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





 POWERING AMERICA: DEFINING RELIABILITY IN A TRANSFORMING ELECTRICITY 
                                INDUSTRY

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

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON ENERGY

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                     SEPTEMBER 14 & OCTOBER 3, 2017

                               __________

                           Serial No. 115-56




[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]











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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, Michigan7
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)

                                  (ii)
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                             C O N T E N T S

                              ----------                              

                           SEPTEMBER 14, 2017

                                                                   Page
Hon. Pete Olson, a Representative in Congress from the State of 
  Texas, prepared statement......................................     2
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, prepared statement........................    31
Hon. Greg Walden, a Representative in Congress from the State of 
  Oregon, prepared statement.....................................    44

                               Witnesses

Neil Chatterjee, Chairman, Federal Energy Regulatory Commission..     3
    Prepared statement...........................................     5
    Answers to submitted questions...............................    46
Patricia Hoffman, Acting Assistant Secretary, Office of 
  Electricity Delivery and Energy Reliability, Department of 
  Energy.........................................................    11
    Prepared statement...........................................    13
    Additional information for the record........................    42
    Answers to submitted questions...............................    62
Gerry W. Cauley, President and Chief Executive Officer, North 
  American Electric Reliability Corporation......................    18
    Prepared statement...........................................    20
    Answers to submitted questions...............................    77

                            OCTOBER 3, 2017
                               Witnesses

Marty Durbin, Executive Vice President and Chief Strategy 
  Officer, American Petroleum Institute..........................    89
    Prepared statement...........................................    91
Paul Bailey, Chief Executive Officer, American Coalition for 
  Clean Coal Electricity.........................................   113
    Prepared statement...........................................   115
Maria G. Korsnick, Chief Executive Officer, Nuclear Energy 
  Institute......................................................   126
    Prepared statement...........................................   128
Thomas C. Kiernan, Chief Executive Officer, American Wind Energy 
  Association....................................................   134
    Prepared statement...........................................   136
Steve Wright, General Manager, Chelan County Public Utility 
  District No. 1, on Behalf of the National Hydropower 
  Association....................................................   150
    Prepared statement...........................................   152
    Answers to submitted questions...............................   292
Christopher Mansour, Vice President, Federal Affairs, Solar 
  Energy Industries Association..................................   185
    Prepared statement...........................................   187
    Answers to submitted questions...............................   296
Kelly Speakes-Backman, Chief Executive Officer, Energy Storage 
  Association....................................................   203
    Prepared statement...........................................   205
John Moore, Senior Attorney and Director of the Sustainable FERC 
  Project, National Resources Defense Council....................   221
    Prepared statement...........................................   223

                           Submitted Material

Statement by Susan F. Tierney, Senior Advisor, Analysis Group, 
  September 12, 2017, submitted by Mr. Olson.....................   272

 
 POWERING AMERICA: DEFINING RELIABILITY IN A TRANSFORMING ELECTRICITY 
                            INDUSTRY, PART 1

                              ----------                              


                      THURSDAY, SEPTEMBER 14, 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. Pete Olson (vice 
chairman of the subcommittee) presiding.
    Members present: Representatives Olson, Barton, Shimkus, 
Murphy, Latta, McKinley, Kinzinger, Griffith, Johnson, Long, 
Bucshon, Flores, Cramer, Walberg, Walden (ex officio), Rush, 
McNerney, Green, Doyle, Castor, Tonko, Loebsack, Butterfield, 
and Pallone (ex officio).
    Staff present: Ray Baum, Staff Director; Elena Brennan, 
Legislative Clerk, Energy/Environment; Karen Christian, General 
Counsel; Wyatt Ellertson, Research Associate, Energy/
Environment; Adam Fromm, Director of Outreach and Coalitions; 
Tom Hassenboehler, Chief Counsel, Energy/Environment; Jordan 
Haverly, Policy Coordinator, Environment; A.T. Johnston, Senior 
Policy Advisor, Energy; Mary Martin, Deputy Chief Counsel, 
Energy/Environment; Alex Miller, Video Production Aide and 
Press Assistant; Brandon Mooney, Deputy Chief Energy Advisor; 
Annelise Rickert, Counsel, Energy; Dan Schneider, Press 
Secretary; Jason Stanek, Senior Counsel, Energy; Madeline Vey, 
Policy Coordinator, Digital Commerce and Consumer Protection; 
Andy Zach, Senior Professional Staff Member, Environment; 
Priscilla Barbour, Minority Energy Fellow; Rick Kessler, 
Minority Senior Advisor and Staff Director, Energy/Environment; 
John Marshall, Minority Policy Coordinator; Alexander Ratner, 
Minority Policy Analyst; Andrew Souvall, Minority Director of 
Communications, Member Services, and Outreach; and Tuley 
Wright, Minority Energy and Environment Policy Advisor.
    Mr. Olson. The hearing will come to order.
    Good morning and welcome. We find ourselves this morning 
with a bit of a challenge on the House floor. Votes may start 
within 5 minutes, multiple roll call votes, may be up to 1\1/2\ 
hours voting on the House floor.
    I had a great opening statement written by my Texas 
constituent Annelise. I will not give it but ask unanimous 
consent to put that in the record.
    Without objection, so ordered.
    [The prepared statement of Mr. Olson follows:]

                 Prepared statement of Hon. Pete Olson

    Today's hearing is part one in the committee's efforts to 
address reliability of the Nation's electricity system. Today 
we have the opportunity to hear from the regulators in charge 
of the reliable delivery of electricity to millions of 
Americans.
    I want to start by sending my thoughts and prayers to the 
family of former Senator Pete Domenici. He was a dedicated 
public servant and a titan on energy policy. He will be missed.
    I also want to take a minute to acknowledge all those 
affected across the United States by both Hurricane Harvey--
like the people of my district--and Hurricane Irma. These 
natural disasters have left the electric industry with one of 
the largest and most complex power restoration efforts in 
United States history.
    To that end, thank you, Acting Assistant Secretary Hoffman, 
here today, for working with my staff in the days after 
Hurricane Harvey to give us an update on gasoline supply in 
Texas. My district is trying to get back on its feet, and it 
will take a united Government to help. Given how much energy 
Texas contributes to the American economy, I hope you will 
continue to work on post-Harvey issues in the weeks and months 
ahead.
    Electricity is a fundamental and essential part of our 
everyday lives. A system failure impacts our health, wealth, 
and national security. These impacts were felt firsthand in the 
wake of Hurricanes Harvey and Irma.
    The electricity sector is experiencing significant change--
driven by fuel costs, decreases in electricity demand, advances 
in technology, and evolving consumer preferences. These changes 
present new challenges and opportunities.
    Our Nation's electricity is supplied by a diverse mix of 
fuel sources- natural gas, coal, nuclear, wind, hydropower, 
solar, and other technologies. Each of these have attributes 
that help system operators protect reliability. Harvey and Irma 
highlight the importance of a reliable grid that is not too 
dependent on one source of energy.
    It also showed the importance of being prepared. This 
committee was instrumental in passing H.R. 3050, the Enhancing 
State Energy Security Planning and Emergency Preparedness Act. 
Our bipartisan bill gives States the flexibility they need to 
address local energy challenges. H.R. 3050 reauthorizes the 
Department of Energy's State Energy Program. It strengthens our 
energy emergency planning and preparedness efforts. States need 
all the tools in the tool box to address fuel supply, 
infrastructure resilience, energy security, and emergency 
preparedness.
    The second part of this important hearing, which will be 
held at a later date, will include a panel of witnesses 
representing different kinds of resources and technologies. 
These witnesses will provide helpful insight into differences 
on our grid, but also how sources of energy are working 
together.
    I want to extend a warm welcome to our panel of witnesses. 
This is the Energy Subcommittee's first Government panel this 
congress. Chairman Chatterjee, we are happy to have you join 
us. We are breathing a sigh of relief now that FERC has quorum. 
I want you back at your desk ASAP. I also want to thank you, 
Mr. Cauley and Assistant Secretary Hoffman, who are joining us 
despite all the work being done at NERC and DOE this week. On 
behalf of the committee, we truly appreciate you being here.

    Mr. Olson. Mr. Rush, would you like to speak, or put your 
statement for the record?
    Mr. Rush. For the record.
    OK. Guys, moving forward, we have three witnesses here. We 
have Mr. Chatterjee, Ms. Hoffman, and Mr. Cauley.
    You guys have 5 minutes for opening statements.
    Mr. Chatterjee, the head of FERC. You have 5 minutes.

    STATEMENTS OF NEIL CHATTERJEE, CHAIRMAN, FEDERAL ENERGY 
   REGULATORY COMMISSION; PATRICIA HOFFMAN, ACTING ASSISTANT 
     SECRETARY, OFFICE OF ELECTRICITY DELIVERY AND ENERGY 
    RELIABILITY, DEPARTMENT OF ENERGY; AND GERRY W. CAULEY, 
PRESIDENT AND CHIEF EXECUTIVE OFFICER, NORTH AMERICAN ELECTRIC 
                    RELIABILITY CORPORATION

                  STATEMENT OF NEIL CHATTERJEE

    Mr. Chatterjee. Thank you, Mr. Chairman, Ranking Member 
Rush, members of the subcommittee, for the opportunity to be 
before you today. Before I begin my remarks, I just want to 
very briefly reflect on the passing of Senator Domenici who 
passed away yesterday, former chairman of the Senate Energy 
Committee, who was a leader in this space. And he will be 
remembered.
    I would like to start by taking a moment to acknowledge all 
of those impacted by Hurricanes Harvey and Irma. The loss of 
life and widespread devastation wrought by the storms has been 
absolutely heartbreaking to see. I know I speak on behalf of 
those in the room and for Americans across the country when I 
say that our thoughts and prayers are with those affected at 
this difficult time. We know the road ahead will not be easy, 
but we will be with you every step of the way.
    It was good to see Congress act swiftly to begin providing 
some of the resources that are needed to those relying on it. 
We at the Federal Energy Regulatory Commission are ready to do 
our part as well.
    It is times like these that also remind us how important 
the reliability and resiliency of the electric grid is in our 
day-to-day lives. Rebuilding from these storms is going to take 
time. But I have been inspired by the way that the brave men 
and women of the utility industry have already stepped forward 
to help.
    Crews from all over the country are assisting in this 
effort. In addition, FERC and NERC have issued a joint 
statement to encourage mutual assistance and assure companies 
that they won't be penalized for helping restore service. FERC 
also granted an extension on filing deadlines so that people 
and companies could focus on what is most important: recovery.
    And finally, in response to the loss of refineries due to 
the storms, the Commission issued an emergency pipeline waiver 
to accelerate the delivery of much-needed fuel and to help 
ensure the continued flow of gasoline to the Northeast. We will 
continue to keep all those affected by Hurricanes Harvey and 
Irma in our prayers as they work to rebuild their homes and 
lives.
    While this is a transformational and exciting period for 
the electric power industry, we must be mindful that 
developments not threaten the robustness or security of the 
electric grid. FERC supports the reliability and the resiliency 
of the grid in several ways. Congress entrusted FERC with the 
responsibility to approve and enforce mandatory reliability 
standards for the grid in 2005. FERC relies on NERC to develop 
and propose new or modified reliability standards for FERC's 
review. These standards include both physical and cybersecurity 
standards.
    Much of this is covered in my written testimony. So, in the 
interest of time, I am going to speed ahead and just say that a 
reliable and resilient grid requires the development of needed 
energy infrastructure. FERC supports that development through 
its statutory responsibility to authorize the construction of 
certain energy infrastructure, such as interstate natural gas 
pipelines, liquefied natural gas terminals, and non-Federal 
hydropower generation. While the lack of a quorum has rendered 
the Commission unable to act on applications for such projects 
for much of this year, I am pleased to report that FERC is now 
addressing the backlog and will continue to make steady 
progress in the coming weeks and months. I am proud to report 
that, since the restoration of the quorum, we have put out 62 
orders and will continue to do that.
    Certainly, FERC's efforts in all of these areas covered in 
my written testimony will continue to involve cross-sector, 
interagency, and public-private coordination. Working with our 
Federal partners, State colleagues, relevant industries, and 
other stakeholders, FERC will continue to seek ways to ensure 
the reliability and resiliency of the electric grid.
    I am committed to working with the subcommittee to continue 
these efforts, and I would like to reiterate my appreciation to 
the chair and ranking member for holding this critical hearing. 
Thank you for allowing me the opportunity to be with you today. 
I apologize for the abbreviated remarks, and I would be happy 
to answer any questions you may have.
    [The prepared statement of Mr. Chatterjee follows:]
    
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

     Mr. Olson. Thank you, Chairman Chatterjee.
    The Chair now calls upon Ms. Patricia Hoffman. She is the 
Acting Under Secretary for Science, the Acting Assistant 
Secretary of the Office of Electricity at the Department of 
Energy.
    You have 5 minutes, ma'am.

                 STATEMENT OF PATRICIA HOFFMAN

    Ms. Hoffman. Chairman Upton, Vice Chairman Olson, Ranking 
Member Rush, and distinguished members of the subcommittee, I 
appreciate the opportunity to discuss with you electricity 
reliability issues in a rapidly transforming electricity 
industry. The U.S. electric sector is in the midst of sweeping 
changes. Looking ahead, I see little reason to expect that this 
process will slow down or that we will reach new equilibrium 
any time soon. Accordingly, I think the fundamental challenge 
is now to understand this process and manage it so that our 
Nation's electric infrastructure remains reliable, affordable, 
and resilient.
    Before I discuss any further details, I would like to echo 
the comments by Chairman Chatterjee and that our thoughts and 
prayers are there for those that are affected. Our organization 
also provides energy-related expertise to FEMA and the 
administration as part of our emergency response activities. We 
have been actively engaged in the response, recovery, and 
rebuilding efforts from Hurricane Harvey and Hurricane Irma. 
The actions that the departments have taken are in support of a 
whole-of-Government response to these disasters and includes 
deploying 26 people to State emergency operation centers, 
Regional and National Response Coordination Centers. We have 
authorized up to 5.3 million barrels of oil for exchange from 
the Strategic Petroleum Reserve. We have supported State and 
regional fuel waivers under the jurisdiction of EPA and hosted 
coordination calls with DOE and emergency response personnel in 
the electric sector, the oil and natural gas sector, and State 
energy offices.
    As Secretary Perry has noted on numerous occasions, America 
is blessed to have the incredible energy systems and resources 
we have today. The millions of dedicated men and women who work 
in the electric industry and are providing response activities 
to restore power, to move fuels, and to repair infrastructure 
are doing a tremendous job and should be recognized for their 
dedication and service.
    Over the last several months, DOE, led by my office, has 
explored numerous issues central to protecting the long-term 
reliability and resiliency of the electric grid. We are seeking 
to inform policymakers of the facts and trends in the electric 
sector and provide a common focal point of discussion for all 
affected stakeholders.
    In addition, we do research at our national laboratories 
with our industry partners. We have focused on new technologies 
for operating, planning, and monitoring and protecting the 
grid. The Department announced on Tuesday up to $50 million to 
national laboratory-led teams focused on resilience and 
cybersecurity.
    In order to keep my comments short, I just want to say, in 
conclusion, Secretary Perry and our DOE team look forward to a 
thoughtful conversation focused on reliability, affordability, 
and resilience in the electric system. The implications are 
profound, and we have one electric grid. And we are more 
dependent on it than ever for our economic well-being and 
national security. The grid must function, and it must function 
well in that it must meet a number of competing technical and 
economic requirements.
    And, for me, managing this change means we must think about 
the grid holistically in a single interactive set of policies; 
we must monitor the grid's characteristics and performance; we 
need to develop a more systematic way of looking ahead; and, 
finally, we must manage change with new processes and practices 
for collaboration that requires coordination between the 
Federal and private-sector partners.
    Thank you, and I look forward to your questions.
    [The prepared statement of Ms. Hoffman follows:]
    
    
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Olson. Thank you, Ms. Hoffman.
    The Chair now calls upon Mr. Gerry Cauley. He is the 
president and CEO of the North American Electric Reliability 
Corporation.
    You have 5 minutes, sir.

                  STATEMENT OF GERRY W. CAULEY

    Mr. Cauley. Thank you, Vice Chairman Olson, and Ranking 
Member Rush, and the members of the subcommittee. Thank you for 
conducting this timely hearing as we face a period of rapid 
change in the electricity industry. Driven by an abundance of 
natural gas, public policy, advances in technology, market 
forces, and customer preferences, this transition is altering 
our understanding of base load power and how generating 
resources are dispatched.
    As the Electric Reliability Organization, NERC is focused 
on the emerging challenges presented by the Nation's rapidly 
changing resource mix. With appropriate policies, careful 
planning, and strong actions, I am confident the electricity 
sector will continue to accommodate these changes and enhance 
reliability and resilience. Even with the changes already under 
way, the bulk power system remains highly reliable and 
resilient and shows improved performance each year. This record 
demonstrates the strong commitment to reliability by all 
stakeholders. But reliability requires constant vigilance now 
more than ever.
    Let me take a moment to describe NERC's role in identifying 
emerging reliability risks before they become bigger problems. 
Each year, we conduct a long-term reliability assessment that 
looks at the reliability of a system 10 years out. Annually, we 
also provide a state-of-reliability report that looks at the 
grid performance over the previous year. We conduct special 
assessments focused on challenges, such as the integration of 
renewables and distributed energy resources and the increased 
reliance on natural gas infrastructure.
    We analyze system events, such as the unexpected loss of 
power from solar farms in California during the Blue Cut fire 
in August of 2016.
    Over the past 6 years, the 50 largest events impacting the 
grid were caused by severe weather, leaving NERC to focus on 
resilience as a priority going forward. Through our studies, we 
are able to provide risk-informed recommendations to 
continuously improve reliability and resilience.
    Next, I would like to turn to how the change in resource 
mix will affect reliability. The grid is highly interconnected 
and depends on having the right combination of resources and 
transmission. It is important to maintain a continuous supply 
of essential reliability services in the right locations on the 
system. As just a few examples, these include inertia, 
frequency response, voltage control, stability, and ramping to 
meet changes in demand and variability of renewable resources. 
Conventional base load units with relatively high availability 
rates and onsite fuel have historically provided these 
essential reliability services. When these units retire, new 
resources coming on to the system must replace these essential 
reliability services that are being lost. As more resources 
move behind the meter, it is also increasingly important for 
the system operators to have visibility into those resources. 
As our power supply becomes increasingly dependent on natural 
gas, we must ensure this just-in-time fuel is as reliable and 
secure as the power plants that need the fuel to operate.
    Many issues and recommendations identified by NERC are 
reflected in DOE's staff report on electricity markets and 
reliability. Both NERC and the DOE study agree on the need to 
maintain essential reliability services, promote resilience, 
coordinate gas/electric issues, and collaborate with Canada and 
Mexico on reliability.
    More specifically, I would like to highlight several 
recommendations of my own. FERC, States, and markets should 
review the economic and market factors driving base load 
generation into early retirements and provide tangible 
incentives for maintaining a diverse and resilient resource 
mix. All new resources should have the capability to support 
essential reliability services. Markets should explicitly value 
and price capacity, essential reliability services, and 
enhanced resilience through fuel diversity. Policymakers should 
evaluate alternatives for ensuring adequate capacity of gas 
pipelines and storage to meet electricity production needs 
during extreme conditions and ensure that gas infrastructure is 
as secure from cybersecurity and physical security threats as 
the grid that it supplies.
    Markets should incent and, as needed, require all 
resources, including demand response, ensure those resources 
will perform in both normal and extreme conditions.
    And finally, policymakers should seek alternatives to 
streamline siting and permitting of transmission.
    To address the challenges and benefits of a more diverse 
resource mix, industry stakeholders and policymakers must 
understand and plan for the risks of our rapidly changing 
resource fleet. NERC plays a critical role as an objective and 
independent expert organization, and I appreciate the 
opportunity to share our thoughts and expertise with you here 
today.
    Thank you.
    [The prepared statement of Mr. Cauley follows:]
    
    
    
    
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    
    Mr. Olson. Thank you, Mr. Cauley.
    The Chair now calls upon the ranking member of the full 
committee, Mr. Pallone, for 5 minutes.
    Mr. Pallone. Mr. Chairman, I will just submit my statement 
for the record because my understanding is that there are going 
to be votes. And I will just submit it for the record. I will 
ask unanimous consent.
    Mr. Olson. Without objection, so ordered.
    [The prepared statement of Mr. Pallone follows:]

             Prepared statement of Hon. Frank Pallone, Jr.

    Mr. Chairman, thank you for holding today's hearing to 
explore how we define electric reliability in today's world. 
This is the first of two hearings that we will be holding on 
electric reliability as part of our bipartisan hearings on the 
electric sector. I appreciate the way the chairmen and the 
Republican committee staff have worked with us and our staff to 
move this series forward in a very constructive way.
    I want to start by welcoming Chairman Chatterjee: we 
appreciate your willingness to come before us so soon after 
taking the reins at FERC. I also appreciate the flexibility of 
Mr. Cauley and Ms. Hoffman in making themselves available 
today. I'm particularly pleased to have Ms. Hoffman, not just 
because of her long service and deep knowledge, but also 
because her presence represents the first time in eight months 
that the Trump Administration has provided this subcommittee 
with a witness. That is unique and unfortunate, and I hope that 
Ms. Hoffman's presence today marks a change for the better.
    I firmly believe that it is time to start looking at 
reliability in new and different ways. If there is one thing we 
have learned in the past two weeks -a period that has left 
nearly 8 million without power-it is that climate change is 
having devastating effects on our communities and we must 
modernize our electricity system to make it more resilient. A 
recent study of FEMA disaster declaration records shows that 
over the last 20 years four times as many counties were hit by 
disaster-scale hurricanes, storms and floods than during the 
two decades before that period.
    While the regulatory standards for what constitutes 
reliability seem not to have changed much in the past few 
decades, the technology by which we can achieve reliability 
certainly has transformed dramatically. In the past, things 
like redundant transmission lines may have been the only way to 
guarantee reliability, but that's hardly the case today.
    We can now make our system more reliable and more resilient 
by incorporating technologies to manage demand and by 
generating and storing power closer to where it is consumed, 
through use of batteries and distributed generation resources 
including renewables like rooftop solar. These assets can be 
connected by microgrids and isolated from the transmission and 
main distribution system.
    While climate change is producing stronger storms more 
frequently that can damage every part of the grid, in most 
storms it is the distribution system that is the most 
vulnerable part of the grid, and not the larger transmission 
system or generating assets. In a grid characterized by large, 
centralized power production, if the distribution lines are 
down, it doesn't matter how many transmission lines we have 
because the power can't get to the consumer. While we are 
awaiting an assessment of the impact of Hurricanes Irma and 
Harvey, I know that in my area, Superstorm Sandy showed us that 
centralized power, carried by lines over great distances, does 
not guarantee reliability or a resilient grid. After its 
experience with Sandy, New Jersey's largest utility said, 
``reliability remains fundamental but is no longer enough now 
that extreme storms have become increasingly common.'' This is 
an important distinction that is playing out in the wake of 
Hurricanes Harvey and Irma.
    To encourage the innovation we need to make our grid more 
reliable and resilient, we also need to reexamine the way we 
calculate rates and how utilities make money. In many ways, 
traditional rate setting encourages utilities to make money 
just by building new transmission lines. Those new lines could 
also have the effect of locking in a market for older, fossil 
fuel generation that accelerates climate change while crowding 
out cleaner and less expensive options for generating power and 
ensuring reliability. Utilities should be able to make money, 
but I'm concerned that the old rate-making model may encourage 
utilities to continue building too many of yesterday's capital 
facilities that do not maximize reliability and resiliency when 
better options are available today.
    As our committee discusses the grid, we should carefully 
reexamine the old approaches to reliability, resiliency and 
ratemaking to seriously consider whether our long-term 
interests are better served by charting a new course.
    Again, thank you for holding this hearing, and I look 
forward to hearing from our distinguished witnesses.

    Mr. Olson. And I thank you all for your testimony.
    And now we begin the question-and-answer portion of this 
hearing.
    I will begin with a question and recognize myself for 5 
minutes.
    Hurricane Harvey hit my home State twice, but we never lost 
power at my home in Sugar Land. Some people are still without 
power in Texas, Louisiana. A lot of people in Florida don't 
have power because of Hurricane Irma. Without power, there is 
much greater damage: mold, even death, as we saw in Florida.
    My first question is for you, Ms. Hoffman. I know that DOE 
has been very busy assisting with Hurricane Harvey and 
Hurricane Irma recovery efforts. We applaud that. But can you 
talk a second about the programs DOE has in its place not only 
to recover but to also prepare for storm events in the future?
    Ms. Hoffman. Yes, Vice Chairman. Thank you very much for 
the question. The Department has been actively engaged with 
utilities through our R&D program to look at advanced 
technologies that we have helped support the industry, test out 
on the grid, such as automated switching, rerouting of power, 
the ability for utilities to do outage management, to really 
take a look at and be proactive in the response characteristics 
for identifying where the outages are. If you remember, 
customers usually have to call the utility to let them know 
their power is out. Now the utilities have been able to 
automate a lot of those systems.
    In addition, we have been working with the States and the 
regions to really exercise and understand--each hurricane is 
different. The damage is significant. And we have been helping 
the States prepare for this.
    Mr. Olson. Well, thank you.
    What has been the role of the ESCC, the electricity 
subsector coordinating council, during hurricane preparations 
and response?
    Ms. Hoffman. The Electric Sector Coordinating Council has 
had a significant role. It is the focal point of coordination 
between the Federal Government and CEOs, the leaders in the 
electric utility industry. This allows for continuity of 
message and activities, so that we are all on the same page of 
what the priorities are and what the activities and the needs 
are by industry to the highest level of the Federal Government, 
as well as industry, in supporting a coordinated, but most 
importantly an effective, restoration process.
    Mr. Olson. And back home, the people say it is working very 
well. Glad to hear it is working well on your side.
    My final question, Ms. Hoffman, is, a few months ago, we 
passed a bill out of this committee, H.R. 3050, that helps 
improve State energy assurance planning. How does an energy 
assurance plan help a State deal with extreme weather events, 
like Harvey, Irma, and more hurricanes?
    Ms. Hoffman. So energy assurance planning is an important 
activity that the States undertake to really take a hard look 
at scenarios of potential events that could impact their State 
but also look at how this affects the energy resources. So it 
allows us to look at contingency, and it really thinks about, 
how do we build in resilience in partnership with the States?
    Mr. Olson. Thank you.
    My last question is for you, Chairman Chatterjee. In order 
to have a reliable electricity system, we must protect our grid 
from cybersecurity threats. For example, I understand you 
participate in the grid exercises. How do these types of 
exercises make the electricity system more reliable? And what 
else are you doing in terms of cybersecurity?
    Mr. Chatterjee. Thank you for the question, Vice Chairman. 
The Commission and I myself take cybersecurity and protecting 
our grid from cyber attacks very seriously. FERC is focused on 
ensuring reliability in the face of some of the cyber 
challenges that we have. We also have an Office of Energy 
Infrastructure Security that is trying to stay ahead of 
potential threats to the grid and participate in some of these 
activities. There is no question that threats to our system of 
electricity generation distribution, whether from hurricanes or 
from cyber attacks, are of the utmost concern to the 
Commission, and I will continue to work with you all and my 
colleagues to ensure the safety of our grid.
    Mr. Olson. Thank you. That is all my questions.
    The Chair now calls upon the gentleman from Illinois, the 
ranking member of the subcommittee, Mr. Rush, for 5 minutes.
    Mr. Rush. I want to thank you, Mr. Chairman.
    I want to ask all three of you the first question. In your 
professional opinion, do you anticipate that climate change 
will continue to play a significant role in threatening the 
Nation's energy infrastructure due to more frequently occurring 
superstorms, hurricanes, and other natural disasters, including 
heat waves, droughts, fires, and floods? Each one of you, I 
would like for you to respond, beginning with you, Mr. 
Chatterjee.
    Mr. Chatterjee. I think it is important, as we confront 
these storms and the impacts that they have had on our grid, 
that we ensure that, as our grid transforms for the future, 
that we ensure that we can bounce back from these types of 
events and have a really reliable and resilient grid.
    As the vice chairman mentioned, when the power goes out, 
people really suffer. I was on an ESCC call with Secretary 
Perry in which he talked about the fact, after a couple of 
days, you are hot, you are tired, you are wet, and if you don't 
have power, you start to get upset. And it is important that, 
in response to these weather events and challenges, that we 
have a reliable and resilient grid. And I think the role of the 
Commission will be to look that, as we are in this 
transformational period, that we ensure that the reliability, 
the world class, second-to-none reliability that our country 
has enjoyed can be maintained going forward.
    Mr. Rush. Ms. Hoffman.
    Ms. Hoffman. I would echo the chairman's comments, that I 
believe it is the duty and responsibility of the electric 
industry to be forward leaning and to think about different 
scenarios and events that will happen, build it off of the 
knowledge base we have experienced, and look about how do we 
build in resilience moving forward; what can we do to our 
infrastructure to continue to support an effective restoration 
process, to getting the lights on as quickly as possible?
    Mr. Cauley. So, understanding climate change is outside of 
my expertise or my organization's expertise, but we do see, in 
recent years, in my time as 8 years as CEO, it seems as we are 
seeing an increase in the magnitude and severity of events, 
flooding, and storms. And it is something, as the other two 
panelists mentioned, I think we have to think about in the 
design of our systems and our preparations to think about, how 
do we prepare for more extremes than we have seen historically?
    Mr. Rush. Each of you, do you feel as though there is a 
sense of urgency that is apparent in the Congress or in both 
administrations or in the administration, be it Republican or 
Democrat? Is there a sense of urgency about greater reliability 
in the event of severe weather challenges?
    Mr. Chatterjee. I laid out in my opening remarks some of 
the steps that the Federal Energy Regulatory Commission took 
immediately to respond to the devastation that was wrought by 
Hurricanes Harvey and Irma. And I can say that we most 
certainly view the reliability and resilience of our grid with 
the utmost sense of urgency.
    Ms. Hoffman. With two Cat 4 hurricanes impacting the 
mainland of the United States, there is definitely a sense of 
urgency. Secretary Perry, former Governor of Texas, recognizes 
the devastation to life and the economic development and human 
safety. So it is definitely forefront on our radar.
    Mr. Cauley. I sense that there has been a strong focus on 
resilience of the grid through both of the most recent 
administrations. And we are working hard on that.
    And the reason is, in my opening remarks, I mentioned the 
50 most significant events we have seen in the U.S. in the last 
5 years are all weather related. So it says we can invest more 
in hardening and protecting our system.
    Florida Power & Light, in Irma, had recently invested $3 
billion on hardening using concrete poles, steel poles, 
elevating substations, and the equipment that was hardened 
performed significantly better than the equipment that had not 
been hardened yet. So it was a good demonstration.
    Mr. Rush. I have just a short period of time now. I want to 
ask Chairman Chatterjee and Mr. Cauley, according to the 
cybersecurity firm Symantec Corporation, there has been an 
uptick in activity by a group of hackers code-named Dragonfly 
2.0 within our domestic energy networks after years of 
seemingly being inactive. Are FERC and NERC monitoring this 
activity? And are you both confident that you have the tools to 
address this issue in order to prevent this group from 
sabotaging our electric infrastructure?
    Mr. Chatterjee. Thank you for the question, Congressman. We 
are aware of the Symantec report and have been coordinating 
closely with other Federal agencies, as well as the NERC ISAC, 
and industry to assess and address this matter as appropriate. 
If it would be helpful to members of the subcommittee, we could 
seek to coordinate with other agencies to provide additional 
information in a nonpublic setting.
    Mr. Cauley. Dragonfly has been around for 3 or 4 years. We 
have been aware of it and communicating with the industry. This 
new reincarnation of Dragonfly 2 is recent. And it has 
characteristics that would make it operative within control 
systems, within substations, and so on. So it is of interest. 
The instances that we have seen have not gotten into those 
systems. They were picked up through traffic between the 
utility systems and information going offshore. So it has not 
done any harm. It has not infiltrated the systems yet. But it 
is there, and it is active.
    Mr. Rush. I yield back, Mr. Chairman.
    Mr. Olson. The gentleman yields back.
    The Chair now calls upon the gentleman from Texas, the vice 
chairman, Joe Barton.
    Mr. Barton.
    I ask all Members, please adhere to the 5-minute time. 
Please, please, please. We have got so many people and 
questions that we are running out of time.
    Chairman Barton, you are up.
    Mr. Barton. Because of what you just said, Mr. Chairman, I 
am going to ask one question, and then I will yield to anybody 
on my side.
    Many, many States are adopting renewable portfolio 
standards, and some of them are fairly aggressive. They want to 
have at least 50 percent--and there might be even a few States 
that are above that--of their electricity generation with 
renewables. My question, I guess, would be to Mr. Cauley, who 
is head of NERC, is it possible to meet the same reliability 
standards if you go to a generation system that is 
predominantly renewable?
    Mr. Cauley. I think, from what we are seeing, it is 
technically feasible, but there are a lot of reliability 
challenges. I gave the example of August a year ago, in 
California, there was a wildfire that caused a transmission 
wire to trip. When 1,200 megawatts of solar panels saw that, 
they thought it was the system collapsing, so they all shut 
down at the worst time. And so there has to be coordination.
    Wind and solar do not inherently come with the controls to 
provide frequency response, voltage response. They just want to 
put out megawatts; they want to put out power. But, 
technically, we have been working with the vendors to show them 
some of those weaknesses and things that need to be done.
    Mr. Barton. In the short term, the answer is no; it is not 
possible. But in the long term, with some battery research and 
other things, it is, perhaps, possible?
    Mr. Cauley. Well, I think the technology is there today. It 
just requires a lot of coordination.
    Mr. Barton. I would yield to Mr. Shimkus.
    Mr. Shimkus. Thank you, Joe.
    And because it is on the same line, this is to Mr. 
Chatterjee.
    We had the qualifying facilities, the PURPA hearing last 
week or 2 weeks ago. So just a couple questions that kind of 
segue right into what Joe was saying. One is: Some of the 
electricity markets talked about how that there may be an 
opportunity to curtail the QFs to make sure they continue to 
keep the reliability of the grid. You have any comments object 
that?
    Mr. Chatterjee. I want to be careful, Congressman, as we 
have------
    Mr. Shimkus. I don't want you to be careful.
    Mr. Chatterjee. As you know, Congress enacted PURPA in 
1978. I think we have heard from numerous stakeholders that 
there is an interest in reviewing potential reforms. 
Significant changes to PURPA would require congressional 
action. There are steps that FERC can take with respect to 
PURPA implementation on minor issues. And we held a technical 
conference on this. But I think we------
    Mr. Shimkus. Let me just go at it this way: You understand 
that there is a concern that maybe some of these projects are 
located for the benefit of the investors over the grid 
reliability?
    Mr. Chatterjee. It is certainly something that we are 
looking at.
    Mr. Shimkus. And let me follow up with this: The one-mile 
debate, hopefully you listened or saw part of the testimony----
--
    Mr. Chatterjee. Yes, sir.
    Mr. Shimkus [continuing]. Where some of these qualifying 
facilities were able to break down the parcels to game the 
system. Is that part of your review and discussion?
    Mr. Chatterjee. It absolutely is. And it is something that 
we would review to see whether that is something that the 
Commission could handle within its purview, potentially not 
require a statutory change from Congress.
    Mr. Shimkus. Great. Thank you.
    And I yield back to Chairman Barton.
    Mr. Barton. I would be happy to yield to any other Member.
    If not, Mr. Chairman, I yield back to you.
    Mr. Olson. The gentleman yields back.
    The Chair calls upon the ranking member of the full 
committee, Mr. Pallone from New Jersey, for 5 minutes.
    Mr. Pallone. Mr. Chairman, I would like to yield my time to 
the gentlewoman from Florida.
    Ms. Castor. Well, I thank the ranking member, Mr. Pallone, 
very much.
    And thank you to our witnesses for being here today.
    I want to thank the utility workers all across the country 
who have flooded into Florida--and I know they did into Texas--
to help get the power back on after millions and millions of my 
neighbors in Florida lost power. So my hats off to them on 
behalf of the citizens of the State of Florida. They still have 
some work to do, but they are making good progress.
    But I think these extreme weather events, these two 
hurricanes, in addition to the other events we have seen just 
in the past few years, require a modern, dramatic response to 
what is happening with the cost of the changing climate. These 
disasters are very expensive. And it is time to make a dramatic 
investment in a modern grid, something that is more resilient, 
something that serves the need of our citizens in a better way. 
We have the brightest minds here in America, and we need to put 
them to work, and we need to put the technology to work, 
whether that is burying lines that we haven't invested in 
before, a greater distributed energy grid, building in the 
renewables over time. I agree they are not the answer in the 
short term. But in the long term, these distributed grids, 
building in renewable energy, is going to help us reduce the 
cost of the changing climate.
    We have to do more on-demand management. That has been a 
battle in the past, and there are some challenges. But we have 
got to do this. The business models, in many States, simply do 
not match the challenges ahead of us. And I hear that the 
Department of Energy wants to be proactive on this. But I don't 
know how we do that when we have seen such tremendous proposed 
cuts from the Trump administration in resilience, in research. 
We have got to rethink that. And I am calling on all of my 
colleagues who understand the challenges ahead. We can't simply 
cut our way and think we are going to be able to address these 
costs and these challenges ahead.
    Ms. Hoffman, certainly these cuts, proposed cuts, to 
research and development and resiliency are going to put us 
further behind. How do we keep up in an era where we need to be 
investing more in a modern grid to ensure we don't have the 
power outages, and we are addressing the costs of the changing 
climate?
    Ms. Hoffman. Thank you, very much, for the question.
    The administration is focused in its fiscal year 2018 
budget on early-stage research. And we really are concentrating 
on maximizing the effectiveness of work at the Department of 
Energy. We did provide a budget to Congress for fiscal year 
2018, and I know it is under deliberations for the House and 
Senate. And we look forward to what Congress provides back for 
what the Department will implement as part of our fiscal year 
2018 appropriations.
    Ms. Castor. You are right. And it is back on the Congress 
in a lot of ways. And I hope that they are listening and 
understand the huge cost if we do not address this. Look at 
what we are facing already in emergency aid packages, flood 
insurance, rising property insurance, property taxes because 
local governments have to raise taxes to harden their water/
wastewater infrastructure and everything they are doing, just 
the loss of life that we are seeing.
    So my message this morning, on the heels of these 
disasters, is let's do more working together, everyone in the 
utility industry, the scientists we have out there, and take 
this on. This is a real call to action. And I share Mr. Rush's 
sense of urgency, as he put it.
    So, thank you, and I yield back.
    Mr. Olson. The gentlelady yields back.
    The Chair now calls upon the gentleman from North Dakota, 
Mr. Cramer, for 5 minutes.
    Mr. Cramer. Thank you, Mr. Vice Chairman.
    And thank you, witnesses, for your service and for being 
with us today.
    I am going to ask of the Chairman first, Chairman 
Chatterjee, as the policy leaders here, we need to respond to 
establish a path for base load generation, especially coal. 
North Dakota is a big coal-producing State. It is mine mouth. 
It is low cost. It is efficient. And I worry about the early 
shutdown, the forced shutdown, frankly, of base load 
generation, especially with plants that have useful life left 
in them. And it really doesn't do anything, in my view, to 
protect America's future energy position while also increasing 
the cost of electricity for consumers.
    And, of course, again, speaking to my State, most of these 
plants belong to vertically integrated utilities, which I think 
has a special concern about this, where the consumers pay for 
the facilities whether they are running or they are not 
running. I think this gets lost a lot of times.
    Can you elaborate, from a FERC perspective a little bit, on 
any strategies that you could deploy that would help adequately 
compensate base load generation?
    Mr. Chatterjee. Thank you for the question, Senator--sorry, 
Freudian slip.
    Mr. Cramer. It happens a lot lately.
    Mr. Chatterjee. It has a nice ring to it.
    Thank you for the question. Obviously, being from Kentucky 
and having grown up in Kentucky, I have seen firsthand the 
importance of coal-fired generation and what coal-fired 
generation means for the delivery of not just affordable but 
reliable electricity. And, certainly, growing up seeing that, I 
have an appreciation for the role that coal-fired generation 
plays in our marketplace.
    In terms of what strategies or path forward, the Commission 
is fuel-neutral. And we will look to ensure that, as our grid 
undergoes this transformation, that we ensure that we evaluate 
the attributes of fuel sources to see what values they provide 
and see if there is a demonstrated need for reliability, 
whether or not those things can be compensated.
    I believe the Democratic nominee for the vacancy on the 
Commission testified to this last week. And he said that, while 
currently, per the DOE report, he believed that there were not 
threats to reliability, even he admitted that we had to closely 
monitor this and watch this. And I think I would echo those 
remarks. We are going to closely watch and monitor whether, in 
fact, transitions in the grid do lead to vulnerabilities and 
threats to reliability and resilience, and whether, in fact, we 
would need to take steps to ensure that that need is met.
    Mr. Cramer. Thank you for that.
    Along the same lines, as you know, a lot of States, they 
have taken some steps to try to work around market solutions to 
preserve these plants and their benefits. But, in most cases, 
these efforts have been challenged. Understandably, they have 
been contested on the basis that they undermine your authority 
or FERC's authority. How can we deal with this? How should we 
deal with this? Or is this just going to be litigation or 
regulation by litigation? Is there a way to deal with the 
States?
    Mr. Chatterjee. Certainly, it is within the State's 
purview, and I believe in States' rights. And States, it is 
their prerogative to determine their sources of generation and 
their generation mix. When it affects interstate commerce and 
potentially does have threats to reliability, I think FERC has 
the authority to weigh in there. I think that it will be 
something that we will look at closely and carefully, build a 
record, adhere to the science and engineering and technology of 
the grid, and make those careful determinations.
    Mr. Cramer. Thank you, and congratulations, by the way.
    In my remaining minute, Ms. Hoffman, I want to talk about 
the role of coal going forward, again, especially with new 
technologies, the R&D that is being developed for cleaner coal, 
of fuel emissions, carbon capture, sequestration, utilization, 
all of those technologies that are very promising but, at this 
point, not quite to marketability, while at the same time--I 
guess my question is, how can DOE, both through its R&D and in 
its advocacy, find ways to build that bridge using the existing 
tools or maybe expanding on them, especially considering we 
have tax reform coming up? Do you see any way for DOE and 
Congress to work to build a bridge to that ultimate future of 
cleaner coal?
    Ms. Hoffman. So, Congressman, I would love to continue to 
work with you in exploring additional ideas. Through our 
research program, we will continue to invest in advancement in 
coal technology, utilization of coal, looking at job growth and 
looking at opportunities to continue to support the coal 
industry.
    Other things that we would like to be able to recognize is 
the value that coal brings, as the study brought out, and can 
it be compensated for the services it provides, frequency 
support, frequency response, fuel diversity.
    Mr. Cramer. Thank you. And good report. I appreciate it.
    Thanks all of you.
    Thank you, Mr. Chairman.
    Mr. Olson. The gentleman yields back.
    The Chair now calls upon the gentleman from California, Mr. 
McNerney, for 5 minutes.
    Mr. McNerney. I thank the chairman.
    And I thank the witnesses.
    I just want to bring to Mr. Cramer's attention: North 
Dakota has the biggest wind potential resource of any State in 
the country. So don't discount alternative energy in North 
Dakota.
    I want to follow up a little bit on Ms. Castor. Yes, we 
need to build more resiliency into our electric grid. We need 
to acknowledge climate change because that is one of the 
drivers. But it is not the only driver: cyber issues, physical 
threats, other drivers. And as cochair of the bipartisan Grid 
Innovation Caucus with Mr. Latta, a Republican, our mission is 
to move forward in that to get the Congress excited about grid 
innovation and resiliency. So let's keep that line of 
communication open.
    Ms. Hoffman, I want to start out with a question about the 
disaster. When disasters strike, like the hurricanes that we 
just saw, there are utilities sharing resources. But what I 
want to know, are there barriers to the sharing of resources 
between utilities that we could address here?
    Ms. Hoffman. Thank you, Congressman, for the question. I 
think that the biggest barrier is allowing the resources to get 
to the location of where they need to be as quickly as 
possible.
    Mr. McNerney. Physical barriers?
    Ms. Hoffman. Physical movement.
    Other barriers and other things that we are trying to do is 
accelerate the assessment time period, which goes down to 
information sharing as part of the public-private partnership 
so that we understand exactly what the damage is so we can 
effectively move resources to respond.
    Mr. McNerney. Thank you.
    Again, Ms. Hoffman, cyber attacks are becoming greater 
threats, including State-sponsored attacks, such as the 
potential connection between Dragonfly and Russia, on attacks 
on our electric grid. So we must continue to focus on 
cybersecurity to build our grid cyber resiliency. So, in 
addition to FERC's Order 829 related to supply chain 
management, are there additional steps that DOE is or should be 
taking with regard to supply chain management to the bulk power 
system?
    Ms. Hoffman. Congressman, absolutely. It is one of the 
areas that we all should be focusing on is supply chain 
management. What the Department is doing is partnering with the 
supply-chain sector that supports the electric industry, 
helping them look at vulnerabilities, look at mitigation 
solutions, but also look at ways to get ahead of the game and 
really identifying ways to monitor any sort of intrusions that 
come on the system, but also be able to look for abnormal 
behaviors.
    Mr. McNerney. OK. Good. And we are looking at some 
legislation that might actually enhance your capabilities in 
that regard.
    Also, there are several traditional reliability and 
resiliency framework tools, including CAIDI, SAIDI, and SAIFI, 
if you know what those are, and the interruption cost estimate 
calculator, is there room for improvement on those tools? 
Should they be upgraded regularly?
    Ms. Hoffman. Yes, Congressman. We always should take a look 
at any tools for new technologies and capabilities to advance 
the utilization. It will help us, in the long term, define, 
what does resiliency mean, and what are the cost-effective 
investments that we should focus on? So all those tools are 
valuable in establishing a baseline but also helping identify 
priorities.
    Mr. McNerney. In the interest of courtesy, I will yield 
back. But I am going to submit questions for the record.
    Mr. Olson. I thank my friend.
    The Chair now calls upon the gentleman from the 
Commonwealth of Virginia, Mr. Griffith, for 5 minutes.
    Mr. Griffith. Thank you, very much, Mr. Chairman.
    In the interest of time, I will submit some questions that 
I had for the record that I had for some folks. And I will try 
to abbreviate my questions as much as I can.
    Chairman Chatterjee, you have said that the existing coal 
and nuclear fleet need to be properly compensated to recognize 
the value they provide the system. Regardless if one agrees or 
not, it is clear that some States do agree and are taking 
action within the jurisdiction to compensate generation 
resources for attributes that are not being properly recognized 
in the wholesale markets.
    Given the current backlog of issues at FERC, how high of a 
priority do you see FERC placing on the issue of proper 
compensation in wholesale markets? And as a part of that, let 
me just say, because of time, I would love to get an extended 
answer, but for purposes of today's hearing, so that folks at 
home know, high, medium, or low?
    Mr. Chatterjee. We can walk and chew gum at the same time. 
I would say high.
    Mr. Griffith. High. OK. I appreciate that very much.
    Ms. Hoffman, the recently released DOE staff report found 
that the uncertainties surrounding New Source Review 
requirements has led to a significant lack of investment in 
plant and efficiency upgrades. And I look to the question I 
just asked where we have acknowledged that coal and nuclear 
fleets are important for grid reliability across the country. 
And so we have that lack of investment in plant and efficiency 
upgrades and that the New Source Review program has impeded or 
resulted in the cancellation of projects which would maintain 
and improve reliability, efficiency, and the safety of existing 
energy capacity--and a lot of times that is coal, but it is 
other things as well. That is why I have authored two bills to 
modernize and streamline the New Source Review Program. Can you 
provide a brief overview, again, looking at another date for a 
longer answer perhaps, but can you provide what DOE plans that 
there are to ensure that this burdensome permitting program 
does not further impact grid reliability? In other words, I am 
working on the legislative end. What are you doing on the 
administrative end?
    Ms. Hoffman. Thank you, Congressman. We are working 
diligently to streamline the review and permitting process that 
is in the jurisdiction of the Department of Energy. We are 
looking, on the transmission side, pre-application process. I 
would be more than glad to have an in-depth conversation on all 
the list of activities that we are working on.
    [Additional information submitted by Ms. Hoffman follows:]
    
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
     
    Mr. Griffith. And I do appreciate that, anything you 
provide to our office. I do apologize that, because of 
hurricanes earlier in the week and now our compressed voting 
schedule today, that I can't get a lengthier answer.
    And, Mr. Chairman, those being the two most vital of my 
questions--others were important, but those were the two most 
important--I yield back.
    Mr. Olson. The gentleman yields back.
    Seeing no further Members wishing to ask questions, I would 
like to thank all the witnesses for being here today. And I 
want to personally apologize for exposing you all to a good 
old-fashioned Texas goat rope because of the floor votes. I 
appreciate your patience.
    Pursuant to committee rules, I remind Members that they 
have 10 business days to submit additional questions for the 
record. I ask that witnesses submit the response within 10 
business days upon receipt of those questions.
    Without objection, the subcommittee is adjourned.
    [Whereupon, at 10:47 a.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                 Prepared statement of Hon. Greg Walden

    As you are aware, this hearing was originally scheduled for 
the beginning of this week but was postponed due to the 
destruction caused by hurricane Irma. I would like all of those 
effected by hurricane Irma to know that we are thinking about 
them and we are doing what we can to hasten the recovery 
efforts, especially as it pertains to restoring power to the 
region. Both hurricane Irma and hurricane Harvey have 
highlighted concerns and challenges that this committee is 
working to address and which we will be talking about this 
morning.
    As we continue our ``Powering America'' hearing series 
today, we will be examining the U.S. electricity system through 
the important lens of reliability. If there is one thing that 
we can all agree upon, it is the fact that this country must 
have an electricity system that provides reliable power to 
every corner of the country. Everyone in this room understands 
that electricity is a crucial component in the lives of all 
Americans and serves as the backbone of the U.S. economy. For 
these reasons, this committee has always paid special attention 
to the issue of reliability, which can be seen through our 
extensive record of hearings and legislation related to the 
electricity sector.
    As noted in previous ``Powering America'' hearings, the 
United States electricity system is going through a significant 
period of transformation which is being driven by several 
factors ranging from a changing generation fuel mix to the 
deployment of new energy technologies located at the edge of 
the grid.
    Clearly, the transforming grid is creating exciting new 
opportunities and benefits for consumers across the country, 
which is demonstrated by low electricity prices and the 
deployment of new consumer-focused energy technologies. 
However, along with the benefits that accompany an evolving 
grid, there are of course some associated challenges that are 
causing many stakeholders to rethink how we should go about 
regulating and operating a 21st century electricity system. 
Chief among these challenges is improving how we address and 
ensure grid reliability.
    Given the importance and far reaching impact of the grid, 
multiple entities and stakeholders are working together to make 
sure that electricity is generated and delivered reliably. 
Joining us today, we have three entities--the Federal Energy 
Regulatory Commission, the Department of Energy, and the North 
American Electric Reliability Corporation--who each play a 
crucial role in overseeing our electricity system. I look 
forward to hearing from them. More specifically, I am 
particularly interested in hearing how these entities are 
implementing market rules and standards to ensure not only a 
reliable grid today but to make sure that we have a reliable 
grid 10 or 20 years from now.
    I should also mention that at a later date, we will be 
hearing from a separate panel of witnesses representing the 
various types of power producing technologies that generate the 
Nation's electricity supply. These witnesses will help us 
understand how various generation resources are working 
together, under the direction of grid operators, to generate 
adequate power and to offer essential grid reliability 
services, such as frequency regulation and voltage support.
    As Americans, we have always been incredibly fortunate to 
have access to reliable electricity at all times of the day and 
in every region of the country. To maintain this reliable 
electricity system going forward, we must continue to promote 
adequate system planning, smart energy policies, and robust 
technology standards, while still providing electricity-sector 
participants with the flexibility they need to bring about 
innovation and sustain low electricity prices. With this goal 
as a backdrop, I look forward to the remainder of this hearing 
and would like to thank our witnesses for their patience and 
flexibility with rescheduling this hearing.



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 POWERING AMERICA: DEFINING RELIABILITY IN A TRANSFORMING ELECTRICITY 
                            INDUSTRY, PART 2

                              ----------                              


                        TUESDAY, OCTOBER 3, 2017

                  House of Representatives,
                            Subcommittee on Energy,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 2:07 p.m., in 
room 2123, Rayburn House Office Building, Hon. Fred Upton 
(chairman of the subcommittee) presiding.
    Members present: Representatives Upton, Olson, Shimkus, 
Latta, Harper, McKinley, Kinzinger, Griffith, Flores, Mullin, 
Cramer, Walberg, Walden (ex officio), Rush, McNerney, Peters, 
Green, Castor, Sarbanes, Tonko, Loebsack, Schrader, Kennedy, 
and Butterfield.
    Staff present: Ray Baum, Staff Director; Allie Bury, 
Legislative Clerk, Energy/Environment; Kelly Collins, Staff 
Assistant; Zack Dareshori, Staff Assistant; Wyatt Ellertson, 
Research Associate, Energy/Environment; Theresa Gambo, Human 
Resources and Office Administrator; Tom Hassenboehler, Chief 
Counsel, Energy/Environment; Jordan Haverly, Policy 
Coordinator, Environment; A.T. Johnston, Senior Policy Advisor, 
Energy; Mary Martin, Deputy Chief Counsel, Energy/Environment; 
Drew McDowell, Executive Assistant; Alex Miller, Video 
Production Aide and Press Assistant; Brandon Mooney, Deputy 
Chief Energy Advisor; Mark Ratner, Policy Coordinator; Peter 
Spencer, Professional Staff Member, Energy; Jason Stanek, 
Senior Counsel, Energy; Madeline Vey, Policy Coordinator, 
Digital Commerce and Consumer Protection; Evan Viau, 
Legislative Clerk; Hamlin Wade, Special Advisor for External 
Affairs; Everett Winnick, Director of Information Technology; 
Andy Zach, Senior Professional Staff Member, Environment; 
Michelle Ash, Minority Chief Counsel, Digital Commerce and 
Consumer Protection; Jeff Carroll, Minority Staff Director; 
Lisa Goldman, Minority Counsel; Dino Papanastasiou, Minority 
GAO Detailee; Caroline Paris-Behr, Minority Policy Analyst; and 
Tim Robinson, Minority Chief Counsel.
    Mr. Upton. Good afternoon, everyone. This is Part II of 
``Powering America: Defining Reliability in a Transforming 
Electricity Industry.``
    And so we have already done our opening statements. We did 
them a couple days ago, so we are going to turn to you. I just 
want to welcome all of you for joining us here today, and 
thanks again for your flexibility in rescheduling this very, 
very important hearing.
    Today, we are going to reconvene with Part II of the Energy 
Subcommittee's hearing entitled ``Powering America: Defining 
Reliability in a Transforming Electricity Industry.``
    The second panel of witnesses will provide their insight 
into how the different attributes of generation resources help 
system operators protect the reliability of the electricity 
grid. Especially in light of Friday's announcement this hearing 
is particularly timely. We are anxious to hear your thoughts.
    As you know, your statements have been made part of the 
record in their entirety and so, if you would take no longer 
than 5 minutes each, and then we will do questions from the 
subcommittee.
    Mr. Durbin, we will start with you, the executive VP and 
chief strategy officer of API, American Petroleum Institute. 
Welcome.

STATEMENTS OF MARTY DURBIN, EXECUTIVE VICE PRESIDENT AND CHIEF 
 STRATEGY OFFICER, AMERICAN PETROLEUM INSTITUTE; PAUL BAILEY, 
  CHIEF EXECUTIVE OFFICER, AMERICAN COALITION FOR CLEAN COAL 
   ELECTRICITY; MARIA G. KORSNICK, CHIEF EXECUTIVE OFFICER, 
 NUCLEAR ENERGY INSTITUTE; THOMAS C. KIERNAN, CHIEF EXECUTIVE 
   OFFICER, AMERICAN WIND ENERGY ASSOCIATION; STEVE WRIGHT, 
 GENERAL MANAGER, CHELAN COUNTY PUBLIC UTILITY DISTRICT NO. 1, 
 ON BEHALF OF THE NATIONAL HYDROPOWER ASSOCIATION; CHRISTOPHER 
    MANSOUR, VICE PRESIDENT, FEDERAL AFFAIRS, SOLAR ENERGY 
INDUSTRIES ASSOCIATION; KELLY SPEAKES-BACKMAN, CHIEF EXECUTIVE 
  OFFICER, ENERGY STORAGE ASSOCIATION; AND JOHN MOORE, SENIOR 
ATTORNEY AND DIRECTOR OF THE SUSTAINABLE FERC PROJECT, NATURAL 
                   RESOURCES DEFENSE COUNCIL

                   STATEMENT OF MARTY DURBIN

    Mr. Durbin. Thank you, Mr. Chairman, members of the 
subcommittee, and thanks for the opportunity to testify today 
on the reliability of our electric grid.
    Increased use of natural gas in electric power generation 
has not only enhanced the reliability of the overall system, 
it's also provided significant environmental and consumer 
benefits.
    The abundance, affordability, low emissions profile, and 
flexibility of natural gas and natural gas-fired generating 
units make it a fuel choice.
    There is no question, however, that the bulk power system 
will continue to rely on multiple fuels including natural gas, 
nuclear, coal, hydro, wind, solar, et cetera.
    For those who believe diversity--fuel diversity is 
important for grid reliability, the good news is that the 
Nation's electric power generation portfolio is far more 
diverse today than it was a decade ago, largely due to the 
increased use of affordable reliable natural gas.
    Government forecasts show that that diversity will be 
maintained for years to come. However, it's important to 
remember that fuel diversity in and of itself does not equal 
reliability.
    Reliability is derived from a diversity of attributes and 
generation, not just the diversity of fuel sources. PJM's March 
2017 report, ``Evolving Resource Mix and System Reliability,`` 
notes ``more diverse fuel portfolios are not necessarily more 
reliable.``
     That said, in every meaningful way, the inherent 
attributes of natural gas fuel generation including 
dispatchability, security of fuel supply, shorter start times, 
frequency response, quicker ramp rates, and lower minimum load 
level, to name a few, make the electric grid more reliable and 
resilient.
    It's important, however, that market rules remain fuel 
neutral by assigning value to performance-based attributes that 
contribute to the reliability and resilience of the grid, 
rather than any particular fuel or technology.
    Looking ahead, as the committee examines how best to ensure 
the long-term reliability and resilience----
    Mr. Upton. Mr. Durbin, even though I can hear you fine, can 
you just move the mic a little bit closer to you?
    Mr. Durbin. Yes, sir.
    Mr. Upton. Great. Thank you.
    Mr. Durbin. As the committee examines how best to ensure 
the long-term reliability and resilience, five factors are 
essential.
    First, as I said a moment ago, natural gas generation 
enhances the flexibility of the electric grid by providing 
flexible and fast ramping, which can cycle off and on in a 
short period.
    This helps maintain stability and reliability of the grid 
as it accommodates an increase in variable renewable energy 
resources.
    Second, Government and private-sector experts are in 
agreement that natural gas will remain an abundant and 
affordable fuel for decades to come.
    Third, because natural gas-fired power plants are one of 
the most cost effective forms of generation to build and 
operation, wholesale electricity costs have been significantly 
reduced.
    As an example, since 2008 average annual wholesale power 
prices in PJM have decreased by almost 50 percent.
    Fourth, the increased use of natural gas and power 
generation continues to drive emissions reductions. In 2016, 
carbon dioxide emissions for electricity generation were at 
nearly 30-year lows and EIA attributes 60 percent of the power-
related CO2 emissions reductions since 2005 to a greater use of 
natural gas.
    Finally, the geographic diversity of the natural gas 
system, where it is produced, and how it is transported makes 
it a reliable and resilient fuel source.
    Market forces and public policy are driving the ongoing 
shift in our Nation's power generation mix. Natural gas 
generation is an important and growing part of that mix.
    Collectively, the environmental advantages, reliability, 
and affordability of natural gas and natural gas generation 
have allowed it to earn its market share in the power 
generation space because it provides and will continue to 
provide reliable low-cost fuel for electricity generation and 
cost savings to consumers.
    The natural gas industry stands ready to work with all 
stakeholders to ensure our Nation's electric grid is reliable, 
safe, and resilient. We were pleased to join more than a dozen 
other energy trade associations in a letter to this committee 
supporting competitive market rules that promote a diverse 
portfolio through fuel-neutral policies.
    Thank you for the opportunity to testify today and I look 
forward to these questions.
    [The prepared statement of Mr. Durbin follows:]
    
    
    
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    Mr. Upton. Thank you.
    Mr. Bailey, president and CEO of American Coalition for 
Clean Coal Electricity, welcome. Nice to see you.

                    STATEMENT OF PAUL BAILEY

    Mr. Bailey. Chairman Upton, members of the subcommittee, we 
want to commend you for holding the hearing today and for 
allowing us the opportunity to testify.
    ACCCE represents America's fleet of coal fuel power plants. 
Through the first half of this year, the fleet supplied 30 
percent of the Nation's electricity needs.
    In 2010, the coal fleet represented more than 300,000 
megawatts of electric generating capacity. Unfortunately, more 
than 100,000 megawatts of coal fuel generating capacity have 
either retired or announced plans to retire.
    These retirements represent one-third of the fleet that 
existed just 7 years ago. A secure electric grid is vital to 
the Nation's well-being. This means the electric grid must be 
both reliable and resilient.
    The coal fleet provides many attributes that help ensure 
both reliability and resilience. These attributes include fuel 
security and many other essential reliability services.
    It is important to keep in mind that reliability and 
resilience are not the same thing. Reliability refers to 
resource adequacy and the security of the bulk power system to 
withstand sudden disturbances, according the NERC.
    Reliability is a well-defined term with agreed upon metrics 
and attributes. For example, my written testimony lists more 
than a dozen reliability attributes. The coal fleet scores well 
against these attributes. Some of the other resources 
represented on this panel also score well on reliability 
attributes.
    On the other hand, there are no agreed upon resilience 
criteria or metrics. Resilience means maintaining a reliable 
grid in the event of a high-impact low-frequency events or, put 
another way, low probability disturbances that have 
catastrophic consequences such as a polar vortex.
    Fuel security is critical to both reliability and 
resilience. Over the past 5 years, the coal fleet has 
maintained an average on-site stockpile of 73 days of sub-
bituminous coals and 82 days of bituminous coal.
    Several recent reports, including those by the National 
Academy of Sciences and PJM, cite the importance of the coal 
fleet's on-site fuel supply that contributes to grid 
reliability and resilience.
    Despite its contribution to reliability and resilience, the 
coal fleet faces a number of challenges. These include 
environmental expenditures, low natural gas prices, mandates 
and incentives for renewables, out-of-market subsidies and 
market rules that do not properly value the attributes of the 
coal fleet.
    Market rules are important because almost two-thirds of the 
coal fleet serves also electricity markets. Last week, DOE took 
an important step by proposing a rule that directs FERC to 
adopt certain electricity market reforms.
    The rule would require RTOs and ISOs to adopt market rules 
to ensure that fuel security, reliability, and resilience 
attributes such as those provided by the coal fleet are fully 
valued.
    Although we are still evaluating the proposal, it 
represents a major step towards achieving at least some reforms 
in wholesale electricity markets.
    However, to achieve DOE's goal and prevent more premature 
coal retirements, these reforms must be adopted quickly. FERC 
must provide strong leadership and act expeditiously and grid 
operators must adopt these and other reforms as soon as 
possible.
    Thank you again for the opportunity to testify today.
    [The prepared statement of Mr. Bailey follows:]
    
    
    
    
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    Mr. Upton. Thank you.
    Next, we are joined by Ms. Maria Korsnick, president and 
CEO of NEI. Welcome.

                 STATEMENT OF MARIA G. KORSNICK

    Ms. Korsnick. Thank you very much.
    For many decades, the Americas' fleet of nuclear reactors 
have served this Nation by providing clean base load power and 
support for local infrastructure.
    Today, those same plants, which support over 475,000 jobs 
across America, are being threatened by energy markets which do 
not value nuclear's attributes.
    This practical and public policy issue must no longer be 
ignored. I thank Chairman Upton and Ranking Member Rush for 
holding this hearing. We need an open and honest conversation 
about what should be done to maintain these important assets.
    Last week the U.S. Department of Energy, under the 
leadership of Secretary Perry, issued a directive ordering FERC 
to take swift action to address U.S. electrical grid 
resiliency.
    This action is a result of DOE's recent report highlighting 
the impact that market and regulatory policies are having on 
base load power plants including our Nation's nuclear reactors.
    Additionally, the IHS Markit issued a report valuing 
diversity at $114 billion a year. It's essential this committee 
encourages FERC and the RTOs to work together to create the 
market rules for the diverse portfolio that we need.
    Unfortunately, current market designs fail to compensate 
the unique and beneficial attributes of nuclear generation and 
here is what I mean.
    First, nuclear produces reliable base load power while not 
emitting harmful air pollutants or carbon dioxide. It produces 
large quantities of electricity around the clock safely and 
reliably, operating over 90 percent of the time for the past 15 
years. That's higher than any other generation source.
    And we provide ancillary services such as voltage, 
frequency, and reactive power support to the grid. Our reactors 
are secure hardened facilities which have the fuel to run for 
18 to 24 months, avoiding reliance on just-in-time fuel 
delivery.
    This is essential when natural disasters and catastrophic 
events occur and we help create the fuel and technology 
diversity that is a bedrock characteristic of a reliable, 
resilient electric sector which helps create affordable and 
stable rates for consumers.
    Let's talk about some real examples. During the 2014 polar 
vortex, nuclear generators performed than all other forms of 
generation, operating with an average capacity factor of 95 
percent.
    More recently, despite Hurricane Harvey's devastating 
impact on the region, the two south Texas nuclear plants 
continued operating at 100 percent power during the storm, 
providing much-needed electricity to police stations, 
hospitals, and shelters.
    And Hurricane Irma ravaged Florida, the St. Lucie Nuclear 
Plant on Florida's east coast, operated a reactor at 100 
percent power to provide what remained of the grid much-needed 
power for critical services.
    The DOE study did a good job laying out the challenges 
facing the electricity system and among these are 
unprecedentedly low natural gas prices, low electricity demand 
growth, and increased use of variable renewable energy due to 
regulation and mandates at the State and Federal levels, which 
are creating unintended consequences for all electricity 
generators but particularly base load plants.
    Although DOE found that the markets have met short-term 
reliability needs at low cost, DOE determined that FERC must 
reform the markets to address system resilience and long-term 
grid stability.
    Comprehensive reform must resolve two pressing problems. 
The markets are not functioning well when prices are negative. 
Reactors are, in fact, forced to pay grid operators to take 
their power.
    And second, market designs fail to compensate nuclear 
generation with a unique set of attributes that I've discussed. 
These attributes play an important role in creating affordable 
electricity for our consumers.
    As we've awaited Federal action, State solutions have 
preserved seven reactors and saved thousands of jobs in New 
York and Illinois and are helping bridge us towards a secure 
energy future.
    I cannot overstate the need for FERC and the RTOs to 
expeditiously implement solutions. Since 2013, three nuclear 
reactors have prematurely retired due to market conditions and 
another eight reactors are scheduled to prematurely retire for 
market or policy reasons.
    Now, some of these plants will shut down more than a decade 
before their operating licenses expire, and when a nuclear 
plant shuts down, the Nation irrevocably loses a reliable 
source of continuous generation and electricity prices and air 
emissions both increase.
    I did not paint a rosy picture today but I painted an 
accurate one. America's nuclear fleet and all the value it 
brings to our Nation is in clear and present danger without 
your action.
    As China and Russia aggressively attempt to replace our 
Nation as the world's leader in nuclear technology, it's now 
more imperative than ever that this committee take action.
    I applaud your leadership in holding this series of 
hearings and I look forward to working together to find ways to 
fix the current market flaws and to ensure America's nuclear 
fleet not only survives but thrives as part of our Nation's 
diverse and reliable system.
    Thank you.
    [The prepared statement of Ms. Korsnick follows:]
    
    
    
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        Mr. Upton. Thank you.
    Next, we are joined by Mr. Tom Kiernan, CEO of American 
Wind Energy Association.
    Tom, welcome back.

                 STATEMENT OF THOMAS C. KIERNAN

    Mr. Kiernan. Thank you very much.
    Chairman Upton, Ranking Member Rush, and other 
distinguished members of the subcommittee, thank you very much 
for the opportunity to testify on behalf of the diverse 
membership of the American Wind Energy Association.
    AWEA represents the entire supply chain of the wind 
industry, from family-owned construction companies in 
Minneapolis, to some of the country's largest utilities, to 
Fortune 500 companies that are increasingly buying our product, 
wind energy.
    The wind industry welcomes the focus on reliability and 
resilience and we have consistently supported more rigorous 
reliability standards at FERC and NERC.
    Now, this should not be surprising, given our advanced 
technology, that some of you may not be aware of, now enable 
wind to provide many if not most of the essential reliability 
services needed for the grid.
    As NERC has noted, reliability and resilience of the grid 
are good and increasing and that wind energy contributes to 
providing these reliability services and resilience of the 
grid.
    Wind is not only capable of delivering these services but 
also has demonstrated a strong track record of doing so and I'd 
like to share six brief examples, if I may.
    First, during the 2014 polar vortex, wind energy was 
resilience to cold weather and helped keep the lights on while 
13,000 megawatts of coal and 1,400 megawatts of nuclear were 
forced offline in PJM alone despite having onsite fuel.
    Second, and similarly, during the 2011 Texas cold snap, 
wind energy received accolades from the grid operators while 
over 3,000 megawatts of coal went offline, despite onsite fuel.
    Third, and more recently, most wind plants along the Texas 
coast continued producing energy as Hurricane Harvey came 
ashore and were producing as long as the grid was up.
    In contrast, two coal units were forced offline and stayed 
offline due to flooded onsite fuel.
    Fourth, grid operators in Texas and Colorado now regularly 
dispatch the output of wind plants up and down to provide 
frequency response and balance electricity's supply and demand 
with a degree of speed and accuracy that exceeds most 
conventional power plants.
    Fifth, during several summer droughts coal and nuclear 
plants have been curtailed due to inadequate cooling water, 
again, despite having onsite fuel.
    And lastly, Iowa and Kansas now produce more than 30 
percent of their electricity from wind, South Dakota and 
Oklahoma more than 25 percent, and this last year down in 
Texas, the main operator produced over 15 percent of their 
electricity from wind, and reliability is at an all-time high, 
with wind providing some of the essential reliability services 
such as reactive power and frequency response.
    I would now like to offer four recommendations for 
electricity policy makers. In summary, first, rely on 
competitive markets; second, focus on reliability services, not 
generation sources; third, do not be distracted by perceived 
problems; and fourth, promote transmission infrastructure. I 
will go quickly through each.
    First, rely on competitive markets--competitive markets 
enable a cost-effective division of labor among energy sources. 
Each energy source will deliver the reliability services it can 
provide best and at the lowest cost, resulting in a cost-
effective delivery of a stable grid.
    Secondly, focus on reliability services, not generation 
sources. Grid operators should seek to identify and compensate 
for reliability services and not some fuel characteristics such 
as whether a resource as onsite fuel.
    In other words, focus on the services that the power system 
needs like flexibility, disturbance ride-through capability, 
frequency in voltage support, and actual energy production in 
times of high demand and not the fuel type of the generator.
    FERC RTOs and NERC are well equipped to define the services 
needed.
    Third, do not be distracted by perceived problems. I've 
seen frequent mention of the supposed harmful effects of 
negative pricing.
    As the DOE notes in their recently released grid study, 
negative crisis ``have had almost no impact on annual average 
day-ahead or real-time wholesale electricity prices,`` and are 
also often caused by fossil or nuclear power plants.
    And fourth, promote transmission infrastructure 
development. Building a more robust transmission system is the 
single most effective tool for improving resiliency.
    A strong integrated power grid would provide the same vast 
benefits as our interstate highway system has in allowing the 
most competitive businesses to deliver their low-cost products 
to consumers.
    So, in sum, we support the objectives of maintaining 
reliability and resilience and urge that they be promoted 
through free and open markets with a focus on reliability 
services, not generation sources, and a program to promote 
transmission infrastructure development.
    Thank you very much.
    [The prepared statement of Mr. Kiernan follows:] 
    
    
    
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    Mr. Upton. Thank you.
    Next we are joined by Steve Wright, GM for Chelan Public 
Utility District on behalf of the National Hydropower 
Association.
    Welcome to you, sir.

                   STATEMENT OF STEVE WRIGHT

    Mr. Wright. Mr. Chairman, Ranking Member, thank you for the 
invitation to appear to today. My name is Steve Wright and I'm 
the general manager at Chelan County, Washington Public Utility 
District.
    Chelan has roughly 2,000 megawatts of hydropower. I'm also 
representing the National Hydropower Association.
    From 2000 to 2013, I was the administrator and chief 
executive officer of the Bonneville Power Administration, 
serving under three presidents.
    My duty today is to describe the value that hydropower 
provides supporting reliable service to our Nation's electric 
consumers.
    This should be one of the easier assignments given to any 
congressional witness, given the vast array of reliability, 
cost, and air emission benefits hydropower provides.
    It's important to understand that maintaining reliability 
involves many complex products and services. These include 
energy, peak capacity, regulation or frequency response, 
spinning and non-spinning reserve, voltage control, black start 
capability and inertia, and particularly important in a world 
increasingly reliant on variable energy resources, there is a 
need for flexible capacity.
    Many generating resources can provide multiple 
characteristics necessary for reliability. But hydropower is 
best positioned to provide them across the board.
    In life we usually have to face a trade-off between quality 
and cost. Not so with respect to hydropower. Hydropower is 
generally the least-cost resource available in the marketplace.
    Hydropower also produces zero air emissions and represents 
a least-cost path to meeting both our reliability and emissions 
national objectives.
    The key challenge for hydropower in the coming decade is 
the lack of policy attention it has received. Hydropower is, 
for the most part, taken for granted in the marketplace.
    This results in significant potential missed opportunities 
for both refurbishment and new construction. There is a need 
for a massive reinvestment in what is an aging fleet.
    Most hydropower capacity in this country was built from 
1930 to 1975. For the most part, the engineering on these 
projects was excellent and the projects are outliving design 
life.
    We are, however, already entering a period where there is a 
need to refurbish tens of thousands of megawatts of hydropower 
capacity.
    The decision whether to invest in hydropower refurbishment 
can be described simply. The cost of refurbishment is compared 
against other alternatives, taking into consideration prices 
for energy, capacity, and environmental attributes.
    In today's market, energy prices are currently quite low, 
in part due to the Federal tax policy. Capacity markets are not 
providing prices commensurate with what's necessary for 
refurbishment or, in some cases, even maintenance of existing 
plants.
    This is in part due to the difficulty of establishing 
markets and regulatory regimes for issues such as resource 
adequacy that address the specific services and actions 
necessary to maintain reliability.
    And the environmental attribute markets are not providing 
pricing commensurate with aggressive goals or emissions 
reductions.
    New hydropower resources and even many refurbishment 
projects face a challenging investment environment, given 
today's pricing. And while low prices sound good for consumers, 
it would not be if it leads to shortage, price volatility, and 
reliability problems.
    Unfortunately, I lived through the West Coast energy crisis 
when we experienced fundamental imbalance between supply and 
demand. Our policy should be developed to assure there is 
adequate supply to achieve high reliability and reduce the risk 
of extreme price excursions.
    NHA's Jeff Leahey provided testimony before the Senate 
Energy Committee that identified Federal policy that needs to 
evolve in the following ways to support hydropower.
    We need relicensing reform. The, roughly, 10 years required 
for relicensing does not compare favorably against the 
permitting requirements for other generating resources. It 
needs similar tax treatment to other zero-emission-generating 
resources and we need further support for research and 
development.
    And I would add to that list support for adequate capacity 
prices to encourage cost-effective investment. The fundamental 
problem addressed last week by the Department of Energy is 
despite best efforts in various regions, markets to this point 
have not been structured to provide adequate compensation for 
the various services necessary to assure long-term resource 
adequacy, reliability, and resiliency.
    Underlying Federal or State tax and other incentive 
policies tend to make robust market design even more difficult. 
The capacity reliability challenge will vary by region, though.
    For example, in the West, with our plethora of variable 
energy resources, our biggest challenge is providing flexible 
capacity.
    Because it is complex, it will be difficult to address in 
an expedited process or with a focus as limited as the concept 
of base load resources. But at the same time, the problem of 
price formation being inadequate to address reliability needs 
is real.
    Policies that assure adequate resource supply for 
reliability deserve the attention of policy makers.
    So in conclusion, hydropower is the Nation's premier 
generation source for reliability, cost, and emissions 
perspective.
    Due to its quiet long history and relative success, it has 
been taken for granted in Federal public policy debates. Given 
what is at stake, hydropower deserves more focus.
    Thank you for the time.
    [The prepared statement of Mr. Wright follows:]
    
    
    
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    Mr. Upton. Thank you.
    Mr. Mansour--Christopher Mansour, VP, Federal affairs, for 
Solar Energy Industries Association.
    Welcome. You need to hit that button.

                STATEMENT OF CHRISTOPHER MANSOUR

    Mr. Mansour. There we go. And members of the committee, I 
am Christopher Mansour, vice president for Federal affairs at 
the Solar Energy Industries Association. Thank you for inviting 
me to appear here before you today.
    Before I begin, just let me say that our president and CEO, 
Abby Hopper, regrets being unable to attend the committee 
today. She's at the U.S. International Trade Commission that's 
right now having its remedy hearing for the solar trade case. 
Further information on this trade case and the threat it poses 
to our industry is available in my written testimony.
    I am testifying today on behalf of SEIA's almost 1,000 
member companies and the 260,000 Americans employed in the U.S. 
solar industry. Solar is a strong driver for the American 
economy.
    In fact, one out of every 15 new jobs created in the United 
States in 2016 was a solar job. While California leads the way 
in solar jobs, States like Nevada, Florida, Arizona, Texas, and 
North Carolina each employ over 7,000 solar workers.
    2016 was also a record year for solar deployment in the 
country. We added 15 gigawatts of solar capacity, double the 
amount installed in 2015. Solar capacity in the United States 
now exceeds 47 gigawatts. Solar firms invested nearly $23 
billion in the United States in 2016.
    Solar was also the number-one source of new generating 
capacity in the United States in the last year. In the first 
quarter of 2016, our country hit an important milestone of 
installing solar panels on 1 million American homes.
    Our industry will double that number to 2 million by 2018 
and double it again to 4 million homes by the end of 2022.
    Solar is a growing part of our electricity mix, delivering 
1.4 percent of the Nation's total electrical usage. This is 
expected to grow to 4 percent by 2020.
    Solar has been and will continue to be deployed in a manner 
that adds to the viability and security of the grid.
    Regarding the Department of Energy's recent staff study on 
grid reliability, we appreciate the willingness of the 
secretary and his team--Secretary of Energy, Mr. Perry, and his 
team--to listen to our concerns with and our suggestions for 
the report.
    We believe that many of comments were reflected in the 
final product. In particular, we agree with one of the findings 
in the report that stated, quote, ``While concerns exist about 
the impact of widespread deployment of renewable energy on the 
retirement of coal and nuclear power plants, the data do not 
suggest a correlation,`` closed quote.
    Last week, the secretary sent the FERC a proposed rule to 
address grid resiliency through cost-based payment mechanisms 
for certain coal and nuclear power plants.
    The secretary cites the need to, quote, ``protect American 
people from the threat of energy outages that could result in 
the loss of traditional base load capacity,`` and specifically 
identifies the ability to provide voltage support, frequency 
services, operating reserves, and reactive powers benefits that 
such generation resources bring to the grid.
    SEIA agrees with the secretary that FERC should continue 
its important work on price formation. We also agree with the 
assertion that generators--all generators--should be fully 
compensated for the energy, capacity, and ancillary services 
that they provide to the grid.
    Where we do not agree with the secretary is that this 
rushed rulemaking is the right way to achieve those ends. FERC 
can and should define any reliability services or products that 
are missing from the marketplace in a technology-neutral 
manner.
    Healthy competition will yield the most innovative 
solutions at the lowest prices for consumers while protecting 
ratepayers from having to shoulder unreasonable and unnecessary 
additional costs for little benefit.
    In my written testimony, you'll find evidence of solar's 
contributions to grid reliability under both normal operating 
conditions and during unusual events.
    During the recent solar eclipse, grid operators accurately 
predicted diminished solar output and adjusted generation 
sources accordingly with no subsequent blackouts or brownouts.
    Solar also withstood the past month's multiple hurricanes. 
Based on what our member companies have told us, very few 
panels--solar panels were actually damaged during these storms.
    Moreover, studies by NREL and others cited in my written 
testimony consistently demonstrate that not only can our 
regional grids accommodate high penetration of solar and other 
renewable sources but that solar projects have the ability to 
provide important services to the grid such as regulation, 
voltage support, and frequency response during various 
operating modes.
    In closing, we support Federal energy policies that promote 
reliability, security, and fuel diversity. Increased 
investments in transmission will bring greater reliability and 
access to more diverse sources of generation.
    We look to FERC to ensure that well-functioning wholesale 
electric--electricity markets thrive. In parts of the country 
without RTOs and ISOs, FERC must guarantee open access and 
nondiscriminatory treatment for independent renewable 
generators.
    Finally, incentivizing significant investments in energy 
storage deployment on the transmission and distribution grids 
will increase grid reliability and promote another important 
resource to systems' operators.
    Thank you, and I look forward to your questions. Thank you, 
Mr. Chairman.
    [The prepared statement of Mr. Mansour follows:]
    
    
    
    
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    Mr. Upton. Thank you.
    Next, we are joined by Kelly Speakes-Backman, CEO of Energy 
Storage Association.
    Welcome.

               STATEMENT OF KELLY SPEAKES-BACKMAN

    Ms. Speakes-Backman. Chairman Upton, Ranking Member Rush, 
on behalf of ESA, thank you very much for your time today. I 
would like to begin my remarks by level setting our 
understanding of the terms reliability, resilience, and 
flexibility.
    Our electric system today is bound to a simple reality of 
physics. Supply must match demand at every moment everywhere. 
If it doesn't, then the result is equipment damage, service 
disruption, or blackouts.
    So what we call reliability is really the ability to 
maintain that match of supply and demand during normal 
operations, even if they are variable or unpredictable.
    What we mean by resilience is the ability to maintain 
service or restore supply during and after a disruptive 
external event. Flexibility is critical to both reliability and 
resilience to ensure uninterrupted power is delivered to 
consumers whenever and wherever they need it.
    Energy storage technologies enable energy to be generated 
at one time and saved for another time. It is pretty simple as 
that. The concept enables an enormous amount of capabilities 
for the grid, be it supplying backup power, reducing peak 
system demands, relieving stressed grid infrastructure, 
enabling higher penetrations of variable generation sources, or 
maintaining the optimal function of inflexible generation 
sources.
    These capabilities ensure that supply and demand reliably 
match during normal operations and make that balance resilient 
to a greater range of threats.
    When most people hear the words energy storage they think 
of batteries, and for good reason. Batteries are everywhere. 
They're in our phones. They're in our computers, appliances, 
our cars, and, increasingly, in our electric grid.
    There are a variety of storage technologies including 
mechanical and thermal, and each has its own performance 
characteristics and best-suited applications. But all do the 
same simple job of storing energy, effectively decoupling 
time--the element of time from supply and demand.
    For today, I'm focussing on batteries. There is 800 
megawatts of battery storage installed nationwide in--at grid 
megawatt scale in 21 States.
    Storage technologies, primarily lithium ion, are declining 
rapidly in cost, dropping by 50 percent every 3 to 4 years and 
projected to continue at this rate.
    Driven by these cost declines, the U.S. is forecasted to 
quadruple its installed storage capacity in just 5 years, 
representing $3 billion in annual sales.
    But more importantly, these sharp cost declines also mean 
that storage will get larger and perform at longer durations, 
increasing their range of applications.
    Storage is uniquely flexible compared to all other grid 
resources. Number one, it promotes the reliability and 
resilience at all levels of the grid and onsite locations.
    It could be owned by utilities, third party providers, or 
consumers for a variety of services and cost-saving 
applications--the only grid resource that can be used both as 
supply when discharging and demand when charging.
    It's capable of near instantaneous response and precise 
control, ramping to full charge or discharge in milliseconds. 
It's capable of near--sorry--a single installation can perform 
multiple functions, even interchangeably over time, and it can 
be deployed quickly at megawatt scale within six months.
    I provided several examples in my testimony that you can 
ask me questions about or what have you. But they include 
maintaining power quality, onsite power, backup power of solar 
plus storage during the recent hurricanes, locational grid 
support, demand response with chillers and water heaters, black 
start capability to enable other generators to return to normal 
operations, response to short-run grid fluctuations, avoiding 
outages from system imbalances, transmission and distribution 
system support during multiyear upgrades, contributions to 
resource adequacy meeting peak demands, and quick deployment 
for broader plant failures.
    Now, we have a lot of values that we can bring to the grid 
and with all of these capabilities you would think that storage 
would be much more prevalent in the market today.
    But I will tell you, I think it's still hindered from full 
deployment. Policy and regulations today focus on what we want 
from technologies rather than performance.
    Because of this, they can't keep pace with the innovation 
and the changing role of the consumer. We see four general 
themes to improving the performance characteristics of grid 
reliability and resilience, which can be competitively and 
cost-effectively met by storage. More details of these 
recommendations can be found in my written testimony.
    And in closing, I'll just say that energy storage is here, 
and it's growing fast. We support market-driven pursuit to 
improve reliability and resilience.
    And I thank you for your time.
    [The prepared statement of Ms. Speakes-Backman follows:]
    
    
    
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    Mr. Upton. Thank you.
    Last, we are joined by Mr. John Moore, Sustainable FERC 
Project, Energy & Transportation Program from the NRDC.
    Nice to see you.

                    STATEMENT OF JOHN MOORE

    Mr. Moore. Thank you very much, Mr. Chairman Upton, Ranking 
Member Rush, and members of the subcommittee. I appreciate the 
opportunity to testify here today.
    One thing I think I can say after listening to everyone 
else on the panel is that we all agree that reliability and 
resiliency is critical as our grid continues to transform and 
that we need to have the ability to maintain a secure system 
and then quickly recover whenever extreme weather, physical 
attacks, or cyberterrorism attack on the grid.
    I think, though, that if Hurricanes Irma and Harvey proved 
anything, it is that no resource actually is perfectly 
resilient or reliable, and actually some resources have more 
vulnerabilities than we might think.
    In point of fact, several nuclear units suffered during 
Irma and Harvey and didn't return to service until days 
afterwards. We've already heard from Mr. Kiernan.
    Saturated coal piles forced the power plant to switch over 
to natural gas, and then distribution and transmission systems 
also can create havoc with reliability and resilience as we've 
seen in Puerto Rico and parts of Florida as the grids were 
knocked offline.
    The key question--and now I'm going to turn to the DOE 
study because that's the topic of the day--the key question is 
whether massive subsidies of the type that the DOE proposes 
to--proposes for the grid would have made any of these power 
plants more reliable or resilient and better able to withstand 
natural forces.
    No. It actually might have made the problem worse by 
undermining markets and freezing out other equally reliable and 
less costly resources.
    We can achieve the same level of reliability at a lower 
cost by first defining reliability services and then deciding--
and then designing markets around those needs. I think you have 
already heard a couple of witnesses testify to that fact.
    Now, to our specific concerns about the Department of 
Energy's proposal, it would send billions of dollars each year 
to outdated technologies without any evidence that these 
payments are necessary.
    It would supplant FERC's competitive electricity markets 
with an anticompetitive command and control system that decides 
what plants open and close by direction of the Federal 
Government.
    You know, I wonder what's happened here to States' rights 
to choose their own resource--to make their own resource 
adequacy decisions.
    Illinois, for example, restructured in 1997 and made the 
decision to link to FERC's market design. Now the Department of 
Energy is telling them too bad, we are going to make your 
customers pay billions of dollars more for something that they 
don't want or need. That, to me, is resource adequacy 
masquerading as resiliency.
    Third, I am very concerned that this would politicize an 
independent agency in a way never before seen. FERC's 
independent system of competitive markets to channel customer 
dollars towards the cheapest generators able to meet customer 
needs would be replaced with a more arbitrary system marked by 
market crashes and peaks that could change with every 
administration.
    In this reliability the goal of DOE's proposal could be 
compromised as politics, not technical assessments, would 
govern payment for grid services.
    So in conclusion, if we want a truly resilient electric 
grid, moving to a low-carbon future will help us get there by 
reducing the risk of extreme weather and other disruptive 
events fueled by climate change.
    Focus on grid reliability in resiliency services and next-
generation market designs coupled with smartly planned 
transmission needed to deliver high levels of clean renewable 
energy to market, and protect States' rights to make their 
energy choices.
    Thank you.
    [The prepared statement of Mr. Moore follows:]
    
    
    
    
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    Mr. Upton. Thank you all, and now we will move to 
questions.
    I want to be relatively quick on these first two. So last 
week--Friday--DOE issued a notice of proposed rulemaking to 
FERC with a 60-day timeline. FERC then re-docketed the notice 
of proposed ruling with a 20-day deadline for initial comments. 
I would note that a typical FERC proposed rulemaking has a 180-
day deadline.
    If you were king, what would that number be for this order 
that came out Friday? And Mr. Durbin, we will start with you, 
just to----
    Mr. Durbin. Well, we joined several of the groups here and 
others around town making a motion to FERC asking for a 90-day.
    Mr. Upton. Ninety-day. Mr. Bailey?
    Mr. Bailey. Being king, I don't have a number for you, Mr. 
Chairman. I honestly don't.
    What we have said is that this needs to be done very, very 
quickly. That's all I can say to you.
    Mr. Upton. Of course. I probably should have said queen or 
king for the day. Sorry.
    Ms. Korsnick. That's OK. I am good with king.
    Mr. Upton. OK. All right.
    Ms. Korsnick. I think the most important thing is that we 
allow for the appropriate conversation to play out, and at the 
same token, as we said, there is a sense of urgency.
    So I think somewhere in the neighborhood of 60 to 90 days 
is appropriate.
    Mr. Upton. Mr. Kiernan?
    Mr. Kiernan. We support the 90-day approach, as Mr. Durbin 
mentioned. I'll also just emphasize this needs to be 
thoughtfully considered.
    Obviously, the wholesale power markets--extraordinarily 
important and complex, and there needs to be a good healthy 
thoughtful deliberative process so that we end up with a 
competitive market that works.
    We worry about some rush to judgment that might support one 
fuel source or another. That is not the right approach.
    Mr. Upton. Mr. Wright?
    Mr. Wright. NHA doesn't have an official position on number 
of days. But I think it's pretty clear, I hope, from my 
testimony that trying to figure out how you get to reliability 
requires you to provide all those different services that are 
necessary and that is a complex conversation.
    And then in addition to that, it's a regionally based 
conversation because we have different issues in different 
parts of----
    Mr. Upton. You're sounding like a politician.
    Mr. Mansour?
    Mr. Mansour. Mr. Chairman, actually, with the notice that 
we filed along with some of the other groups here, it was 90 
days for the initial comment period plus another 45 for 
responses.
    So and actually, 90 days is probably not sufficient in any 
case. This is an extremely large undertaking. It's a huge 
change in the way markets would work and FERC should take their 
time and they should hold a technical conference on this. They 
should allow for a maximum amount of public comment and input 
from a range of stakeholders.
    Ms. Speakes-Backman. I will--well, first, to answer your 
question I would say--directly I would say 90 days is--would be 
sufficient for us to be able to rush through and answer.
    But I will also--I would also like to add that especially 
based on the DOE staff report, we believe that resilience 
should really encompass much more than just fuel supply and 
so--and resilience is a--is a large issue and a large problem 
that we need to consider.
    It's a lot more complicated than simply the fuel supply, 
and for that reason we think there needs to be more time given 
to this.
    Mr. Upton. Mr. Moore?
    Mr. Moore. Sure. It probably doesn't surprise you to--for 
me to say that if I were king I'd probably put it in the trash 
can because I don't think it meets minimum standards of due 
process in the Administrative Procedure Act, along with the 
fact that other RTOs like PJM and ISO New England where many of 
these plants are located are working diligently on this now, in 
all seriousness.
    Mr. Upton. The DOE staff report found that FERC should 
expedite its efforts regarding its price formation efforts. 
Additionally, DOE has recently filed a notice of proposed 
rulemaking with FERC, as we know, directing FERC to accurately 
price generation resources necessary to maintain reliability 
and resiliency.
    Yes or no, do you support FERC implementing DOE's filed 
NLPR as written? Some of you talked about that in your 
testimony but some of you did not.
    Mr. Durbin. If it is yes or no, the answer is no. I, again, 
think that this was the--what they asked for on Friday was 
totally inconsistent with what--with the study they put out in 
August.
    Mr. Upton. Mr. Bailey?
    Mr. Bailey. Yes, sir. With a huge caveat, we are still 
looking at it. If the two answers are yes or no, I would--I 
would say yes.
    Mr. Upton. Ms. Korsnick?
    Ms. Korsnick. We think it's a good baseline but we think 
additional conversations need to be had through the rulemaking 
process.
    Mr. Upton. Mr. Kiernan?
    Mr. Kiernan. No, we do not, and I would just add an 
example. The technological advances of wind energy show that 
you want to allow the markets to compete and evolve and not 
pick one fuel source over another.
    Mr. Upton. Mr. Wright?
    Mr. Wright. No on the process. Yes on the substance of it's 
a good idea to address price formation.
    Mr. Upton. Mr. Mansour.
    Mr. Mansour. It would have to be no on the process and no 
on the NOPR itself. Let the markets run.
    Mr. Upton. Ms. Speakes?
    Ms. Speakes-Backman. No as written.
    Mr. Upton. Mr. Moore?
    Mr. Moore. I think majority wins. No.
    Mr. Upton. OK. My time is expired.
    I yield to the ranking member of the subcommittee, my 
friend, Mr. Rush.
    Mr. Rush. I want to thank you, Mr. Chairman.
    Mr. Moore, in your written testimony, you state that the 
Nation's power grid to continue to transform towards a low-
carbon future that will improve reliability and resilience by 
helping to prevent and reduce outages caused by the increase in 
extreme weather and other disruptions--events.
    You also say that efforts to ensure reliability and 
resilience during extreme weather should focus largely on the 
distribution system rather than on any particular type of 
generation system.
    Can you briefly discuss some of the issues learned this 
historic hurricane season regarding reliability and resilience 
issues?
    Also, can you explain why policymakers should be looking at 
low-carbon resources and focus on distribution rather than 
sources of generation?
    Mr. Moore. Certainly. First of all, distribution system 
failures represent far and away the highest number of outages 
that cause blackouts in the country.
    There is no--absolutely positively no question about that, 
and that if you can't deliver power from any resource to the 
customer it's just as good as no power at all. So that's number 
one.
    And number two, as I implied, reducing the carbon--reducing 
carbon pollution reduces the risk of the high-intensity types 
of events that we have seen like the hurricanes last year.
    Mr. Rush. Ms. Speakes-Backman, yesterday Bloomberg reported 
that Sonnen, a generation--a German, rather, energy storage 
company is planning to install 15 micro grids in Puerto Rico in 
order to provide electricity to emergency relief centers.
    Additionally, it is reported that Tesla, Incorporated will 
be sending hundreds of its overall power wall battery systems, 
and Sonoma, Puerto Rico's largest rooftop solar provider, plans 
to install batteries to complement its system. We have been 
told that it will take months to fully restore the island's 
electricity grid.
    But in the meantime, can you discuss how we might utilize 
these small CO micro grids systems which can be installed 
quickly to restore power to a few buildings at a time that will 
help power hospitals, fire stations, relief shelters, and other 
emergency shelters during these most difficult times?
    Ms. Speakes-Backman. Thank you, sir, for the question, and 
I believe, sir, that you have the answer. You gave it in your 
question and I appreciate that.
    Solar plus storage and storage plus many resources, as a 
matter of fact, depending on the location, especially if you've 
got distributed energy resources, can be a holdover, if you 
will, while you rebuild the grid to a more resilient phase.
    And so this is why we have been cooperating and 
collaborating with SEIA. Just recently, on Friday and then on 
Monday, both SEIA and the Energy Storage Association announced 
a joint effort to request members supply and donate their 
resources, donate their expertise, and donate their dollars to 
support the efforts in Puerto Rico, to build micro grids of 
solar and storage to get us through this difficult time.
    Mr. Rush. Do you think that the Department of Energy is--
could do more in terms of helping to encourage and assist in 
these micro grid efforts?
    Ms. Speakes-Backman. Sir, I think that the Department of 
Energy has continued to serve as an excellent resource for us 
in research and in working to commercialize batteries for 
storage.
    I think, certainly, there are always things that we can do 
more to help--to help understand the applications that can be 
made and help to extend the duration periods of storage.
    Mr. Rush. So do you also feel as though these micro grid 
systems are something that we should seriously consider in 
terms of the future?
    Ms. Speakes-Backman. Absolutely. It meets many of the 
requirements that were laid out in the DOE staff report for 
resilience beyond fuel--beyond fuel supply.
    So the ability not only to withstand external forces, 
whether they be weather or other external forces of calamitous 
events but also with respect to bringing the grid back on and 
to work within small communities to become islands of refuge, 
if you will, to be able to supply consumers with the 
refrigeration for their medicines, for their food, to be able 
to charge your batteries for your phone and your appliances and 
your computer to communicate with loved ones.
    It's a very important aspect of reliability and resilience 
both.
    Mr. Rush. Mr. Chairman, I yield back.
    Mr. Upton. Thank you.
    The Chair would recognize for 5 minutes the gentleman from 
West Virginia, Mr. McKinley.
    Mr. McKinley. Thank you, Mr. Chairman. Ms. Speakes, let me 
just start with you. Thank you for making the definition of 
reliability. I think so many on the panel have played around 
with that word.
    They use it to fit their definition. Yours was very 
specific and I appreciate that. Others used it for their own 
purpose in their definition.
    Mr. Wright, I got to you. My concern is shared with you and 
that is if we--and as we proceed with the tax reform, one of 
the concerns is that the tax credit for hydroelectricity at 1.8 
cents--I think it goes up to nearly three quarters of a million 
dollars per plant to be able to subsidize that--I am concerned 
that that type of tax credit could be lost with that.
    So we are going to be spending some time on research and 
make sure that we have those reliability on that. So thank you 
for bringing that as your point, because I've seen several in 
West Virginia located there.
    Third is on gas reliability. I am, obviously, sitting in 
the center of the Utica-Marcellus. We are big proponents of it. 
There are three power plants that are considered in West 
Virginia to be open.
    But my concern has been, and we have been talking again 
about this tax credit, is how we can do more research into 
making sure that the gas is the reliable source that Ms. 
Speakes was talking about because we have had too many outages 
with gas.
    We want it to be--I can see the tremendous future using gas 
as a source. But when we see that we have had nearly--from 2014 
to the first quarter of this year, there were 4,000 outages 
with gas because of the lack of supply--4,000 times that 
they've had to shut down, not the least of which came out 
through the polar vortex.
    But I think we can--with research and the R&D we can 
salvage a lot more of that and bring it more in line. Because 
in my frame of mind, where I am coming from, nuclear is the 
most dependable, and I would say gas--excuse me, coal would be 
the next and then we would get into some of the others--fall 
down through that.
    I want to bring gas up to a much more dependable source. 
But we have got to do the research to make sure that we can get 
that so that we don't have these outages.
    And the last I want to turn to is Mr. Bailey. We had--Gerry 
Cauley was here, the CEO of NERC, and he testified here before 
one of our hearings that, quote, ``Markets should review the 
economic and market factors driving base load generation into 
early retirement.``
    Now, that, I think, is the crux of much of this. Are we 
moving too fast into this arena when we've--about national 
security when we don't have power?
    We can all talk about--we have all got our talking points 
about what happened during the polar vortex and we saw the 
numbers of plants shut down. Twenty-two percent of PJM shut 
down that.
    So back on what NERC has been challenged--what FERC has 
been challenged to do following along what NERC has talked 
about, is this--if we are going to be serious in Congress about 
fuel security, don't you think this concept that has been 
proposed by DOE and over to FERC--is that a reasonable approach 
that they should be taking?
    Mr. Bailey. Mr. McKinley, so right now we are facing the 
prospect or likelihood of another 40,000 megawatts of coal 
retirements over the near horizon.
    We have had 60,000 in the past. We face another 40,000. We 
agree with DOE that the markets are distorted. Now, there are a 
couple things that could be done and they are not mutually 
exclusive.
    One, you could take the approach of DOE to address merchant 
generation. That's about 60,000-something megawatts as a coal 
fleet that would be affected--we are guessing right now--an 
educated guess--that could benefit from this.
    There is a large part of the coal fleet that's not covered 
that serves wholesale electricity markets. It's not merchant 
generation.
    So we have, in effect--I am trying to simplify this--we 
have a DOE rule that helps merchant coal and nuclear. There are 
other market reforms that could be undertaken to help those 
other fuel-secure coal-fired generating units.
    The problem we have and the reason DOE set an aggressive 
schedule--and I'll come back to my non-answer to Chairman Upton 
earlier--is that we have talked to a couple of the grid 
operators that have the most coal-fired generation in their 
regions and we simply asked them how long it would take them to 
undertake market reforms--for market reforms that would help 
base load generation.
    One of them told us 2 years. The other one told us 3 years. 
The one who told us 2 years said no, the guy who said 3 years 
is probably right.
    So we do need to have a sense of urgency about this. Ms. 
Korsnick spoke to it, and I would say the same thing also.
    Mr. McKinley. Yield back.
    Mr. Olson [presiding]. Gentleman's time has expired.
    The Chair now calls upon the gentleman from Saratoga 
Springs, New York, Mr. Tonko, for 5 minutes.
    Mr. Tonko. Thank you, Mr. Chair.
    Thank you to the witnesses also for the insightful 
testimony this afternoon.
    Mr. Moore, your testimony noted that electrical 
distribution systems are responsible for over 90 percent of 
total electric power interruptions.
    You're sharing the panel with a number of generation 
resources. Rather than picking winners and losers in 
generation, can more be done to harden distribution and 
transmission infrastructure?
    Mr. Moore. I think you--yes, I think utilities, especially 
in New York in the wake of Sandy and starting in Florida a few 
years ago started to do exactly that kind of hardening and 
those are the kinds of utility-focused actions that can be done 
outside of market design.
    PJM actually developed some generation-specific, I would 
call them, hardening or resilience standards after the polar 
vortex that weren't embedded in the markets though had some 
common sense ideas like making sure your burners worked in the 
coal--for the gas plants and things like that--winter 
preparation.
    So those are the kinds of things that I think customers on 
the ground would actually, you know, see fast and immediate 
benefits and would--actually could be done at relatively low 
cost. I think we can't forget the consumer in all this.
    What we want to make sure is that we are not gold-plating 
the system in different ways. But we--I think some--I think 
utilities do recognize that our distribution system needs, you 
know, continuous improvement.
    Mr. Tonko. Thank you.
    And Mr. Kiernan and Mr. Mansour, do you agree that there 
are reliability benefits that can be gained through additional 
transmission estimates?
    Mr. Kiernan. I think that's a great question. Yes, 
transmission absolutely will improve reliability on the grid, 
resilience on the grid and, frankly, I think supports, you 
know, virtually all of our sources of electricity.
    So it just makes sense to figure out ways to enhance and 
strengthen and extend our transmission grid for the benefits of 
the grid and to benefit, frankly, for us to be able to compete 
in providing low-cost reliable resilient electricity.
    Mr. Mansour. We agree, Mr. Tonko. Absolutely. The more 
transmission--reliable transmission that you have in place 
gives you a range of possibilities to reel in power from 
various different sources and uses the diversity of fuel that 
we already have on the grid to the greatest extent possible.
    And to answer to your other question on the distribution 
grid, we feel distributed generation from solar on rooftops is, 
obviously, a very positive benefit and provides a lot of that 
hardening, and when you marry it with storage either in a 
person's home or in their hardware store or in their Wal-Mart, 
it certainly does increase the ability of the distribution grid 
to maintain that kind of services.
    Mr. Tonko. Thank you. The R Street Institute's response to 
last week's DOE notice of proposed rulemaking seems to agree 
with that sentiment. They say, and I quote, ``A resiliency 
initiative should prioritize mitigating transmission and 
distribution damage and accelerating restoration.``
    Mr. Moore, R Street also suggests that DOE's proposal seeks 
to take emergency action on, at best, a low to medium level 
resiliency issue. Do you agree?
    Mr. Moore. I think that it is nowhere near the crisis that 
some parties have portrayed it to be. So yes, I generally agree 
that there are other things we can do like that transmission 
integration that would go a lot further towards improving the 
resiliency grid.
    Mr. Tonko. Is DOE's proposed rule likely to raise cost to 
consumers without commensurate resiliency benefits?
    Mr. Moore. Sure, so far as I can tell, because it's very 
hard to predict the full extent of the costs, but our initial 
calculations say that at least $15 billion a year just from the 
operating and maintenance costs reflected in the units that 
could be covered by the rule.
    That doesn't include the higher rates of return and--return 
on equity, excuse me--and other things and the additional 
higher market prices that we would have.
    So I think a lot of work is going to be gone--is going to 
be put into figuring exactly how bad this would be for the 
consumer.
    Mr. Tonko. Thank you. And much of the discussion today has 
focused on reliability and resiliency. But I want to bring up 
another important consideration.
    I believe that a modernized grid must also be flexible. 
Flexibility allows for rapid response and smooth integration of 
variable resources.
    So Mr. Durbin and Ms. Speakes-Backman, can you explain why 
we should not be overlooking flexibility and how does gas 
generation and storage's flexibility reinforce grid reliability 
and resiliency?
    Mr. Durbin. Mr. Tonko, if I could, I think--because I laid 
it out in the written testimony as well--it's one of the 
higher-valued attributes that natural gas brings to the table 
here and the flexibility to be able to provide that, that quick 
ramping flexibility, being able to follow a load, being able--
you know, as variable sources come in, on and off of the grid, 
you know, a natural gas plant can be up and running in minutes 
rather than in hours or days.
    So, again, I think you can't overlook the need for 
flexibility as the grid is now integrating additional types of 
generation sources and technology.
    Mr. Tonko. Ms. Speakes-Backman, please.
    Ms. Speakes-Backman. Yes. On the--on the side of 
resilience, certainly, there is frequency response. There is 
micro grid islanding. There is black start service so that the 
centralized generation can come up.
    And storage operates from zero to 100 percent in 
milliseconds and so it's able not only to provide resilience in 
the--in times of major outages but it's also able to ride 
through regular normal operations of frequency regulation.
    The important thing to note, though, is there is multiple 
attributes to resiliency. So I could list those out--they are 
in my testimony--but it's important that they all be accounted 
for, not just one part of resiliency because, for example, 
let's say we do have all the 90-day--90-day fuel source on 
hand.
    If transmission and distribution is unavailable that's not 
helpful. You can't get the power to people, and so you need a 
more distributed resource in that time.
    The whole point, frankly, of resiliency is to plan for the 
unexpected. And so you have to have multiple solutions 
available and online and ready to react regardless of what you 
think the solution--what you think the problem is going to be.
    Mr. Tonko. Thank you.
    Mr. Chair, thank you for generous time.
    Mr. Olson. Gentleman's time is expired.
    The Chair now calls upon the chairman of the full 
committee, Mr. Walden, for 5 minutes.
    Mr. Walden. Thank you very much, Mr. Chairman.
    I want to welcome our panelists. Mr. Wright, good to see 
you again in this capacity.
    Last week, I explored the panel of witness--I asked them 
whether the wholesale power markets were working to respond to 
and engage changes in consumer behavior driven by new 
technologies and other lower cost generation options.
    And the answer from most of the panel was to embrace 
competitive markets and to ensure that the markets do not have 
a technology bias.
    So this week, I want to ask the same question of this 
distinguished panel. I understand the DOE issued an order on 
Friday on reliability and resiliency that is certainly helping 
to get the conversation started and one which we will be 
actively overseeing.
    But I also understand how complicated these issues are and 
we shouldn't consider any one issue in a vacuum. There are 
market forces, economics at play as well as consumer 
preferences, new technology, jobs, subsidies, regulations 
affecting environmental externalities and carbon and regionally 
preferred resources.
    So is reliability the only attribute not getting properly 
valued in these markets and, hypothetically--let me underscore, 
hypothetically, if we were able to design the wholesale 
electricity markets fresh from a blank sheet of paper, what 
would you recommend?
    Who would like to start that? And then I just want to go 
down the panel. It's the only question I have for you today. 
Who wants to tackle that first? I am going to get to all of you 
so----
    Mr. Durbin. Mr. Walden, I'll go ahead and start.
    Mr. Walden. Thank you.
    Mr. Durbin. Again, with a clean sheet of paper, I think we 
still need to look at what is it that's brought the value of 
the grid we have today.
    Mr. Walden. Right.
    Mr. Durbin. I think we do have a very--an effective and 
efficient grid certainly in need of improvement. But I think we 
can't lose sight of the fact that we certainly look in the 
last, you know, 8 to 10 years--some of the benefits that we are 
really seeing, certainly, from the consumer price perspective.
    So consumer benefits or the flexibility of attributes that 
we just talked about before, that's being driven by market 
forces. You know, I understand that, you know, natural gas----
    Mr. Walden. We also have State regulation coming in. You've 
got subsidies involved in the markets. I am not saying that any 
of that's bad but----
    Mr. Durbin. No question. No, I am not----
    Mr. Walden [continuing]. Things are changing.
    Mr. Durbin. I am not denying that there are--there are 
other forces that I think those are some areas we need--we need 
to look at and see are they distorting, you know, the market.
    But I think, you know, certainly from a natural gas 
perspective the fact that we've had market forces allow natural 
gas----
    Mr. Walden. Right. Enormous change.
    Mr. Durbin [continuing]. To play a much bigger part, and 
wholesale prices dropped by 50 percent in PJM. So I think more 
than anything else that's got to be the focus to allow for 
market-driven fuel neutral policies, going forward.
    Mr. Walden. All right. I've only got 2 minutes for all of 
you to respond, so to the extent you can. And if you have other 
thoughts past this, please get them to me.
    Yes, sir.
    Mr. Kiernan. I'll jump in. Tom Kiernan, American Wind 
Energy--the process I would suggest, first, trust the experts--
FERC and NERC and the RTOs--to establish the specific 
reliability and resilient services as opposed to other bodies 
or DOE saying, here's the fuel source we prefer.
    Let the experts pick the exact services and then allow us 
to compete for it, and the reason being, obviously, 
technologies are moving forward. Each of our technologies are 
advancing, and wind a number of years ago might not have been 
able to compete well for some technology, but right now, I 
think, we are the best----
    Mr. Walden. Very competitive.
    Mr. Kiernan [continuing]. At disturbance ride-through 
capability because of our power electronics. And you want the 
market to be rewarded for those innovations and advancements. 
So trust the experts and allow competition.
    Mr. Walden. Good. And I know when Mr. Wright was in a 
previous position we talked about the ebbs and flows of wind 
energy in the Northwest, where a thousand megawatts within an 
hour could come and go, and so then how do you balance that out 
and make the grid work.
    So we heard last week battery storage didn't count in one 
RTO because it didn't have a flywheel. I mean, so we've got 
some legacy regulation to deal with.
    Mr. Wright, do you have a comment on how we might do this--
--
    Mr. Wright. Specifically, to your question, first of all, I 
want to strongly endorse technology neutral. I think that is 
the key.
    And then the question is what are the attributes that we 
want out of our power system. If we want reliability then we 
would go through the characteristics that are necessary--the 
services and products that are necessary in order to produce 
reliability and then let's make sure that we are providing 
value associated with that.
    If we want environmental attributes out of our power system 
then we should be clear about what are those environmental 
attributes that we want out of it and then make sure that we 
have incentives associated with that.
    That clarity around the outcome that we want would be the 
most useful thing that we could do in terms of better defining 
what will produce the outcome that consumers want.
    Ms. Speakes-Backman. Hi. I would just like to underscore 
what Mr. Wright said in that if we focus on the performance 
rather than the technology I think we can get there a little 
bit faster.
    The FERC is--has a couple of rulemakings that are working 
toward looking at resilience. States are doing some work but 
I'll tell you, there is a big--there is a big difference 
between when we talk about the difference between reliability 
and resilience.
    Because at the State level, as a former regulator I can 
tell you we had lots of cost-effectiveness training and cost-
effectiveness tests to ensure reliability but not on the 
resilience. There were always the out clauses for those major 
storms.
    Well, these major storms are happening more--more often and 
with more severity. And the tools aren't necessarily there at 
the State level to be able to value that.
    Mr. Walden. Yes, sir.
    Mr. Moore. Sure. Yes, technology neutral, performance 
focused--I think FERC has done a very good job of recognizing 
regional variations and so that needs to continue to occur.
    Clearly, I think energy markets have to--have to move 
beyond just fuel-based pricing and what we are doing now, I 
think, you know, focus more on congestion pricing as a bigger 
component of this and move away from a one-size-fits-all 
capacity market design.
    I am really concerned about the money we are putting into 
capacity markets. Do we need to put all that money into that 
market? Can we do something else?
    And last, just aggregate--smaller resources need to be able 
to participate in the market now. We have many more resources. 
It doesn't do anyone any good if they've got a nest thermostat 
or a smart meter if they can't access the markets shaping the 
price for the day.
    Mr. Walden. All right. I know I am way over my time, but 
this is an important topic, obviously, for the committee. The 
chairman, the vice chairman, the staff have done a great job, I 
think, teeing up these issues as we look at the future of the 
electricity grid. And so we very much value your input.
    And with that, Mr. Chairman, I yield back.
    Mr. Olson. The chairman of the full committee is never out 
of time. You always yield back. [Laughter.]
    Chairman calls----
    Mr. Walden. I've come a long way since I was Mr. Wright's 
driver, but we will explain that later.
    Mr. Olson. The Chair now calls upon the gentleman from 
Iowa, Mr. Loebsack, for 5 minutes.
    Mr. Loebsack. Thank you, Mr. Chair.
    I am very proud of my State for a lot of reasons, but Mr. 
Kiernan knows particularly wind, but I'll get to that in a 
second.
    You know, actually Iowa is quite varied in terms of the 
sources of power that we have. We saw built not that long ago a 
natural gas plant. We, of course, have a lot of coal. We are 
exploding on the solar front.
    I think we have tremendous potential for hydropower, 
especially in small streams and small rivers if we can get 
there at some point. I think they have tremendous potential.
    But, clearly, I am very proud of Iowa's wind energy story 
and its place as a national leader in wind energy production.
    And Mr. Kiernan knows it very well--he mentioned Iowa and 
Kansas a little bit earlier. My wife and I actually took a 
little bit of time away, about a week in August, and we drove 
up through northwest Iowa.
    I can see some of the old lattice-style turbines. They are 
not very pretty, actually, compared to the newer ones. But and 
then we went to South Dakota and North Dakota and just saw the 
tremendous growth in wind energy up in those two States as 
well.
    I have been fighting for a strong wind energy sector in my 
State since I've been in Congress. I think it's--not, again, to 
take away from the other sources of energy but, you know, it's 
cost effective.
    It's been--it's been a good cost-effective source of energy 
in Iowa and creates great jobs, continues to--we continue to 
work for job growth in this sector. I just think it's real 
important.
    We are upwards of 36, 37 percent of our electricity in Iowa 
generated by wind. Again, we are growing in these other--in 
solar in particular as well.
    Well, I really only have one or two questions at most, and 
for Mr. Kiernan, when it comes to reliability, we have seen 
this tremendous growth in Iowa.
    Have there been particular problems in Iowa when it comes 
to reliability and other States as well where we have seen this 
tremendous growth in wind energy?
    Mr. Kiernan. Well, thank you for the question. But first, 
also thank you for your leadership. You've been an 
extraordinary champion out there for all different sources but 
very much for wind and we appreciate that.
    Mr. Loebsack. By the way, I forgot--we have a nuclear power 
plant at Palo too. I forgot about that.
    Ms. Korsnick.: Thank you for that honorable mention.
    Mr. Loebsack. Sorry about that. It's not my district 
anymore. That's why I overlooked it. I apologize.
    Mr. Kiernan. But as we are 36 and well on the way to 40 
percent in Iowa, there have not been any reliability concerns. 
And as I mentioned earlier with our newer technology that a lot 
of folks may not be aware of, we are able to provide most of 
the essential reliability services. So we have not had a 
problem on that front at all and I think the grid operators 
speak to that on a regular basis and I believe Mr. Cauley from 
NERC last week spoke to that as well. So wind is a very 
reliable part of a resilient grid and we are quite proud of 
that.
    Mr. Loebsack. And that was my next question about the grid 
operators, and there hasn't been any particular issues at this 
point?
    Mr. Kiernan. Not that I am aware of, and actually grid 
operators, whether it's PJM, SPP, but also DOE's NREL have done 
studies showing that--NREL came out with a study that we could 
do well over 50 percent renewable without any issues.
    PJM had 35 percent wind energy in one study and then 
extended it up to 80 percent in another study. So all these 
studies are showing that we keep blowing past these artificial 
ceilings people think for wind or wind and solar.
    We are just--because of the innovation of America, we are 
just blowing past any perceived barriers and doing it reliably 
and, frankly, cost effectively for consumers.
    As you mentioned, in Iowa and other States, the costs have 
been flat or coming down as we have added cost-effective wind 
energy on the grid.
    Mr. Loebsack. Great. That's all I have. Thank you very 
much, and I will yield back the remainder of my time. Thank 
you, Mr. Chair.
    Mr. Olson. Gentleman yields back. The Chair now calls upon 
the gentleman from Illinois, Mr. Shimkus, for 5 minutes.
    Mr. Shimkus. Thank you, Mr. Chairman. Thanks for you all 
being here.
    So I am listening and the question is why are we here--
what's brought us to this time. Everyrone has mentioned 
reliability, resilience, flexibility as a key component.
    But we have also had a tremendously changing market from 
not just historically of regional monopolies in States. Mr. 
Moore, you mentioned Illinois. We went to competition.
    But we also had a FERC that really allowed a changing of 
the transmission and the buying and selling across State lines 
without a change in the actual statutory language by the 
Federal Power Act.
    Everybody would agree with that, right? I mean, we had a 
hearing last year with--talking about this and the Federal 
Power Act was so kind of vague it just--and some people were 
applauding that because it allowed this transformation that 
really did not have the guidelines of a legislative input.
    And so now we have new entrants into the market, some--and 
they get more competitive but some were incentivized by public 
policy also, and we are trying to struggle with this new entity 
that we have and I think public policy folks--we just have to 
decide how do we keep focused as some of the commentaries were, 
what is our goals and our objectives in the future.
    But I don't think--I don't think we should dismiss and in 
essence maybe penalize a major generation that helped get us 
here.
    When I first became a Member of Congress we had three main 
generation capacities. We had coal, we had nuclear, and we had 
hydro. Natural gas was too high and wind and solar wasn't--
wasn't there yet. Wasn't in the competitive world.
    So now, again, I think our biggest challenge is making a 
definition without--everybody knows where I stand. A major 
nuclear power State. We do have some wind. We have big coal 
generation.
    But I find even in this discussion between the DOE's 
language, PJM's language, NERC language is a difference in what 
I used to understand is the term of base load, because my base 
load debate came out of regional monopolies serving at set area 
and what was the demand and who could provide that.
    Now base load has some different definitions based upon who 
you're asking. So whether that's stacked generation or--so I am 
going to do what Chairman Walden did, go down the table real 
quick.
    What is your definition of base load or is there a 
definition of base load and should there be a definition of 
base load?
    Mr. Durbin.
    Mr. Durbin. I would suggest that the traditional definition 
of base load is no longer relevant. I think base load--you 
know, the traditional base load plants that we have there are--
continue and will continue to provide an important source to 
the electric grid.
    But I think the grid has now moved to a place because we 
have now got such advances in technology, that we have got 
these more flexible, you know, sources there. We have got--got 
the, you know, both from a performance, cost, and, you know----
    Mr. Shimkus. Let's go quickly. So I want to get down. So--
--
    Mr. Durbin. So my answer is I don't think the traditional 
definition--it no longer--we have got to stay focused on the 
attributes that are necessary to make the grid reliable.
    Mr. Shimkus. Mr. Bailey?
    Mr. Bailey. You know, the material I've read recently says, 
you know, the term base load is outmoded. Maybe the term is. 
Maybe it isn't.
    To me, the discussion now is, you know, about reliability, 
resilience, flexibility, that sort of thing. So I've personally 
sort of moved away from it. But it's a good----
    Mr. Shimkus. Let me just--we won't ever get through 
everybody so let me just say----
    Ms. Korsnick. I am ready. I am ready.
    Mr. Shimkus [continuing]. In a regional transmission 
organization they had--they still have a base load that they 
have to, in essence, the demand that they have to meet. Is that 
true?
    Ms. Korsnick. That's true.
    Mr. Shimkus. An RTO?
    Ms. Korsnick. Yes.
    Mr. Shimkus. And do we or should--and that was from--Maria 
answered that--and should we--is there--part of the elephant in 
the room is do you incentivize those who can provide big 
percentages of a base load in an RTO? Maria.
    Ms. Korsnick. Well, I go back to your first question on 
what's base load and let's say, you know, you can be there 7 
days a week, 24 hours a day. Somebody needs to be there all the 
time and I think there is a, you know, a value for that base 
load power.
    Mr. Shimkus. That's part of the discussion and debate and I 
am over my time. I've probably put more questions than I 
probably should have in the whole mix but that's what the 
hearing is for.
    Thank you. I yield back.
    Mr. Olson. Thank you.
    The Chair now calls upon the gentleman from California, Mr. 
McNerney, for 5 minutes.
    Mr. McNerney. Well, I thank the gentleman from Texas, and I 
want to thank the witnesses.
    You know, it's interesting the different perspectives that 
you all are bringing to this. But I think one thing that was in 
common was that you all felt like the real solution is in true 
valuation of the different sources of power.
    And I am wondering how would we go about achieving a true 
valuation. I know we'd want to have metrics defining resiliency 
that would work.
    Mr. Moore, could you take a crack at that?
    Mr. Moore. Sure. FERC has already, you know, started down 
this road by creating technology-neutral markets for frequency 
response, inertia services, voltage support, and things like 
that--the whole range of ancillary services.
    So there is already a track record. I think the work to be 
done is on what additional reliability or resiliency metrics we 
might need to do.
    So I think there is a lot--there is more work to be done. I 
know that we are already transforming the grid in some places 
more than other in this country, you know, and doing fairly 
well.
    So I think as new resources come into the market like 
energy storage, let's look at if there are barriers, as we have 
already heard, that might exist in some markets.
    I can just say that I have not heard one RTO, for example, 
say that we need a base load unit to meet reliability and 
resiliency needs of the future.
    Mr. McNerney. So it does require some Federal involvement 
then to get there?
    Mr. Moore. I think--I think FERC and the RTOs are looking 
at this, yes.
    Mr. McNerney. So if that were to come about, would the 
increased penetration of intermittent renewables cause 
reliability problems?
    You can go ahead, Mr. Kiernan.
    Mr. Kiernan. If I can jump in. No. I mean, we have got wind 
and solar that are reliably being added to the grid. We do 
think base load is kind of an older concept but I will say some 
grid operators refer to wind as the new base load.
    Base load is often--it used to be referred to as the lowest 
cost out there and, frankly, in many parts of the regions or 
the country, on an unsubsidized basis wind is the lowest cost 
source of new generation. So that's a way a number of folks are 
thinking about wind. It's just affordable.
     Mr. Mansour. I would just use the example of California. 
Yesterday at noon, California got 45 percent of its electricity 
from renewable sources.
    Now, that includes solar, wind, who are intermittent, but 
then some others who are not like geothermal and some others. 
But California, as you know, serves the sixth largest GDP in 
the world.
    Mr. McNerney. Well, I mean, that's the thing. The Nation 
has different characteristics and I think all of the different 
sorts of generation will be more preferable in different 
regions.
    So, I mean, there is tremendous new technologies and 
entrepreneurs that are entering the market. I hear about them 
all the time on the Grid Innovation Caucus. Mr. Latta and I are 
cochairs of that caucus, by the way.
    How will this impact the reliability of resilience and 
flexibility--this new technology and the new entrepreneurs that 
we are hearing from?
    Mr. Moore? You're kind of the neutral--you're the only one 
that's really neutral here today.
    Mr. Moore. I'm trying to be as neutral as possible.
    Mr. McNerney. As possible.
    Mr. Moore. No, I think that innovation really is a driving 
force here, as you said, and that, you know, FERC's standard is 
just and reasonable rates without undue discrimination.
    As someone has already said, it's a pretty general 
principle but it's been foundational and really important and 
it gives FERC and the RTOs the flexibility to change market 
rules to strike down barriers to new entry and that--and if 
they do so in a way that those resources and those new services 
can meet grid needs more affordably and cheaply, then so be it. 
That's what's beautiful about the FERC market design.
    Mr. McNerney. Would it be a good idea for Federal policies 
to encourage deployment of the new technologies.
    Mr. Moore. I think--I think we strongly encourage research 
and development in that area along with next-generation market 
designs.
    I think NREL and the labs have done terrific work on 
exactly that kind of work in the past and I think to maintain 
our Nation's, you know, leading role in the next-generation 
modernized grid we need to keep the foot on the accelerator on 
those initiatives.
    Mr. McNerney. One of the technologies that I'd like to see 
a little more is carbon sequestration.
    Mr. Bailey, could you address where we are, what the future 
looks like in terms of carbon sequestration?
    Mr. Bailey. Trying to think of a simple answer to this. You 
know, carbon capture sequestration is still under development. 
It is--it is still very important. The U.S. will probably need 
it at some point in time. The rest of the world, certainly, is 
going to need it longer term.
    Obviously, we are going to continue work on fossil fuels. 
The last time I looked at the figures on carbon capture and 
sequestration was 2 or 3 years ago, and everyone knows that it 
is prohibitively expensive. We hope it will not be.
    A new coal unit, for example, would be somewhere in the 
range of $2 billion, and adding carbon sequestration and 
storage to one, this is--this is probably badly out of date but 
it'll give you sort of a scale of magnitude--it was about 
another billion.
    Now, that suggested we had a lot more work to do on carbon 
capture and sequestration.
    Mr. McNerney. Yes. I just want to finish by saying to my 
Republican colleagues please embrace carbon sequestration for 
your own good--for your own districts' goods.
    With that I yield back.
    Mr. Olson. Gentleman yields back.
    The Chair now sees the gentleman from Michigan showed up. 
The Chair calls upon Mr. Walberg for 5 minutes.
    Mr. Walberg. It's called--thank you, Mr. Chairman--it's 
called Michigan sequestration here.
    Thanks to the panel for being here. It's important to 
continuation of the issue we look at for energy.
    Mr. Wright, you may or may not know, but we have a fairly 
major pumped hydro storage facility in Michigan--in western 
Michigan, connected to CMS Energy from my district.
    Interesting process for me to comprehend. How are pumped 
hydro storage facilities helping integrate intermittent forms 
of renewable energy into the grid?
    Mr. Wright. Mr. Walberg, I am familiar with that. I am 
actually a graduate of Central Michigan University and 
Farmington Hills Harrison High School. So from your area.
    Mr. Walberg. Hey.
    Mr. Wright. The pump storage makes huge contribution 
because what we are trying to do--there is really radical 
change happening to the operation of the electric power system 
today and we shouldn't underestimate the impacts of that 
change.
    We can deal with those impacts if we have time, money, and 
foresight, and one of the ways that we deal with that is 
through finding ways to be able to take energy from times when 
it is being produced and it doesn't produce highest value for 
consumers and move it into periods when it does.
    Pumped storage creates that capability to be able to move 
the energy in a time when it creates highest value.
    Mr. Walberg. I've been interested to watch that as I've 
learned more about that and absolutely correct, it is a way of 
in my mind, of producing something that would be produced 
naturally at many places with hydropower but using it in a way 
that makes sense to add to that as well and be creative in its 
usage. So thank you.
    Ms. Korsnick, can you explain how onsite fuel contributes 
to the reliability of the electric grid?
    Ms. Korsnick. Yes, certainly. For a nuclear plant, for 
example, we put all the fuel that we need for 18 to 24 months 
in the--in the reactor core. So we are not depending on any 
sort of fuel delivery.
    And so you can just imagine through what we just mentioned, 
on some of the recent hurricanes or any sort of catastrophic 
event you're assured that your fuel is there ready to go.
    In the case of a nuclear reactor it's already in that core 
ready to produce the much-needed power any time that it's 
needed.
    Mr. Walberg. I think hardened is a good word that we need 
to remember relative to nuclear power. Nothing is hardened 
against everything, I suppose, but it's significantly hardened 
when we think about nuclear and I think of our plant, DTE Fermi 
plant sitting on Lake Erie. Fortunately, no tsunamis do we 
expect there.
    But the hardening that's gone on is encouraging, plus, as 
you've talked about, the ability to store the necessary fuel to 
have the power.
    Go and talk to us about nuclear power support of voltage 
control. How does it do that and, significantly, what do we see 
there?
    Ms. Korsnick. Certainly. I can actually reflect on my times 
as an operator in the control room at a nuclear plant and, you 
know, you'd get a call from the----
    Mr. Walberg. I wondered why you were glowing. [Laughter.]
    Bad joke. Bad joke.
    Ms. Korsnick. You'd get a call from the transmission 
operator, and just based on the fact that the power plant 
produces the power that it does, you have the ability to adjust 
voltage in support of the grid and you also can adjust what's 
called reactive power in support of the grid.
    And so, you know, this is as a result of the size of the 
power plant and one of the attributes, quite frankly, that 
nuclear brings to the grid is these ancillary services.
    Mr. Walberg. Thank you.
    Mr. Chairman, I yield back.
    Mr. Olson. The gentleman yields back.
    The Chair calls upon the gentleman from Texas, Mr. Green, 
for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman, and I want to thank 
both the chairman and the ranking member for holding the 
hearing today.
    Grid reliability and resiliency is something we often take 
for granted. With Secretary Perry's directive to FERC for a 
proposed rulemaking for a grid resiliency pricing rule, this 
issue deserves a lot of discussion. And when Secretary Perry 
was Governor of Texas that's when we expanded our wind power 
dramatically and it's part of our grid in ERCOT.
    I am afraid the latest move may artificially tip the scale 
and that's something, I think when he comes before our 
committee we need to talk about.
    The secretary has issued a directive to combat what he 
calls immediate dangers. In the North American Electric 
Reliability Corp. report from earlier this year made no claim 
of a grid in crisis from the retirement of coal power plants.
    The CEO of NERC testified in June that the state of 
reliability in North America remains strong and the trend line 
shows continuing improvement year upon year.
    In its 2017 report, NERC did highlight that transition to 
gas and renewable generation requires new strategy to ensure 
voltage control, power ramping capabilities, and frequency 
support.
    Storage capabilities are key as those new fuel sources 
expand their share of the power generation. I want to ask the 
panel in terms of these newer fuel sources of gas, solar, and 
wind: What changes have we seen in terms of storage 
capabilities in the last few years, and where is the industry 
going, and how does this address the issue of reliability and 
resiliency when it comes to fuel sources?
    We will start at this end, if you could--as brief as you 
can.
    Mr. Durbin. Thank you. Thank you for the question.
    Mr. Green. I am not a Senator. They only give me 5 minutes.
    [Laughter.]
    Mr. Durbin. From the natural gas standpoint, one of the 
strengths that it brings is the robust nature of the entire 
system. So you've got geographic diversity as far as where we 
are producing and how it's transported around the country--
300,000 miles of pipe.
    You know, storage facilities all around the country so you 
package all that together with the--with the--and then 
delivering it to the--you know, to the end user--to the 
generator. You've got a powerful portfolio that they can then 
pull from to provide that reliability.
    Mr. Green. Anybody else? Yes.
    Mr. Kiernan. Just from wind's perspective, I mean, we 
welcome storage on the grid. Obviously, it brings some services 
that are helpful to the grid.
    But to be clear, wind energy does not need storage per se 
because the grid itself in a way is one large storage system in 
which the grid operators are compensating one for another. You 
know, if wind is a little low, they kick in more gas, et 
cetera. So we welcome storage but it's not needed to add more 
wind.
    Ms. Speakes-Backman. I will just add and echo that, that 
energy storage on the grid it likes all resources from solar 
and wind and hydropower to natural gas, coal, nuclear. It spans 
the entire spectrum of energy.
    It addresses short term in fluctuations and it addresses 
long-term issues of transitioning of the grid. For example, the 
ability to put storage in a specific location to offset peak 
periods during the times of transmission and distribution 
upgrades or to even offset the costs of those upgrades.
    And so I would say that while storage can enable more 
generation from variable resources, it also supports the grid 
in those so-called base load resources as well.
    Mr. Green. Mr. Durbin, one of the criticisms of gas-fired 
electrical generators, especially in the Northeast, that they 
often have trouble getting deliveries of the commodity during 
cold months and due to pipeline bottlenecks and being put in 
line behind gas providers for pipeline capacity.
    Are there fixes to the existing market rules that would 
increase your liability when it comes to natural gas or do you 
see an infrastructure problem?
    Someday we may get a pipeline across New York to serve the 
Northeast. But I think Congress may need to get into that 
business--that States can't just stop someone from going 
across.
    But anyway, is there something we can do with that problem?
    Mr. Durbin. Yes. First of all, I completely agree with you 
about New York and happy to help in any way we can.
    But I think when you're talking about the Northeast it is 
both. Yes, there is a constriction--there is not enough 
infrastructure in place. I mean, need more pipelines to serve 
the demand in the Northeast region. There is a reason why they 
pay more than 50 percent more for electricity than any other 
region of the country.
    Having said that, there are market fixes that can be made 
and you have generators who, in large part, you know, have 
interruptible contracts, you know, for their gas. The fact is 
nobody--even during the polar vortex, no one who had a firm 
contract for gas didn't get their gas. Everyone got their gas.
    And so, you know, any outages we referred to was more--it 
was contractual outages because they didn't have--you know, 
they had interruptible contracts. But I do think that there are 
things that could be done to allow for generators to enter 
into.
    Sometimes they are not allowed to enter into those types of 
contracts. The answer is yes, there are solutions.
    Mr. Green. And I know I am out of time.
    But, Mr. Chairman, let me just mention, when we had 
Hurricane Harvey coming in, a lot of our problems were there 
but the nuclear power plant southwest of Houston stayed and--
stayed and continued producing electricity.
    So, I mean, that's why we need all the above and have a 
market that has many different sources.
    Thank you, Mr. Chairman.
    Mr. Olson. Gentleman's time has expired.
    The Chair now calls upon the gentleman from Illinois, Mr. 
Kinzinger, for 5 minutes.
    Mr. Kinzinger. Well, thank you, Mr. Chairman, and I want to 
thank everybody for being here and thank you for your time. The 
hearing is particularly timely.
    This question I am going to actually ask to Ms. Korsnick. 
As I mentioned, the hearing is timely because DOE filed a 
notice of proposed rulemaking for FERC to accurately compensate 
generation resources like nuclear, which is extremely important 
in my district and in my State necessary to maintain 
reliability and resiliency.
    The secretary cited events like the 2014 polar vortex, 
which, in Illinois and throughout PJM, could have been much 
worse if it was not for our nuclear fleet.
    What challenges does the nuclear industry face when it 
comes to participation in wholesale electricity markets?
    Ms. Korsnick. One of the challenges, for example, and it 
actually occurs in your States--some of the other technologies 
make money besides just from what they get from the market, so, 
say, from tax credits, for example. And as a result of that, 
they are interested in putting their power on the grid and it 
can even be at a low price.
    It could be zero. It could be even less than zero, and they 
are still going to make money because they are going to get 
that tax credit.
    So I think we are all a fan of fair markets. We would just 
share that the markets in fact are not fair today and that's an 
example in this case where it's not fair to both sides and in 
this case when the prices go negative and the nuclear plant is 
operating, essentially they have to pay the grid operator to 
take their power.
    Mr. Kinzinger. And let me ask you, if this DOE's rulemaking 
is put into place, if it's implemented, how would that affect 
the existing nuclear generation fleet?
    And let me--I guess I'll follow on--if the markets aren't 
reformed, do you anticipate this trend of early plant 
retirements will continue and how would that affect grid 
reliability?
    Ms. Korsnick. Absolutely. I'll take your second question 
first. But if this trend were to continue, yes, you will see 
more premature closures of nuclear plants and, again, from a 
nuclear plant perspective, once that decision is made to close 
that plant, that decision isn't reversed. Once people no longer 
are licensed, et cetera, and you start going through the 
decommissioning process, it's not something that you turn 
around and change.
    So these decisions are once and done decisions, which is 
why we want to be very careful that as a nation we are not 
making some strategic decisions based on some market challenges 
that we will later regret.
    And so, as you mentioned, the notice of proposed rulemaking 
from Secretary Perry, one of the things that it does is it 
recognizes some of the attributes that nuclear does bring to 
the market in the area of resiliency.
    Specifically, they are focused on that 90-day fuel supply 
as one of the examples that they use for resiliency and some of 
the other ancillary services like voltage support, et cetera, 
that can be offered by a nuclear plant.
    So it goes to valuing some of the attributes that nuclear 
is bringing to the market today that aren't being recognized.
    So yes, it would be helpful.
    Mr. Kinzinger. As well as carbon neutral, I think it's 
important to note.
    In your testimony you discuss that China and Russia are 
aggressively working to export nuclear technology around the 
world. It's a big concern of mine. Can you discuss that effort 
and provide your perspective on how this could actually affect 
our national security?
    Ms. Korsnick. Absolutely. There is 58 reactors being built 
around the world today. Two-thirds of those are being built by 
Chinese and Russian design.
    The Russians know very well what it is that you get when 
you build a reactor in somebody's country. You start a 100-year 
relationship with that country, by the time you design it, 
build it, operate it, and decommission it.
    So they strategically look at the building of these 
facilities in terms of establishing that relationship, and if 
you look at the United States, quite frankly, as a result of us 
allowing our nuclear fleet to begin to atrophy, we are ceding 
our leadership at the national--at the international table, 
quite frankly, on nuclear issues.
    That means we have less of a voice on operational 
excellence. That means we have less of a voice on 
nonproliferation issues, because all of that comes with the 
package, if you will, when we build American reactors around 
the world.
    And so, quite frankly, we just need to look strategically 
at the messages that we are sending, and by shutting down our 
fleet at home it does not put us in a leadership role 
internationally and that affects our national security.
    Mr. Kinzinger. Yes, and it's hard to take a leadership role 
when you have less skin in the game than your competitors I 
think is important to note.
    So thank you all for being here. Thank you for 
participating and, Mr. Chairman, I'll yield back.
    Mr. Olson. The gentleman yields back.
    The Chair now calls upon the gentleman from Oregon, Mr. 
Schrader, for 5 minutes.
    Mr. Schrader. Thank you, Mr. Chairman. I appreciate it very 
much. Just to preface my remarks, I am one of those all-of-the-
above energy guys. I think that's an important--you have made 
that crystal clear, I think, in your testimony to not get 
locked in on just one source of energy.
    Focusing a little bit on the hydro, if I may, with Mr. 
Wright. You know, some discussion about base load. I do want to 
make sure that we have--our lights go on, our heat work, or 
whatever as time goes on.
    Seems like hydro is never talked about as base load. Could 
you give me your perspective on that?
    Mr. Wright. Sure. I think--I think base load actually is 
two components. It's a pricing component and it's an 
availability component.
    So, historically, the lowest cost--lowest variable cost 
resource on the system operated as much as you could possibly 
operate it and those tend to be nuclear and coal plants, and it 
was also available all the time.
    Now what we are finding with variable energy resources--
those lowest variable cost resources tend to be solar, wind, 
and hydro--are all operating and we compete, candidly, for 
market share at the points when lows are low and then we also 
are operating as much as we can when loads are higher.
    So what you really need is to be able to combine those two. 
You want the lowest cost resources operating but you want to 
make sure that you have the availability to meet all loads at 
all times.
    And so it's going to take a new concept, I think, beyond--a 
new word, because the word that we've been using for our 
history in the electricity industry, the industry has changed 
too much----
    Mr. Schrader. I know.
    Mr. Wright [continuing]. And we are going to have to come 
up with a new way to describe this.
    Mr. Schrader. Could you also comment on long-term versus 
short-term focus on energy sources? You know, natural gas is a 
great resource--very low cost now, total disruptor in the 
market place putting pressure on our nuclear friends and, 
frankly, our hydro friends and I think pretty much everybody in 
the marketplace--coal, you name it.
    So how do we--how do we deal with that sort of disruption? 
I know out in my neck of the woods in the Pacific Northwest 
people are talking about really having trouble coming to grips 
with long-term BPA contracts--our Bonneville Power 
Administration, which have historically been the backbone of 
energy up there.
    What--get a comment maybe from Mr. Wright and maybe Mr. 
Durbin, if that's all right, or anyone else?
    Mr. Wright. First of all, we go through cycles in 
electricity markets. We went through cycles in the late 1990s 
when prices were really low and then we had the West Coast 
energy crisis and prices got really high.
    And what we struggle with is how do we go through those 
periods when prices are low and make sure that we maintain the 
resources that will create best value for consumers for the 
longest period of time.
    In this moment, I think what we are seeing is, as I said in 
my testimony, low energy prices and low capacity prices. To the 
extent that we can find ways to be able to think long term--
what is it that will create best value for consumers over the 
long term both from a cost perspective and an environmental 
perspective and then we make sure that we have pricing regimes 
that will support those resources for the long term.
    The difficulty that I see right now is that we--in the 
market formations that have been put together so far they are 
too focused on the short-term. You know, they are too much 
looking at the next couple of years as opposed to how do we be 
positioned for the longer term.
    Mr. Schrader. Mr. Durbin?
    Mr. Durbin. Sure. I, certainly, acknowledge that natural 
gas and power generation has been a disruptive force. But I 
would also argue it's been a very positive disruptive force 
from consumer benefits on the costs of power, wholesale costs 
of 50 percent, environmental benefits, and emission 
reductions--you know, greater reliability to the system itself.
    So do we--are there--are there ways that we can look at the 
market rules that are out there to catch up, if you will? Yes, 
absolutely. But I think, again, we have got to go back--go back 
and make sure that what's being valued are the reliability 
attributes and do that in a fuel-neutral and technology-neutral 
basis.
    Mr. Schrader. All right. Very good.
    Last question, if I may, I think, is large-scale battery 
storage. How closer are we to that? I mean, is it going to 
happen in the next year or two, or is it 10 years off, or can 
you give us a prediction, please?
    Ms. Speakes-Backman. It's happening today. It is happening 
today. There are--there is currently--the largest scale battery 
storage is 100 megawatts for 4 hours of riding through on the 
grid scale, and that's in North America.
    Exponentially, our market is growing. It's grown at the 
grid scale level by 70 percent in the last eight--sorry, the 
costs of grid scale storage has gone down 70 percent in the 
last 8 years on the grid, and commercial and industrial level, 
those costs have gone down 80 percent in the last 2 years.
    So we are seeing steep, steep drops in the cost. We are 
seeing States and Federal agencies begin to understand the 
valuation of storage, both on its supply into the grid and its 
taking off the grid of excess resources and beginning to 
consider, at least, being able to value that.
    And so I say that that time is now. We are able to 
encourage more penetration of low and no-carbon resources. We 
are able to take additional power off the grid for those base 
load resources that are inflexible and can't ramp up and down 
very easily, thereby extending the life of those resources.
    So I think this is happening now.
    Mr. Schrader. Thank you very much, and I yield back, Mr. 
Chairman.
    Mr. Olson. The gentleman yields back.
    The Chair now calls upon the Texan with the patience of 
Job, the gentrifying Aggie from College Station, Texas, Mr. 
Flores, for 5 minutes.
    Mr. Flores. You've misstated the patience part.
    But I am an all-of-the-above resilience and reliability 
guy. I just noticed my solar system at my house was producing 
2\1/2\ times what I was consuming at this point in time. But 
then it just dropped offline because it got cloudy a few 
minutes ago.
    So for you three at that end of the table, I am glad you're 
here.
    Ms. Speakes-Backman. You should have storage.
    Mr. Flores. I am working on it. That's the next. I am 
waiting for the exponential price decreases that you're talking 
about. But I plan to do that.
    We have talked a lot today about reliability, resilience, 
emissions characteristics, inventory, and fuel on board. One of 
the things we haven't talked about too much is the land 
environmental impact of the different types of energy.
    So I have a question for Mr. Durbin and Mr. Bailey and Ms. 
Korsnick about if you--if you could, and you can use whatever 
metric you want to, but if you have a, let's say, a typical 
500-megawatt plant, how many acres does it take of your 
respective power sources vis-a-vis solar, vis-a-vis wind?
    Do you all have those numbers off the top of your head? If 
you don't, just pass and we will go to the next one.
    Mr. Durbin. I don't have them with me. We do have them. I'd 
be happy to provide them for you.
    Mr. Flores. OK. All right. Mr. Bailey?
    Mr. Bailey. Pass.
    Mr. Flores. OK. Ms. Korsnick?
    Ms. Korsnick. I would just say, roughly, you know, a square 
mile is what you would need for--you said 500 megawatt. It 
could be a 1,000-megawatt----
    Mr. Flores. OK.
    Ms. Korsnick [continuing]. Nuclear plant. I guess wind and 
solar----
    Mr. Flores. So it--OK. What would it be for wind?
    Mr. Kiernan. If I can jump in----
    Mr. Flores. Sure.
    Mr. Kiernan [continuing]. It's interesting. For a wind farm 
it's actually less than 2 percent of the land is used for 
turbines and foundations. The rest is continued to be used for 
farming and ranching and other sources at the land--or other 
activities the landowner wants.
    Mr. Flores. It takes a certain footprint to make that work, 
though.
    Mr. Kiernan. But that is just 2 percent. The foundation or 
the access roads--you aggregate that all, it's still just 2 
percent and cattle, they don't seem to mind, and the wheat does 
seem to grow. So it's a wonderful multiple use of the land.
    Mr. Flores. OK. How about the birds? OK. We will come back 
to that later. Go ahead.
    Mr. Kiernan. Happy to----
    Mr. Flores. No, go ahead, Mr. Mansour.
    Mr. Mansour. From the standpoint of solar, you know, a 500-
megawatt solar facility would probably be somewhere in the 
range of eight to nine square miles.
    Mr. Flores. OK.
    Mr. Mansour. So it is taking up a lot of room. You'll see 
those bigger ones, though, on mostly public lands and they are 
lands that, for the most part, nobody else has any desire to 
use or, you know, either in the--now or in the future other 
than for----
    Mr. Flores. And I won't talk about batteries because, I 
mean--do you have a--you had an answer for that?
    Ms. Speakes-Backman. Yes, I do, actually.
    Mr. Flores. OK.
    Ms. Speakes-Backman. There is no direct air, water, or--air 
or water impacts and it's got a minimal footprint. You can put 
a 30-megawatt battery storage in the--in the space of a--spare 
space of a substation.
    Mr. Flores. OK. Very good.
    Mr. Moore. And, Mr. Flores, can I just add, I think I've 
got the proxy for energy efficiency at the meeting today and 
energy efficiency takes zero additional land resources.
    Mr. Flores. I like your answer. That's good. Yes. I've gone 
almost all LED in my home.
    In terms of the--there's--we have talked a lot about 
resilience and reliability and one of the things that got my 
attention a few weeks ago is that there was a large-scale 
failure in eastern Australia because there was a weather 
disruption that knocked the wind offline.
    They didn't have enough spinning reserves backed up. And so 
that implies to me that there is a relationship between the 
base load terminology that we have used and then also the other 
non-base-load power.
    So my question for this, and I am going to ask this of our 
three base load folks, if I can, although I guess hydro is sort 
of base load from time to time--if you have one megawatt of 
base load, with your three technologies what would it--let me--
if you have a megawatt of solar or wind, what does it take in 
terms of reserves to back that up in your three technologies 
for base load? No? You want to start first, Ms. Korsnick? Mr. 
Bailey? Mr. Durbin?
    Mr. Bailey. I should turn the mic on them. I think the 
capacity--you probably ought to ask solar and wind what the 
capacity factors are. But they are less than 50 percent, as I 
recall.
    Mr. Flores. OK. And then----
    Mr. Bailey. Maybe 30, 20 percent--something like that.
    Mr. Flores. OK. I have a question for--how many were 
against the FERC proposal, by a show of hands?
    Mr. Durbin. The the DOE proposal?
    Mr. Flores. The DOE. Excuse me. The DOE request of FERC. I 
am sorry. OK. Against. OK. All right.
    And so you would essentially be against putting in pricing 
characteristics because of fuel resilient or fuel supply for 
resiliency purposes.
    How do you feel about getting rid of all subsidies for all 
technologies to have a truly economically neutral technology 
solution? We will start with wind.
    Mr. Kiernan. I'm happy to address that. Thank you.
    The production tax credit is being phased out, as you well 
know, and I am pleased to say the wind industry proposed that, 
supported that, and as we say, we kind of have tax reformed 
ourselves. So that's phasing out. We are good with that, and 
honestly, we do call on our colleagues let's level the playing 
field and not have subsidies across the board.
    I would also, if I may--you mentioned birds earlier. It's 
actually only .03 percent of all human-caused bird deaths are 
wind turbines.
    Mr. Flores. OK. That's cool.
    Mr. Mansour. With solar, again, we are in the same kind of 
situation. Not exactly the same ramp down for the investment 
tax credit but with the extension in 2015, you know, Congress 
gave us an extension with the ramp down in the out years. And 
our company is--nobody is excited about having their tax credit 
go down. But our companies are willing to go along with that.
    I would say I think you'd be hard-pressed to find any of 
the technologies represented up here who haven't received some 
sort of help from the Federal Government since their inception 
with the possible exception of Energy Storage, which really 
deserves some.
    Mr. Flores. I am into spending R&D for the battery parts. 
So anyway, I've run out of time. I wish I could go longer. I 
yield back.
    Mr. Olson. The gentleman yields back.
    The Chair now calls upon the gentlelady from Florida, Ms. 
Castor, for 5 minutes.
    Ms. Castor. Thank you, Mr. Olson, for yielding and thank 
you to all of the witnesses for a very interesting discussion. 
And at the outset, I want to say thank you to Mr. Rush for 
continuing to raise the important issue of rebuilding or 
building a new resilient modern grid in Puerto Rico. In the 
U.S. Virgin Islands we have a once in a lifetime opportunity to 
do so and I look forward to the bipartisan efforts to protect 
the taxpayer in the future from another catastrophe.
    And I guess Chairman Upton kind of set the tone at the 
outset with his questions relating to the Department of 
Energy's notice of proposed rulemaking for their so-called grid 
resiliency pricing rule.
    I'd say, first off, that the time frame set by the DOE is 
extraordinarily too short for such a transformative impactful 
type of shift in Federal policy that is going to impact all 
consumers across the country and all businesses, likely 
shifting huge costs onto the folks we represent at home. So 
that's--hopefully, smarter heads will prevail on that time 
frame.
    And then--but to the heart of the matter, for the DOE to 
cite economic and national security as the guiding principle 
for this notice of proposed rulemaking really turns that on its 
head.
    It's--especially looking at it now through the lens of the 
most destructive hurricane season that we have had probably in 
our lifetimes. Maybe Katrina standing alone.
    Even Katrina standing alone probably will not rise to what 
we are going to have to do for the three hurricanes that have 
hit this year and the other extreme weather events.
    What they have put forward at the Department of Energy is a 
policy for 50 years ago based on the fuel MECS of 50 years ago. 
It is not a policy for resiliency and modernization for 2017 
and the changing energy mix that is out there.
    And when they--when I hear the talk of costs, I always like 
to remind everyone, yes, they are the finite energy costs that 
we analyze.
    But if you're a person in Texas or Florida or just about 
anywhere, what you're seeing right now--rising air conditioning 
costs because of higher temperatures, your flood insurance is 
going up, the emergency aid package that all taxpayers will 
pay, that's going to be a high-ticket item--property insurance, 
beach re-nourishment, property taxes, not even to mention the 
increased cost of carbon pollution.
    So this is quite a misguided effort that they need to take 
back to the shop and work on it. And I'll give you one example. 
In the Tampa Bay area just last week the Tampa Electric 
Company, now owned by Emery, that has been primary--primarily 
natural gas but the Big Bend plant is a longstanding coal-fired 
power plant, they've just announced the largest investment in 
solar power in the history of the State of Florida.
    The so-called Sunshine State--we are not quite there when 
it comes to solar power. They are able to do this because not 
just consumers are demanding it but it makes sense for their 
bottom line. This is what the market is telling them.
    Solar is much more inexpensive now, and I think this is 
just going to be the first step. You're going to--Duke Energy 
has already said they are going to do this. Other utilities are 
going to do this.
    But, Mr. Mansour, with a so-called resiliency pricing rule 
like this, don't you think if you're favoring certain fuel 
sources that's going to have a chilling effect on other low-
carbon fuels of the future?
    Mr. Mansour. Congresswoman Castor, we share your concern 
both with the timing--the speed with which this is going 
forward--and actually the intent in general.
    We feel very strongly that the grid itself right now, yes, 
it needs improvement. Those improvements should come as a 
result of market forces that look at and value some attributes 
in the way that they should be. We think----
    Ms. Castor. And this is in a State that does not have a 
renewable portfolio standard, no renewable goals. So there is 
not that argument either that we are tipping the scale somehow.
    Mr. Mansour. And we share your concern with transfer of 
lots of money from ratepayers to basically subsidized certain 
types of generating capacity.
    Ms. Castor. Mr. Moore, you've said that you anticipate this 
would be extraordinarily expensive for consumers and 
businesses, and you threw out a multibillion-dollar number.
    Do you see the chilling effect, as well, and we will add in 
those costs, too?
    Mr. Moore. Sure. I see it in numerous ways and I think that 
to simply pick one attribute over all others and reward that 
one attribute without any evidence to back it up, those mean 
that is diverting, easily, billions of dollars a year directly 
and indirectly, chilling market design and, you know, taking 
away good dollars that could have been--you know, the consumers 
could have held on to those dollars.
    Ms. Castor. So I would say that the true threat to 
resiliency is the Trump administration's allegiance to the 
policies and the fuel MECS of 50 years ago.
    Clearly, they are favoring fuel sources that are less 
competitive today. This is going to cost consumers dearly. I 
cannot believe that in--while we are still recovering from 
hurricanes there is no mention of mitigating transmission or 
distribution damage in a resiliency rule or how we accelerate 
restoration after an extreme weather event.
    So I trust that the comments to the DOE and FERC will 
reflect all of these concerns. Thank you, and I yield back.
    Mr. Olson. The gentlelady yields back.
    The Chair now calls upon the gentleman from the 
Commonwealth of Virginia, Mr. Griffith, for 5 minutes.
    Mr. Griffith. Thank you very much, Mr. Chairman. I 
appreciate it greatly. I find some of the comments today 
somewhat interesting.
    I, too, am an all-of-the-above kind of guy but, you know, 
let's take a look at history as we see it in reality as opposed 
to just with our particularly viewpoint.
    I confess up front, my district has a lot of natural gas 
and a lot of coal. With that being said, Mr. Moore said we 
don't want to get into a situation where we have, you know, one 
administration coming in and then another administration coming 
in.
    But in fairness, that's exactly what we have seen because 
the--if we would have gone to the market policy, say, 10 years 
ago that many have advocated today, wind and solar and even 
battery storage would be in a lot different position because 
the market kings would have been those forces that have 
recently been characterized as being 50 years old, and to now 
have those particular fuel sources castigated to the trash heap 
of history without recognizing the huge investments that our 
ratepayers have put into those and recognizing that that is at 
least for the next 10 or 15, maybe 20 years a big part of our 
grid reliability creates some interesting issues.
    We are where we are. We need to move forward. I understand 
that. But it is nice to note that sometimes you have to look at 
history.
    For example, the great State of Florida talks about air 
conditioning. You know, 125 years ago, before coal was 
discovered in my district, the people came to the mountains to 
get out of the heat, and they spent months in the summertime 
getting out of Richmond and Washington and coming to the 
mountains of Virginia.
    It was a big economic source. We have shifted from that to 
coal and now we are shifting again. But I don't know that we 
should do it as rapidly as some people want without, I think, 
risking our reliability.
    Mr. Bailey, I got to--I got to say, you know, I was 
listening. I wasn't in the room when you actually said it but I 
was listening on the TV as sometimes we want to do when we are 
trying to do five things at one time.
    And could you tell me again those numbers? Seventy-two days 
I think I heard that we have--able to stockpile certain types 
of coal and 80 something for another kind. Could you go over 
that again? Because it was just nice to hear.
    Mr. Bailey. I would be pleased to. Over the past 5 years, 
average coal stockpile at a power plant has been 72 days for 
bituminous and 83 days for sub-bituminous.
    Mr. Griffith. Yes. Over--since you ask, over the last 9 
years, the low has been a little over 40 days and the high has 
been a little over a hundred days.
    So while there may be some difficulties with other things, 
you can put a lot of coal in the back 40 if you need it to be 
there for reliability purposes.
    Mr. Bailey. There is--there is a lot. Yes, sir.
    Mr. Griffith. Yes. I do appreciate that.
    Look, we have got some interesting things going on. I am 
curious, Ms. Speakes-Backman, if you all consider from your 
industry standpoint pump storage hydro to be batteries, because 
that's kind of the way I've been looking at it, and we are 
looking at putting some of those, hopefully, into some 
abandoned coal mines to generate some economic development in 
our neck of the woods and store that.
    They are even talking about using some renewable sources--
wind or solar--to pump it up in the nonpeak periods and then 
have the water ready to flow down to the lower levels of the 
mine at the appropriate time when it's peak. Do you all 
consider that a part of your mission?
    Ms. Speakes-Backman. Absolutely. Absolutely, 100 percent.
    You know, hydro is one of the early storage technologies. 
It helped to offtake the oversupply from base load resources 
back in the day when it was beginning to be installed.
    So we absolutely consider storage as or hydro--pumped hydro 
storage as part of our storage infrastructure. Mr. Wright has 
represented the hydro storage industry quite well and so I 
focused on batteries today.
    Mr. Griffith. And I appreciate that very much and do 
appreciate Mr. Wright's testimony as well.
    In closing, I have to say it's not politically necessarily 
a positive, but as a conservative Republican I am also a bird 
watcher. So I am concerned about wind killing birds.
    I recognize that it may not be a huge percentage. Clean 
windows on big office buildings does a lot of damage to birds 
as well. But I once had a bill on that and tried to solve that 
problem at least for Federal buildings as we renovated as well.
    But I do hope that the wind industry and the solar industry 
will recognize that we have some obligation to make sure we are 
not whacking or frying the birds as they go over or near our 
energy facilities.
    Mr. Kiernan. Thank you for bringing that up, and I very 
much share your concern as a former executive with New 
Hampshire Audubon.
    I, as well, am out there birding on a regular basis and I 
will say the wind industry takes very seriously our strategy to 
reduce bird take.
    And I appreciate the Department of Energy. Actually some of 
their grants have gone to helping advance new technologies that 
are being commercially tested as we speak.
    So we are hopeful that we can take our low impact and make 
it even lower.
    Mr. Griffith. Thank you very much, and I yield.
    Mr. Mansour. Let me just add, on behalf of the solar 
industry, we also work very hard to mitigate the impact on 
wildlife whether it is avian species or some of the terrestrial 
ones, as well.
    So our companies spend tens and tens of millions of dollars 
per project to try to mitigate those kind of impacts.
    Mr. Griffith. And I appreciate that, and thank you very 
much and yield back.
    Ms. Speakes-Backman. For the record, we don't kill any 
birds.
    [Laughter.]
    We are pretty good on that front, too.
    Mr. Olson. The gentleman yields back.
    The Chair now calls upon himself for 40 minutes, 5 per 
witness.
    [Laughter.]
    OK, you guys passed the test.
    This is an important hearing, and that importance was 
reinforced this week by the Department of Energy's proposal to 
FERC on valuing base load generation.
    But most importantly, it gives Texans like me a chance to 
do what we like best--brag about Texas. Unlike many States, 
Texas has a very diverse power grid.
    We think we have the most diverse one in America. Mr. 
Durbin, natural gas is number-one for power production in 
Texas.
    Mr. Bailey, it was coal until 2 years ago. Coal is number 2 
very closely. Ms. Korsnick, we have Comanche Pass and south 
Texas, two nuclear plants. My colleague, Gene Green, mentioned 
about south Texas.
    Harvey hit in Corpus Christi. The worst part of the 
hurricane is the northeast side. That part hit Bay City in 
south Texas. Not one blip of power lost, despite a category 
four hurricane hitting a nuclear reactor.
    Also, we have exploding solar. Mr. Mansour, Army bases--
Fort Hood and Fort Bliss, the biggest ones in the Army are now 
using solar to power the base. They actually export that to the 
power grid there locally.
    We are number one, Mr. Kiernan, in wind power. Texas is 
number one for wind. And last spring, as you know, almost half 
of our power grid was supplied by wind power--one half for one 
day.
    And back home in my district, a place called Thompsons, 
Texas, I wish Mr. McNerney was still here because we have 
what's called the Petro Nova Project. It's NRG's Parish Power 
Plant and this is a true carbon capture sequestration for 
enhanced oil recovery that works.
    Working with a Japanese company, we have technology that 
grabs 98 percent of the CO2 coming from one coal generator. 
That's viable because about 65 miles southeast is an old 
oilfield. There is a pipeline that comes by.
    So they grab that CO2, put it in that pipeline--like 
fracking fluid, repressurized. Hey, they are making money by 
carbon capture sequestration. But that's rare.
    But this diversity does not make the coast immune to 
problems. In the winter of 2013, we had a big cold snap. Lost 
two of our coal generators. Had rolling brownouts and blackouts 
all across the State.
    Some days there is not enough wind, and then during 
Hurricane Harvey, we had way too much wind. The turbines went 
offline. And these problems aren't hypothetical and they show 
that there is not one perfect energy source.
    And my question just to the entire panel, I'd like to go 
down the line for the different sources here and I'd like you 
to describe what's the common cause of unplanned outages where 
you can't provide power and then talk about how you are 
addressing those issues.
    Mr. Durbin, you're up. Natural gas.
    Mr. Durbin. Thank you for the question. As I mentioned to 
Mr. Green--as we talked about it, and Mr. McKinley had raised 
the issue of outages--for natural gas and power generation, any 
outage is being caused not by a lack of supply or a lack of 
availability but by contracts that--you know, they are 
interruptible contracts.
    So these are all things that can be addressed, can be--can 
be resolved with the natural gas to continue to provide that 
reliable service.
    Mr. Olson. Mr. Bailey--coal, sir.
    Mr. Bailey. Yes, sir.
    Well, we talked about the amount of fuel onsite at fuel 
plants. We think that makes the coal fleet very reliable and 
subject to very few outages, frankly.
    Mr. Olson. Ms. Korsnick, nuclear power, ma'am.
    Ms. Korsnick. As I stated, if you look at the nuclear fleet 
in the United States, we have had greater than a 90 percent 
capacity factor for 15 years. So I would say in general nuclear 
has fewer unplanned outages.
    We do have a refueling outage every 18 to 24 months on our 
plants.
    Mr. Olson. Mr. Kiernan, wind power, sir.
    Mr. Kiernan. If I can start with a contextual observation. 
Gerry Cauley of NERC a week or two ago commented about the 
reliability on the grid is good and getting better.
    So I just, first, want to observe that this is an important 
topic. But we don't have an urgent problem. We just need to 
work it.
    As to wind, it's fascinating because we have wind turbines 
that are relatively small--1, 2, 3 megawatts--and they are 
geographically dispersed, while there might be a few that go 
down because the winds are too high in one part of Texas, there 
are a bunch in another part of Texas that are still rolling 
along.
    So actually our geographic diversity gives us tremendous 
resiliency that we are adding to the grid.
    Mr. Olson. Mr. Wright, solar power, sir. I am sorry.
    Mr. Wright. Water.
    Mr. Olson. Water guy--hydro. That's not much for Texas but, 
please, what's your biggest challenges for the Nation?
    Mr. Wright. My colleagues from the large public power 
council.
    So you have hydro power in Texas as well. The--what I would 
say is, look, anybody that has hydro resources, run them, son, 
as much as they can because it's the low-cost resource. It's 
the most reliable resource. It's the air emission-free 
resource.
    The biggest challenge in the hydropower industry is that 
it's an aging fleet and we need to make investments in that 
fleet in order to make sure that we continue to be able to get 
the output from it.
    Mr. Olson. Mr. Mansour, finally.
    Mr. Mansour. Yes, sir.
    Mr. Chairman, I am going to totally ignore your question. 
But I am going to follow your lead by bragging on solar in 
Texas.
    We got 1.6 gigawatts right now. We are going to go to 
another almost 5 gigawatts over the next 5 years, and a lot of 
that is because the way ERCOT and the Texas market is set up.
    Mr. Olson. Keep talking.
    Mr. Mansour. Yes. I am not sure. I think it was Mr. Green 
that talked about some of the work that former Governor Perry 
did with the CREZ lines.
    Yes, that incentivized a lot of wind. Basically, it was the 
classic build it and they will come. So, you know, the people 
of Texas put out I think it was $10 billion or more to build 
these CREZ lines or some--these transmission lines.
    Wind was the first to respond because they were a little 
bit ahead of us. But solar is catching up and we already employ 
over 9,000 people in the State of Texas and we are going to be 
growing in your State.
    Mr. Olson. Ms. Speakes-Backman, concentration type stuff.
    Ms. Speakes-Backman. I love this question because we are 
here for reliability and resilience, and for all of these 
resources along the table.
    In fact, Texas has quite a few batteries in place on the 
grid and just pointing that out. Duke has batteries providing 
frequency regulation. AEP has batteries that have extended the 
transmission and distribution life with another 20 megawatts 
being built colocated with wind, as a matter of fact.
    Fort Bliss was among one of the first locations to build 
micro grid with mission insurance as its--as its objective. So 
we are here for everybody. We are kind of like the bacon of the 
grid. We make everything better.
    [Laughter.]
    Mr. Olson. You know what Texans like to hear? The bacon of 
the grid. Mr. Moore?
    Ms. Speakes-Backman. I grew up in Ohio. I love bacon.
    Mr. Olson. Your comments, Mr. Moore.
    Mr. Moore. Sure. Just that people come from all over the 
world to see how Texas integrates large amounts of renewable 
energy onto the system.
    ERCOT has done a terrific job with it and I think a key 
reason for the success, to echo another speaker, is the 
incredible amount of new transmission to pull the grid 
together.
    So given that most outages are caused to the distribution 
transmission system with the, you know, wires and poles, let's 
focus on smart design for the system.
    Mr. Olson. All those praises for Texas. So join me: 
[singing] ``The stars at night ...''
    [Laughter.]
    And seeing no further Members wish to ask questions, I 
would like to thank all of our witnesses for being here today.
    And there is one document for the record. I ask unanimous 
consent that written testimony of Dr. Susan Tierney in a 
summary--she was supposed to be here, but she could not be 
here--be entered into the record.
    Without objection.
    [The information appears at the conclusion of the hearing.]
    Mr. Olson. And pursuant to committee rules, I remind 
Members that they have 10 business days to submit additional 
questions for the record and ask the witnesses to submit their 
response within 10 business days upon receipt of the questions.
    And without objection, this committee is adjourned.
    [Whereupon, at 4:23 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
    
    
    
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