[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]


 
                   THE 21ST CENTURY ELECTRICITY CHALLENGE: 
                    ENSURING A SECURE, RELIABLE, AND MODERN
                    ELECTRICITY SYSTEM

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

                                HEARING

                               BEFORE THE

                    SUBCOMMITTEE ON ENERGY AND POWER

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 4, 2015

                               __________

                           Serial No. 114-18
                           
                           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                      
                           

      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov
                        
                        
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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman

JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
  Chairman Emeritus                    Ranking Member
ED WHITFIELD, Kentucky               BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
JOSEPH R. PITTS, Pennsylvania        ELIOT L. ENGEL, New York
GREG WALDEN, Oregon                  GENE GREEN, Texas
TIM MURPHY, Pennsylvania             DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas            LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee          MICHAEL F. DOYLE, Pennsylvania
  Vice Chairman                      JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana             G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio                DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington   KATHY CASTOR, Florida
GREGG HARPER, Mississippi            JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey            JERRY McNERNEY, California
BRETT GUTHRIE, Kentucky              PETER WELCH, Vermont
PETE OLSON, Texas                    BEN RAY LUJAN, New Mexico
DAVID B. McKINLEY, West Virginia     PAUL TONKO, New York
MIKE POMPEO, Kansas                  JOHN A. YARMUTH, Kentucky
ADAM KINZINGER, Illinois             YVETTE D. CLARKE, New York
H. MORGAN GRIFFITH, Virginia         DAVID LOEBSACK, Iowa
GUS M. BILIRAKIS, Florida            KURT SCHRADER, Oregon
BILL JOHNSON, Ohio                   JOSEPH P. KENNEDY, III, 
BILLY LONG, Missouri                 Massachusetts
RENEE L. ELLMERS, North Carolina     TONY CARDENAS, California7
LARRY BUCSHON, Indiana
BILL FLORES, Texas
SUSAN W. BROOKS, Indiana
MARKWAYNE MULLIN, Oklahoma
RICHARD HUDSON, North Carolina
CHRIS COLLINS, New York
KEVIN CRAMER, North Dakota

                    Subcommittee on Energy and Power

                         ED WHITFIELD, Kentucky
                                 Chairman
PETE OLSON, Texas                    BOBBY L. RUSH, Illinois
  Vice Chairman                        Ranking Member
JOHN SHIMKUS, Illinois               JERRY McNERNEY, California
JOSEPH R. PITTS, Pennsylvania        PAUL TONKO, New York
ROBERT E. LATTA, Ohio                ELIOT L. ENGEL, New York
GREGG HARPER, Vice Chairman          GENE GREEN, Texas
DAVID B. McKINLEY, West Virginia     LOIS CAPPS, California
MIKE POMPEO, Kansas                  MICHAEL F. DOYLE, Pennsylvania
ADAM KINZINGER, Illinois             KATHY CASTOR, Florida
H. MORGAN GRIFFITH, Virginia         JOHN P. SARBANES, Maryland
BILL JOHNSON, Ohio                   PETER WELCH, Vermont
BILLY LONG, Missouri                 JOHN A. YARMUTH, Kentucky
RENEE L. ELLMERS, North Carolina     DAVID LOEBSACK, Iowa
BILL FLORES, Texas                   FRANK PALLONE, Jr., New Jersey (ex 
MARKWAYNE MULLIN, Oklahoma               officio)
RICHARD HUDSON, North Carolina
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)

                                  (ii)
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Ed Whitfield, a Representative in Congress from the 
  Commonwealth of Kentucky, opening statement....................     1
    Prepared statement...........................................     2
Hon. Jerry McNerney, a Representative in Congress from the State 
  of California, opening statement...............................     3
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     5
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, prepared statement...................................   103

                               Witnesses

Thomas Siebel, Chairman and Chief Executive Officer, C3 Energy...     7
    Prepared statement...........................................    10
    Additional material submitted for the record \1\
Dean Kamen, Founder and President, DEKA Research and Development 
  Corporation....................................................    27
    Prepared statement...........................................    30
    Additional material submitted for the record \2\
    Answers to submitted questions...............................   105
Michael Atkinson, President, Alstom Grid, Inc., on Behalf of 
  GridWise Alliance..............................................    34
    Prepared statement...........................................    36
Christopher Christiansen, Co-Founder and Executive Vice 
  President, Alevo Energy, Inc...................................    48
    Prepared statement...........................................    50
Joel Ivy, General Manager, Lakeland Electric, on Behalf of 
  American Public Power Association..............................    54
    Prepared statement...........................................    56
Paul Nahi, Chief Executive Officer, Enphase Energy...............    65
    Prepared statement...........................................    67
    Answers to submitted questions...............................   107
Naimish Patel, Chief Executive Officer, Gridco Systems...........    72
    Prepared statement...........................................    75
    Answers to submitted questions...............................   111

----------
\1\ The information has been retained in committee files and also 
  is available at  http://docs.house.gov/meetings/IF/IF03/
  20150304/103072/HHRG-114-IF03-Wstate-SiebelT-20150304-
  SD001.pdf.
\2\ The information has been retained in committee files and also 
  is available at  http://docs.house.gov/meetings/IF/IF03/
  20150304/103072/HHRG-114-IF03-Wstate-KamenD-20150304-SD002.pdf.


 THE 21ST CENTURY ELECTRICITY CHALLENGE: ENSURING A SECURE, RELIABLE, 
                     AND MODERN ELECTRICITY SYSTEM

                              ----------                              


                        WEDNESDAY, MARCH 4, 2015

                  House of Representatives,
                  Subcommittee on Energy and Power,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:17 a.m., in 
room 2123 of the Rayburn House Office Building, Hon. Ed 
Whitfield (chairman of the subcommittee) presiding.
    Members present: Representatives Whitfield, Olson, Shimkus, 
Pitts, Latta, Harper, McKinley, Pompeo, Kinzinger, Griffith, 
Johnson, Ellmers, Mullin, Hudson, McNerney, Tonko, Green, 
Welch, Loebsack, and Pallone (ex officio).
    Staff present: Nick Abraham, Legislative Clerk; Charlotte 
Baker, Deputy Communications Director; Leighton Brown, Press 
Assistant; Allison Busbee, Policy Coordinator, Energy and 
Power; Patrick Currier, Counsel, Energy and Power; Tom 
Hassenboehler, Chief Counsel, Energy and Power; Tim Pataki, 
Professional Staff Member; Chris Sarley, Policy Coordinator, 
Environment and the Economy; Christine Brennan, Democratic 
Press Secretary; Michael Goo, Democratic Senior Counsel, Energy 
and Environment; Caitlin Haberman, Democratic Professional 
Staff Member; and Rick Kessler, Democratic Senior Advisor and 
Staff Director, Energy and Environment.

  OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN 
           CONGRESS FROM THE COMMONWEALTH OF KENTUCKY

    Mr. Whitfield. I would like to call the hearing to order 
this morning, and certainly want to thank our panel of 
distinguished witnesses. I am not going to introduce them at 
this time, but when you--right before your opening statements, 
I will introduce each one of you, and each one of you will be 
given 5 minutes to make your opening statement, and then we 
will have an opportunity to ask questions.
    Today's hearing is entitled ``The 21st Century Electricity 
Challenge: Ensuring a Secure, Reliable, and Modern Electricity 
System.'' And I recognize myself for 5 minutes, I see I am 
already started on the clock.
    As we all know, the U.S. was the first nation to electrify, 
and our system of generation, transmission, distribution, and 
related communication remains the best in the world. 
Nonetheless, new challenges are emerging, as are opportunities 
to modernize and improve the electric grid. The challenges are 
significant. Much of our grid is outdated. In fact, I have 
heard--I think I remember in someone's statement, 70 percent of 
our grid is over 25 years old. Coal-fired generation facilities 
are shutting down at an alarming rate, reserve margins are 
inadequate in several regions, intermittent and remote 
renewable capacity is coming online, and cyber threats pose a 
growing concern. Those are some of the challenges, but the--we 
have many opportunities also. Utilities are planning to invest 
more than $60 billion in transmission infrastructure through 
2024 to modernize the Nation's electric grid, while abundant 
fuel resources and advanced generation, storage, and 
distribution management technologies can help modernize and 
diversify the Nation's power portfolio. Further, big data 
energy analytics and new information technologies offer a 
diverse suite of novel products and services that can identify 
and mitigate inefficiencies in the electricity supply chain, 
while helping utilities meet changing consumer expectations.
    So we have many opportunities, and that is why we want you 
distinguished gentlemen here today to give us some insights on 
opportunities for the future.
    [The prepared statement of Mr. Whitfield follows:]

                Prepared statement of Hon. Ed Whitfield

    Ensuring a secure, reliable, and affordable electricity 
system that meets the needs of the American people may very 
well be the most important task within this subcommittee's 
jurisdiction. Indeed, the National Academy of Engineering cited 
electrification as the greatest achievement affecting the 
quality of life in the 20th century. This morning's hearing is 
focused on improving our electricity system in the 21st 
century.
    The U.S. was the first nation to electrify, and our system 
of generation, transmission, distribution and related 
communications remains the best in the world. Nonetheless, new 
challenges are emerging, as are opportunities to modernize and 
improve the electric grid.
    The challenges are significant--much of our grid is 
outdated, coal-fired generation facilities are shutting down at 
an alarming rate, reserve margins are inadequate in several 
regions, intermittent and remote renewable capacity is coming 
online, and cyber threats pose a growing concern.
    But there are opportunities, as well. Utilities plan to 
invest more than $60 billion in transmission infrastructure 
through 2024 to modernize the Nation's electric grid, while 
abundant fuel resources and advanced generation, storage, and 
distribution management technologies can help modernize and 
diversify the Nation's power portfolio.
    Further, ``big data'' energy analytics and new information 
technologies offer a diverse suite of novel products and 
services that can identify and mitigate inefficiencies in the 
electricity supply chain while helping utilities meet changing 
consumer expectations.
    The availability of advanced, user-friendly communications 
technologies has disrupted the traditional business model for 
nearly every consumer sector from home entertainment to taxis. 
The electricity sector is witnessing a similar shift. New 
innovative products and technologies in the electricity space 
hold the potential to empower consumers to make smarter 
decisions in energy usage, while providing new, more efficient 
and responsive ways to generate and distribute power. As 
consumer expectations and technology evolve, new business and 
regulatory models within the electricity sector also may be 
necessary to better reflect changing market conditions.
    A more modern and resilient grid will be better positioned 
to withstand and minimize any impacts resulting from severe 
weather, cyber attacks or any other threats to the grid. 
However, as the grid becomes increasingly reliant on 
information technology and digital communications devices, 
thousands of potential new grid access points are being 
created. While encouraging technology and innovation in the 
electricity sector should be a priority, policies must ensure 
that new grid-related products do no leave the grid more 
exposed or compromise customer information and privacy.
    Given the shift taking place in the electricity sector, it 
is paramount that policymakers and regulators at the Federal, 
State, and local level carefully weigh policies that can adapt 
to these new challenges and opportunities to build a market-
driven, modern, and flexible system while ensuring the 
continued safe, reliable and affordable delivery of electricity 
to consumers.

    Mr. Whitfield. So with that, I will yield back the balance 
of my time. And, Mr. McNerney, I will recognize you for a 5-
minute opening statement.

 OPENING STATEMENT OF HON. JERRY MCNERNEY, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. McNerney. Well, thank you, Mr. Chairman.
    Hey, this is a really exciting hearing. It is an area I 
care a lot about. You know, the American grid is one of the 
great engineering challenges of the--great engineering 
achievements of the 20th century. It has provided us reliable 
electric power, it has helped our industry grow, and yet at 
today's hearing we are going to get a look at what the 21st 
century grid might look like, but also what the transition 
between where we are today and what the 21st century grid is 
going to look like. It is going to be an opportunity and some 
very big challenges.
    Some of the factors that I want to bring to our attention 
are, coal is still our number one energy producer. Produces 
about 38 percent of our power. And to the chagrin of some of 
our colleagues, that number is decreasing over time. New--
natural gas is our number two energy--electric energy supplier, 
and that is growing rapidly. There are some challenges with 
natural gas. We have the distribution challenge, especially in 
New England States, and--but the price of natural gas is going 
down, or is low now because of all the abundance of natural 
gas. So it is a real opportunity for us. Nuclear is number 
three, and I think nuclear is kind of stagnant right now. That 
may change over time. And fourth, renewable energies. It is 
growing rapidly, but it is only 13 percent of our capacity, and 
that includes hydro. So we have--with renewable energy, there 
is cost competitiveness. We can produce renewable energy pretty 
cheaply now, but we can't dispatch it. It is not going to be 
there necessarily when we need it, so there needs to be some 
account taken to that and--when we integrate renewables into 
the grid. But if you look at what is happening, California is 
going to require 33 percent nuclear power by 2020, so we have 
to rise up for this challenge.
    We also have the specter of climate change sitting there in 
front of us. It is going to require us to reduce fossil fuels, 
but it is also going to require us to increase efficiency. We 
have a need to make our grid more resilient. We are seeing that 
with our bigger storms now. We also have physical and 
cybersecurity. We want to make sure that our grid is strong, is 
safe. If there are physical attacks, if there are cyber 
attacks, if there are storms, if there are earthquakes, 
whatever the--nature throws at us or whatever our fellow human 
beings throw at us, we have to be able to maintain our grid, so 
this is a pretty big challenge.
    There are big opportunities. I just want to tick off some 
technology. Some of these I don't even understand myself. We 
have the automated circuit breakers and feeder switches. That 
is going to allow us to switch problems, we can--it is just 
like a transistor in a radio. I mean it is going to allow us to 
switch back and forth, and that gives us quite a bit of 
flexibility. There are mapping systems that will allow us to 
stop grid problems from spreading from one part of the Nation, 
and one sector to another. We have load management tools like 
megawatts that are being adopted in San Francisco. We also have 
smart meter technology, which I helped develop for a period of 
years in California.
    So there is a lot of technology out there, but a big 
opportunity is if we can provide cheap power for our customers, 
then manufacturing is going to be able to continue to grow and 
thrive in this country, and without it, we are going to be 
hamstrung. So this is a big challenge for Congress. It is going 
to require continued investment and commitment in Congress and 
in industry. We need to understand the big picture challenge 
before we do anything drastic here in Congress. We need to 
understand the engineering challenges. We need to put money out 
there so that the engineering challenges can be met. We need to 
incentivize that. We need to make the investment, and that 
means investment here in Washington, but it means also 
investment in our States, and it means investment by private 
investors. And how are we going to invest--incentivize private 
investors in grid innovation and grid technology, and 
development and grid infrastructure development if they are not 
sure they are going to get their money back? So we have to be 
able to figure that out. So this is part of the big picture 
challenge.
    But my colleague, Renee Ellmers, and I have started the 
Grid Innovation Caucus. That is giving us here in Congress 
several members that are interested in this area an opportunity 
to talk about some of these issues. So--and think about the big 
picture.
    I do have a story from my past when I developed wind energy 
technology, I started in the business in about 1980 when the 
industry was just at the beginning. And, you know, we went out 
there and we got an investment from some folks out there. We 
designed a wind turbine from a plain piece of paper. It was a 
wonderful experience. We put it up in the hills of New 
Hampshire, turned it on, had all the investors come out, turned 
it on, and then things started turning, the blades all flew off 
and everyone had to run for cover. But, you know, the investors 
stuck with us, and year after year we put a little bit more 
understanding in the blade roots, in the foundations, and the 
transmission, and in all engineering parts of that machine, and 
how, because of that kind of work, wind energy is very cost-
effective, it is growing very rapidly. So you have to make the 
investment, you have to stick with it, and if you do, you get 
rewarded.
    So that will be my opening statement. Mr. Chairman, I yield 
back.
    Mr. Whitfield. Mr. McNerney, I am glad to see you so 
enthusiastic this morning. So, you know, I want to also give a 
warm welcome to our former Secretary of Energy, Spencer 
Abraham. Appreciate you joining us today, very much. And Mr. 
Charlie Bass, a former member of this committee, we appreciate 
him being here as well.
    Our chairman, Fred Upton, is going to be a little late 
arriving today, so at this time, I would like to recognize Mr. 
Pallone for his 5-minute opening statement.

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. Thank you, Mr. Chairman, for holding this 
hearing on the future of the grid. I don't know if I can be as 
energized as Mr. McNerney, but I did notice how energized you 
were and I was happy to see it.
    The National Academy of Sciences has referred to the U.S. 
electricity grid as the greatest engineering achievement of the 
20th century because it delivers critical energy services to 
consumers in an instantaneous, affordable and dependable 
manner. In fact, as a society, we have come to expect that 
every time we flip the switch in a dark room, light will 
appear. But our grid is changing as we speak. There are ever-
growing demands on the grid to power our new technologies, to 
accept new forms of generation, while at the same time 
conventional attacks, cyber attacks, climate change, and other 
new threats require the grid to become more resilient. And the 
grid is now the subject of almost constant innovation and 
entrepreneurship as well as--as many of our witnesses are going 
to attest. How we unleash that innovative spirit and at the 
same time ensure overall system reliability is the challenge 
for the grid of the future.
    Fortunately, advanced technologies exist to address these 
challenges, with substantial benefits for both the electricity 
sector and, in most cases, consumers. These new technologies 
are working smarter and promise electricity generation and 
delivery that is more efficient, economic and environmentally 
responsive. And while this transition will not be quick or 
easy, our witnesses today make clear that the move towards 
smart grid technology is already here.
    Today, you can already find this technology deployed around 
the Nation. You can see it in the deployment of smart meters 
and other technologies that facilitate greater energy 
efficiency and cost savings, as well as in the deployment of 
solar and other distributed generation. These technologies will 
also help us move forward in the fight against climate change, 
providing new ways to reduce greenhouse gases emissions, while 
at the same time enhancing overall system resiliency and 
reliability.
    In my home State of New Jersey, you can also see the 
deployment of smart grid technologies in the work DOE has done 
to set up a microgrid to prevent transit service outages in 
northern New Jersey, like the one we experienced during Super 
Storm Sandy. And while the movement to these new technologies 
is important in many cases, its near-turn adoption is not 
inevitable, nor is it necessarily a panacea for all the 
problems we face. And we will need to work with our State and 
local counterparts, including State regulators, to develop 
workable solutions. For instances, while a microgrid may help 
preserve power for a portion of a community during an extreme 
weather event, policymakers will be the ones tasked with 
deciding who gets the benefits of that power, and who pays for 
establishing the infrastructure. Similarly, the rate of 
adoption for many of these new technologies often depends on 
the incentives put in place by policymakers. For example, real 
time smart metering can provide consumers with critical 
information about their energy use during hours of peak demand, 
yet without the proper structures in place to encourage 
residential or commercial customers to use energy during off-
peak hours, there is little motivation for someone to charge 
their electric vehicle at night instead of in the morning, or 
to alter their business plans to ensure others can consume 
electricity during the day.
    And so policy questions still exist, but there is little 
doubt that adopting these new technologies to move us towards a 
smarter grid could spur benefits for consumers, our economy and 
the environment, and the witnesses before us today can help us 
navigate these obstacles to quickly realize the benefits of 
these technologies in a cost-effective manner. So I look 
forward to hearing your views.
    I would like to yield the remainder of my time to the 
gentleman from Texas, Mr. Green.
    Mr. Green. Thank my colleague for yielding to me--our 
ranking member colleague. I want to thank all our panelists for 
being here today, and I look forward to discussing this 
critical component of our economy.
    The electrical system and grid are technological wonders, 
and the--it is the bedrock of our industrial and commercial and 
domestic way of life. When folks turn on the switch, they never 
question whether America's power sector will perform.
    In the 20th century, we expanded rapidly, constructing 
lines and establishing functioning markets. The complexity and 
vastness of the U.S. utility transmission and distribution 
system is unmatched across the globe.
    In the 21st century, we face challenges and opportunities 
from a changing marketplace. Traditional utilities face new 
challenge because the integration of renewable resources, 
implementing the new environmental regulations built on the 
rapid expansion of cheap natural gas. Transmission and 
distribution companies are looking at new dynamics of 
distributor generation.
    Finally, consumers are increasingly savvy and informed 
about consumption management and household efficiencies. As 
legislatures, we must provide these constituents the tools 
required to meet the challenges and capitalize on the 
opportunities of the new marketplace. Today, it is my hope we 
can elicit some information that would help us better 
understand the rapidly changing atmosphere, and assist us in 
crafting solutions so as to remain innovative, flexible, but 
100 percent reliable.
    And I yield back my time.
    Mr. Whitfield. The gentleman yields back. And that 
concludes the opening statements.
    So now I would like to introduce our panel. And once again, 
we thank all of you for joining us today, and we look forward 
to your testimony.
    Our first witness this morning is Mr. Tom Siebel who is 
chairman and CEO of C3 Energy, also one of the founders of 
Oracle.
    Each one of you will be given 5 minutes, then the little 
red light will come on when 5 minutes is up, but we won't go 
strictly by that red light. But, Mr. Siebel, thanks for being 
with us, and you are recognized for 5 minutes.

 STATEMENTS OF THOMAS M. SIEBEL, CHAIRMAN AND CHIEF EXECUTIVE 
  OFFICER, C3 ENERGY; DEAN KAMEN, FOUNDER AND PRESIDENT, DEKA 
    RESEARCH AND DEVELOPMENT CORPORATION; MICHAEL ATKINSON, 
 PRESIDENT, ALSTOM GRID, INC., ON BEHALF OF GRIDWISE ALLIANCE; 
    CHRISTOPHER CHRISTIANSEN, CO-FOUNDER AND EXECUTIVE VICE 
   PRESIDENT, ALEVO ENERGY, INC.; JOEL IVY, GENERAL MANAGER, 
     LAKELAND ELECTRIC, ON BEHALF OF AMERICAN PUBLIC POWER 
   ASSOCIATION; PAUL NAHI, CHIEF EXECUTIVE OFFICER, ENPHASE 
  ENERGY; AND NAIMISH PATEL, CHIEF EXECUTIVE OFFICER, GRIDCO 
                            SYSTEMS

                 STATEMENT OF THOMAS M. SIEBEL

    Mr. Siebel. Good morning. Mr. Chairman, thank you for the 
opportunity.
    I am here from Silicon Valley, and I have spent the last 4 
decades in the information technology business, and we have 
been working for the better part of the last decade to think 
about the problem of applying the state-of-the-art of 
information technology and communication technology to the 
value chain associated with power generation, transmission, 
distribution, metering, and consumption. And if we are to look 
at this value chain, it would be--today, it would be largely 
recognizable by Thomas Edison, because we are dealing with late 
19th century and early 20th century technologies, where at one 
end of the value chain we are boiling water and spinning a 
turbine, OK, we are rotating a magnet within a coil, creating a 
voltage, stepping up the voltage to, you know, higher voltage, 
transmitting it over long distances at high voltage, medium 
distances at medium voltage. It goes to a meter and then to the 
consumer. This is pretty much what it looks like. And it works 
great until it breaks. OK, and then when it breaks, whoever, 
Baltimore Gas and Electric or Constellation Energy or Pacific 
Gas and Electric, sends trucks out with people with volt meters 
to climb telephone poles and go down manhole covers, to find 
boxes that don't conduct electricity, and they keep replacing 
boxes until the lights go back on. And this is pretty much how 
it works.
    Now, this infrastructure--these--the way that utilities are 
operated is then tend to run these businesses of generation, 
transmission, distribution, metering, customer care and 
billing, as separate business units, and as separate business 
units they have these separate enterprise information systems 
that have been supplied over the years by companies like Oracle 
and General Electric and Siemens and others. There are lots of 
reasons we can get into some other time why these enterprise 
information systems don't want to communicate with one another. 
It makes it very difficult to share information, but let it be 
said that, you know, this has all been kind of driven by 
Moore's law. Now, this decade, worldwide, this infrastructure 
is being upgraded so that all the devices are becoming remotely 
machine-addressable, so we can remotely sense their state. The 
most common being the smart meter. So we don't have to send a 
truck out to read it once a month, we can read it once a minute 
or once every 15 minutes. But what is significant is not the 
smart meter, the entire value chain is being sensored, from the 
vibration sensor on the nuclear reactor to the thermostat, the 
variable speed fan at Wal-Mart, OK, the single phasers, the 
step transformers, the stepdown transformers, and the 
substations. So as this becomes sensored, this begins to look 
like a fully sensored--basically, a fully connected sensor 
network. A guy named Bob Metcalfe out of Xerox PARC, he 
invented something called Ethernet, OK, and he coined something 
called Metcalfe's law. So the power of that network is the 
function of the square of the number of nodes that are 
connected.
    So when this is--the amount that is being invested, I don't 
know if I mentioned this, in upgrading this network worldwide 
this decade is $2 trillion. So this is the largest and most 
complex machine every built. The amount being invested in the 
U.S. this decade upgrading this infrastructure is $1 trillion. 
So as we do this, if we read a meter every 15 minutes, it is 
being read 32,000 signals a year. If we read it once a month, 
it is 12 signals a year. That is four orders of magnitude. 
Actually, we are increasing the amount of data by six orders of 
magnitude. So we have massive amounts of data that is being 
collected, and so what we can do now is we can apply the 
sciences of big data, cloud-scale computing, analytics, machine 
learning, and these new social human-computer interaction 
models to dramatically, you know, to optimize the entire value 
chain to, you know, if we balance--it reduces the amount of 
fuel that we need to generate by a percent. OK, if we use these 
technologies for predictive maintenance, we can replace devices 
before they fail, dramatically increasing safety, increasing 
reliability, we can, you know, increase the security 
infrastructure, and by the way, we can reduce the environmental 
consequences of the value chain by, say, order of 50 percent.
    So this is what we are doing today all over the world. I 
would say that Europe is probably ahead of the U.S. as it 
relates to this today. We are doing this now, and now putting 
this in the perspective of a company based in Rome, they have 
67 million meters in 40 countries, and so they are a 100-
billion-euro company. It is a utility roughly the size of the 
U.S. market. And there, we are aggregating I think 7 trillion 
rows of data into an 800 terabyte cloud image. We process these 
data at the rate of 800,000 transactions per second, OK. Apply 
machine learning to optimize the value chain and the economic 
benefit to do this across the world is 6.3 billion euros a 
year. We are doing this at Exelon. The economic benefit to 
them, $2.7 billion. This is the economic benefit to their 
consumers. Baltimore Gas and Electric, Pacific Gas and 
Electric, Socal Edison, Commonwealth Edison, we are doing--GDF 
Suez, so we are doing this all around the world today. This is 
what will make the smart grids smart, is the information 
technology, the ability to apply big data, analytics machine 
learning, and new human-computer interaction models. And the 
economic, social and environmental benefits are significant. So 
this is the exercise upon which we have been engaged, and it is 
fascinatingly difficult and fascinatingly exciting.
    Thank you.
    [The prepared statement of Mr. Siebel follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Whitfield. Well, thank you very much.
    And our next witness is Mr. Dean Kamen, who is the Founder 
and President, inventor and--also, but he is the Founder and 
President of DEKA Research and Development Corporation. And, 
Mr. Kamen, thank you very much for joining us, and you are 
recognized for 5 minutes.

                    STATEMENT OF DEAN KAMEN

    Mr. Kamen. Thank you, Mr. Chairman, and I think everybody 
here knows we are not here to talk about whether there will be 
disruptive change in the grid, but how it is going to happen 
and hopefully how to make it happen in the best possible way.
    Though we are here to talk about energy, I am a technology 
guy and I thought a very quick review, and it will be a very 
quick review, of a few other industries that were dramatically 
transformed at the intersection of new technologies that were 
properly embraced to take over from old systems that suddenly 
seemed inefficient and terrible. So as an example, I will give 
you computing. We all grew up, I think, with big computers that 
sat some place and, you know, the average kid today doesn't 
know about what Mr. Watson and his company were about, they 
have tablets and cell phones, and they changed an industry and 
they wiped out an old infrastructure. There were interestingly 
three major infrastructures that were built in the 1880s--were 
established in the 1880s; photography, communications, and 
energy.
    So quickly, looking at this one, Alexander Bell in the 
1880s decided we can let everybody talk to everybody, all you 
needed was a wire from your ear to anybody else's ear. And it 
took about 100 years to build up that massive infrastructure. 
Then the technology came along, and that was really neat. Most 
kids don't know that a house has a phone. You have a phone. And 
technology like wireless and cellular and fiber optics have 
just transformed the communication industry, I think we would 
all agree, for the better.
    Photograph, again, in the 1880s it was a wonderful thing. 
We all remember our Kodak moments. We remember we could get 
that stuff to actually develop in only one day. You ask the 
average kid for a selfie today, they don't know what film is, 
and the Kodak moment is--Kodak is history, it is a memory. So 
it is because technologies came along that were just 
breathtakingly better.
    What about energy. That is what we are here to talk about. 
Well, in the 1880s there was this guy Edison and Tesla, and 
they gave us big centralized plans, like Ma Bell, photography, 
what do we know about that great model that we have already 
heard is from virtually everybody out there and the first 
speaker, it is 150-year-old architecture. What do we know about 
it? Is it ready for disruption? Well, it is old, it is 
inefficient, it is unreliable, it is expensive, and it is 
dirty.
    Quick facts about what the grid is today. We have about 1 
terawatt, 1,000 gigawatts, of production capacity at an average 
of $1 a watt to produce that. That is $1 trillion in generation 
assets. Well, more than 50 percent of that stuff is 30 years 
old, and if you only replace the stuff that is that old at $1 a 
watt, it is $500 billion. Once you make that energy, you have 
to move it. And you just heard, at high voltage, transmission 
lines, they cost about $1 million a mile, and oops, sometimes 
they are not quite what we would like them to be. And 70 
percent of those things are 25 years old or more, and there are 
280,000 miles of that high voltage stuff, so if you replace the 
really old stuff, it is another $200 billion. Then you have the 
low voltage stuff in all your neighborhoods. Wires hanging on 
wooden poles. What could possibly go wrong? So those things are 
a real deal, they are only $140,000 a mile, and there are 2.2 
million miles of that stuff and 50 percent of that is at least 
30 years old. And if you just replace the stuff that old, it is 
another $150 billion. And then, of course, you have the annual 
capital cost of that infrastructure. Now, that is $90 billion 
is what we are spending in this country right now to keep that 
architecture operating, and we have all heard how critical it 
is, but by the way, that $90 billion, that is not one drop of 
oil or one pound of coal, that is just to keep that system up.
    So is there a better, more efficient way to do to this 
industry what has happened to communications, for instance? I 
think so. Everybody loves solar panels, and I think you will 
hear from this whole panel, between solar panels, battery 
technology, wind technology, controls technology, megawatts, 
all of these things are going to change. The question is how do 
we catalyze them to work together instead of frustrate each 
other, both technically and in a regulatory environment.
    Well, everybody I know loves solar panels. Very few people 
I know have put up enough solar panels that they have 
disconnected themselves from that grid that we all complain 
about. It is our lifeline. So how do you catalyze more people 
to do this? Well, the more you put those up without doing 
something else, you are actually hurting the grid because they 
add instability, unless you add good technology, and they lower 
the amount of power coming through the grid, but the models by 
which the grids are funded is by selling electricity. The more 
of this stuff you put up, it is a competitive perverse 
alternative to the grid. You have to do something that can 
catalyze this stuff to happen in a way that helps everybody, 
including the people supplying the power. So we said, why don't 
we make an appliance, like all the other appliances in a house, 
that might help. This appliance makes 10,000 watts of 
electricity. We call--it is a sterling thermal technology. It 
is about as quiet literally as your hot water heater or your 
furnace, and the ones that we have made now 20 of, and placed 
them with a great visionary partner, David Crane, the chairman 
of NRG, have already produced 300 million watt hours of power 
directly where it is needed in places where we can also use the 
waste heat because after all, it brings the same fuel as your 
hot water heater. 100 million of those things could produce as 
much power as the whole grid. I don't think we need to go that 
far, but is 100 million a lot? No. Americans have 140 million 
appliances bigger than this. Much more relevant, they have 117 
million hot water heaters and 182 million furnaces, together 
that is 200 million appliances that use exactly the same 
infrastructure as us, except we will make your electricity and 
your heat. Where else could you put these things? This is why I 
think it can work to make the grid a great new future. Don't 
put them in the houses, put them out on those transformer pads. 
By the way, there were 40 million of those transformer pads 
sitting there now between the grid at that last stop and the 
user, and it is close enough to the user that we can still 
recover the heat, so we said put them out there, you lower the 
installation cost, you will make them easier to service, you 
will get higher efficiency, higher reliability, because houses 
can share them. Neighborhoods can start putting these things in 
under an intelligent control plan, and as you put a bunch of 
them near a set of houses, you don't need another one of those 
wooden poles with the wires draped through your trees. You put 
enough of those neighborhoods together, you don't need that 
substation. Over the next few years you, in a controlled way, 
get rid of enough substations, you start eliminating 
transmission lines, and finally you eliminate the power plants 
that aren't the efficient ones, and then America has a bright 
future.
    [The prepared statement of Mr. Kamen follows:]
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    Mr. Whitfield. Marvelous. Thank you, Mr. Kamen. We 
appreciate that.
    Our next witness is Mr. Michael Atkinson, who is the 
President of Alstom Grid, Incorporated, who is testifying on 
behalf of GridWise Alliance. So you are recognized for 5 
minutes, Mr. Atkinson.

                 STATEMENT OF MICHAEL ATKINSON

    Mr. Atkinson. Good morning, Chairman Whitfield, Ranking 
Member Rush, full committee Chairman Upton, and Ranking Member 
Pallone, Congressman McNerney, and distinguished members of 
this subcommittee. I am Michael Atkinson, President of Alstom 
Grid, Incorporated, and also I am here on behalf of the 
GridWise Alliance. I appreciate the opportunity to testify at 
today's hearing.
    The U.S. electric system is undergoing a transformation 
unlike anything we have experienced in the past 100 years. This 
transformation will create opportunities to enhance 
reliability, efficiency, resiliency and security of the grid. 
The grid will continue to serve as the backbone of the Nation's 
electric infrastructure. It will enable innovation to flourish, 
and the supply and demand of electricity across the 
transmission and distribution networks, all while continuing to 
provide safe, affordable, reliable power.
    The future grid will optimize the management and operations 
of the entire electric system value chain, which includes power 
generation, delivery and consumption. For example, new smart 
grid technologies help to enhance situational awareness, 
prevent outages, accelerate restoration, and--in the case of 
extreme events, and also integrate distributed energy 
resources. In addition, other technologies--other related 
technologies and capabilities such as energy storage, power 
electronics, and microgrids will also improve the performance 
of the grid.
    The Electric Power Research Institute has estimated that 
the total benefit of smart grid is in the trillions of dollars. 
More importantly, for every dollar invested, $2.80 to $6 in 
benefits are realized.
    GridWise and DOE's Office of Electricity work with hundreds 
of public and private stakeholders to develop a shared vision 
for the grid, which includes the following. The grid will be 
the key component of the future electric system. This system 
will include both central and distributed generation sources. 
Powering communications will flow in multiple directions. 
Residential, commercial and industrial customers will use the 
grid in different ways, becoming both consumers and producers 
of electricity. This will help achieve the following three 
outcomes to accelerate the transformation to the 21st century 
electricity system. First, building on this shared vision, 
enable policies to ensure the markets, regulations, and new 
technologies are all aligned. Congress can exercise its 
leadership to facilitate ongoing and new public-private 
collaboration to achieve the grid of the future. Second, the 
pursuit of this future grid will continue to spur innovation 
and attract ideas, talent and resources from a range of 
industries. And I think you only need to look to my right to 
see that. Third, create additional highly skilled jobs. The 
transformation of the grid will necessitate advanced skills to 
implement these technologies.
    In conclusion, we have an important opportunity to 
accelerate the modernization of our Nation's electric grid. 
This will drive economic growth, strengthen our global 
competitiveness, and create highly skilled jobs. Action is 
needed now because this is a complex issue, and the technology 
and policy changes required could take years to implement. I 
want to underscore that access to a reliable, efficient, 
resilient and secure grid is a major source of our Nation's 
competitive advantage. Congress can play a key leadership role 
in facilitating the acceleration of grid modernization, and 
ensuring that we maintain this competitive advantage into the 
future.
    Mr. Chairman, thank you for the opportunity to testify. I 
look forward to any questions.
    [The prepared statement of Mr. Atkinson follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]   
        
    Mr. Whitfield. Thank you, Mr. Atkinson.
    And our next witness is Mr. Christopher Christiansen, who 
is Executive Vice President, Alevo Energy. And you are 
recognized for 5 minutes, Mr. Christiansen.

             STATEMENT OF CHRISTOPHER CHRISTIANSEN

    Mr. Christiansen. Thank you. And, Chairman Whitfield, 
Ranking Member Rush, and members of the committee, thank you 
for inviting me to testify on behalf of Alevo, Inc. You will 
hear from me today how Alevo believes that energy storage will 
play a crucial role in ensuring a secure, reliable and modern 
electricity system.
    I will also discuss how Federal policymakers can help to 
accomplish this goal by reducing regulatory barriers to the 
development of energy storage to benefit electricity ratepayers 
and consumers.
    My name is Christopher Christiansen, and I am the co-
founder of Alevo, and I serve as the executive vice president 
of the Energy Division, which means I am responsible for all 
the energy daily activities, which include production design, 
business development, and sales strategies. I am also 
overseeing the development of over 200 megawatts of battery 
energy storage projects, which we are implementing in the next 
12 months.
    Alevo is a leading provider of energy storage systems 
designed to deliver grid-scale electricity on demand. Alevo 
couples grid analytics with our innovative battery technology, 
the Alevo GridBank. Alevo GridBank features a nonflammable, 
long life inorganic battery that enables a new source-agnostic 
architecture for electrical grids that reduce waste, greenhouse 
gases, create efficiencies and lower costs for the world's 
energy producers and their consumers. Our mission is to 
maximize the value, availability, usability and cleanliness of 
electricity to better serve mankind and the environment.
    Alevo's manufacturing plant is located in a former 
cigarette plant in North Carolina in Concord, in the district 
of Congressman Hudson. We are on track to employ 500 people in 
2015, and we expect to employ over 2,500 by the end of next 
year. We are also set up for significant growth, as Congressman 
Hudson knows, because we have a 3 \1/2\ million-square-foot 
facility that can, at full capacity, produce 16 gigawatt hours 
a year. Within the next 12 months, we are manufacturing and 
commissioning more than 200 megawatts of energy storage 
batteries.
    Alevo is building a vertically integrated manufacturing and 
deployment organization, creating a global energy storage 
business to work with the world's leading and largest energy 
companies.
    The electric grid is the only system of production that has 
not had a way to store its product efficiently. Energy storage 
changes that equation, allowing us to store that electric 
production and then use it when we need it, where we need it, 
and at the best price. Energy storage technologies, like the 
battery Alevo is manufacturing, will change the way our 
electric grid works, to enable greater efficiency of our 
existing generation fleet by optimizing heat rates, reduce 
ramping, to allow for increased resilience and reliability of 
the system, and to lower the cost of electricity for every 
consumer. Additionally, the increased efficiency provided by 
storage lowers emission and water usage, 2 important and 
environmental benefits realized without adding cost to 
ratepayers.
    According to market research firm, IHS, energy storage 
growth will explode from 340 megawatts in 2012 to 2013, to 6 
gigawatts by 2017, and over 40 gigawatts by 2022. To put that 
in perspective, 40 gigawatts is equivalent to 40 new coal or 
gas fire power plants, and it is enough power to power a home--
over 32 million homes for 1 hour. This explosion would create 
jobs in manufacturing, as with Alevo, right here in the U.S., 
allowing us to put our innovation to use to the benefit of the 
electric grid and consumers.
    As the theme of this hearing suggests, energy storage 
technologies like Alevo's GridBank will secure a reliable and 
modern electric grid. The 21st century grid will be exposed to 
increased generation from variable sources, and also increased 
fluctuations in load. States hit by Hurricane Sandy, like New 
Jersey and New York, are already building these technologies 
into their resilience plans to ensure that emergency services 
are kept functional during catastrophic events. Even during 
ordinary power blips or outages, energy storage can help a 
system and its consumers ride through those events seamlessly. 
Southern California Edison recently issued a series of awards 
to accommodate local capacity requirements for their electric 
customers. They were required to consider 50 megawatts of 
storage; instead, they awarded 50--sorry, they awarded 260 
megawatts of storage, since it was competitive and provided the 
flexibility the utility needed for the system. As utilities and 
system operators consider their needs both now and in the 
future, and with the right policies in place, more and more 
energy storage is being deployed, decreasing the perceived risk 
inherent in new technologies, and reducing the cost of those 
technologies through increased scale. Alevo is positioned to 
drive down those scales--those costs even further with the 
manufacturing of hundreds of megawatts of energy storage 
capacity in the first year alone. One key policy that this 
committee can change is to reduce regulatory barriers for 
energy storage facilities, including exemption for Federal and 
State regulations in the same way those barriers are currently 
used for qualifying coal generation facilities. Congress could 
also ask FERC to valuate the value generated by energy storage, 
and ensure that FERC's current policies recognize and award 
those values.
    I look forward to addressing any questions the committee 
has about Alevo and our innovation, or about energy storage 
technologies more generally. And I thank you for the 
opportunity to present this testimony.
    [The prepared statement of Mr. Christiansen follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]    
    
    Mr. Whitfield. Thank you, Mr. Christiansen.
    At this time, I would like to recognize Mr. Joel Ivy, who 
is General Manager of Lakeland Electric, who is testifying on 
behalf of the American Public Power Association. You are 
recognized for 5 minutes.

                     STATEMENT OF JOEL IVY

    Mr. Ivy. Thank you, Mr. Chairman. Good morning, everyone. I 
bring you warm greetings from sunny Florida.
    The American Public Power Association, based in Washington, 
DC, is the national service organization for the more than 
2,000 not-for-profit community-owned electric utilities in the 
United States. Lakeland Electric in Lakeland, Florida, is an 
APPA member, serving approximately 122,000 customer accounts in 
central Florida for the past 110 years. Like other public power 
utilities represented by APPA, Lakeland Electric was created to 
serve the needs of its local community by providing low-cost, 
reliable electric service on a not-for-profit basis.
    Public power utilities have been improving our grid-based 
technologies for some time now. As fiber optic systems started 
to become more prolific, the application of smarter tools and 
equipment became truly viable. Together with newer wireless 
technologies, we have been able to greatly expand access to 
information, perhaps like never before.
    I will discuss initiatives being, excuse me, under--I will 
discuss initiatives being undertaken nationwide by public power 
utilities related to grid innovation, but focus the bulk on my 
testimony on what Lakeland Electric has done and why. I am 
defining grid innovation as including deployment of smart meter 
technologies and communication systems to support those and 
other technologies, deployment of distributed generation, or 
DER, distributed energy resources, including storage. Increased 
real- and near-time real-time monitoring of power systems, 
which enhances situational awareness, and management of the big 
data being accumulated through the use of smart grid 
technologies. In addition, I want to discuss briefly some of 
the challenges to deploying these technologies, including 
cybersecurity.
    So the deployment of AMI, or automated metering 
infrastructure, is significantly more mainstream than a decade 
ago. It has become almost the default choice for upgrades to 
meters, leaving on the question of using fiber or wireless, or 
in Lakeland's case, both. This effort was kick-started with 
Federal grants and loans, of which my organization was a proud 
recipient. In fact, we completed our deployment in 2013, and 
are now offering customer access to their information via our 
Web portal, and have some creative alternative rate programs 
for earlier adopters to use to save money and energy in their 
homes and businesses.
    The APPA and Lakeland are generally supportive of 
distributed energy resource technologies, such as rooftop 
solar, but the concepts of rate programs that will continue to 
spur this investment, while allowing utilities recovery of our 
fixed cost, is among the fastest growing issues in our 
industry. Excuse me. Net metering in some locations such as 
Lakeland provides a customer credit based on the full retail 
rate, which may allow customers to reach a net-zero bill on an 
annual basis. Changes to our rates must not punish the early 
adopters who invested in older, more expensive solar 
technologies. At the same time, we must ensure utilities have 
proper revenue to recover the cost of our poles, wires and 
generators. This rate design issue is going on appropriately at 
local and State levels across the country, including in 
Lakeland.
    Regarding distributed energy resources, utilities are also 
concerned about customers having access to good information 
that allows them to make sound decisions without future 
regrets. Business practices that may be leading to the 
provision of erroneous information to customers, including 
information provided by certain solar leasing companies related 
to the payback of the leases, which are in turn being tied to 
unrealistically high assessments of annual electricity price 
increases, are at the heart of our concern.
    The future construct of the smart grid is full of unknowns 
as we look out longer into the future, and continued Federal 
support for funding innovative projects will be very important 
as our Nation's entrepreneurs provide the newest and best 
support equipment and processes.
    Finally, Lakeland--Federal, State, and local collaboration 
is essential to maintaining physical and cybersecurity. While 
Lakeland has adopted cybersecurity as an essential business 
practice, the collaboration with governments at all levels 
remains a critical component, particularly related to 
information sharing.
    In summary, public power utilities like Lakeland Electric 
are deploying a variety of technologies to optimize a grid for 
more efficient and reliable service. In so doing, we worked 
very collaboratively with our customers, our policymakers, and 
our communities to determine what is most appropriate at the 
local level. The Federal Government can help in terms of 
targeted grants, and research and development, as well as in 
the area of cybersecurity, by sharing actionable and timely 
information with the industry.
    Mr. Chairman, thank you for allowing me to be here.
    [The prepared statement of Mr. Ivy follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
           
    Mr. Whitfield. Well, thank you, Mr. Ivy.
    And at this time, I would like to recognize Mr. Paul Nahi, 
who is CEO of Enphase Energy. And you are recognized for 5 
minutes.

                     STATEMENT OF PAUL NAHI

    Mr. Nahi. Thank you, Mr. Chairman. Chairman Whitfield and 
fellow subcommittee members, than you for the opportunity to 
testify at the Subcommittee on Energy and Power's 21st century 
electricity challenge hearing.
    Enphase Energy provides solar energy solutions for the 
residential and commercial market, as well as energy services 
for utilities. Through the most sophisticated power electronics 
and communications technology in the world, we are able to 
bring a level of visibility, intelligence and control to our 
solar systems, which are deployed in over 80 countries. This 
has enabled us to leverage our solar assets to help strengthen 
and increase the resilience of the grid, while providing clean, 
affordable energy for our customers in the U.S. and all over 
the world. A public utility company located in the San 
Francisco Bay area, Enphase has grown to over 600 employees 
since 2006, and plans to employ over 750 employees by the end 
of 2015. Our products are now installed by tens of thousands of 
workers across the United States each day. We have a profitable 
business, and continue to invest in new technologies and new 
markets to enable more consumers to enjoy the benefits of 
clean, affordable energy, while helping our utility partners 
strengthen and stabilize the grid. In doing so, we are creating 
both blue- and white-collared jobs in our country, and creating 
competitively priced products that make the United States a 
global leader in our technology class.
    Our advanced technology solutions turns solar systems into 
assets on the grid, and our energy management system addresses 
the grid's needs via our intelligent communications technology. 
In fact, we just completed an upgrade with a utility partner to 
remotely modify the operating characteristics of thousands of 
solar systems to substantially strengthen their distribution 
and feeder networks. In essence, we enable solar systems to 
observe and then respond to the potential grid issues, thus 
increasing its reliability. By optimizing the grid in this 
manner, we can either delay or eliminate significant capital 
costs, thereby reducing cost for consumers.
    As is implied by our product offering, it is clear that our 
number one job at Enphase is to help provide clean, affordable 
energy, while increasing grid stability. At the same time, we 
recognize the urgent need to increase the security of our 
energy supply. Energy security is fundamental to the health of 
our country. It is also a specific focus of this Congress. It 
must be recognized that new, clean energy resources can play a 
significant role in enhancing our energy security. Solar and 
wind are abundant and limitless, and it is our responsibility 
to harness these resources responsibly. That said, Enphase and 
others in this new energy economy will play a fundamental role 
in ensuring the energy security of our country. The 
technologies we develop leverage years of innovation in the 
semiconductor and information technology markets, and include 
many of our own advances. Because of this, each system we ship 
is embedded with the most advanced security protocols, and can 
be remotely updated as necessary to prevent new cyber threats. 
We take our role as a though leader in the energy security 
seriously, and believe this arena will become increasingly 
critical over time.
    In order to ensure that our efforts to provide clean energy 
to consumers, while strengthening the resiliency and security 
of the grid, continue unabated, we must also maintain our 
relentless pursuit of more cost-effective solutions. Providing 
clean, secure energy is not enough. We must make it affordable 
for everyone. We have been able to dramatically lower the cost 
of our solar solutions, and are now applying the same 
technology to storage, where we also expect to see a dramatic 
decrease in costs. The same processes and semiconductor 
technologies used for developing and scaling the consumer 
electronics market are now being applied by Enphase to the 
renewable energy market. Technologies like the Enphase energy 
management system have the ability to realize significant cost 
reductions through economies of scale and continued innovation. 
It is my opinion that solar and other energy technologies will 
play a fundamental role in the new energy economy as a result 
of our ability to innovate and scale, resulting in highly cost-
competitive, reliable and secure energy generation.
    Enphase Energy is built on a foundation of collaboration. 
We believe that a health industry lifts all market 
participants. We have no doubt that the creation of a new 
energy economy will result in hundreds of thousands of new jobs 
for Americans, and we are looking forward to enabling those 
interested in participating in this industry to make a smooth 
and successful transition. The result will be a strong and 
vibrant industry, abundant access to clean, affordable energy, 
a large, well-paid workforce, and a prosperous future for all 
Americans. The success of our company and other new energy 
participants is a testament to the increasing demand for 
affordable, clean energy, and we do not expect this to subside.
    That said, I believe our role as job creators now and in 
the future cannot be underestimated. With this role comes the 
responsibility to help others transition to this new and 
growing industry. We must recognize the amazing accomplishments 
of those in the industry who carved the path before us, and 
provide the support necessary to enable them to participate in 
this new energy paradigm.
    Lastly, we aim to remain competitive internationally to 
ensure the United States retains a position of leadership in 
the world's energy ecosystem.
    I appreciate the opportunity to testify before this 
committee, and look forward to working with Congress as we 
continue to add jobs, increase grid stability, protect our 
citizens against cyber threats, and ensure the United States 
maintains its position as a global technology leader. Thank 
you.
    [The prepared statement of Mr. Nahi follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]    
    
    Mr. Whitfield. Thank you.
    Our next witness is Mr. Naimish Patel, who is the CEO of 
Gridco Systems. And you are recognized for 5 minutes.

                   STATEMENT OF NAIMISH PATEL

    Mr. Patel. Thank you, Mr. Chairman, and the other 
distinguished guests or congressional members of this 
committee.
    This is an important topic we will be speaking about today. 
My name is Naimish Patel. I am the CEO of Gridco Systems, a 
leading provider of agile grid infrastructure, that is 
consisting of advanced control and power flow technologies for 
the electric grid.
    Since the Pearl Street Power Station first went online in 
Manhattan in 1882, the electric grid in the U.S. has become 
pervasive in its reach, essential to the sustainable growth of 
our economy and national security, and a services platform that 
we have become intimately reliant upon, yet often take for 
granted; all testament to the work of the numerous utilities 
that maintain and operate our grid.
    Today, however, utilities are operating in a changing 
environment that poses a wide variety of challenges, but also 
opportunities for innovation. Much as our telephone system 
experienced a transformation in the 1990s, catalyzed by 
customer adoption of computing and demand for information 
services, so too are we seeing the beginning of a customer-
driven evolution of the electric grid. Consumers of power are 
increasingly also becoming producers, through adoption of 
rooftop solar or small-scale wind power, requiring the 
distribution grid to accommodate two-way power flow for the 
first time, counter to the assumptions underlying its original 
architecture. Customer adoption of electric vehicles is 
creating new demand for power, each vehicle equivalent to 
entire home while charging, requiring new utility demand 
control measures to avert overloading existing infrastructure. 
Customer adoption of energy efficiency measures and home 
automation offer new resources that utilities can potentially 
harness for systemic benefit, blurring the nature of the 
relationship between utility and customer. Finally, increasing 
diversification of customer demand is creating stress on 
regulatory frameworks that have traditionally been oriented 
towards one-size-fits-all power delivery. All of these changes 
are compounded by the fact that centralized base-load 
generation and transmission capacity are growing tighter, and 
increasing volatility in global weather patterns is driving the 
need for higher levels of grid resiliency. In the face of these 
challenges, utilities must continue to deliver on their 
fundamental mission of supplying safe, reliable, and affordable 
power, while also introducing system flexibility in order to be 
adaptive to a more dynamic and diverse demand/supply 
environment. Emerging at this intersection of requirements is a 
historic opportunity for regulators, utilities and technology 
suppliers to jointly innovate.
    Not surprisingly, given the aforementioned trends are 
occurring at the edge of the grid where customers connect, the 
electric grid's distribution system is on the forefront of 
change. Historically, investment in the distribution system has 
targeted upgrades of wires, poles and transformers; what is 
typically referred to as grid reinforcement. While these 
investments in grid capacity are indeed necessary, the 
flexibility to accommodate a more dynamic demand/supply 
environment relies on investment in infrastructure that can 
efficiently utilize existing capacity in order to curb costly 
grid reinforcement and, thus, electricity rates, while assuring 
reliable delivery of power under rapidly changing conditions. 
Much as the Internet is based on devices that actively and 
dynamically manage the flow of information across fiber optic 
or copper wires, the electric grid will increasingly require 
devices that actively and dynamically manage the flow of power, 
all under the control of a reliable, secure and scalable grid 
operating system. Fortunately, the technology building blocks 
needed to provide these functions are available, and at the 
cost, efficiency, and reliability metrics expected of electric 
utilities. Advancements in power electronics technology 
borrowed from hybrid and electric vehicles, wind convertors and 
solar inverters, can now be leveraged to provide dynamic 
regulation and routing of power flows at utility scale. While 
ruggedized distributed controllers, coupled with advanced 
networking techniques borrowed from the telephone sector, 
enable an emerging grid operating system to manage both utility 
and customer-owned assets, including power regulators, 
distributed energy resources, and home automation gateways, 
amongst many others. These core functions make the grid not 
just smart, but agile. It is brains and brawn in combination, 
or smarts in conjunction with action, that underlies agility, 
and most importantly, provides for a strong, standalone 
business case.
    We at Gridco Systems are singularly focused on providing 
these essential building blocks of the agile grid. We are 
working with utilities throughout the Nation in deploying our 
empower solution to address the challenges of today, while 
providing the foundation to adapt to the challenges of 
tomorrow. Strong economics drives our customer engagement 
process. Gridco's focus is on delivering solutions that are 
more cost-effective, and delivering more compelling benefits to 
cost ratio than business-as-usual approaches, avoiding the need 
for subsidies and rate increases. As such, many utilities are 
able to leverage existing budgets to implement our solutions to 
address DER integration, increase asset and capacity 
utilization, improved energy efficiency, and deliver higher 
power quality, all justified on the fundamental economic 
benefits rendered.
    Technology availability is currently not the limiting 
factor in driving modernization of the electric grid. Missing 
are the financial incentives for utilities to invest in new 
technologies to address diversification of customer demand. And 
to be clear, I am not suggesting that use of subsidies. The 
cost of service-based regulatory compact that has guided the 
evolution of the distribution system since the Public Utility 
Holding Company Act of 1935, has proved highly effective during 
times of simultaneous load growth, relatively uniform customer 
demand, and increasing economies of scale and supply. Such 
macroeconomic conditions generally present from the 1930's to 
the 1980's, maintained low electricity rates and reliable 
service for end customers, while strong predictable returns for 
investors. Over the last 2 decades, however, average load 
growth in the U.S. has slowed, becoming less coupled to GDP 
growth, owing in part to the adoption of energy efficiency 
measures, and also to an increase in the service orientation of 
the U.S. economy. Nevertheless, the reliable operation of the 
electric grid is as critical as ever to those customers--to our 
growth of our economy, and as such, continued investment is 
essential, but without rate increases for those customers whose 
use of the grid has not changed. After all, changes in customer 
use of the electric grid are by no means universal, at least at 
present. Customer adoption of rooftop solar, energy efficiency 
measures, and electric vehicles tend to be highly 
demographically correlated. As such, a minority of end 
customers, albeit a rapidly growing minority, is demanding 
something new of the grid, yet, the cost to accommodate them 
are socialized across the entire customer base under currently 
regulatory structure. Further compounding this is the fact that 
such customers may even pay less into the system, owing to 
their lower consumption of energy. Let us be clear; we want the 
grid to accommodate such customers. Their behind-the-meter 
investments are driven by basic economics that are only getting 
stronger. However, the revenue a utility realizes from these 
customers must reflect the actual cost of service to 
accommodate them. Fundamentally, not all customers are alike, 
and electricity rates structures must not only start to account 
for diversification of customer demand, but indeed, incentive--
incentivize utilities to supply such demand.
    Conversations among State regulators, utilities, suppliers 
and other stakeholders are occurring throughout the Nation on 
how to evolve rate design to better align utility revenues with 
their underlying costs.
    Mr. Whitfield. Mr. Patel, I have let you go over almost 3 
minutes, so would you conclude?
    Mr. Patel. Yes, sure.
    Let us not forget that modernizing the electric grid is not 
only good for our national security and economic growth here at 
home, but also represents an opportunity for the U.S. to lead a 
global renaissance in energy services and grid infrastructure.
    Thank you for the opportunity to speak at this forum.
    [The prepared statement of Mr. Patel follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
        
    Mr. Whitfield. Thank you very much for your testimony. And 
thank all of you.
    And at this time we will open it up for questions, and I 
will recognize myself for 5 minutes.
    Mr. Siebel, you had mentioned that the smart grid analytics 
technology, the savings are so great over cost that you really 
don't need incentives or subsidies from the Government for some 
of this, but anytime we go through transformation of any 
sector, certainly in the electricity sector, there are always 
impediments, and you do refer to some State regulations and 
accounting rules. I was wondering if you would elaborate a 
little bit on that for us?
    Mr. Siebel. Thank you. Thank you, Mr. Chairman.
    We retained McKinsey and Company to do a study on the 
economic benefit of a smart grid analytics platform, and you 
think of this as the operating system for the smart grid, so it 
is the economic benefit to the U.S. consumer. And the study, 
which we will be happy to provide the committee if they are 
interested, concludes that the economic benefit is $300 per 
meter, per year. So it is pretty significant. So this is like 
$50 billion a year in economic and social benefit across the 
United States.
    Now, we have the adoption of these new technologies. If we 
look at all the new technologies that are being developed in 
Silicon Valley, Boston, Jerusalem, anywhere today, these are 
all Cloud-based Saas systems, you read about it every day, 
Google, Facebook, Twitter, whatever, so this is where 
innovation is happening.
    Now, the way that utilities make money is they spend money, 
and they spend money on capital and they get a guaranteed 
return on the capital by their regulator. Now, if they spend 
money on technology that was developed in the last decade, what 
we call enterprise information systems that you install behind 
a firewall, they will get a guaranteed return on that 
investment. It is capital expenditure and they get a return on 
that investment. If they invest money on this new generation of 
Cloud-based, what we call software as a service and platform as 
a service-type technologies, that is not deemed to be a capital 
investment, it is deemed to be an operating expense. So there 
is a disincentive to invest in innovation. If they invest in 
innovation, it results in reduced profitability and reduced 
cash flow for the utility. If they invest in obsolete 
technology, you get a 9 percent return on the investment.
    So I think the regulatory incentives at the State level 
need to change, and if they don't change, we are depriving the 
American consumer of innovation.
    Mr. Whitfield. Yes. I would ask any of you, in America, we 
have this pretty well balkanized system. We have some 
independent systems like California, Texas, we have RTOs, we 
have regulated States, deregulated States. Does that balkanized 
system impede the growth of technology in the electricity 
sector?
    Mr. Siebel. I would comment briefly. I think it does. I 
mean if we are dealing with a company like GDF Suez, or a 
company like Anel, Anel is--both of these companies are roughly 
the size of the U.S. market.
    Mr. Whitfield. Yes.
    Mr. Siebel. They operate in 40 countries, they might be 
100-billion-euro businesses, and they have in the order of 70 
to 80 million meters. So this is roughly the size of the U.S. 
This is one decision process addressing----
    Mr. Whitfield. Yes.
    Mr. Siebel [continuing]. 25 to 40 countries. In the U.S., 
you have 3,250 utilities servicing 100 million meters.
    Mr. Whitfield. All right.
    Mr. Siebel. So it is highly, highly, as you would say, 
balkanized.
    Mr. Whitfield. You know, Mr. Kamen, in your testimony, we 
go through these transformations, there are always unintended 
consequences, and you do refer to the distributed energy 
resource death spiral of Germany. Would you elaborate on that a 
little bit?
    Mr. Kamen. Well, as I said, new technologies bring new 
opportunities. They also sometimes bring problems, especially 
to stranded infrastructure. And I am not a policy guy, but as I 
said, there are some perverse incentives out there. From a 
practical point of view, if the entire system that has ran for 
150 years premised on the generating company only making money 
by selling more power, there is not an encouragement to save. 
If they have to run it through a whole system that they already 
own, and somebody puts a solar panel at the other end, instead 
of supporting the overall system, it hurts the guys that are 
losing some of that. But from a technology point of view, there 
is a subtlety that I don't think maybe the regulators 
understand as well as the technology people which is, those big 
power plants are very good at producing a constant amount of 
power. It takes, in many cases, hours and hours and hours to 
bring those big boilers up. When you start putting transient 
capability online without enough battery, for instance, or 
other kinds of new technologies, what happens when that cloud 
goes by and suddenly a couple of hundred megawatts that was 
there goes away, or when that wind stops, you are asking that 
big tired grid that you were trying to avoid paying their bill 
an hour ago, suddenly you are desperate for more power. They 
have a tougher time reacting and keeping a stable grid with 
these other systems online than they had before, and they are 
making less money.
    In the case of Germany, the instability from a pure 
technology point of view, not an economic or financial point of 
view, but the instability induced in their large systems by all 
these new transient systems is making life difficult from a 
technology----
    Mr. Whitfield. Right.
    Mr. Kamen [continuing]. Point of view, therefore, making a 
reliability issue and a security issue. And I think we should 
avoid that in this country.
    Mr. Whitfield. Yes. Yes. My time is out, but I did want to 
just convey one thing. I was talking to a CEO of a big utility 
company in California, and they were building some additional 
transmission lines underground, and he said that the cost for 
them per mile was $100 million, which--that is a lot.
    At this time, recognize the gentleman from California, Mr. 
McNerney, 5 minutes.
    Mr. McNerney. Thank you, Mr. Chairman. I want to thank the 
witnesses for all your testimonies. Very good this morning.
    Mr. Kamen, I just want to ask you a question here. What do 
you think the microgenerators that you discussed, I forget what 
you called them, what do you think they would do to the grid 
system, to the transmission system, to the traditional utility 
company?
    Mr. Kamen. So one of the things I particularly think should 
be attractive about it, again, as I said before, almost all of 
the systems out there are presented, some--it is true, some it 
is by perception, as a somebody wins, somebody loses 
alternative, as we move forward.
    I think if you can make, for instance, these generators, 
which is what they are, that use the--a lot of the 
infrastructure, for instance, the largest buried infrastructure 
in the country that we don't need $100 million a mile for is 
natural gas, and many, many buildings have buried tanks with 
oil, propane. If our device could be moved so close to where it 
is needed, but still on the energy producer's side of that 
equation, still just outside the meter, then the energy 
producers could have millions of these small devices that they 
own and operate, because most buildings and, certainly, grandma 
doesn't want to become her own utility company because she has 
a solar panel, but if the utility companies and energy 
providers could compete with each other to have small units 
that are so close to the loads, they still get the full 
advantage of being a supplier of energy with just millions of 
little plants, but they get to avoid needing those transmission 
lines, distribution lines, substations, et cetera, that 
everybody is talking about being expensive, unreliable, and 
subject to issues.
    Mr. McNerney. Right. Thank you. Nice answer.
    Mr. Atkinson, you said that the future will spur innovation 
and investment. How do you see it spurring investment in 
transmission systems, the future technology?
    Mr. Atkinson. Today, it is spurring investment. As we get a 
framework, you are aligning our market, our policy, our 
technology, everything, you know, lines up for companies to 
come in, you know, drive solutions forward and invest. Again, 
as I point to the gentlemen on my right, came from different 
places, have come into the grid, and now are investing based on 
what exists today, based on the, you know, again, the policy 
and the technology that is available today and looking forward 
into the future.
    Mr. McNerney. OK. Mr. Christiansen, just sort of an 
estimate, if someone puts a solar system on their house, how 
much will the storage devices that you are talking about add to 
the capital cost? Will it add 20 percent to the capital cost in 
order to serve the--a good purpose for the homeowner?
    Mr. Christiansen. To direct cost, I mean on our unit we 
really do not approach the distributed solar household market, 
we see greater benefit of the grid connected bigger units.
    Mr. McNerney. So you are not talking about a residential--
--
    Mr. Christiansen. We are talking megawatts scale, that is 
what we produce.
    Mr. McNerney. OK.
    Mr. Christiansen. We produce--yes, and then multi-mega--our 
standard building block is 1 megawatt hour, 2 megawatt units.
    Mr. McNerney. OK. So you don't want to answer that question 
for the residential----
    Mr. Christiansen. I mean I could estimate based on 
competing--competitors' price estimates, but----
    Mr. McNerney. OK, I will give you a chance to answer that 
off-line later.
    Mr. Atkinson, do you think there is a role for the Federal 
Government, then, with respect to grid modernization?
    Mr. Atkinson. Absolutely. I--again, I think you are helping 
drive that shared vision forward, aligning, you know, the 
public and creating new public-private partnerships. You know, 
today, companies like myself, you know, we are working with the 
national labs, we are working with our customers, and creating, 
you know, a more defined framework for that I think is a great 
job for the Federal Government to do, and that then allows the 
public and the private sectors to get together, you know, and 
fill out the space. Again, there is significant investment 
going on in the grid today, and it needs to continue. It is--it 
will exist in the future. It is the backbone of, you know, what 
we do, and it needs to be utilized in different ways.
    Mr. McNerney. So you see a significant role for the 
national labs then in creating this future?
    Mr. Atkinson. Absolutely. I think the national labs, you 
know, we are out--our technology center, Global Center of 
Excellence for Grid Technologies in Redmond, Washington, we 
have a very close relationship with VNNL. We work with several 
of the others as well. They have a different timescale that 
they look at, and it is great getting together with them and a 
customer. A customer who is doing things today, national lab is 
looking out 3, 5, 10 years, us looking out 1 to 3 years, and 
merging that together and figuring out what is going to work, 
and then figuring out how to commercialize that.
    Mr. McNerney. Thank you.
    Mr. Chairman, I yield back.
    Mr. Whitfield. At this time, recognize the gentleman from 
Illinois, Mr. Shimkus, for 5 minutes.
    Mr. Shimkus. Thank you. Sorry for bouncing back and forth. 
I have another hearing upstairs, and met with the funeral home 
directors, and so we are trying to do multiple things at once.
    Mr. Kamen, it is great to see you. Charlie Bass, it is good 
to see you. Secretary, good to see you back in the crowd.
    FIRST Robotics. I will do the plug, right? We talked 
earlier, so the actual--the championship is in St. Louis, 
Missouri, which is right across the river from where I live. We 
follow it very, very closely. Thank you for that because now, 
it has gone not just into high school, but in the middle 
schools and in the grade schools with the Lego thing. And our 
Christian Dade School that I graduated from, my wife teaches 
at, they are all in it, and it is a great thing that you have 
started and I want to give that plug here.
    Also, I would like to go on just the issue, I know you have 
a great diverse background as an inventor in the medical field, 
insulin pumps, dialysis, why are you interested in this energy 
debate?
    Mr. Kamen. First of all, thanks for the plug for FIRST. You 
are all invited to our----
    Mr. Shimkus. It is the--and you have to use it when you get 
it, right?
    Mr. Kamen. Well, we have events in every congressional 
district. Schools from every district. I hope all of you will 
get involved, but thank you for that. And also thank you for 
asking because, honestly, we did not start building a small 
power generation systems for the U.S. After all is said and 
done, we still have a world class energy system. We have heard 
about that. I am a member of the National Academies. We did 
determine a few years ago it was one of the great achievements 
of the last century.
    I started building these small boxes because there are 2 
billion people around the world that have never used 
electricity. And I made a box of a similar size that would make 
clean water without a lot of other stuff. It didn't need 
filters or membranes or chemicals, but it needs a little 
electricity to run. And I thought the two most basic human 
needs around the world, water and power, ought to be available 
to everybody, and the rest of the world they are going to skip 
over ever building a power grid, just the way they skipped over 
landlines for cell phones--for phones, and now most of the 
developing world has this productivity called a cell phone, but 
they don't have a grid. Our little boxes can operate remotely 
to make true microgrids, and in fact, we ran two villages in 
Bangladesh for 6 months off two of these boxes, and the only 
fuel that went into them was the methane coming off a pit full 
of cow dung. If we bring these things into production here, the 
U.S. could start supplying electricity to a couple of billion 
friends around the world.
    Mr. Shimkus. And I think the last time you really testified 
was on that technology also, as I remember.
    Mr. Christiansen, I was interested in your testimony, and 
of course, I am from a cold part of the country, that is a big 
debate here, but you--this--as I understand it, the provisions 
of getting--we want to create efficiencies by our major 
generators, the base load folks, and sometimes that goes up and 
down, and then--and peekers come in, so just briefly, how do we 
segue your technology, and what is it again, and then how do 
you think it is being reviewed and accepted by our friends down 
the street at the Environmental Protection Agency?
    Mr. Christiansen. Well, we actually have sent this idea to 
the EPA as well. We did that last April. And the concept is 
essentially coupled with base load. You can optimize heat 
grades, basically have a unit that operates at constant output, 
almost like your car going down the highway at highway speeds 
where your battery system handles the flexible components, and 
that is what batteries are good at. They excel at responding 
quickly, fast and accurately, and that is what batteries should 
do. And then you have a unit that generates--that gets to be a 
generator and generates constant. And we have done a study 
that--on the whole west end connector, we sent it to the EPA on 
that, and you can essentially incorporate storage and have the 
efficiency pay for the storage units.
    Mr. Shimkus. Great, thank you.
    And I want to end up with Mr. Siebel. What do you see the 
primary regulatory burdens preventing utilities from grading 
adoption of new information technologies?
    Mr. Siebel. Great question. The barrier is very simple. OK. 
Utilities get a return on things that are deemed to be capital 
expense. Information technologies developed in the 20th century 
are deemed to be capital expense. You buy a piece of iron, a 
computer, disks, you put it behind your firewall, you get a 
disk from Oracle and you install it, that is a capital expense. 
The new--and you get a guaranteed return on those investments 
through your rate case, so you can pass it on to the rate case.
    Investments in the new generations of technologies that 
they never see and touch, these softwares of service 
technologies like using Google or Facebook or Twitter, where 
nothing is ever installed, they get--that is not a capital 
expense for accounting treatment, so they--not deemed to be 
capital, so they cannot pass the cost on to the ratepayer. So 
it is deemed an operating expense, lowers profitability, lowers 
cash flow, major disincentive to invest in innovation. 
Consumers--U.S. consumers deprived of all the innovation going 
on today.
    Mr. Shimkus. And I thank you.
    Thank you, Mr. Chairman. Sorry for going past.
    Mr. Whitfield. At this time, recognize the gentleman from 
New Jersey, Mr. Pallone, for 5 minutes.
    Mr. Pallone. Thank you, Mr. Chairman.
    I wanted to ask two things of Mr. Atkinson. First, you 
talked a lot about--and I wasn't here so I have to apologize, I 
had to go to the other hearing, but you talked a lot about 
increasing reliability. What has industry been doing since the 
blackout in August 2003 that, you know, went from Ohio to New 
York, to improve the reliability of the grid, and where are 
there technology gaps at this point?
    Mr. Atkinson. There has been a lot of activity since 2003. 
It was a bit of a wakeup call. You know, one of the things it 
spurred, honestly, was the creation of the GridWise Alliance. 
That is what--the reason it was formed was to, you know, move 
forward and address these things.
    Another thing this, you know, people started paying a lot 
of attention to--as you looked at the root cause of why it 
happened, was situational awareness. We as a company came out 
with a product around situational awareness, letting people 
understand what is happening with the bigger picture and not 
just in the specific numbers and charts and graphs they are 
used to looking at.
    Since that point, us and, you know, frankly, our 
competition as well, has driven that, you know, situational 
awareness through all of the technologies that they have, 
making sure, again, that there is a bigger picture look at what 
is happening in the grid, not just right in front of me, but 
the potential ripple effects as it extends out from just my 
system.
    Mr. Pallone. And then I wanted to ask you with regard to 
Super Storm Sandy, my constituents and I personally endured 
Super Storm Sandy, and could you explain--could you please 
explain whether and how we might avoid such severe and long-
lasting power outages in future extreme events? It think it was 
about 2 weeks or so that we were out of power. What is being 
done now to prepare for future extreme events like that?
    Mr. Atkinson. An awful lot is being done. You know, the--as 
the grid is being, you know, rebuilt and revamped, it is being 
hardened. New technologies are coming into play. There was a 
microgrid that was--you discussed yourself with the trains, 
making sure that they can continue to flow. Also I believe 
around Princeton there is a microgrid that has been put in 
place as well to maintain power.
    The--at the same time, there is a lot we could learn from 
each other. The GridWise Alliance, you know, joined together a 
bunch of people to discuss best practices. And just, you know, 
some people came back differently, better or worse than others. 
What are the best practices and how can utilities leverage that 
for the next event. We know these events are going to continue 
to happen, and it is minimizing their impact that we need to, 
you know, focus on.
    And then additionally, just the grid technologies continue 
to advance. You know, distribution systems that are being put 
in place today, the advanced systems, you know, they 
automatically identify a fault. You no longer have people out 
in a dicey situation, you know, looking for where the fault may 
be along miles of lines. You can identify very closely where a 
fault is. You can also do some automatic reconfiguration of the 
system to bring some people back automatically, thus minimizing 
the number of people that are, you know, experiencing the 
outage. And all this is helping things come back faster from 
the inevitable events.
    Mr. Pallone. All right, thanks.
    I wanted to move to Mr. Nahi, if I am pronouncing it right. 
There was an earlier question, again, I wasn't here, raised by 
one of my colleagues about issues relating to integration of 
solar and wind to the grid, but to the extent there are truly 
issues there, aren't they easily dealt with? Could you just 
respond to that?
    Mr. Nahi. Sure. So I think we have to acknowledge that the 
dynamics that are making solar as powerful as it is today are 
doing nothing but getting better. The cost of solar energy 
continues to decrease exponentially year on year, while at the 
same time grid electricity, utility electricity, is continuing 
to increase in price. So the--it is less a question of how we 
do it, if we do it, it is a question of how we do it, and the 
reality is that the integration, the technologies that are 
available today at the--at--for distributed generation are so 
sophisticated that not only does it make the integration 
relatively straightforward, it actually acts to strengthen the 
grid. The fact is that the old hub and spoke model that we 
currently have is inherently flawed. What we want is more 
generation of all kinds, more distributed generation, and 
associated with that brings about greater visibility, greater 
control, there is more and more we can do to leverage solar as 
an asset on the grid and increase stability if we have the 
will. The technology is here. We don't need any more. And I 
would say that it has become so sophisticated that it is 
relatively straightforward to integrate right now. With the 
appropriate policy and regulatory issues, with the right--the 
will to support it, we can easily integrate more and more 
distributed generation.
    Mr. Pallone. All right, thanks a lot.
    Thank you, Chairman.
    Mr. Whitfield. At this time, recognize the gentleman from 
Pennsylvania, Mr. Pitts, for 5 minutes.
    Mr. Pitts. Thank you, Mr. Chairman. Thank you for your 
testimony. Good to see you. Charlie Bass, the Secretary, 
welcome.
    Mr. Atkinson, please tell us a bit about your R and D 
process, how does Alstom Grid go about bringing R and D to the 
market?
    Mr. Atkinson. First and foremost, we listen to our 
customers. The--and we work on solutions that are solving, you 
know, business problems. We are constantly, and I believe all 
technology providers are constantly working towards a more 
cost-effective delivery of electricity. You know, as we look 
longer out again, I thought that we have, you know, we discuss 
a lot with the national labs and we, you know, taking a step 
back, looking even further out as to what may be happening and, 
you know, begin planning ahead, but a lot of our efforts are 
focused in the now-to-3 years, you know, things that can, you 
know, be commercial pretty quickly.
    Our R and D center is located, you know, for the globe, is 
located here in the U.S. We have, you know, we hired, you know, 
in the last 8 years we have more than doubled the number of 
advanced engineers, power system engineers, and computer 
scientists. We work mostly with Masters in PhD, you know, 
people. It is a high-end workforce, and they are sitting around 
working with customers, working to solve their problems, and 
then working to adapt what was a specific customer problem to a 
larger set of, you know, use cases across the industry, and 
that is when you come up with a full commercial product.
    We are focused on single code base and, you know, we 
created here and again for use cases in the U.S. and globally 
but, you know, making sure we have a single product pack that 
we can leverage globally.
    Mr. Pitts. Thank you.
    Mr. Christiansen, you stated that your technology is source 
agnostic architecture that helps balance the grid. What is the 
importance of being source agnostic?
    Mr. Christiansen. I think the key point is that we are a 
flexible resource that is not purely a renewable integration, 
it is an optimizer for all assets. You look at the grid itself, 
the grid needs flexibility, it needs a dynamic resource that 
can adjust to changing load, change in generation, and can do 
it quickly, and that is unrelated to the source reflected. We 
have done studies where collocated with coal, we are collocated 
with natural gas, we have been working with cases where we 
collocated with nuclear. And the value proposition for storage 
is unique that it fits into all generation resources.
    Mr. Pitts. Mr. Ivy, how do the advanced grid technologies 
being deployed by Lakeland Electric better empower consumers to 
save energy and reduce their electricity bills?
    Mr. Ivy. So we have enabled the customer information to be 
available on a customer account basis by anybody that is 
willing to get in there and look at what their consumption 
patterns are. We have also deployed shift-to-save rates. Our 
shift-to-save rate is a three-tiered rate. It is intended to 
incentivize people to go to a lower cost rate that is in an 
off-peak period of the day. We have a winter peak, oddly 
enough, in Florida, but we have a lot of northern visitors. So 
the tendency of wanting to get people to shift their 
consumption patterns from like 7 o'clock in the morning, 
everybody takes a shower, everybody turns on their heater, a 
cold morning, or two or three cold mornings in a row, and all 
of a sudden we have a winter peak that looks like this. That is 
what we have to build our system to.
    So we are actively engaged with the consumers in outreach 
groups and civic organizations, and whatnot, trying to get them 
to get a good feel for how they can use that data to their 
advantage.
    Mr. Pitts. OK. Mr. Kamen, in your testimony you noted the 
need to promote renewable energy technology while ensuring 
continued viability of the utility-based model, siting Germany 
as a cautionary tale. How do you think these 2 seemingly 
opposing objectives can be achieved?
    Mr. Kamen. Well, I think if you include all the energy 
producers and the people that handle transmission, distribution 
and retail, and included them in making these transitions to 
modern, clean, efficient technologies, first of all, a lot of 
people in the public don't want to own and operate their own 
photovoltaic farms, et cetera. They are used to having somebody 
from whom they get a bill once a month and they have reliable 
power. So if you could make small distributed generators, but 
make them compatible, for instance, with solar panels, and as 
you have heard, the technology to make instant power 
electronically is pretty good, but the big old plants can't 
respond as quickly when suddenly there is a cloud or the wind 
dies, but if those utility companies had access to distributed, 
very quick response ways to make energy so if the wind went 
away, if the cloud came by, if those batteries, even those 
great batteries go down a little, if those utilities and those 
energy suppliers are part of an integrated--that could say I am 
going to put clean, efficient, small, new stuff out there, it 
still helps them as the old guard get rid of some of their 
problems with these aging systems, right back to those big 
plants, those old transmission lines, those unreliable 
distribution, the switch gears, the transmission that the 
substations that we are hearing about being a problem during 
Sandy. So I think creating a piece of technology that could be 
put behind the meter, could be put in front of the meter, but 
giving all of the stakeholders the capability to find 
competitive ways to optimize producing energy, doing it 
cleanly, doing it effectively, everybody wins.
    Mr. Pitts. My time has expired. Thank you.
    Mr. Whitfield. At this time, recognize the gentleman from 
New York, Mr. Tonko, for 5 minutes.
    Mr. Tonko. Thank you, Mr. Chair. And welcome to our 
panelists.
    A number of you have mentioned in your testimony the 
increased role of customer involvement in the current operation 
of the grid, and the prospects for much more involvement in the 
future. Of course, this represents a significant departure from 
the mostly passive role that the average consumer plays now. 
They receive a bill and they pay it. If the power goes out, 
they call their local utility and report it. Now, consumers are 
also producing energy, and their ability to refine and manage 
their appliances and sources of energy are expanding. This is 
certainly part of what the smart grid is all about.
    You all mentioned the need for better information to go to 
consumers about their choices, and to educate them about how 
all this is going to work. How are utilities approaching this 
given phenomenon? Anyone? Yes, Mr. Siebel?
    Mr. Siebel. If we look at the utility engagement model, 
customer engagement model, it is firmly entrenched in, say, 
1950. OK, so where the primary communication is through direct 
mail and the call center. So if any of you remember Publisher's 
Clearinghouse when we grew up, that is kind of what it is like.
    Now, it is clear that consumer expectations are 
dramatically changing. You know, with Uber and Amazon and 
Google, we can do anything in 30 seconds and two clicks. And 
fundamentally, there are very few transactions that we want to 
engage in with a--with our utility. Pay a bill, question a 
bill, establish service, change service, hook up our PV array, 
whatever it may--that is about it. All of those things are very 
time-consuming and painful transactions for a consumer to 
engage with. So we are working today with Northeast Utilities, 
Exelon, Commonwealth Edison, Pacific Gas and Electric, Socal 
Edison, Anel in Italy, GDF Suez and Europe, and basically what 
is going on is applying the learnings that we have learned from 
Uber and Google and Amazon, and applying that level of 
interaction to the customer engagement problem, so a consumer 
can get--basically do anything they want to do, you know, 
within a minute and say 5 clicks.
    Mr. Tonko. Um-hum.
    Mr. Siebel. And so there is major investment going on in 
this. Much of it was driven initially by the State-mandated 
energy efficiency mandates that are coming out, I think 39 
States where they have almost $10 billion a year allocated for 
energy efficiency programs, but with, you know, fuel prices 
diminishing, those efforts are now being put to, you know, 
reinvent the customer engagement model, and we are working with 
utilities all over the world to do that.
    Mr. Tonko. Well, I agree we need to provide sufficient 
engagement of consumers early enough in the process to get good 
input from them on the frontend of program design.
    I would point out an issue we had in New York with rolling 
out smart meters. There were a significant number of consumers 
that strongly opposed having them installed because of a 
variety of concerns, including privacy. I would also point out 
that opening up the utility and the grid to a broader two-way 
conversation with customers presents both opportunities and 
problems in terms of computer security. I think with a much 
more dynamic and two-way role for the consumer and grid 
operations, we are going to need a more inclusive process to 
engage our consumers. Have any of you thoughts about what that 
might be in terms of engagement? Yes, Mr. Ivy?
    Mr. Ivy. We are actually going through the throws of that 
in Florida. The Sunshine State has sunshine laws that allows 
everything be done in the sunshine. So if you are a public 
agency like we are, for example, we are kind of beholding to 
public records requests and we are to be providing what the 
requestor is asking for. At the heart of kind of what you are 
saying with us is, there is also information that we are 
keeping hourly information on metering data, things that can 
indicate whether or not people are home or not, closer to a 
real-time basis than just the monthly consumption information 
perhaps that they could get before. So we are wanting to push 
the notion in Tallahassee that perhaps we want to close that 
down just a little bit without getting rid of peoples' ability 
to still get access to historical-type information.
    Those conversations are important. They need to be had 
because we need to make sure that we are protecting the 
consumers' information.
    Mr. Tonko. Thank you very much.
    And, Mr. Christiansen, as an advocate for renewable energy, 
I am very interested in the work your firm is doing with energy 
storage. You seem very encouraging. I feel encouraged about the 
possibilities. But the other day I heard a bit more skepticism 
about how fast this technology could evolve to make a 
significant contribution to the grid. What are the biggest 
challenges, and how quickly down the road will we see a 
meaningful energy storage outcome?
    Mr. Christiansen. So we are in the process now of deploying 
over 200 megawatts, which we will do in 2015, and that is in 
markets that have been opened by, you know, FERC Order 755, 
opened the way to some of these markets. We also have 
tremendous interest now from utilities and also international. 
I think we can do some work on the policy part and ensuring 
that storage gets cheated for the value of the--and the 
flexibility, and the speed and accuracy it provides, and that 
will help more installations come up.
    Mr. Tonko. Thank you very much.
    With that, Mr. Chair, I yield back.
    Mr. Whitfield. Gentleman yields back.
    At this time, recognize the gentleman from West Virginia, 
Mr. McKinley, for 5 minutes.
    Mr. McKinley. Thank you, Mr. Chairman.
    I thought that when we came here, the hearing was the 
ensuring a secure, reliable and modern electric system, and I 
thought by extension, we were going to be talking a lot more 
about the grid, and I have got more confused as I have heard 
all this discussion. It is much like, you know, I am an 
engineer by training and, by virtue of that, I suppose I can 
take on the lawyers in the room, because you ask 100 lawyers an 
opinion on something, you are going to get 100 different 
opinions. So I am curious, I have heard very professorial 
comments, very in-depth, your white papers that you have all 
developed about this topic, but I wonder whether or not we have 
been able to reach America with the story, because we have been 
talking about source agnostic architecture. We have even heard 
about balkanizing. We have heard about platforms, we have 
talked about polar vortexes. Mr. Kamen, you were about as close 
to talking to the American public as I have seen in this panel. 
One thing I have learned in Congress in my 4 years here, that 
we have trouble when we are confronted with more than one 
option, and I haven't heard the option. I have heard seven or 
eight different themes of where we should go, and I am really 
trying to get to a point with the grid of what is--and the 
folks on the other side, they all keep talking about consensus, 
so I will take their word. Is there a consensus of where we 
should go to develop grid reliability, because what we have not 
talked about is the public's resistance, the public doesn't 
want--``don't put that high-tension line over my property, not 
in my back yard''. We haven't talked about electromagnetic 
pulse, the threat to our grid reliability with that, because we 
know that is a serious challenge. We have talked about the fact 
that we have had briefings, I don't think I am breaching 
protocol here, but we can shut off someone else's grid in 
another country, and they can shut off our grid, because we 
have that capability. There was just some mention slightly 
about the EPA regulations and shutting down some of our 
powerhouses that when we had this polar vortex, that we are now 
leading to a point that we came within, what I was told, 700 
megawatts of having a brown-out last winter. That is really 
threatening. I don't know whether people across American 
understand, that is really just one powerhouse, 700 megawatts.
    And then the option of the age issue, I would like for you 
to just explain in terms that we don't use here in the beltway 
for Mildred Schmidt to understand, what does that have to do 
with what--tell me a little bit more about the age because we 
have waterlines and sewer lines, and buildings and roads and 
bridges that are far older than 25 years. Why should I be 
worried about electric grid--why should I be worried about the 
electric power lines being 25 years old? So with that, I would 
like to hear, is there a consensus of where we should go, where 
Congress should be putting its first priority in getting 
greater reliance or dependability, or are we just kind of 
talking abstract again? Is there a consensus? Mr. Kamen.
    Mr. Kamen. First of all, thanks for being an engineer in 
Congress.
    Mr. McKinley. It is lonely.
    Mr. Kamen. Secondly, I would continue, you know, in our 
FIRST competitions we call it coopertition. We believe that if 
you apply technologies properly, everybody can win as they 
compete because the public gets the best that way. And I think 
what you have heard from everybody is the grid is getting 
older, it is getting, for various reasons, the environment, 
terrorism, cyber attacks, and it is more fragile, and you are 
hearing a lot of people adding a lot of new technologies, but I 
would think where there is a consensus should be that you have 
to get all the people that provide the net result to the 
public, as you point out, working together so that you don't 
create an if-I-win-you-lose situation. And the energy 
providers, the transmission or the generation--for instance, 
our partner for our little box is a major generator, NRG, yet 
they are now becoming one of the biggest suppliers of solar 
panels, and working with us on these small distributed boxes. 
In one perverse way, you could say they are undermining their 
core business, but, you know, like they always say, the 
railroads went away because they thought they were in the train 
business, not the transportation business.
    And to your point, the public doesn't care about CDMA and 
TDMA and Time Division--they care about a cell phone being more 
convenience than a landline. So the public--if the public could 
have a simple appliance put into their home that already used 
infrastructure that we have great confidence in, because it is 
buried under the ground, like gas lines, like their oil, like 
their propane, and it could be made to work in parallel with 
solar and wind and the grid, because it sits at the 
intersection of all those things, somebody with an appliance 
like that would say, my costs went down because the waste heat 
from this thing is now my water system and my furnace, and I 
have more security and reliability because it is distributed, 
it is sort of like getting a back-up generator free, the people 
that run the grid and all the other systems win with it because 
it deals with transient problems, it is compatible with solar 
panels, it is compatible with batteries, it is compatible with 
the big producers.
    Mr. McKinley. My time has expired, but I just--so thank you 
for your comments. I am going to ask if you could please--I 
don't have time, we are limited to 5 minutes here, so if you 
could please each of you could--would you mind, I would like to 
hear from you what is the number one thing we should do. If you 
could write that to me, I would like----
    Mr. Kamen. Yes.
    Mr. McKinley. So that it is more direct. Instead of this 
abstract idea, let us get down to concrete where we can----
    Mr. Whitfield. And did anyone else want to briefly respond 
to that? You looked like you wanted to say something, Mr. 
Siebel.
    Mr. Siebel. Yes, sir. You have an 800-pound gorilla in the 
room here, is the cybersecurity problem. OK, now, every now and 
then, I mean and this is an opportunity where the Federal 
Government can play a role. All right, so every year or so, we 
get the word out of Washington that this is a priority. The 
fact of the matter is any hostile government, OK, any 10 smart 
engineers from UC Berkeley, OK, could bring down the grid from 
Boston to New York, you know, in 4 days. And this system is 
entirely exposed. And if you bring in the leadership from 
Homeland Security, DHS, in here to talk what they--I think what 
they will say, and what I believe, before we really do 
something about this, we are going to have the equivalent of 9/
11. There is going to be some disaster, and it is not going to 
be good, and it will come from just some bad actor or some 
kids. And then we will get serious and spend, you know, $100 
billion a year on it for, you know, 10 years and declare a war 
on whatever it is. OK, but this system is so vulnerable and so 
fragile, and there is going to be a problem and we are not 
going to be happy. And it is fixable.
    Mr. McKinley. So if you--again, when you----
    Mr. Siebel. I will personally send you a letter, sir.
    Mr. McKinley [continuing]. See it, you have that--tell me 
what is----
    Mr. Whitfield. And Mr. Patel wanted to make a comment.
    Mr. Patel. Yes. On a basic level, customers care about the 
cost of electricity and it being on when they want it. And for 
the variety of reasons we have discussed, we are at a point in 
the evolution of the grid where there are fundamentally two 
paths that utilities can go. One is to do what they have done 
in the past, which his to invest in wires and transformers, and 
poles and grid hardening, another option is to actually take a 
different path where the cost of upgrading the infrastructure 
can be lower. See, the challenge with the first path is costs 
are going to go up. That means your rates are going to go up. 
Investing in wires and poles is expensive.
    Now, with the technologies that we have all been discussing 
today, there is an opportunity for a much lower-cost path. Now, 
the question is why isn't that happening? Why are utilities not 
pursuing the lower-cost path? And from my perspective, it comes 
down to incentives. You know, the regulatory compact that has 
driven decision making at distribution utilities is not 
directly incentivizing them to take the lower-cost path. Why? 
Because it is a little bit more risky, because of, you know, 
adoption of new technology is always somewhat risky, but also 
because there isn't the direct financial incentive for them to 
adopt something lower cost. And so in my view, there needs to 
be a change on a State-by-State basis to the regulatory compact 
insomuch as it relates to how utilities invest in a capitally 
efficient way, rather than just investing in capital----
    Mr. Whitfield. Yes.
    Mr. Patel [continuing]. As has been referred to multiple 
times. And I think those incentives, once in place, the market 
and efficiency will naturally drive to an outcome that 
addresses reliability in a cost-effective way.
    Mr. Whitfield. Thank you, Mr. Patel.
    At this time, I would like to recognize the gentleman from 
Iowa, Mr. Loebsack, for 5 minutes.
    Mr. Loebsack. Thank you, Mr. Chair. Thank you for having 
this very, very critical hearing today, and thanks to all of 
you for being here. I really appreciate this very much.
    I am new on this committee, on the larger committee. I am 
new on the subcommittee, but I have been dealing with these 
issues, especially in rural Iowa, since I have been in office 
since 2007. Trying to get my head around all of this. It isn't 
all that easy, as you might imagine as well, because all of you 
are kind of coming at this from different angles and what have 
you. But, you know, clearly, the idea of the smart grid makes a 
lot of sense. The whole idea of the--of an individual sort of 
having more control over how they use energy, the amount of 
energy they use and all, I mean I get my, you know, monthly 
utility bill, it tells you sort of in a macro-sense how much I 
have used, but that is not nearly the same as being able to 
control, you know, time of day and all kinds of things much 
better than I am able to do now, so I really appreciate that. 
And I do believe in individuals taking their own responsibility 
for their decisions.
    And we see in Iowa, for example, we do see a lot of wind 
turbines, you know, at farms, and solar panels powering, you 
know, hog farms, for example. I mean there is all kinds of 
stuff like that going on around this country, and around the 24 
counties in my congressional district. It is really quite 
fascinating to see how this is all going. And the local RECs 
are kind of coming onboard more on solar, and some of these 
alternative energies as well. So it is really pretty exciting, 
and I am glad that Mr. McNerney was excited because--I am not 
quite as excited, but I am excited about all this, and sort of 
where we can go from here.
    You know, Iowa, traditionally, we were a coal State, not 
unlike parts of Illinois where Congressman Shimkus is from. 
John L. Lewis, actually, is from Iowa, long ago. But we have 
made this transition in many ways. I like to remind people that 
27.3 percent of our energy in Iowa is wind-generated. We have a 
heck of a lot of wind energy in Iowa. Now there is big 
controversy about building a transmission line across the State 
carrying, you know, energy that is not necessarily generated in 
Iowa, but in other places, over to other markets to the east of 
us. But we are really making tremendous progress when it comes 
to renewables, there is no doubt about that.
    But I do want to ask kind of a general question. Anybody 
wants to answer this. And keeping in mind that if I get--if 
that takes my time--I want to come back to you, Mr. Kamen, 
especially the German issue and some things you were talking 
about, and if I don't get to that then we will do it for the 
record, if that is OK. Thank you.
    So, you know, I am from a rural area. We have a lot of 
challenges. We have natural disasters. Aligned Energy said they 
lost 6,000 poles in February of 2007 when we had this massive 
ice storm. And I guess if you could be as specific as possible, 
how do we look at making sure that we get sufficient energy--
continue to get sufficient energy to the more rural areas in 
places like Iowa and other places? I know it is a general 
question, and it is a big challenge to answer that question, 
but I want to open that up to anyone. You are nodding, Mr. 
Kamen. I don't want to be preferential here, but you are 
nodding like you do want to answer that question.
    Mr. Kamen. Well, as I said before, the actual stimulus to 
make our little box was for the parts of the world that have no 
grid at all----
    Mr. Loebsack. Right.
    Mr. Kamen [continuing]. Because it is very compatible with 
microgrids and can be networked, especially when you put smart 
technology around to connect them, and you make them compatible 
with solar, so you reduce your fuel needs, which could be hog 
waste or other things, but I think the more you have an 
unstructured area that doesn't have a big grid already in 
place, transmission, distribution, substations, the more the 
21st century is going to start from the other end of this 
equation and start integrating local solar, local wind----
    Mr. Loebsack. Right.
    Mr. Kamen [continuing]. But you need a system to make sure 
it is there all the time. And so since most places have some 
sources of fuel, natural gas or propane or----
    Mr. Loebsack. Um-hum.
    Mr. Kamen [continuing]. Number two, and, you know, we build 
a technology that is agnostic to that, if you have a hot water 
heater or a furnace, well you have--you can make electricity. 
So I think, again, it is also a piece of hardware that the 
competitive environment will say any forward-thinking utility 
or energy generator, or transmission company or any other 
provider would say it is compatible with what they are doing, 
and it should be made part of the equation for the future.
    Mr. Loebsack. If I could just skip--I know I kind of opened 
that up to everybody, but now I am thinking in terms of 
regulatory framework, making sure that we integrate some of 
these things into, you know, the generation and provision of 
power to folks, because it was mentioned, you know, we have to 
have the right regulatory framework, right policy, right 
regulatory approach. What is that approach? I think you were 
saying--talking about that, Mr. Nahi.
    Mr. Nahi. Exactly. So I completely agree with Mr. Kamen 
that the right answer is distributor generation.
    Mr. Loebsack. Um-hum.
    Mr. Nahi. It can't be done at the expense of the grid, this 
is done in concert with the grid, but really what we need is 
more and more of all kinds of distributor generation.
    Mr. Loebsack. OK.
    Mr. Nahi. In terms of the regulatory and policy changes 
that need to be adopted for that, we have to recognize that the 
potential for an adverse relationship between the renewable 
energy companies and the utilities exist. It doesn't have to 
be.
    Mr. Loebsack. Right.
    Mr. Nahi. There are ways these companies can work together, 
there are ways that we can help the utilities adopt to a 
business model that would provide for more distributed 
generation. Right now, most of the distributed generation, not 
all but most, is done by third-party companies.
    Mr. Loebsack. Right.
    Mr. Nahi. There is no reason why the utilities themselves 
can't take a greater ownership and greater responsibility for 
putting on more of that distributed generation.
    Mr. Whitfield. Thank you.
    Mr. Loebsack. Thank you. And, Mr. Chair, thank you. And I 
am going to pursue this with you, Mr. Nahi, more after this, 
and also Mr. Kamen on the German issue, if I may. Thank you. 
Thank you.
    Mr. Latta [presiding]. Well, thank you very much. The 
gentleman yields back. And the Chair recognizes himself for 5 
minutes. And I apologize, there is another subcommittee of the 
full committee running at the same time as this, but I tell 
you, this is a very, very important issue and I really 
appreciate the testimony that you all submitted today, and also 
being here today.
    And, Mr. Siebel, if I could start with you, how do the 
kinds of energy analytics you have described help us with 
energy security and reliability?
    Mr. Siebel. Great question. So what we do when we look at 
this as a big data problem is we aggregate all the data from 
all of the operating systems in the utility, generation 
information, meter data management, customer care and billing, 
outage management, Volt/VAR, all of it into a unified data 
image in the Cloud. These can be like petabyte-sized data 
images, which are, in engineering speak, bigger than a 
breadbox. OK, and then we can correlate so that we get these, 
say, for predictive maintenance or grid reliability, or energy 
efficiency or whatever it may be, we can see in real time 
across the entire value chain from when somebody is moving a 
thermostat, to making a decision on whether we are going to 
bring on a peaker plant or change capacitates to balance Volt/
VAR. Now, over in another building, OK, in a subbasement, there 
are 13 people looking at computer screens, and they are looking 
at utilities that are provided by companies like Symantec and 
like Hewlett Packard, and whatnot, looking for virus detection 
and malware detection that are penetrating the network. And 
basically, this is a pattern recognition problem, where they 
are looking for strings that look similar to malware that they 
have seen come out of China or Syria or Korea, or whatever it 
may be. And then this person, almost like an accountant with 
green iron shade, is kind of looking at this gibberish coming 
across the screen that says this is the type of malware that is 
trying to come in from this point. The question is what do you 
do with it.
    By being on a core like that as just another data source 
with the entire grid infrastructure, you can say, what does 
this mean, what portion of the grid is impacted, what critical 
infrastructure is impacted, what is the single point of 
failure, so you can then prioritize, and so you can both 
prevent them at the perimeter and you can do something about it 
right away. And so this is where cybersecurity comes together 
with kind of big data analytics. And we have done a lot of work 
with this at the University of Illinois with--and UC Berkeley, 
The Trust Group, and it is a well-understood problem. The fact 
is there are no budgets at the utility level to deal with it, 
and this is where I think the Federal Government can do 
something to encourage investment in hardening the system.
    Mr. Latta. Well, thank you very much.
    Mr. Atkinson, and how do advanced grid technologies help 
prevent the outages and enable the grid to better withstand 
outages when they do occur, and how can the technologies 
facilitate faster outage restorations and provide utility crews 
with greater situational awareness?
    Mr. Atkinson. It comes down to situational awareness. 
Allowing people to understand what is going on with the grid at 
all levels, pushing that information out from a centralized 
room into the hands of the people in the field that are there, 
and giving them more accurate information. And the technologies 
that exist today, you can identify the location of faults to, 
you know, a very close geographic proximity, rather than it is 
somewhere in, you know, in this, you know, series of seven 
blocks. You can send people directly out to a--the fault. They 
have a knowledge of what is happening because, you know, one of 
the things we discussed is things are, you know, more 
distributed energy resources are in play, you have to be 
careful, and you have multidirectional flow of electricity that 
changes the safety environment for the line worker pretty 
dramatically, and he needs to understand what is going on, and 
there needs to be, you know, that communication about what is 
going on. The technology that exists today is allowing that, 
and it continues to get better and better.
    As far as preventing outages, you know, as you see things 
happening, you know, from the transmission system down into the 
distribution systems, you see harmonics building, you get a 
chance to adapt quickly where, you know, the faster, you know, 
talking system today. The phasor measurement units are 
providing data 100 times a second, versus once every 6 seconds. 
You are able to get an accurate dynamic picture of what is 
happening, and it gives you a chance actually to, in some 
cases, you know, and there is proof this, eliminate when an 
outage was about to happen. If an outage does happen, you are 
now working on coming back faster, and eliminating as many 
people from that outage as you can. And again, that is where 
the fault identification, automatic restoration through 
switching on the rest of the grid, brings back a portion of the 
people, leaving a subset that is still out, and again, you have 
identified it very closely where it is, giving you a better 
chance to come back quickly.
    Mr. Latta. Well, thank you very much.
    My time has expired, and the Chair recognizes the gentleman 
from Ohio, Mr. Johnson, for 5 minutes.
    Mr. Johnson. Thank you, Mr. Chairman.
    Mr. Kamen, you testified that advanced grid technologies 
offer a promising future for U.S. electric systems, but the 
immediate challenge is to develop the appropriate business 
models and regulatory structures to effectively manage the 
integration of modern technologies. Do you have any 
recommendations as to what these business models and regulatory 
structures might look like?
    Mr. Kamen. So with the caveat that I think thermodynamics 
is way easier than Government, way easier, I----
    Mr. Johnson. I would agree with that.
    Mr. Kamen [continuing]. I would give you an example from my 
practical life experience. I spent 30 years building medical 
equipment. We built some very advanced medical equipment, life 
support equipment, and as tough as the standard is to get an 
FDA approval, once you get it, you have it, and every hospital, 
whether it is Harvard or UCLA or--you know what the standard 
is, you build stuff, it gets approved and you are done.
    We just built 20 of these model systems that our partner, 
NRG, has put around the country, but pretty much not only every 
State but almost every city and every town has a different set 
of rules about how you put these in, what you are required to 
do, and how do you make them become legally part of the grid. I 
think if there was some standard that the feds could put out so 
what the FDA does for medical products, if you guys could do 
for energy products, you could encourage innovators to start 
making stuff because they know what they have to do----
    Mr. Johnson. OK.
    Mr. Kamen [continuing]. They know if they did it, it could 
be used everywhere.
    Mr. Johnson. OK. Good.
    Mr. Atkinson, your testimony suggests that the grid of the 
future will enable electrons to flow into or even multiple 
directions. Why is having flexibility in power flows 
significant, and how can advanced grid technologies facilitate 
this?
    Mr. Atkinson. In the traditional hub and spoke that was 
mentioned before, you have an outage upstream, everybody 
downstream is out. When you have multiple directional flow, you 
get a chance to re-switch your system, reconfigure your grid on 
the fly, thus allowing, you know, all or some of the people to 
be brought back up immediately and not suffer that outage.
    The technologies today, you know, they exist to do this and 
they continue to get better, and the algorithms that are 
written, you know, continue to improve and, you know, it 
continues to move forward. Again, it exists today, getting 
better into the future.
    Mr. Johnson. OK. Mr. Christiansen, how can energy storage 
help utilities and consumers ride through outages and other 
power interruptions seamlessly? I understand it, but for the 
American people I would like----
    Mr. Christiansen. I think, first of all----
    Mr. Johnson [continuing]. For them to hear from you.
    Mr. Christiansen. Yes. First of all, to piggyback on 
everybody's comments here on having a distributed network and 
really, in my creative environment but almost local balancing 
authorities, adds a lot of reliability to the system. You have 
this capacitance in the grid that is able to soak up capacity 
and quickly deliver it back when it is needed really helps you 
ride through any peak, you know, that nature. Also as a good 
blank start----
    Mr. Johnson. Sure.
    Mr. Christiansen [continuing]. Get--helps us just to get 
back up to speed again after an outage, and this is a huge 
benefit by energy storage.
    Mr. Johnson. Yes. I--as a chief information officer for a 
global publicly traded manufacturing company, I had to be 
concerned about the data center and UPSs and those kinds of 
things, to make sure that we had that steady power.
    A lot of folks don't realize in today's high-tech arena 
what a power outage, a power surge, and what those constantly 
changing power parameters do to solid state circuitry and those 
kinds of things. It wreaks havoc.
    Mr. Ivy, you state in your testimony that greater adoption 
of advance grid technologies may help create self-healing 
grids. Can you expand on this concept of a self-healing grid a 
little bit?
    Mr. Ivy. We have actually touched on this quite a bit, and 
Mr. Atkinson did a fair job of describing that I think. So if 
there is an outage somewhere in the field, like he said, in the 
original hub and spoke method, you are just out if you are 
downstream of that, or even in some area around it you are 
still out.
    We are installing in our company, and other municipalities 
and investment utilities around the country are pretty advanced 
already in the tactics of installing these high-speed switches 
that are sensing where these short-circuits are in the system, 
and they are talking to each other to try to figure out how to 
isolate it----
    Mr. Johnson. Um-hum.
    Mr. Ivy [continuing]. And then the goal is to have it just 
isolated to the smallest area that you can possibly have it in. 
So then that allows us then also to dispatch somebody straight 
to what the problem is, because normally it is lightning, it is 
trees, it is an animal, something that can be cleared up very 
quickly, we can get the lights back on very, very quickly.
    Mr. Johnson. OK, very good.
    Well, thank you, Mr. Chairman, and I yield back. Thank you, 
gentlemen.
    Mr. Whitfield. Gentleman yields back.
    At this time, recognize Mr. Mullin, the gentleman from 
Oklahoma, for 5 minutes.
    Mr. Mullin. Thank you, Mr. Chairman.
    I want to start with Mr. Ivy, and I know these two may not 
actually go together, but in practical and legal terms, which 
those are the two I am talking about, is it better for the 
development of advanced grid technology to be managed at the 
local or State levels?
    Mr. Ivy. Our preference is certainly at the local level 
because all of our systems have these unique nuances to them. I 
think somebody had brought up in Iowa, for example, their 
system is pretty sparse. They don't serve a lot of customers. 
Their needs are going to be decidedly different from mine. I am 
like a 258 square mile service area, very dense, pretty good 
population base. So the kinds of things that we need to do in 
my area are going to be decidedly different from what other 
people would want to do. And then you have the State rules that 
go along with the implementation, or not, incentives or not, 
that exist, so it can get pretty much--well, I am just going to 
say, there is no one-size-fits-all for us, and so our 
preference is to keep it as local as possible.
    Mr. Mullin. Thank you.
    Mr. Kamen, you made a point in your written testimony that 
more than 50 percent of the generating capacity in the U.S. is 
30 years old, and at 70 percent of the 280,000 miles of 
transmission line is more than 25 years old. What do you feel 
your company, as well as other companies like yours bring to 
the table in addressing this issue?
    Mr. Kamen. I think that, you know, like with a used car, 
you reach a point where it is cheaper to buy a new one than to 
keep fixing the old one. I think if you could----
    Mr. Mullin. Unless it is antique. You have to hold onto 
those.
    Mr. Kamen. OK. Agreed. I have a 1913 Model T and it is not 
for sale.
    Mr. Mullin. Wow.
    Mr. Kamen. I would tell you if the proper incentives were 
put before the people that produce the energy, transmit the 
energy, distribute the energy, supply it to the end user, if 
they had a clean piece of paper and could invest their money in 
alternatives to just fixing these things that are, as you have 
heard, more--when it is a big central power plant, 
cybersecurity is a real issue. There are only a few of them to 
take down, you heard that there are only a few plants that are 
hub and spoke, it is very hard to make them self-healing. If 
you could have thousands and thousands of small, locally 
operated and controlled units that, by the way, when there are 
thousands or for--hundreds of thousands of them, you can put 
them so close to where you need the electricity that you can 
also take their waste heat, because all of these systems make 
mostly waste heat of whatever energy they burn, but you can't 
transmit heat very far, but if you made lots of small 
distributed plants, you would sort of get as a bonus, you could 
use the waste heat in most places so it is no longer waste, it 
is what people need for their furnace, not water, you would be 
much safer against anybody taking one system down. It might 
require more sophisticated controls and interaction, but as we 
have heard, that is becoming easier and easier. So if you could 
create a system instead of taking these very, very old systems, 
which they sort of have no other choice but to keep them up and 
operating, and allow them to transition to a new alternative 
technology, they would do better.
    Mr. Mullin. What is keeping it down? What is keeping the 
companies from being able to do this? Are we the hindrance?
    Mr. Kamen. From my understanding, when I have talked to 
people that do generation, that do transmission, it is a--it 
boggles my mind, as I--I wasn't kidding when I said 
thermodynamics and engineering is easier than regulation, I 
have heard CEOs of major energy-related companies say I am not 
allowed to do transmission, I generate, or I am not allowed to 
generate, I do transmission. I can't put your box somewhere 
there. And I get a headache thinking, I think I just spoke to 
my power company who said I can do this but not do that. Well, 
my lights only come on when all of that stuff is done.
    Mr. Mullin. Does anybody else on the panel want to address 
that? What is holding the industry back?
    Voice. I sense they do, but----
    Mr. Mullin. Yes. I am the good guy, I am not going to hurt 
you, but I need. Look, I come from a business, and the only 
reason why I am here is because the biggest problem I had with 
running our company was rules that were being made up here.
    Mr. Ivy. Um-hum.
    Mr. Mullin. And so I understand it, but I need to know what 
it is that is holding you back so we can help.
    Mr. Ivy. Let us look a little bit at the macroeconomic 
piece of it. And, you know, the answer or the solution for the 
future is, and I will tell you is a combination of all the 
stuff that we have been talking about. So you have a great 
panel here.
    We--when we build a $300 million natural gas combined cycle 
generating unit, we spread the cost of that out over 25 to 40 
years maybe, and whoever is on the system at the time gets to 
help--not only do they get the benefit of it, but they get to 
help pay their share of the cost for that facility.
    I have been challenged with being a little stodgy, little 
narrow-minded in my thinking, but we are that way be design and 
I accept that almost as a pat on the back because we are that 
way by design. We don't change quickly. I am leveraged right 
now about 60 percent debt to my assets, and that is fairly 
typical for the utility business. So we still have to look at 
the long-term payout before we start looking at a rapid and 
widespread integration of these different types of technologies 
that we are hearing. That is one of my main concerns. And I 
will tell you, that is a local issue, and we are talking about 
it. We are talking about it with our city commission, about the 
need to start changing our minds about how long we should be 
amortizing that debt out like that. So it is going on but 
unfortunately, it is not going to happen really quick.
    Mr. Mullin. Thank you.
    My time is out.
    Mr. Whitfield. At this time recognize the gentleman from 
Virginia, Mr. Griffith, for 5 minutes.
    Mr. Griffith. Thank you very much. Wow, what a great panel 
you have put together, Mr. Chairman. It has really been a very 
educational morning. I have been here since the beginning, so I 
can say that you all have been very helpful in educating me. I 
happen to be one of the few members of this committee that is 
one of those evil lawyers everybody talks about, so I need lots 
of help in understanding these things. But I am concerned about 
privacy issues, and, Mr. Ivy, your company has some smart 
meters, as I understand it, and you all have an opt-out 
provision. Can you tell me what that is important to your 
customers?
    Mr. Ivy. The opt-out provision is as much not wanting to 
have a smart meter on the side of their house as it is anything 
else, frankly. So they have a standard digital meter that we 
read manually once a month. That is not very many that are 
left, and less than \1/2\ a percent of our consumers went that 
direction. I am more concerned about the hourly information 
that we can collect and maintain in our large database that we 
have. That is the part that I am looking to try to conceal, and 
if people can still get access to more historical-type 
information that they can get already before smart meters were 
available, fine. I don't have an issue with that.
    Mr. Griffith. OK. I do appreciate that. I am concerned 
about all the collection of this data and being able to predict 
with the new smart grids and so forth what the usage is going 
to be is very important, but when it comes to an individual 
house, sometimes, you know, just because we can doesn't mean we 
should. So I appreciate that perspective. I am excited--
although I am having some kind of a technical glitch here, I 
don't know whether my phone is too close or whether I am just 
electric today or something--but, Mr. Kamen, I am excited about 
the technology you are talking about with these small 
generators. So how small a facility can they be used at, and 
how big can you go?
    Mr. Kamen. Sadly, I think again, the thermodynamics limits 
this kind of technology from getting very, very big, but it can 
get pretty small. We built a few small ones for DARPA a number 
of years ago that a man could carry around base, and run it on 
any liquid fuel. The ones that we build now at NRG produce 10 
kilowatts, that is enough for a small neighborhood of houses or 
a small business----
    Mr. Griffith. All right, let us----
    Mr. Kamen [continuing]. The size of a typical home 
appliance. I----
    Mr. Griffith. Let us define that small neighborhood. I live 
on a cul-de-sac with 13 houses, do I need to be bigger?
    Mr. Kamen. OK. The average American home consumes less than 
2 kilowatts. So a 10 kilowatt unit, and I would probably put a 
cluster of three or four of them on a pad, and then they, at 
that last pad at the bottom of what used to come from all those 
things we have been talking about, distribution, switch--half--
let us say four of these on a pad would handle your 
neighborhood and would have the advantage that if one of them 
went down, with the redundancy, you have the other three would 
keep everybody happy, and at their convenience, somebody would 
fix the one that went down.
    Mr. Griffith. And as a part of that, because I was thinking 
about it when the testimony was going on earlier about the 
storms and the neighborhoods being wiped out----
    Mr. Kamen. The big advantage we have is, of course, we run 
on any fuel, and typically your neighborhood has buried lines 
in it that are bringing natural gas. You probably have buried 
tanks with heating oil or propane. Those things are way less 
susceptible to problems than wires running through all the 
trees that get taken down by ice or wind or hurricanes, and 
these boxes then are so close to where you need them that the 
rest of the system going down hundreds of miles away isn't 
going to affect you, and again, they are so close to your loads 
that you can also take their ``waste heat'' and turn it into 
your heat and hot water. It is no longer waste.
    Mr. Griffith. Well, I am hoping I have time to get back to 
waste heat, but you said it could use any fuel at--on a couple 
of occasions, but then once you said liquid fuel----
    Mr. Kamen. Or gaseous. We right now run on natural gas, 
propane, diesel fuel, gasoline. The device is actually running 
on something that looks like a burner in your hot water heater, 
which is why it doesn't make lots of noise. An engine, diesel 
cycle, Rankine cycle, auto cycle, typical--an engine has a very 
specific kind of fuel because it touches every part of the 
inside of your engine. It gets atomized, a spark comes in, 
compression come--an engine typically has a very, very 
selective appetite for fuel, but your hot water heater will 
keep water hot if there is a flame under it, and it doesn't 
really care what the fuel is. We are running a system that 
looks much more similar to your hot water heater, but we turn 
some of that energy into electricity instead of heat.
    Mr. Griffith. So if I had a big storm, and for some reason 
I lost--let us say I have natural gas, which my neighborhood 
doesn't, but let us say that we had natural gas, and some--for 
some reason we lost our natural gas, would I be able to drive 
down to the local gas station and----
    Mr. Kamen. Absolutely.
    Mr. Griffith [continuing]. Get my tank filled up?
    Mr. Kamen. Absolutely. When we were asked to fire these 
little ones up for the Department of Defense, the original deal 
they said was you have to be able to switch from one fuel to 
another with only a 2-hour cool down, shutdown and refit it. We 
said to them we don't need 2 hours, we will add a little 
gasoline to the diesel fuel, throw in a little beer and let it 
keep running, and we never even shut the engines off as we 
changed fuel.
    Mr. Griffith. I think this is exciting, and I would love to 
get to waste heat but my time is up, but I find it exciting 
from another perspective because one of the fears that some 
folks have, and I am--probably share some of that, is that if 
you get a smart grid that covers everything, and you have just 
a few big providers, that gives a lot of power to a few folks 
in the switch room. This gives power back to smaller 
communities and so forth, and I think it is very exciting 
technology.
    Thank you all so much for being here, all of you. I had 
other questions for others but I don't have time, but what a 
great panel. Thank you.
    Mr. Whitfield. Gentleman yields back.
    At this time, recognize the gentleman from Texas, Mr. 
Green, 5 minutes.
    Mr. Green. Thank you, Mr. Chairman. And I want to thank our 
panel.
    You know, we draft legislation and if it becomes law, it 
may be 30 years before we go back and visit it. And back 
yesterday, we had a hearing on oil exports, it is from the 
1970s. I know you all have a lot of good suggestions in your 
remarks about what is going to happen in the electricity market 
over the next few years in alternative fuels. I just am glad to 
hear that, you know, my generator I bought when Hurricane Ike 
was hitting Houston, Texas, in September 2008, that I may have 
another fuel source from going down and, you know, buying 
gasoline. And the problem is we haven't needed that generator 
for 7 years, but--so I have to start it up every 30 days to 
make sure it doesn't foul up when we need it.
    I know that sometimes you are all over the board though on 
envisioning what may happen with industrial and consumer 
demand. I know the testimony, and we have seen it, 
efficiencies, that is part of--should be part of what we do, 
but at least in my area, and I have east Harris County, we have 
refineries and chemical plants, they are always looking for 
ways that they can efficiently run those plants and, you know, 
as cheap as they can. And some of them probably have cut their 
fuel requirements over the years because the cogeneration and 
lots of things, in fact, I don't think we have a chemical plant 
that doesn't have a cogen facility, but do you expect 
industrial and consumer demand to increase over the new few 
years? We can't save our way out of the power.
    Mr. Ivy. If I can jump in. I assume you are talking about 
retail customer consumption, industrial consumer demand. What 
we are seeing all across our industry is kind of a suppression 
of demand increase on us. So on a per unit basis, let us say, 
households, for example, they are not consuming even though 
they have as many appliances as they have ever had. They have 
much more energy-efficient appliances. And we are seeing a 
little bit of that on the industrial sector as well. We are 
going to see a--I will caveat this, based on the cost of 
energy, we could see an increase in industrial demand based on 
industrial growth, able to add new processes to their 
facilities and whatnot, and I think that is very important 
while we continue to keep our eye on what the price that we are 
giving them is, because that signals what they are going to be 
doing. That is going to be probably where the main amount of 
growth in electricity consumption comes from, in my opinion.
    Mr. Green. Anyone else?
    Mr. Patel. Well, I think there are certain parts of the 
country that are seeing load growth because of electric 
vehicles. That is obviously very small as a percentage of load 
growth right now, but that is occurring, and I think that 
depending on the price evolution of electric vehicles, we could 
see a rapid adoption of that. But I would also say there is 
something that is actually keeping or containing the growth on 
the electrical demand side, and that is the fact that, it goes 
back again to our regulatory compact since 1935 which, in 
effect, utilities are constrained to operate at one point in 
the customer's demand curve. And it is actually multiple points 
depending on whether you are a, you know, industrial or 
commercial customer, but there are relatively few points on the 
customer's demand curve that utilities are constrained to 
operate on. If we were imagined to say allow the utility to 
address different customer demands, but also at different price 
points, now the total opportunity to the electrical--to the 
electric delivery ecosystem as a whole actually can increase. 
And there are some prime examples of where there is a need to 
do this. In storm--particularly storm-prone areas, there are 
cases where there is a demographic living in those areas that 
are actually willing to pay more for electrical service should 
it be recovered more quickly. Now, the utilities are currently 
constrained to offer a price of electricity in that area and 
other areas in their service territory that is the same, yet 
there is demand that goes unfulfilled because of this fact. And 
so if you were to enable utilities to operate at multiple 
points and address--diversify demand from the customer, you can 
actually now increase the total size----
    Mr. Green. I only have 5 minutes, so appreciate it.
    One of the issues though, and I understand where you are 
coming from on that, but--is infrastructure. For example, we 
have--Texas has grown--wind power--predominantly in west Texas, 
but also on the Gulf Coast. Gulf Coast it is much easier to do 
transmission to the urban areas, San Antonio, Austin, Dallas, 
Fort Worth, whereas west Texas, the ratepayers in Texas to get 
that spending $5 billion for the transmission. And we are--of 
course, we have a competitive market in ERCOT that--and we are 
very proud of that. In fact, whether you are democrat or 
republican for Texas, we barred our ability--although ERCOT has 
gone through some tough times, but I think they are back on 
their feet now, they are much better.
    Mr. Ivy, in the sector--the new transmission lines, we--
should we be concerned with building more of these intrastate 
in eastern Texas or interstate?
    Mr. Ivy. As renewable energy gets to be much more prolific 
in our industry, our ability to offload the variability is a 
way to help manage the system reliability. If any one of us 
believes that we are going to get up to 30, 40, 50 percent 
penetration and manage it all on our own, we are not drinking 
the right Kool-Aid. So I think it is very important that we 
start looking at--in Texas' case, that is almost blasphemy to 
say that you are going to build transmission outside the State 
like that, but you may well get to the point where that needs 
to be the thing that you do just to be able to help manage the 
variability, but still facilitate----
    Mr. Green. Mr. Chairman, I appreciate it, and I know I am 
out of time, but in Texas we don't mind selling it to you, we 
just don't want you to take it from us.
    Mr. Whitfield. Thank you.
    And at this time, I recognize the gentlelady from North 
Carolina, Mrs. Ellmers, for 5 minutes.
    Mrs. Ellmers. Thank you so much to my colleague, and thank 
you for this panel. This is awesome. And, Ranking Member 
McNerney, I don't know if he had mentioned, because I had to 
step out, that we co-chair the Grid Innovation Caucus together, 
and we are very, very excited and energized, no pun intended, 
on this issue and all of the significance of it.
    And, Mr. Kamen, I can't agree with you more, when it comes 
to thermodynamics and then when you are talking about what we 
do here, it makes absolutely no sense. You are talking about 
logic and facts, and unfortunately, many times those things do 
not fit into what we do here, unfortunately. So, you know, it 
is so funny, I have my list of questions and I have changed up, 
you know, as I am listening to the conversation because I want 
to ask everything and, obviously, I can't.
    I do want to get to the question of the hurdles that are in 
place, that are standing in the way of us moving forward with 
more of the grid innovation, and how do we pay for this, what 
do we do, how can we do a better job as legislators just being 
able to tell your story and the advancements that can happen. 
You know, I just believe that when we are talking about energy, 
and long-term energy policy for our future of this country, we 
have the grid technology as a part of that conversation. It is 
just so vital to our future.
    You know, Mr. Atkinson, I just want to go back to the 
conversation we have been having about the, you know, how we 
incorporate analytics into everything that we are doing, and 
obviously, that is a big part. As far as your ability to 
improve the way you forecast how energy will be used into the 
future, and the supply that is needed, are your companies 
incorporating these things, do you have that capability, and 
are there metrics in place now where we can start measuring the 
efficiencies and the improvements?
    Mr. Atkinson. Yes, we do those things. The--we do, you 
know, multiple levels of load forecasting----
    Mrs. Ellmers. Um-hum.
    Mr. Atkinson [continuing]. Or help utilities do multiple 
levels of load forecasting. We have the technology that allows 
them, you know, short-term, medium-term, long-term, based on 
lots of factors, lots of variability, historical patterns, 
weather patterns, existing weather, you know, in the near-term, 
you know, projected weather in the far-term. That is, of 
course, only a small piece of data analytics.
    Mrs. Ellmers. Um-hum.
    Mr. Atkinson [continuing]. But it, you know, it is a pretty 
major piece for the utilities because, you know, as we have 
talked about here today, you know, there is a lot of assets on 
the grid and they are incredible assets. A lot of them are very 
big and move slowly.
    Mrs. Ellmers. Um-hum.
    Mr. Atkinson. You know, what Mr. Kamen is talking about----
    Mrs. Ellmers. Um-hum.
    Mr. Atkinson [continuing]. Are some smaller and more nimble 
assets.
    Mrs. Ellmers. Um-hum.
    Mr. Atkinson. And, you know, again, you need kind of an 
all-the-above though. Everything needs to be considered, 
everything needs to be integrated, and the more accurate you 
are in what you do, you can balance those different assets and, 
you know, the intermittency with the other renewable assets as 
well, you know, be it wind, solar, storage.
    Mrs. Ellmers. Um-hum.
    Mr. Atkinson. Storage----
    Mrs. Ellmers. Um-hum.
    Mr. Atkinson [continuing]. Is a big piece of what we are 
also talking about as well. So again, it is a little bit of an 
all-the-above. We have the analytics today to do this kind of 
forecasting. We have the technology that also integrates, you 
know, the control systems, as it were, of all the different 
types of technologies, understands what they are doing, and is 
able to present a simple view of that to the operators in the 
control room, to the utilities who are on the frontlines----
    Mrs. Ellmers. Um-hum.
    Mr. Atkinson [continuing]. Of, you know, making sure that 
we all have electricity at the flip of a switch. That is what 
we want.
    Mrs. Ellmers. Yes. And, Mr. Christiansen, you--I can see 
that you want to comment on that as well.
    Mr. Christiansen. Yes, and I guess the--my comment goes out 
to the type of data that we use----
    Mrs. Ellmers. Um-hum.
    Mr. Christiansen [continuing]. When we typically use these 
analyses, something that Alevo does as well. We try to--we do 
base systems to evaluate the proposition of what storage 
brings. And it goes back to Mr. Siebel's comment that, you 
know, the amount of data that we need to really optimize the 
grid is tremendous, and when we look at average data of just 
typically what is available today as an average heat grid for 
the year----
    Mrs. Ellmers. Um-hum.
    Mr. Christiansen [continuing]. It really--when we look at 
the variability and the granulidity we need for the grid today, 
it is just not enough data to make the----
    Mrs. Ellmers. Um-hum.
    Mr. Christiansen [continuing]. Choices or to look at the 
value proposition.
    Mrs. Ellmers. Um-hum.
    Mr. Christiansen. So really, it goes down to collecting, 
you know, down to sub-hourly data----
    Mrs. Ellmers. Um-hum.
    Mr. Christiansen [continuing]. Regarding automation--
    Mrs. Ellmers. Um-hum.
    Mr. Christiansen [continuing]. That type of data.
    Mrs. Ellmers. One of the things that I have learned over 
time is for my rural electric co-ops, the importance of the 
smart meters for consumers and how they have been able to 
really have that dynamic relationship with their providers, so 
that they can actually control cost. So I would just like to 
add to that in my 5 seconds left. Thank you on behalf of the 
customers of our rural electric co-ops because you are 
providing for them the--this vital piece so that they can 
actually be doing a better job in their costs every day. So 
thank you. And thank you to the panel. You guys are awesome.
    Mr. Whitfield. Well, thank you.
    That concludes today's hearing, and I want to thank each 
and every one of you for joining us today, for your testimony, 
for responding to our questions. And we look forward to working 
with you as we move forward, and it is going to take the 
efforts of all of us, of course, to be successful.
    And I will keep the record open for 10 days for any 
additional materials.
    And with that, the hearing is concluded.
    [Whereupon, at 12:38 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                 Prepared statement of Hon. Fred Upton

    America is currently enjoying an energy renaissance, and we 
are all better for it. But this resurgence is not limited to 
just oil and natural gas. In fact, the nation that created the 
modern electricity system is poised to reinvent it, bringing 
with it the potential benefits to both electricity producers 
and consumers all the while helping to keep the American 
economy competitive in the decades ahead.
    Utilities are spending billions of dollars each year 
modernizing the grid and making it smarter. These jobcreating 
technology and infrastructure projects are an integral part of 
our architecture of abundance, and will give us an electricity 
system that can better serve the current and future needs of 
users--from homeowners to small businesses to major 
manufacturers.
    Our potential is exciting. The same information technology 
revolution we have seen in our smart phones and in many new 
business models can be applied to create an electricity system 
that is more secure, reliable, efficient, integrated, and 
responsive to user needs.
    Old problems like power outages will be addressed as a 
smarter grid can substantially reduce the number and duration 
of blackouts. At the same time, new opportunities are emerging, 
such as electricity storage breakthroughs that can improve 
efficiency and allow for greater diversity of supply, and 
better communications between each link in the electricity 
chain to further drive efficiencies.
    And greater transparency and new technologies increasingly 
allow consumers and businesses to have more control over their 
electricity use. For homeowners in Michigan and across the 
country, that means help where it matters most--the bottom line 
with lower electric bills. And for businesses, that means less 
spending on energy and more available for hiring. Lower bills 
and more jobs--the future is certainly bright.
    But with new technologies come new challenges. Just as data 
theft is a crime that previous generations didn't have to worry 
about, a digitally connected grid is subject to new forms of 
manipulation by bad actors. We need to protect both the grid 
and consumers from cyber threats and other risks. The good news 
is that the same advances that make these threats possible are 
also capable of addressing them.
    Of course, Congress must decide the proper role of 
Government in these changes to the electricity system. New 
mandates and subsidies are not the answer. But we do need to 
identify and address regulatory barriers to entry, market-
distorting incentives, and artificial constraints on 
competition that will be critical to further innovation.
    Although the age of electricity is well into its second 
century, the pace of innovation is as rapid as ever. Federal 
energy policy needs to adapt in order to ensure that these 
advances can continue.

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