[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
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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:]
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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:]
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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:]
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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:]
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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:]
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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:]
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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.]
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