[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]




 POWERING AMERICA: A REVIEW OF THE OPERATION AND EFFECTIVENESS OF THE 
                 NATION'S WHOLESALE ELECTRICITY MARKETS

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

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON ENERGY

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 26, 2017

                               __________

                           Serial No. 115-49







[GRAPHIC(S) 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

                          GREG WALDEN, Oregon
                                 Chairman
JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
  Vice Chairman                        Ranking Member
FRED UPTON, Michigan                 BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
TIM MURPHY, Pennsylvania             ELIOT L. ENGEL, New York
MICHAEL C. BURGESS, Texas            GENE GREEN, Texas
MARSHA BLACKBURN, Tennessee          DIANA DeGETTE, Colorado
STEVE SCALISE, Louisiana             MICHAEL F. DOYLE, Pennsylvania
ROBERT E. LATTA, Ohio                JANICE D. SCHAKOWSKY, Illinois
CATHY McMORRIS RODGERS, Washington   G.K. BUTTERFIELD, North Carolina
GREGG HARPER, Mississippi            DORIS O. MATSUI, California
LEONARD LANCE, New Jersey            KATHY CASTOR, Florida
BRETT GUTHRIE, Kentucky              JOHN P. SARBANES, Maryland
PETE OLSON, Texas                    JERRY McNERNEY, California
DAVID B. McKINLEY, West Virginia     PETER WELCH, Vermont
ADAM KINZINGER, Illinois             BEN RAY LUJAN, New Mexico
H. MORGAN GRIFFITH, Virginia         PAUL TONKO, New York
GUS M. BILIRAKIS, Florida            YVETTE D. CLARKE, New York
BILL JOHNSON, Ohio                   DAVID LOEBSACK, Iowa
BILLY LONG, Missouri                 KURT SCHRADER, Oregon
LARRY BUCSHON, Indiana               JOSEPH P. KENNEDY, III, 
BILL FLORES, Texas                       Massachusetts
SUSAN W. BROOKS, Indiana             TONY CARDENAS, California
MARKWAYNE MULLIN, Oklahoma           RAUL RUIZ, California
RICHARD HUDSON, North Carolina       SCOTT H. PETERS, California
CHRIS COLLINS, New York              DEBBIE DINGELL, Michigan
KEVIN CRAMER, North Dakota
TIM WALBERG, Michigan
MIMI WALTERS, California
RYAN A. COSTELLO, Pennsylvania
EARL L. ``BUDDY'' CARTER, Georgia
                         Subcommittee on Energy

                          FRED UPTON, Michigan
                                 Chairman
PETE OLSON, Texas                    BOBBY L. RUSH, Illinois
  Vice Chairman                        Ranking Member
JOE BARTON, Texas                    JERRY McNERNEY, California
JOHN SHIMKUS, Illinois               SCOTT H. PETERS, California
TIM MURPHY, Pennsylvania             GENE GREEN, Texas
ROBERT E. LATTA, Ohio                MICHAEL F. DOYLE, Pennsylvania
GREGG HARPER, Mississippi            KATHY CASTOR, Florida
DAVID B. McKINLEY, West Virginia     JOHN P. SARBANES, Maryland
ADAM KINZINGER, Illinois             PETER WELCH, Vermont
H. MORGAN GRIFFITH, Virginia         PAUL TONKO, New York
BILL JOHNSON, Ohio                   DAVID LOEBSACK, Iowa
BILLY LONG, Missouri                 KURT SCHRADER, Oregon
LARRY BUCSHON, Indiana               JOSEPH P. KENNEDY, III, 
BILL FLORES, Texas                       Massachusetts
MARKWAYNE MULLIN, Oklahoma           G.K. BUTTERFIELD, North Carolina
RICHARD HUDSON, North Carolina       FRANK PALLONE, Jr., New Jersey (ex 
KEVIN CRAMER, North Dakota               officio)
TIM WALBERG, Michigan
GREG WALDEN, Oregon (ex officio)
































  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................     1
    Prepared statement...........................................     2
Hon. Bobby L. Rush, a Representative in Congress from the State 
  of Illinois, opening statement.................................     4
Hon. Greg Walden, a Representative in Congress from the State of 
  Oregon, opening statement......................................     5
    Prepared statement...........................................     6

                               Witnesses

Gordon Van Welie, President and CEO, ISO New England.............     9
    Prepared statement...........................................    11
    Answers to submitted questions...............................   119
Nick Brown, President and CEO, Southwest Power Pool..............    25
    Prepared statement...........................................    27
    Answers to submitted questions...............................   128
Bradley C. Jones, President and CEO, New York ISO................    36
    Prepared statement...........................................    38
    Answers to submitted questions...............................   136
Richard Doying, Executive Vice President, Midcontinent ISO.......    43
    Prepared statement...........................................    45
    Answers to submitted questions...............................   142
Cheryl Mele, Senior Vice President and CEO, Ercot................    53
    Prepared statement...........................................    55
    Answers to submitted questions...............................   153
Keith Casey, Vice President, Market & Infrastructure Development, 
  California ISO.................................................    63
    Prepared statement...........................................    65
    Answers to submitted questions...............................   157
Craig Glazer, Vice President, Federal Government Policy, PJM 
  Interconnection, LLC...........................................    73
    Prepared statement...........................................    75
    Answers to submitted questions...............................   165

 
 POWERING AMERICA: A REVIEW OF THE OPERATION AND EFFECTIVENESS OF THE 
                 NATION'S WHOLESALE ELECTRICITY MARKETS

                              ----------                              


                        WEDNESDAY, JULY 26, 2017

                  House of Representatives,
                            Subcommittee on Energy,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:00 a.m., in 
room 2123 Rayburn House Office Building, Hon. Fred Upton 
(chairman of the subcommittee) presiding.
    Members present: Representatives Upton, Olson, Barton, 
Shimkus, Murphy, Latta, Harper, McKinley, Kinzinger, Griffith, 
Johnson, Long, Flores, Mullin, Hudson, Cramer, Walberg, Walden 
(ex officio), Rush, McNerney, Peters, Green, Doyle, Castor, 
Welch, Tonko, Loebsack, Schrader, Kennedy, Butterfield, and 
Pallone (ex officio).
    Staff present: Elena Brennan, Legislative Clerk, Energy/
Environment; Jerry Couri, Chief Environmental Advisor; Wyatt 
Ellertson, Research Associate, Energy/Environment; Tom 
Hassenboehler, Chief Counsel, Energy/Environment; A.T. 
Johnston, Senior Policy Advisor, Energy; Alex Miller, Video 
Production Aide and Press Assistant; Brandon Mooney, Deputy 
Chief Energy Advisor; Mark Ratner, Policy Coordinator; Annelise 
Rickert, Counsel, Energy; Dan Schneider, Press Secretary; Sam 
Spector, Policy Coordinator, Oversight and Investigations; 
Jason Stanek, Senior Counsel, Energy; Madeline Vey, Policy 
Coordinator, Digital Commerce and Consumer Protection; Evan 
Viau, Staff Assistant; Andy Zach, Senior Professional Staff 
Member, Environment; Priscilla Barbour, Minority Energy Fellow; 
David Cwiertny, Minority Energy/Environment Fellow; Jean Fruci, 
Minority Energy and Environment Policy Advisor; Rick Kessler, 
Minority Senior Advisor and Staff Director, Energy and 
Environment; and Tuley Wright, Minority Energy and Environment 
Policy Advisor.

   OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Upton. The Subcommittee on Energy will now come to 
order and the chair would recognize himself for an opening 
statement.
    So good morning. Last week, the subcommittee embarked on 
its first hearing in our Powering America series where a panel 
of witnesses shared their diverse perspectives regarding the 
state of the wholesale electricity markets. And during that 
hearing, we heard directly from market participants who operate 
in all seven of the nation's RTO and ISO markets. Today, I 
would like to welcome representatives from the nation's grid 
operators and invite them to share their thoughts regarding the 
current issues and the challenges in their respective regional 
markets.
    Americans have come to expect that electricity will always 
be available when it is needed and it is the role of the grid 
operators to make sure that this expectation is always met. 
RTOs and ISOs play a vital role in the delivery of power from 
the generator to the consumer, but it is a role that is largely 
outside the public's view.
    By operating and dispatching the transmission systems 24/7, 
the grid operators must ensure that supply and demand is 
continually kept in balance. In addition, they are responsible 
for conducting long-term planning to reduce congestion on 
existing transmission lines and to ensure that there is 
adequate transmission capacity to reliably serve future 
electricity demand.
    So as we sit in the committee room today, the grid operator 
responsible for coordinating the movement of electricity in 
D.C. is known as the PJM. In addition to serving the needs of 
13 other states including Michigan, and serving 65 million 
folks, PJM also operates over 82,000 miles of transmission 
lines. And that should provide a sense of the size and the 
importance of these grid operators.
    Along with the other six grid operators at the table today, 
these RTOs and ISOs combined serve two-thirds of the nation's 
population. However, as we heard from our witnesses last week, 
there are concerns regarding the state of our nation's 
competitive electricity markets. Some of the testimony focused 
on a specific RTO function such as the complexities of the 
capacity market, but we spent much of the time focused on 
broader issues involving grid reliability, market competition, 
generator fuel diversity, and whether certain baseload 
resources should receive financial assistance to remain viable.
    As our witnesses are aware, there are many involving 
challenges currently facing the electricity industry. In a very 
short period, we have witnessed significant changes in the 
market supply and demand fundamentals and specifically weak 
growth in electricity consumption combined with the 
availability of large supplies of inexpensive natural gas. In 
turn, wholesale electricity prices are now at near-record lows 
around the country and these low prices have resulted in some 
generators being unable to recover their costs. Notably, 
several states are advancing proposals to support at-risk 
nuclear plants that are unable to survive on revenues from the 
energy and capacity markets alone.
    The witnesses before the subcommittee today all operate 
competitive markets, the dispatch generation across the country 
based on lowest cost. They also now find themselves in the 
middle of this policy debate involving changing technology, 
environmental goals, and the effects of out-of-market actions. 
Many are questioning whether the RTO and ISO markets can remain 
competitive and perform all of their existing essential 
functions while still tackling the new challenges in the faces 
of these emerging trends.
    So as our Powering America series continues, I look forward 
to learning more about what is occurring in each of your 
regions, hearing your thoughts regarding what, if any, reforms 
could assist your efforts to achieve greater efficiencies, 
reliability, and competition in your organized market.
    And I yield the balance of my time to the gentleman from 
Oklahoma, Mr. Mullin.
    [The prepared statement of Mr. Upton follows:]

                 Prepared statement of Hon. Fred Upton

    Good morning. Last week this subcommittee embarked on its 
first hearing in our ``Powering America'' series, where a panel 
of witnesses shared their diverse perspectives regarding the 
state of the wholesale electricity markets. During that 
hearing, we heard from directly from market participants who 
operate in all seven of the nation's RTO and ISO markets. 
Today, I'd like to welcome representatives from the nation's 
grid operators and invite them to share their thoughts 
regarding current issues and challenges in their respective 
regional markets.
    Americans have come to expect that electricity will always 
be available when it's needed, and it is the role of the grid 
operators to make sure that this expectation is always met. 
RTOs and ISOs play a vital role in the delivery of power from 
the generator to the consumer, but it's a role that is largely 
outside the public's view. By operating and dispatching the 
transmission system 24/7, the grid operators must ensure that 
supply and demand is continually kept in balance. In addition, 
they are responsible for conducting long-term planning to 
reduce congestion on existing transmission lines and to ensure 
that there's adequate transmission capacity to reliably serve 
future electricity demand.
    As we sit in this Committee room today, the grid operator 
responsible for coordinating the movement of electricity to 
Washington D.C. is known as ``PJM''. In addition to serving the 
needs of 13 other states (including Michigan) and serving 65 
million people, PJM also operates over 82,000 miles of 
transmission lines. That should provide a sense of the size and 
importance of these grid operators. Along with the other six 
grid operators at the table today, these RTOs and ISOs combined 
serve two-thirds of the nation's population.
    However, as we heard from our witnesses last week, there 
are concerns regarding the state of our nation's competitive 
electricity markets. Some of the testimony focused on specific 
RTO functions, such as the complexities of the ``capacity'' 
market--but we spent much of the time focused on broader issues 
involving grid reliability, market competition, generator fuel 
diversity and whether certain baseload resources should receive 
financial assistance to remain viable.
    As our witnesses are aware, there are many evolving 
challenges currently facing the electricity industry. In a very 
short period, we've witnessed significant changes in the 
market's supply and demand fundamentals; specifically, weak 
growth in electricity consumption combined with the 
availability of large supplies of inexpensive natural gas. In 
turn, wholesale electricity prices are now at near record lows 
around the country and these low prices have resulted in some 
generators being unable to recover their costs. Notably, 
several States are advancing proposals to support ``at-risk'' 
nuclear plants that are unable to survive on revenues from the 
energy and capacity markets alone.
    The witnesses before the subcommittee today all operate 
competitive markets that dispatch generation across the country 
based on lowest-cost. They also now find themselves in in the 
middle of this policy debate involving changing technology, 
environmental goals, and the effects of ``out-of-market'' 
actions. Many are questioning whether the RTO and ISO markets 
can remain competitive and perform all their existing essential 
functions, while also tackling new challenges in the face of 
these emerging trends.

    Mr. Mullin. Thank you, Chairman Upton, for yielding. I just 
want to take a quick moment to recognize those that are here. 
One of the witnesses today is Mr. Nick Brown who represents the 
Southwest Power Pool. Southwest Power Pool is a regional 
transmission organization whose members like Oklahoma Gas and 
Electric and GRDA operate in my state and help provide power to 
millions of Oklahomans.
    I want to thank all the witnesses for being here and look 
forward to hearing your testimony as this committee evaluates 
the state of our wholesale electricity markets and I yield 
back.
    Mr. Upton. The time is expired, you yield back. I recognize 
the ranking member of the subcommittee, Mr. Rush.

 OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Rush. I want to thank you, Mr. Chairman, for holding 
this important hearing today examining the operation and 
effectiveness of the nation's wholesale electricity markets. I 
must also commend you, Mr. Chairman, for following up last 
week's very informative hearing where we heard from industry 
insiders, with today's discussion consisting of regional grid 
operators as these are the people responsible for administering 
the nation's wholesale electricity market and managing the day-
to-day operations of the respective transmission systems.
    Mr. Chairman, it has been some time since this subcommittee 
has held comprehensive hearings on the Federal Power Act, and I 
think these informative discussions greatly benefit all of our 
members and will also help us make better, more informed 
decisions when determining whether we need to update the 
Federal Power Act or leave it as it is.
    Mr. Chairman, one of the points that every one of our 
industry panelists from last week's hearing agreed upon was the 
fact that the nation's electricity grid has changed in recent 
years and will continue to undergo dramatic transformations in 
the near future. Whether spurred by state and federal policy, 
marketing forces, or consumer demands and behavior, we have 
seen significant new trends taking place in the electricity 
market.
    Mr. Chairman, consumers are driving many of these changes 
as they demand new tools to more responsibly use energy both as 
a way to save money and as a way to save their environment. 
Some of these trends include greater demand for cleaner, 
renewable sources of energy to compete with traditional fossil 
fuels, an increase in distributed generation and demand 
response resources, more energy efficiency initiatives and all 
the while demanding lower energy costs. With all of these 
consumer-driven changes there is also the debate as whether 
issues such as fuel diversity and distributive energy make the 
grid more or less reliable, and I look forward to hearing from 
our witnesses on this important topic.
    There is also the important issue of grid modernization and 
grid security. As new and different sources of energy are 
absorbed into the grid, it is important that we have the 
infrastructure in place to get this new, cleaner energy from 
the places where it is produced to the places where it is 
needed. Congress should not only focus on streamlining 
regulations in an environmentally safe and responsible way, but 
also, Mr. Chairman, we should be making sure that we provide 
adequate investment into modernizing and securing the grid.
    Mr. Chairman, the American people want to feel confident 
that our energy infrastructure provides secure, reliable, 
sustainable energy while also understanding that the grid is 
safe from attacks, whether those attacks mean cyber or 
physical, natural or man-made.
    So Mr. Chairman, I look forward to engaging today's 
distinguished panelists on what they identify as the greatest 
opportunities as well as the most difficult challenges that we 
see in ensuring that we have a greener, cleaner, more 
integrated 21st century grid. And with that Mr. Chairman, I 
thank you and I yield back the balance of my time.
    Mr. Upton. Thank you. The gentleman yields back. The chair 
would recognize the chair of the full committee, the gentleman 
from Oregon, for an opening statement, Mr. Walden.

  OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF OREGON

    Mr. Walden. Well, good morning, Mr. Chairman and members of 
the committee and our distinguished panelists. As you will 
recall, last week we held our first hearing on the Powering 
America series where we received testimony from a wide range of 
electricity sector stakeholders. That hearing provided this 
committee with the perspective, concerns, and ideas from the 
individuals who participate in the electricity markets.
    So today, we pick up where we left off and continue our 
review of America's electricity system by hearing from 
individuals who operate, actually operate, the electricity 
markets known as regional grid operators, so thank you all for 
being here. Regional grid operators, or RTOs and ISOs, are one 
of the options Americans have to access reliable and affordable 
electricity. They accomplish this by performing a variety of 
functions ranging from long-term transmission planning services 
to overseeing competitive energy markets where wholesale 
electricity is bought and sold.
    Now in my home State of Oregon and neighboring state of 
Washington, similar grid operator functions are performed for 
various consumer-owned utilities by the Bonneville Power 
Administration or the BPA. BPA is a nonprofit, federal power 
and marketing administration based in the Pacific Northwest and 
is part of the Department of Energy. Past attempts have failed 
to form an RTO for the states of Oregon and Washington which 
encompass my Eastern Oregon district. That opposition, I should 
tell you, remains strong today.
    But given the size and scope of America's electricity 
system, it is safe to say that the job of regional grid 
operators has never been easy, and looking at recent 
developments within the nation's power sector, it is apparent 
that the job is becoming even more challenging. Thousands of 
different stakeholders participate in the U.S. electricity 
system and many of these stakeholders have differing and 
competing desires for how wholesale electricity markets should 
be administered.
    The RTOs and ISOs regulated by FERC have the difficult task 
of deciding how to best manage and oversee energy markets in 
order to provide power in the most affordable and reliable way 
for the consumers they serve. RTOs and ISOs do not own any 
physical grid assets and they do not exist to create a profit. 
They act as an independent, nonprofit entity and their goal is 
to effectively orchestrate the generation and delivery of 
affordable electricity across the bulk power grid by 
instantaneously matching power supply with power demand for 
customers.
    Today, we have a panel of RTO executives who bring a wealth 
of experience operating organized electricity markets, and I 
look forward to their ideas on how we can we best serve the 
needs of the consumers we all need to take care of. 
Additionally, I look forward to discussing other important 
issues with our witnesses such as how RTOs and ISOs can 
accommodate state policies in the areas they serve while 
preserving the competitive nature of markets and how RTOs and 
ISOs can incorporate new forms of generation onto the grid 
without compromising system reliability.
    Even though many Americans may not understand the 
complexities of wholesale electricity markets, one thing most 
Americans do understand is the electricity bill that arrives in 
their mailboxes each month. This is especially true for 
American businesses who rely on affordable power to succeed and 
grow our economy and jobs.
    The goal of this committee and I think of the operators is 
to make sure that consumers are always coming out as winners. 
If we keep the consumer at the front and that is our goal when 
making important policy decisions, I am confident that the U.S. 
electricity system will continue to thrive and flourish and 
meet the needs of all Americans. With that in mind I am eager 
to discuss how we can ensure affordable energy for consumers 
across the country while also maintaining system reliability 
now and in the future.
    So Mr. Chairman thanks for the hearing. To our witnesses, 
thank you all for participating. I got your testimony here. We 
have a couple of subcommittees meeting at the same time as you 
might imagine, so I will be in and out. With that if there are 
other members on the committee that would like the balance of 
my time I am happy to yield to them and, if not, I will yield 
back to the chairman and thanks again.
    [The prepared statement of Mr. Walden follows:]

                 Prepared statement of Hon. Greg Walden

    As you will recall, last week we held our first hearing in 
the Powering America series where we received testimony from a 
wide range of electricity sector stakeholders. That hearing 
provided this committee with perspectives, concerns, and ideas 
from the individuals who participate in electricity markets. 
Today, we pick up where we left off and continue our review of 
America's electricity system by hearing from the individuals 
who operate the electricity markets, known as regional grid 
operators.
    Regional grid operators, or RTOs and ISOs, are one of the 
options Americans have to access reliable and affordable 
electricity. They accomplish this by performing a variety of 
functions, ranging from long-term transmission planning 
services to overseeing competitive energy markets where 
wholesale electricity is bought and sold.
    In my home State of Oregon and the state of Washington 
similar grid operator functions are performed for various 
consumer owned utilities through the Bonneville Power 
Administration. BPA is a non-profit federal power marketing 
administration based in the Pacific Northwest that is part of 
the Department of Energy. Past attempts have failed to form a 
RTO for the states of Oregon and Washington, which encompass my 
eastern Oregon district. That opposition remains strong today.
    But given the size and scope of America's electricity 
system, it is safe to say that the job of regional grid 
operators has never been easy, and looking at recent 
developments within the nation's power sector it is apparent 
that their job is becoming even more challenging. Thousands of 
different stakeholders participate in the U.S. electricity 
system and many of these stakeholders have differing and 
competing desires for how wholesale electricity markets should 
be administered.
    The RTOs and ISOs, regulated by FERC, have the difficult 
task of deciding how to best manage and oversee energy markets 
in order to provide power in the most affordable and reliable 
way for the customers they serve. RTOs and ISOs do not own any 
physical grid assets and they do not exist to create profit. 
They act as independent, non-profit entities and their goal is 
to effectively orchestrate the generation and delivery of 
affordable electricity across the bulk power grid by 
instantaneously matching power supply with power demand for 
their customers.
    Today, we have a panel of RTO executives who bring a wealth 
of experience operating organized electricity markets and I 
look forward to their ideas on how we can best serve the needs 
of the customers they serve.
    Additionally, I look forward to discussing other important 
issues with our witnesses, such as how RTOs and ISOs can 
accommodate state policies in the areas they serve while 
preserving the competitive nature of markets and how RTOs and 
ISOs can incorporate new forms of generation onto the grid 
without compromising system reliability.
    Even though many Americans may not understand the 
complexities of wholesale electricity markets, one thing most 
Americans do understand is the electricity bill that arrives in 
their mailbox each month. This is especially true for American 
businesses who rely on affordable power to succeed and grow the 
economy. The goal of this committee, and I think of the grid 
operators, is to make sure that consumers are always coming out 
as winners. If we keep this goal in mind when making important 
policy decisions, I am confident that the U.S. electricity 
system will continue to thrive and flourish and meet the needs 
of all Americans. With that in mind, I am eager to discuss how 
we can ensure affordable energy for consumers across the 
country while also maintaining system reliability now and in 
the years to come.

    Mr. Upton. The gentleman yields back. The chair will 
recognize the ranking member of the full committee, Mr. 
Pallone, for an opening statement.
    Mr. Pallone. Thank you, Chairman Upton. This is the second 
hearing on this subject in the subcommittee this month and just 
like last week's hearing, Ranking Member Rush and I worked in 
partnership with Chairman Upton and Walden to set up today's 
hearing in order to provide us important and unbiased 
background for future decisions.
    I am pleased we have an opportunity to hear from those who 
are entrusted to run the grid, the regional transmission 
organizations, or RTOs. While versions of these independent 
system operators have existed for decades, it was the Energy 
Policy Act of 2005 that enshrined these organizations as 
central to the wholesale markets and these markets have yielded 
us many benefits including some of the lowest prices we have 
ever seen for electricity.
    However, that doesn't mean that we should just turn a blind 
eye to the question of whether these organizations are properly 
positioned to address the many changes that are underway in the 
electricity sector. RTOs make decisions every day that greatly 
affect the market, its participants, and consumers. In some 
ways they are more powerful on a day-to-day basis than the 
Federal Energy Regulatory Commission, which is why we need to 
ensure that RTOs are providing unbiased management of their 
systems and not veering into the kind of policymaking that is 
the responsibility of Congress and the states.
    Today, RTOs have their work cut out for them. New 
technologies, evolving policies, fuel market changes, and aging 
infrastructure all influence the operation, reliability, and 
resiliency of the grid, so too do changes in patterns and 
distribution of electricity demand. All of these factors have 
called into question the most basic tenets of ratemaking and 
challenged the longstanding financial model for utilities. They 
are also having an impact on wholesale markets with 
implications for the competitive position of more traditional 
grid assets, and I am sure we are going to hear more about 
these issues from our witnesses today.
    The growth of distributed generation and these new 
technologies are also creating opportunities for consumers and 
their advocates to have a more active role in the electricity 
sector. Consumers are driving policies at the state level 
through the Public Utility Commissions and seeking input on 
decisions that impact generation, distribution, and 
transmission of electricity. Although consumers have not played 
a role in RTO decisionmaking, it may be time to put in place 
formal mechanisms to facilitate direct communication between 
consumer advocates and the RTOs.
    And each of the organizations we will hear from today 
operates differently. While they are all administering 
wholesale markets, their governance structures, market rules, 
state and regional policies, and relationships to market 
participants and consumers are different. This hearing gives us 
the opportunity to compare and contrast the different 
approaches and to evaluate whether some approaches offer 
advantages in managing the grid.
    And keeping the electric grid operating is essential to our 
economy and our safety, so the RTOs' focus on grid reliability 
and resiliency is understandable, but these concepts are 
evolving along with the new technologies and tools that have 
emerged over the past decade. Reliability and resiliency are no 
longer defined solely by transmission and baseload generation 
assets. In some cases, I have seen transmission projects 
needlessly rubberstamped in the name of reliability.
    There are certainly other ways to address reliability than 
just gold plating the transmission system. Newer and bigger 
transmission lines are no longer always the best or most cost 
effective answer to the question of how we improve reliability. 
It is time for the RTOs to begin to adapt to this new reality. 
Distributed energy resources, renewable and otherwise, along 
with efficiency and demand response are equally important. And 
of course we certainly do need more interstate and 
interregional transmission, particularly from the Great Plains 
to the rest of the Eastern Interconnection. The lack of 
progress in this area leads me to ask whether the approval 
process between regions is working as effectively and 
efficiently as it should and whether regions have become too 
balkanized and unable to work together for the greater good.
    So Mr. Chairman, I am pleased that we have been able to 
work together on this hearing series evaluating our nation's 
electricity markets. Last week, we learned about the 
perspectives of market participants and today have an 
experienced panel representing our nation's RTOs. But what we 
have been missing so far is an analysis of consumer 
perspectives. And there are number of important issues 
impacting consumers that we must consider including governance 
structure, cost recovery models, and appropriate transparency, 
and I hope that we will commit to holding such a hearing from 
the consumer perspectives in the near future.
    That said, I look forward to hearing from the panel and I 
yield back, Mr. Chairman.
    Mr. Upton. Thank you. With that, all member statements have 
been completed. We are joined by great witnesses today and we 
will start with 5 minutes for each one with Gordon van Welie, 
president and CEO of ISO New England.
    Welcome. You need to hit the mike button there.

  STATEMENTS OF GORDON VAN WELIE, PRESIDENT AND CEO, ISO NEW 
 ENGLAND; NICK BROWN, PRESIDENT AND CEO, SOUTHWEST POWER POOL; 
  BRADLEY C. JONES, PRESIDENT AND CEO, NEW YORK ISO; RICHARD 
  DOYING, EXECUTIVE VICE PRESIDENT, MIDCONTINENT ISO; CHERYL 
 MELE, SENIOR VICE PRESIDENT AND CEO, ERCOT; KEITH CASEY, VICE 
PRESIDENT, MARKET & INFRASTRUCTURE DEVELOPMENT, CALIFORNIA ISO; 
 AND, CRAIG GLAZER, VICE PRESIDENT, FEDERAL GOVERNMENT POLICY, 
                    PJM INTERCONNECTION, LLC

                 STATEMENT OF GORDON VAN WELIE

    Mr. Van Welie. Good morning, Chairman Upton, Ranking Member 
Rush, and members of the subcommittee. Thank you for the 
opportunity to appear before you this morning. As you said, my 
name is Gordon van Welie. I am the CEO of ISO New England. And 
the ISO was established back in 1997 and led to the creation of 
wholesale electricity markets and the subsequent investment in 
the region of some $30 billion in electricity supply and 
transmission infrastructure.
    This has caused a dramatic change in how electricity is 
produced and consumed and I believe this transformation is 
accelerating. Wholesale markets have produced demonstrable 
benefits for New England electricity consumers. For instance, 
in 2016, New England's wholesale electricity markets cleared 
$5.4 billion in revenues. This was the lowest since 2003 and 
down from high water mark of nearly $14 billion in 2008. During 
this period, emissions have decreased substantially, and since 
I last appeared before this subcommittee the forward capacity 
market has driven investment in approximately 5,600 megawatts 
of additional generation in demand resources including energy 
efficiency.
    I last appeared before the subcommittee in March of 2013 to 
discuss the transformation of our power system resources. At 
the time, I noted a pair of key issues. First, the critical 
need for accurate price formation and performance incentives in 
our wholesale markets to ensure reliable electricity supply, 
and second, I stressed the importance of adequate fuel 
infrastructure and supply arrangements. We now have had an 
additional 4 years of experience to underscore the importance 
of both issues.
    I would like to update the subcommittee on these issues and 
also speak to cybersecurity challenge. First, I would like to 
comment on the issue of state-sponsored resources and their 
impact on wholesale markets. The region is preparing to 
accommodate an influx of state-sponsored, carbon-free 
resources. ISO New England has proposed changes to our forward 
capacity market to ensure appropriate price formation and to 
accommodate the states' policies. These changes will allow 
existing resources that are seeking to retire to swap their 
capacity obligations with state-sponsored resources. We believe 
that this is innovative way to continue to utilize the 
wholesale market to ensure reliability while gradually 
transitioning the region towards an energy supply with lowered 
carbon emissions.
    We are currently discussing this proposal with our 
stakeholders and intend to file the market rules with the FERC 
in January of 2018. This proposal will likely accelerate the 
retirement of uneconomic non-gas generators which are the 
resources we currently rely upon when the region's gas 
pipelines are constrained and unable to supply gas generators.
    This leads me to the issue of fuel security, which 
continues to be a top priority for ISO New England. The region 
is experiencing a major shift in the generation mix and we 
anticipate this ongoing transition could lead to the retirement 
of approximately a third of the generation fleet within the 
next decade. The shift away from generators with onsite fuel to 
gas generators relying on just-in-time fuel delivery has 
exposed the limitations of New England's fuel infrastructure.
    As I have previously testified, the constraints on the 
natural gas transportation during very cold winters can lead to 
reliability risks and price volatility in the wholesale market. 
The transformation of the resource mix will continue to drive 
additional retirements among gas generators and likely 
exacerbate the effects of these pipeline constraints. In order 
to mitigate the risk, New England market participants or the 
states will have to invest in sufficient infrastructure and 
fuel arrangements and the ISO may have to make additional 
improvements to the wholesale market rules to incent these 
investments. The ISO is studying this fuel security risk and 
will report preliminary results in October of this year.
    Finally, the ISO is working to improve the safeguards for 
our control center and business system infrastructure. We 
recognize the volume and sophistication of the threats against 
the electric grid are rising. I can assure the subcommittee 
that we also recognize the importance of critical cybersecurity 
assets that we operate and are constantly working to identify 
and address these dynamic and evolving challenges.
    Since I last appeared before the subcommittee, ISO New 
England has made many operational and market-based changes to 
meet the needs of our region. Market forces and public policy 
decisions are impacting both operations and markets and the 
region continues to require innovative solutions to ensure 
reliable, environmentally responsible, and competitive 
electricity supply. I believe that the collaborative governance 
and risk management structures in place in New England will 
keep us on course to navigate and meet these challenges. Thank 
you and I look forward to your questions.
    [The prepared statement of Mr. Van Welie follows:]
    
    
    
    
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    Mr. Upton. Thank you.
    Next, we are joined by Nick Brown, president and CEO of 
Southwest Power Pool. Welcome.

                    STATEMENT OF NICK BROWN

    Mr. Brown. Thank you and good morning, Chairman Upton and 
Ranking Member Rush and all the members of the subcommittee. My 
name is Nick Brown. I am president and CEO of Southwest Power 
Pool, an organization for which I have worked 32 years. The 
title of today's topic, Review of the Operation and 
Effectiveness of the Nation's Wholesale Electricity Markets, I 
appreciate your interest in that topic and I am here to tell 
you the wholesale markets are functioning very well and very 
effectively.
    In Southwest Power Pool we are focused on end use customers 
and we focus a great deal of our attention in ensuring that our 
benefit to cost ratio is large and increasing. Today it is 
greater than 11:1 versus the cost of operation of our 
organization across all reports of 14 states in the central 
part of the U.S. We have over 83,000 megawatts of generation 
and our footprint serving just shy of 55,000 megawatts of load, 
so obviously our reserve margins are multiple of our minimum 
criteria and we are very blessed that that portfolio is very 
diverse.
    We have significant coal, gas, nuclear, a huge amount of 
wind and continuing to grow, and hydro. In fact, this morning I 
pulled up our web site in real time, a typical summer day, and 
our footprint wa 46 percent coal, 28 percent wind, 19 percent 
natural gas, 6 percent nuclear, 4 percent hydro, a very diverse 
portfolio.
    Very important to understand that the wind in our footprint 
has grown significantly over the past decade to nearly 17,000 
megawatts. Nearly 17,000 megawatts. Also important is that half 
of that came on line in the last 2 years. It operates 
extraordinarily reliably and does so for a multiple of reasons.
    I will tell you as an engineer with training in operations 
and planning, if you had asked me 10 years ago if we would have 
been able to reliably accommodate even half of that I would 
have said no. Period. End of discussion. So how are we able to 
do that today? There are specific reasons that we are able to 
accommodate that magnitude of wind in a very reliable fashion.
    First and foremost, over the last 10 years, we have 
invested in nearly $10 billion in transmission across our 14-
state footprint and that has been paid for under policies 
developed by our regional state committee who is comprised of a 
commissioner from each of our states who, collaboratively, 
through our committee and their committee processes, determined 
a cost allocation process to pay for that transmission. But for 
that transmission we would not be able to accommodate in a 
reliable fashion that magnitude of wind.
    Second, a day-ahead energy and day-ahead unit commitment 
market, we are able to commit generating units across those 14 
states in a very, very reliable fashion. And then third, we 
consolidated all of the balancing authorities, more than 20, in 
our 14-state footprint, but for any one of those being pulled 
out of the equation we would not be able to accomplish. 
Reliability is job one. We can accommodate managing the system 
in a reliable fashion and we can mandatorily from a reliability 
unit commitment perspective maintain whatever generation is 
needed to protect reliability.
    Second, I want to go on to cybersecurity. It is an 
interest. It is a very, very high risk for our organization, 
but we are subject to the standards of the North American 
Electric Reliability Corporation. They require us to 
mandatorily comply with those. We are heavily audited against 
those. They are backstopped by the Federal Energy Regulatory 
Commission as are our market rules and we are subject to 
penalties of up to a million dollars a day per violation.
    I believe we are in good hands, but the reliability 
standards are a threshold. We focus on security far above 
minimum reliability standards. I appreciate your time today.
    [The prepared statement of Mr. Brown follows:]
    
    
    
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    Mr. Upton. Thank you.
    Next we are joined by Bradley Jones, President and CEO of 
New York ISO. Thank you.

                   STATEMENT OF BRADLEY JONES

    Mr. Jones. Thank you. Chairman Upton, Ranking Member Rush, 
members of the subcommittee, thank you for having me here. I am 
the chairman and CEO of the New York ISO. Prior to my position 
as CEO of the New York ISO, I was the chief operating officer 
of the Electrical Reliability Council of Texas.
    New York has gone through significant changes much of the 
country has. Social, economic, policy changes are driving 
significant changes among each of these ISOs, and each of these 
ISOs here before you have responded to those changes and have 
built systems to ensure that they have the capability to 
maintain reliable, safe operations of their systems as well as 
do so at the lowest possible economic cost for their consumers.
    I would like to highlight three of the critical functions 
of the NYISO. First, the NYISO operates the bulk electric 
system and does so under reliability rules that are set by the 
nation, by the state, and by our regions. Second, we operate 
competitive electricity markets throughout our regions to 
attain that lowest possible cost for consumers. And third, the 
NYISO conducts planning studies to ensure that we can guarantee 
reliability out into the future not just for today.
    Since 1999, the competitive markets in New York have 
delivered consistently for consumers. Over $7.8 billion over 
the last several years have been returned back to consumers 
through the efficient operation of our systems. Now beyond 
efficiency, since 1999, the creation of the NYISO, we have also 
seen a significant reduction in air emissions. Carbon is down 
by 43 percent from our generation fleet. Nitrogen oxides are 
down by 87 percent and sulfur dioxide down by 98 percent in 
that same period, significant track record. Yet, New York State 
continues to be a national leader on the environment and clean 
energy.
    And at the NYISO we see a recognition as we move forward to 
ensure this clean energy future that we have something we must 
address. In our state we are beginning to recognize that we 
have a state which is characterized by a tale of two grids, a 
grid in Upstate which is primarily clean energy, nuclear 
energy, hydro, wind, solar, all components that have low 
emissions and yet in the south where much of our load is, over 
two-thirds of our load, Downstate we have a grid which is 
characterized by over 75 percent fossil fuel generation.
    In order to achieve our low emissions and clean energy 
objectives we must be able to transport that power. To move 
renewable power throughout our grid we have to focus on the 
transmission system in New York. Now I need to applaud FERC. 
FERC passed, several years ago, an Order 1000 which has given 
the great opportunity to move forward on transmission projects 
within our region.
    We have two major transmission projects that are currently 
underway and under consideration. One that moves power a 
thousand megawatts from left to right across the state and will 
enable us to get more of our power out of the hydro resources 
we have in the west as well as the wind resources we have in 
the west. We also have another transmission project that is 
moving from Central New York down into our load centers of the 
Lower Hudson Valley, New York City, and Long Island.
    Third, under consideration we are looking forward to 
working with the Public Service Commission in New York to drive 
one additional policy improvement. That is transmission from 
our north country into the central part of the state so that we 
can capture again renewable resources in that region. Achieving 
our renewable future, which is set by our governor as a goal of 
achieving 50 percent renewables by 2030, depends upon building 
transmission in the state. We are making great progress thanks 
to the work of the FERC so far and we will be making more 
progress as we go forward.
    In addition, we are working very closely with the state of 
New York as an effective partner on analyzing the possibility 
of integrating carbon directly into our markets. What I mean by 
that is pricing carbon into the market dispatch, something that 
at this time that I don't believe any other state is doing, but 
certainly something that I believe most economists would 
suggest is the best way to accommodate low carbon resources in 
our markets.
    We are very much at the beginning of this process. We have 
been working very closely with our state in a collaborative 
way. Our market participants requested that we hire a 
consultant. We hired the very renowned Brattle Group in to 
study this issue. We hope in the next several days to release a 
major report on the possibility of integrating carbon into our 
markets.
    We think it is an extraordinary way that could, is very 
promising for our future not only at keeping costs down for our 
consumers, but also in doing so in a way that reduces carbon 
even further than the current programs in place. So New York 
ISO, much like these ISOs before you, have accommodated change, 
they have led change. We will continue to do that in the 
future. Thank you.
    [The prepared statement of Mr. Jones follows:]
    
    
    
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    Mr. Upton. Thank you.
    Next, Richard Doying, executive VP for Midcontinent ISO. 
Welcome.

                  STATEMENT OF RICHARD DOYING

    Mr. Doying. Good morning, Chairman Upton, Vice Chairman 
Olson, and Ranking Member Rush, and the rest of the 
subcommittee members. I appreciate the opportunity to talk to 
you today about the important topic of energy markets and their 
effectiveness and efficiency.
    I started at MISO in 2002 as we were developing the energy 
markets, and we have seen significant change in the markets and 
the resources since that time and I look forward to discussing 
those changes with you and how the markets have adapted to deal 
with those changes. I know the committee is interested in 
hearing about retirement of generation coal and nuclear units 
as well as increases in gas, increases in renewable energy, and 
I intend to focus my remarks here today on just those issues.
    As a brief introduction to MISO we are, as noted earlier, a 
501(c)(4), a public interest organization, so we exist for the 
benefit of the consumers in our region to reliably operate the 
system as well as to ensure the lowest cost delivered prices to 
those customers. We operate about 175,000 megawatts of 
generation across 15 states, serving about 42 million people. 
As part of that we annually generate about $3 million in 
benefits for all of our consumers.
    The industry is being impacted by a combination of 
regulatory, political, and economic factors and we have already 
experienced a dramatic shift and changes in the MISO region. 
While coal-fired generation supplied about 75 percent of the 
energy consumed in the MISO region in 2005, it now accounts for 
less than 50 percent, about 46 percent. While gas resources 
generated about 7 percent of the energy consumed in the MISO 
region in 2005, that number is now at 27 percent. And while 
renewables generated and accounted for almost zero percent of 
our energy in 2005, it now accounts for about 7 percent and it 
continues to grow rapidly.
    The changes in that generation profile are due both to 
reduction in coal and the retirement of about 13,000 megawatts 
of coal within the region, but it is also driven by economic 
factors, primarily the reduction in natural gas prices. If you 
looked at the natural gas prices in 2005 and considered how far 
they would reduce by 2015 and the fact that gas would be a more 
economic fuel source than coal, no one would have believed that 
that could possibly be the case. But it has led to considerable 
change in the generation resource mixes as well as the 
operation of the grid.
    So how do markets adapt to those changes? We innovate. We 
create new market products and new market services in order to 
accommodate those changes in the resource mix and we continue 
to innovate in order to address particularly renewables and the 
increase in gas generation. So I will note three different 
areas where that occurs.
    One is we partner with our states as they conduct their 
resource planning to evaluate the generation portfolio that 
they plan to bring forward in the future and to provide our 
planning and oversight to make sure that they understand in an 
aggregate basis across the broader region the implications of 
changes they may be making in their portfolio and how that will 
affect the operation of the grid in the market. We also 
facilitate infrastructure investment and reliable grid 
planning. That process has resulted in over $26 billion of new 
transmission infrastructure. An original portfolio of about 
$5.6 billion approved in 2011 resulted in 28,000 direct 
construction jobs and about 50,000 jobs total.
    We also work continuously to improve our markets, to 
innovate the market design and products and services. We have a 
market roadmap process where we work with all of our 
stakeholders including states, including the load-serving 
entities, generators as well as all other interested 
stakeholders, and that includes changes that are directly 
related to the changes that I noted in the generation mix in 
the region.
    And I will give you just a couple examples of those. 
Previously we introduced a new product that would allow wind 
generators to participate in the market on the same basis as 
thermal generators offering into the market and allowing 
dispatch within the region in order to assure the most 
operationally reliable as well as market efficient outcomes. 
More recent examples of additional changes to address both the 
changing fuel mix as well as increasing gas would be new market 
capabilities for combined cycle units which are very flexible 
and can offer in multiple configurations into the market and 
that will allow us to optimize the uses of those resources.
    Finally, we work closely with other sectors such as the 
natural gas sector and we will continue to do so as we go 
forward and gas becomes more important. I hope my written 
comments and introductory comments have been helpful to the 
committee in terms of introducing these topics and I look 
forward to the conversation.
    [The prepared statement of Mr. Doying follows:]
    
    
    
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    Mr. Upton. Thank you.
    Cheryl Mele, senior VP and chief operating officer of 
ERCOT, welcome.

                    STATEMENT OF CHERYL MELE

    Ms. Mele. Good morning, Chairman Upton, Ranking Member 
Rush, and members of the subcommittee. Thank you for the 
opportunity to address you today and offer ERCOT's perspective 
on the wholesale competitive markets. My name is Cheryl Mele 
and I am the senior vice president and chief operating officer 
for the Electric Reliability Council of Texas.
    ERCOT manages the flow of electric power to about 24 
million Texas customers. This represents about 90 percent of 
the load in Texas. We are a membership-based 501(c)(4) 
nonprofit corporation governed by a board of directors and 
subject to the oversight of the Public Utility Commission of 
Texas as well as the Texas legislature. ERCOT is the only non-
FERC jurisdictional power market in the continental United 
States. We are subject to the reliability and security 
standards set by NERC, and maintaining this regulatory 
structure is vital and will continue to bring the benefits of a 
reliable grid and vibrant market with the lowest cost to the 
consumers of Texas that we serve.
    ERCOT has an energy-only market. With limited exceptions, 
generators are paid only for the energy they actually put onto 
the grid. A number of enhancements have been made to ERCOT's 
market since it was launched, but the core energy-only 
principles have not changed. We continue to discuss further 
refinements with stakeholders and regulators and to consider 
the appropriate role for the ERCOT market and operations in 
accommodating newer technologies that may offer different 
characteristics whether they are storage, additional 
renewables, flexible thermal units or distributed generation.
    Contrary to the national trend, we project an annual 
average of 1.5 percent load growth over the next 5 years, and 
in recent years the energy use in ERCOT has grown by an average 
of about two percent annually. The generation fleet in ERCOT 
features a diverse fuel mix including more wind than any other 
state. We currently have over 18,000 megawatts of wind 
installed and operating in ERCOT.
    In 2016, the energy produced in ERCOT was predominantly 
from natural gas plants at about 43 percent, followed by coal 
at just under 29 percent, wind at 15 percent, and nuclear at 12 
percent. That continued load growth and new generation 
investments support continued investment in transmission in the 
region. With natural gas playing such a large role in our 
generation fuel mix, commodity price of natural gas is the 
primary driver of the wholesale prices in ERCOT. With 
consistently low gas prices and ample reserve margins, the 
average wholesale price of power in ERCOT has been very low in 
recent years. We recognize these low prices effect generation 
owners' revenues and we are always attuned to the reality and 
possibility of generation unit retirements that could affect 
our reserve margin outlook.
    Like all independent system operators, reliability is our 
primary measure of performance. We have successfully updated 
our operations and market rules to reflect a changing grid and 
we will continue to work with stakeholders as technologies 
evolve or issues emerge. Through innovation, our staff and 
stakeholders have shown an enormous capability to solve new and 
challenging problems today and in the future. While not a 
market issue, we are appreciative of and remain committed to 
our external collaborations with relevant federal and state 
governmental agencies, the industry, and national labs to 
enhance everyone's cybersecurity posture.
    In conclusion, with healthy reserves and low prices in 
ERCOT's energy-only market, continuing with the current, 
predictable regulatory structure is important. This allows us 
to be responsive to all of our regulators as well as the 
consumer and market participants. We will continue to 
collaborate to address future challenges and opportunities in 
the ERCOT region and we will continually investigate the inputs 
and tools needed to support reliability as the grid continues 
to change. Thank you for your time today and opportunity to 
appear before you.
    [The prepared statement of Ms. Mele follows:]
    
    
    
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    Mr. Upton. Thank you.
    Dr. Casey, Keith Casey, vice president of Market & 
Infrastructure Development, California ISO, welcome to you as 
well.

                    STATEMENT OF KEITH CASEY

    Mr. Casey. Good morning, Chairman Upton, Ranking Member 
Rush, and members of the subcommittee. As you noted my name is 
Keith Casey. I am vice president of Market & Infrastructure 
Development at the California ISO, and I want to thank you for 
the opportunity to be here to discuss the operation and 
effectiveness of the organized wholesale markets in California. 
We appreciate the committee's attention to this important issue 
and my comments today will focus on what is working well in our 
markets and, frankly, some candid discussion around some of the 
challenges we are having.
    Since the ISO started operations in 1998, we have almost 20 
years of operating experience and have been evolving our 
markets considerably since the Western Energy Crisis occurred 
17 years ago. Our markets are in far better shape now than they 
were then, and over the past 15 years have been yielding 
significant benefits to our market participants. They have been 
very stable and competitive.
    In recent years, as I am sure many of you know, California 
has established itself as a global leader in environmental 
energy policies that are dramatically transforming the resource 
mix on the grid. Today, renewables comprise about 30 percent of 
the total energy produced in our markets and are on track to 
meet 50 percent by 2030, if not sooner. This transition from 
large station power to a more diverse and decentralized system 
has created a new value proposition for the California ISO.
    Our centralized energy markets are proving to be highly 
valuable if not essential for successfully integrating and 
managing a diverse fleet of grid resources. Indeed, our success 
has encouraged other transmission providers in the West to join 
our real-time market and form the Western Energy Imbalance 
Market. That market currently serves five entities comprising 
approximately eight western states and serves half the electric 
load of the Western Interconnection. And we have seven other 
entities that are planning to join the Western Energy Imbalance 
Market over the next several years.
    Since its inception in 2014, the Western Imbalance Market 
has created significant benefits not just for California, but 
for all the participating entities. In addition to the 
wholesale market, California provides significant value to 
market participants through facilitating new resource 
interconnections to the grid and developing long-term 
transmission planning. Both of these functions have evolved 
significantly over the years to meet the changing needs of the 
industry and ISO has used these processes to connect 20,000 
megawatts of renewables to the grid and approve over $7 billion 
in transmission investments.
    So notwithstanding these successes, there remain 
significant challenges to enabling the transformation of the 
grid. I will highlight two of them. The first is to maintain 
the resources we need for essential reliability services during 
the transformation of the electric grid; and secondly, to 
ensure the transmission infrastructure needed to support the 
diverse set of resources across the West can one day be 
developed.
    Reliably integrating high levels of renewables into the 
power system represents a significant challenge that requires a 
complement fleet of resources that are highly dispatchable and 
flexible to balance the system and balance the ramping 
challenges that we face. We also need to make sure we maintain 
essential reliability services like voltage support, frequency 
response, and the ability to have a resilient grid that can 
respond reliably to contingencies.
    In the near future, California will need to rely primarily 
on the natural gas fleet to provide these essential grid 
services. However, as you have heard in testimony last week, 
the gas fleet in California is under financial duress due to 
lower energy prices, surplus capacity, and minimal bilateral 
contracting, and as a result, conventional power plants are 
beginning to seek some sort of backstop procurement from the 
California ISO to keep them financially viable or indicating 
they will otherwise retire. Currently, the ISO is working with 
the California Public Utilities Commission and our stakeholders 
to explore regulatory market options for addressing this 
problem.
    Just quickly on the second issue which is with respect to 
tapping the benefits of an expanded Western region. To date, 
the majority of California renewable resources are located 
within state and are predominantly solar photovoltaic and 
relying too heavily on one particular technology like solar PV 
exacerbates renewal integration challenges and essentially can 
create oversupply conditions at certain parts of the day and 
increase ramping challenges for the ISO to manage.
    So as California looks to achieve a 50 percent RPS it could 
take advantage of the opportunity to tap into other high 
quality renewables across the West. Ultimately, having a more 
diverse mix of renewables to meet the RPS goal will lessen the 
integration challenges, and may ultimately prove more cost-
effective for California.
    But of course building transmission across multi-states has 
challenges. There has to be agreement on what the benefits are 
to each state and ultimately how the costs of that transmission 
will be shared. That is a significant challenge. It is one best 
left to the states to resolve, but a major challenge 
nonetheless.
    So in summary, I believe the market and grid services 
provided by the ISO are continuing to provide high value by 
enabling the transition to a low-carbon, modern grid and we 
will continue to look for opportunities to enhance our market 
and address the challenges I mentioned to you so we can 
continue to yield the benefits. I thank you for your time and 
look forward to your questions.
    [The prepared statement of Mr. Casey follows:]
    
    
    
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    Mr. Upton. Thank you.
    Our last panelist is Craig Glazer, VP of Federal Government 
Policy, PJM Interconnection, welcome.

                   STATEMENT OF CRAIG GLAZER

    Mr. Glazer. Thank you, Mr. Chairman and Ranking Member 
Rush. I am Craig Glazer on behalf of PJM. We operate in 13 
states from Chicago to North Carolina up to the New York 
border. I want to start with a personal promise. That is to--we 
have operators who have been keeping the lights on in your 
district, Mr. Chairman, and Mr. Rush's district, Mr. 
Griffith's, Mr. Johnson's, Mr. McKinley's, Mr. Doyle's 
district, and I will just give you my personal promise. We will 
continue to work as hard we can to keep those lights on and 
keep prices low.
    Now it was the author Stephen Covey who instructed us in 
his book, The 7 Habits of Highly Effective People, it is sort 
of a favorite quote of mine where he says the main thing is to 
keep the main thing the main thing. It is sort of a favorite 
quote, the main thing to keep the main thing the main thing. 
And in the case of PJM, Mr. Chairman, Steve Covey's main thing 
can be summarized in a couple of words. Investors are investing 
in new, innovative generation in our region. It is funding the 
all-of-the-above strategy that many people in Congress have 
talked about. And the generation fleet as a result is more 
diverse than it has ever been, more reliable than it has ever 
been, and prices are lower than they have ever been.
    But I am not asking you to take my word for it. If you had 
a chance, if we could take a drive around the region we could 
start out to show you some of this diversity. We would start 
out in Mr. McKinley's district.
    [Photo shown.]
    Mr. Glazer. This is the new coal facility known as the 
Longview Power Station using state-of-the-art coal technology. 
OK. Then as we continue that drive around we would find we 
could go to Cecil County, Maryland.
    [Photo shown.]
    Mr. Glazer. This is an example of a natural gas plant that 
is self-supplying municipal load. I know we heard a lot about 
that. This plant is doing that very thing and depending on the 
PJM market to do it.
    [Photo shown.]
    Mr. Glazer. We then drive over to near Mr. Latta's 
district, the Fremont Energy Center, another new, another 
state-of-the-art natural gas facility that is self-supplying 
another municipal customer.
    Just to show you the diversity, we could then take a trip 
to Laurel Mountain, West Virginia.
    [Photo shown.]
    Mr. Glazer. You would find a major wind facility there as 
well as a new, innovative battery facility all of which are 
depending and selling their output into the PJM market.
    And frankly, as part of the sort of ``expect the 
unexpected,'' we could end up near Mr. Rush, near your district 
at the Shedd Aquarium in Chicago.
    [Photo shown.]
     Mr. Glazer. That is actually studying using its pumps at 
the aquarium to sell into our frequency regulation market as 
well as they vary the pumps. So a lot of innovation and a lot 
of diversity that is out there.
    Now I don't want to mislead you. We at PJM have challenges 
like everybody else and I hope we can talk about some of them 
in this hearing. They include enhancing grid resilience, 
reforming price formation rules, determining and rewarding the 
attributes of what has come to be called baseload generation, 
accommodating state policies that was mentioned before, and as 
was also mentioned before, continually being on the top of our 
game when it comes to cybersecurity.
    But the bottom line or, as Mr. Covey said, the main thing 
is investors are investing, consumers are enjoying the lowest 
electricity prices, and our system is more diverse and reliable 
than it has ever been. That is a testimonial to a lot of 
people. One is those operators that were there this morning 
when your constituents woke up and will be there tonight when 
they go to sleep to ensure that the lights stay on. It is also 
a testimonial to our stakeholders and to our regulator.
    I want to give a shout-out to the Federal Energy Regulatory 
Commission. It is a very professional regulatory agency. I was 
a former regulator myself. I wish I had some of the staff that 
we had at the Federal Energy Regulatory Commission. And a 
shout-out to the Congress which in this very room devise 
policies that have enabled this nation to move to a competitive 
market model which I would posit to you with all kinds of 
issues around it, but I think overall has served this nation 
well.
    We can argue about this market rule with that market rule 
and legitimately have those discussions and frankly we are our 
own harshest critics in PJM many times on these issues. But I 
think when I go back and reflect on the hearings, as many 
witnesses have stated, the Federal Power Act and the 
competitive market model have served the nation well and would 
urge everybody to keep that in mind as we debate some of these 
other issues.
    So thank you and I look forward to your questions.
    [The prepared statement of Mr. Glazer follows:]
    
    
   
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    Mr. Upton. Well, thank you all. And at this point we will 
go to members with questions and we will try to keep to a 
strict 5-minute Q&A to try and get done by early this 
afternoon.
    I want to focus a little bit about the participation on 
cybersecurity efforts. Mr. Van Welie, you talked a little bit 
about it. I would like to follow up to see the participation 
with the grid exercises as well as cybersecurity training for 
ISO New England employees.
    And Mr. Brown, your comment that you thought your 
operations were far above the standards, which is great, but 
what can we do to try and help prevent a cyber attack?
    And Mr. Van Welie, we will start with you.
    Mr. Van Welie. Well, so I think what--
    Mr. Upton. What else can we do constructively to help?
    Mr. Van Welie. Constructively, well, I think with the 
establishment of the oversight over the NERC by the FERC, the 
establishment of cybersecurity standards, I think we set a very 
important baseline in the industry with regard to managing 
cybersecurity, but those are what I would call a minimum 
baseline.
    Ultimately, all of the ISOs in front of you here today 
employ a defense-in-depth strategy and it is about deploying 
automated systems to detect issues. It is about training your 
employees which are often the weakest link in the chain. And I 
think that if I sort of look back over the past decade, I have 
seen the electric industry really lift its game with regard to 
cybersecurity.
    And that is not to say there is more to be done. I think 
there is a lot more to be done. I think the risk is shifting a 
lot from whereas we were previously concerned about cyber in 
the control centers, I think there is a greater risk out in the 
field. And so I see that utilities are going to have to invest 
money in this space and I think what Congress can do is to be 
supportive of the cost recovery of those investments and I 
think it is a necessary investment.
    The other thing I worry about, to be honest with you, it is 
true and I heard a number of the members today mention the 
proliferation of distributed energy resources. The issue with 
distributed energy resources is they often are relying on the 
internet for communications back to the control centers. And I 
think that is a weak link in the chain that we need to pay some 
attention to.
    If we are going to rely on those resources to be a 
substantial part of the capacity to keep the grid going and 
reliable, we need to make sure that those resources which are 
often in private hands are practicing safe cybersecurity 
practices as well.
    Mr. Upton. Mr. Brown?
    Mr. Brown. So what can you do, certainly support the 
standard development process, but as Gordon indicated that is 
minimum. Policy can never keep up with technology, so we are 
constantly communicating among our regions and with the 
government entities on attacks that are occurring in real time.
    And that is why I emphasize the standards are important 
because we are all in this together, highly interconnected, 
highly interdependent, so we must all operate at a minimum 
threshold. But in order to keep up with the attacks that are 
very real-time we have to go above and beyond the standards 
because again policy can never keep up with technology.
    Mr. Upton. Anybody else want to comment? Oh, Mr. Jones.
    Mr. Jones. Yes, thank you. One additional thing that I 
think is important and Nick touched on that as well is threat 
identification. So from the federal side that is the most 
important element for us, threat identification and 
dissemination of that information. That allows us to prepare 
for these threats and defend against them. Thank you.
    Mr. Upton. Let me go to my next question and that is, it is 
a good thing that with all of the things that have been going 
on that harmful emissions from the power sector have been 
reduced, I think, rather significantly. I know, Mr. Jones, in 
New York we have seen the NYISO achieve a 98 percent reduction 
in SO2 emissions since the markets began operation 
in 2000. So with all these changes that are going on whether it 
be RPS standards by states, reduction in coal, tell us a little 
bit about how you expect to see that continue in the next 
decade or so.
    Mr. Jones. Excellent, thank you. New York State is 
currently undergoing a strong push toward reduction of carbon 
emissions, so CO2 emissions in the environment from 
our generation fleet. The goal is currently to achieve a 40 
percent, 50 percent, rather, reduction in carbon emissions from 
1990 levels by 2030 and an 80 percent reduction by 2050.
    In order to achieve that, there are a number of steps that 
the state has already taken. Number one, to drive more 
renewables in the state to achieve these high renewable 
penetrations, but they have also stepped forward recently to 
preserve the low carbon emissions associated with a portion of 
the nuclear fleet in New York. And we have supported that but 
we have also supported moving that into the competitive market 
environment.
    So to the degree that we can do that, the best way to 
control emissions of carbon throughout our state would be to 
integrate it directly into our dispatch in the energy market 
side. We are currently working on that with the state of New 
York, as I said. We will have a report coming out very shortly 
which will identify the opportunities and the very promising 
nature of that approach. We will begin discussing that with our 
market participants as well and we hope to have something in 
the very near future.
    Mr. Upton. When you get that report we will be anxious to 
take a look at it.
    Mr. Jones. Thank you.
    Mr. Upton. My time is expired, so let me go to Mr. Rush for 
5 minutes.
    Mr. Rush. I want to thank you, Mr. Chairman. My question is 
to Mr. Glazer. In your written testimony you state that PJM 
works with its stakeholders on proactive rule changes in order 
to ensure that the market can continue to accommodate 
individual state policies in a manner that still preserves 
competitive outcomes without burdening neighboring states that 
may not have the same state policy.
    As you are aware, to the consternation of some stakeholders 
states like Illinois and New York have implemented policies 
that take into account the social cost of carbon by giving 
credit to their nuclear fleets as safe, reliable, zero-carbon 
sources of energy.
    Mr. Glazer, how would you address the assertion that adding 
value to nuclear fleets unfairly distorts the market? In other 
words, how do we incorporate the social cost of carbon in a way 
that reflects that cost in energy clearing prices? And on this 
question I would also like to hear from Mr. Jones on this 
issue.
    Mr. Glazer. Thank you, Mr. Rush. I appreciate the question. 
This whole question about accommodating state policies, of 
course we need to accommodate state policies and we do that. It 
is not a question of whether we should do it, there is no 
question we should do it. It is a how do you do it question and 
that is the difficult part. Let me give you just an example.
    Maryland may have one state policy supporting renewable 
generation. West Virginia borders Maryland. They have a 
completely different policy. It is all an interconnected grid, 
the electrons don't respect state borders. So the trick is to 
find a way to ensure that Maryland's policy or Illinois policy 
is not exported to West Virginia in my example that may not buy 
into that same policy.
    So how do we do it? There was a discussion, we are working 
on sort of almost like, if you will, firewalls, that would 
ensure that the market prices are protected, that we don't 
export to an unwilling state what that policy is, but at the 
same time allow states like Illinois to go forward with what it 
wants to do.
    So that is the rub here. It is an interconnected grid, 
electrons, we don't want to force other states to absorb that 
policy, but we want to respect what Illinois did. And that is 
what we have got proposals out to accomplish.
    Mr. Rush. So do you have a more definitive example of how 
you would do that because you have illuminated the problem?
    Mr. Glazer. Yes, we are looking at, for example, 
potentially running the market two times, if you will. Running 
the market once that would allow the Illinois nuclear units in 
this case to participate in the market, but also almost running 
it a second time to correct any sort of price-oppressive 
effects of the fact that there is a subsidy going to certain 
nuclear units in Illinois but not the same equivalent nuclear 
units, in Ohio or Maryland or anyplace else.
    So it is a technique that we are looking at. We have 
actually got a proposal to do that and it is a vigorous subject 
of discussion.
    Mr. Rush. Thank you. Mr. Jones?
    Mr. Jones. So the proposal in our region is different than 
most of the other ISOs. As Mr. Glazer had mentioned, multi-
state ISOs have a difficult time of getting all of the states 
onto the same policy position.
    In the three ISOs that are led by a single state--
California, Texas, and New York--it is much easier to implement 
state policy directly since we have a single state. In the 
State of New York we want to approach this issue through the 
energy market. To best say this, in states that are approaching 
it through a capacity market the vernacular that is used is to 
accommodate state policy into the market. In our state, by 
using the energy market we are actually helping to achieve the 
goals of the state. It is a rather significant difference but 
it is one that we hope to deliver on.
    Mr. Rush. I yield back, Mr. Chairman.
    Mr. Upton. Thank you. Dr. Murphy?
    Mr. Murphy. Thank you, Mr. Chairman.
    Mr. Glazer. So I am from southwestern Pennsylvania and 
represent an area right in the heart of the PJM area. And as we 
are talking about this mix of state and federal regulations, 
can you give a little more detail of how they run into, 
interfere with each other, and then I will follow up from 
there.
    Mr. Glazer. OK. And it is, a prime example is Pennsylvania 
has a renewable portfolio standard that includes, as I 
understand it, clean coal technology as one attribute of a 
portfolio standard. Maryland doesn't have that. But the 
electrons don't really care. They are moving across the border, 
they don't really care.
    So the question is: How does Pennsylvania's policy not get 
exported to Maryland and vice versa? So what we are looking as 
how do we, in a multi-state market how do we accommodate what 
every state can do, but in the absence of a national federal 
policy on any of these subjects how do we make this all fit 
together? We think we can. We think this is very achievable but 
it does take some work.
    Mr. Murphy. So let's talk about how this is achievable 
because states and federal regulators there is this bright line 
in some places. But does this take on our part some large 
overarching legislation? Do we recognize any of the state 
preferences there at all? Because obviously I represent coal 
country, every square inch of my district has coal under it, 
has Marcellus shale natural gas in multiple layers, 
Westinghouse nuclear is, part of it is in my district. We have 
got it all. So, but another area may not have that or prefer 
that so what is the solution?
    Mr. Glazer. Mr. Murphy, I think it is a great question. 
There is no question that the more direction on these issues 
that can come from this Congress or from the Administration the 
better, because then it is federal policy whatever that policy 
is.
    And I like to say the markets are like a blender. They are 
only as good as the ingredients you put into the blender. But 
they do, once you put those ingredients in they produce the 
most efficient answer, so the more direction we can get from 
this Congress I think that helps. It is when states as Mr. 
Jones indicated start going in different directions that it 
gets complicated. But your district is a perfect example of 
having rich in all of these resources, and I think the PJM 
market appreciates it and we all benefit from the richness of 
those resources.
    Mr. Murphy. Which these electrons get mixed up, so we can't 
put a filter at the border. So if a state doesn't like coal we 
can't keep the coal electrons out?
    Mr. Glazer. That is right. That is right, because electrons 
follow--
    Mr. Murphy. Are you sure we can't do that because if they 
don't want coal I am glad to say, all right, you don't get to 
have them. You have a brownout then.
    Mr. Glazer. Right.
    Mr. Murphy. Can't do that?
    Mr. Glazer. Can't do that.
    Mr. Murphy. All right, too bad.
    Mr. Glazer. They follow the laws of physics and they go 
where they go. Yes, that is the problem.
    Mr. Murphy. Mr. Jones, do you have a comment on that too? I 
am just curious. He made reference to you there, what we need 
to do on the federal side in ironing out these state-federal 
differences.
    Mr. Jones. Why are there state and federal differences?
    Mr. Murphy. Well, how, what we need to do to help overcome 
if there is some problems between them.
    Mr. Jones. So in multi-state ISOs the difficulty, of 
course, is to figure out how to accommodate each individual 
state with their particular policy positions. The PJM has 
issued a very short white paper that described one way that it 
could be done. For example, I think their white paper describes 
that each energy market could carry its own price of carbon. 
Those states that do not want to have a price of carbon would 
be adjusted as the power flows across those interfaces.
    So there are ways to do it, it is just much more difficult 
than what we might be able to achieve in New York.
    Mr. Murphy. Anybody else have a comment on that because it 
is part of what we--Dr. Casey?
    Mr. Casey. Yes, I would just note that in California we 
have a cap and trade program for carbon allowances within state 
and we have the issue of particularly when we run our Western 
Energy Imbalance Market we are dispatching resources all over 
the West. How do we attribute which resources are supporting 
imports into California that would--
    Mr. Murphy. What is it you trade?
    Mr. Casey. Well, we are trading energy. So we are 
optimizing--
    Mr. Murphy. But it has to do with carbon too, right?
    Mr. Casey. Yes.
    Mr. Murphy. So if something like a nuclear power plant or a 
solar plant doesn't generate carbon they trade what?
    Mr. Casey. Well, they wouldn't have a compliance obligation 
for purposes of cap and trade if they are not emitting GHG. But 
to the extent we are dispatching resources outside of 
California that have a carbon emission and they are supporting 
transfers into California, we have developed in our market a 
method to attribute that that resource in Arizona is supporting 
a transfer into California and is subject to a GHG price and 
ultimately a compliance obligation for compliance with 
California's cap and trade.
    So I just mentioned it as it is a market mechanism where 
through the dispatch you can try to tease out which resources 
are being dispatched to support transfers to another state and 
can enforce a carbon price to it.
    Mr. Murphy. I think, Mr. Chairman, that is part of the 
complexity that we need to figure out on all of that. It 
sounded very convincing, but I have no idea what you just said. 
Thank you very much.
    Mr. Upton. We will give you 3 days to write a written 
statement, OK. Mr. McNerney is recognized for 5 minutes.
    Mr. McNerney. Well, thank you, Mr. Chairman. I appreciate 
how business loves stability and predictability especially 
utility markets, so I am sort of going to leave that. But I 
would like to ask a question and ask each one of you to answer 
it in about 15 or 20 seconds starting with Mr. Glazer and 
moving this way. What changes, if any, are needed in federal 
policies to encourage investment needed for utility companies 
to manage the challenges you are facing with the rapidly 
changing marketplace?
    Mr. Glazer. Very quickly, we are moving beyond reliability 
standards to look at a more resilient grid. And there is a lot 
of attributes of a resilient grid. It will require support. It 
is not going to be inexpensive to do, we have to do it wisely. 
I think this committee's focus on these resiliency efforts 
would be very, very helpful.
    Mr. McNerney. OK.
    Mr. Casey. I think in the case of California we have a very 
robust investment environment with the integrated resource 
planning that goes on at the Public Utilities Commission and 
the direction and renewable procurement and the supporting 
transmission. So I don't see, really, a need for anything 
beyond what we have. I think we have adequate investment 
incentives there.
    Ms. Mele. From an ERCOT perspective, I think that as I 
stated in my comments is that predictability is what we need to 
guide the future there and so I don't think there is anything 
that we really need. I think that some of the focus on NERC 
standards and making sure cybersecurity standards continue to 
develop in that sharing of information is probably largely the 
most impactful thing to us from here.
    Mr. Doying. I guess I would tend to agree with the other 
commenters and that is we do have federal support from NERC for 
CIP standards and for resiliency standards. Markets as I noted 
are able to adapt to the changes in the underlying market, the 
composition of the generation fleet, and I think the most 
important thing for us is regulatory stability. We largely have 
that through FERC, but to the extent that you have policies 
that come out that go in different directions over different 
periods of time that that is not beneficial to market 
participants or the marketplace.
    Mr. McNerney. Mr. Jones?
    Mr. Jones. Thank you. From New York's perspective we have a 
great deal of investment. We are very comfortable. We have 
investment in solar, wind resources, investment in natural gas 
field facilities. As I had mentioned to you earlier though, we 
have a great deal of need for additional transmission 
investment. And I don't believe anything additional from this 
body needs to move forward, but we do need to have continued 
focus by the FERC on moving our transmission projects forward. 
Thank you.
    Mr. Brown. No additional policy changes are needed in our 
region from this body. I would say though it would help if we 
had a quorum at FERC.
    Mr. McNerney. All right.
    Mr. Van Welie. I agree with the previous speakers that 
regulatory certainty is very important. I think that I have 
watched the industry struggle with what is the long-term 
trajectory on carbon pricing, so from an investment point of 
view as one is investing in new long-lived assets that are 30 
to 40 years in terms of their economic life, having some 
certainty around that question would be very beneficial.
    And I think as a nation we have struggled with that one and 
I doubt we are going to resolve it any time soon, but that 
certainly would help us achieve that objective through the 
market if we could get it more clearly stated at a federal 
level.
    Mr. McNerney. Thank you.
    Mr. Casey, one of my priorities has been to support 
technologies and projects that are making the electric grid 
smarter and more reliable, more resilient, flexible, and 
secure. As California ISO meets the challenges of renewable 
energy integration and other state policy objectives, what is 
ISO doing to support advanced grid technologies?
    Mr. Casey. I would say, in short, a lot. I think in many 
ways we are leading the world in advancing new technologies 
into the power grid. There is a lot happening on the 
distribution network with, as you know with microgrids, energy 
storage, demand response, many of those resources are behind 
the customer meter. They are not connected to the transmission 
system. But we have put forward market models to enable those 
resources to actively participate as a grid resource so that we 
can be able to dispatch them to help meet the system needs.
    Demand response is an area in California that I think there 
is a huge untapped potential to really more fully develop. We 
have been a big advocate with that working with the Public 
Utilities Commission to really get to the technology capability 
to what demand response can really do. We have a lot of old 
programs out there that really you can only call once in a 
while. We need more advanced programs in demand response that 
we can call every day and it is seamless to the customer, they 
don't even know it is happening.
    Those are just some examples of what we are trying to do on 
the customer side. There are other things we are doing on the 
transmission side as well.
    Mr. McNerney. Thank you, Mr. Chairman.
    Mr. Upton. Mr. Barton?
    Mr. Barton. Thank you, Mr. Chairman. Thank you for holding 
this hearing. We want to welcome Cheryl Mele who is from ERCOT 
in Texas. We are always glad to have you here. I just have one 
question, Mr. Chairman. Several years ago, in the Energy Policy 
Act of 2005 we had a very small section, section 1222, get 
authorized, the Southwestern Power Administration to build 
several new transmission lines. One of those projects has been 
approved, the Plains & Eastern Clean project line. It starts in 
either Texas and/or Oklahoma, crosses through Arkansas and goes 
into Tennessee.
    The State of Arkansas has filed a lawsuit, and I don't know 
if it is the state itself or stakeholders in Arkansas against 
that project. I would like to ask the head of the Southwest 
Power Pool if he is familiar with this project and, if so, what 
your position is on it.
    Mr. Brown. So yes, I am very familiar with the project. It 
is not a product of a regional planning process that involves 
all of our diverse constituents, both regulatory commissions 
and all of our very diverse membership, it is a market-driven 
solution to delivering wind from the western part of our 
footprint to load centers in the East. We are not opposed to 
the line, I would just say it is not a product of a regional 
planning process.
    The question is, do load centers in the East want to use 
that particular DC line as a transportation facility that is 
constructed solely for the benefit of the wind generators in 
the West and the load centers in the East, or do those load 
centers in the East prefer an AC solution that becomes a 
product of our regional planning process? The costs can be 
comparable.
    The utilization of a DC line is limited again to benefit 
the buyer on one end and the seller on the other end. An AC 
solution benefits everyone in the footprint. Both can reliably 
accommodate the same mission. Again it is, you know, what 
solution do you prefer.
    Mr. Barton. All right. What about the representative of the 
MISO, it goes through your territory too. What is your position 
on it?
    Mr. Doying. I would concur with Nick that it is not part of 
the regional planning process. I think this is a great example 
of somewhere where the RTOs have the ability to accommodate the 
policy decisions that are made by states or by bodies such as 
this one. If it doesn't go through the planning process it is 
not eligible for cost allocation throughout the rest of the 
footprint, which means that to the extent it is approved by 
states or other entities and they are willing to pay the bill 
then it can certainly go forward and we would certainly 
accommodate the transmission within our system. So I certainly 
don't object to it and we will wait to see how the litigation 
plays out.
    Mr. Barton. Well, I am told that one of the Arkansas 
objections is that they don't receive any of the power, but I 
am also told that the line is willing to, and it maybe even has 
planned in a connection point in Arkansas that if they wanted, 
if Arkansas wanted to it could receive power. Are you familiar 
with that?
    Mr. Doying. No, sir. I am not.
    Mr. Brown. And yes, I am, and certainly it could be 
accommodated. The real question is, are there loads in Arkansas 
that want that choice of delivery system, a DC line versus an 
AC solution that can provide other benefits to the state.
    Mr. Barton. I doubt that anybody on the panel understands 
the difference between DC and AC. Well, Mr. Shimkus, we will 
say Mr.--OK, Mr. Flores says he does. Mr. Morgan, I stand--and 
I am sure Mr. McKinley does, so I stand corrected. I will say I 
am the only one that doesn't understand the difference. Anyway 
thank you, Mr. Chairman.
    Mr. Upton. Mr. Peters?
    Mr. Peters. Thank you, Mr. Chairman. I want to thank all 
the witnesses. I also want to thank the staff for the excellent 
work that they did together to prepare us for this.
    Dr. Casey, I wanted to ask you about distributed generation 
and maybe you could describe for me what are the challenges in 
terms of reliability to the proliferation of distributed 
generation and whether the state is looking at weighing in 
terms of what is the most efficient way to provide, say, solar 
power? Is it large-scale solar farms or is it rooftop? Is the 
state taking a position on that and moving it one way or 
another or are we just kind of letting that happen?
    Mr. Casey. Well, with respect to reliability issues with 
distributed energy I think it deals mainly with modernizing the 
distribution network to accommodate it. As you know, these 
systems were designed with one-way flow of power from large 
central stations to consumers that were static consumers. The 
grid of the future is going to be much more dynamic. You are 
going to have bidirectional flows, you are going to have a lot 
of automation on the system.
    So I think from a reliability standpoint, the distribution 
utilities are really struggling to keep pace with how they need 
to upgrade the distribution network to provide the safety and 
controls to make sure that that dynamic can be reliably 
managed. As a transmission grid operator, that is really not 
our issue. That is the issue for the distribution utility. But 
as I mentioned, we are trying to leverage those distribution 
networks as a resource for the transmission network.
    On your question around going forward, is California going 
to rely more on large central station renewables versus 
distribution, my sense it is going to be both. I think what is 
happening on the distribution system is, it is not policy 
driven, it is consumer driven. People want more control. I know 
you are very involved with the naval bases in San Diego. They 
want more resiliency with their system with their microgrids. 
Other companies are doing the same. So a lot of that is just 
happening and we are enabling it, but to achieve ultimately the 
environmental policy objectives California has you are going to 
need more large central station solar and wind.
    Mr. Peters. I would just ask the panel a question on 
cybersecurity and maybe ask it in an overly provocative way is 
why should I trust you to take care of cybersecurity? Is there 
a federal role for that? What interests you in having federal 
participation? What scares you about that? Does anybody want to 
offer me some advice about why I should get involved or why I 
should sit back?
    Mr. Glazer. Mr. Peters, I would be happy to address that. 
This is joint effort. We are the people on the front lines. It 
is our systems that people are trying to hack into in many 
cases. But what the Federal Government has is the authority 
through this Congress to require standards. That is very 
important. Also, the Federal Government has information as to 
threats that we don't have. We are not an intelligence agency. 
So I think this is not an either/or proposition, it is really a 
partnership.
    Mr. Peters. OK. I think that makes sense to me. I think 
that information, best practices, setting standards makes a lot 
of sense. And I know we have taken some steps to make sure that 
an outage in one place doesn't so greatly affect the whole 
country, so I think there is protection. But if you have any 
thoughts after this on that I would love to hear it.
    And then Mr. Jones, I am not as familiar with the 
regulatory regime in New York. I assume that that is what is 
driving investment in renewables and the reduction in emissions 
that you described. Can you just tell me a little bit about 
whether that is the case and what it is about the regulatory 
framework in New York that is helping?
    Mr. Jones. So the regulatory framework coupling with the 
efficiencies that are driven out of the markets within our 
systems itself is really what has contributed to those 
reductions, so more efficient generation has come to our 
markets to compete. That more efficient generation has lower 
emissions than the less efficient generation. And as the new 
generation comes to market, much of the older generation has 
left that had higher heat rates and higher emissions, so it has 
been a combination of both.
    On top of that the State of New York has been a driver for 
decades in trying to improve the environment throughout New 
York and throughout the country for that matter. There are a 
number of initiatives in place, as I had mentioned earlier. 
They are achieving a high renewables penetration, achieving 
significant reductions in carbon emissions that are driving 
changes in our markets as we attempt to achieve that through 
the NYISO itself.
    Mr. Peters. Thank you very much again to the witnesses. And 
Mr. Chairman, I yield back.
    Mr. Upton. Mr. Shimkus?
    Mr. Shimkus. Thank you, Mr. Chairman. I apologize for being 
in and out. Members do that all the time especially when you 
have competing hearings and other legislation you are working 
on.
    This is an area that I love to talk about and it is 
evolving and you all are managing a system that--I think FERC 
was here. I mentioned to some of you who came to visit my 
office that FERC was here a year or 2 ago and they basically 
said, the Federal Power Act has not been rewritten. It has been 
vague enough for us to evolve over time.
    So for that I want to thank Mr. Glazer and Mr. Doying for 
visiting the office, and Mr. Brown, I am sorry you got Mike 
Ross with you. You seemed to be successful even with him there, 
so we will keep cheering on--and a pharmacist dealing in 
electrons.
    So Mr. Glazer, in the last hearing of maybe last week and 
we talked about a little bit self-supply debate and issue, can 
you talk about that from the aspect of our munis and our co-ops 
and especially in the MISO generating area and then the PJM 
area? This is an Illinois kind of specific issue. Can you just 
talk about if they, if you were asked do you allow self-supply 
what would your answer be?
    Mr. Glazer. Thank you for the question. And you may have 
been out when I said not only do we allow self-supply, in fact 
I think I showed some examples. These are some power plants 
that in fact are self-supplying.
    Mr. Shimkus. My apologies for not being here.
    Mr. Glazer. No, no. I understand that. Just so you are 
aware, I actually brought pictures of plants that actually 
today are exactly doing that. The particular situation with 
regard to the IMEA--
    Mr. Shimkus. Well, as long as you have addressed it, I am 
good.
    Mr. Glazer. OK, OK. Yes. The short answer is there are--I 
was a little concerned about the panel because there was this 
impression on the last panel that there is some rule against 
self-supply, and as I tried to show absolutely we have self-
supply today. We have shaken hands with the public power 
entities and worked out those arrangements. So it is happening 
today as we speak and we have no intention of changing that.
    Mr. Shimkus. Thank you. I want to really dovetail a little 
bit on Joe Barton's question because that line also goes 
through southern Illinois and it is really more of a siting 
fight versus--and I think the AC and the DC argument is really 
kind of the critical debate of what can be used locally versus 
what is being used, because the local landowners, in essence 
eminent domain fights are like we are not seeing it and they 
are just forcing their way through. And I always can blame the 
Public Utility Commission of Illinois and FERC without taking 
direct responsibility for that.
    But it is a difficult process that makes you wonder if 
public policy needs to be involved somehow in addressing--well, 
Mr. Glazer, we were talking about this yesterday. When you look 
at the maps, and Mr. Doying, when you look at the maps, 
sometimes your RTO, the ISO areas look like political 
gerrymandering to some extent. And that is not positive. That 
is really a negative comment.
    And sometimes because of the engineering aspects they make 
more sense than just a visual, but that is why we grapple with 
this. That is why I am glad the chairman has these hearings. 
Not a question, I guess, just a comment.
    I want to also raise to Mr. Jones, you are with the New 
York ISO. So it just popped in my mind, and I have a new 
legislative staffer who wasn't here, but I raised a couple 
years ago a concern of my alma mater which is West Point and 
their ability to get a new, some additional transmission into 
the Academy. I think I had a meeting or two after that. I don't 
know the status of that and I can ask them. I was on the board 
of visitors at that time which is the responsibility of that 
board is to kind of take a look at the Academy and see if it is 
accomplishing its mission. It is training our young men and 
women to be the best leaders of our other young men and women.
    But also part of that is facilities and the ability of them 
to have the opportunity with the electricity and their needs, 
so if you would have some people go back and check that on my 
behalf I would appreciate it.
    Mr. Jones. I would be happy to.
    Mr. Shimkus. No other questions. Again I apologize for not 
being here. I yield back my time.
    Mr. Upton. Mr. Doyle?
    Mr. Doyle. Thank you, Mr. Chairman. Thank you to all the 
panelists.
    Mr. Glazer, I want to ask you about PJM's report on the 
evolving resource mix and system reliability. It sort of 
received considerable attention especially for the claim that 
PJM's resource portfolio could feature up to 86 percent natural 
gas and maintain operational reliability.
    I note also in the report though that you acknowledge that 
this hypothetical resource portfolio raises questions about 
electric system resilience and additional risks were not 
captured in the analysis including gas deliverability during 
polar vortex type conditions and to go on to include 
uncertainties associated with economics and public policy.
    And we have seen an incredible increase in the share of 
natural gas in the markets and I am a big supporter of natural 
gas, I am not speaking against it because it has its benefits. 
But I want to know how you view this trend going forward? Do 
you think we are going to continue to see greater shares of 
natural gas in our markets and are you concerned about that 
from a resiliency standpoint and what does it mean for the 
long-term perspective in terms of infrastructure investment?
    Mr. Glazer. Mr. Doyle, thank you very much for that 
question. First off, the good news is particularly in your 
district you have the strong natural gas pipeline 
infrastructure in that district and in many of the districts 
that we serve. That particular report was one of a number of 
reports that we have done.
    It was looking at the equivalent of if you went to shop for 
a car it was asking the question just like you would ask, what 
is the size of the gas tank? What is the miles per gallon? What 
is the ability to go from zero to 60? We were looking at 
different fuels and how they perform as part of a generation 
mix and gas served very well in that context as did coal as did 
a number of other fuels.
    But it is just one part of the puzzle and I think you put 
your finger on it. The system is strong. We have tested 
individual pipeline dependencies and we look at those. But the 
next thing we need to do and we are focused on is resiliency, 
which is that sort of high-risk, low-frequency event, what if a 
lot of pipelines go out, what happens?
    And so that is sort of the next generation. That is where 
we are now. We are beyond just the NERC reliability standards 
and that is the focus, a big at PJM initiative.
    Mr. Doyle. Thank you. I want to talk about price formation 
too. You mentioned energy price formation reforms basically 
saying that the existing rules fail to appropriately value 
large generating plants. And I want to say that I appreciate 
PJM's response to a notice of proposed rulemaking from FERC 
earlier this year and share the concern that current energy 
pricing mechanisms fail to fully transparently and accurately 
value an array of resources in our markets.
    So I am interested in PJM's proposal of a load following 
product that encourages the development of new, innovative, and 
flexible resources. Could you describe what type of issue this 
product would address and what type of generation resources 
would qualify?
    Mr. Glazer. Great, thank you. First of all, let me just 
very quickly just sort of analogize to what this problem is 
because it gets very wonky very quickly. But imagine you go in 
the supermarket. You want to get a can of beans. You want to 
make sure that that can of beans, the price you are paying for 
that is reflected right there on the shelf, you know what you 
are buying.
    And because of some ways, the way price formation has 
happened, actually what happens is you can see an artificially 
low price, then you get to the checkout counter and suddenly 
there is an add-on price you never knew about. That is not a 
great system. So we need to find ways to both price that so you 
know what you are buying and frankly the manufacturer can keep 
making the beans, if you will. So that is one aspect of our 
price formation.
    The second aspect is the load following product. Who can 
benefit from this? Wind technology, energy storage, batteries, 
anybody that can be flexible it is a way to reward them 
directly and so we are beginning those discussions with FERC. I 
think it can be very promising for new technology.
    Mr. Doyle. Great. And I want to ask you this question and 
the rest of the panel too. Congress is looking at, I don't know 
if we are looking at it as we speak, but there is a lot of talk 
about passing a carbon tax. And I am curious. Would PJM have 
any issue in implementing this policy? Do you think reliability 
or resilience would suffer if given the fact if you were given 
adequate time to adopt it? What are your thoughts if we were to 
enact a carbon tax?
    Mr. Glazer. Again the market is a blender. This would be an 
ingredient and we could easily absorb that into the market and 
it would be reflected in the prices that people pay. Obviously 
we continue to ensure the system is reliable, but it would 
work. And the market, it actually is adaptable to that kind of 
proposal.
    Mr. Doyle. OK, just down the line real quick, yes or no. 
Would you be able to, do you think resiliency or reliability 
would be affected or could you adapt to it?
    Mr. Casey. Well, in the case of California, we are--
    Mr. Upton. Want it to be just a yes or no. His time is 
expired, so just answer his question yes or no as he asked.
    Mr. Casey. OK, yes.
    Ms. Mele. It could be accommodated, yes.
    Mr. Doying. Yes.
    Mr. Jones. Yes.
    Mr. Brown. Yes, but not the preferable way.
    Mr. Van Welie. Yes.
    Mr. Doyle. OK. And Mr. Chairman, thank you.
    And I just want to say hello to my friend Mike Ross, a 
former member and colleague of ours and a great member of the 
Energy and Commerce Committee regardless of what Shimkus says.
    Mr. Upton. He was indeed a very good member and still 
remains a friend.
    Mr. McKinley?
    Mr. McKinley. Thank you, Mr. Chairman.
    And Mr. Glazer, I think I am going to direct most of my 
comments to you with PJM. I appreciate you using Longview as 
one of your models, but you are well aware that the current 
regulations in this country prevent us from building into the 
Longview 2?
    Mr. Glazer. Well aware of that, yes.
    Mr. McKinley. So why I think it is so important that if we 
are serious about developing baseload we have to be able to 
take that into consideration on how we are going to be able to 
replicate the success that occurred at Longview.
    Mr. Glazer. And it is a success story, I agree.
    Mr. McKinley. Yes, absolutely it is. And I had the pleasure 
with Secretary Perry there touring the plant just a few weeks 
ago and then he went over to NETL to look at some of the fossil 
fuel research facilities and what is underway on that. So just 
for the record, we can't do what you want us to do.
    The secondly is that you said in your testimony you want to 
keep prices low. That is one thing that you said--you are 
helping to try to keep prices low. But yet we have perhaps 
conflict and maybe you can help clarify that in keeping prices 
low. West Virginia now has lost its stature of being number two 
in lowest cost energy costs to now the 26th, just in 10 years. 
Pennsylvania and Ohio are also in that 25 to 28 range on that 
so I don't think the utility rates in the PJM market are 
particularly low. Do you want to comment about that?
    Mr. Glazer. Mr. McKinley, I think it is not a question of 
are they, further, we don't see our mission keeping them low as 
much as making sure the prices are right, that they are sending 
the correct price signals for new investment just like we just 
talked about for a future Longview. That is really the goal is 
to make sure the prices are fair and right, attract 
investment--
    Mr. McKinley. Then at the same time we are--and I support 
the chairman's mission for nuclear facilities. For example, in 
Illinois we know that the state is going to subsidize or has 
already started to subsidize their rates for nuclear. But when 
they bid into the PJM market that means that they have a 
competitive advantage over coal and gas fired in the East. Do 
you want to respond to that?
    Mr. Glazer. And that is exactly the concern with sort of 
just a state sort of subsidizing a plant, because it has the 
effect of crowding out other plants in the state like West 
Virginia that didn't adopt that particular policy because you 
don't have any nuclear plants in West Virginia.
    So you are absolutely right. It is a concern. That is why 
we are looking at some mechanisms to--
    Mr. McKinley. So you are trying to develop something that 
does that?
    Mr. Glazer. We are trying to do something that prevents the 
harm, if you will, Illinois doing something that hurts West 
Virginia coal plants.
    Mr. McKinley. Should regulators be rewarding baseload 
production and should they be rewarding lowering carbon 
emissions as part of their rate base?
    Mr. Glazer. Yes, one of the problems, and I am a former 
regulator. One of the problems in this whole area, if you start 
picking winners and losers inevitably as a regulator we got it 
wrong and then we just create stranded costs and we create 
problems.
    Mr. McKinley. Would trying to protect our baseload be 
something that is subjective?
    Mr. Glazer. What I am saying, Mr. McKinley, is picking out 
particular power plants.
    Mr. McKinley. I am not trying to--
    Mr. Glazer. Right. But in terms of a mix of resources we 
agree, but the way to get at it is not to say I need x amount 
of coal, x amount of nuclear, x amount of gas, because who 
decides that question? To us, the best way to look at it is 
what are the reliability attributes of those? And frankly our 
study, as Mr. Doyle pointed out, the study actually identified 
many reliability attributes of coal that are very valuable to 
it.
    Mr. McKinley. And I want to be very supportive of natural 
gas because obviously the Marcellus is in Utica, the 
possibilities that come forth from that.
    Mr. Glazer. Right.
    Mr. McKinley. But we look at that and we see during the 
polar vortex in 2014 we saw what happened that they went from 
about a hundred dollars per megawatt hour up to what, it went 
from the average of $30 up to $1,800 for a megawatt hour during 
that polar vortex.
    What savings could we have had if we had been using base 
price back on coal and, you say coal, for example, coal and 
nuclear?
    Mr. Glazer. Well, to be honest, we saw power plants that 
were not producing during the polar vortex and some cases were 
coal and some cases were gas. Overall, the extreme weather hit 
the entire fleet pretty hard. So we have actually changed our 
system to award that good performance of all those units, coal 
and natural gas, and that helps to moderate the fluctuations 
and the energy prices as well.
    Mr. McKinley. I have 20 more questions so I guess we will 
have to have a meeting.
    Mr. Glazer. I will be happy to follow up with you.
    Mr. McKinley. Yes, we will, please. Thank you, Mr. Glazer.
    Mr. Glazer. Yes, thank you.
    Mr. Upton. Mr. Green.
    Mr. Green. Thank you, Mr. Chairman, and thank you and our 
ranking member for holding this hearing particularly after last 
week's hearing we had on electricity and power.
    Coming from Texas, I have to admit when--Ms. Mele, your 
testimony said that our natural gas is 43 percent followed by 
coal at 28 percent and wind at 15 and nuclear at 12 percent. Do 
you expect our baseload to change? Are we seeing more wind 
power coming to the market? And by the way, everybody on the 
committee is used to us in Texas bragging. I was happy a number 
of years ago when the Public Utility Commission to get that 
wind power from West Texas to the Dallas-Fort Worth, San 
Antonio, Austin, and of course the Houston market where I am 
from, made a decision and spent, was it $5 billion?
    Ms. Mele. Yes, sir. Actually it was a little bit more than 
that. About $6.9 billion was invested under the legislature's 
direction to really--
    Mr. Green. To make sure that wind could get to the urban 
areas where the customers are.
    Ms. Mele. Correct. And so today we have about 14,400 
megawatts of wind taking advantage of those CREZ lines, and 
actually in the queue of potential interest being shown is an 
additional 23,000 megawatts of wind. So we assume that will not 
all get built, but that interest in developing wind in Texas in 
the western region and the Panhandle continues.
    Mr. Green. ERCOT is the only RTO in the nation that is not 
regulated by FERC. You offer a perspective of what we are 
discussing today. In your testimony you mentioned Competitive 
Renewable Energy Zones, CREZ, was mandated by the state 
legislature. How has this program evolved since its inception 
and do you believe it could be replicated across other RTOs 
present today?
    Ms. Mele. I don't know if I can offer comment to the other 
RTOs. They can probably add their own. But I do think that that 
certainty of having a resource like the CREZ lines built 
certainly has enabled the interest of wind to develop, but also 
is serving some our industrial loads in West Texas associated 
with our natural gas and oil businesses. And it also is 
starting to show a value for the solar development that is 
beginning to grow in that western region as well.
    Mr. Green. What are ERCOT's projections for the 
incorporation of large-scale solar projects and how the 
additional solar impact on your current fuel generation mix 
under ERCOT jurisdiction?
    Ms. Mele. Yeah, today we have just over 700 megawatts of 
utility-scale solar installed in ERCOT. As we look down the 
road at what is in the cue for development we are seeing 
significant interest in solar. It is in the thousands of 
megawatts over the next several years. When we did our long-
term system assessment and really looked at what resources are 
likely to be developed in Texas based on the resource that we 
do have in solar and wind and natural gas and those, that tends 
to be where the interest is being expressed in the applications 
that we see for interconnection requests, so we believe that 
will continue.
    But just looking at the solar development, we have an 
expectation of about 850 megawatts in 2018, over 7,000 
megawatts is expressed interest in 2019, and 8,000 megawatts-
plus the following year, so this is going to be another big 
resource that can take advantage of those CREZ lines.
    Mr. Green. And so you see these numbers in your testimony 
shifting over the years because solar is not part of it now but 
there is growth. And I go home every weekend and I love when I 
drive to South Texas to see grandchildren, starting about north 
of Corpus with those windmills and then they skip a little bit 
of the urban area, but then between King Ranch, from King Ranch 
to Raymondville almost in the South Texas area there that--is 
it potential for any offshore? I have heard of offshore wind 
power also being developed, but again on the Texas coast it is 
all land-based.
    Ms. Mele. Yes, it continues to be land-based, and the 
virtues of that southern and coastal wind that we have is that 
it tends to be there and available during the peak consumption 
hours in the afternoon. And so that resource development has 
really been valuable to our state.
    Mr. Green. What is the difference in the wind power, say, 
in South Texas as compared to West Texas and the megawatts that 
they deliver?
    Ms. Mele. The actual installations in South and coastal 
Texas are quite a bit lower. I don't have those exact numbers, 
but I would say it is probably over in maybe 3- to 5,000 
megawatts.
    Mr. Green. OK.
    Ms. Mele. I can certainly confirm those numbers for you.
    Mr. Green. So the wind blows more in West Texas than it 
does in South Texas.
    Ms. Mele. Well, the wind blows predictably in South Texas, 
but it blows more in West Texas.
    Mr. Green. OK. Thank you, Mr. Chairman.
    Mr. Johnson [presiding]. I thank the gentleman for yielding 
back. I recognize Mr. Griffith for 5 minutes.
    Mr. Griffith. Thank you very much, Mr. Chairman. I 
appreciate it. As you may realize if you watch this committee 
very often, you have entered into the coal sector of this panel 
starting with Mr. McKinley, or Mr. Shimkus, then Mr. McKinley, 
myself, and Mr. Johnson, and others.
    Coal fueled power is still critical to our electrical 
supply. It provides about 30 percent of the power we use and is 
a workhorse that if we don't kill it is always available. It 
helps prop up intermittent wind and solar and uninterruptable 
natural gas without a hundred percent firm guaranteed contract 
power sources, yet it has been under severe regulatory assault 
and victimized by generous subsidies, e.g., wind, PTC and solar 
ITC, and mandates, e.g., state renewable portfolio standard 
requirements offered to competing power sources.
    We have lost about 60,000 megawatts of coal generation over 
the last 5 years and the remaining coal plants in competitive 
markets are very much at risk. In my understanding of how power 
markets work, and I want to clarify some of that if I am wrong. 
But my understanding is, is that those generators don't get 
compensated for the resiliency they provide the grid. So it is 
a perfect storm for fuel secure baseload generators like coal 
units and each of the individual clouds in that storm is the 
result of a policy decision.
    Now earlier, Mr. Glazer, you said something about rewarding 
those that are available and I interpreted that as resiliency. 
So tell me how that works because that ought to be helping my 
coal-fired plants.
    Mr. Glazer. Thank you, Mr. Griffith. And we actually see 
this initiative as doing just that. It was one of my 
supermarket analogies with the price of a can of beans making 
sure that the full price is reflected in what you buy. And in 
the case of coal to the extent it is providing a service to 
customers, ensuring that that is reflected in the price, 
absolutely.
    Mr. Griffith. Well, I hope, and if you can give me some 
more information on that I would appreciate it.
    Mr. Glazer. Sure.
    Mr. Griffith. And I hope you will continue with that 
because when you start talking about resiliency I don't think 
there is anything better than coal. I too have natural gas. I 
don't have as much as Mr. Shimkus or Mr. McKinley have, but it 
is important that we have a mix.
    Now one of the other things that you said earlier that 
intrigued me when you were talking to Mr. McKinley about cost 
is you said, of course we don't want to have stranded costs. 
But in my district alone there have been several facilities 
that still had life that were shuttered because of regulations. 
And when those are shuttered and there is a stranded cost, 
isn't it the ratepayer that ends up picking up that cost in the 
long run?
    Mr. Glazer. Well, and we--
    Mr. Griffith. I just need a yes or no because of time.
    Mr. Glazer. Yes, yes. And we moved to a market to try to 
not put it all on the backs of the customers, to be honest with 
you.
    Mr. Griffith. And I appreciate that but I think it ends up 
pretty much on their backs, notwithstanding your good efforts. 
Now I have got to get something straight because I don't 
understand.
    Mr. Glazer. OK.
    Mr. Griffith. So when we had our previous hearing the folks 
were talking about, you know, the payment for self-supply and 
self-supply. And you are here today and you have pictures of 
some self-supply facilities and I think it is great and we have 
got some great coal plants out there that are working on some 
of this type of stuff.
    Clearly there is a disconnect so I need your help in 
filling in the gaps. Is it what they get paid if they sell back 
to the PJM or others? I mean where is the disconnect? Because I 
think both sets of witnesses are honest brokers trying to do 
the best they can, but clearly there is something that doesn't 
fit.
    Mr. Glazer. Yes, and it is a fair point.
    Mr. Griffith. I have your position, I have their position, 
but where is the disconnect?
    Mr. Glazer. Yes, yes. No, and it is a fair point, so two 
things very quickly. One is, I think they were referring to a 
court of appeals decision that puts some uncertainty around the 
various rules that we have. Embedded within that was the self-
supply exemption we worked out with public power. The court 
didn't overturn that but it did overturn the rest of it, so 
there is a little bit of uncertainty going forward but not for 
lack of wanting to honor that deal or even FERC wanting to 
honor that deal. So I think that is really part of what we were 
talking about.
    And the public power says we should just have a totally 
different model in terms of how we buy capacity. I don't want 
to take a lot of time, but that has got its own set of problems 
with it, one of them being there is no price transparency. If 
everybody can just do bilateral deals it is like going to the 
supermarket. There is no prices. You just wait until the 
checkout line and then you have to negotiate what the price is 
and you don't know what the person--it just doesn't work very 
well. So that is, I think, the essence of the beef.
    Mr. Griffith. All right, so, is it something that we ought 
to resolve? I personally think it is much better if we let you 
all figure it out, but at the same time if we need to resolve 
that so that we guarantee that both the urban markets and the 
more rural markets are being served and getting a fair rate, I 
am happy to wade into that if that is necessary.
    Mr. Glazer. And we will keep the dialogue going. I think in 
a large part it has been worked out. We have got to work out 
what is the impact of this court decision and we will keep you 
posted on that.
    Mr. Griffith. Thank you very much and I yield back.
    Mr. Johnson. I thank the gentleman for yielding back. I now 
recognize Mr. Kennedy for 5 minutes.
    Mr. Kennedy. Thank you, Mr. Chairman. Thank you to the 
witnesses. Thank you to the committee for calling an important 
hearing. Thank you, Mr. Van Welie, for coming down. Thank you 
for the time to speak with the New England delegation 
yesterday, and your team as well.
    I am going to echo some of the comments of my colleagues I 
think, first and foremost, to say this is really a complex area 
of a critically important market and so I think you have seen 
from the folks on this side of the dais anyway a real effort to 
understand it. Some obviously do better than others.
    In that I haven't been around Congress too long, but I do 
know that the greater the complexity the harder it is, one, to 
oversee, and the more likelihood is that incentives aren't 
perhaps structured quite as well as, or there is opportunities 
there for incentives to skew to folks that happen to know this 
industry really well, particularly if those that are overseeing 
it don't have that same degree of expertise.
    Mr. Van Welie and his team has been generous with their 
time in walking us through some of the challenges that we face 
in New England including a conversation yesterday and I wanted 
to further engage in that conversation. ISO New England has 
been very effective in driving down those wholesale market 
rates to very low levels and those prices have come down.
    One of the challenges that we face again that we talked 
about yesterday is that while those wholesale rates are low, 
those retail rates aren't and that once the energy comes out 
from that wholesale marketplace because of a whole bunch of 
factors that is not under ISO's control, some of which isn't 
directly under Federal Government of Congress's control, all of 
a sudden the price that the end user gets is not cheap. And 
that is something that I hear actually from constituents and 
particularly as they are trying to bring back a manufacturing 
industry in the Northeast when those energy costs start to be a 
driving factor for their own businesses.
    We ran into some problems here with FERC, obviously an FCA 
8, without having a sufficient quorum. What is the best way and 
do you have any suggestions to ensure that there is some sort 
of, whether it is a public advocate or some way to make sure 
that the public has a way, a seat at the table and some method 
to push back on a system, the price increase? Because 
understanding that the wholesale rates are low trying to 
explain this at a town hall, not all that productive from 
somebody that has tried and failed. And with due respect it is 
not all that great to say, well, the wholesale rates are low 
but da-da-da-da-da. They don't care what the wholesale rates 
are. They care what they are having to pay.
    So how do we get to a point where we can address some of 
these concerns where the public actually feels like they have a 
seat at the table?
    Mr. Van Welie. So yes, a great question. I would say that 
there are some well-established structures for the public to 
have a voice both the wholesale and at the retail levels. So 
just to describe briefly what happens with the structure around 
the ISO, we are compelled to take every rule change through a 
stakeholder process. There are six sectors in that stakeholder 
process, one of which is end users. There is another sector for 
public power.
    So public is represented right at the table when we are 
discussing all the market rule changes at the wholesale level. 
We also, several years ago, established something called the 
Consumer Liaison Group and so that is a place where consumer 
advocates and the public can have a voice with directly to the 
ISO as well. So the states are also represented through their 
regulatory commissions.
    Mr. Kennedy. Can I push you to get to the retail level 
because we have about a minute left.
    Mr. Van Welie. OK. And well, at the retail level I think 
you have a similar structure in place around the Public Utility 
Commissions in each of the six states, so I think there are 
many opportunities for the public to engage in this discussion.
    I think the issue that you started this with though is the 
complexity. And so getting an understanding of how wholesale 
affects retail prices and what is in the retail price and what 
has been added in there, I think is a very daunting task for 
somebody who is uneducated. And I would be happy to talk more 
offline about how we can perhaps improve upon that.
    Mr. Kennedy. Well, I would certainly appreciate it. As we 
look at the focus, in 30 seconds, ISO is focused on 
reliability, obviously stems from the reason for your work. The 
challenge then comes on that cost side if the issue on 
reliability ends up being, well, we can make it reliable at a 
certain price point where generators will come in and say we 
are willing to enter this marketplace but at a set price, would 
those prices then get passed along to consumers?
    And again we have seen those wholesale rates come down, but 
at a retail level that anger ends up getting channeled in 
certain levels, town halls are a great place for that anger to 
get channeled. But there is a tension there that is going to 
break at some point particularly given the resource-constrained 
environment that we might find ourselves in. So let's continue 
the conversation. And sorry for going over, thank you.
    Mr. Johnson. I thank the gentleman for yielding back. The 
chair will now recognize himself for 5 minutes.
    Mr. Glazer, in your testimony you stated PJM is concerned 
about potential retirements of additional coal resources and 
that the relevant question is how best to respond to that. You 
asked to have your feet held to the fire to devise market-based 
solutions to address these challenges. What can and should 
Congress do to play a role in this process? Anything else you 
would like to expand on in relation to this issue?
    Mr. Glazer. Thank you, Mr. Johnson, for that great 
question. Really is the subject as we are going to look at what 
the future is we have got to focus on this question of 
resilience. And part of resilience is who decides? Who decides 
what is a credible threat and who decides as many consumers 
argue it is gold plating the system. Where is that balance? We 
need input from the federal government with that. We need 
oversight from this committee on those kinds of questions. It 
is a whole new area for all of us.
    Mr. Johnson. OK. All right, well, I thank you for that. 
Perhaps you have already touched on this next issue with some 
of your previous answers, but as you know, FERC began a 
stakeholder process to reform the process at which market 
prices are determined and paid back. Does PJM believe that 
these price formation rules have been successful thus far?
    Mr. Glazer. We think what they have done has been very 
helpful, but we need to and we have been, frankly, pushing on 
the Commission to move on this next level which is what I 
talked about before how we do a load following product, how we 
focus on these inflexible units that ought to be able to set 
price.
    My supermarket example with the can of beans, that is the 
kind of stuff, frankly, we are asking the new Commission when 
it gets seated to take this to the next level. What they have 
done has been helpful. This is a big issue and might help a lot 
of those issues that you have raised.
    Mr. Johnson. OK, all right. Well, what remaining areas of 
price formation reform are of greatest concern to your RTO?
    Mr. Glazer. This one is probably the largest, which is do 
we let these large block loaded units, which in some cases are 
coal units or large natural gas units, could even be nuclear 
units, to set price? That is a very big issue. I think if we 
truly got our hands around that it is not a panacea but would 
help to take some of the pressure off this whole question about 
baseload.
    So we are just beginning that dialogue, in fairness to 
FERC, but this committee's oversight over that would be 
appreciated.
    Mr. Johnson. OK. And you mentioned the word resiliency just 
a few minutes ago and you also touched on it in your testimony, 
a very important topic that has been receiving a lot of 
increasing attention. So what steps are PJM taking to promote a 
resilient power grid especially in the context of extreme 
events?
    Mr. Glazer. And great question. We have got, actually we 
just outlined for the stakeholders literally a complex map of 
things we are doing, some of it is just done in the control 
room operating the system more conservatively at times when we 
are seeing issues on pipelines, for example. Some of them are 
operational. Some of them are these price formation type 
issues. Some of these are planning.
    We have got some critical transmission substations. How do 
we make them less critical so that in fact something happens 
they don't have this big impact? Those are the kind of things 
we are looking at. We have got a whole map that we have 
outlined of those initiatives which I would be happy to share 
with the committee.
    Mr. Johnson. OK, great. Well, let it be noted that the 
interim chairman yielded back over a minute of his time. Yes, I 
will recognize Mr. Pallone.
    Mr. Pallone. Thank you, Mr. Chairman. I have to get to a 
couple of things here, so for the first question if I could 
just ask all the panelists to just answer either yes or no, 
otherwise I am not going to get to the other question.
    So the question for everyone yes or no is does your RTO or 
ISO have a designated body responsible for consumer input or 
advocacy? Just yes or no.
    Mr. Van Welie. Yes.
    Mr. Brown. Yes.
    Mr. Jones. Yes.
    Mr. Doying. Yes.
    Ms. Mele. Yes.
    Mr. Casey. The answer no to that.
    Mr. Pallone. You said no, Dr. Casey, okay.
    Mr. Glazer. And I would say yes.
    Mr. Pallone. OK, so everyone was a yes except for Dr. 
Casey. Thank you. All right, so let me move on. This is more 
specific to my congressional district.
    In my congressional district, Jersey Central Power and 
Light, a subsidiary of First Energy, has proposed the Monmouth 
County Reliability Project, a 10-mile, 230 kilowatt 
transmission line and substation enhancement project. But a lot 
of questions have been raised about the necessity of the 
project for meeting its proposed goal of increasing reliability 
of the push into the grid serving Monmouth County. I have 
raised these myself at public hearings. And this project was 
recommended by PJM's Transmission Expansion Advisory Committee 
and approved by its board of managers.
    So Mr. Glazer, assuming you understand what I asked, if not 
I will repeat it, critics say that the process for approval of 
transmission projects lacks transparency, consumer advocate 
input, and true independent oversight. What can PJM do to 
address some of those concerns, if you will?
    Mr. Glazer. Mr. Pallone, I appreciate the question. I do 
not agree with the premise of it because these meetings are 
open, the material is published, and we don't just passively do 
that. We reach out to the consumer advocates, they are very 
active in our process--to the states as well, the BPU in New 
Jersey, so people are there.
    The problem comes in then you go to a siting process months 
later and people, the public is hearing about it for the first 
time. So maybe we need to do more, admittedly, to sort of reach 
out to the public on these things than we do and that is a fair 
point that we will talk about to address some of those issues. 
We are not the deciding authority here, but people do need to 
understand what the need is and there probably is more we could 
do, to be honest.
    Mr. Pallone. So what you are saying to me is that it is 
not, you believe that there is opportunity for consumer input 
and oversight, but the problem is they just may not be aware of 
what those opportunities are.
    Mr. Glazer. Right, and in fairness we need to do more in 
that area.
    Mr. Pallone. All right. Well, again, I appreciate that and 
if we can work together on thinking about better ways of doing 
that I certainly appreciate it. I just wanted to say, I 
understand the need to prepare so there is enough electricity 
generation to cover the needs of the market, but I also worry 
that drastically overestimating load forecasts on a regular 
basis can lead to unnecessary build-out that ultimately has to 
be paid for by the ratepayers.
    And to that point some are peak load forecasts for PJM's 
annual reliability planning have been consistently and 
significantly overestimated for the past 8 years even as the 
actual use of electricity in my state has declined. So some 
projects that have been approved by PJM and have been 
constructed based on what I consider overly optimistic 
forecasts have resulted in underutilized transmission lines.
    So Mr. Glazer, what checks and balances are in place to 
encourage PJM not to overexaggerate forecasts?
    Mr. Glazer. Thank you for the question. This is a Gordian 
knot, because if you overestimate consumers would pay too much; 
if you underestimate you could run short and then be in a 
serious reliability problem. So it is a Gordian knot to find 
the right mix. It has been very tough over the past couple of 
years, not an excuse but a reality, because we have seen the 
economy, the impacts of the recession, and we have seen energy 
efficiency. As the economy picks up we are not seeing the load 
picking up, which is showing us that maybe there is some 
permanent energy efficiency changes which are then affecting 
the load forecast. But it is kind of a difficult area to ping 
it exactly right, but we are trying to work very hard on 
getting this more sophisticated.
    Mr. Pallone. All right, let me just throw in one more 
thing. What can PJM do, in your opinion, to minimize 
transmission projects that are approved, built, and then 
underutilized resulting in unnecessary high cost to ratepayers? 
Is there any recommendation you would have?
    Mr. Glazer. We generally don't have a problem of 
underutilized transmission lines, they are pretty utilized at 
this point. As I was talking about with Mr. Shimkus, a 
situation where I can't get power into Chicago because the 
system is too tight, so generally they are well utilized once 
they are built.
    This whole question of do you build it just in time or do 
you look forward a little bit and predict is a very tough one 
because it takes a couple years to get a transmission line 
built, so it is difficult. If anything, we have canceled a 
whole bunch of transmission lines in response to let's not 
overbuild the system. Sometimes I worry maybe we canceled too 
many, but in fact we have canceled a bunch of lines. So we have 
tried to be responsive to the changing needs of the system, 
very much so.
    Mr. Pallone. So you don't have any suggestions about trying 
to minimize that problem?
    Mr. Glazer. The way we do it is to continuously question--
    Mr. Johnson. If you can answer that quickly, Mr. Glazer, 
the time is expired.
    Mr. Glazer. Yes, to continually question what we have done, 
to look at it year by year and cancel projects we don't need 
any longer.
    Mr. Pallone. All right, thank you.
    Thank you, Mr. Chairman.
    Mr. Johnson. I thank the gentleman, his time has expired. I 
now recognize Mr. Flores from Texas.
    Mr. Flores. I thank the chairman. By the way Mr. Chairman, 
I want to share the news with you that a member of this 
committee, Steve Scalise, has been released from the hospital, 
so we look forward to him joining us soon. Prayers for his 
continued recovery.
    I have a couple of micro questions just because I am a 
little bit of a nerd on some of these things, and then I want 
to come back out to the macro. I was just checking my home 
solar system, we are producing about 86 percent of my daily 
needs right now. We will go up to about 130 percent, maybe 
less, because my wife is home with the thermostats under her 
sole control.
    In any event, Ms. Mele, this raises sort of an issue. Do 
you have an idea in ERCOT how much distributed power is behind 
the meter like what I am doing? Do we have a way to measure 
that?
    Ms. Mele. That is something that we are currently 
discussing with our stakeholders and we recognize that as an 
important thing for us to keep our eyes on. So really, with 
something like your rooftop solar we have proposed in a white 
paper to the stakeholder community and market participants that 
we start to talk about how we get a view of that perhaps 
through aggregation.
    As the transmission operator and wholesale market operator, 
we don't really want to get down into the distribution system, 
but we do think it is important where they start to see a 
significant amount of that building up at a transmission load 
point that there would be some visibility to come back to 
ERCOT. That is for our operational readiness as well as for our 
planning. Not different than the conversation we just had about 
transmission resources, we need to consider how we use that 
information in our transmission planning process.
    So at this time we don't have a exact picture of how much 
is out there. There are some reports that are filed to the 
Public Utility Commission that do give us some insight into 
that.
    Mr. Flores. OK. I was just curious, because I mean implied 
in your answer is that it does have an impact on distribution 
and reliability or dispatch and reliability.
    And so that sort of I want to come out to just another 
level up, in Texas, because of the tax credits for certain 
types of power, we have had negative pricing enter into the 
market and so that seems to be disruptive to being able to 
dispatch with transparency and reliability.
    Can you tell us what the challenges are because this has to 
do with wind primarily and some solar. What has that done to 
your job?
    Ms. Mele. So I think the important thing to think about for 
our job as the people who are responsible to forecast and 
procure the resources that we believe are going to be needed to 
get through the day as well as the ancillary services to close 
the gap between the load forecast and the operational 
difference in real time, what we have focused on is really the 
accuracy of forecasting. We have done a lot of work, especially 
with wind, to look at how accurate we can get that forecast, 
considering where we are, and looking at what that net load 
ramp potential is. So here is what might change based on where 
we currently are with wind and here is load is going and trying 
to really focus in on that.
    We have actually added a new operating desk in our control 
room. It has been in place now for about 8 months, and some of 
their primary responsibilities are really looking at that, 
looking closely at forecast. We use some pretty sophisticated 
software to do both our load forecasting and monitoring our 
wind. In addition to that they are looking at what is the 
inertia on the grid as we have this changing resource mix.
    Mr. Flores. Right, right. Well, that takes us to the next 
area I wanted to go and I welcome comments from any of you on 
this and I want to start with Ms. Mele. We have got the 
challenges in managing baseload and also renewables which by 
the way they are structured are intermittent.
    Recently in Australia there was an incident that was 
weather related that caused their wind energy, wind resources, 
to drop off line in southeast Australia and putting 1.7 million 
people in the dark. And they really hadn't factored in that 
type of an event and so they didn't have enough baseload ready, 
enough inertia, if you will, to be able to back the system up 
and bring people back on line.
    What are each of you doing about that particular issue? And 
I only have about 49 seconds. We will start with you, Mr. 
Glazer.
    Mr. Glazer. This is one of those resilience issues. It 
deals with things like black start to be able to--resilience 
isn't just preventing things but restoring the system rapidly. 
Those are some of the things that we are digging into.
    Mr. Flores. OK. Dr. Casey?
    Mr. Casey. A couple of things, one, carrying reserves.
    Mr. Flores. Quickly.
    Mr. Casey. To make sure when that happens we have backup so 
at least they can step in. And secondly, making sure the 
inverter technologies with these new technologies can ride 
through events on the system.
    Mr. Flores. Right.
    Mr. Casey. It is a relatively new technology. We are 
learning as we go, but we are discovering issues and we are 
trying to fix them.
    Mr. Flores. Let me just quickly, through the rest of you, 
are each of you familiar with this incident and are learning 
from this incident? OK, thank you. I used up all my time. Thank 
you, I yield back and I will submit additional questions for 
the record.
    Mr. Johnson. I thank the gentleman for yielding back and 
recognize now Mr. Tonko for 5 minutes.
    Mr. Tonko. Thank you, Mr. Chair. Because of a conflict I 
apologize for missing the beginning of the hearing and for 
hitting any topics that may have already been covered. And I 
thank all of you for participating this morning, it is a wealth 
of talent to have at the table.
    And if I might do my hometown, or home state shout-out to 
Mr. Jones, thank you for being here and for all of the great 
work that you do to guarantee great reliability throughout my 
home State of New York and for your work to keep our state on 
the cutting edge of our nation's energy transformation.
    So we are very happy with the results. New York has 
launched a number of ambitious state policies, including 
environmental and fuel diversity goals, the Reforming the 
Energy Vision, the REV concept, and clean energy standards are 
keeping the state at the forefront of our changing energy 
system. ISO clearly benefits from dealing with a single state 
government so there are not competing state interests or goals 
to balance.
    Mr. Jones, based on your testimony it sounds like RTOs can 
play a role in achieving state policy goals. How has NYISO been 
involved in New York's REV initiative?
    Mr. Jones. Thank you, Mr. Tonko. REV initiative is 
primarily directed at animating our customers in a way that the 
customers can participate in both the retail and the wholesale 
markets. From NYISO's perspective we have gotten engaged on 
that issue and that we launched last fall a DER roadmap. A 
roadmap provided some clarity to our approach going forward to 
individuals that are proposing to invest in distributed 
resources.
    Those resources now we are bringing into a pilot program. 
The pilot program is intended for us to develop the types of 
communications that we will communicate both price and dispatch 
these individuals and the settlement process is to make sure 
that happens. We hope in a 3-year period to be able to solidify 
all of the wholesale market interactions. We are currently also 
working with our distribution companies within the State of New 
York to assist them in developing their systems.
    Mr. Tonko. Thank you. Obviously that effort with 
distributed resources provides great value to the grid.
    Mr. Jones. Yes, sir. We see great opportunity to by 
animating those customers to reduce overall needs for both 
transmission and new generation resources to provide 
significant value to our customers.
    Mr. Tonko. Super, thank you. And at the market 
participants' hearing last week we heard complaints from some 
witnesses about out-of-market subsidies. Now New York's ISO 
recently commissioned a study from the Brattle Group to explore 
the potential to pursue state environmental and other goals 
within its market structure. You have suggested that this could 
incentivize cleaner generation, provide proper price signals in 
the competitive markets, and help achieve state policy goals. 
How might that work?
    Mr. Jones. Just to put it as simply as I can, the way it 
would work is that we would charge generators that produce 
carbon emissions. We would charge them for the value of those 
carbon emissions. That money then we would return to customers. 
But because those individuals are being charged for that cost, 
that cost would be reflected into the marketplace, the price, 
and low carbon emissions resources then would benefit by that 
higher clearing price.
    Mr. Tonko. And is there a timeline that you have for 
considering the possibility of adopting these types of changes?
    Mr. Jones. Yes. We are about to launch the Brattle report 
or Brattle, rather, will launch it on our behalf within the 
next several days. At that point we will begin to engage our 
market participants as we have been working closely with the 
PSC, the Public Service Commission of New York, throughout the 
last several months. We will engage our market participants. I 
would hope that in a period of 3 years we could have that 
implemented within our markets.
    Mr. Tonko. Thanks a lot. And your 2017 Power Trends Report 
identifies transmission constraints as a limitation for New 
York to get clean energy resources to some high demand areas. 
We are also seeing this on a larger scale throughout the nation 
where renewable resource potential is high in the Midwest. Can 
you explain how New York's ISO's role in overcoming these 
constraints is working?
    Mr. Jones. It is working quite well. We need to continue to 
drive the process to improve it and speed the process up. We 
currently have two projects that are well underway, one from 
Western New York to Central New York, one project that will 
take power from Central New York down into New York City and 
Long Island. We see additional needs going forward and we 
proposed those to the Public Service Commission. They are 
currently evaluating those. We hope to move those forward very 
quickly.
    Mr. Tonko. Thank you. And just for those in the eastern 
portion of our nation that are here as witnesses, you have 
created capacity markets. Do you think that the capacity 
markets are the optimal in least-cost means to determine the 
mix of generation resources that we need to serve our 
customers? Mr. Glazer?
    Mr. Glazer. Nothing is perfect, but I think they have 
accomplished the goals of in getting new investments very 
efficiently, retiring inefficient investments, so I think they 
are overall working well.
    Mr. Tonko. Mr. Van Welie, please?
    Mr. Van Welie. Yes, I do think so.
    Mr. Tonko. And Mr. Jones?
    Mr. Jones. Yes, very much so.
    Mr. Tonko. Thank you. Again thank you for the work you do. 
It is so valuable in this given transformation period, so thank 
you. I yield back, Mr. Chairman.
    Mr. Johnson. I thank the gentleman for yielding back.
    And seeing there are no further members wishing to ask 
questions, I would like to thank all of our witnesses once 
again for being here today. In pursuant to committee rules, I 
will remind members that they have 10 business days to submit 
additional questions for the record and I ask that witnesses 
submit their response within 10 business days upon receipt of 
the questions. Without objection, the subcommittee is 
adjourned.
    [Whereupon, at 12:22 p.m., the subcommittee was adjourned.]
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