[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
DISCUSSION DRAFT ADDRESSING ENERGY
RELIABILITY AND SECURITY
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY AND POWER
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
MAY 19, 2015
__________
Serial No. 114-44
[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
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Page
Hon. Ed Whitfield, a Representative in Congress from the
Commonwealth of Kentucky, opening statement.................... 1
Prepared statement........................................... 3
Hon. Jerry McNerney, a Representative in Congress from the State
of California, prepared statement.............................. 3
Hon. Bobby L. Rush, a Representative in Congress from the State
of Illinois, opening statement................................. 37
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, prepared statement................................... 173
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, prepared statement........................ 174
Witnesses
Michael Bardee, Director, Office of Electric Reliability, Federal
Energy Regulatory Commission................................... 5
Prepared statement........................................... 7
Gerry W. Cauley, President and Chief Executive Officer, North
American Electric Reliability Corporation...................... 18
Prepared statement........................................... 20
Answers to submitted questions............................... 193
Thomas A. Fanning, Chairman, President, and Chief Executive
Officer, Southern Company...................................... 57
Prepared statement........................................... 60
Elinor Haider, Vice President, Market Development, Veolia Energy
North America, on behalf of the Alliance for Industrial
Efficiency..................................................... 78
Prepared statement........................................... 80
Joseph Dominguez, Executive Vice President, Governmental and
Regulatory Affairs and Public Policy, Exelon Corporation....... 90
Prepared statement........................................... 92
Michael Bergey, President and Chief Executive Officer, Bergey
Windpower Company, on behalf of the Distributed Wind Energy
Association.................................................... 103
Prepared statement........................................... 105
John N. Moore, Senior Attorney, Natural Resources Defense Council 111
Prepared statement........................................... 113
John Di Stasio, President, Large Public Power Council............ 129
Prepared statement........................................... 131
Emily Heitman, Vice President and General Manager, Commercial
Operations for Medium and Large Power Transformers in North
America, ABB, Inc., on behalf of the National Electrical
Manufacturers Association...................................... 137
Prepared statement........................................... 139
Elgie Holstein, Senior Director for Strategic Planning,
Environmental Defense Fund..................................... 151
Prepared statement........................................... 153
Submitted Material
Discussion draft, Title I: Modernizing and Protecting
Infrastructure--Energy Reliability and Security, \1\ submitted
by Mr. Whitfield
Letter of May 18, 2015, from Susan N. Kelly, President and Chief
Executive Officer, American Public Powers Association, et al.,
to Mr. Whitfield, submitted by Mr. Whitfield................... 176
Letter of May 18, 2015, from Phyllis Cuttino, Director, Clean
Energy Initiative, The Pew Charitable Trusts, to Mr. Whitfield
and Mr. Rush, submitted by Mr. Whitfield....................... 178
Statement of May 19, 2015, American Public Power Association,
submitted by Mr. Whitfield..................................... 180
----------
\1\ The information has been retained in committee files and also is
available at http://docs.house.gov/meetings/IF/IF03/20150519/103477/
BILLS-114pih-DiscussionDraftonTitleI-EnergyReliabilityandSecurity.pdf.
DISCUSSION DRAFT ADDRESSING ENERGY RELIABILITY AND SECURITY
----------
TUESDAY, MAY 19, 2015
House of Representatives,
Subcommittee on Energy and Power,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:00 a.m., in
room 2123 of the Rayburn House Office Building, Hon. Ed
Whitfield (chairman of the subcommittee) presiding.
Members present: Representatives Whitfield, Olson, Barton,
Shimkus, Pitts, Latta, Harper, McKinley, Kinzinger, Griffith,
Johnson, Long, Ellmers, Flores, Mullin, Hudson, Upton (ex
officio), Rush, McNerney, Tonko, Engel, Green, Doyle, Sarbanes,
and Loebsack.
Staff present: Nick Abraham, Legislative Associate, Energy
and Power; Gary Andres, Staff Director; Charlotte Baker, Deputy
Communications Director; Will Batson, Legislative Clerk;
Allison Busbee, Policy Coordinator, Energy and Power; Patrick
Currier, Senior Counsel, Energy and Power; A.T. Johnson, Senior
Policy Advisor, Energy and Power; Tom Hassenboehler, Chief
Counsel, Energy and Power; Michael Goo, Democratic Chief
Counsel, Energy and Environment; Caitlin Haberman, Democratic
Professional Staff Member; and Rick Kessler, Democratic Senior
Advisor and Staff Director, Energy and Environment.
Mr. Whitfield. It is 10 o'clock, and so I would like to
call this hearing to order.
Today, we are going to continue our discussion on our
discussion draft, and the subject matter today is energy
reliability and security. And we are going to have 2 panels of
witnesses, and I will get to the specific introduction of the
panels in just a moment, but at this time, I would like to
recognize myself for a 5-minute opening statement.
OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF KENTUCKY
The American people, throughout its history, have had a
goal of having affordable, abundant, and reliable electricity,
and we have been pretty successful at that. And today, we have
an abundance of fuel. Unfortunately, electricity rates are
continuing to go up, and electric reliability faces a number of
challenges, both new and old. The rapid retirement of coal-
fired generation, due in part to aggressive EPA regulations,
means that this reliable source of base load generation is
being lost at a rate that is faster than it can be replaced. At
the same time, mandates and incentives for renewable power have
led to growth in sources like wind, but these energy sources
pose great intermittency issues. And, as we learned at last
week's hearing, hydropower and natural gas face significant
permitting hurdles. Altogether, the Nation's electric grid,
though still the best in the world, is aging and in need of
extensive modernization.
The security of our electricity supply is also at risk. No
one seriously doubts that there are those who wish to do
America harm, and that includes the threat of physical or
cyberattacks on our electricity system.
At our March hearing on 21st century electricity, we
learned that as the grid becomes more reliant on information
technology and digital communications devices, thousands of new
grid access points are created, potentially increasing the
avenues for outside attacks. And while these new threats need
to be addressed, we can't forget about the old ones such as
damage from severe weather, especially now that the ability of
utilities to respond to emergencies is complicated by the
growing list of environmental regulations. But where there is a
challenge, there is also opportunity. Over the next decade
alone, utilities plan to invest more than $60 billion in
transmission infrastructure through 2024 to modernize the grid.
That is a lot of private sector jobs. And the application of
the information revolution to the electric grid holds the
potential for more efficient and cost-effective delivery and
use of power, which will help homeowners as well as businesses.
And we must not forget that we are in a global marketplace, and
we are competing with nations around the world to produce jobs.
This discussion draft contains a number of measures to
strengthen reliability and security and prepare the grid for
the future. This includes provisions to resolve potential
conflicts between grid reliability and environmental
regulations, and to improve emergency preparedness and
response. It requires a Department of Energy plan regarding the
creation of a Strategic Transformer Reserve, and also
establishes a volunteer program to harden the grid against
cybersecurity threats. Other measures encourage State public
utility commission and utilities to improve grid resilience and
promote investments in energy analytics technology to increase
efficiencies and lower the cost for ratepayers, while
strengthening reliability and security. The discussion draft
also requires FERC to work with each RTO to encourage a diverse
generation portfolio, long-term reliability and price certainty
for customers, and enhanced performance assurance during peak
periods.
So we are really excited about this discussion draft, and
our opportunity to pass this legislation to improve the
conditions of our electricity in America.\1\
---------------------------------------------------------------------------
\1\ The discussion draft has been retained in committee files and
also is available at http://docs.house.gov/meetings/IF/IF03/20150519/
103477/BILLS-114pih-DiscussionDraftonTitleI-
EnergyReliabilityandSecurity.pdf.
---------------------------------------------------------------------------
[The prepared statement of Mr. Whitfield follows:]
Prepared statement of Hon. Ed Whitfield
This subcommittee has devoted considerable attention to the
issue of electricity affordability, and for good reason given
that electric bills are on the rise and that new regulations
threaten continued increases in the years ahead. Today, we will
focus on something equally important to electricity costs, and
that's electricity reliability and security. We have introduced
a discussion draft on the subject that we plan to include in
our bipartisan energy bill. The draft contains ideas designed
to ensure that the lights stay on in the decades to come. I
thank our witnesses and in particular the Federal Energy
Regulatory Commission and the North American Electric
Reliability Corporation for their expertise and their vigilance
on reliability and security concerns.
Electricity reliability faces a number of challenges, both
new and old. The rapid retirement of coal-fired generation due
in part to aggressive EPA regulations means that this reliable
source of base load generation is being lost at a rate that is
faster than it can be replaced. At the same time, mandates and
incentives for renewable power have led to growth in sources
like wind, but these energy sources pose great intermittency
issues. And, as we learned at last week's hearing, hydropower
and natural gas face significant permitting hurdles.
Altogether, the Nation's electric grid, though still the best
in the world, is aging and in need of extensive modernization.
The security of our electricity supply is also at risk. No
one seriously doubts that there are those who wish to do
America harm, and that includes the threat of physical or
cyberattacks on our electricity system. At our March hearing on
21st century electricity, we learned that as the grid becomes
more reliant on information technology and digital
communications devices, thousands of new grid access points are
created, potentially increasing the avenues for outside
attacks.
And while these new threats need to be addressed, we can't
forget about the old ones such as damage from severe weather,
especially now that the ability of utilities to respond to
emergencies is complicated by the growing list of environmental
regulations.
But where there is challenge there is also opportunity.
Over the next decade alone, utilities plan to invest more than
$60 billion in transmission infrastructure through 2024 to
modernize the grid. That's a lot of private sector jobs. And
the application of the information revolution to the electric
grid holds the potential for more efficient and cost-effective
delivery and use of power, which will help homeowners as well
as businesses.
The discussion draft contains a number of measures to
strengthen reliability and security and prepare the grid for
the future. This includes provisions to resolve potential
conflicts between grid reliability and environmental
regulations, and to improve emergency preparedness and
response. It requires a Department of Energy plan regarding the
creation of a Strategic Transformer Reserve, and also
establishes a voluntary program to harden the grid against
cybersecurity threats.
Other measures encourage State public utility commissions
and utilities to improve grid resilience and promote
investments in energy analytics technology to increase
efficiencies and lower costs for ratepayers while strengthening
reliability and security. The discussion draft also requires
FERC to work with each regional transmission organization to
encourage a diverse generation portfolio, long-term reliability
and price certainty for customers, and enhanced performance
assurance during peak periods.
America was the first nation to electrify, and overall our
system of generating and delivering power remains the best in
the world. But to stay that way in the years ahead we need to
better address existing and emerging threats, and I believe the
ideas in this discussion draft are a good start.
Mr. Whitfield. And I will yield back the balance of my
time, and I recognize the gentleman from California, Mr.
McNerney, for a 5-minute opening statement.
OPENING STATEMENT OF HON. JERRY MCNERNEY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. McNerney. Thank you, Mr. Chairman. I just wanted to let
the subcommittee know that the ranking member's plane has been
delayed, so he will be here later this morning.
I had a chance to review the discussion draft. I think
there are some very good provisions in it. We clearly need to
look at our electrical infrastructure, our security, the
reliability of it, can we meet the demands of the 21st century.
And there is a lot of good opportunity and technology out there
to help us get there, and we want to make sure that we put the
right incentives in place, and that we give a roadmap that
makes sense.
One or two of the provisions in--one or two of the sections
I think are problematic; we need to discuss those in some
detail, but by and large, the proposed bill looks favorable.
And I am going to work with the ranking member to make sure
that we have something that we can all agree on.
So with that, I am going to yield back. Anyone else on our
side needs to--would like to--I would like to recognize the
gentleman from Texas.
Mr. Green. Thank you, Mr. Chairman, and I will use all my 5
minutes for questions.
But Section 1201 resolves an issue in the Federal law
between reliability and environmental protection, and that is
one of the issues that we have worked on on a bipartisan basis.
I am pleased that it includes issues that both my good friends,
Congressman Pete Olson and Mike Doyle, and I have worked on,
and the legislation resolves conflicts in Federal law that puts
reliability and environmental protections at odds with each
other. And I have said many times, the choice doesn't have to
be either/or; it can be both, and we demonstrate it in this
language.
And with that, I appreciate the Chair including that, and I
will have some questions when I get my 5 minutes.
Thank you, and I will yield back.
Mr. McNerney. Mr. Chairman, I yield back the remainder of
my time.
Mr. Whitfield. Thank you very much.
Is there anyone else on our side that would like to make a
statement? OK.
When Mr. Rush comes in we will give him an opportunity to
make a statement at that time, if he has one.
So now we can proceed to our first panel. We are delighted
to have on our first panel Mr. Michael Bardee, who is the
Director of the Office of Electric Reliability over at FERC.
And, Mr. Bardee, thanks very much for being with us today. We
also have Mr. Gerry Cauley, who is the president and CEO of the
North American Electric Reliability Corporation. Thank both of
you gentlemen for being with us. We appreciate your expertise,
and we look forward to your comments on this discussion draft,
and look forward to working with you as we move forward.
So, Mr. Bardee, I will recognize you for a 5-minute opening
statement.
STATEMENTS OF MICHAEL BARDEE, DIRECTOR, OFFICE OF ELECTRIC
RELIABILITY, FEDERAL ENERGY REGULATORY COMMISSION; AND GERRY W.
CAULEY, PRESIDENT AND CHIEF EXECUTIVE OFFICER, NORTH AMERICAN
ELECTRIC RELIABILITY CORPORATION
STATEMENT OF MICHAEL BARDEE
Mr. Bardee. Thank you, Chairman Whitfield, and members of
the subcommittee. Thank you for inviting me to appear before
you today. I am here today as a commission staff witness, and
my remarks do not necessarily represent the views of the
commission or any individual commissioner.
Section 1201 of the discussion draft seeks to resolve
conflicts between the requirements of Federal Power Act Section
202(c) and environmental laws. I support the concept in Section
1201. Operating a power plant in compliance with Section 202(c)
should not cause a violation of environmental laws.
Section 1202 of the discussion draft would require the
commission, in coordination with NERC, to perform reliability
analyses of major rules proposed or issued by other Federal
agencies if they may impact an electric generating unit, and
have an annual effect on the economy of $1 billion or more. The
number and type of rules that might be subject to this section
is unclear; thus, it is difficult for me to foresee the
ramifications of this section. Also, the commission has the
expertise to evaluate these type of analyses, but generally has
not maintained the tools and data to perform such analyses
itself on the proposed timelines. If Congress gives the
commission this responsibility, Section 1202 should be
clarified so that planning authorities must timely conduct and
provide the analyses and information requested by the
commission. In this way, Section 1202 would rely primarily on
their existing processes for identifying and addressing
reliability issues, while allowing the commission to ensure
consistent, objective analyses of these rules.
Section 1204 of the discussion draft would allow the
Department of Energy, in certain circumstances, to require
actions to address grid security emergencies. The commission
has approved standards for cybersecurity, physical security,
and geomagnetic disturbances. Last week, the commission
proposed to approve, but required changes to, an additional
standard for GMD events. Section 1204 would address concerns
that the current processes for developing standards are too
slow, too open, and too unpredictable for emergencies. But
while Section 1204 authorizes requirements to protect against
imminent danger, it should be clarified to also address
restoration of grid reliability after an unforeseen attack or
event.
Section 1208 would require the commission to direct each
RTO and ISO with a capacity market or comparable market to
demonstrate how it meets certain requirements. The requirements
include integrated system planning practices, such as having a
diverse generation portfolio and stable pricing for customers.
In general, the commission prefers to rely on competitive
forces when reasonable, but recognizes that traditional
regulatory approaches are sometimes needed in wholesale
electricity markets. Section 1208 takes a different approach
and would impose on RTO and ISO capacity markets a broad
overlay of traditional regulatory requirements. This approach
may reduce the potential for these markets to provide consumers
with the benefits achievable through competitive forces, and
may cause unnecessary conflicts between Federal and State
regulatory efforts. It would be preferable to not codify such
an approach, and instead, allow the commission to adapt market
rules over time with the goal of maximizing competitive forces.
In conclusion, thank you again for inviting me to testify
today. I would be happy to answer any questions you may have.
[The prepared statement of Mr. Bardee follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Thank you very much.
Mr. Cauley, you are recognized for 5 minutes.
STATEMENT OF GERRY W. CAULEY
Mr. Cauley. Thank you, Chairman Whitfield, and good morning
to the members of the committee.
I am very pleased to be here today to testify concerning
the energy reliability and security discussion draft. My name
is Gerry Cauley, and I am the president and CEO of the North
American Electric Reliability Corporation. I have dedicated the
last 35 years of my career to the reliability and security of
the power grid, and at this point, I can say there has never
been a time where I have been more concerned about reliability
and security than today.
The threat of cyber and physical attacks on the grid by
nation-state terrorist groups and criminal actors is at an all-
time high. I believe the first line of defense in securing the
grid is robust information-sharing regarding threats and
vulnerabilities. Any one entity, public or private, cannot see
a complete picture of all security threats and activities.
Unfettered sharing of information among entities responsible
for protecting the grid, both industry and Government, helps us
better understand how to protect the grid. However, sensitive
grid security information must be effectively safeguarded from
public disclosure that could allow information to fall into our
adversaries' hands.
I am also concerned about potential future risk to
reliability and adequacy of power supplies that might be
introduced by Government regulations and rules that cause a
dramatic transformation in how we produce electricity for our
customers. As suggested in the draft, such rules should be
subject to rigorous electrical and market analysis to avoid
unnecessary risks to future reliability and adequacy of
electricity supply. As noted in a recent NERC report, it can
take many years to build transmission lines and gas
infrastructure to safely accommodate a large transformation of
our power generation supply.
I also appreciate the recognition in the draft language
regarding the role of the Nation's Electric Reliability
Organization. As the ERO, NERC assures the reliability of power
system through mandatory standards, rigorous compliance
monitoring and enforcement, and reliability assessments. We
also operate the Electricity Sector Information Sharing and
Analysis Center, and conduct continent-wide security exercises.
NERC appreciates the recognition in the draft language of the
ERO's important role in security and reliability assessments.
In the remainder of my time, I would like to touch on a few
specific points within the draft language with regard to
Section 1202 on reliability analysis of major rules. NERC has
been conducting grid reliability assessments for 45 years, and
we are expert at it. We perform annual long-term assessments,
as well as assessments of emerging issues, such as impacts of
environmental regulations, integration of renewable resources,
interdependencies with natural gas, and geomagnetic
disturbances. The bill's reliability analysis section
identifies a role for FERC in coordination with the ERO to
conduct an independent reliability analysis and propose new
rules. And we have three comments on this section. Essentially,
we support the proposal. NERC would be pleased to work with
FERC on reliability analysis of proposed new rules that propose
potential challenges to resource adequacy or reliability.
And agreeing with my colleague's comments, second point,
the language triggering a reliability review for any major rule
that may impact even a single electric generating unit could
sweep in a larger than necessary number of reviews. And we
would suggest broader criteria focusing only on the most
important significant proposed rules would be more practical.
And finally, we would be more--we think it would be helpful
to have a bit more time than the 90-day and 120-day proposals
for the analysis.
Referring to Section 1204 on grid security, with regard to
emergency authority language, NERC is supportive of legislation
clarifying Federal Government authority during grid
emergencies. Specifically, we appreciate being part of the DOE
consultation process when considering emergency orders that is
contemplated in the draft. With regard to information-sharing,
NERC supports the intent of the draft language to promote
robust sharing of security information, and the safeguarding of
sensitive information. However, a significant amount of
information-sharing already exists, and should be allowed to
continue. Our cybersecurity standards require reporting of
certain cyberthreats and incidents. Our ES-ISAC provides a
venue for sharing a voluntary cyber and physical security
information across the entire electricity sector. It is
important to provide key protection sought by the draft for
critical electric infrastructure information, including Federal
and State FOIA exemptions, the language proposing FERC
regulations governing and handling nondisclosure of CEII could
be helpful.
Finally, the draft does not address incentives and
protections for sharing of critical cyber and physical security
threats and vulnerabilities that are outside the bounds of
CEII.
I look forward to your questions. Thank you.
[The prepared statement of Mr. Cauley follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Thanks, Mr. Cauley. We appreciate the
testimony of both of you.
And at this time, I recognize myself for 5 minutes of
questions.
I think all of us acknowledge that the electricity industry
today faces a great deal of uncertainty, and the decisions that
this Congress makes with bills like what we are trying to put
together at this time are going to have a great impact going
forward in the future. And I hope that we can make the right
decision because the American people deserve it, and we want to
be competitive in the global marketplace. And one of the real
frustrating things for me personally has been how aggressive
EPA has been, and they are focused on a clean environment,
which is vitally important, but one of the areas that has
bothered me and many others is that EPA seems to have been
trying to take a lead in making a decision that reliability is
not going to be affected in a meaningful way by any of these
regulations. And we know that EPA has been more prolific in
this administration than any time in recent memory, and those
regulations are going to have a dramatic impact. And that is
why we see so many lawsuits being filed, we are not sure what
final rules are going to be coming out, so we have a lot of
uncertainty.
But Section 1202 is designed to help address this
reliability issue. And I was reading a statement just this
morning from one of our witnesses, and he said that 1202, that
this provision is unnecessary because FERC jurisdictional grid
regions already are required to assess the impacts of
environmental standards on grid operations.
So I would ask you two gentlemen if you would respond to
that. I mean do you see some real advantage in having our
Section 1202, or do you believe that maybe this witness is
correct?
Mr. Bardee. Chairman Whitfield, I would say that there is a
fair amount of work done by the industry on these types of
issues now through entities like NERC, through its regional
entities, through the utilities. Whether Section 1202 is
necessary or not I would leave to Congress, but if Congress
feels like the commission should have the responsibility in
that section, I would just want to make sure that we could do
it in a reasonable time frame, and do it well. And I think it
is important that those perspectives of what will be the
impacts on reliability should be fully considered, and the
ramifications explored before any final rule is issued.
Mr. Whitfield. And, Mr. Cauley, of course, you all have the
responsibility on reliability, and we all appreciate everything
that you are doing, but would you comment on my question?
Mr. Cauley. Sure, Mr. Chairman. I would support the
inclusion of that section in the final legislation. We do
assessments all the time, and we have done them on
environmental issues, we have done them on solar magnetic
disturbances, essential reliability services, introduction of
renewables, and most of the time these early warnings and
assessments of issues coming up can be addressed. The industry
is flexible, they can adapt, they can make investments and
change. But I think we have seen sometimes the proposed change
is too dramatic, and I think that is what I see in limited use,
in limited cases, that that section would provide a backstop in
the event that the proposed nonelectric rules were going to
drive us into an untenable spot in terms of reliability risk,
whether it is resource availability or it is electric and gas
infrastructure to support keeping the grid reliable several
years down the road.
So I think as a backstop on extreme cases, it is necessary.
Mr. Whitfield. OK. And would you just briefly summarize the
conclusion of NERC's recent Phase I report?
Mr. Cauley. We published a report just in April, the second
report on the 111(d) proposed rule, and we concluded that there
would be a continued acceleration of retirement of coal units,
and a dramatic shift of coal units from being base-loaded to
being essentially peaking rarely used units. It is questionable
about whether the economics would support them staying around
under that little bit of use, and it--we think there might be
incentives to retire them even further.
The shift to 70 percent or more of dependence on gas, we
will--what we need to ensure is that there is adequate gas
supply. Gas is a just-in-time fuel, and we need to make sure
there is sufficient pipeline capacity and storage capacity to
meet the coldest days and the peak load systems, that the
energy is going to be there for electricity.
We also are concerned about maintaining a base of electric
services, essential reliability services. Large rotating
machines provide these electrical characteristics, inherently
stability, inertia, voltage and frequency control. So we need
to make sure that the policies are in place to make sure that
they are still there.
So a number of other recommendations and suggestions, but
we are concerned about the timing of the early portions of the
targets that were proposed by EPA.
Mr. Whitfield. Thank you very much. My time has expired.
At this time, I recognize the gentleman from California,
Mr. McNerney.
Mr. McNerney. Thank you, Mr. Chair.
First, Mr. Cauley, on the Section 1206, which is--I am one
of the coauthors on ``Cyber Sense''--do you have other
recommendations how to improve cybersecurity of our electric
network?
Mr. Cauley. Well, I think the proposal in 1206 is--can be
helpful. One of the challenges we have is we have a global
supply chain in our grid. So to have a process where vendors
are vetted and equipment is vetted, and we can share that
information, I think is very helpful. So I support that
proposal.
I think the biggest issue for me is ensuring that the asset
owners in the grid feel that they can share threat and
vulnerability information; stuff that they are seeing on their
systems, share it without threat of liability and without
threat of compliance sanctions, when really, they are just
trying to help us put together a bigger piece of the puzzle
about what is happening. I think that is really essential.
Mr. McNerney. So that might be a way to strengthen that
section, then?
Mr. Cauley. Yes.
Mr. McNerney. Thank you.
Mr. Chairman, the section I think that is going to give us
the most controversy is Section 1202.
And I have a couple of questions, Mr. Bardee, about that.
Do you feel that Section 1202 will require FERC to interfere
with State jurisdictions?
Mr. Bardee. You know, I don't know that Section 1202 would
cause us to interfere with State authorities and
responsibility, and certainly, it would be our goal not to do
so. If we were given that responsibility, I would see it as
more trying to objectively assess the possible future impacts
of a proposed rule, and then it would be a matter for the
initiating agency to consider that input from us and others in
deciding on a final rule, hopefully in a way that would not
overstep interstate rules.
Mr. McNerney. Well, do you feel that FERC and the DOE are
already coordinating adequately with rule-generating
organizations?
Mr. Bardee. Excuse me, with who?
Mr. McNerney. With rule--with agencies that generate the
rules.
Mr. Bardee. We certainly have been engaging with EPA, DOE,
and the commission. Our staff have been meeting with EPA
periodically as the Clean Power Plan has been developed, even
before it was formally proposed. And my expectation is that
that will continue so that EPA understands the perspectives
that commission staff and DOE staff can offer to assist them in
their decision-making.
Mr. McNerney. Do you think that if Section 1202 is enacted,
that it would enhance that cooperation, or would it change it,
or would it make it worse?
Mr. Bardee. I certainly don't think it would make it worse.
I think it is hard to say whether it would make a significant
difference in the amount of engagement between the agencies. I
think the most important matter is that entities with that kind
of a planning role continue to perform the work they have
already, such as NERC, such as PJM, such as WECC, because they
have the best tools and information to provide that input.
Mr. McNerney. One of the other issues is the 90 days and
120 days. The 90 days for a proposal, and 120 from the actual
rule. Do you think FERC has the resources to be able to
respond, say, to the Clean Power Plan or the Mercury Air Toxic
Standards, within that time frame--within those time frames?
Mr. Bardee. I think it would be very difficult to meet a
90-day deadline on a proposed rule. Just to give a couple of
examples, when EPA issued its proposed Clean Power Plan, PJM
and MISO and ERCOT did not issue their analyses until November,
which was about 5 months after the proposal came out. I don't
know how long NERC's work took, Mr. Cauley could address it,
but I think it was in the range of about 5 to 6 months. And
whether that can be squeezed into a tighter time, maybe that is
possible, but 3 months would be very challenging.
Mr. McNerney. Mr. Cauley, do you want to follow up with
that?
Mr. Cauley. Well, we did publish our initial report in
October. So from June to October. It does take--4 to 5 months
is an extreme case. We have to collect a lot of data on
individual generators and load forecasts across all regions
that we look at, so it is a very data-intensive, very detailed
analytic process. So 90 days or 120 days both are very short
for that kind of analysis.
Mr. McNerney. OK, so an improvement in the bill might be to
give, say, 6 months or something of that order then?
Mr. Cauley. That is correct.
Mr. McNerney. All right, thank you.
I yield back.
Mr. Whitfield. Gentleman yields back.
At this time, I recognize the gentleman from Texas for 5
minutes, Mr. Barton.
Mr. Barton. Thank you, Mr. Chairman.
I want to ask Mr. Bardee, is it a true statement that
electricity markets are regional rather than national?
Mr. Bardee. I think it would be fair to say that the
electricity markets are regional. There is some trading across
regional boundaries, but primarily the markets are regional, in
my view.
Mr. Barton. OK. I would--Mr. Cauley, do you agree with
that?
Mr. Cauley. Yes, sir.
Mr. Barton. OK. If that is the case, as we are coming up
with this national bill, do we have the responsibility to allow
for regional differences in these standards and requirements?
Mr. Bardee. I think the way I would describe the Clean
Power Plan is it is a state-centric proposal. There certainly
have been a number of studies that have indicated significant
benefits achievable from regional compliance efforts, economic
benefits and reliability benefits, and I would hope that there
is a way for the States to achieve some of those benefits, but
right now, the proposal is State-based.
Mr. Barton. OK. Well, here is my point I am trying to get
at. Texas is an anomaly because of ERCOT. Two-thirds of our
power generation and our consumption is intrastate, within the
State, and is controlled by the State. It has to comply with
FERC regulations, but it is independent. About \1/3\, we have
transmission lines that cross State boundaries in the west and
in the east, but for all intents and purposes, the bulk of the
electricity market in Texas is an intrastate market. That is
not the case in other States. They are almost, I think, all
interstate markets, but in the Midwest and the Northeast, I
believe I am correct that their demand curve is flat or
declining. Is that correct?
Mr. Bardee. I am not sure, sir, but I certainly am aware
that load growth has not been as significant as it had been in
the past. The----
Mr. Barton. Well----
Mr. Bardee [continuing]. Rate of increase has declined,
certainly.
Mr. Barton. You know, if you have to maintain a reliability
criteria and protect against cyberthreats in a market that is
stable, and the demand is either stable or declining, that is
one thing, if you are in a market, I would say Florida, Texas,
maybe California, I am not sure, Arizona, where there still is
robust demand increase, that is an entirely different thing.
Much different. And, in my opinion, we need to allow for those
differences at the legislative level, but also at the
regulatory level at FERC, and it is something that I haven't
seen a lot of commentary on. We just assume that the
electricity market in the United States is one big market and
it is all the same. That is not true. That is not true. It is
totally different, and as we move forward with this legislative
proposal, we need to allow for that. If we get it right at the
legislative level, then there is at least some chance that we
can get it right at the regulatory level too. And that is the
main point that I wanted to make, Mr. Chairman, that this is--
this--we need to look at it from a regional basis, and make
some allowances to give the State regulatory agencies and the
FERC with their partners at the North American Electric
Reliability Corporation the ability to show some flexibility.
And I am going to yield back the balance of my time.
Mr. Whitfield. Yes. Well, thank you. I mean you make a--
definitely a good point because we don't have a national
market, we do have a very balkanized system, appreciate your
comments.
At this time I recognize the gentleman from New York, Mr.
Tonko, for 5 minutes.
Mr. Tonko. Thank you, Mr. Chair.
You state in your testimony, Mr. Bardee, that the Federal
Power Act, Section 215, is inadequate for emergency action, and
that the procedures outlined in this section, and I quote, ``do
not provide an effective and timely means of addressing urgent
cyber or other national security risks to the bulk power
system.'' Is this primarily related to the issue of
deliberative open processes for reliability standards
development, or are you thinking of other barriers to effect
and timely action as well?
Mr. Bardee. What I was trying to describe was the current
process which is open and very deliberative, and that can be a
strength in the normal context of developing standards for
traditional engineering concerns in the electric field. But in
the context of cyberthreats or physical threats that we may
face, it is difficult to envision that process working that
quickly. Now, this past year, we directed NERC to provide a
standard on physical security within 90 days, to send us a
proposal within 90 days, and they well met that deadline, but
even so, it is not clear that you could have that process work
as quickly as you might need it in an emergency.
Mr. Tonko. Thank you for the clarification.
And, Mr. Bardee, again, I am concerned that the language in
Section 1208 of the discussion draft places too many
constraints on RTOs and ISOs and their choice of resources they
might use to ensure grid reliability. Now, this section is not
very forward-looking. It appears to equate base load power
capability with reliability. We in New York and in the
Northeast learned through the experience with Hurricane Sandy
that systems like combined local or heat and power and micro
grids provided power for some customers even when the grid went
down. So as you know, new technologies are being added to the
grid in greater efficiency, demand response programs, and
renewable generation are all transforming the grid in very
rapid fashion.
Now, it appears that this section would constrain the
development of these new grid resources, and FERC's ability to
integrate them into competitive markets. Might that be a
concern?
Mr. Bardee. Our concern with Section 1208 is that it could
be construed as requiring us to set rules and impose standards
that could chill market participants from the choices they
might otherwise make of their own free will.
Now, we understand that sometimes in capacity markets you
do have to have certain boundaries to elicit a reasonable
supply at adequate prices, but we think Section 1208 raises an
undue risk of constraining the choices of market participants.
Mr. Tonko. So would it have impacted perhaps the outcome
that was evident in greater New York with the impact of
Hurricane Sandy?
Mr. Bardee. I couldn't say for sure. I would say that
depending on how something like a diverse generation portfolio
is defined, what are the components of it and what are the
percentages of it, it could be applied in a manner that would
limit perhaps the development of distributed generation
resources.
Mr. Tonko. And I would ask either of you, if the Strategic
Transformer Reserve Plan had been in place, how many times
might it have supplied equipment and response to an emergency
over the past 5 to 10 years?
Mr. Cauley. My belief is it would not have been instituted.
There was a significant amount of transformer capability at
individual companies. We also have a database for sharing
transformers that can be swapped in emergencies. So at this
point, with the number of transformer events, typically in the
one or two levels, would never have kicked into the strategic
level.
Mr. Tonko. Um-hum. And would it have helped in the cases of
Hurricanes Katrina or Sandy, for example?
Mr. Cauley. The large equipment, transformers in
particular, were really not affected by the storms. The storm
outages were predominantly trees and distribution, and local
poles and lines, and not the heavy equipment inside of a
substation.
Mr. Tonko. And I assume there would be costs associated
with setting up and operating this transformer reserve program?
Mr. Cauley. There would be costs, and I don't want to--just
because it hasn't happened, we have large-scale cyberattacks,
physical attacks, GMD. I understand the risk that it is trying
to address, I just think it needs to be very carefully managed,
what we are trying to achieve. It is a last resort backstop and
cost needs to be a consideration.
Mr. Tonko. And, Mr. Barbee, any--Bardee, anything?
Mr. Bardee. I think it is important to ensure that we have
an adequate supply of spare transformers and other equipment.
This could be a useful tool for achieving that goal. It depends
on the extent of efforts industry is making and will make in
the future, but I think it could be a good tool for ensuring we
get there.
Mr. Tonko. I see my time has expired, so I will yield back,
Mr. Chair.
Mr. Whitfield. At this time, I recognize the gentleman from
Texas, Mr. Olson, for 5 minutes.
Mr. Olson. I thank the Chair. And welcome, Mr. Bardee and
Mr. Cauley.
Our country is vast. Its size means a power crisis could
happen anytime, anywhere. Hurricanes, tornadoes, earthquakes,
floods, extreme heat, extreme cold. When that happens, DOE
might order a coal or gas plant to stay online for a long time.
We are talking about a short-term order; a matter of days,
where the plant needs to run full throttle. That is the last
line of defense to a power crisis. But by following that order,
the plant might slip past the clean air permits. That isn't a
loophole; that is DOE working to keep the lights on, and yet
the plant can be penalized by another agency for extending
those limits. This has happened before. Right across the
Potomac on short--it is runway 1 at DCA, a Virginia plant was
ordered to run beyond its permits. They were fined.
The first section of this bill deals with this problem. I
wrote this language with my friends, Mr. Doyle from
Pennsylvania and my Texan, Mr. Green, to protect our grid and
our environment. It has passed this committee twice without
opposition. It has also passed the House twice without a no-
vote. I am going to push that boulder up the hill one more
time.
My question is, is this conflict still a threat, and could
you discuss whether it is reasonable to trap a company between
two regulators? You first, Mr. Bardee.
Mr. Bardee. We never know when that circumstance might
develop again, but it is possible that it occurs again, and for
that reason I think it would be helpful to have legislation
that prevents utilities from having to choose between violating
their obligations under the Federal Power Act and under an
environmental law. They shouldn't have to make that choice.
When they are told to run for reliability purposes under the
Federal Power Act, they should just do that.
Mr. Olson. Mr. Cauley, your comments, sir?
Mr. Cauley. I agree. I support that. I think FERC has been
effective up to this point in the isolated cases where this
issue has come up where they have granted must-run status. If
the 111(d) rule as proposed last year were to go into effect,
which I hope--hopefully that it is not, that there will be some
changes, I think the frequency and breadth of those cases would
be more frequent going forward.
Mr. Olson. Yes. Back home, we had 2 power plants go out in
Dallas, Fort Worth just because of ice. Put us into rolling
blackouts/brownouts for about a 1-day period, so this is very
important we get this right.
I want to follow, Mr. Bardee, dig deeper on a line of
questioning from my colleague from New York about the physical
and cybersecurity. In your testimony, the--you mentioned the
process for setting standards is inclusive--now, I want to
quote, ``but slow, open, and unpredictable.'' And you also said
that there is ``inadequate''--it is ``inadequate for emergency
action.'' My question is this. Without this bill, does DOE and
FERC, or anyone else, have reasonable emergency authority for
the grid? Do you have it right now? What has changed--what
needs to change?
Mr. Bardee. I think this provision would be important for
ensuring that the Federal Government could require the actions
necessary in an emergency, whether that is cyber, physical, or
other type of emergency. There are some authorities that could
be used. Federal Power Act Section 202(c) that we just talked
about has some value in certain emergencies. NERC has the
authority to issue things like alerts and advisories, but they
do not reach as comprehensively as the proposed legislation in
the discussion draft, which I think would be important.
Mr. Olson. Thank you. Mr. Cauley, your comments, sir?
Mr. Cauley. The words around standards being comprehensive
and slow and deliberate and inclusive should not be an
indictment of standards. Standards were not meant to deal with
emergencies, and they don't. We did a physical security
standard in 78 days. FERC approved it in 150 days. Standards
were meant to be more enduring. Emergency powers do not exist,
they are needed. We support legislation that addresses that.
Emergency powers, in my view, are meant to deal with crisis
issues. If--should one military facility have a priority over
electricity customers in restoring power? Should one city be
more strategic than another? The industry does not have the
capability to make those decisions in insolation in a time of
crisis.
Mr. Olson. My time has expired. Yield back. Thank you.
Mr. Whitfield. At this time, I recognize the gentleman from
Illinois for an opening statement. He was delayed because of a
plane problem. So, Mr. Rush, you are recognized 5 minutes for
an opening statement.
OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
Mr. Rush. Thank you, Mr. Chairman. Mr. Chairman, I look
forward to the days that we can have a hearing on airplane
reliability.
I want to thank you, Mr. Chairman, for holding this
important hearing on grid reliability and security.
Mr. Chairman, with recent high-profile cyberattacks on both
private and public domestic targets, including entertainment
companies, financial firms, and even the White House earlier
this year, it is high time that this subcommittee revisit this
extremely important issue of grid security and resiliency.
Mr. Chairman, if recent history is any indication, then it
is not a matter of if but when some threat, whether it be a
national disturbance, an individual hacker, a rogue State, or
even a well-known foreign power, challenges the resiliency of
our Nation's energy infrastructure.
Mr. Chairman, this issue of grid reliability and security
must be addressed in a bipartisan manner. As was done in the
past with the Grid Act that was originally introduced by then-
Congressman Markey and the Full Committee Chairman Upton, which
passed the House in June of 2010.
Mr. Chairman, while there are some worthy provisions in the
draft that helps move the ball forward, there is still some
work to do on some sections of this bill. Specifically, I have
concerns with Section 1202 which requires FERC to conduct an
``independent reliability analysis'' of any proposed or any
major rule that may have ``an impact on electric utility
generating unit or units with a major rule defined as any rule
estimated to cost more than $1 million.'' It is important that
this section is not used, Mr. Chairman, as a backdoor attempt
to block critical elements of 2 EPA rules that were promulgated
recently. The final Mercury Air Toxic Standards, MATS, or the
proposed Clean Power Plan, CPP.
Mr. Chairman, FERC or DOE already routinely coordinate with
other Federal agencies for proposed or final rules affecting
the electric power sector, and it is not entirely clear if this
provision could be used to prevent an agency from issuing a
statutory mandated final rule. In a section that will require
more than--more work as 2004, and it is--as it is unclear if
DOE or FERC would have the authority to address vulnerabilities
or threats to the grid before they happen and take preventive
measures. It is also not clear if this language authorizes
requirements for restoration of grid reliability after an
unforeseen act or event or attack.
Under the previously mentioned Grid Act, a ``grid security
threat'' was defined as a substantial likelihood of a malicious
act or natural occurrence, while in the discussion draft, acts
or events must pose an imminent danger to the grid in order to
be considered; setting a much higher bar for regulatory action.
In addition to these concerns, Mr. Chairman, we want to
continue to work with the majority to ensure that the final
draft, specifically Sections 1203, 1207, and 1208, does not
rely so heavily solely on traditional sources of energy, but
also promotes the deployment and use of renewable energy
sources. As the EIA reports, Mr. Chairman, there has been a
shift in electricity generation toward cleaner sources of
electricity, with 13 percent of electric generations coming
from renewable sources, including hydropower, in 2014.
Mr. Chairman, as renewable energy capacity continues to
develop in the U.S. due to a range of emerging technologies and
best practices, it is important that we integrate these
renewable energy sources into the grid in order to boost fuel
diversity, while also maintaining reliability.
So I look forward, Mr. Chairman, to today's witnesses. And
with that I yield back.
Mr. Whitfield. Gentleman yields back.
At this time, I recognize the gentleman from Illinois, Mr.
Shimkus, for 5 minutes.
Mr. Shimkus. Thank you, Mr. Chairman.
This is a great hearing. Appreciate you all being here. We
have great concerns about the change in base load generation
based upon the focus of this administration on continuing to
ratchet-down emission standards to a point where base load goes
off-line, and that is kind of the basic premise of a lot of our
concern about reliability.
So under the--I was going on the Web site--FERC's
responsibility is numerous things, independent agency, but
obviously, on an independent agency that regulates the
interstate transmission of blank, blank, blank, and
electricity, which is a responsibility which you all have. So I
think part of the testimony, Mr. Bardee, kind of surprises us
when, in your opening statement, you say that FERC lacks the
tools and data to complete the reliability analysis. It is my
understanding, based upon your mission statement, that is what
you are supposed to do. So why do you make that statement?
Isn't that part of the mission statement of FERC, to regulate
the interstate transmission of electricity? And why do you say
that, right now, you don't have the tools and data to be able
to complete the reliability analysis that is, I think,
mentioned in 1202?
Mr. Bardee. What I meant by that, sir, is we do have the
staff with the expertise to be able to perform that kind of
analysis, but we do not maintain fully current models, fully
current data that will allow us to do that without requesting
assistance from others to update us and provide us with the
current models that they use--the planning authorities use--and
the most up-to-date data.
Mr. Shimkus. And who are you referring to by the planning--
--
Mr. Bardee. Planning authorities generally would be
entities such as PJM; in the west, WECC, the Western
Electricity Coordinating Council; in the Southeast, Southern is
the planning authority. In a similar way, NERC functions as
capable of performing the same types of analyses.
Mr. Shimkus. But EPA completes a resource adequacy and
reliability analysis for its regulations, but you all say that
you lack the tools and the data. So----
Mr. Bardee. Well----
Mr. Shimkus. Let me just--I will just finish. Is EPA better
positioned to complete the reliability analysis than you all
are?
Mr. Bardee. No, we--sir, we are fully capable of doing that
work, but if we were tasked to perform that kind of analysis,
we would certainly prefer to turn first to the planning
authorities and say please assist us, and then we will review
your work, we may ask you to perform additional analyses, we
may perform supplemental work of our own. We can do that work,
but they do that work day in and day out and we do not. We just
have that capability to perform it as-needed. And at times, we
need to reach out and get information to assist us in
performing that.
Mr. Shimkus. And can you help provide for the committee
the--what the FERC proposed in its 2016 budget for that--for
the Office of Reliability, and also the number of employees
that are currently in that Office of Reliability?
Mr. Bardee. Yes, sir.
Mr. Shimkus. Thank you very much.
Mr. Cauley, you mentioned the involvement in the ESI-ISAC,
so I want to make sure I got that right. Can you explain your
role in that, and which other agencies and stakeholders NERC
collaborates with?
Mr. Cauley. I am the corporate CEO and heavily involved
directly. I have two officers of the company who manage that
for us. We coordinate with the entire industry. We have about
1,500 organizations that are registered users with the ISAC. We
interface on a daily basis with DHS, the NCCIC, DOE, NSA, FBI,
and others, to share information.
Mr. Shimkus. And so you are testifying that it is a good
model for voluntary information-sharing. This discussion draft,
does this compliment the work at ES-ISAC?
Mr. Cauley. My sense is it doesn't really address it. The
focus on information-sharing in the draft is focused on CEII
information, which is system planning and study information
that is filed with FERC or comes available to FERC, but there
is a wealth, many more times more information that is shared
unilaterally among the industry that never goes to FERC----
Mr. Shimkus. Thank you very much. That----
Mr. Cauley [continuing]. That is not really addressed in
the draft.
Mr. Shimkus. Yes, that testimony is very helpful and we
appreciate that.
And I yield back.
Mr. Whitfield. Gentleman yields back.
At this time, I recognize the gentleman from Texas, Mr.
Green, for 5 minutes.
Mr. Green. Thank you, Mr. Chairman.
Director Bardee, as I stated a few minutes ago, Section
1201 resolves an issue in Federal law between reliability and
environmental protection. Director Bardee, does FERC have any
concerns that additional conflicts may arise as more
environmental rules are promulgated?
Mr. Bardee. It is certainly possible that future conflicts
will arise, as they have in the past, and for that reason I
think the goal, the intent of Section 1201 is an appropriate
one to find a way to resolve those conflicts so the utilities
aren't stuck with an unenviable choice.
Mr. Green. OK. Should Congress be on the lookout for
conflicts? Section 1207 amends the Section 111(d) of the Public
Utility Regulatory Policies Act, or PURPA, and includes States
shall consider language. What role should PURPA play in
markets?
Mr. Bardee. I think PURPA has served a role in the past,
but the appropriate role going forward is not something I would
be prepared to offer an opinion on at this point in time, sir.
Mr. Green. OK. My understanding, within the last decade,
the only real change in PURPA has been the ``States shall
consider'' language. Are you of--either--are either of you
aware of any broad changes in PURPA since the EPAC '05?
Mr. Bardee. I am not aware of any, sir. Not significant
changes.
Mr. Green. Is PURPA still effective legislation, or should
there be an effort to readdress PURPA in our committee?
Mr. Bardee. I could not say at this time, sir. I have not
focused on that in my recent career.
Mr. Green. OK. Section 1208 of the discussion draft amends
the Federal Power Act by adding a new section. Have Regional
Transmission Organizations, RTOs, or Independent System
Operators, ISOs, already performed the action under Section
1208?
Mr. Bardee. The RTOs and ISOs have certain market rules to
ensure that they achieve their functions reliably, and those
goals, in the capacity markets, for example, include ensuring
that they have a reasonable set of resources to meet those
needs. They have each taken different ways to do that, and the
commission has allowed that flexibility for each to approach
their task as they and their market participants thought
appropriate. And I think having that flexibility has been
beneficial.
Mr. Green. Would FERC requirements bring any additional
benefits to the market?
Mr. Bardee. Our goal has been, for many years now, to allow
competitive forces to produce those benefits wherever possible,
and to use more traditional tools only when those competitive
forces were not sufficient.
Mr. Green. OK. Mr. Chairman, I don't have any more
questions. Thank you, and I yield back.
Mr. Whitfield. Gentleman yields back.
At this time, I recognize the gentleman from Ohio, Mr.
Latta, for 5 minutes.
Mr. Latta. Thank you, Mr. Chairman. And thanks for our
panel for being with us this morning. It is a very important
issue.
I know many in this committee have heard me talk about what
my district looks like in northwest and west central Ohio with
just about 60,000 manufacturing jobs, and how important it is
to have that base load capacity every day to turn those
machines on to put so many tens of thousands of people to work.
And, Mr. Bardee, if I could ask this question to you
regarding Section 1208, and I understand your concern about
having Congress legislate instead of having FERC use the
current regulatory structure to operate within the markets, but
I also have heard again about the concerns surrounding the
reliability and base load generation going forward, as well as
the inability of some market structures to function properly.
These concerns of many in the community believe that some
legislation may be needed. Could you discuss some ways that we
could work together to address these concerns in the
legislation?
Mr. Bardee. Certainly, I and others at the commission could
work with the committee staff to see if there were appropriate
legislative changes. My main concern would be to avoid
codifying things that might have unforeseen harmful effects on
those markets and restraining competition.
Mr. Latta. Could you maybe just enumerate what that might
be?
Mr. Bardee. Excuse----
Mr. Latta. Could you enumerate what that might be? You say
you would be concerned on some of the codifications.
Mr. Bardee. I don't have any specific suggestions right now
on what would be appropriate to codify, but I would certainly
be willing to discuss that with the committee staff.
Mr. Latta. OK. Mr. Cauley, if I could ask you. Again, it is
very important because, regarding the discussion draft that is
before us today, why is it important that the definition of the
grid emergency be limited in scope and duration?
Mr. Cauley. Pardon me? Could you repeat the question?
Mr. Latta. Yes. Why would--why is it important that the
definition of the grid emergency be limited in scope and in
duration?
Mr. Cauley. Well, I think first, the industry is very adept
at recovering the system in an emergency situation, and
deploying resources and equipment to get the system back. And I
think there are rare occasions and hopefully short duration
occasions where we are facing a true national crisis, whether
it is a large-scale cyber or physical attack or coordinated
terrorist event, which could exceed on an interim basis the
capability and the coordination of resources of the industry
leadership. So I think those kinds of things are needed in a
short period of time, but we should resist thinking that the
Government or Department of Energy would run the grid for
months or, you know, operationally take over the grid. I think
the leadership of the industry is very capable of taking--doing
the operational aspects.
Mr. Latta. Let me just follow up. You know, when we are
talking about these grid emergencies, and I have had some
discussions in regards to the electromagnetic pulse and
geomagnetic storms and other, you know, terrorist-type actions
or malicious acts that could happen, do we--you know, are we
prepared right now do you think, Mr. Cauley, to meet those
situations?
Mr. Cauley. We continue to get more prepared all the time.
We have a very robust set of cybersecurity standards going into
their fifth generation, very adaptive to the evolving threats
situation. We have a new physical security standard that will
safeguard the highest priority critical stations, that will--
the first enforcement date for that is October. We have a new
standard on GMD, withstand capability, so solar storms. We
have--we are setting up that all equipment has to withstand a
100-year storm. So we are making progress in those areas. We do
not have specific rules at this point regarding EMP, but we are
making progress on what we perceive as the three active threat
areas that we are focused on at this point.
Mr. Latta. Let me ask on the EMP, how concerned are you on
those and that occurring?
Mr. Cauley. Well, I am concerned. There are different forms
of EMP. The nuclear blast form seems to be a very catastrophic
national defense issue. It is very difficult for the power
industry to defend against that as a civilian industry. In
terms of a threat to substations, the handheld, vehicle-mounted
EMP devices appear at this point to be a less imminent threat
than physical attacks like shootings and bombs and
cyberattacks, and those kinds of things, that we are working
hard to protect against at this point.
Mr. Latta. Well, thank you very much.
And, Mr. Chairman, I see my time has expired, and I yield
back.
Mr. Whitfield. At this time, I recognize the gentleman from
Pennsylvania, Mr. Doyle, for 5 minutes.
Mr. Doyle. Thank you, Mr. Chairman. And I want to thank you
and the ranking member for holding this hearing on grid
reliability. And I want to thank both you gentlemen for
testifying today.
Mr. Bardee, I was glad to see your support for, as you say,
the concept behind Section 1201 of this discussion draft. It is
something that I strongly support too; that we need to make
sure that we keep the lights on for our constituents. It seems
to be the main goal of the energy industry; providing power to
people when they need it.
As many of the members of the committee know, we have been
working with Congressman Olson and Green on this legislation
for 3 years now to reach a compromise that eventually passed
this committee last session by voice vote, and later passed the
House by a voice vote.
Many of the questions that I have have already been asked,
I just want to go over a couple of things. So you gentlemen
both agree that it is important that we give the industry some
clarity regarding what they are supposed to do in an emergency
situation, is that correct?
Mr. Bardee. Yes, sir.
Mr. Doyle. And do you think Section 1202 accomplishes that
goal, or is there something more that--you know, as you read
the section, do you think it gets us where we need to be when
we have those emergency situations?
Mr. Bardee. Sir, I don't have an opinion on the exact
wording of this section. It certainly is aimed at addressing
the concern that you have identified, and I support, of
providing clarity. Whether others think there might be, you
know, slightly different wording that would be appropriate, I
would defer to them.
Mr. Doyle. Um-hum. Mr. Cauley?
Mr. Cauley. And we would agree exactly. The purpose and
intent is right, the general direction is right, but specific
language we don't have an opinion on.
Mr. Doyle. Great. No, I understand. I heard both of you
gentlemen express concern over a 90-day period that can conduct
the reliability assessment. I just wanted to be clear what are
you recommending? Obviously, you think 90 days is much too
short of a time. Were you advocating--did I hear you say 120
days, or longer than that?
Mr. Cauley. I think one thing in that section of the draft,
hopefully when it is concluded, will be more flexible in terms
of understanding that not every conflict between reliability
and other rules is going to be equal. Sometimes it might be
regional, sometimes it might be a national issue, sometimes it
might be very complex. A very short assessment period is 4
months. Extremely short with a limited scope. More complex
ones, 6 months would be a minimum time to do a competent job.
Mr. Doyle. Do you agree with that?
Mr. Bardee. I would agree, sir.
Mr. Doyle. So a 4-to-6-month time frame, you are saying,
makes a lot more sense than--and 90 days is just not practical.
And let me just finally ask because, as I said, many of these
questions have been asked already, but I want you both to just
answer, you know, what really concerns you in terms of the
greatest challenges that we are facing on grid reliability and
security? What scares you that we either aren't paying
attention to or aren't resourcing properly or, you know, what
should we be focused on in terms of that? What do you see as
those--the greatest challenges that we face on reliability and
security?
Mr. Cauley. I will suggest two areas. One is a dramatic
reform and transformation of the grid under the current
environmental rules. There is a lot of change anticipated, a
lot of shifting to new resources, new kinds of controls and
dispatch, underlying infrastructure and transmission and gas
pipelines to support that. So the concern is making sure that
we have done the analysis, that we know where we are going is
safe, that we have the right resources, that we can withstand
extreme droughts and heatwaves and cold weather, and not
disappoint electricity customers. The second area that I worry
about most is in the cyber and physical security area, and just
making sure that our mounting defenses are good enough and we
are staying ahead of the game with our adversaries.
Mr. Bardee. I would just add two more sort of subcomponents
of what Mr. Cauley has just emphasized. As the grid continues
to transform, I think we need to focus on 2 issues
significantly. One is, the growing dependence on natural gas
means that we need to look and ensure that we have an adequate
infrastructure, whether it be pipelines or dual fuel facilities
or onsite storage, those kinds of techniques for ensuring that
we can use the gas when we need to. And the other component
that I would add is what has been called essential reliability
services; things like voltage support and frequency support. As
we change the resources that we rely on, we need to make sure
we have the right tools in place, the right metrics, and the
right standards.
Mr. Doyle. Thank you. Mr. Chairman, I see my time is
expiring, but I would say that I think it would be shortsighted
for us to put all our eggs in any one fuel basket, and we have
a lot of work to do on energy infrastructure.
Thank you for the time.
Mr. Whitfield. Thank you very much.
And at this time, I recognize the gentleman from Virginia,
Mr. Griffith, for 5 minutes.
Mr. Griffith. Thank you very much. And appreciate you all
being here for the hearing.
You just had a discussion in regard to the timelines that
are built into the bill, and indicated that you all would need
more time to do your analyses, isn't that correct?
Mr. Cauley. Yes. Yes, sir.
Mr. Griffith. And, Mr. Bardee?
Mr. Bardee. Yes, sir.
Mr. Griffith. And I certainly appreciate that and hope that
we will incorporate that into the final draft. That being said,
the Clean Power Plan requires the States to come up with I
think it is 13 months, but less than a year and a half. After
the plan is a final rule, the Clean Power Plan requires the
States to come up with their plan, which then must be--begin
implementation by 2020. Doesn't that seem to be rather short?
If it is going to take you all, the experts in this, more than
90 or 120 days to come up with an analysis of the plan, doesn't
it just scream out that reason would call that the States need
more time to come up with their plan as well?
Mr. Bardee. Certainly, I have heard representatives for
States express their need for more time, and as you have heard
here today, we have expressed a need for more time if we are
given the responsibilities described in the legislation.
Mr. Griffith. And I certain appreciate that and understand
that you do need more time. I also note that--Mr. Cauley, that
NERC's recommendations in the 2 reports that have come out have
both addressed that concern, not just on your behalf, but on
concern of the industry and grid reliability, that there is
more time needed to address the reliability concerns and
infrastructure deployment, more time to accommodate reliability
enhancement, more time to develop coordinated plans to address
shifts in generation. Is that a fair statement of your
position?
Mr. Cauley. That is true, and I think you have touched on
the planning and preparation is difficult. Some States might
require legislation. It is broader, it includes energy
efficiency and renewables. So we have--actually have the easy
job of just doing the reliability analysis. I think it is very
complex at each individual State, and it is going to be a
challenge under those time constraints.
Mr. Griffith. And I do appreciate that. It is one of the
reasons why I think your report highlights another important
reason why we need to pass the Ratepayer Protection Act, which
would require that the challenges--the legal challenges, I
don't think they pass the muster. I think they fail in the
courts on the Clean Power Plan. I don't think they have the
authority under 111(d). But it requires that the issue be
resolved before they can move forward, and that also would buy
everybody a little bit more time to prepare if that is the
direction we are going in.
Now, that being said as well, one of the things that your
report showed, Mr. Cauley, your November report, in there you
said, potential issues are most acute in areas where power
generators rely on interruptible natural gas pipeline
transportation. Could you elaborate on that for just a minute
for me?
Mr. Cauley. Well, my concern is that the business model for
gas is different than the business model for electricity. In
the gas industry, if you pay for a pipeline and you pay for
capacity in a pipeline, you can have it and use it on a firm
basis. The difficulty is you don't want to pay for the entire
year for those 3 days when you have the extreme cold in the
middle of winter. So in the electricity side we have an
obligation to serve and we must provide electricity. The
disconnect is we don't see that same business model on the
delivery of gas. So somehow those two disconnects have got to
be dealt with.
Mr. Griffith. And you really don't have that problem if you
are dealing with coal because they can just load some ore on a
train or a truck, isn't that correct?
Mr. Cauley. Well, that is why fuel diversity is a benefit
because some resources will have fuel onsite, and gives us some
security, you know, even if the rivers are frozen or something
like that. If there is a pile there, we can get to it.
Mr. Griffith. Right. And your reports also indicate that,
again, remember, we are talking about a plan coming out
sometime this summer, States have to have their plan done in
2016, and then compliance beginning in 2020, and yet in many
areas of the Nation there aren't sufficient gas pipelines. As a
result of that, in my region we have controversy over 2
pipelines that are now getting started, and they are laying out
the plans and so forth. But I think your report indicated
sometimes it takes 5 to 6 years just to get that up and
running. And--am I not correct--is that correct?
Mr. Cauley. That is correct. In most cases, it does.
Mr. Griffith. And then that puts us beyond the 2020 start
date to comply for the States, so it makes it very difficult
for the States then to be able to use or to count on the
natural gas that is not yet there, if it is just in the
planning stages. And I would also note, because my time is
running out, it also means that we don't have time for the
clean coal technologies which the Department of Energy indicate
are probably going to be viable, at least 1 or more, by 2025 to
incorporate those into the State plans that have to be done
under the Clean Power Plan by next year, isn't that correct?
Mr. Cauley. That was the intent of our report, to highlight
the physical constraints of getting there to the early years of
the targets.
Mr. Griffith. I thank you very much, and yield back.
Mr. Whitfield. At this time, I recognize the gentleman from
New York, Mr. Engel, for 5 minutes.
Mr. Engel. Thank you. Thank you very much, Mr. Chairman.
Let me first say it is vital that we work together in a
bipartisan way, so I thank you for this, to improve the
reliability, resilience, and security of our electric grid.
Today, the U.S. electric power system consists of
approximately 390,000 miles of transmission lines, including
more than 200,000 miles of high-voltage lines, connecting to
more than 6,000 power stations and 45,000 substations. Now, a
report last year by the National Governors Association found
that 70 percent of the Nation's transmission lines and
transformers are at least 25 years old, and 60 percent of
circuit breakers are at least 30 years old. And it is noted
that much of the infrastructure was designed in the 1950s,
making this system, and I quote, ``vulnerable to disruption.''
Mr. Tonko asked a question about Hurricane Sandy. I want to
go back to Superstorm Sandy, because that is a powerful example
of one of those disruptions. Sandy swept through my district
and the surrounding region in October 2012, knocking out power
to over 8 million people. Some New Yorkers, including my
district, waited more than 2 weeks for their lights to turn
back on, struggling the whole time to keep their families safe
and warm and fed. To protect against this type of outage in the
future, New York is working to design and implement an
initiative called Reforming the Energy Vision, or REV, and
among other things, REV is designed to take pressure off the
grid by promoting the generation of distributed power, such as
solar, wind, combined heat and power, energy storage, and other
systems, at customer locations. This would essentially turn
electric utilities into a new kind of entity which, instead of
distributing electricity themselves, would effectively direct
traffic by coordinating distribution of electricity produced by
a multitude of smaller entities.
So let me ask you gentlemen, are you familiar with the REV
initiative in New York, do you think its distributed generation
model should be replicated in other regions, would the draft
legislation we are discussing today encourage or discourage the
use of this model?
Mr. Bardee. Sir, I am somewhat familiar with the
initiative, and I think from my perspective, working at the
commission, our goal would be to not impede New York's ability
to do that and let them make those choices, as other States can
choose for themselves what types of resources they think
appropriate.
Mr. Cauley. I also am familiar a bit from afar. During
Superstorm Sandy, the bulk power grid actually performed very
well and remained intact during the storm. The vast majority of
the impacts were at the distribution level, as I said, power
lines down the streets and so on. I think anything that can be
done to build resilience through the grid at both the
distribution and the bulk power side is helpful. I just do
believe that it needs to be balanced in terms of reliance on a
strong interconnected grid is helpful, but also having
resources and backup capability at individual customers'
critical loads is very important as well.
Mr. Tonko. Thank you very much. I think it is a good
initiative, and we will--time will, of course, tell, but I
think it is innovative and something that we should move
towards.
In addition to managing demand and strengthening our grid
to protect against power outages, I believe we must also look
at ways to restore power if and when a disruption does occur.
What do you believe are the most important things we can do to
enable a rapid restoration of power?
Mr. Cauley. I think we look at Sandy as probably the most
recent learning experience, and in many respects, the
restoration was executed superbly in terms of moving of trucks
and equipment and resources across long distances, and getting
equipment back together. I think what I took away in a number
of reports is sometimes we have to make sure that we are
focused on the human toll during an event. People can't charge
their devices, they can't find gas, in some cases food may be
hard to acquire, so I think that was a great learning from
Sandy that it is not just getting the lights back on and the
poles back up as quickly as possible, but how do you help the
public cope during that event, and how do you make sure gas
stations and other key resources have power that they need to
supply citizens.
Mr. Bardee. I think the only thing I would add is in terms
of design resiliency, there are things you can do in terms of
the hardening of existing facilities. There are also
techniques, and these were brought out to light by Hurricane
Sandy. So I think those are also important aspects of how to
address these going forward.
Mr. Tonko. You know the slogan, the perfect storm, this
actually was the perfect storm, or most imperfect storm, but it
was just something that, unfortunately, we can learn from it
because a lot of people obviously suffered from it.
Thank you, gentlemen. Thank you, Mr. Chairman.
Mr. Whitfield. At this time, I recognize the gentleman from
Missouri, Mr. Long, for 5 minutes.
Mr. Long. Thank you, Mr. Chairman.
Mr. Cauley, during your question-and-answer session here
today, you said that hopefully there will be some changes to
111(d) before implementation. What type of changes would you
like to see in 111(d)?
Mr. Cauley. I am hopeful, only because I have listened in
public to statements by senior officials at EPA, so I have no
particular information, but I think in terms of timing of the
targets to make a more progressive transition. Ideally----
Mr. Long. More progressive?
Mr. Cauley. More--not in a political sense, but in a----
Mr. Long. Well, I know not the political sense, but I am
talking about more rapidly, progressive?
Mr. Cauley. But to slow them down and phase them in more
gently so that--essentially, the way the original proposal was
is targets were, on average, you had to be 80 percent of the
way there in the first year. That was too steep of a hill to
climb, I think, physically in terms of reliability. So our
suggestion in terms of timing would be to make the compliance
targets more gradual, more phased-in over a period of time to
allow us to make sure that the infrastructure is there, gas and
transmission and the dispatch capability is there to meet those
targets.
Mr. Long. OK. Yes, I--on progressive, I didn't mean to
imply politically, but I thought you were wanting to speed up
the process----
Mr. Cauley. No, slow it down----
Mr. Long [continuing]. But the opposite is true?
Mr. Cauley [continuing]. On the front end.
Mr. Long. Yes, OK. Also for you, Mr. Cauley, the EPA's
proposed rule includes interim targets beginning in 2020. Based
on this rule, 11 States have achieved--11 States must achieve
75 percent of the total goal for the first interim date of
2020. And my State of Missouri has to achieve over 60 percent
total goal by then. What impact do you think the sudden change
by States to meet the 2020 interim targets will have on
reliability issues?
Mr. Cauley. Well, it creates challenges in terms of--if
some units may be forced to retire, they are no longer
economic, and particularly coal and base load units----
Mr. Long. And I might add we get 85 percent of our
electricity from coal in Missouri.
Mr. Cauley. Some of those units might not retire, but might
not be available to operate but at very limited times. In
regions where gas--natural gas supply is an issue, going from
less than 30 percent dependence on gas to 70 percent dependence
creates a huge new demand on gas utilization, and whether the
gas is going to be there every day in the cold days in the
winter is going to be a challenge.
Mr. Long. OK. Also for you, Mr. Cauley, the--when NERC puts
out an alert, what is the general response time of the utility
sector?
Mr. Cauley. The alerts vary. There is a level 1, 2, and 3,
and we can set whatever response time is appropriate for the
situation. A level 3 is the most urgent, and it requires a
mandated response from the entities. Level 1 is an advisory
heads-up, and level 2 is a recommended set of actions, but does
not require a response back that it was completed.
Mr. Long. OK, thank you.
And for you, Mr. Bardee, I understand you have concerns
regarding the timing for FERC to complete its required analysis
within the 90 days of being proposed. Wouldn't you agree that
having such a report would be beneficial to those members of
the public submitting comments on the proposed rule?
Mr. Bardee. I think the analyses that we have seen, for
example, in the context of the Clean Power Plan are certainly
informative and useful, and I am sure the public has benefitted
from seeing that information.
Mr. Long. OK. What role should FERC have in the review of
State implementation plans, and what about in review of Federal
plans?
Mr. Bardee. You know, the commissioners wrote a letter to
EPA just this past week addressing that point, and what they
indicated was that they felt they needed to be careful not to
overstep their role and intrude on the authority and
responsibility of States. But having said that, they indicated
that the existing processes would be the starting point for how
to address the reliability implications of those plans. And
that could be supplemented with any additional guidance or work
that the commissioners felt appropriate.
Mr. Long. To save me trying to run that down, could you
provide my staff with a copy of that letter?
Mr. Bardee. Yes, sir.
Mr. Long. OK, thank you all.
And, Mr. Chairman, I yield back.
Mr. Whitfield. Gentleman yields back.
At this time, I recognize the gentleman from Illinois, Mr.
Rush, for 5 minutes.
Mr. Rush. I want to thank you, Mr. Chairman.
Director Bardee, on the previous version of the Grid Act
grid security threat was defined as a substantial likelihood of
a malicious act or natural occurrence, while in the discussion
draft, acts or events must pose an imminent danger to the grid
in order to be considered for action, setting a much higher bar
for regulatory action. In your opinion, does Section 1204 make
it clear that DOE or FERC have the authority to address
vulnerabilities or threats to the grids--grid before they
happen, and can take preventive measures? Also, you had
recommendations for clarifying that this language authorizes
requirements for restoration of grid reliability after an
unforeseen act or event. Can you also talk about these
recommendations that you have?
Mr. Bardee. The section would authorize the Department of
Energy to take these actions, not the commission, and it would
address grid security emergencies, as you have indicated,
defined as an imminent danger. Whether that gets to
vulnerabilities is not clear to me. I don't think it would
include a vulnerability unless it also posed an imminent
danger. But I think, nonetheless, the authority in that
provision would be a beneficial one and would allow the
Department, the Secretary of Energy, to take action in an
emergency, or after an emergency--well, let me put it this way.
I would hope that the provision would be clarified to allow the
Secretary to take action after an unforeseen attack or event. I
think that is as important as being able to take action to
protect against an--a foreseen imminent danger.
Mr. Rush. Mr. Cauley, do you have any remarks?
Mr. Cauley. Yes, I support the direction of that section in
the draft, and I agree with your point that the emergency may
become apparent beforehand, and maybe we can prevent it. It may
be how do you respond during an attack, and then how do you
recover after the fact. And I think we should be clear in the
language that it would potentially have that authority during
that entire span before, during, and after, as needed. So thank
you.
Mr. Rush. In your testimony, Mr. Bardee, you note that for
years FERC has sought to foster the development of competitive
markets for wholesale electricity that benefit energy consumers
by encourage the diverse resources, spurring innovation and
deployment of new technologies. How does Section 1208 differ in
its approach?
Mr. Bardee. Section 1208 would have the RTOs, the ISOs, and
the commission address whether those markets met certain
parameters such as a diverse generation portfolio, stable
pricing for customers, pricing adequacy for resources. And
those are all considerations typically considered by States
when they do integrated resource planning. But in the context
of the wholesale markets, the commission has tried to rely more
on competitive forces when those forces were sufficient, and
the kinds of techniques I have just mentioned and that are
included in Section 1208 could be applied--could construed in
ways that would constrain those forces--those competitive
forces unnecessarily, and that would concern us.
Mr. Rush. Does the legislative mandate drafted in Section
1208 maximize competition in order to best benefit consumers?
Mr. Bardee. Well, certainly, our goal under the Federal
Power Act, as we administer it now, would be to do so; to
maximize competitive forces within those markets for the
benefit of consumers. And I would hope that our authority to do
that is not constrained in ways that reduce those benefits.
Mr. Rush. I want to thank you, Mr. Chairman. I yield back.
Mr. Whitfield. Gentleman yields back.
At this time, I recognize the gentlelady from North
Carolina, Mrs. Ellmers, for 5 minutes.
Mrs. Ellmers. Thank you, Mr. Chairman. And I would like to
thank you also for this subcommittee hearing, and your staff
for the hard work that they have done on this discussion draft.
It is--as we all know, it is no secret that our grid
infrastructure is aging and needs modernization. A more secure,
reliable, and resilient grid is a matter of national security,
and I am pleased to see the leadership of this committee on
this matter.
Mr. Bardee, I would like to ask you a question first. In
November of last year, FERC issued Order number 802 approving
the reliability standard which relates to physical security.
Can you briefly explain on this new--what this new physical
security standard is?
Mr. Bardee. Sure. The proposal sent to us by NERC and that
we approved basically had 3 steps in it. The first was for the
affected utilities to identify their critical facilities. The
second was to then assess the threats and vulnerabilities that
those facilities may face. And the third step was to develop a
plan to mitigate those threats and vulnerabilities. Right now,
the industry is working very hard to meet the first task;
identifying their critical facilities. That is due to be
completed in October, and then the other steps follow in
sequence over time.
Mrs. Ellmers. Um-hum. And when we are talking about
industry, are we also talking about the electricity sector?
Mr. Bardee. Yes.
Mrs. Ellmers. Yes, OK. Just to be clear. And is compliance
mandatory?
Mr. Bardee. Compliance is mandatory.
Mrs. Ellmers. It is mandatory. Thank you.
Mr. Cauley, thank you for being here as well. And since
becoming officially designated Electric Reliability
Organization, established by Congress in 2005, what would you
say has been ERC's most significant contribution to ensuring
reliability?
Mr. Cauley. Well, I think there are many, but I think the
mandatory standards and enforcement capability, we have a very
comprehensive regime of compliance audits and reviews, has had
a very significant improvement on the bulk power performance.
Mrs. Ellmers. Um-hum.
Mr. Cauley. We have seen things like vegetation management
issues that cause--were the triggering events for the 2003
blackout, have essentially gone to zero----
Mrs. Ellmers. Um-hum.
Mr. Cauley [continuing]. And so there are a number of areas
where we have seen significant improvement and performance
across-
Mrs. Ellmers. Um-hum.
Mr. Cauley [continuing]. Electric industry.
Mrs. Ellmers. What do you feel--what else can be done in
order to improve upon this?
Mr. Cauley. Well, we do a lot of other things. We are
moving into an area of technical analytics where we can get a
lot of detailed----
Mrs. Ellmers. Um-hum.
Mr. Cauley [continuing]. Performance information. I think
we are getting much smarter in the last few years about what
causes equipment to fail and why do events happen. So we are
getting that information out----
Mrs. Ellmers. Um-hum.
Mr. Cauley [continuing]. In terms of lessons learned and
recommendations to industry.
Mrs. Ellmers. And there again, when we consider industry,
what more can industry do to improve upon this as well, and
what part do they play?
Mr. Cauley. Well, industry has been working very closely
with us. We have a number of technical----
Mrs. Ellmers. Um-hum.
Mr. Cauley [continuing]. Committees. We--another example is
the polar vortex and the cold weather, there was a lot more----
Mrs. Ellmers. Um-hum.
Mr. Cauley [continuing]. There in a couple of events and we
survived the most recent version of that with a lot of the
information we were able to get out; why does instrumentation
freeze up, what kind of exposure problems were we seeing. So we
have been working with industry to turn that information----
Mrs. Ellmers. Um-hum.
Mr. Cauley [continuing]. Back around. What I find is that
most of the time in most issues, industry will do the right
thing because they are interested in serving their customers as
much as anybody else, if they know what it is that they have to
do.
Mrs. Ellmers. Great, thank you so much.
Mr. Chairman, I yield back the remainder of my time.
Mr. Whitfield. Gentlelady yields back the balance of her
time.
At this time, I will recognize the gentleman from Texas,
Mr. Flores, for 5 minutes.
Mr. Flores. Thank you, Mr. Chairman, and I appreciate the
opportunity to be part of this hearing.
Mr. Bardee, in your testimony you discuss the concern that
the overlay of regulatory requirements in competitive markets
may reduce the potential for these markets to provide consumers
with the benefits achievable through competitive forces.
Basically, I think what that report says is that we should let
the electricity markets work in a free fashion and not distort
them, in other words, not picking winners and losers. And my
question is this. Can we infer based on the testimony that FERC
does not approve of the wind production tax credit or State
renewable requirements, or other similar actions that impair
the ability of a competitive market to behave like a truly
competitive market?
Mr. Bardee. I actually don't have an opinion on those
particular issues, but certainly, the goal of the commission is
to rely on competitive forces and prevent undue discrimination.
That is our--one of our core responsibilities under the Federal
Power Act, and we seek to do that so that all resources are
able to compete in the wholesale markets.
Mr. Flores. OK. Thank you. And, Mr. Bardee--or, excuse me,
Mr. Cauley, you noted that FERC has recently approved the NREC
[sic] Critical Infrastructure Protection Version 5 standards
which become enforceable on April 1 of next year, related to
cybersecurity. First question is, can you briefly expand on the
new Version 5 cybersecurity standards?
Mr. Cauley. Well, these are dramatically different. First
off, they cover the entirety of the bulk power system, not just
the high priority, highest voltage equipment. They require a
risk-based controls approach, which means set up the systems to
monitor, patch, keep up your defenses, as opposed to a sort of
checklist-type approach. And those are the predominant changes,
and it is prioritized, so we will have the most extensive
controls on the highest voltage, highest critical equipment,
and because of cost considerations and balancing risk, the
lowest priority parts of the system will receive some amount of
controls and assurance but not as extensive.
Mr. Flores. OK. So the electricity sector is certainly
subject to the standards. Is compliance mandatory?
Mr. Cauley. Yes, it is with everyone.
Mr. Flores. OK. Mr. Chairman, that is all my questions.
Thank you, and I yield back the balance of my time.
Mr. Whitfield. Gentleman yields back.
At this time, I recognize the gentleman from West Virginia,
Mr. McKinley, for 5 minutes.
Mr. McKinley. Thank you, Mr. Chairman.
Couple of questions back on the--Section 1202 dealt with
the major rule in the billion-dollar threshold. In the last two
Congresses, we have been dealing with the threshold level of
$100 million, and we have lowered that to $50 million for the
reason that at $100 million, 98.5 percent of all rules fall
under the $100 million classification. So I am curious, how
many will fall above $1 billion annually?
Mr. Bardee. I don't have a sense of that, sir. It is just
hard for me to know. I will tell you that from my experience at
the commission, I can't think of a rule that would cross that
threshold. Perhaps going back years ago to when we required
open access, but I would have to go back and look at that.
Mr. McKinley. OK. Just curious because I don't think this
is even going to apply at a billion dollars on that, so thank
you, based on what we know from the Rain Act.
Secondly, Moeller from FERC was here several times, and
made comments in 13 and 14. Both times he was saying from FERC
that if we don't do something drastic here in Washington, we
are going to see rolling brownouts in the Midwest by the year
2017. I--we asked that question of Ms. Miles that was here last
week and she refused to comment. Do you have a comment about
that? Is that an accurate statement, if we don't do something,
we are going to see some brownouts? I heard you talk a little
bit about gas pipeline networking and like--but given that the
long length of time it takes to get that permitting and--are we
facing that in the Midwest? Do you agree or disagree with
Moeller's comments?
Mr. Bardee. Certainly, there will be work to do if EPA
adopts a final rule for the Clean Power Plan, along the lines
of developing infrastructure like I mentioned earlier, the gas
infrastructure and also the electric infrastructure. Looking at
the information that is available on the plan as it has been
analyzed over recent months, I think some States will have
little difficulty complying with the plan. States like
California or some of the States in the RGGI Program. On the
other end of the spectrum, a State like Arizona would have
significant challenge in doing that.
Mr. McKinley. Well, so does this mean--do you agree with
Moeller's statement that we could have problems by--in 2017 if
we don't do something?
Mr. Bardee. I think looking at the body----
Mr. McKinley. It is a yes or no----
Mr. Bardee [continuing]. Of analysis----
Mr. McKinley. Should be a yes or no. I am sorry--we only
have 5 minutes, we have to keep our responses as short as
possible. So do you agree or disagree with Moeller?
Mr. Bardee. I would say, sir, that the industry has a
history of meeting the challenges presented to it, whether you
look back at something like the acid rain issue or
transitioning to open access, like we----
Mr. McKinley. Well, this--thank you. This is Washington, I
guess, we are not going to get that answer that I was looking
for one way or the other.
Earlier this year, we had a panel up here that were talking
about cybersecurity, and finally when I asked the question of
all the issues that had been raised, where should we be
prioritizing, and he sat--remember he sat at the very end seat,
he said, on cybersecurity, he said, a high school kid could
hack into our grid system in America within 4 days and shut our
grid down. That ought to concern a lot of us about the
capabilities or the vulnerabilities we have. Do you agree, both
of you, that--how vulnerable we are with a high school kid
being able to hack in and shut down our grid?
Mr. Cauley. I am not sure I agree with that specific
example, but I do have cybersecurity as our number 1 priority
on protecting the grid.
Mr. McKinley. OK. Let's--in the time frame that I have,
just--if you were starting together--Mr. Bardee, if you started
from scratch with this legislation, because there has been some
criticism and there has been some positives said about this, if
you had to start from scratch, what would be the number one
thing that you think we should do on grid reliability? First
thing that--if you had to write a whole new bill, what would it
be? What would be the first thing you would include in it?
Mr. Bardee. I think I would start with Section 1204 on
dealing with grid security emergencies. Of the issues in here,
that would be my foremost----
Mr. McKinley. OK, 1204.
Mr. Bardee [continuing]. Recommendation.
Mr. McKinley. OK, thank you.
And I am running out of time, so I yield back the balance
of my time. Thank you very much.
Mr. Whitfield. Gentleman yields back.
At this time, I recognize the gentleman from Ohio, Mr.
Johnson, for 5 minutes.
Mr. Johnson. Thank you, Mr. Chairman.
Mr. Bardee, I represent an area of our Nation, a swath of
our State, Appalachia, where energy and electric reliability is
of critical importance. Many seniors live out in rural areas.
When the power goes out, cell phone towers are gone, telephones
don't work, these--many of these seniors have health issues, no
way to get in contact with them. I have had manufacturers
coming to me saying that they have been approached by the
energy companies asking them to idol their plants for a period
of time because there is not enough energy on the grid to meet
peak demands. So electric reliability is a big issue. And when
you look at power plants, they take a long time to build, so if
we lose one to retirement, it can take perhaps bumping up on to
a decade to get those power plants replaced.
Can you give me assurance today that we will have
sufficient base load capacity available 10 years from now to
assure electric reliability?
Mr. Bardee. What I would say, sir, is, as I mentioned
earlier, the industry has a demonstrated history of meeting the
challenges given to it.
Mr. Johnson. No, I don't want a political correct answer.
That is a very simple question. In your position, can you
assure me that we are going to have enough base load capacity
to ensure electric reliability 10 years from now?
Mr. Bardee. I think the industry will do what it needs to
do, sir.
Mr. Johnson. No, I am asking you your opinion.
Mr. Bardee. We will do what we need to do to fulfill our--
--
Mr. Johnson. Is that a yes----
Mr. Bardee [continuing]. Responsibilities.
Mr. Johnson [continuing]. Or--is that a yes?
Mr. Bardee. I think all of us are committed to maintaining
reliability, sir.
Mr. Johnson. OK. All right. Well, let me ask you another
question then. Would you explain--because what I have heard you
say is that you won't say yes, so I see that as a big maybe. So
if we can't assure reliability, why would FERC have a problem
asking RTOs that operate in capacity markets to bring in
filings that give markets and consumers a longer term assurance
of reliability?
Mr. Bardee. Do you mean how long of a contractual
commitment----
Mr. Johnson. Yes.
Mr. Bardee [continuing]. Suppliers get in a capacity
market?
Mr. Johnson. Yes.
Mr. Bardee. We have allowed the individual markets to
develop those rules. Some of them have a 3-year requirement,
and some of them treat it as an annual requirement. And----
Mr. Johnson. But our legislation asked the RTOs to bring in
filings that give markets and consumers a longer term
assurance. Am I correct that FERC opposes that language in the
legislation?
Mr. Bardee. We do not think it would be helpful to codify
requirements that----
Mr. Johnson. Why not?
Mr. Bardee. Because they would potentially restrict
competition from providing----
Mr. Johnson. But isn't your job to ensure electric
reliability?
Mr. Bardee. That is one of our responsibilities is to
help----
Mr. Johnson. One of your responsibilities? You are the
director of the Office of Electric Reliability.
Mr. Bardee. I meant the commission, sir.
Mr. Johnson. That should be your primary job, right?
Mr. Bardee. Me personally, my role is as the director of
the Office of Electric Reliability, yes.
Mr. Johnson. All right. I am not sure why the FERC would
have an issue with that.
Mr. Cauley, as envisioned by our discussion draft, you
stated that NERC would be pleased to coordinate with FERC on
reliability assessments of rules that pose real or potential
challenges to resource adequacy or the reliability of the bulk
power system. Do you feel NERC is well suited for this
additional responsibility, and if so, why?
Mr. Cauley. I think we are equipped today to do that, and
we do those kinds of assessments on a regular basis. The only
challenge might be resourcing based on volume and the timing.
One suggestion I had to help with the language is, it seems
to specifically require those assessments for all rules. It
seems there should be on a need basis, you know, the magnitude
of the impacts and potential risks. So I think it is an
authorization and a capability that should be there, but I
don't know that it should be independent separate review for
every single rule that might come out.
Mr. Johnson. OK. All right.
Mr. Bardee, back to you. Would you agree that all
generation does not possess equal reliability attributes?
Mr. Bardee. I think different resources have different
capabilities.
Mr. Johnson. OK, that is good. Would you also agree that
the current capacity market, let's use PJM as an example, only
sets a capacity target, in other words, the capacity market
secures only a specific number of megawatts regardless of the
reliability attributes, including location of those megawatts?
Is that an accurate statement?
Mr. Bardee. My recollection is they do have some limits on
demand resources, and obviously, there is litigation pending
about that now. Looking ahead, there is a pending proposal by
them to put in place capacity performance requirements which
would differentiate between certain resources.
Mr. Johnson. Well, do you agree then that capacity doesn't
necessarily equal reliability, does it? Those are 2 different
things.
Mr. Bardee. You need to look at whether the resources you
have will meet your needs in all appropriate circumstances.
Mr. Johnson. That doesn't answer the question. Does
capacity equal reliability, in your mind?
Mr. Bardee. It depends on the kind of capacity you have in
mind, sir.
Mr. Johnson. I think that answer is no, Mr. Chairman, if I
understood it. But I will yield back.
Mr. Whitfield. Gentleman yields back.
Now, I believe everyone has had the opportunity to ask
questions, so that will conclude the--no, we would take a
second round but we have another wonderful panel coming up.
Thanks for that suggestion, John.
Listen, I want to thank you all very much for joining us,
and we really appreciate your responding to our questions. And
we look forward to working with both of you as we move forward,
trying to address some of these issues. So you all are
dismissed.
And at this time, I would like to call up the second panel
of witnesses. And we have 8 witnesses on the second panel, and
I am just going to wait until it comes time to each one of you
to give your opening statements and I will introduce you at
that time.
But our first witness this morning, I am going to call on
the gentleman from Mississippi, Mr. Harper, to introduce our
first witness. If you would do that, Mr. Harper.
Mr. Harper. Thank you, Mr. Chairman. And I thank you for
the recognition and for the opportunity to introduce our first
witness on this panel. Tom Fanning is chairman, president, and
CEO of Southern Company, one of America's largest producers of
electricity. He has worked for Southern Company for more than
30 years, and was elected president by the Board of Directors
in July 2010. Mr. Fanning became president in August 2010, and
CEO and chairman in December of 2010. Mississippi Power, a
wholly owned subsidiary of Southern Company, provides
electricity in my home State of Mississippi, and I am glad Tom
could be with us today to share on this important topic. His
knowledge will benefit us as we move forward, and I appreciate
his willingness to be here. Welcome.
Thank you, Mr. Chairman.
Mr. Whitfield. And, Mr. Fanning, we appreciate your being
with us, and you are recognized for 5 minutes for an opening
statement.
STATEMENTS OF THOMAS A. FANNING, CHAIRMAN, PRESIDENT, AND CHIEF
EXECUTIVE OFFICER, SOUTHERN COMPANY; ELINOR HAIDER, VICE
PRESIDENT, MARKET DEVELOPMENT, VEOLIA ENERGY NORTH AMERICA, ON
BEHALF OF THE ALLIANCE FOR INDUSTRIAL EFFICIENCY; JOSEPH
DOMINGUEZ, EXECUTIVE VICE PRESIDENT, GOVERNMENTAL AND
REGULATORY AFFAIRS AND PUBLIC POLICY, EXELON CORPORATION;
MICHAEL BERGEY, PRESIDENT AND CHIEF EXECUTIVE OFFICER, BERGEY
WINDPOWER COMPANY, ON BEHALF OF THE DISTRIBUTED WIND ENERGY
ASSOCIATION; JOHN N. MOORE, SENIOR ATTORNEY, NATURAL RESOURCES
DEFENSE COUNCIL; JOHN DI STASIO, PRESIDENT, LARGE PUBLIC POWER
COUNCIL; EMILY HEITMAN, VICE PRESIDENT AND GENERAL MANAGER,
COMMERCIAL OPERATIONS FOR MEDIUM AND LARGE POWER TRANSFORMERS
IN NORTH AMERICA, ABB, INC., ON BEHALF OF THE NATIONAL
ELECTRICAL MANUFACTURERS ASSOCIATION; AND ELGIE HOLSTEIN,
SENIOR DIRECTOR FOR STRATEGIC PLANNING, ENVIRONMENTAL DEFENSE
FUND
STATEMENT OF THOMAS A. FANNING
Mr. Fanning. Thank you, sir, and thank you for that
introduction. Chairman Whitfield, Ranking Member Rush, and
members of the subcommittee, thank you for inviting me to
testify today.
My name is Tom Fanning and I am the chairman, president,
and chief executive officer of Southern Company. With 4.5
million customers and approximately 46,000 megawatts of
generating capacity, Southern Company is a leading U.S.
producer of clean, safe, reliable, and affordable electricity.
Providing reliable electric service is Southern Company's core
business, and mitigating risks to reliability is vital to
keeping the lights on for the customer and for a privilege to
serve. I am also a chair of the Electricity Subsector
Coordinating Council, or ESCC. The ESCC is the principle
liaison between the electric sector and Federal Government for
coordinating efforts to prepare for and respond to
cyberthreats, physical terrorism, and natural disasters that
imperil critical infrastructure.
The ESCC is where the most senior leadership in the
industry and Government come together to improve the security,
resiliency, and responsiveness of the industry, and by
extension, the Nation. In that regard, I would like to thank
the American Public Power Association and the NRECA for their
collaboration in the ESCC.
While the chair of the ESCC, I am speaking in my capacity
as CEO of Southern Company. I am here today to talk primarily
about the security, base load protection, and reliability
analysis provisions found respectively in Sections 1204, 1207,
and 1202 in the committee's recently released discussion draft
on the energy reliability and security, part of the committee's
architecture of abundance legislation. The committee is
demonstrating leadership by proposing the discussion draft
language to enhance system security and resiliency, retain the
reliability and economic benefits provided by base load
generation, and protect electric reliability.
I would like to respectfully offer a few items for the
committee's consideration to further secure the effectiveness
of this legislation. First, Southern Company supports Section
1204, provisions that would further facilitate industry-
Government coordination and information-sharing as the Nation
addresses the emerging and constantly evolving electronic and
physical threats to the availability of reliable electricity.
Because electricity is critical to the Nation's economy and to
the lives of Americans, protecting the grid is a shared
responsibility between the industry and Government. Regarding
language in the discussion draft providing the Secretary of
Energy emergency authority to address grid security
emergencies, the electricity sector widely recognizes the risk
of imminent threats to the grid and the importance of rapid
response. Should Congress feel that granting emergency
authority is warranted, we agree that DOE is the appropriate
agency to execute that authority. We believe that such
emergency authority can most effectively be utilized if, as
recognized by Section 1204, the industry is consulted to the
extent possible prior to a directive's issuance. Such
communication ensures that industry expertise is harnessed and
incorporated into the emergency directives to more effectively
assess the underlying threat, and develop modes of response.
The ESCC is well-positioned to provide a ready conduit to allow
for such Government-industry consultations on emergency energy
authority, and the ESCC should be added to any legislative list
of entities to be consulted with prior to the issuance of
emergency orders.
Provisions in the draft language exempting critical
electric infrastructure security information from the Freedom
of Information Act, and providing--and protecting such
information from disclosure will boost the confidence of those
like members of the ESCC who participate and collaborate in the
sharing of information. Provisions in the draft increasing
critical infrastructure sector access to classified information
will further increase the operational awareness of those on the
front lines of defending the electric grid. These provisions
align with the ESCC priorities, and we also encourage ongoing
efforts with Congress to pass broad information-sharing
legislation that would apply to all critical infrastructure
sectors, given their mutual interdependence.
Second, we support Section 1207 as a reasonable first step
to promote efforts to ensure that base load generation
continues to serve the energy needs of customers for many
decades to come. Base load generation is vital to ensuring the
continued supply of clean, safe, reliable, and affordable
electricity to families and businesses because it provides 24
hours a day, 7 days a week capability to support reliability,
and it also helps ensure the affordability and stability of
electricity prices.
Third, Section 1202's proposed reliability analysis
requirement for new major Federal agency rulemakings will fill
a significant regulatory gap. In recent years, the Nation's
fleet of electric generation facilities has been affected by
the new regulations promulgated by the United States
Environmental Protection Agencies that could have the potential
to jeopardize the reliability of the bulk electric system. The
proposed Section 1202 would ensure that the reliability effects
of proposed or new final rule are assessed in a timely manner
by the Federal Energy Regulatory Commission in coordination
with the Electric Reliability Organization.
I thank the committee for holding this important hearing
today, and giving me this opportunity to testify. And,
Chairman, and all members, let me say I so applaud the notion
of the architecture of abundance. You know, I speak nationally
in many different forums about the notion of policy for the
United States. It has been set for decades in the past on the
notion of scarcity. We have a singular opportunity today to set
policy based on abundance, and that really does change our
thinking. When I think about the obligation as CEO of one of
the most important energy companies in America, and the
obligation that you all have to face a broad constituency and
the broad entrance of your constituency, then I think that what
we must do is understand this notion that we have the
opportunity to restore manufacturing in America, grow jobs,
grow personal incomes, and make American lives better. And so
this opportunity of clean, safe, reliable, affordable energy
provided by nuclear, clean coal, natural gas, renewables, and
energy efficiency, is something we can all stand behind. But it
goes beyond the blessings of this Nation's resources. It really
goes to issues that you all have already talked about. Chairman
Whitfield, you referred to it, Congressman Barton referred to
it, and it is the notion of market design, because when I think
about the excellent design, where I come from, the Southeast,
an integrated regulated market design, we are incented to
provide the best reliability and the lowest prices, with the
best customer service possible. Different deregulated markets
are incented actually the opposite way; acting completely
rationally in an economic manner, they benefit from a lack of
reliability and higher prices and more volatility. We think the
work you are doing is really important to the success of the
American economy.
Thank you very much.
[The prepared statement of Mr. Fanning follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Thank you very much. Appreciate that.
And our second witness today is Ms. Elinor Haider, who is
vice president, Market Development, at Veolia North America.
And she is testifying on behalf of the Alliance for Industrial
Efficiency.
Welcome, and you are recognized for 5 minutes.
STATEMENT OF ELINOR HAIDER
Ms. Haider. Thank you. Chairman Whitfield, Ranking Member
Rush, and of--other members of the subcommittee, thank you for
the opportunity to testify.
My testimony will address the role of combined heat and
power in enhancing resiliency and reliability. With 180,000
employees worldwide, Veolia has been creating integrated energy
infrastructure and environmental solutions for over 160 years.
Last year, Veolia supplied 150 million with drinking and
wastewater services, produced 52 million megawatt hours of
energy, and converted 31 million metric tons of waste into new
materials and energy.
In the U.S., our 8,000 employees ensure the reliable,
efficient supply of energy with over 500 megawatts of owned or
operated combined heat and power, and the largest portfolio of
district energy systems. Veolia is a member of the Alliance for
Industrial Efficiency, a diverse coalition that includes
representatives from the business, environmental, labor, and
contractor communities. The alliance is committed to enhancing
manufacturing competitiveness, and creating job through
industrial energy efficiency, particularly through the use of
combined heat and power and waste heat to power. Both Veolia
and the alliance are pleased to see the recognition of CHP's
grid resiliency benefits in Section 1207 of the committee's
discussion draft.
Conventional power generation is inefficient. More than \2/
3\ of the fuel inputs are lost from our smokestacks as wasted
heat, and never converted to useful energy. Another 7 percent
is lost in the transmission and distribution of electric energy
over long distances and multiple voltage changes. The energy
lost in the U.S. from wasted heat in power generation is
greater than the total energy use in all of Japan. This
inefficiency costs consumers and businesses, and harms
America's competitiveness. By making use of both heat and
electricity from a single fuel source located closer to the
user, CHP dramatically increases fuel efficiency and eliminates
much of this waste. CHP typically uses more than 70 percent of
fuel inputs. By producing both heat and electricity on-site and
independent of the grid, CHP can run without interruption
during an extreme weather event.
As one of the U.S.'s leading owners and operators of CHP
systems, Veolia's customers benefit from the energy efficiency
and resiliency provided by CHP at universities, hospitals,
biotech, R&D, and other critical facilities.
The benefits of this expertise were on stark display during
the $70 billion Superstorm Sandy. While nearly 8 million
residents across the Mid-Atlantic lost power, those with
resilient CHP systems kept the lights on. There is no more
illustrative case than New York University, where Veolia has
played a critical role in implementing CHP. NYU has 2 campuses
in Manhattan. Ten years ago NYU selected Veolia to serve as
owner's representative, to design and manage expansion of its
Washington Square Campus energy plant. The expanded CHP system
generates up to 90,000 pounds of steam per hour, and 13
megawatts of electricity, serving 37 buildings. While the
majority of Manhattan was without power during Sandy, that
campus had electricity, heat, and hot water. It became a place
of refuge during the height of the storm. That NYU campus kept
the lights on. On the other hand, NYU Langone Medical Center
did not have CHP. It lost all power, knocking out its
communication systems, and leading to the dangerous forced
evacuation of critical care patients on gurneys and in dozens
of ambulances.
In response to its experience at the 2 campuses, NYU
selected Veolia to support development and operations of a new
CHP energy plant for the NYU Langone Medical Center campus. The
new plant has 13 megawatts of electric generating capacity, and
165,000 pounds per hour of steam. It will be completely self-
sufficient in the event of a utility power interruption. NYU
Langone will also keep the lights on. When we consider energy
resiliency, the price of inaction, such as the $540 million in
FEMA-funded repair work at Langone, needs to be considered in
our cost benefits analysis.
In the aftermath of Superstorm Sandy, New York, New Jersey,
Massachusetts, and Connecticut have each adopted policies to
support greater use of CHP. Other regions have also long
recognized that CHP can help keep critical infrastructure
online during extreme weather events. Following Hurricanes
Katrina, Rita, and Ike, Texas and Louisiana adopted legislation
to encourage CHP deployment in critical facilities. Texas has
model legislation that requires critical public facilities to
obtain a CHP feasibility study during any renovation or new
construction, and has laws that set minimum efficiency and
resiliency requirements for CHP systems. By encouraging
electric utilities to develop a plan to increase the
utilization of resiliency-related technologies, and supporting
cost recovery for such systems, the committee's discussion
draft takes an important step to help keep the lights on during
extreme weather events.
Both Veolia and the Alliance for Industrial Efficiency look
forward to working with the committee as it continues to make
these recommendations a reality through the architecture of
abundance.
Thank you for the opportunity to testify.
[The prepared statement of Ms. Haider follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Thank you.
And our next witness is Mr. Joseph Dominguez, who is the
Executive Vice President for Government and Regulatory Affairs
and Public Policy with Exelon Corporation.
So welcome, and you are recognized for 5 minutes.
STATEMENT OF JOSEPH DOMINGUEZ
Mr. Dominguez. Thank you, Mr. Chairman, members of the
subcommittee, thank you for the opportunity to be here today.
I work for Exelon. I head public policy for Exelon. We have
three major utilities serving about 8 million customers. We are
probably well--most well known as being the Nation's largest
owner and operator of nuclear facilities. We have about a \1/4\
of the Nation's fleet. We also buy and sell electricity and gas
in about 48 different States.
I am going to focus my comments today on Section 1208 of
the discussion draft, and I am going to try to reflect some of
the questions and answers that have already been rendered here
today.
It is universally recognized and very often stated that we
are in the midst of this major transformation in the electric
sector. In fact, it is so often stated that it is almost a
waste of your time to hear it again, except to put it in
context. No one believes this transformation is going to occur
immediately. It is going to unfold over many decades. The cost
of the transformation is yet unknown. It will have reliability
impacts. And so we need to focus, while we focus on new
technologies, also on the existing steel in the ground. I
believe that Section 1208 begins an important discussion of the
value of base load assets, but more importantly, of the value
of all central assets to maintaining reliability for consumers.
Today's hearing is appropriately timed. Chairman Whitfield
talked about the stresses on coal plants across the country.
Those stresses are being equally felt on nuclear facilities
across the country. About 5 percent of the nuclear assets in
the country have announced retirement. Additional units are
slated for retirement by 2019. Wall Street analysts and some
academics talk frequently about the potential for up to 25
percent of the Nation's fleet to retire.
Ironically, nuclear faces this crisis at a time where its
zero carbon attributes and its inherent reliability should be
most valued from a policy perspective. Nuclear power offers a
host of benefits. It provides over 60 percent of the Nation's
zero emission electricity. The units operate at over 90 percent
reliability across the country. And the polar vortex and PJM
was a good illustration of how valuable these units are for
supporting reliability for the 61 million customers in that
RTO. And on January 7 of last year, we often talk about almost
losing the system across this 13-State region. In point of
fact, we did lose the system from the perspective of not having
enough contracted resources, contracted capacity to keep the
lights on across the region. But for voluntary participation
from some demand response Providers, but for the fact that we
have some emergency imports from other regions of the country,
we would have had to go into load shedding in the teeth of the
worst winter. The performance of the units on that particular
day was extraordinarily poor. We lost about 47 percent of the
natural gas units across PJM, accounting for something like
20,000 megawatts of electricity. We lost 34 percent of the coal
that day. We lost 26 percent of the oil-fired generation. And
because the wind wasn't blowing, we didn't get a particularly
good performance from renewables. The fact of the matter is
that nuclear fleet across PJM was the reason we didn't have an
outage. Over 97 percent of the fleet continued to participate,
and that, along with hydro, carried the system on its
shoulders.
There have been a number of findings as a result of the
polar vortex experience. One of those findings is that the
capacity products we have in this RTO aren't sufficiently,
aren't proportionately, well designed to meet the load
requirements in the RTO. This is not a new problem. It was a
problem that was understood and addressed by the New England
ISO a couple of years in advance of PJM, but it took a crisis
in PJM, or a near crisis, to bring it to the attention.
Section 1208 properly drafted could codify some of the
lessons learned, and require that other RTOs embrace those
lessons learned as we move forward. And I am talking about New
York, I am talking about MISO, I am talking about California
RTOs. Additional work needs to be done, and it can't be done
after a crisis or a near crisis.
So we support the concepts in 1208. It has been talked
about today as being anti-distributed generation or anti-
renewable. I think the appropriate focus here shouldn't be on
the type of technology, but what we want out of that
technology. The discussion draft indicates that we want
something like 30 days of available fuel on-site, or available
to--through contract to support the Nation's needs in the time
of an emergency. No one is planning for that. At best, what we
are planning for is avoiding a 1-in-10-year crisis, but no one
is planning for having a system that would be available, for
example, if a terrorist attack or a cyberattack undermined the
gas infrastructure in the country, taking out natural gas
availability. We don't have a long-term plan for that. I think
1208 begins that discussion, and I think it is a necessary
discussion and one that will be helpful to all the RTOs, and
properly fashioned, will not exclude any technologies from
participation.
[The prepared statement of Mr. Dominguez follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Thank you very much.
Our next witness is Mr. Mike Bergey, who is the president
and CEO of Bergey Windpower. He is also board president of the
Distributed Wind Energy Association, and is testifying on
behalf of the Distributed Wind Energy Association.
So welcome, Mr. Bergey, and you are recognized for 5
minutes.
STATEMENT OF MICHAEL BERGEY
Mr. Bergey. Thank you, Mr. Chairman. Thank you, Ranking
Member Rush, and the subcommittee members for giving me the
opportunity to appear before you today.
My name is Mike Bergey. I am president and CEO of Bergey
Windpower Company, a 38-year-old Oklahoma family-owned business
that manufactures wind turbines. We are currently the world's
leading supplier of small wind turbines, and we have supplied
turbines in all 50 U.S. States, and over 100 countries around
the world.
As you mentioned, I am also president of the Distributed
Wind Energy Association, which represents the behind-the-meter
distributed generation segment of the wind industry. Not the
wind farms. That is the American Wind Energy Association. We
have a little over 100 members. They are mostly small
businesses.
Last year, 94 percent of the small wind turbines that were
installed in America were built here. So we are also part of
the renaissance of American manufacturing.
I have commented in my written testimony on all 8 proposed
sections, but I would like to confine my comments today to
Section 1207, because I believe that it has the largest
potential from my perspective of increasing the resiliency of
the Nation's electric power grid. It proposes to do so by
modifying PURPA. And I have some experience with PURPA because
I was involved with the first--when it was passed, and the
first implementations at the very State level. I think it is a
very powerful tool. I do like 1207's prescription that
regulatory agencies and utilities will have to look at various
ways to enhance resiliency. I will point out that PURPA, back
in 1978, under Section 210, was a critical element in the rise
of distributed generation in America, and it sparked the
creation of thousands of companies, millions of jobs, and
hundreds of billions of dollars in new investments in energy
generation technologies. I do see merit, as I said, in
requiring the States to take a look at the opportunities. Some
States, that will be duplicative; California, New York come to
mind, but it will also serve to get other States, like
Oklahoma, off the dime on that. So that would be welcome.
That said, I would like to point out some issues that I see
in the current draft of 1207 as being somewhat problematic.
First, it would seem to cover only regulated utilities, so
unregulated utilities, which include many rural co-ops, would
seem to get a pass under this. I may not--I may have missed
something, but that is my reading.
Secondly, it does not specifically mention renewable
distributed generation. It does mention distributed generation,
but not renewable. But renewable distributed generation is a
fast and growing segment of the distributed generation market,
and one with the greatest application to grid resiliency.
And finally, it provides a counterintuitive emphasis on
base load generation. On this last point, I say
counterintuitive because, as an engineer, it is my
understanding that a fewer number of larger assets is more
vulnerable and less resilient than a system with a higher
number of smaller assets, particularly if they have greater
special and fuel diversity. After you factor-in dependency on
functional--on the T&D network for base load plants to serve
critical loads, I see the proposed Section 22 as undermining
the intent of Section 1207, and potentially nullifying the
gains to be made in Section 20(b). It is now well-established
that an intermittency is manageable through combinations of
complimentary technologies, such as wind power and natural gas-
fired combustion turbines. So I see no compelling technical
reason to elevate base load plants to a protected status.
Reliability is the issue, not the way in which we get there.
The potential for distributed generation to contribute to
the modern grid should not be underestimated. We have just done
a white paper that shows tremendous potential for distributed
wind. The same could be said for distributed solar. And I think
emerging storage, there are lots of exciting new additions out
on the distribution network that can give us additional grid
resiliency.
My primary request of this committee is to bolster Section
1207 to take advantage of the opportunities in emerging
distributed renewable energy, storage controls, and other grid-
enhancing technologies offered today and tomorrow. If there are
legislative opportunities to promote distributed generation
beyond the discussion draft, I would encourage the committee to
seize those opportunities. Doing so will help build the
American economy, while delivering the improvements in energy
reliability and security that we all would like to see.
In summary, I believe the discussion draft contains many
worthwhile aspects, but I think it can be improved upon. I
appreciate that it is a draft, and I look forward to working
with the committee and the staff on further improvements.
Thank you for the opportunity.
[The prepared statement of Mr. Bergey follows:]
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Mr. Whitfield. Thank you, Mr. Bergey.
And our next witness is Mr. John Moore, who has been here a
few times before, and he is Senior Attorney for--and also
involved in the Sustainable FERC Project--from the Natural
Resources Defense Council.
Mr. Moore, welcome, and you are recognized for 5 minutes.
STATEMENT OF JOHN N. MOORE
Mr. Moore. Thank you, Mr. Chairman Whitfield, Ranking
Member Rush, and members of the subcommittee.
My name is John Moore, and I am delighted to be here to
participate in this hearing today.
I am a senior attorney at the Natural Resources Defense
Council. Most of my work at NRDC is for something called the
Sustainable FERC Project, which, as the name suggests, is a
coalition of environmental and clean energy groups that support
cleaner, more reliable, and affordable energy future primarily
through reforms to FERC and FERC jurisdictional markets.
Now, I want to make three points today, primarily. One, the
grid is a dynamic and always-evolving entity. But that is OK.
We have kept calm, we have planned ahead. The grid operators
and States are doing their jobs. Second, environmental
standards are compatible with reliability. And third, Congress
should take care not to do anything that would impede
innovation, hamstring grid planners, and prevent economic
progress.
So since 2005, our Nation has retired over 90,000 megawatts
of older and dirtier power plants, while adding over 200,000
megawatts of newer and cleaner utility-scaled generation, along
with many thousands of megawatts of energy efficiency, rooftop
solar, small wind, intelligent energy management systems.
Already, we are halfway to that 30 percent goal of cutting
carbon pollution by 2030. We are already making progress.
Now, speaking of dates, did you know what happened on 20--
on April 16 to the grid? I will tell you. Nothing happened,
which is a good thing for the grid. That was the initial
compliance deadline for the Mercury and Air Toxics Rule, which
EPA issued in 2012. Now, remember, many opponents of the MATS
worried that when we reached this deadline there would be
blackouts and other reliability problems. That did not come to
pass. Power companies planned ahead to upgrade or retire power
plants and build new resources. The grid adapted and it will
continue to adapt thanks to the hard work and ingenuity of our
grid planners; 2 of whom we have already heard from.
The same will be true with the Clean Power Plan. This
standard offers unparalleled flexibility, more so than any
other previous Clean Air Act standard, for States to choose
among different compliance solutions, while preserving and even
strengthening reliability.
So as you work through this legislation, we encourage you
to preserve the flexibility of electricity markets, States, and
grid planners to adapt and innovate to always-changing
circumstances.
To that point, we are concerned with several provisions in
the discussion draft that could conflict with these goals.
First, Section 1201. It provides broad amnesty for power plant
owners from liability under environmental laws. It fails to
acknowledge carefully designed environmental standards that
were intended to prevent reliability conflicts from arising.
The Clean Power Plan is one example of that. It could increase
conflicts between reliability and compliance, and threaten
human health and the environment.
Second, Section 1202 requires FERC to assess the grid
impacts of Federal rules that could affect power plants. This
provision is unnecessary because, as FERC points out in its
recent letter to EPA, we have already heard about that letter
today, FERC jurisdictional grid regions already are required to
assess the impacts of the environmental standards on grid
operations. So existing processes are the foundation for
compliance moving forward.
Finally, we have concerns about the base load elements of
Section 1207 and 1208, which we believe unfairly preference
expensive base load generation over other resources,
specifically, by freezing the grid's evolution in a moment in
time now, and creating a one-sized rigid system. At a time when
many regions are working to develop the nimble, flexible, and
reliable systems that we need to cope with increasingly extreme
weather events, these provisions would move us backwards.
So in closing, let's focus on policies that protect
reliability while cutting pollution, expanding our economy and
saving consumers money.
Thank you.
[The prepared statement of Mr. Moore follows:]
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Mr. Whitfield. Thank you, Mr. Moore.
And our next witness is Mr. John Di Stasio, who is the
president of the Large Public Power Council.
Welcome, and you are recognized for 5 minutes, Mr. Di
Stasio.
STATEMENT OF JOHN DI STASIO
Mr. Di Stasio. Thank you, Chairman Whitfield, Ranking
Member Rush, members of the subcommittee, and fellow panelists.
Thank you for inviting me to testify today. I am honored to
appear on this panel of distinguished witnesses, and appreciate
the opportunity to address the important issues facing the
electric sector as the country pursues key national priorities.
As was mentioned, my name is John Di Stasio. I am the
president of the Large Public Power Council, also known as
LPPC. Before I assumed this role earlier this year, I was the
CEO of the Sacramento Municipal Utility District, a public
power system located in northern California.
So LPPC is an organization of the 25 largest public power
utilities, providing electricity to 30 million consumers across
13 States, many that are represented by members on this
subcommittee, including Texas, North Carolina, Oklahoma,
California, New York, and Florida. LPPC members are also
dedicated to protecting the environment and the health and
welfare of the communities we serve. About 36 percent of LPPC
member-owned supply is carbon-free, including wind, solar,
nuclear, and hydro, and this number is expected to grow by 10
percentage points in the next 10 years. Over the same period of
time, LPPC members are also projected to purchase an additional
5,000 megawatts of carbon-free power, which will comprise 90
percent of the member supply purchases.
We are clearly in the midst of a transition to a cleaner
supply mix and a more dynamic electric system. As members of
the subcommittee are vitally aware, a significant aspect of
this transition is the need to anticipate a myriad of changes
required to meet grid modernization, environmental goals,
reliability, resiliency, and physical and cybersecurity goals.
The move to different base load generation, resiliency--excuse
me, integration of growing intermittent resources and new
technologies is technically achievable, but it does require
thoughtful planning, implementation, and coordination across
systems and regions. Current reliability provisions in the
Federal Power Act clearly did not envision a transformation of
the U.S. electric power sector, and the--while the current
system is robust, it is not infinitely flexible. This
transformation will not end in the next 15 years, given the
need to deal with other important priorities in the future. So
an appropriate, up-front reliability assurance mechanism, right
sized to the risk, will serve us well in that long transition.
I have the following points in this regard. LPPC's systems
are consumer-owned, so we are directly accountable to the
consumers and the communities we serve. They are affected by
our actions, so we seek to balance reliability, affordability,
and environmental stewardship. All reliability issues can be
overcome with enough time and money, but assuring reliability
prospectively when major changes are under consideration will
present--will prevent unnecessary delays and additional costs
for consumers. After-the-fact reliability review mechanisms are
also vital, but they are triggered by emergencies or unforeseen
conditions, as opposed to preventing them in the first place.
The members of LPPC are committed to reliability and
resiliency, and recognize an increased responsibility in that
regard. Given an increasingly digital world and a variety of
new and emerging risks, we work closely with Federal Government
in a variety of ways to proactively address challenges, and we
are committed to do so going forward.
I also want to thank the chairman for the discussion draft
released May 7. LPPC's members are reviewing the specific
sections and the legislative language in detail, and will be
pleased to work with the members of this subcommittee and full
committee to provide more specific input as the language is
further refined.
With that, again, I want to thank the chairman and members
of the subcommittee for their attention, and I would be happy
to address any questions that you have for me.
[The prepared statement of Mr. Di Stasio follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Thank you very much, Mr. Di Stasio.
At this time, our next witness is Emily Heitman, who is
vice president and General Manager for the Demand Side
Organization Power Transformers at ABB, Inc., and she is
testifying on behalf of the National Electrical Manufacturers
Association.
So you are recognized for 5 minutes.
STATEMENT OF EMILY HEITMAN
Ms. Heitman. Good morning, Chairman Whitfield, Ranking
Member Rush, and members of the subcommittee. My name is Emily
Heitman, I am Vice President and General Manager of Commercial
Operations for Power Transformers at ABB. Thank you for
inviting me to speak today on behalf of ABB and the National
Electrical Manufacturers Association.
I will be walking through the critical nature of large
power transformers, the challenges in replacing them, industry
and ABB's efforts thus far to mitigate resiliency risks, and
what is lacking in those efforts.
ABB is a leading manufacturer of power and automation
products, and services for utilities, industry, Government, and
transportation. We are the largest supplier of electrical grid
systems and large power transformers across the globe.
One of the most essential components of the electrical grid
is the large power transformer, otherwise known as the LPT.
LPTs either increase the voltage of electricity from generation
sources for long-distance transmission, or decrease the voltage
of electricity close to the end-user. The failure of a single
LPT can cause a power disturbance, however, the concurrent
failure of multiple LPTs could lead to a significant widespread
outage. While designed to withstand operational risks, such as
lightning strikes and power fluctuations, LPTs are still
vulnerable to a number of threats, like extreme weather events,
intentional criminal attacks, geomagnetic disturbances, and
electromagnetic pulse. Furthermore, the U.S. fleet of LPTs is
aging, and older units may be more vulnerable to disruption.
While most utilities do own a spare, for each large power
transformer design, they are generally placed directly next to
the units in use and are subject to the same risks that were
just previously mentioned. Replacing a damaged LPT is
especially difficult. The time to manufacture a new unit will--
which requires both designs, since few LPTs are made to the
same specification, and production, can take anywhere from 12
to 24 months. LPTs have unique materials and components
associated with their manufacturing, and unfortunately,
periodic material and component shortages can also delay their
production. Once manufactured, the transportation and delivery
of these large, ultra-heavy units also pose challenges. LPTs
can weigh more than 400 tons. This size and weight often
requires delivery by specialized train cars and trucks, of
which there is limited availability in North America. In
addition, with many of the existing LPTs having been in place
for more than 40 years, the routes of access once available may
have since been derated or even removed, leaving some
substations and LPTs virtually stranded. Since a large power
transformer must be disassembled to ship and then reassembled
on-site, unique knowledge, skills, and equipment are necessary
to complete the final installation of an LPT.
Now, industry and Government have both been responsive to
these challenges. NEMA has brought together transformer
manufacturers to develop industry recommendations. NEMA is not
alone. The Edison Electric Institute, the Department of Energy,
NERC, FERC, and the Department of Homeland Security have all
taken important steps to address grid resiliency. We support
and applaud all of these efforts, but we are concerned that
gaps still remain. At ABB, we are developing solutions to
significantly increase transformer resiliency. These apply to
both existing and new transformers. ABB's approach has 5
components: vulnerability assessment, design modifications to
harden the transformer, remote monitoring and communications,
rapid damage assessment and repair, and rapid deployable
transformers. But it is important to recognize that the
development of a rapidly deployable transformer will only
reduce the time it takes to transport and energize an LPT. The
manufacturing of those units still take months. Should an event
occur that requires a replacement transformer, utilities would
still face a long delay if there is no replacement unit in
reserve.
H.R. 2244, authored by Congresswoman Renee Ellmers and
Congressman Jerry McNerney, as well as the Energy and Commerce
Committee's discussion draft addressing reliability and
security, direct the Department of Energy to produce a plan to
create a strategic transformer reserve. ABB and NEMA support
this legislation. We believe the creation of a strategic
transformer reserve will fill a gap in our Nation's capability
to respond to the catastrophic loss of several LPTs. Having
reserves of LPTs located at strategic points around the country
would improve grid resiliency and complement existing industry
programs. Given the complexity of the electric system,
precisely how a strategic transformer reserve should be
designed and operated warrants further analysis. H.R. 2244 and
the committee draft direct DOE to undertake the needed review.
They offer an appropriate response to a significant
vulnerability to our Nation's electric grid and we urge the
adoption.
ABB and NEMA would like to once again thank the committee
for inviting us to testify on this important topic. Improving
the security and resiliency of our energy infrastructure
requires ongoing cooperation between Government and industry.
ABB and NEMA are fully committed to this effort.
I look forward to answering your questions.
[The prepared statement of Ms. Heitman follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Thanks very much, Ms. Heitman.
And then our next witness is Mr. Elgie--is it Hol-steen or
Hol-stine?
Mr. Holstein. Hol-steen, thank you.
Mr. Whitfield. Hol-steen. Mr. Elgie Holstein, who is the
Senior Director for Strategic Planning at the Environmental
Defense Fund.
We are delighted you are with us today, and you are
recognized for 5 minutes.
STATEMENT OF ELGIE HOLSTEIN
Mr. Holstein. Mr. Chairman, thank you--and members of the
subcommittee, thank you for this opportunity to share our
thoughts about the draft bill before you today.
Achieving environmental reliability and other goals of grid
modernization will be hindered by any measures that
straightjacket rather than enhance the grid's increasing
agility. That is the risk represented by Section 1202 of the
draft, which requires the preparation by FERC and NERC of an
independent regulatory analysis for any major proposed
environmental rule. Simply stated, this appears to be an
overreaction to fears about the rapid changes underway in the
electric utility industry, and perhaps to EPA's proposed Clean
Power Plan. Those fears are groundless and do not reflect
processes in place to assure reliability.
Consider the fact that from 2011 through the end of this
year, some 36 gigawatts of base load power will have been
retired with no discernable adverse impact on reliability. At
the same time, new power plants, more renewable capacity,
transmission upgrades, and numerous demand side energy
resources will be added to the diversity and reliability of the
grid.
This remarkable ability by the electricity sector to adjust
to changing market conditions and regulatory expectations
demonstrates a fundamental point; that the industry, working
together with FERC, State utility regulatory commissions,
regional transmission organizations, and independent system
operators can meet the Nation's need for reliability.
In a May 15 letter to EPA, the FERC commissioners
summarized their role in assuring reliability. They said in
part the following, reliability also depends on factors beyond
the commission's jurisdiction, such as State authority over
local distribution and integrated resource planning. The
commission is not seeking to alter this balance.
The commissioners' letter is a reminder that planning for
and delivering grid reliability, including the consideration of
potential impacts from proposed new environmental rules, is
secured through the interaction of multiple parties over time,
including those at the regional and State level, and those
actively engaged in markets. The problem with Section 1202 is
that it upsets this balance of interest by elevating the role
of FERC and NERC in major environmental rulemakings. As the
FERC commissioners make clear in their letter, a thorough
assessment of the impacts of, for example, the proposed Clean
Power Plan, requires the ongoing input of diverse perspectives
and expertise.
We have a similar concern with elevating the role of NERC
in Federal agencies' environmental rulemaking. The fact is that
NERC has been overly cautious and consistently pessimistic,
also consistently wrong, about the ability of industry and
regulators to adjust to changing conditions, including
environmental rulemakings. Now, NERC does play an important
role by giving voice to a conservative, worst-case outlook as
part of a mix of organizations with unique perspectives and
responsibilities for reliability, but its views should be
considered along with other voices, not granted an elevated
role in the environmental rulemaking process. Perhaps a
stronger case could be made for Section 1202 if environmental
agencies were failing adequately to consider the reliability
impacts of their rulemakings, but there is no evidence of that.
I would like to turn now to a brief discussion of the other
sections of the draft bill. Section 1201 includes what amounts
to an opt-out for parties found to be in violation of any
Federal, State, or local environmental law or regulation while
operating under an emergency order. Again, there seems to be
little, if any, need for such provisions. The Department of
Energy has issued fewer than 10 must-run orders, and only once
has such an order resulted in a claimed conflict with
environmental requirements. That was mentioned earlier today by
one of the members of the subcommittee, who noted the Miron
Plant, which was the company involved here, but it was later
found that the plant had not taken prudent actions that it
could have taken to operate in a manner that was in compliance
with both DOE's order and EPA's requirements.
Potential hazard inherent in Section 1201 is that it will
provide a perverse incentive for utilities to slow their
compliance activities. Sections 1204, 1205, and 1206 establish
some potentially worthwhile approaches to addressing critical
electricity, infrastructure emergencies, and the loss of
critically damaged large power transformers, as well as the
need to identify cybersecure technologies. Again, we think
these provisions are well worth serious consideration by the
committee.
Section 1207 usefully directs State commissions to consider
requiring electric utilities within their jurisdictions to
develop plans to increase the utilization of resiliency-related
technologies. Unfortunately, Section 1207 then veers off
course. By restricting its focus to base load generation, and
listing reliability attributes, the section marginalizes the
rapidly grown role of renewable generation, storage, and demand
side resources.
And finally, as in Section 1207, the capacity market
criteria in Section 1208 create the same bias in favor of
traditional base load generation, and against a broader
portfolio of resources that are increasingly important to
capacity markets and, therefore, to reliability.
Environmental Defense Fund believes that there are some
worthwhile elements to the draft, especially regarding planning
for emergencies and for physical and cyberattacks on the grid.
We look forward to working with you, Mr. Chairman, and members
of the subcommittee.
[The prepared statement of Mr. Holstein follows:]
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Mr. Whitfield. Thank you, Mr. Holstein.
And thank all of you very much for your patience and
staying here with us today. We appreciate your testimony.
You know, these hearings are so enlightening because it is
always good to hear divergent views on these key issues. And we
have heard the broad spectrum of views on this discussion
draft, and it is quite obvious to everyone that the very key to
this is base load electricity. And some people want to move
away from that, some people want to protect it.
But the question that I would ask is--I will ask you, Mr.
Fanning and Mr. Dominguez, to comment on it. Why is--well, let
me back up a minute. We have heard a lot of discussion about
there is really should not be a concern about reliability, and
maybe we could agree with that, but I would also point out at
this time renewables minus hydro is producing only 6 percent of
the electricity in the country. So the fact that there hasn't
been a reliability problem to this point is encouraging, but
with the mad rush for more renewables, I don't think that we
can emphatically say that there won't be a reliability problem
in the future. But why is base load electricity still
important, Mr. Fanning?
Mr. Fanning. Yes, thank you, Chairman. As I mentioned
before, as CEO of a major company representing 4 \1/2\ million
customers, and let's remember, of the families we are
privileged to serve in my area of the United States, fully 46
percent of those families make less than $40,000 a year. And
they are making tough kitchen table economic decisions every
day. And while there are awfully laudable outcomes from efforts
to improve our air and water and other things, I must be
accountable to those families by providing a balance of clean,
safe, reliable, and affordable energy. We can't let any one of
those attributes essentially subvert the other. And when I
think about the value of base load electricity, it provides us
an avenue to essentially play offense against all the economic
and other challenges this great Nation faces right now. And I
think when we are able to provide for a sure supply of
electricity at reasonable prices that will not be volatile,
remember, when we think about in finance or in business----
Mr. Whitfield. Is that one of the definitions of base load;
not volatile?
Mr. Fanning. Yes, generally. When you think about nuclear
and coal and some others, it is--biomass, for example, they
have a much more reliable stream of energy profile over time,
as compared to the high volatility of natural gas and the
intermittency of renewables. So it is really important to
balance clean, safe, reliable, affordable.
Mr. Whitfield. And one of the things that you point out in
your testimony, Mr. Dominguez, that on January 7, 2014, you
went through a litany of outages--forced outages. Is that what
you were referring to on base load--the importance of base
load?
Mr. Dominguez. Yes. I think we get caught up in the use of
the word base load. Let's substitute the word base load for
generation that has 3 attributes. It doesn't depend on the
weather to work. That would be one criterion in the definition.
The second criterion is it has on-site fuel. For a period of
time, we don't have to worry about an interstate system to
bring fuel to it for its just-in-time operation. And the third
attribute I would say is it provides fuel diversity. Most
technologies provide fuel diversity and are important, but the
2 things that base load, the way we have defined it, does is it
provides certainty that it is going to be here on August 7 of
this year, January 7 of next year, regardless of the weather
condition, regardless of whether it is snow or wind or
whatever. And it doesn't depend on external sources for fuel.
For example, for nuclear, we have 24 months of fuel loaded in
the core. That lets the grid operators sleep easy that no fuel
interruption----
Mr. Whitfield. Um-hum.
Mr. Dominguez [continuing]. Is going to cause an outage.
Mr. Whitfield. Well, was it the consensus among
professionals in the electric generating business that, in the
latest polar vortex, that without the base load, as you
described it, that we would not have been able to meet our
obligations?
Mr. Dominguez. Unquestionably true. And I can tell you in
polar vortex 1 and 2, we saved our customers over $125 million
by being able to shift fuels from one to another. So the
diversity--the value of the portfolio is enormous.
Mr. Whitfield. OK. My time is already running out, but I
read all of your testimony. I didn't--there was a couple of
them that came in late last night, I didn't get to finish
reading those, but I read yours, Mr. Moore, and, Mr. Fanning, I
know you also addressed Order 1,000, and we would like to
continue some discussions about Order 1,000 and some of the
issues that that provides as well.
So at this time, I would like to recognize the gentleman
from Illinois, Mr. Rush, for 5 minutes.
Mr. Rush. Thank you, Mr. Chairman.
Mr. Dominguez, I want to thank you for your testimony
today, and especially your comments regarding the nuclear
fleet's contribution as carbon-free base load power.
My State of Illinois is--almost \1/2\ of the State's
electricity comes from nuclear power. And Exelon recently said
that iit may have to prematurely retire up to 3 nuclear power
plants in the State of Illinois. And maybe you could take a
moment or so to explain or to share with me the effects that--
to the ratepayers in my State if this would happen, and if you
could also speak to the environmental impact that closing these
plants would have on my State.
Mr. Dominguez. Sure. Well, I don't think we need to look
further than the State reports themselves. In 2014, the
Illinois House asked State agencies to consider the economic
environmental reliability and cost impacts of losing 3 of the
State's 11 nuclear facilities. The conclusions were that, from
an economic standpoint, we would lose approximately $1.8
billion in economic activity associated with the employees at
the plant, and other economic effects.
The Illinois Commerce Commission commissioned PJM and MISO
and also other independent experts to analyze the cost of power
increases associated with losing the plants in a supply and
demand market. They concluded that the cost on an annual basis
would be something like $500 million to $1.2 billion a year.
And then lastly, the Illinois EPA was tasked with asking
the question about compliance with upcoming rules around carbon
that EPA is working on 111(d). And conclusion was that without
the plants, the cost of compliance to Illinois customers could
be $18 billion higher over a 10-year period.
So in sum total, they concluded that the cost was about $3
billion a year in terms of customer and economic impacts
associated with the loss of the plants. When you think about
these assets, and there is--I heard some questions this morning
about assets that are 25 years old, some of these plants are 25
years old, but that doesn't tell the story. They are designed
to run for 60 years. They are designed to run up to 80 years,
we believe. So simply pointing out that something is old
doesn't provide any information if you don't have context
around the design life. And the point I am making,
Representative Rush, is that these impacts will be felt each
year of that remaining design life where the assets are no
longer available, because once they are shut down, they don't
get turned back on.
Mr. Rush. I want to thank----
Mr. Dominguez. And we are looking at tens of billions of
dollars.
Mr. Rush. Yes, I am running out of time here.
Mr. Moore, Mr. Holstein, from your experiences, in the more
than 40 years that EPA has been implementing the Clean Air Act,
has compliance with air pollution standards ever resulted in
reliability problems?
Mr. Moore. The answer is no, Mr. Rush. The answer is no, it
has not. The EPA regulations have worked in coordination with
grid operators, reliability authorities, States and others.
Order 1,000, as you mentioned earlier, really worth a lot more
discussion probably than we have time here for today, but that
order really helps create new forums and processes for States
and FERC and FERC jurisdictional regions to work together, and
help resolve some of those thorny jurisdictional issues. So
that is helping now.
Mr. Rush. Mr. Holstein, do you agree with the approach
taken in Section 1202 that makes it unclear if FERC has the
legal authority to delay or block EPA rules if the commission
was not able to complete its reliability analysis by the
deadlines mandated in this draft?
Mr. Holstein. Mr. Rush, as I stated in my testimony, I have
many reservations about Section 1202 mostly because, even
though it is clearly intended to help ensure reliability, I
believe it actually does the reverse because it elevates the
views of parties, specifically FERC and NERC, who admittedly
have an important--very important role in the reliability--
maintenance of reliability. But they don't have the only role,
and as they indicated in their letter to EPA, they stress
themselves that a balance must be struck in considering--in
providing input to rulemaking agencies such as EPA, and that
balance means let's involve actual market participants and the
regulators that they work with at the State level. And I think
it would be a shame if we elevated FERC and NERC's role to the
detriment of the other entities that play such an important
role in reliability.
Mr. Rush. Thank you both.
I yield back, Mr. Chairman.
Mr. Whitfield. The Chair recognizes Mr. Olson of Texas for
5 minutes.
Mr. Olson. I thank the Chair.
In using a term from college basketball, welcome to the
elite eight, all of you.
My first question is for our friends at ABB, Ms. Heitman. I
appreciate your support for this bill's strategic transformer
reserve. I agree this is worth considering. One question I had
for you though is on hardening new transformers. You mention in
your testimony, and I don't want you to say anything that can
be used against those trade secrets, but I would like to ask
about that. What are some things that the next generation of
large transformers should be defended against? EMPs,
cyberattacks, men with rifles like California, what keeps you
up at night, Ms. Heitman?
Ms. Heitman. Thank you, Congressman Olson.
We are absolutely committed to developing technology to
respond to the resiliency concerns on all four counts that I
mentioned; the criminal attacks, extreme weather, GMD, EMP.
Some of the things that we are doing that I can share with you
today, we are in the final stages of development of a ballistic
protection for the transformer itself, as well as shielding and
fortifying the critical components and valves of the
transformer. We have technology available today for dry
bushings. Why dry bushings are so important today, the majority
of transformers installed have oil-filled bushings. In a
failure mode of any type, which could occur from any of the
mentioned threats, an oil-filled bushing actually drops down
into the tank and can cause a failure of the transformer
itself. Dry bushings on the other hand, we have many videos
that you can shoot at a--at the dry bushings, no failure occurs
at all, and most importantly, it does not drop down into the
tank.
And finally, with remote cooling, we have this technology
available to be able to place the cooling at a--in a remote
location away from the transformer, and potentially in a secure
location.
Mr. Olson. And these are all cost-effective steps, correct?
They will be supported by the economy, they are not
overburdensome, is that fair to assume?
Ms. Heitman. The dry bushings have already been adopted by
many utilities----
Mr. Olson. Yes.
Ms. Heitman [continuing]. And remote cooling was actually
adopted by CenterPoint in the recent example of the recovery
transformer shipped.
Mr. Olson. There we go, the market speaks.
Mr. Fanning, for you, I appreciate your testimony and the
conversation about information-sharing. It sounds like the ESCC
is doing a good job, and I would like to delve into where we
are in keeping an open line of communication between industry
and Government. What kind of information is being shared today
from company to company, and between companies and Government?
Mr. Fanning. Yes, thank you very much for that question. In
fact, there was a report given to the administration, the
President, from the National Infrastructure Advisory Council
that called out the ESCC as kind of the benchmark for all other
coordinating councils to follow. I think there are a number of
different reasons why that is, including CEO participation and
the fact that in the electricity industry, our genetic material
is all about reliability and keeping the lights on, and that
really drives the United States' economy.
With respect to the threats, we have put in place standard
technologies, software, and information-sharing regimes across
our companies, and run then through--you had Gerry Cauley on
earlier, this ES-ISAC, where we have now processes in place to
assess before the problems occur and take action. And so that
has been critically important. Aligning ourselves has been a
great step forward. The next challenge will be aligning our
other interdependent organizations, including telecom,
transportation, water, and the financial systems. It is an
enormous effort and it is something we are working on right
now.
Mr. Olson. A lot of work for this committee, obviously.
Mr. Dominguez, care to comment on that, sir? I am sorry,
the EEO--what is the acronym here? ESCC.
Mr. Dominguez. We also are participating. I think Tom
framed it exactly right, I think there is a lot of good work
going on and we welcome the conversation going forward.
Mr. Olson. We are out of time. The final fun question. I
talked about basketball, the elite eight, to open this line of
questioning. Ms. Heitman, you are from Houston, Texas; Clutch
City, USA. Who will win the basketball tonight out there in
Oakland, the Houston Rockets or the Golden State Warriors?
Ms. Heitman. I think ABB has no response on that.
Mr. Olson. Yield back.
Mr. Whitfield. I also want to thank Mr. Olson for raising
the issue of dry bushings.
At this time, I recognize the gentleman from California,
Mr. McNerney, for 5 minutes.
Mr. McNerney. Well, I have a projected answer for Mr.
Olson's question. I think the Warriors are going to do pretty
good tonight. So, you know, actually----
Mr. Olson. Fear the bear.
Mr. McNerney. All the testimony was really good. I would
love to ask every single one of you specific questions, so
thank you for coming out and talking.
I have repeatedly asked my republican colleagues to embrace
carbon sequestration because climate change is coming, it is
here, and we need to start doing things about it. If we don't,
some of the coal-generating facilities are going to be seeing
more problems.
Mr. Fanning, you have a project going at Kemper. Could you
just give us a rundown on where you are on that?
Mr. Kemper. Yes. Real quickly, you know, people do a lot of
rhetoric. There is one company in America doing all the above,
and it is Southern Company. Leading the United States in new
nuclear, we are building 21st Century Coal, that is the one you
are talking about. We have made a huge shift in natural gas,
one of the leading owners of solar, and big in energy
efficiency.
With respect to 21st Century Coal, we have developed out
own technology, we are the only company doing robust,
proprietary research and development in our industry. We
developed a technology along with our partner, Kellogg Brown
and Root, which will take native Mississippi lignite, we will
essentially gasify it, and we will be able to strip out the CO2
so that we can produce more electricity with less of a carbon
footprint than natural gas. And in this case, the CO2 will not
be a waste stream; we will use it to produce more domestic oil
production.
Mr. McNerney. Yes, very good. And you are also, as you
mentioned, developing nuclear, so you must have done the
calculations that that is a positive----
Mr. Fanning. Absolutely.
Mr. McNerney. Very good. I think I heard you say toward the
end of your testimony that the--an unregulated utility market
would lead to some problems. Was I right in hearing that?
Mr. Fanning. Yes.
Mr. McNerney. OK, good. Could you expand on that little
bit?
Mr. Fanning. Yes, easily. I think the only way you can do,
and it is one of the reasons why Southern Company is the only
company in America doing a full portfolio of solutions, is
there are no price signals in existence today to build new
nuclear, for example, in a deregulated market. There are no
price signals in existence to build and advance the notion of
21st Century Coal in America in any deregulated market. And, in
fact, when you think about the incentives, I mean I will just
pull Exelon out, Chris Crane and I--the CEO of Exelon and I--
agree on this, he is a wonderful friend of mine and all that,
but, for example, Exelon would benefit, your bottom line would
benefit, from a carbon tax. You produce a lot of your energy
from nuclear, which emits no carbon, and that is a good thing.
A carbon tax would be bad for America, in my view, because it
raises the price of energy, where America has a global
competitive advantage.
So what I get at there is, there are incentives in
deregulated markets, which reward higher prices. In an
integrated regulated market, you are rewarded for lower prices.
In a reregulated market, because prices go up during times of
scarcity, there are incentives--there are a lack of incentives,
anyway, to reduce scarcity.
Mr. McNerney. Right.
Mr. Fanning. In my market, in transmission and
distribution, we spend about $1 billion a year in the wires
business.
Mr. McNerney. Thank you. I am going to switch you over to
transformers. Ms. Heitman, you gave a list of things that would
improve the reliability resilience of transformers. It was kind
of quick so I wasn't able to write it down. Do you think those
items should be identified in the legislation, or some more
general way to discuss those?
Ms. Heitman. I think that part of them--most of them
actually already are identified as far as the need to both
harden the existing--the hardening of the existing units I
don't believe are--is in the legislation itself. I think that
has got to be finalized in development by the industry at this
point, but as far as the ability to respond in an emergency
situation, yes, I think that is critical. I think the rapid
replacement in the case of a damage of multiple LPTs has--is
addressed with the recovery transformer program.
Mr. McNerney. OK, thanks.
Mr. Holstein, you--do you see this Section 1208 affecting
grid modernization or new technologies being developed for the
grid? In other words, you said that this straightjackets the
utilities, could you explain that a little bit please?
Mr. Holstein. Yes, I think the criteria that are laid out
in the section, as I said in my testimony, create a bias in
favor of traditional base load generation. And I want to say
something about that in just a moment. But at--in so doing, it
reduces or marginalizes the role of many of the other tools
that are increasingly available to grid planners in order to
provide reliability. So I think in that sense, it is
counterproductive. But a fundamental point I want to make is
that in listening to this discussion, it might be easy to
conclude that there is some kind of either/or proposition here;
that you are either for base load generation or you are against
it. My organization, Environmental Defense Fund, has supported
lots of base load generation including license extensions for
nuclear plants. So base load is part of it, but we just want to
make sure that in legislating for reliability, we don't
marginalize the many other tools that are available, including
demand side resources, renewables, et cetera, even if you
believe that the contributions they make are not as great as
the contributions that base load makes. It doesn't matter. What
we are after here is a diverse portfolio and, therefore,
because there is this connection, a more reliable grid.
Mr. McNerney. Thank you.
Mr. Chairman, I yield.
Mr. Whitfield. Gentleman yields back.
At this time, I recognize the gentleman from Pennsylvania,
Mr. Pitts, for 5 minutes.
Mr. Pitts. Thank you, Mr. Chairman. Thank you very much for
this very informative and interesting testimony.
Mr. Dominguez, some argue that maintaining base load
generation is not critical to reliability, and that such
generation can be replaced by simple load shedding and other
demand side management strategies. What is the problem with
overreliance on load shedding as strategy for mainlining
reliability?
Mr. Dominguez. Well, I--you know, I think it almost answers
itself. When we are asking or customers to give up the use of
electricity to preserve the reliability of the system, that is
OK if it is done on a voluntary basis and the customers can
preplan, but if we are literally putting our system in a place
where, in order to maintain reliability, we have to
involuntarily shut down customers, it is a very dangerous spot
for us to be, and on behalf of the 8 million customers we
serve, clearly not what they expect from the electric system
and the service we provide.
Mr. Pitts. Now, you talk about the need to balance
reliability and affordability and clean energy, and a lot has
been made of the push for more renewables in Europe, and I
Germany in particular, how have those policy decisions affected
reliability and affordability of electricity?
Mr. Dominguez. Well, I think the affordability question has
been answered, unfortunately, for German consumers at least.
The reliability question still remains. Presently, the rate for
electricity in Germany is about 50 cents U.S. per kilowatt
hour. That is about three times or better the rate in the
Philadelphia area that we serve, Baltimore or Chicago. Many
have begun to talk about electricity in Germany as a luxury
product. And I think the lesson from Germany was that it moved
very quickly into these technologies without fully
understanding the impact on cost for the average consumer. Mr.
Fanning talked about the economic issues that face his
customers. Our customers face the very same issues. 300 percent
increase in rates would be a problem. At the same time the
country made a decision to begin shutting down its nuclear
assets, which has meant that not only prices increased, but
emissions have also not followed the trajectory one would
assume through the increase of renewable energy.
So I think there are a lot of takeaways from the European
experience. This is a transition that could be managed, but we
need to manage it carefully. We need to pay attention to the
resources that keep prices low, that keep electricity reliable,
and that are working today and could work, and are designed to
work, for decades into the future.
Mr. Pitts. One thing we learned recently is that in
Portugal, which has invested in a lot of renewables and natural
gas, LNG, that the market now has caused them to buy a lot more
coal and produce a lot more electricity with coal because it is
so cheap. I mean the market force is there. You want to comment
on that?
Mr. Dominguez. Yes, sure. I mean the situation in Europe is
different than the U.S. situation in the sense that shale gas
availability has not reached the same proportional level of
involvement in Europe. It is a really minimal player, so they
still depend on natural gas imports from Russia and from other
countries. And so what they have found in Europe is that, to
offset the variability of renewables, coal steam generation
units do a pretty good job of filling the gaps when the
renewables don't operate for environmental reasons. So as a
consequence to that, they buy more coal, emissions unexpectedly
have increased, notwithstanding the substantial and growing
contribution of renewables in these markets.
Mr. Pitts. In the minute I have left, you mentioned in your
testimony that--the fact that hydro and nuclear power was
primarily responsible for keeping a lot of us from losing power
during the polar vortex, and that we lost power from natural
gas and coal. Why did that occur?
Mr. Dominguez. Well, a couple of different reasons. For--as
Gerry Cauley mentioned when he was here earlier this morning,
what we found is that the equipment wasn't robust enough to
sustain the very severe weather temperatures. And so that took
about \1/2\--of the 47 percent of natural gas that didn't show
up, \1/2\ of it was the equipment just didn't work because it
got real cold. The other \1/2\ was, it was connected to gas
pipelines but there were no molecules in those pipelines.
For coal it was a similar story. We saw coal plants that
weren't appropriately ready for the weather conditions. But
then in addition to that, you have to recognize that a number
of the coal plants in PJM require natural gas to start. So if
natural gas isn't available, you can't start the boilers and,
therefore, you lost the coal plants. That was kind of the
story.
Mr. Pitts. Thank you, Mr. Chairman.
Mr. Whitfield. Gentleman yields back.
The Chair recognizes the gentleman from New York for 5
minutes.
Mr. Tonko. Thank you, Mr. Chair. Welcome to our witnesses.
Mr. Bergey, in your testimony you indicated that Section
1207 of the draft provides ``a counterintuitive emphasis on
base load generation.'' Some have suggested that adding more
distributed generation to the grid could indeed reduce its
reliability because of the integration challenges and the
variable nature of renewable power. Do you agree with that
sentiment?
Mr. Bergey. No. I have heard it for 30 years and it
hasn't--wasn't true then, it is not true now. In fact, over the
last 30 years, the power electronics that are used to interface
the variable resources with the grid have gotten much more
sophisticated, and they have risen to the degree now that we
can provide our support, power factor correction, we can even
reduce harmonics that come from your home computer power
supply, for example.
Thirty years ago we were told, and there were rules passed
that require wind systems, solar systems to go offline almost
immediately with any grid disturbance. Now, we are coming full
circle and being asked to stay on and help support the grid
through short-term disturbances because there is a recognition
that this can be done safely and cost-effectively with existing
technology. And this is technology that is on the move. We are
getting cheaper, more capable, more interconnected electronics,
and the more that those are spread over with solar, wind,
storage, and other resources such as that, the rise of micro
grids gives us, I think, tremendous capabilities for the future
for adding resiliency.
Mr. Tonko. Well, with that being said, are you concerned
that Section 1207, as currently drafted, may discourage further
innovation and adoption of renewable generation, energy
efficiency, micro grid, and energy storage technologies?
Mr. Bergey. I do have concerns with the way it is written,
if that was the question.
Mr. Tonko. OK. Any recommendations on how to improve that?
Mr. Bergey. Well, I think, as I said in my testimony, I
think elevating base load to a special status is
counterproductive; that we should take an all-of-the-above
approach. I agree with many of the statements that have been
made about the value of base load, and it has an important
role. I can't tell you how the transition of the power grid is
going to go over the next 30 years, but I can say that
distributed generation for certainly--for sure is going to play
an increasing role and give us increasing opportunities. It
would be unfortunate if the legislation put a--you know, was
more of an anchor than a sail.
Mr. Tonko. Um-hum. Mr. Holstein, in your testimony you
stated that the capacity market design feature in Section 1208,
requiring generation to be available essentially every day for
a period of at least 30 days, may put ratepayers at risk of
higher costs. Is this because you believe RTOs and ISOs may
encourage overinvestment in that base load power----
Mr. Holstein. I think----
Mr. Tonko [continuing]. Context?
Mr. Holstein. Yes, sir. I think--but that is not the only
reason. As I indicated in my testimony, if you look at the
criteria that are laid out in Section 1208, this is true of
Section 1207 as well, but in 1208 with respect to capacity
markets, the legislation as it is currently drafted creates a
set of criteria, the 30-day limitation, for example, seems
especially capricious and unnecessary, and overall, I think it
forces this overreliance on base load, and as I said in my
testimony, marginalizes all the other resources that can be
brought to bear, not always perfectly, but nonetheless do play
a role, and an increasing role, in bringing about the grid
reliability that the subcommittee members are so concerned
about maintaining, and rightfully so.
Mr. Tonko. And what impact do you think that this would
have on energy efficiency and other demand response or
management programs?
Mr. Holstein. I think it would have a chilling effect for
the reasons I have said, because of this imbalanced emphasis on
base load brought about by this set of criteria that you can
see, looking, for example, on page 40, that really puts
reliability and capacity market reliability through capacity
markets in a box. And I think that is unnecessarily
restrictive, and I would hope that the members of this
subcommittee would embrace once again the notion that
competitive markets work best, and they work best in providing
reliability, just as they work best in providing lots of other
things.
Mr. Tonko. Mr. Moore, your sense of that? Any comment in
that regard?
Mr. Moore. I think Mr. Holstein is right, and that as we
move increasingly to more renewable energy, base load
generation isn't as effective as bringing the--integrating the
renewable energy into the system as other forms of dispatchable
generation like some combined cycle natural gas plants. One of
the things I want to bring out is really a groundbreaking study
that General Electric did for PJM, which is essentially the
Nation's largest grid operator, last year this study found that
you could integrate 113,000 megawatts of wind and solar into
the PJM grid, that is about 30 percent of total generation,
without any additional reliability effects, and with virtually
no additional ``backup power.'' So you have those facts, plus
the fact that you are burning a lot less coal and natural gas,
saving consumers money that way as well and cutting carbon
pollution. So you can have an equally reliable grid with a lot
more renewable energy in it than we have now.
Mr. Tonko. Thank you.
Mr. Chair, I yield back.
Mr. Latta [presiding]. Gentleman yields back.
The Chair now recognizes himself for 5 minutes.
Mr. Fanning, if I could ask you. The discussion draft
permits owners, operators, and users of bulk power system
facilities to recover prudently incurred costs for complying
with an emergency order. I assume you support this, and why
would that be important?
Mr. Fanning. Absolutely. You know, and the only kind of
modification would be this notion of prudent, get to
reasonable, but in the time of an emergency, we absolutely need
to take the steps necessary to keep the lights on. We don't
want to get in an argument about what is required at that
moment. Let's get to job one and take care of that.
When I think about the broader, non-emergency conditions in
any sort of RTO or ISO, we need to make sure that there are
enough mechanisms in place to provide for reliability and
balance the notions of clean, safe, reliable and affordable. We
need to make sure all that works well.
Mr. Latta. Thank you.
Ms.--is it--I want to make sure, is it Haider?
Ms. Haider. Haider.
Mr. Latta. Thank you. Could you describe some of the
reliability and security benefits of innovative technologies
such as combined heat and power and waste heat to power?
Ms. Haider. Sure. I mean, the real benefit of combined heat
and power, which by the way, is an energy-efficiency
technology, not a renewable technology, is that it generates
heat and electricity from a single fuel source. So by capturing
the waste heat from the electric generation, you are increasing
your fuel efficiency and eliminating some of that waste. So as
I stated earlier, CHP can actually use more than 70 percent of
its fuel inputs, so there is an incredible amount of efficiency
in that power and heat generation simultaneously.
Combined heat and power right now is about 8 percent of
U.S. generating capacity, so it is actually a fair amount of
capacity; 82 gigawatts of installed capacity.
Mr. Latta. Thank you very much.
And, Mr. Di Stasio, do you believe that recent and pending
environmental initiatives could threatened electric
reliability, and if so, are there significant economic trends
and factors affecting that grid reliability today that we
should be cognizant of?
Mr. Di Stasio. Thank you. So I think that people have been
focused, as was on the first panel, with the Clean Power Plan,
and I would just say that the only difference is, I would agree
with my colleagues that said we haven't had an issue with
reliability in 40 years, but there is a cumulative impact over
time, and there is also, I would say in the CPP, a much more
transformative nature to it because of the significant change
in power supply and power flows. That said, our testimony was
really intended to be focused generically on the fact that we
are trying to seek key Federal environmental action, and at the
same time trying to modernize the grid. We are adding more
digital devices, we are looking to introduce more renewables.
All of these things are worthwhile pursuits, but being able to
look at them in a prospective way is what we were advocating.
And so relative to Section 1202, while all of the
triggering mechanisms and the time frames for studies may not
be exactly right as proposed, the point is is that if we took
some time to make sure we got it right the first time, we will
make sure that, at the end, consumers won't be exposed to
unnecessary reliability risks or unnecessary costs, or for
doing things in a retroactive manner.
Mr. Latta. Well, thank you.
And, Ms. Heitman, if I could ask you just a follow-up from
Mr. Olson from Texas, when you were talking about the LPTs and
the lifespan of where we are, because I thought it was
interesting, in your testimony you say that, you know, we have
some of the units out there being 70 years of age. What percent
would that be?
Ms. Heitman. I am not sure exactly what percentage is
greater than 70 years, but the majority of the transformers in
the--installed today, according to the DOE report that exists,
is 25-plus years.
Mr. Latta. OK, so we don't know right off the bat what
would be over 70. It is amazing those things are still in
operation.
Ms. Heitman. No, I couldn't tell you what percentage is
over 70 years----
Mr. Latta. Well, they made them quite----
Ms. Heitman [continuing]. Only that they do exist.
Mr. Latta. They made them quite well.
I am going to yield back the balance of my time.
And recognize the gentleman from Virginia for 5 minutes.
Mr. Griffith. Thank you very much, Mr. Chairman. Appreciate
that.
Ms. Heitman, welcome. I want to personally welcome you
because, while we don't make the large power transformers in my
district, we do make transformers at an ABB plant in Bland,
Virginia. So thank you very much for those jobs.
As you were talking about new developments and new products
that your company was rolling out, I was seeing jobs coming to
an area of my district that can use those jobs in a beautiful
county. So we welcome you here today.
You have answered all the questions that I had in your
testimony. You have done quite a good job. Is there anything
that you wanted to touch on that you didn't feel you had time
to cover?
Ms. Heitman. I think that we talked a little bit about the
rapidly deployable transformer----
Mr. Griffith. Um-hum.
Ms. Heitman [continuing]. And one of the interesting things
about that is I think it works very well hand-in-hand with the
Government programs and with this new technology. Today, ABB's
development of this rapidly deployable transformer that was
done in conjunction with DOE, DHS, and EPRI actually allows for
a modular transformer to be transported very quickly from the
factory to the utility, but without a reserve production of
transformers, this only--the months of production are still
required. So when we looked at that development, it only gets
us part of the way there, from what we can tell.
Mr. Griffith. And that is why you favor the strategic plan
to have some extra transformers that are out there for
emergency situations?
Ms. Heitman. Yes, sir.
Mr. Griffith. And you said this earlier but I just wanted
to underline it. Your testimony would indicate those have to be
spread around the country so you can get them there quickly,
because these units are very large and weigh a lot, and so if
you had them all stored in one location, it might--and you had
a--say you stored them all in Florida and you had a problem in
Washington State, it would take you a long time to get them
there, isn't that correct?
Ms. Heitman. Well, the interesting thing was we--the test
that we ran was from St. Louis, Missouri, down to CenterPoint,
in Houston. These units were shipped from the back dock of the
factor in St. Louis, and installed and energized within 5 days,
10 hours, and 10 minutes. And that was with no overtime. So we
would leave it up to the DOE. We won't make a recommendation on
where these should be strategically located, but certainly the
closer to the region that they are going to be installed, the
faster that could be--but with the design of this deployable
transformer, we are talking days and not traditionally weeks of
transportation that would have occurred.
Mr. Griffith. Yes, appreciate that. And in your testimony,
you have just indicated in a number of situations where
different agencies were working together and so forth, and I
have to tell you all that I support the 1202 provisions. I
think they are important for this bill, and I think they are
good. And one criticism that was made was it wasn't clear
whether or not they gave the authority to FERC and NERC to slow
down or stop the EPA. As I read it, it does not, it just makes
it a part of the report, but if my colleagues on the other side
of the aisle would like clarity, I would be happy to have an
amendment drafted that would make it clear that, in fact, a
report--that reliability would be affected from either FERC or
NERC could actually stop those regulations, if that is what
they want.
Mr. Dominguez, one of the witnesses testified that the
mercury rules came into effect on April 16, and nothing
dramatic occurred, but your power company doesn't generally
have a problem on April 16, it is usually in the heart of
winter or the heat of summer, isn't that true?
Mr. Dominguez. Yes, I think, Representative, it is a little
early to declare success. What we do know and hope works is EPA
has created some safety valve mechanisms in the rule that will
allow units that are needed to stay on, to say on. But until we
are a few years out, after plant retirements and really see how
the system performs through the most extreme weather, I think
it is premature to say anything like that.
Mr. Griffith. And, Mr. Fanning, your opinion would be the
same on that?
Mr. Fanning. Yes. I would just add, I am the Chairman of
the Board of the Atlanta Federal Reserve Bank, and I am an
Executive of the Committee of the Conference Chair, so the big
fed, and I can tell you one of the events that happened between
the passage of HAPSMACT, now MATS, in 2016, is an economy that
went south in a hurry and demand went way down. And so we have
had, if you will, the blessing of a poor economy that has
really helped our reliability.
Normally, Southern Company would have added, from a
capacity growth standpoint, 900 megawatts a year. Now, we are
adding about 400 megawatts a year.
Mr. Griffith. Right.
Mr. Fanning. So the economy had an enormous influence on
the outcomes here.
Mr. Griffith. Right. And I do note with some interest that
Mr. Dominguez testified that PJM had some significant risks in
2014, and you talked about voluntary versus involuntary
requests to stop using power, but in 2015 in my district, there
were several occasions when various smaller companies asked
their consumers not to consume as much. Is that--and I will ask
Mr. Fanning and Mr. Dominguez both, was that your experience in
2015 as well, that there were--while there weren't any dramatic
issues, there were issues in your area? Neither one of your
companies serves my district, so I am not criticizing your
companies.
Mr. Dominguez. No, I would say that is consistent. Look, a
lot of our customers sign up to voluntarily exercise demand
response, which is withdraw load. And so as part of the
protocols as we get up to the edges of the system, we start
asking people to actually voluntarily curtail, and they get
paid for that, works quite well. But, sure, we have seen that
in the last winter.
Mr. Griffith. And, Mr. Fanning?
Mr. Fanning. Value is a function of risk and return, and
the closer we live to the edge of poor reliability, we way
increase the risk to the United States economy. And so if
return is growing the United States economy, American commerce
cannot stay on that kind of volatility.
Mr. Griffith. Well said.
I yield back.
Mr. Whitfield. Gentleman's time has expired.
At this time, recognize the gentlelady from North Carolina,
Mrs. Ellmers, for 5 minutes.
Mrs. Ellmers. Thank you, Mr. Chairman. And I want to thank
the panel for being here. This has been a really great
discussion.
And, Ms. Heitman, I would like to ask you a few questions.
What are some of the steps manufacturers have to take to help
address the vulnerability of large power transformers? I know
we were discussing a moment ago with Mr. Griffith from Virginia
the need to have ready transformers ready to go in an
emergency, but what are some of the other things from the
manufacturing standpoint that need to be done?
Ms. Heitman. Yes, the vulnerability of the transformers, we
mentioned the old--older and aging fleet in the--in place
today, I think the manufacturers can assess and help assess the
vulnerability of the existing fleet that is in existence, and
then make recommendations around what repairs may be necessary.
Mrs. Ellmers. Um-hum.
Ms. Heitman. Additionally, there is hardening technology
that is under development in order to protect against potential
criminal attack in that case. There is modeling that can be
done for both GMD and ENP to assess the risk there, as well as
putting together programs in conjunction with utilities today
in----
Mrs. Ellmers. Um-hum.
Ms. Heitman [continuing]. Rapid repair of a damaged
transformer, and also employing the technology that was
developed on a recovery transformer to rapidly replace a unit
if it is damaged.
Mrs. Ellmers. Wow, you kind of answered all of my questions
that I have for you in one fell--so you are very good. And
there again, it is very sobering when we think about the age of
these transformers, and I know we were talking a moment ago
about the, you know, a number of them being 70 years old. I
have 38 to 40 years, but basically, you have indicated that 25
year and above age is commonplace, correct?
Ms. Heitman. Very average today, yes.
Mrs. Ellmers. And, you know, with these--you know, these
are implications of needed, you know, resources to be applied,
and I can see how that is an issue, and the challenges that
exist in relation to that. Can you just designate maybe one or
two things what--that can be done in the design and production
of a large power transformer that might play into the age and,
you know, for instance, when we are looking at the possibility
of new transformers, you know, how long is that process, what
can be done, and does it make more sense to really look at
those aging transformers and try to revitalize them?
Ms. Heitman. I think that--well, I will start with what--
why a--why the manufacturing of a transformer is--takes so
long. First of all, most of the transformers--large power
transformers are customized by utility. So unlike a lot of the
other electrical equipment in the substation, which we
represent as well as NEMA, the manufacturers that make those,
those are more standardized pieces of equipment, as opposed to
the LPT----
Mrs. Ellmers. Um-hum.
Ms. Heitman [continuing]. Which is designed to the
specification of the utility. So the process is, first, a
utility is spending--could spend up to a month to design or
write the specifications for the specific transformer, then
following that there is a 1-month process of the different
manufacturers putting together a--doing a design for the
quotation of that transformer, followed by a full-out--once
that decision has been made as to who is to manufacture that
unit----
Mrs. Ellmers. Um-hum.
Ms. Heitman [continuing]. It is almost 3 months in
electrical and mechanical design, 3 months in procuring the
specialized materials, 2 months in manufacturing and testing, 1
month in traditional transportation, and then 1 month in the
installation and commissioning of the unit itself.
Mrs. Ellmers. Um-hum. Um-hum.
Ms. Heitman. And then what I believe that the manufacturers
can be doing to assist in this process is we are willing to
assist in technology and also specifications----
Mrs. Ellmers. Um-hum.
Ms. Heitman [continuing]. Of a potential reserve program,
and whether there is even potential to standardize across that
program.
Mrs. Ellmers. Um-hum. Thank you so much.
Mr. Fanning, in the discussion draft directing FERC to the
study that impacts major rules to make sure we understand the
impact of electric reliability, I have a couple of questions in
relation to that. In your opinion, who is the best and most
unbiased source of information on electric reliability impacts
of the rule, and why?
Mr. Fanning. The companies themselves.
Mrs. Ellmers. Very good. I like that answer. And to that--
and, you know, I am just going to move on. You mentioned that
the base load provides voltage and frequency support, and we
get that, could you explain in more detail what you are
referring to, and why base load is so important to it, because
I know there has been a discussion that--you know, we have kind
of gone back and forth a little bit about reliability and what
is available, and in conjunction with the renewables and the
increased amount, but why is it so important that we continue
to maintain that base load?
Mr. Fanning. Well, I could give a long answer. I want to
give a short answer. It is so important to think about the
portfolio of resources, not only nuclear, 21st Century Coal,
natural gas, renewables, energy efficiency, each of those has a
different cost and energy profile.
Mrs. Ellmers. Um-hum.
Mr. Fanning. All of those have an important place to play
in the whole portfolio. When I think though, you know, we all
kind of get wound around the axel in energy policy about clean,
safe, reliable, affordable, at the end of the day, we have to
support the livelihood of the United States economy and help
these families make tough kitchen table economic decisions
every day. And one of the things I applaud, Chairman, about
the--this notion of architecture of abundance, that is exactly
the right point to follow. That is the principle. And when I
think about where America is, not in my lifetime or your
parents' lifetimes, we have this opportunity where we can
promote energy security, that will promote national security,
and that will promote economic security, and give America a
chance to regain its status as the premiere economy in the
world. It is all those reasons why base load energy capacity
must play a part in this Nation's energy future.
Mrs. Ellmers. Thank you so much.
And thank you, Mr. Chairman, for indulging me and my time.
Mr. Whitfield. Well, that concludes the questions for this
panel. I want to thank all of you once again. We have spent the
last 3 \1/2\ hours together. I hope you all had as much fun as
we had, but it has been a very important issue that we are
dealing with, and we do appreciate the different views and your
opinions on this.
And in conclusion, since you have been here--if there is
anyone who wants to make additional comment before we adjourn,
I will give you the opportunity. OK. OK. That is the end of
that.
I would like to ask unanimous consent that the following
statements and letters be submitted for the record. You all
have seen these, Mr. Rush----
Mr. Rush. Yes.
Mr. Whitfield [continuing]. And you approve of them. A
letter on behalf of the American Public Power Association,
Edison Electric Institute, and National Rural Electric
Cooperative Association, a letter from The Pew Charitable
Trusts, and a statement from the American Public Power
Association.
Without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Whitfield. So that concludes today's hearing. We look
forward to working with all of you. Thank you again very much.
[Whereupon, at 1:30 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Prepared statement of Hon. Fred Upton
We all know how a power outage can bring our lives to a
standstill. It is bad enough for homeowners when the lights go
out, but it can be even more difficult for business owners and
their employees. Now imagine the damage to our quality of life
and the economy if blackouts became more frequent--or, even
worse, if the power were to stay out for weeks or possibly even
months at a time. Those are the risks we aim to address with
this discussion draft, and I look forward to adding these
measures to enhance electric reliability and security into our
bipartisan energy bill.
In addition to the longstanding reliability threats like
downed power lines from storms, we have relatively new threats
like terrorists who would like nothing better than to take down
our electric grid for an extended period of time.
At the same time, utilities are being asked to comply with
a number of challenging new environmental requirements which
may have the unintended consequence of putting reliability at
increased risk and limiting the ability to respond when things
do go wrong.
These and other challenges are made even more serious by
the fact that the Nation's electric grid is overdue for a major
upgrade. We may have the best electricity system in the world,
but it won't stay that way for long without substantial new
investments.
The good news is we can address these concerns and ensure a
reliable and secure power supply for the new century. But it
will take several policy changes that are included in the
discussion draft, including measures to promote advanced grid
technologies that will help us establish a more modern,
flexible, and resilient grid.
Other measures in the discussion draft are designed to
protect the grid against outside threats, be they physical or
cyber attacks. This includes provisions for Governments and the
private sector to work together in anticipating the ways bad
actors could sabotage our electricity system and taking action
to address and mitigate vulnerabilities.
Other measures seek to head off any potential conflict
between environmental measures and reliability. New regulations
raise potential reliability issues by reducing the diversity of
the power supply, necessitating early retirements of existing
base load capacity, introducing more non-base load resources,
and adding red tape that limits the flexibility to respond to
an emergency. There is no reason we can't have cleaner air and
more reliable power, and I welcome NERC and FERC's input on
what is needed to ensure that new Federal regulations do not
compromise reliability.
The National Academy of Engineering cited electrification
as the greatest achievement affecting the quality of life in
the 20th century, but it is every bit as important to modernize
the grid to face the new and emerging challenges of the 21st
century. I look forward to the continued collaboration on
reliability and security provisions to better safeguard our
power supply for the years ahead.
Prepared statement of Hon. Frank Pallone, Jr.
Thank you, Chairman Whitfield and Ranking Member Rush for
holding this hearing on a serious topic that should know no
party lines: energy reliability and security. We often take for
granted that the lights will go on when we flip a switch and
that, even in an emergency, heat and gasoline, will be
available.
But extreme weather events are costing us dearly, both in
human life and in recovery costs. Our changing climate is
exacerbating power outages. The power infrastructure is at
higher risk from storm surges and coastal inundation. The costs
can be huge--just look at the fallout from Superstorm Sandy.
Since 2011, there have been more than 42 extreme weather events
in the United States that each cost at least $1 billion in
damages.
These events challenge our confidence in the energy supply,
so they should also drive our efforts to move toward a new,
more secure, resilient and sustainable system of energy
delivery.
The draft before us takes a few steps in the right
direction and, in some cases, builds on bipartisan agreements
previously approved by our committee. That's a good start, but
it's far from perfect. For instance, I would like to understand
why the provisions are no longer included in the bipartisan
GRID Act to address the vulnerability of our critical electric.
Unfortunately, the bill also takes many steps that are too
grounded in the past, particularly with regard to the
reliability of the grid. Instead of embracing new distributed
and renewable technologies, cutting edge energy storage, and
demand response, parts of this draft appear to be designed to
tighten our grip on the large, expensive, and inflexible
facilities and energy sources of the past. In addition, in
addressing electricity capacity markets, the draft doesn't
support distributed generation and renewables. That's
unfortunate because I think capacity markets are worthy of the
committee's careful examination and consideration.
Lastly, I want to outline my concerns with the draft's
unprecedented requirement for FERC to complete a ``reliability
analysis'' of major rules that cost over a billion dollars.
This section appears to be aimed straight at the Clean Power
Plan, something the Chairman had pledged to avoid in this
process. FERC certainly has the ability to comment on EPA rules
if it so chooses, so at a minimum, I'm not sure why this
provision is needed. But most importantly, it raises the
specter of reliability failure where none exist. As EPA
recently said: ``Over the past 45 years, EPA has never issued a
rule that has threatened the delivery of affordable and
reliable electricity to American families, and the Clean Power
Plan will not change that.''
I couldn't agree more. Mr. Chairman, I'm generally pleased
to see consensus language on some provisions in this bill. I
hope we can build on this draft to ensure the enactment of an
energy bill developed in a truly bipartisan fashion.
Thank you, and I look forward to hearing from our
witnesses.
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