try to take a 
whack at that question?
    Mr. Casey. The benefits of what we do are that you will pay 
less for electricity, and you will breathe. And your children 
will breathe, and your grandchildren will breathe.
    The Chairman. Right.
    Mr. Casey. That is what I do when I tell my mother.
    The Chairman. When you tell your mother.
    Mr. Casey. She thinks I am great. [Laughter.]
    The Chairman. Yes. So, Mr. Schurr, would you like to take a 
whack at that question?
    Mr. Schurr. I would love to take a shot at that. My mother 
lives in Sacramento. It gets very hot in the summer. So here is 
how it works.
    The Chairman. Okay.
    Mr. Schurr. On a hot summer day, when there are fewer 
resources available to generate power during those peak 
afternoons, if you are willing to exchange utilities' control 
of your thermostats for short periods of time,----
    The Chairman. So for your mother----
    Mr. Schurr [continuing]. They will pay you money.
    The Chairman. For your mother in the course of the day----
    Mr. Schurr. ``You are not even there, Mom.''
    The Chairman. But you said ``peak.''
    Mr. Schurr. During the peak periods.
    The Chairman. How would you explain it but not using that 
word?
    Mr. Schurr. So during the hot afternoon when power is in 
short supply, that is the peak.
    The Chairman. Why is it in short supply in the middle of 
the afternoon?
    Mr. Schurr. Hot weather. Everybody runs their air 
conditioner at the same time. Office buildings are lighting at 
the same time.
    The Chairman. Oh, good. Now you have got it. Okay. Now, her 
air conditioning, everyone else's air conditioning is running. 
Go ahead.
    Mr. Schurr. So if you are willing to exchange control of 
your air conditioner on behalf of the good of the community----
    The Chairman. What do you mean ``exchange control''?
    Mr. Schurr. Let the utility control----
    The Chairman. Who will I exchange control with?
    Mr. Schurr. The utility.
    The Chairman. With the utility?
    Mr. Schurr. Instead of----
    The Chairman. You would give the utility control over her 
air conditioner?
    Mr. Schurr. For a short period of time.
    The Chairman. Okay.
    Mr. Schurr. She will receive a payment from the utility----
    The Chairman. A payment from whom?
    Mr. Schurr [continuing]. To reduce her bill.
    The Chairman. From whom?
    Mr. Schurr. From SMUD in this case.
    The Chairman. From whom?
    Mr. Schurr. Sacramento Municipal Utility District, the 
local utility.
    The Chairman. And they will pay her to do what?
    Mr. Schurr. Just give them the right to do that. It is like 
an emergency supply.
    The Chairman. And then they are going to turn down her air 
conditioner?
    Mr. Schurr. Well, in this case turn up the thermostat for 
just a few degrees over maybe an hour or two. And that peak 
load reduction is one of the other benefits.
    The Chairman. That what?
    Mr. Schurr. Peak load. You don't like that word.
    The Chairman. Try again. [Laughter.]
    That what?
    Mr. Schurr. That hot afternoon.
    The Chairman. Okay.
    Mr. Schurr. Load reduction----
    The Chairman. Okay.
    Mr. Schurr [continuing]. Is one of the benefits that 
advanced metering gives to the utility, in addition to meter-
reading reductions.
    The Chairman. Just remember, all of you, that in order for 
us to pass legislation, we have to convince your mothers.
    Mr. Schurr. Understand.
    The Chairman. Okay? Not whoever you do your PowerPoint 
presentations to. You know what I am saying? So that is the 
whole key to this story and how the testimony has to be.
    Mr. Zimmerman, you talk to your mother. You are always 
thinking about your mother at Wal-Mart.
    Mr. Zimmerman. Actually, my mother passed away several 
years ago.
    The Chairman. Oh, I am sorry.
    Mr. Zimmerman. But we do exactly already what was described 
here with several utility companies, all the way from giving 
them actual control through our system to make those 
adjustments to still the old-fashioned way. They call us and 
say, ``Hey, between 3:30 and 5:00 tomorrow, can you shed 10 
percent of your load from your stores?'' And we can do that.
    What the smart grid allows us to do is we are making those 
decisions maybe a day or two ahead of time. And then we get to 
that time. Maybe you didn't need to do it for an hour and a 
half. Maybe you needed to do it for two hours. But since we 
have manually programmed this, we are going to do it for that 
set time, for that set hour and a half versus with the smart 
grid that has been described, it will only occur during the 
time that it really makes sense and for the duration that 
really makes sense so it will always keep the system running at 
peak efficiency.
    The Chairman. Okay. So, you know, my mother, she always 
said to me, ``Eddie, you have got to learn how to work smarter, 
not harder.'' And nothing ticked her off more than these 
utility bills, nothing, or the auto insurance rate for my 
father, by the way, who never had an accident. But because we 
lived in Malden, he had a higher rate than a kid who had three 
accidents who lived in Winchester. It always used to drive her 
crazy.
    So they are all experts on these things, but they don't 
talk about it in the terms that you are, their utility bills. 
So the deal that you are going to offer to them is a deal 
politically as well that we will change policies in order to 
benefit them. Right? And that is what we have to sell here 
politically and to put it into terms that they understand as 
they are talking to other people in their age group about these 
issues.
    And they will go, ``Why don't we do that? I have never 
liked the utility. I have always felt they were overcharging 
me. If this gives me an opportunity to save some money, then 
that is a great thing.'' Okay? And that is the pitch that we 
have to make as public officials to change the rules. And then 
IBM and GE and Wal-Mart all become beneficiaries of it, 
obviously, but we have to put it in those terms to win this 
argument.
    So let's do this. There is a roll call again that has been 
called on the House floor. I am going to give everybody one 
minute to summarize for the record what you would like us all 
to remember from your testimony so that we can move forward.
    Our intent is to obviously pass legislation this year in 
this Congress on these issues to add on to what was in the 
stimulus package and to look at it from a regulatory 
perspective, from a tax perspective. And anything you can do to 
summarize in terms of how you view the issue and what you think 
needs to happen would be very helpful to us.
    So let's go in reverse order of the opening testimony. We 
will begin with you, Mr. Hoecker.
    Mr. Hoecker. Thank you, Mr. Chairman.
    My closing comment about electric transmission and the need 
to strengthen and upgrade the transmission grid is simply that 
it provides options, and it provides choices. If you have got a 
good, solid grid, you can use a preferred energy mix. You can 
access renewable energy. You can access the cheapest or the 
greenest power available. You can access emergency power. Your 
utility can integrate those variable resources we have been 
talking about. And you can serve new customers.
    The electric transmission grid, as I said, doesn't solve 
all the problems, but everything we have talked about in terms 
of efficiency and clean energy can't happen without 
transmission and a stronger transmission system.
    The Chairman. Thank you, Mr. Hoecker.
    Ms. Brostmeyer.
    Ms. Brostmeyer. Thank you, Mr. Chairman.
    Yes. The incorporation of turbine efficiency technologies 
is so important in today's discussion on clean energy. And I 
would like to really have that in everybody's mind when they 
think about green energy and how we should be moving to get 
more power as our power needs in the world increase.
    Spar-Shell is one great example that our company has 
developed that would improve the amount of power available and 
also provide green energy because some of the new power 
generated would actually require no fuel to generate.
    So my hope is that, going forward, when people think about 
green energy, they say, ``Wow. The first thing we ought to do 
is fix those plants that are on the ground already, some of 
them 30 to 50 years old, and let Florida Turbine and other 
companies put some new technologies in them to make them 
cleaner, to make them create more power, up to 15 percent more 
power, without putting too much money into infrastructure.''
    The Chairman. Thank you, Ms. Brostmeyer.
    Mr. Zimmerman.
    Mr. Zimmerman. Mr. Chairman, Wal-Mart because of our scale 
represents one of the largest footprints in the world, about 
750 million square feet. We have about 150 million customers 
walking through our doors in our U.S. stores every year.
    The things we have done with energy efficiency and existing 
control technologies, we have the data that proves the results 
of those efforts and the paybacks. I think part of our role is 
to share that.
    We already have relationships with NREL, Oak Ridge, DOE, 
and others, but we are the biggest laboratory that you could 
hope to find. We want to be partners in this discussion and 
share all of that.
    And, in closing, I have just got to add one of the things 
we can't lose sight of is energy efficiency. It is still the 
lowest-hanging fruit. And, as I walked into this room, I looked 
up at the lighting. It is T12 fluorescents. We haven't 
installed a T12 fluorescent lamp in a Wal-Mart store in over a 
decade. We need to keep moving forward with energy-efficient 
measures.
    The Chairman. Did you know that the Bush administration 
actually missed all 35 deadlines for improving appliances and 
lighting from 2001 to 2007?
    Mr. Zimmerman. Well, now is our chance.
    The Chairman. Well, now is our chance, yes. They missed 
their chance. [Laughter.]
    So, believe me, it is going to happen. That is a classic 
working smarter, not harder issue. You solve the problems with 
technology.
    Mr. Schurr.
    Mr. Schurr. Thank you for the opportunity today to testify. 
I think my mother will also appreciate your exchange, and I 
will make sure she gets a chance to see it.
    The Chairman. Thank you.
    Mr. Schurr. I think it is evident that the smart grid is 
needed for energy efficiency and renewables. All the testimony 
today came to that conclusion. Yet, there is a substantial 
amount of inertia in the market. We don't think that inertia is 
from consumers or voters.
    We just finished a 5,000-consumer survey. They all want to 
be more involved. In fact, 90 percent of them said they want a 
smart meter, if you believe that. So we are sure that consumers 
are ready for this.
    And I think you are right in describing that it is 
important that they understand what the benefits are and so 
forth, but this inertia is real. And I think the stimulus money 
will be excellent seed funding. It will get some areas started 
that otherwise wouldn't start. And we need to monitor that 
closely. And I think there could be an opportunity for 
additional funding to support what works.
    And, finally, I think the DOE focus on standards would be a 
very helpful place to focus where standard acceleration, 
already it is working but it is working too slowly, would also 
be a place where we could make inroads.
    The Chairman. And, Mr. Schurr, just in terms of talking 
about mothers, when Bill McGowan, who was the founder of MCI, 
came into my office in 1977 and started talking about another 
phone company, I was thinking, ``Now, how is he going to do 
that? Will he build like three-foot-high phone poles all across 
America? How can you have another phone company? How can you 
have lower phone bills?''
    So it took me about two months just to internalize this 
shift, but you have to explain it to people in ways that they 
then embrace that change and try to break the connection with 
the old way of doing business. So we thank you for your 
testimony.
    Mr. Gilligan.
    Mr. Gilligan. Thank you.
    The smart grid is about enabling high penetration of 
renewables, both wind and solar. It is about more efficiency, 
less losses and waste in a delivery system. And, for my mother 
and consumers, it is about getting them information so they can 
make more informed choices about how and when they want to use 
their power to save money.
    To accelerate this and to get the most beneficial use out 
of the stimulus money, we are recommending that we focus on 
really demonstrating these benefits so that the cost-benefit 
equation is clear to utilities and to regulators and that this 
investment continues to transform the grid well after the 
stimulus money is gone.
    We believe that the technology is ready today and that the 
benefits are real, but it needs to be demonstrated.
    The Chairman. Thank you, Mr. Gilligan.
    Mr. Casey.
    Mr. Casey. Thank you, Mr. Chairman.
    The smart grid, as we all have acknowledged, has the 
potential to reduce emissions by an enormous relative amount. 
One expert has estimated it to be the equivalent of taking 140 
million cars off the road, a big impact.
    It has been called the single most productive application 
of an information technology solution to climate change. 
Eighty-five percent of the carbon emission reduction benefits 
come from the grid and the operation of the grid.
    So what is needed to make that happen? Part of it is a cost 
problem. We talked about that. Some of that can be solved 
simply by getting manufacturing volume. Some of that will be 
solved as technology innovates with deployment. But we need the 
stimulus package, the money that is now at the DOE. It has been 
given to them with somewhat flexible assignment. They have to 
disburse money to the programs that Mr. Gilligan talked about 
where we can prove this.
    Regulatory changes in the states need to be made so that 
the utilities, who are the ones who are going to deploy this 
equipment, actually can make money at it, instead of lose 
money. And I think standards as well are an important element.
    The Chairman. Great. Well, we thank each of you for your 
testimony today. This is a very important hearing going 
forward. The revolution that is now under way is something that 
we have to speed up. We have to make it happen faster.
    It will create more jobs. It will help with our environment 
if we can electrify the cars that we drive, back out the oil 
that we import from OPEC, and make our whole system of 
producing goods in our society more efficient while reducing 
the price of electricity for people at home.
    So this is win-win-win-win-win-win. But we have to really 
try to work hard now to get this done. And while my mother 
passed away ten years ago, her admonitions still grip my brain. 
And she gave me an agenda, as each of our mothers do, for what 
we should be doing every day. And so my intention this year is 
to make this revolution become something that is national and 
not just localized.
    We thank each of you for your testimony today. Thank you. 
This hearing is adjourned.
    [Whereupon, at 12:06 p.m., the Commmittee was adjourned.]

    [GRAPHIC] [TIFF OMITTED] T2185A.098
    
    [GRAPHIC] [TIFF OMITTED] T2185A.099
    
    [GRAPHIC] [TIFF OMITTED] T2185A.100
    
    [GRAPHIC] [TIFF OMITTED] T2185A.101
    
    [GRAPHIC] [TIFF OMITTED] T2185A.102
    
    [GRAPHIC] [TIFF OMITTED] T2185A.103
    
    [GRAPHIC] [TIFF OMITTED] T2185A.104
    
    [GRAPHIC] [TIFF OMITTED] T2185A.105
    
    [GRAPHIC] [TIFF OMITTED] T2185A.106
    
    [GRAPHIC] [TIFF OMITTED] T2185A.107
    
    [GRAPHIC] [TIFF OMITTED] T2185A.108
    
    [GRAPHIC] [TIFF OMITTED] T2185A.109
    
    [GRAPHIC] [TIFF OMITTED] T2185A.110
    
    [GRAPHIC] [TIFF OMITTED] T2185A.111
    
    [GRAPHIC] [TIFF OMITTED] T2185A.112
    
    [GRAPHIC] [TIFF OMITTED] T2185A.113
    
    [GRAPHIC] [TIFF OMITTED] T2185A.114
    
    [GRAPHIC] [TIFF OMITTED] T2185A.115
    
    [GRAPHIC] [TIFF OMITTED] T2185A.116
    
    [GRAPHIC] [TIFF OMITTED] T2185A.117
    
    [GRAPHIC] [TIFF OMITTED] T2185A.118
    
    [GRAPHIC] [TIFF OMITTED] T2185A.119
    
    [GRAPHIC] [TIFF OMITTED] T2185A.120
    
    [GRAPHIC] [TIFF OMITTED] T2185A.121
    
    [GRAPHIC] [TIFF OMITTED] T2185A.122
    
    [GRAPHIC] [TIFF OMITTED] T2185A.123
    
    [GRAPHIC] [TIFF OMITTED] T2185A.124
    
    [GRAPHIC] [TIFF OMITTED] T2185A.125
    
    [GRAPHIC] [TIFF OMITTED] T2185A.126
    
    [GRAPHIC] [TIFF OMITTED] T2185A.127
    
    [GRAPHIC] [TIFF OMITTED] T2185A.128
    
    [GRAPHIC] [TIFF OMITTED] T2185A.129
    
